Last month, I conducted a webinar on three of the most important lessons companies can learn from Ford’s epic turnaround. During that session, I got a number of great questions from the participants. One of the best was this: How important is a mission statement when it comes to establishing or changing a company’s culture? I answered by saying that it is extremely important. So important, in fact, that I want to elaborate on the reasons why.
But first, let me talk about what I don’t mean by “mission statement.”
When I refer to a mission statement, I don’t mean some bland mélange of corporate argot full of sound and fury, signifying nothing. Unfortunately, that’s what most mission statements are, as “Weird Al” Yankovic hilariously highlights in his recent eponymously titled song (Note: If your company’s mission statement echoes Weird Al’s random collection of business platitudes, you’re doing it wrong).
It doesn’t have to be that way, of course, and it shouldn’t.
A real mission statement is one that genuinely reflects the aims of your organization and is backed up by what you actually do. It is a roadmap that shows everyone — your employees, your shareholders, your suppliers, your customers and your leadership team — where you are going. And you need to know where you are going before you can figure out how to get there. That’s why a mission statement is so important when it comes to establishing or changing a company’s culture.
Let’s look at a powerful, real world example.
In my book, American Icon: Alan Mulally and the Fight to Save Ford Motor Company, I describe how Bill Ford Jr. flew Mulally to Michigan for a frank discussion at his home in Ann Arbor before offering him the job of CEO. Mulally drafted Ford’s new mission statement on the plane ride back to his home in Seattle.
It didn’t consist of a lot of corporate-speak. It didn’t use the term synergy even once. In fact, it consisted of just four simple words: “Profitable growth for all.” But they were immensely powerful words, particularly in light of the automaker’s circumstances at the time.
To begin with, Ford was not profitable. The company was about to post a record loss of more than $12.6 billion for 2006. So, right from the beginning, Mulally was letting everyone know that the first priority was to get Ford back in the black.
Nor was Ford growing. Its share of the U.S. car market, which was still the largest market in the world in 2006, had been declining for more than a decade. And the situation wasn’t much better in the rest of the world. Its rare gains were often the result of the unhealthy practice of “buying share” — selling vehicles at a deep discount, or even a loss, in order to steal sales from competitors. Mulally was making it clear that he was committed to growth, but only if it was real. As he put it, not just growth but “profitable growth.”
Which brings us to the most powerful part of Mulally’s mission statement: “for all.” When Mulally said “all,” he meant that this profitable growth would not just benefit Ford’s shareholders or senior executives, but all of the company’s employees, both hourly and salaried. He meant that it would benefit all of Ford’s dealers and suppliers, too. Mulally’s “all” even encompassed all of the communities in which Ford had a presence.
This was huge, because in 2006, Ford was a company reviled by its employees. They had endured years of painful cuts and downsizing with no end in sight. Ford was a company despised by its dealers and suppliers for pushing policies that wounded their businesses in a desperate attempt to stanch its own bleeding. And it was a company reviled by many towns and cities for the trail of rusting factories and boarded-up warehouses it left in the wake of its long decline.
To each of these key constituencies, Mulally was proffering the promise of better days. With four simple words, he was declaring that Ford Motor Company was going to transform itself from a shrinking, money-losing failure into a profitable, growing enterprise that would benefit all of its stakeholders.
That was the mission he was accepting when he agreed to take the job as Ford’s CEO, and it was the mission he was giving to every man and woman who labored for the Blue Oval.
Mulally’s turnaround plan was nothing more — or less — than a means of accomplishing this mission. It informed every decision he and his leadership team made over the next four years. It defined Ford’s relations with its employees, its dealers, its suppliers and its unions.
Instead of trying to save the company at their expense, Mulally showed each of these groups how they could become more successful by helping Ford succeed.
If the United Auto Workers would agree to the contract changes necessary to profitably produce cars in the United States, Ford would insource vehicles currently slated for production in Mexico.
If suppliers would give Ford access to their brightest engineers and best technology, the automaker would give them longer contracts and a seat at the planning table.
If dealers would help polish the Blue Oval by upgrading their stores and selling more than just trucks, Ford would reward them with more profitable products and pricing.
And if cities would support Ford’s restructuring with tax incentives, the automaker would reward them with new major new investments in factories and job creation.
By the end of 2010, Ford Motor Company had delivered on all of these promises and become one of the most profitable automakers in the world. Mulally and his team had accomplished their mission of delivering profitable growth for all. And Ford continues to do that today.
That is how a mission statement — a real mission statement — can change a company’s culture. So, if you want to change your organization’s culture, start by figuring out what you stand for and what you want to achieve. Then figure out how to do it.