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From corporate missions to mission-led companies

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How to define a mission-led company? In our opinion column from our Responsible Way #8, Frédéric Ponchon, Portfolio Manager of the Sycomore Shared Growth fund, explains Sycomore AM's standpoint in regards with the topic and outlines the benefits that companies can reap by including a mission at the very heart of their strategy. Explanations.

As a long-term investor, our obsession is to identify the factor(s) that contribute to the success and sustainability of a company. Based on our experience, we have been able to pinpoint one key characteristic shared by long-term successful companies: a corporate mission.

But what do we mean by mission? Applied to companies, the term is derived from literature on management and strategy. Formally, it is a short statement that should neither be too banal, nor too precise – to avoid being restrictive. For example, Danone has set itself the following mission: “bring health through food to as many people as possible”. Essilor focuses on “improving lives by improving sight”. It is a short sentence that summarizes and structures a system at the heart of the organisation, covering the company’s primary purpose (why does the company exist?), its strategy (what is the business rationale: which markets to address, based on what competitive edge?), the company’s values (set of beliefs and principles) and the practices and behaviour promoted by the company (translation into action).

In an ever-changing world, a mission statement is a major competitive advantage, enabling a company to show agility and responsiveness. The mission statement is the goal that drives faster short-term decisions, while the corporate strategy has to adapt constantly to the economic environment and can temporarily become obsolete.

A mission statement is a major competitive advantage

The process of formalising and implementing a mission statement helps to raise fundamental questions: what are the businesses of tomorrow, the markets and clients of the future? This is how a true mission statement stands out from a simple description of the company’s activities – it sets a framework for an unknown future. It constitutes an objective that projects the organization into an expansionist perspective that is conducive to innovation. Finally, it lies at the heart of a company’s corporate culture, a common language driving cohesion and facilitates the way the teams operate collectively.

When the focus of the mission is on a social or environmental project, it acquires an additional dimension, as it sets its sights on an ideal that supersedes individual interests, sometimes in conflict with other stakeholders (shareholders, employees, suppliers, clients). The mission offers a point of convergence between corporate and collective interests - as their rift is neither unavoidable nor desirable. Thus, the company deploys its resources, its efficiency, its expertise as well as its broad footprint to serve society. Companies carrying such mission are those that we consider truly as mission-led companies.

The mission offers a point of convergence between corporate and collective interests

They benefit from an incremental competitive advantage that arises from the philosophical and moral resonance that the mission can inspire, on the one hand, to employees, who will be more deeply engaged in its pursuit, and on the other hand, to clients/consumers for whom the mission will become a positive selection criterion. Generally speaking, mission-led companies are successful in bringing together all of their stakeholders, including suppliers and public authorities, for more fruitful collaborations and benevolent interactions.

There are still rather few publicly listed mission-led companies. This is an opportunity for us investors and for society as a whole. Often several latent features already exist – behaviours, values, corporate culture, ... If they are formally structured into a mission statement, they will enable companies to draw the full benefits. This process creates considerable value for the company, its stakeholders and the wider community interest. For this very reason, we are particularly keen to promote this model.

Download our Responsible Way #8 by clicking here

The opinions and estimates constitute our judgment and are subject to change without notice. We believe that the information provided in these pages is reliable, but it should not be considered exhaustive. These data, graphics or extracts were calculated or made on the basis of public information we believe to be reliable but which nevertheless have not been subject to independent verification on our part.

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