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:
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.
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 economically viable.
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.
Bob Norton 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.