1.5 - Vision
Core Values and Core Competencies
Core values are the defining beliefs and principles that guide someone's actions and decisions, and this applies to both individuals and businesses. Common examples include creativity, excellence, transparency, empathy, and reliability. Businesses communicate their core values to keep employees aligned around a shared purpose and to guide decision-makers toward choices that fit what the company believes in.
For example, a clothing company with transparency as a core value might publish where every item is made and how its factory workers are treated. One with reliability as a core value might promise next-day delivery and make sure every manager plans around keeping that promise.
Core competencies are different. These are the capabilities, skills, and expertise that help an individual or business outperform its rivals and gain a competitive advantage. Examples include innovation, customer service, communication, ethical behavior, and efficiency. Businesses lean on their core competencies when deciding which opportunities to chase and how to allocate resources to best serve customers. On a personal level, individuals also weigh their own core values and competencies when picking an education path, a career, or a specific job.
A quick way to keep the two apart: core values are what you believe in, and core competencies are what you're good at. A business whose core competency is innovation might put more money into research and development and chase new product ideas, while one whose core competency is efficiency might go after markets where low prices win. For individuals, someone who values creativity and is great at communicating might look at careers in marketing or design, while someone who values reliability and is strong with numbers might lean toward accounting.
Vision and Mission Statements
A vision statement gives a short, concise picture of a business's core values and its aspirations, meaning what it ultimately wants to become or achieve. A mission statement, on the other hand, describes what the business actually does and how it plans to reach its long-term goals.
Here's an example for a made-up bakery called Morning Loaf:
- Vision statement: "A neighborhood where everyone can start the day with fresh, honest food."
- Mission statement: "We bake bread and pastries from scratch every morning with ingredients from local farms, sell them at fair prices, and donate what's left at the end of the day to local food banks."
The vision is short and describes the future the bakery wants, along with the values behind it (freshness, honesty). The mission says what the bakery actually does, who it serves, and how it plans to get there.
Feature | Vision statement | Mission statement |
Question it answers | What do we want to become, and what do we believe? | What do we do, and how will we reach our goals? |
Time focus | The long-term future | What the business does now to get there |
Length | Very short, often one sentence | Usually a bit longer and more specific |
When you write or evaluate one of these, check that the vision is short, inspiring, and reflects the business's core values, and that the mission clearly says what the business does, who it serves, and how. A statement so vague it could fit any company (like "We strive to be the best") doesn't guide anyone's decisions.
Both statements serve two audiences. For people inside the business, like employees and managers, they communicate long-term goals and core values, guide decision-making, and give everyone a shared sense of purpose. For people outside the business, like customers, investors, and partners, they signal the business's goals and values and help others understand what the company stands for and what it's trying to accomplish over time.
Goals of Businesses, Social Enterprises, and Nonprofits
Not every organization exists for the same reason. There are three types to know, and each has different goals.
Businesses (for-profit) aim to earn profits and grow them over time, fulfill their stated mission and goals, and stay competitive and viable in the long run. Profit is what's left after costs are subtracted from revenue:
So there are two ways to improve profit: bring in more revenue (sell more units, find new customers, launch new products, or raise prices if customers keep buying) and/or cut costs (cheaper suppliers, more efficient production, less waste). For example, a business with $100,000 in revenue and $80,000 in costs earns $20,000 in profit. If it raises revenue to $110,000 with the same costs, profit becomes $30,000. If it instead cuts costs to $75,000, profit becomes $25,000. Doing both brings profit to $35,000.
Social enterprises are businesses that try to make a profit and achieve a social goal at the same time. They can make an impact in three ways:
- Through their products: what they sell helps solve a social problem, like a company selling low-cost solar lamps to families without reliable electricity.
- Through their operations: how they run the business helps people, like a bakery that hires and trains people who have struggled to find work, such as people coming out of prison.
- Through their financial model: how they use their money helps people, like Bombas, which donates an item of clothing to people experiencing homelessness for every item a customer buys.
Social enterprises still need profit to survive, but they also measure success by their social impact.
Nonprofit organizations exist to serve the public good, not to make money for owners. A nonprofit can still bring in more money than it spends (a surplus), but by law that surplus has to be reinvested in the organization and its mission. It can't be paid out to owners the way a business's profit can. Nonprofits often rely on grants (money from governments, foundations, or companies for a specific purpose, which doesn't have to be paid back) and donations, along with other revenue like ticket sales, fees, or gift shop sales. Food banks, many museums, and the American Red Cross are nonprofits.
Feature | For-profit business | Social enterprise | Nonprofit |
Main goal | Earn and grow profit | Earn profit and help solve a social problem | Serve the public good |
Extra money (profit or surplus) | Goes to the owners or is reinvested | Goes to the owners or is reinvested, often to grow its impact | Must be reinvested in the organization |
Main sources of money | Sales | Sales | Grants, donations, and some sales or fees |
Example | A sneaker company | Bombas | A food bank |