How Mission Statements Can Help (or Hurt) Your Company | 7investing
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Businessman writing a mission statement in an open notebook

How Mission Statements Can Help (or Hurt) Your Company

February 22, 2021

For a small company like 7investing, mission statements matter because they keep everyone focused on a clear goal. When we say “7investing is empowering you to invest in your future,” that’s a very simple sentence that empowers everything we do.

As companies grow, however, mission statements become less important. Google may use “to organize the world’s information and make it universally accessible and useful” as a mission statement — and its leaders may use that as a touchstone — but Joe in accounting might just want his next raise and Sandra the programmer might be more interested in solving coding problems than being a small piece of an overall mission.

In most cases, companies — especially larger publicly traded companies — have a “mission” of making money. They may use their mission statement as a guidepost to help them find the best path toward doing that, but most mission statements don’t affect whether I invest in a company and some have even deterred me from doing so.

Mission statements can hurt too

I’m a fan of Chipotle Mexican Grill (NYSE: CMG) as a consumer because they offer tasty tacos. I’ve never based my decision on whether to eat there or not because the company has a mission statement where it pledges to “to provide food with integrity.”

There are certainly consumers who want to know where their food gets sourced from and that the restaurant they’re eating at tries to do more good than harm when it comes to its supply chain.  In many cases, and in mine certainly, that’s more of a broad idea than a driving factor. I go to Chipotle over Moe’s and Taco Bell because it has better food, not because those other two use more artificial ingredients.

Because of its integrity pledge, Chipotle has lousy queso because it can’t use the processed cheese that gives that topping/dip its signature texture. If I had to pick as a consumer, I’d be okay with a little less integrity and better queso.

Chipotle has made the sourcing of its food and “integrity” a marketing line. Its founders likely believe in that message. Current CEO Brian Niccol, who came from Taco Bell, certainly sees the value in the “we’re good to the planet angle,” but he also sees the value of putting a Doritos-based taco on a menu and offering food that’s tasty — but maybe not quite up to the way Chipotle sells itself.

You can also argue that because Chipotle was very public with its “holier than thou” messaging, it may have been punished worse than rival chains would be during its E. coli scandal a few years back. Feeling bad after eating Taco Bell is expected, so a little food poisoning would have been shrugged off whereas Chipotle’s customers (and even some investors) felt betrayed impacting sales for multiple quarters.

Simple is better

It’s easier for a company to keep its employees focused on a simple mission statement. Ollie’s Bargain Outlet (NASDAQ: OLLI), for example, has made “good stuff cheap,” its tagline and a mission statement of sorts. That’s a guiding principle that’s easy for buyers and managers to follow. All they have to do is ask “is this item both good and cheap?” That sounds silly, but go to Big Lots, Ocean State Job Lot, or any other Ollie’s rival and you can see that those companies have the “cheap” part down while the “good” part is clearly not always a focus.

Mission statements aren’t something that factor into my investing decisions unless the company and its mission are as clearly entwined as Ollie’s is with “good stuff cheap.” I want to own companies that have a clear purpose, behave (mostly) ethically, and work steadily toward long-term growth. Those are things you identify over time via watching how a company operates. If a mission statement helped, then that’s great. But it’s the results I watch — not the intentions.