By Bob Norton
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is a "Vision"? Why
Do You NEED One? How Do You Use it? How Do You Know It Is Complete?
What is a Vision?
There is a lot of talk about maintaining
a vision, especially as part of a CEO's job. In my opinion, vision
is one of those terms that is both greatly overused and largely misunderstood.
Many people consider vision to be an all encompassing view of the
product, others will expand it’s meaning to include the entire
market and still others believe the term encompasses far more.
Without a clear vision you will not get angel investors or venture
capital of any kind. This needs to be done first and presenting to any
investor before this is properly flushed out is the most common mistake
of new entrepreneurs. They burn their chances of getting money or
referrals 90% of the time by getting in front of people too early.
Having been personally responsible for
a corporation’s vision
for many years, I believe it covers more than what most people think.
So, what follows is my definition of vision, and I do not understate
the case when I say that, with few exceptions, the lack of a strong
vision puts you at a distinct competitive disadvantage.
To begin with, I believe a vision must
encompass everything about the business. This includes everything
from things as high level and broad as the organizational chart right
down to details like basic product functionality. It also includes
the strategic and tactical levels of every discipline required to
run the business. This must include these two levels for finance,
sales, marketing, operations, and product development. Each variable
must be imagined over time as a series, because many will rapidly
change. Does this sound like a mind-blowing exercise? Yes it does.
Thankfully, though, because our brains are wired to think visually,
and are the most powerful computers on earth, this task is well within
most people’s intellectual
capacity. The biggest issue is most people don’t have all the
needed information or the experience to understand and design these
business models. This is real work; not magic, luck, or the flash of
insight that may have been the genesis of a product’s unique
abilities. As Thomas Edison says “Genius is one percent inspiration
and ninety nine percent perspiration.” The exercise of writing
a business plan generally fills in much of the vision and is worth
the effort even if you throw the plan in the trash when you are done.
It can allow the merger of different skill sets to happen. However
this is not the same as having the experience in one head, which forces
greater discipline and integration and allows the Model to be "run" in
the visionary's head.
Why, you ask, must a vision be so elaborate? Because, the purpose
of a vision is to have something complete, and against which you can
hold up all major business decisions. It is almost a philosophy for
the company to live by. This helps ensure consistency across departmental
goals and helps eliminate other major factors that can split a business
into fractional pieces; such as two departments going after different
objectives, and effectively dividing your resources across these objectives,
or even markets.
Let us take a look at an example. Leslie
Wexler of The Limited, one of the most successful retailers of all
time, uses "Victoria" of
Victoria's Secret's fame as a big part of his vision. “Victoria” is
a fictional female customer who is willing to wear the clothes that
go into the Victoria Secret catalog. If Leslie can't picture Victoria
wearing a piece of clothing then it doesn't go into the catalog. This
is his way of testing their market position, and includes factors such
as fashion/style and price. To me, this is a simple example of a "customer
vision." It makes up just one slice of the vision pie as "Product
Development", shown below, and might overflow onto the "marketing" slice,
but by no means is it a complete corporate vision.
What are the Other Slices of the Vision Pie?
Well, each major function (or department) that is required to create
a business makes up a slice of the pie. For example, a typical company
would include the following vision slices:
- Sales - Target Customer, pricing, sales and distribution models,
strategies and tactics.
- Marketing - All sales lead generation
functions and activities designed to educate consumers and position
- Finance - All sources and uses of capital, all systems
to manage and project it, all accounting functions to track expenses
- Product Development (R & D) -
Idea generation, architecture, design, development, testing, and
quality assurance. Each of these is a process that evolves over
time, not just an idea.
- Customer Service - The service model (i.e.
team or individual), CRM or Operations
Many young companies have a good product
vision that stems from technical founders who saw a need and understood
how to fill it. However, most of these founders lack the experience
in the other "business" areas
needed to turn a “product only vision” into a viable business.
They see the market need and the solution, but require help to build
an organization that can deliver the product to the market, which is
a much more complex endeavor involving many disciplines. Getting any
one of these slices wrong will probably be fatal to a company.
Well, you get the point. There are usually five major slices, with
two parts to each (the strategic and tactical levels). The vision is
everything needed to make the company work across all these functions.
And remember, that it must be a series of these snapshots over time
for planning and growth purposes, as it must evolve slowly, not make
big leaps. I would recommend corporate snapshots for today, one year
out, two years out, three years out and even five years out. The further
out your vision is, the less detail you will need to have because many
things will change over time and because you only need to understand
and plan the deltas for each year.
Of course, the financial plan slice should include each month or quarter
in great detail for year one and two, but it is generally a total waste
of time to do more than annual numbers for years three and beyond,
as experience and circumstances will modify these for sure. However,
this is just another slice that focuses on financial specifics and
tries to show that the business can be profitable at some future point.
So how do you design, develop and communicate
such a complex beast? Well, it could be one of the most challenging
exercises in the gray matter of your cerebral cortex. We all have
exceptional capacity to think visually and generally that is how
a vision is best evolved. A framework of experience is needed in
each discipline. Without it, you cannot really validate the model
without VERY expensive real life trial and error. Most entrepreneurs
make the mistake of learning it on their own through expensive trial
and error when they could save hundreds of thousands of dollars,
even millions by involving someone with the right experience. Many
visions are "un-executable".
This means that they are doomed to fail from day one because of something
the entrepreneur does not yet know, or has not recognized due to lack
of experience. It is pretty easy to visualize something that may never
work. Let's face it, venture capitalists, who are generally smart,
educated professionals, do it every day by investing the bulk of their
dollars (60% to 90%) in businesses that will never work! The fact is
there are way too many variables for anyone to really know something
will work well unless they have experience in all the required disciplines.
Any Vision Must Evolve With Time
Now let’s think about a series
of these vision pies over time to create a stack of them with a pie
for each of the following three to five years (see below). With each
additional year, the vision will contain less detail and the current
probability of being right diminishes greatly.
Thus, every vision needs actual validation in the real world for virtually
all it elements. Certainly, the ones that have not been done EXACTLY
that way before, and have not had great success, are a major risk and
deserve special testing in ways that will not disrupt the business
if they fail. This testing is known as actively managing the risks,
something any CEO should be doing.
Most venture capitalists insist on a "seasoned" CEO at the
helm of a new company; someone who, based on many years of experience,
can actually run these "vision simulations" or business models
in their head. Many things can cause a business to fail. Even small
things that fail to work because of typical personality types in certain
jobs can delay or prevent a business from being successful. Only a
significant amount of real world executive level management experience
can reduce this risk.
How Do You Practically Implement a Vision?
Unfortunately, it is impractical to expect every department head to
understand the entire vision. As a matter of fact, it is virtually
impossible because it is likely that they do not understand the other
disciplines well enough, or have enough access to information. However,
a good CEO makes sure each department head has a complete understanding
of their slice of the vision and how it is phased in properly, over
time, with the other departments. This can sometimes be done by creating
interlocking goals or end dates that are one or more quarters away.
For example, customer service will hire a new manager when sales hit
20 new customers.
A vision is important because it is what
unifies all of the resources on a single "objective". That
objective being, ultimately, a single position in the marketplace.
This position must include virtually all product factors recognizable
by a sophisticated buyer in the market, as well as all the variables
that make up the complex structure of the organization to create,
deliver and service that product.
Each day a CEO will use the vision to measure decisions against, each
day the VP of Engineering should be making decisions consistent with
their slice of the vision, and each day all key management players
should be doing the same. If you have someone measuring their daily
decisions against their modus operandi at a former company, or just
their favorite way of doing things, then odds are you have a personnel
problem that needs to be addressed. This is a common problem because
human nature dictates that we to do it the way we always have (the
easiest way), as opposed to really thinking about how this situation
may be different.
In my experience, it takes a new CEO from four to eight weeks of full-time
work to develop a complete vision for the company. This will vary greatly
depending on the complexity of the company, market and product involved.
Vision development must include time spent with customers, time spent
with all key employees, and lots of research to validate the theories
that are being used to make decisions.
How Can a Vision Be Communicated?
One of a CEO's most important roles is to communicate the vision to
management and employees and yet be open enough to the possibly superior
experience of others in a specific area to modify it as they learn
more. We can debate how much of this vision investors and customers
need to know, as this will vary greatly from time to time, and by industry
and competitive environment, but the employees need to understand those
parts of the vision that affect their jobs. At a minimum, they need
to know at least enough to make day-to-day decisions that are consistent
with that vision.
When a CEO actually communicates their
vision it must be tuned to the particular audience and their ability
to understand that vision. The broader the audience, the more simply
the vision must be presented. The simplest example is the mission
statement, or "elevator pitch".
The mission statement is simply a vision that is distilled down to
the simplest and most understandable end result or objective. For example:
"Widgets Software will be the best
software component maker for software development tools used in the
development of video-on-demand products."
This is a simple statement. It is easy for anyone in any department
to understand, but it obviously implies a huge number of moving parts
in many departments and disciplines. It clearly communicates that Widgets
Software is NOT in the media content or entertainment business, nor
the application business. These would be very different business models
needing very different organizations. It should prevent people from
investing resources in things that might make more sense for these
other business models.
In high level staff meetings where all senior management is present,
this vision can be explained in much more detail because you can assume
the audience knows a lot more about the basis for the vision and has
more experience. During one-on-one meetings with experts in certain
areas, you can drill down on this vision to great detail, talking in
short-hand and using diagrams about specific attributes as they evolve
over time (i.e. people, capital budgets, other resources).
In my opinion the greater the ability the CEO has to develop this
internal vision in their own mind, the greater the chance of success
for the business. However, quality teams can develop a vision too,
it just takes a lot more work and discipline but is often necessary
in larger companies. The vision essentially creates a philosophy for
the business to run by, which helps to insure minimum waste, maximum
impact, and ensures convergence on the goal (a market position) by
all the troops at the same time. Having them all arrive at the goal
at different times is usually a problem and a topic for another day.
A well developed vision is a combination of lots of experience, thought,
research and understanding of customer needs all unified in ONE PERSON'S
head. This is then run as a model against a backdrop of operations
experience to verify, as much as possible, what can really work in
the real world. Hopefully this can all be done at a cost that is some
margin above what customers are be willing to pay to make the business
In closing a vision is the design of everything needed for the business
to work, combined with the experience to know it can really work that
way in the real world. Essentially a mental simulation. So a vision
is actually a very complex model that can be run in someone's head,
which takes into account all the major business disciplines, and thousands
of real world practical factors that are only available through long
experience. I think this is a pretty good working and practical definition
of a vision, and there is no doubt that having one can greatly increase
your chances of success.
is the author of four books on growing companies and CEO of C-Level
Enterprises, Inc. which helps companies grow more rapidly with
products, training and consulting.