you for sharing with us your analysis of our Mission Statement. I found it
to be fascinating -- indeed, even thought-provoking -- and would like to
provide you with a general reaction to your analysis.
First, an overview.
While I am not familiar with the Strategic Management textbook from which
you derived your "nine essential parts of a mission statement," we might
take issue with the thought that a mission statement must contain a certain
number of elements or that it must include specific references to the use
of technology or a concern for survival, etc. Indeed, the latter should be
so basic as to not require notice. Equally important, a mission statement
that attempts to cover "nine essential parts" could become so cumbersome
as to render it incomprehensible to some -- if not most -- of its intended
audiences. Conversely, one could also argue that the nine points in your
list is incomplete; in this age of "quality" that is the subject of countless
books and seminars, and the pursuit of which has consumed many corporations,
it was noticeably absent from your list.
Rather than developing an
expansive, widely inclusive mission statement, we followed our belief in
the concept that "less is more" and developed one that is highly focused
on our essence -- what we are "all about" once everything else is distilled
away. Then, we have chosen to address such specifics as the use of technology
and the need to grow and concern for our crew (our preferred term for employees)
-- all of which support our mission statement -- through a separate statement
called "Vanguard's Critical Success Factors." (I'll come back to this momentarily.)
In terms of your analysis, I certainly agree with your points 1 and
2. As for #3, Markets -- we specifically left that off of our mission statement.
We could have said something like "In markets where we choose to compete"
-- but that's stating the obvious. We could have said "In the USA, Europe,
and Australia" -- where we are. But what about where we want to be in the
future? Certainly we'd be foolish to signal to the marketplace where we might
be looking next...and if we didn't put our next markets in our mission statement,
wouldn't we be in violation of our mission statement if we went somewhere
that we didn't list?
As for #4, Technology -- we address that in our
Critical Success Factors. The fact is, we do not treat technology as a separate
and distinct entity. It is woven into our corporate fabric, serving as a
support function to all of our goals and objectives. We do not see technology
as being our mission; rather, it to be used to support our mission.
for #5, Concern for survival, growth -- again, this is addressed in our Critical
Success Factors. Its omission is probably a greater reflection of our belief
that "if we focus on doing the right things right -- i.e., fulfilling our
mission statement" -- growth will be achieved. However, we do not seek growth
for growth's sake...indeed, in some respects, growth is viewed as a by-product
(some would even say a "curse") that results from doing the right things
As for #6, Philosophy -- your analysis is correct: our philosophy
and self-concept are intertwined, and inseparable. We offer what we believe
is the highest value proposition in our industry, as stated succinctly in
the closing phrase of our Mission Statement -- "...the highest standards
of quality and at the lowest reasonable cost." So, we think you ought to
give us the point for this one.
We agree with #7.
As for #8,
Concern for public image, environment -- we are all about substance, from
which an unshakable image will be derived. To us, putting a concern for public
image in a Mission Statement makes it sound like some publicity effort, done
primarily -- if not solely -- for effect. That's not what we are about.
that doesn't mean we don't care about our image...only that a focus on that
image misses the point. Once again, if we're doing the right things right,
the proper image will follow. As for a concern about the environment, well,
we're not a manufacturing firm creating toxic wastes. Thus, we're not so
sure that this belongs in our Mission Statement.
As for #9, Concern
for employees -- we address this in our Critical Success Factors. We see
concern for our employees as being important to achieving the success of
our mission, not being a part of our mission in and of itself. Our mission
is as it is stated in our Mission Statement. Concern for our crew is, of
course, critical -- for, without a talented and productive crew, we cannot
achieve our mission.
Now, despite achieving a score of only 3 on your
9-point scale, we seem to be doing alright. We have, for the third consecutive
year, ranked #1 in net cash inflow for our industry; we again dominated the
"Forbes" list of "best buy" funds (taking 42% of the list, up from 36% a
year ago); our shareholder retention rate continues to be twice the industry
average; our average expense ratio declined again (even as the industry's
rate has either remained steady or may have risen again); and we have received
either the highest or one of the highest scores for client service in surveys
conducted recently by Smart-Money, Worth, and Mutual Funds magazines. And
our business strategy continues to be lauded in academia, particularly by
such a luminary as Michael Porter at the Harvard Business School.
have repeatedly referenced our Critical Success Factors, so I will list them
below. Note that by separating them from the Mission Statement, we are able
to keep that Statement highly focused and simple. We are also able to develop
specific and measurable objectives that, if they are achieved, will help
us fulfill our Mission. And we are able to adapt, modify, or add objectives
as conditions change -- without changing our Mission Statement. The Critical
Success Factors are:
1. Provide investment returns that are consistently better than those of competitors.
Serve as the role model for the industry by adhering to the highest standards
of ethical behavior and fiduciary responsibility.
3. Maintain highly effective controls to safeguard assets.
4. Be easy for clients to deal with.
5. Maintain the lowest expense ratio.
6. Develop and maintain a competent, motivated, productive, and diverse crew.
7. Provide assistance, education, guidance, and, when appropriate, advice that
enable clients to meet their financial goals.
8. Use technology to sustain competitive leadership.
9. Attract new clients and assets.
10. Adapt, evolve, and continuously improve to attain unmatchable quality.
that each of these supports our Mission Statement. They are not our Mission
-- they are in support of our Mission. At the end of the day, what counts
to those who have chosen to invest in our funds is -- first and foremost
-- "Am I earning a return better than that provided by alternative
mutual funds?" That is followed quickly by "Am I getting a high standard
That's what our shareholders want...and it is our mission
to deliver that to them. Everything else is in support of that mission.
I hope this is helpful to you and your class. Thanks again for writing and sharing your analysis with us.
Brian S. Mattes