A company’s mission statement should define a company’s purpose. When I come across a company’s mission statement, I look for three qualities:

1. Is it inspirational? I believe mission statements should define the primary problem the company is trying to solve and invite employees to participate in something bigger than themselves.

2. Is it big? The company’s goal should not be a low hurdle to clear, it should be a big hairy audacious goal (BHAG) as Jim Collins, the famous business culture author, called it. Think of when the U.S. government set out to put a man on the moon in the 1960s. That was a big hairy audacious goal that made NASA go to extreme efforts to achieve.

3. Is it flexible? The goal should be flexible enough to offer more than one solution to a big problem. For instance, I don’t want an oil company to say it wants to extract enough oil to fuel all the cars on earth. I would prefer it to say it wants to provide enough energy to fuel all the cars on earth. That gives the company permission to pursue finding alternative forms of energy to solve the problem it is trying to answer (fueling cars).

When I find these qualities in a company’s mission statement, I immediately take notice. That is not to say that all mission statements matter. Sometimes mission statements sound lofty and inspirational, but are little more than fluff, written by PR specialists and consultants. Other times the mission statement is inspirational, big, and flexible, but was written a long time ago by a previous management team and has little relevance to what the company does today. Investors always need to look beyond a corporation’s mission statement to its actions and culture. If the actions and culture don’t match the mission statement, the mission is probably best ignored by investors.

One mission statement that stands out is Microsoft‘s (NASDAQ:MSFT): “To empower every person and every organization on the planet to achieve more.” It’s inspirational, big, and flexible. What’s even better is that when CEO Satya Nadella took the company’s reins in 2014, the mission statement was “A PC on every desk and in every home, running Microsoft software.” When Bill Gates had first penned this mission, it was big and inspirational (if not flexible). But by the time Nadella took over, it was old, stale, small, not even close to inspirational. The company needed to hit refresh, and by resetting the mission statement Nadella unleashed a decade of productivity and innovation at Microsoft.

Already a 7investing member? Log in here.