Don’t Let Opportunism Compromise Your Corporate Mission

by Graham Kenny - June 03, 2020

As we come out of the pandemic, chasing any opportunity will obviously be a temptation for many cash-hungry businesses. But be careful. That way lies ruin. You don’t want to go out of business just as work picks up. Now’s the time to clarify your mission statement for the resurgence that lies ahead.

For example, let’s look at what happened to MinServ (not its real name), a major provider of outsourced mining services in Australia, with branches across the country. It provides advice on property acquisition and sale, project feasibility, geotechnical issues, and mine sustainability and closure. MinServ is regarded as the most innovative business in this space, setting the standards of quality for Australia’s multi-billion-dollar mining industry.

But in 2019 the company unexpectedly experienced a serious collapse in profits.  Geoff, MinServ’s CEO, called me in to help them understand why.  After a day with the leadership team, it became clear that strategy at MinServ had given way to opportunism.  To put it bluntly, the company was:

• Chasing Any Client. MinServ has seen off several large competitors who have tried to enter the Australian market. As a result, it has grown, as has its cost base. This has required a shift of focus from small to larger clients. But at the unit level, there remains a temptation to chase work more suited to competitors geared to smaller projects.  As Geoff told me, “When you start the year and you don’t have a lot of work booked up, you tend to chase jobs.” Unfortunately, this put MinServ up against local, smaller businesses with low overheads.
• Providing Any Service. Clients are great at unfocusing a business: “Could you do this for us? Do you provide that service?” Employees play the game too, suggesting to the client: “We could do this. We could do that.” And it was staff who in 2018 suggested an expansion of services into specialized industry training for geologists, mineralogists, and geoscientists.  Although this looked like an easy way to make money, MinServ came up against stiff competition from specialized training businesses as well as organizations which provided these services at no cost, such as government departments and product suppliers.
• Hiring Anyone. Labor costs account for over 60% of total company expenses at MinServ. In 2018, Geoff gave branch managers the latitude to expand staff numbers by hiring graduates fresh out of university. But as Geoff put it, “We underestimated the time it takes to bring on new graduates.” Rather than boost MinServ’s capabilities as he’d hoped, the inexperience of the graduates meant that they weren’t productive. Managing the process also took field managers’ focus away from business development. While many graduates have since been laid off, the decision had a big impact on the 2019 bottom line.

Why did they end up doing this? 

When I confronted Geoff with my diagnosis, Geoff confessed: “You’ve caught us out. We have approached this by listing all our problems/things to do and then working backwards to fit them into the strategy!”

The key words are “listing all our problems.” Strategy does not begin with a list, but with a clear choice of problem – a decision about “the business we’re in.” MinServ’s financial woes were rooted in its failure to make this decision.

Let’s take a look at the company’s mission statement Geoff shared with me: “At MinServ, our business is based on creating great relationships with clients, so we are committed to open and consistent communication. Our people are not only professionally qualified and technically experienced - they have a genuine enthusiasm for mining. MinServ can assist you to plan, coordinate and implement a project.”

This is worse than vague, it’s generic. It barely even mentions the mining industry, and certainly doesn’t define MinServ’s niche within it. Worse, it completely fails to lay out answers to the three fundamental questions of any mission statement: Who are our customers? What range of services do we wish to provide them? What is the level of service? Think of a Hilton as compared to local motel. They both provide accommodation, but they have very different customers, provide them with a different range of services, at different standards of quality - all of which should be reflected in their mission statements.

A re-draft of MinServ’s mission statement came up with fewer words but much better focus: “At MinServ, we provide large-scale, fully integrated geotechnical services to the highest industry standards for global mining companies.”

A clear mission statement not only defines the business you’re in, but also the business you’re not in. And having one will serve as a guiding star to help your businesses emerge from the pandemic stronger.

Graham Kenny, CEO of Strategic Factors, is a recognized expert in strategy who helps managers, executives, and boards create successful organizations in the private, public, and not-for-profit sectors. You can connect to or follow him on LinkedIn.