Extraordinary Companies

All companies dream of becoming institutions but very few manage to achieve that status. Most of organizations are born, blossom and then either wither away or are amalgamated into a bigger company all in a period of a few short decades. Companies in todays environment have a life span much less than that of a human, strange since so much effort and man hours of very intelligent people are spent trying to make it more than a short lived bubble.

What then differentiates one of these bleeps on the business landscape from the Goliath's which transcends people lifetimes, make an indelible mark on how business is done and leave a legacy for the future generation of companies to learn from.

Mission and Vision are the two terms that are key to the question above. All great corporations be it IBM, HP, Nordstorm, Tata’s or any other live for much more than just quarter to quarter earnings and the associated fluctuations of its stock price. They do business for a purpose and though they keep a keen eye on the profit and loss but that is more of a way to assess their efficiency than being the be all and end all.

Mission is the reason the company is in existence. To accomplish it is what stops the management to sell the company to the next highest bidder which gives the maximum return on investment to the shareholders. Mission of a company is the great goal which it is trying to achieve, which will make the world a better place. Merck for instance has its mission to reduce human disease and suffering. Lofty indeed, but this is what defines everything that management at Merck does. Trying to achieve its mission is the only way Merck can explain its shareholders why it donates hundreds of millions of dollars of free drugs in Africa.

Mission such as above are the purpose of an organization and help everyone in the company work for more than just money. A compelling mission is what brings like minded people together and justifies them dedicating the most productive years of their lives to the growth of the company. What they have worked for is not just the organizations bottom lines but for furthering the cause that the company represents and these employees value.

Vision on the other hand are the milestones on the road to achieving the mission of the company. Vision statements are set targets with a date which the company decides to achieve that will bring it a step closer to making its Mission a reality. Vision should not be just another management update to the employees but should be so compelling that it should be the topic of discussion in cafeterias, company get togethers, when colleagues meet in the hallway and almost every corporate communication. The more colorful or challenging the Vision the more likelihood that employees will go that extra mile to make it come true.

Ratan Tata the chairperson of the TATA Motors set a vision to build a sub $2,000 car to make it affordable to the vast majority of Indians instead of a select few. It was at that point of time considered impossible by the best in the consumer vehicle industry. Nonetheless Tata stuck to this vision and was able to rally his entire company to take up the challenge and they rose to the occasion to prove all the skeptics wrong and come up with the Nano.

Tata is a fine example of what people and companies can achieve when a vision is set, management buy in is visible to the employees and adequate support and resources are provided to meet them.

Another trait of such organizations, which are working for more that just the next set of numbers, is that they treat their employees as partners in a journey, as people who are together based on shared interests and goals and hence who become irreplaceable once they are gone. In times of economic distress letting go of staff is one of the last options which is better left in-exercised. Why, because they realize that economic cycles are temporary but loss of people with shared zeal and passion is permanent.

Layoffs at such companies is a strategic decision such as when a line of business is being closed either because it does not fit with its core business or has lost relevance due to environment changes and hence does not contribute towards the Mission of the company. All strategic decisions including mass layoffs are governed by the guiding mission. Even in such case adequate care is taken to make the transition smooth, just like one would do to an old friend who has seen many ups and downs with you.

When lacking a compelling Mission or when a company deviates from the same a culture of transactional relationship breeds. Such companies are not able to rally staff around a common goal but instead place disproportionate focus on the numbers and how the street reacts to them. The existence of such organizations is very much defined by their profits and profitability every quarter. This places an extraordinary pressure on the management to make the numbers look good, at any cost, which in the long run is detrimental to the health of the organization.

In such companies tactical maneuvers gain importance over strategic direction since the priorities are skewed towards immediate profit booking. In extraordinary companies profits, profitability and other numbers are used to gauge the efficiency of operations and as a feedback to the business leaders but they are not the only criteria in decision making. Strategic thinking in such organizations is governed by the purpose of their existence and how to fulfill that. These companies thus escape the numbers pressure which recently has been the reason for downfall of more than a few, cooking up accounting books to meet expectations. Such short term outlook also results in companies following a hiring and firing policy which further dilutes the culture and invariably results in employees developing a transactional relationship, further making the Mission irrelevant.

To become an extraordinary company is a conscious decision that the management takes. It involves much thought, direction and eventually guts to stick to the right path even when the going gets tough, because only then the tough gets separated from the departed.