Here's your second lesson on Developing Your Vision...
Let us take a look at an example, Leslie Wexler of The Limited, one of the most successful retailers of all time. Leslie 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. She is just a figment of his imagination really. 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', a tool for
selecting your products and market position. This makes up just one piece of one slice of the vision pie as the 'Product Development' filter or market position if you prefer (there is overlap here), shown on the previous
page, 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: 1) Sales - Target customer, pricing, sales and distribution models, strategies and
tactics. 2) Marketing - All sales-lead generation functions and activities designed to educate consumers and position the company, competitive intelligence and market positioning strategy. 3) Finance - All sources and uses
of capital, all systems to manage and project it, all accounting functions to track expenses and revenues. 4) 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. 5) Customer Service - The service model (i.e. team or individual), CRM or Operations... Many young companies have a good product-vision that stems from the
technical founders who often see a need and understand how to fill it. However, most of these founders lack 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
is often 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). Vision is everything needed to make the company work across all these functions.
And remember, that it must also 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 details 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. Sometimes financial people will run numbers over and over again in great detail for five years out. This is basically just plain silly and a waste of effort
and time at a certain point. I call it being “perfectly incorrect”. All these models will be very wrong, GUARANTEED, the idea is to iterate them closer and closer to reality as you gain more data and experience.
The goal of a financial model is to simulate, project and plan and that simulation must be updated as you go. If you have to adjust your pricing by even 15% then every previous version of that model is instantly obsolete. This
is just another slice that focuses on financial specifics and tries to show that the business can be profitable at some time in the future. 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. Tomorrow's lesson will go over the importance of evolving your vision over time...