The Economist

50 Business The EconomistAugust 4th 2018

1

2 companies has found it easier to resist).

But it also means the giants get to deter-

mine who wins and who loses she adds.

When Tencent invested $600m last sum-

mer in Mobike a shared-bike startup for

example Alibaba countered with a $700m

stake in a rival Ofo. In a flash dozens of

smaller competitors were out of the race.

The duopoly’s rivalry also thwarts am-

bition at younger firms. The story of

Ele.me a food-delivery platform founded

a decade ago whose name roughly means

“Hungry yet?” is illustrative. It was expect-

ed to grow into an independent firm with a

valuation as high as $20bn or more. But in

2015 a merger occurred which made Ali-

baba feel insecure in food delivery. Mei-

tuan backed by Alibaba joined with its

arch-rival Dazhong Dianping backed by

Tencent. Soon afterwards Meituan-Dian-

ping raised $3.3bn in a funding round led

by Tencent giving the latter more sway.

Alibaba’s riposte was to dump almost

the entirety of its shares in Meituan. Seek-

ing a new way to rival it Alibaba invested

in Ele.me and in April bought the platform

outright in a deal that valued Ele.me at

$9.5bn. It is now merely part of Alibaba’s

arsenal one among 60 investments the

giant has made since 2017 according to a

tally by Sanford C. Bernstein a research

firm. An Alibaba vice-president has been

installed as its new chief executive.

As ambition shrinks within startups in-

novation suffers. Few are trying to build a

platform ofusers because they expect to

rely for traffic on WeChat. Startups which

win Tencent’s or Alibaba’s favour expect to

profit from reams of data logistics net-

works payment gateways and technologi-

cal support too. Gordon Orr a former

head of China for McKinsey says that en-

trepreneurs tend to prefer a data-sharing

agreement cemented with an equity share-

holding than one without. For Alibaba and

“O

UR mission is what drives us to do

everything possible to expand

human potential.” As a credo it sounds

suitably inspiring. But which member of

the Dow Jones Industrial Average has this

as a mission statement? And which com-

pany says that “our purpose unifies us in a

common cause and growth strategy of

improving more consumers’ lives in

small but meaningful ways each day?”

Top marks if you knew that the first

statement came from Nike which makes

sportswear and the second from Procter

&Gamble(P&G) a consumer-goods

group. But the slogans could have been

switched between the two companies

without stretching credulity.

Mission statements are not compul-

sory but they appeal to executives seek-

ing to emphasise that their business is

about more than making money. That in

turn they hope should draw recruits

who want to join a company with a

broader purpose which is an aim of

many millennial employees.

Some of these statements are better

than others. WhileP&G’s is wordy there

is something pleasingly punchy about

Caterpillar’s credo—“our solutions help

our customers build a better world”—and

it is linked to the firm’s core business of

construction machinery.

But many groups talk in such grandi-

ose world-saving terms that they may re-

mind listeners of Ralph Waldo Emerson’s

joke: “The louder he talked of his honour

the faster we counted our spoons.” Cisco

wants to “change the world” Walgreens

Boots Alliance says it is “caring for people

and communities around the world” and

Chevron talks of “enabling human pro-

gress by developing the energy that im-

proves lives and powers the world for-

ward”. And you just wanted enough

petrol to get you to the shops.

Of course it is difficult to boil down

your activities to a single sentence. Like the

Spanish Inquisition’s “diverse elements”

in the sketch by Monty Python the tempta-

tion is to keep adding points until confu-

sion results. Cisco has a mission statement

a vision statement and a list of values in-

cluding “win together” and “always do the

right thing”.

While God made do with just ten com-

mandments Goldman Sachs has 14 busi-

ness principles. Some of these do not seem

to be “principles” at all but unexciting de-

scriptions of the nature of investment

banking such as “our business is highly

competitive and we aggressively seek to

expand our client relationships.”

In the face of such long-windedness

JPMorgan Chase might at first glance de-

serve credit for having a list of just four core

principles. Alas the quartet is pretty ano-

dyne—“a great team and winning culture”

is one example. And each principle comes

with its own sub-principles making 20 in

all including such convoluted efforts as

“we are field and client driven; we operate

at the local level” and “we maintain an

open entrepreneurial meritocracy for all”.

The danger is that by aiming to in-

spire firms produce pious platitudes in-

stead. For example Exxon Mobil says “we

must continuously achieve superior fi-

nancial and operating results while si-

multaneously adhering to high ethical

standards.” Sounds good. But how will

Exxon bring it about? Recent financial re-

sults have not been good; it is hard to

judge ethical standards from the outside.

The danger with grand expressions of

virtue is that they induce cynicism. It is all

very well for firms to say they “value their

people”. But that is best demonstrated not

by verbiage but by concrete measures

such as reducing the gender pay gap or

paying staff above the minimum wage.

Indeed mission statements are most

worth analysing for the things they fail to

mention. None of the firms cited as a core

principle that they should provide their

workers with a decent pension. Few if

any state that they try to avoid compul-

sory redundancies. Among the Dow com-

ponents Johnson & Johnson a consum-

er-products group is unusual for stating

that it must “bear our fair share of taxes”.

Paying tax is a pretty good way of demon-

strating corporate citizenship.

The best statements are short and de-

scribe the business in a way that custom-

ers and employees can understand and

appreciate. McDonald’s is admirably suc-

cinct: “to be our customers’ favourite

place and way to eat and drink”. Visa

with economical elegance says its vision

is “to be the best way to pay and be paid

for everyone everywhere.” And Walmart

talks of “saving people money so they can

live better”. It is not the stuff of inspiring

oratory. But such clear direct statements

at least create the impression that the

company knows what it is doing.

Bartleby Mission implausible

When visions and values descend into verbiage

Economist.com/blogs/bartleby