Your Business Foundation – Part 2 – Establishing Guiding Principles

April 15, 2009

Once, we understand the owner’s purpose for the business, and then we can better define the guiding principles for how it is to be managed. That typically starts with the mission and vision of the company.

Mission Statement versus Vision Statement

There is often confusion about a mission statement versus a vision statement. There are number of web sites that attempt to explain the difference – for instance, the Free Management Library. For me, it simply boils down to:

  1. A mission Statement is the ‘why’ the company exists.
  2. A vision Statement is ‘what’ the company does.

So, the mission statement is more about the internal motivation of the company and usually inspires the employees of the company. For instance, National Instruments mission is to empower engineers and scientist to improve the world. So, our mission explains why we exist, but doesn’t really explain what are going to do.

Then, the vision statement provides a basic description of what are doing to accomplish our mission. The vision statement is usually less ‘fluffy’ and more customer-facing. At NI, we create hardware and software tools (e.g. graphical system design) that empower ….

Core Values

Next, companies often like to define a core set of values that dictate ‘how’ the company will operate. It is essentially codifies the personality, spirit, and culture of the company. For instance NI’s core values are:

  1. Respect for people (customers, employees, stakeholders, suppliers, and partners)
  2. Honesty and integrity in our business dealings and activities
  3. A focus on customer service
  4. And emphasis on both break-through innovations and continuous improvement in all that we do

Note that if these values are indeed intended to drive the behavior of your company, then it is important that they be written down, posted around your facilities, and published for others to see.

By establishing your guiding principles, you create a solid foundation for your business plan – the subject of my next post.