How much is a good mission and vision worth in US dollars?

A vision is often understood as something you just need. That's what the textbook says.

Many companies only have a vision because the ISO says you have to have one to get a quality certificate. So they wrote something down.

But for really existential, for really valuable they hold completely different things.

I am convinced that the power, the benefits and value of a vision are drastically underestimated.

Why? Because many executives do not recognize or understand that a well-honed mission and vision can have tremendous material value in US dollars.

Let's take a concrete and current example. Let's take a company that is disrupting and revolutionizing its industry right now and in the last few years. And it is pushing its competitors ahead. Let's take Tesla.

We at the FutureManagementGroup AG have been reporting on Tesla to our clients since 2006. Back then, we only reaped a pitiful smile and in extreme cases a self-confident lecture about the fact that battery electric cars make no technical sense. Today the world looks completely different.

Tesla is a strange company. Tesla does countless things differently from everyone else.

The automobile manufacturers, the OEMs, produce less than 20 percent of the added value of a car themselves, consequently they buy more than 80 percent of the value from suppliers.

Tesla, however, has more than 70% vertical integration and thus accounts for more than 70% of the value added, ie the sub-products on the car itself.

Tesla not only makes cars, Tesla builds and operates a worldwide charging infrastructure with its superchargers. And that is since 2013.

Tesla supplies solar panels and solar roof tiles for production of electricity.

And last but not least the electricity storage, the powerwalls for households and the powerpacks for businesses and entire regions.

Tesla's mission is to accelerate the world's transition to sustainable transport and energy.

And in the automotive business the vision is to become the most fascinating car company in the world.

Let's focus on the cars. In 2017, Tesla built just over 100,000 cars. Tesla is therefore still a dwarf among manufacturers today.

Since its foundation, Tesla has almost continuously produced negative cash flows, and in total has only produced losses.

According to common business criteria, Tesla should have been shut down by 2014 at the latest.

Nevertheless, Tesla's market capitalization is higher than that of most traditional manufacturers.

It is downright crazy, if we divide the market value of Tesla by the number of cars produced and do the same for other manufacturers.

Porsche ranks a around $ 100,000 per car. But Tesla ranks at an enormous 600,000 USD.

So Tesla is worth a whopping six times as much as Porsche per car produced.

Why is that so? Tesla AND Porsche have production facilities, a business model, a business organization.

The build quality of Porsche, the panel gaps for example, is still visibly better than that of Tesla.

From a material point of view, Tesla is essentially comparable to BMW. But what makes the difference?

Let's subtract the pro-car value of Porsche from the pro-car value of Tesla. We arrive at a difference of 500,000 USD.

There seems to be something that makes Tesla unique and is highly valued.

It is the belief of employees, customers and investors in a bright future for Tesla. In their future-proof mission and motivating vision.

Investors in particular are betting a lot of their own money on this bright future. They must be very convinced of it.

They obviously are more confident about the future of Tesla than about the future of Porsche and even more so than of any other manufacturer..

It is not that the traditional manufacturers have no visions. Even VW and Daimler say that they want to be leaders in electric mobility. Incredibly, one even says that they already are, although you cannot buy a really good electric car from them.

To reserve a Tesla Model 3, people queued at night just to pre-order a car that will be delivered in more than two years, and that they have never seen before, much less test driven.

But Tesla keeps most, if not all, their promises they make.

Tesla invests almost three times as much of their revenue in research and development as VW, BMW or Daimler.

And if you ask Tesla drivers about their satisfaction - Would you buy this car again - incredible 98% say YES. Despite unequal panel gaps. That's the highest customer satisfaction in the industry.

Now, if we multiply the $ 500,000 difference with the 100,000 cars produced in 2017, we arrive at an answer to our question: What is the mission and vision of Tesla worth? Believe it or not, it is 50 billion dollars! Almost all of their market capitalization.

And now?

Yes, I know, you are not Tesla and Tesla is a real exception.

Your mission and vision will not be worth 50 billion, maybe not even one.

It would be good if you could see the tremendous value of a well-made, enthusiastically supported, future-proof mission and motivating vision.

You will more easily attract and retain your customers, your investors and your employees. Show people a future they can look forward to.

Take your chance. Do not wait until someone comes who has a great vision. Life is short. Develop your vision of a bright future