Why Vision Matters More Than Ever

A clear corporate vision—not a vision statement—improves organizational performance and attracts top talent. Author Mark Lipton discusses his book, Guiding Growth: How Vision Keeps Companies on Course.

by Martha Lagace, Senior Editor, HBS Working Knowledge
Why Vision Matters More Than Ever

Lagace: "Vision" was a much-trumpeted trend in recent years. Why did you decide to take on this subject and examine it anew?

Lipton: "Trend" is an interesting choice of word. What got me involved in examining the notion of organizational vision was that I thought originally that it was beyond a trend: I was convinced it was just a fad. In fact, I didn’t believe this "vision thing" had made any impact on organizational performance.

It was very big a decade ago, and my clients wanted help developing visions. As both a researcher and consultant, I’m leery of management techniques that haven’t passed research muster, so I turned down the work. I became so cynical about it, though, that I thought I should ramp up a research project to support my working hypothesis that vision makes no difference.

Was I in for a surprise! My data showed just the opposite—I found that a clearly articulated vision, fully implemented across an organization, in fact makes a profoundly positive difference.

The results were published in an article (in MIT’s Sloan Management Review) that garnered an unusual amount of interest. Executives who read it were asking for even more information about developing and implementing a vision. Since I was being transformed from an "atheist" to a veritable born-again believer in organizational vision, a book seemed like the next logical step to merge some fascinating research linking vision and organizational growth with my own experiences helping organizations implement visions.

The work I do with CEOs and executive groups has made me realize that it is difficult for them to stretch their thinking way out to the future.
— Mark Lipton

But this isn’t "my" issue. The Conference Board has just released the results of a study involving 700 global CEOs; the CEOs were asked what they think are the key management and marketplace issues. For 2002, the top one was "Engaging employees in the vision." While it was also number 1 in 2001, the percentage of CEOs ranking it at the top was even greater in 2002. While CEOs really believe in vision, they unfortunately have a difficult time developing a growth vision and executing against it.

Q: Which companies or individuals do you consider success stories in terms of lining up support for a vision, and why?

A: I found some organizations have vision in their "organizational DNA" almost from their inception, and there are others who had CEOs with the smarts to see that articulating and implementing a growth vision was the key to getting them out of a rut when their very survival was at stake.

Whole Foods Market, for example, does not have a myopic focus on the bottom line or share price, but it is committed to a vision that emphasizes more far-reaching aspirations. They actually want to change a part of the world in which they operate. Even though they don’t obsess over the bottom line, their earnings growth rate is triple that of the industry in which they operate. And their stock price over the past two years has more than doubled.

Oakley’s, a high-end designer and manufacturer of sporting accessories and eyewear, is another good example. Here’s a firm that doesn’t even have a formal vision "statement," but they are vision-driven. The organization doesn’t look too much at the short term, but is continually stretching its people to be more creative and innovative. It’s an innovation machine, cranking out amazing new products through homegrown technology. They are operating in a very difficult marketing space at the moment, but they have huge margins and market share.

eBay gets it, too. Why? Because they realize the best talent is attracted to firms with a compelling vision. The people who work there do so for reasons they consider far more important than things like "maximizing shareholder value." I think of profit and share price as the metaphorical equivalent of the food we eat and the air we breathe; they are not the reason we’re alive but, without them, there is no life.

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I no longer believe in vision statements…
— Mark Lipton

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Some of the people who are savvy at this? I’m impressed with Gordon Bethune at Continental Airlines, who took a crippled company out of its third bankruptcy and, through a well-implemented growth vision, got it really cooking again—at least until 9-9-01. But Continental, to its credit (and vision), is hanging in there through a very, very difficult time for the industry.

Kip Tendell and Garrett Boone of The Container Store are impressive entrepreneurs who understand how to grow an organization through vision.

It happens in the non-profit sector as well. I’m finishing a case on Mimi Silbert and her organization in San Francisco, Delancey Street. They are the most successful organization in the country when it comes to taking hardened criminals and turning them into middle-class citizens contributing to society—and she does this without a dime of taxpayer money. How? By following a vision.

Q: In thinking about vision, you write, "Visions are not created so that they can be achieved precisely." What do you mean?

A: The work I do with CEOs and executive groups has made me realize that it is difficult for them to stretch their thinking toward the future. They’re very "grounded," realistic people. They are drawn towards missions, which describe what an organization does now, rather than vision, which describes why an organization engages in these activities. Visions, therefore, must describe the desired long-term future of the organization—a future that typically is not quite achievable, but not so fantastic as to seem like a ridiculous pipedream.

The vision-development process is therefore a balancing act. It requires imagination, a mental capacity for synthesis, and a trust in intuition.

Visions need to challenge people, evoke a feeling that draws people towards wanting to be a part of something quite special. When a vision is framed as something that is achievable within a set amount of years, then it falls into the terrain of a strategic plan.

I, personally, get motivated by challenging visions that reach out to the future and serve as a beacon for corporate direction. Strategic plans don’t turn me on; they don’t turn most people on, but they are necessary. By the way, we are now also quite clear that strategic plans have a much higher probability of not being achieved if there is no over-arcing vision informing them.

Q: What are some of the main stumbling blocks you see that senior managers face in building a vision for the company? What are basic steps to overcome them?

A: I mentioned the need for synthesis, imagination, and a trust in one’s intuition. When an executive needs to be in control, fears mistakes, is uncomfortable with ambiguity, and tends to judge rather than facilitate the creation of ideas, then the result will probably be a vision constrained by a short time horizon.

Typically, visions are not far-reaching enough, not big enough. Often, a vision is so generic that people cannot latch onto it, they can’t feel it in their heart and gut. And even when there’s a good vision, it’s guaranteed to fail miserably if senior management doesn’t walk the talk.

What is the source of some of these problems? There are some key prerequisites that often don’t exist as senior managers begin the process. Without them present, any vision that gets built will have severe limitations and no impact on the bottom line.

First, the group involved in this process has to acknowledge that emotion is involved. Vision depends on the ability to feel. It requires passion, a deep visceral commitment that signals to others what they stand for. I’ll admit, this can be scary as hell because when it comes down to it, figuring out what you stand for requires that you clarify who you are. While vision building isn’t group therapy or as touchy-feely as this may sound, it does require that each individual involved in the process look inside and talk about what is really important to him or her.

Second, the group must accept that the process is, by nature, imprecise, frustrating, and tedious. Done well, it’s a creative and often chaotic process that at the start seems to defy linear thinking. It requires synthesis and imagination and it often involves confusion. Put all these emotions and cognitive processes together and one realizes quickly that this is not the kind of stuff that many executives have much fun with. In fact, many just run away from a process like this when they realize it isn’t all rational, linear decision making.

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Typically, visions are not far-reaching enough, not big enough.
— Mark Lipton

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A third stumbling block is reserved for entrepreneurs. Yes, many—if not most—entrepreneurs can be quite visionary by nature and that’s what makes them so successful. But there’s some "baggage" we see coming along with the entrepreneur CEO that can be a stumbling block to a successful, vision-driven organization.

Entrepreneurs have a tendency to create structures and work environments that they can personally dominate. Often decision making is too top-down and contradicts what we found in the firms who did guide their growth through vision. And entrepreneurs often delegate impulsively. Certainly, not all entrepreneurs bring these traits into their firms, but they should be on guard that these organizational manifestations don’t happen. If they do, the vision will backfire.

One of the checklists I use in Guiding Growth may be helpful here as senior managers begin the vision-building process. When you have a vision work-in-progress, take a pause. Then ask yourself if what you’re creating will do the following:

* Will it motivate you to join this organization and continue to motivate you once you are there?

* Does it provide a beacon for guiding the kinds of adaptation and change required for continual growth?

* Does it describe a future that is more attractive than the present?

* Will it challenge you?

* Can it serve as the basis to formulate strategy that can be acted on?

* Will it serve as a framework to keep decision making in context?

Q: What can managers do to get everyone in their organization to hold the same vision?

A: There’s a fairly comprehensive answer to this and it takes up half of the book in Guiding Growth. The essence of the model that addresses this question, and evolved first from academic research and then applying the findings through many consulting engagements, is based on four key elements. I call it "The Vision Framework."

Beyond the vision framework, though, getting people to "hold" the same vision requires some straightforward strategies. First and foremost is communication. I no longer believe in vision "statements," since management gets too dependent on a piece or two of paper hung up on conference room walls. Far more important is the way all managers talk to people about the vision, in their own way, using their own language.

We found that stories are profoundly powerful: stories of the firm’s history as it illustrates part of the vision; stories of organizational heroes who exemplify values embedded in the vision; and vivid stories about what the future can look like. I believe in preaching to the converted—preachers do it all the time! Strengthening commitment, intellectual performance and morale of those already on your side is essential.

"Markers of Progress" are also very helpful. If the vision is to be taken seriously, there must be measurements to indicate whether progress is being made. For example, Gordon Bethune did some brilliant things to get everyone on board with his vision when he took over at Continental Airlines. First, to communicate that people should always be thinking of ways to improve the customer experience, he dumped one of the huge, official rulebooks into a fifty-five-gallon drum, doused it with gasoline, and lit it afire. It was a symbol that screamed out: You run this airline, not a rulebook that prevents you from being creative.

At the time, people were afraid to make decisions or take risks since they got punished if they did anything that was out of line with the rulebook. Obviously, the rulebook wasn’t working anyway. He set on-time arrival goals and, when they were achieved, everyone received a nice bonus each month—but it wasn’t just the bonus. The bonus checks were cut separately and mailed to everyone’s home, regardless of whether they had a direct-deposit plan. He wanted people to hold a check in their hands and see that it existed because they achieved something concrete that was part of the vision.

While I’ve featured many creative ways organizations have reinforced their visions in Guiding Growth, the most important thing is to consider how to communicate it through as many different media as possible. Not only should people get rewarded when they act in ways thoroughly consistent with the vision, but they should also get punished when their behavior is inconsistent. There’s a winnowing process: People who are challenged and motivated by the vision stay and thrive; those who cannot buy into it ultimately leave.

Mark Lipton is founder of the consulting firm Lipton & Co., which specializes in organizational growth. He is chair of the Organizational Change Management program at the Milano Graduate School, New School University, in New York City.

You can buy the book at: http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=7060

Excerpted from Guiding Growth: How Vision Keeps Companies on Course by Mark Lipton. Copyright 2003 Harvard Business School Publishing Corporation. Reprinted by permission of Harvard Business School Press. All rights reserved.

An effective vision needs to articulate the organization’s position on three core themes. These are the principles that guide the vision process2 While they may at first appear to be relatively independent; their interdependence becomes evident once the articulation process begins.

* Raison d’être—the organization’s purpose, or reason for being

* Strategy—how that raison d’être will be achieved

* Values—the key assumptions, attitudes, and beliefs embodied by the organization and represented in the daily flow of activities necessary for moving it closer to the raison d’être and for supporting the strategy

Raison d’être
An organization’s raison d’être is the essential reason why it exists and carries out its activities. "I think people assume, wrongly, that a company exists solely to have money," said Hewlett-Packard founder, David Packard, expressing his sense of the relationship between financial goals and purpose in an organization. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being."3

Thinking about raison d’être in this context contrasts the theme with a term it is often confused with: mission. Let’s clear up this point right away. The basic difference is that mission describes what the organization does, while raison d’être speaks more to why the organization exists and what it will look like as it works toward that high-level goal. While a mission may be a declaration of purpose and broad objectives, it is not one of direction. Missions commonly describe what business the organization is in and the markets and customers it serves. Although missions may rarely change over time, their delimiting nature has the impact of erecting borders around organizational activities and thereby has the potential to decelerate growth.4

Taco Bell, for example, once defined itself as being in the Mexican fast-food business (a mission). To the people at Taco Bell, that definition came with a certain mindset regarding the delivery of their product. Fast food meant a freestanding "box" restaurant. Over the course of a decade, though, beginning in 1984, CEO John Martin pulled the firm’s self-definition away from a particular product or market to being in "the business of feeding people" (more of a raison d’être). (To give in and use the pun, Martin helped the company think "out of the box.") This enabled the company to stake out new markets with thousands of new "points of access," such as stalls and kiosks in airports, malls, convenience stores, and the cafeterias of high schools and colleges. This simple shift away from a product-oriented mission that focused on a business domain (Mexican fast food) has had a dramatic bearing on new avenues for growth .5

A notion that originated in the business strategy field that I have found helpful to expand reflection on a firm’s raison d’être is known as "outside-in" thinking. Typical mission statements invariably represent "inside-out" thinking: Executives see the future through the lens of current products and customers. This perspective starts with current assets, an organization, a core competence, perhaps a brand—and tries to build on it. The mission response can only be "What are we doing now and how can I explain it so it leads us to doing more of it?"

An outside-in perspective looks at the drivers of change. What are the needs of a current market and markets perhaps not even conceived of yet? What do people out in the world need? How are their needs changing? Many looking through this lens realize—with discomfort—that these changes imply that goods or services being produced today are on their way to being obsolete or becoming a subset of some new need. Companies with an enviable record of sustainable growth look at themselves from the perspective of their present and future customers. They ask what is happening in their marketplace, how needs are changing, what is causing the changes, and where the resulting opportunities lie.

Noel Tichy and Ram Charan, both well-known academics, consultants, and authors, have studied a number of huge organizations that continue to lumber along the growth path despite their size. They assert that "the greatest source of risk in a business is failure to understand the needs of the customer or end user. If people don’t look from the outside in, external change will overtake them, no matter how much energy they lavish on their business….reach into your customers’ thoughts, see their needs, and work backward. The rest is execution."

I use a simple test to keep executives honest in determining whether they have really defined their raison d’être or whether they have merely engaged in a writing exercise that states a mission. They must continually ask: "Is this what our organization or division does, or is it clarifying why we are in business?" "What" tends to be about mission. "Why" is the vision.

The satirical cartoonist Roz Chast published one of her pieces in the New Yorker that she labeled, "The Tunnel of Why."6 In the cartoon, an adolescent girl is facing her mother on the living room couch, and the dialogue bubbles above both their heads form a cyclic spiral:

DAUGHTER: Can Debbie sleep over?

MOTHER: No.

DAUGHTER: Why?

MOTHER: Because it’s not a good night for a sleep-over.

DAUGHTER: Why?

MOTHER: Because Grandma and Grandpa are coming.

DAUGHTER: Why?

MOTHER: Because we haven’t seen them for a while.

DAUGHTER: Why?

MOTHER: Because they live far away.

DAUGHTER: Why?

…and on it goes, until—in excruciatingly small print—the mother ultimately reaches what I refer to as the "terminal answer." Anyone who has spent time with children can appreciate the Tunnel of Why. I am always amused that children are so motivated to find the terminal answer and so skilled at understanding what is required to get it. In most cases, it requires asking "why" three or four times in response to the initial answer. While some authors have formalized this technique as "The Four (or Five) Whys," in my experience I find it is best used to the extent that it helps unravel a statement of mission to get at the true purpose behind it. sup>7 If a raison d’être describes what the organization does, then the resulting vision will be too constrained. If it describes why the organization is involved in its business activities, then a more challenging and far-reaching purpose is communicated.

Whole Foods Market, while casually referring to itself as a "grocery store," states in its Declaration that "our vision goes far beyond just being a food retailer." They see themselves as a dynamic leader in the quality food business, and success is "measured by customer satisfaction, Team Member excellence and happiness, return on capital investment, improvement in the state of the environment, and local and larger community support."8 While some of the success metrics might be considered practical and measurable, others may be considered unrelated to business, if not downright sappy. But they are quantifiable and they all work because the performance metrics keep people focused on the larger purpose of the organization’s existence.

Strategy

Too often, but understandably given the pressures of Wall Street and other stakeholders, not to mention the press, organizations formulate strategies in a knee-jerk reaction to current events and over time look back to assess the success of these strategies based solely on how well they matched subsequent events. The test should not be how well a strategy stands up to external events but how well it enables the organization to remain viable and sustain its growth. The driving force for strategy should be the raison d’être because without this larger purpose, strategy is limited to tactical maneuvering designed to win the current round of the game.

Whole Foods Market’s strategy, as stated in its vision, includes the following:

* "Continually experiment and innovate in order to raise our retail standards….create store environments that are inviting, fun, unique, informal, comfortable, attractive, nurturing, and educational. We want our stores to become community meeting places where our customers come to join their friends and to make new ones."

* "Design and promote safe work environments where motivated Team Members can flourish and reach their highest potential. And no matter how long a person has worked or plans to work with us, each and every Team Member is a valued contributor."

* "Grow at such a pace that our quality of work environment, Team Member productivity and excellence, customer satisfaction, and financial health continue to prosper."9

The vision also connects the company to its external environment:

* "[Our business is] intimately tied to the neighborhood and larger community that we serve and in which we live. The unique character of our stores is a direct reflection of the customers who shop with us. Without their support, both financial and philosophical, Whole Foods would not be in business….We donate 5 percent of our after-tax profits to not-for-profit organizations. We have a program that financially supports Team Members for doing voluntary community service."

* "Satisfying all our stakeholders and achieving our standards is our goal. [Our leadership makes] sure the interests, desires and needs of our various stakeholders are kept in balance. We recognize that this is a dynamic process. It requires participation and communication by all of our stakeholders. It requires listening compassionately, thinking carefully and acting with integrity….Creating and nurturing this community of stakeholders is critical to the long-term success of our company.10

So, if looking from the outside-in yields a new set of needs demanded by the marketplace, then what is a different way of producing the product or delivering the service? How can these needs be met before anyone else develops the capacity? Can new needs be created?

United Parcel Service (UPS) would probably be aghast at seeing itself described as "the package delivery company." Its senior managers have unobtrusively been executing a far-reaching strategy to become much more than just a package handler. Over the years, they have put the company at the center of every crucial logistics step of its corporate clients’ operations, from shipping the raw materials for a product to processing the payment for its final sale. Their strategy, in the spirit of a vision-related strategy, is to leverage technology so powerfully that they will morph into an organization that helps companies manage their supply chain, store their inventory, repair their products, answer their phones—and deliver their parcels. By 2002 this strategy, emanating from a noncore business, had already accounted for 25 percent of revenue and remains one of UPS’ distinctive competencies.11

Values

How are values defined? What do they look like? They might be written down; more likely, though, they are part of the "genetic code" of an organization. They are the "norm"—"the way we do things around here."

For Whole Foods, values are seamlessly woven throughout its Declaration and they "are not values that change from time to time, situation to situation or person to person, but rather they are the underpinning of our company culture."12 A small sample of its stated values includes the following:

* "We value experiments. Friendly competition within the company helps us to continually improve our stores. We constantly innovate and raise our retail standards and are not afraid to try new ideas and concepts."

* "We take responsibility for our own success and failures. We celebrate success and see failures as opportunities for growth."

* "We believe knowledge is power and we support our Team Members’ right to access information that impacts their jobs. We also recognize everyone’s right to be listened to and heard regardless of their point of view."13

The description of the firm’s values is long and specific. The vision also provides direct linkages to action. For example, the organizational structure component of Whole Foods is guided by the following statement within its vision:
The fundamental work unit of the company is the self-directed Team. Teams meet regularly to discuss issues, solve problems and appreciate each others’ contributions. Every Team Member belongs to a team.

These values get passed down from one generation of management to the next. (It’s no surprise that successful organizations with strong, working visions do a lot of "promoting from within.") They become an integral part of the selection, reward, and promotion mechanisms of the firm, and those who prosper do so because there is a natural fit between their abilities, their values, and the type of behavior that brings success in that particular organization. They do not prosper merely by being sycophants.

An intriguing question posed by researchers, including myself, is why the values of long-lived, continually growing organizations have remained stable and relevant over the years. Perhaps it is due to the visionary genius of the founders. They no doubt had their own notions of what it took to be successful in their particular fields, and their own personal values and belief systems reflected that notion. This in turn helped to shape their own basic blueprint for the kinds of people and the behavior that fit the nature of the business they wanted to create. Jim Casey, for example, who founded UPS in 1907, instilled the value of resourcefulness into the organization. Although UPS may appear conservative and old-fashioned to outsiders, this value has always been important to its culture. Resourcefulness has enabled UPS to continually evolve, grow, and remain sustainable beyond its original business foundation that involved delivering handwritten messages and telegrams, bail money for prisoners, and cocaine, morphine, and opium for Seattle’s drug users.15

The values established by founders of firms remaining sustainable over the long term have a common theme: they are not constraining (e.g., "efficiency"). On the contrary, they are enabling (e.g., "innovation"). While long-held values continue to serve as guides to "the way we do things around here," the early struggles actually created a climate for collective learning that acted as a catalyst for each individual’s continual development. In these organizations, it became possible for the original values to be revisited, and reinterpreted, in ways that remained not only true to the spirit of the founders but also relevant to the modern world. The core values did not change, and one value—continual learning—seems to be consistent across the sustained scalers.

The clarity of values stands out in these firms. These values serve, in effect, as permission statements—allowing people to act on their own for the good of the company. In my own consulting work I start with an assumption that employees want to do the right thing and all too often management refuses to let them do it.

2. M. Lipton, "Demystifying the Development of an Organizational Vision," Sloan Management Review 37, no. 4 (1996): 83-92.

3. D. Kirby and K. Lewis, eds., D. Packard, The HP Way: How Bill Hewlett and I Built Our Company (New York: HarperBusiness, 1996), 172.

4. Taco Bell Web site (accessed 12 July 2002).

5. R. Charan and N. Tichy, Every Business Is a Growth Business (New York: Random House, 1998), 71.

6. Roz Chast, "The Tunnel of Why," New Yorker, 21 May 2001, ID# 45580.

7. See, e.g., R. Barrett, Liberating the Corporate Soul (Woburn, MA: Butterworth Heinemann, 1998), 112.

8. Whole Foods Market Web site (accessed 25 June 2002).

9. Ibid.

10. Ibid.

11. E. Schonfeld, "The Total Package," Ecompany, June 2001, 92.

12. Whole Foods Market Web site (accessed 25 June 2002).

13. Ibid.

14. Personal conversations with various store managers, New York, NY, and Cambridge, MA, February 2002.

15. Schonfeld, "The Total Package," 92.

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