Miguel McInnis is an Independent Healthcare Executive and Strategic Advisor to startups, tech companies, health systems, and non-profits.
Too often, there is misalignment within organizations between the organizational mission statement, the operational reality, the actions of the board and executive team, and customers’ or stakeholders’ expectations.
This misalignment in good economic times often yields underperformance and missed opportunities. In tough economic times or fierce market competition, it can result in loss of customers, market share and even bankruptcy. The inability of organizations to create alignment between these groups is a challenge that strategic planning, market analysis and customer surveying is unable to fix because there isn’t a common “North Star” to focus on.
High-performing organizations know their North Star is the equity they create. I’m not talking about social equity, but financial equity as defined by the value that’s created for the intended stakeholder, which, in many cases, is your customer. Organizations treating equity as a financial metric—i.e., shareholder equity and stakeholder value—often outperform their competitors.
So let’s define equity using the balance sheet definition, which is the residual value after liabilities are subtracted from assets. If an organization intends to create shareholder equity or stakeholder value, it starts with the organizational mission. The organizational mission statement must be able to translate into measurable equity-building practices that create organizational alignment. This is critical to create sustainable competitive advantage in a volatile economic environment.
Bridging The Mission-To-Management Gap
Corporate mission statements often fall short when it comes to influencing day-to-day behavior within organizations. While many companies—and especially non-profits—develop inspiring, long-term mission statements, I’ve noticed management practices often remain narrowly focused on short-term objectives. This disconnect stems from the qualitative nature of mission statements, which emphasize broad aspirations. In contrast, quantitative demands of management require specific, measurable targets.
The result is that organizations frequently implement strategies that sound transformational, but ultimately deliver only incremental improvements. To address this gap, it’s essential to operationalize the intended equity to be created, serving as a bridge between organizational aspiration and practical execution.
Mission statements should therefore be designed to include clear financial equity targets, such as return on equity (ROE) or economic value added (EVA). By doing so, organizations can convert their overarching mission into measurable practices. This approach enables companies to quantify their purpose without abandoning it, ensuring that their long-term vision is consistently translated into actionable and impactful management decisions.
Defining Equity As A Financial North Star
Equity should serve as the ultimate gauge of an organization’s overall health and success. Unlike short-term metrics like revenue or profit, which can fluctuate and only reflect immediate performance, equity encompasses the accumulated value created for shareholders or stakeholders over time. This measure considers all obligations that have been fulfilled, providing a comprehensive view of the organization’s financial standing.
Furthermore, equity is distinctive in its ability to capture both the current achievements and future growth potential of an organization. It’s not limited to immediate financial returns, but also reflects the enduring value that’s generated through sustained efforts and strategic decision-making.
By focusing on equity, organizations can prioritize long-term value creation, which is essential for fostering sustainable change and maintaining a competitive advantage in volatile environments.
How Equity-Focused Organizations Make Decisions
Organizations that make equity their central focus approach all decisions regarding capital allocation and investments with a long-term perspective on equity impact. Rather than prioritizing metrics such as internal rate of return or payback period, these organizations assess how each decision will contribute to the sustained growth of equity over time.
This equity-centric mindset is also evident in the organization’s approach to risk management. The primary goal is to safeguard equity from erosion, which businesses achieve by implementing balanced growth strategies. These strategies are carefully designed to consider and align the interests of customers, employees, vendors and other key stakeholders.
By using the financial definition of equity as their guiding principle, these organizations introduce a level of discipline that is often absent in social definitions of equity. When executed effectively, this approach provides a natural framework that supports the principles of stakeholder capitalism. Importantly, it helps prevent the deterioration of stakeholder relationships, which, if neglected, can ultimately lead to the destruction of organizational equity.
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