Thursday, July 14, 2005


The best way to understand a non-profit is to review its mission statement. If the statement is long and convoluted it is safe to assume that the organization lacks focus and direction. It should be short, sweet and to the point, memorable and constantly revisited to assure that it remains relevant to donors, volunteers and staff.
The practical purpose of the mission statement is to remind the agency’s decision makers of their moral foundation. In this regard, there is no difference between non-profits and for-profits. In fact, non-profits can learn a great deal from for-profits.
Leann Cadani may have put it best. In Corporate Mission Statements: A Strategic Management Issue she writes, “The Mission Statement is a crucial element in the strategic planning of a business organization. Creating a mission is one of the first actions an organization should take. This can be a building block for an overall strategy and development of more specific functional strategies. By defining a mission an organization is making a statement of organizational purpose.”
According to Joseph Badaracco in Defining Moments: When Managers Must Choose between Right and Right, “Mission statements and credos can remind managers of the larger purposes their work serves, something easily lost in the hurly-burly of everyday life.” Rudy Giuliani, in Leadership, also speaks about the importance of a clearly defined mission. “Thus, finding the right organizational structure starts with a mission. Then you have to identify your aims, and what you should do to achieve them; find the right people for the job; and constantly follow up to make sure everyone is sticking to the original purpose, that no one’s taken over your team and sidetracked them.”
Remember in 1982 when you couldn’t buy Tylenol? Johnson & Johnson’s mission is to place the priority of the health of its customers above all else. So what to do when containers of Tylenol are poisoned in Chicago and the next day your stock price plunges 20% and you lose $2 billion in company value? Launch a nation-wide advertising campaign pointing out that the cyanide did not come from your plants, that it was an isolated incident of an individual madman, and that the product is safe. Of course that is not what mission-driven Johnson & Johnson did. They pulled Tylenol from the shelves and took a $240 million hit! As their credo states, “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.” That’s why their CEO was praised, not condemned, for the decision.
Ever hear of river blindness? Scientists at Merck found the cure for the disease that was decimating the lives of Africans. On average it costs $200 million and takes 12 years to develop a drug. In this case just to market Mectizan, as the cure was named, was expected to cost $2 million in its first year for distribution alone. It was estimated that the annual bill for producing and distributing the drug would be $20 million. The $3 price tag per pill was too high for anyone with the disease to pay. No governmental or international organization was willing to pick up the tab. What to do? “The mission of Merck & Co., Inc., is to provide society with superior products and services.” Merck gives the drug away for free. Every year it takes a multi-million dollar hit so that thousands of Africans can see. Again, the decision was praised by shareholders.
Then, of course, there are companies that take a leadership role when government fails. For example, South African mining conglomerate Anglo American could not get the South African government to approve a prescription drug campaign to fight AIDS which is destroying the country, lowering life expectancy to 48 years. With 25 to 30% of its employees being HIV positive, the company had to act. Against government wishes Anglo American decided to provide its employees with drug treatment, in addition to launching an educational campaign. Where government failed to act, a for-profit company took the leadership role and offered its expertise to local communities and health agencies. (Eventually the South African government decided to follow Anglo American’s lead.)
Of course cynics will say that Johnson & Johnson had no choice but to pull Tylenol from the shelves because no one would buy the product. And Merck may be losing millions on Mectizan but it gains untold millions from good press and good will. And as for Anglo American, it needed to protect its work force. But cynics just don’t get it. Having a moral foundation to one’s decisions is good business.
In his recently published book, Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value, Bill George, the former chairman and CEO of Medtronic, places mission at the center of his formula for success. He clearly states that the book’s purpose is “to show all leaders… that there is a better way to lead than we have seen in the past decade – by pursuing your mission, living by your values, and getting superior results for all stakeholders.”
George describes Medtronic as “a mission-driven company.” The mission statement that the company’s founder, Earl Bakken, wrote was “to restore people to fuller lives.” The full mission statement is literally plastered throughout the company, and a regular topic of discussion among employees.
Bakken wrote the mission statement in 1962. Five years earlier the company had created the first pacemaker. On the verge of bankruptcy the company’s board of directors urged Bakken to write the company’s mission statement. “It gave the company a clear purpose and focus. Within three months the company turned profitable and has been so ever since.”
According to George, “the best-kept secret in business is that mission-driven companies create far more shareholder value than do financially driven firms.” (During his tenure at Medtronic, George “created $60 billion in shareholder value!”)
While few non-profits have the impact on society of for-profits, learning for-profit decision making can serve as a guide to non-profits facing moral decisions to which all too often there is no clear decision. Hopefully when non-profits make those tough decisions, their boards and cohorts will show them the same support as their for-profit counterparts.