One of the most visible and essential elements of your job as a leader is creating an exciting, unified vision of the longer-term future for your company or unit. (We discuss this need in more detail in Ron’s book The Harvard Business Review Leader’s Handbook and in previous articles.) This is difficult enough, but even once a vision is in place, many leaders fail to implement it over the years. many years to perform that it may require. For example, a 2018 McKinsey survey found that only 16% of companies committed to a multi-year process of digital transformation reported sustainable performance improvement.
Based on years of consulting on large-scale change at dozens of companies across many industries, we believe what holds back most leaders is not translating the vision into a structured plan that they monitor over time. Sure, leaders know how to set goals, create measurable KPIs, use dashboards, and engage people at short notice. However, when change efforts take years, tracking often becomes blurry and falls away in the face of rapidly changing business and economic conditions that force constant adjustment to produce day-to-day results.
Take a big technology company that we worked with. The senior leaders set out a five-year ambition to move from hardware to software and services. However, in the first two years after the vision was announced, the senior team devoted most of its time to activities related to getting results from hardware products so that the current business would not suffer. Meanwhile, the core transformation, although often mentioned in strategic updates and stakeholder reviews, is still not fully realized.
By contrast, in 2013, with $4 billion in revenue, Adobe Systems embarked on a major transition from a license sales model to a cloud-based subscription model. The company’s sales shrank by 8% in the first year and were flat in the second year. The voices of skeptics and opponents were loud and clear. However, buoyed by CEO Shantanu Narayen’s determination, the senior team remained true to their longer-term strategic intentions. Adobe’s recurring revenue reached $6 billion in 2016 and $14 billion today; 80% of that revenue now comes from subscriptions and associated sources.
What did Narayen and the Adobe team do well? How do you execute a vision over time while dealing with unexpected distractions and the pressure to produce short-term results?
There are three approaches that we have seen leaders use successfully to address these challenges and realize a multi-year vision – individually or in combination:Plan from the vision. Promote a structured annual planning process that connects the long-term vision with short-term action. Focus your experiments. Encourage projects that iterate to the vision. Train your people. Develop training and education that makes the vision come to life over time
Let’s take a closer look at each of these.
Vision-Based Planning Process
Most companies engage in an annual planning process to define business goals and budgets and then convert them into goals for the business unit, department, and so on. The starting point of this exercise is often financial, based on questions such as what numbers do we need to satisfy investors? and how much improvement is possible compared to last year’s performance? But this approach requires short-term thinking. While the long-term vision can be mentioned in the process, it is not the driver for strategy, resource allocation or individual action.
Instead, start your planning process with the long-term vision. That’s what Jack Welch did as GE CEO when he insisted that its leaders begin their planning process with “dream sessions.” His team would identify the longer-term opportunities for what their business could become, then shape their annual plans with those opportunities in mind.
Similarly, Marc Benioff, CEO of Salesforce, has used a planning method for over 20 years that starts with his firm overall vision for the company and his software-as-a-service approach. He calls his method the V2MOM: vision, values, methods, obstacles and measures. At the beginning of each year, Benioff drafts a company-wide one-pager that, as the acronym suggests, first articulates the overall vision of the company and then outlines his thoughts on the key steps needed to get there. (The vision remains largely stable from year to year as implementation priorities and methods change.) He then hands the document over to each of his direct reports and asks them to work with their teams to develop a V2MOM document for create their own groups. The leadership team then goes through all V2MOMs to achieve full company-wide alignment and commitment to their strategic intentions for the next 12 months. This ensures that each unit of the company understands and agrees to the balance between short-term goals and the long-term vision in their day-to-day work.
Of course, not everyone is a founder or CEO who can drive vision realization from above. Leaders at other levels may also purposefully pursue a large-scale goal over time, especially if they hone the experimentation already taking place in the company, specifically to iterate toward that vision.
More often than not, visions don’t come true in straight lines; and we don’t always know what it takes to get there. That’s where experimentation comes in – setting up little tests to find out what will and won’t work on the path to the vision, while also building support for it along the way. But without a focused approach, this experimentation may not lead to the ultimate goal you are trying to achieve.
Take the story of Gary Scholten, an executive who led a successful effort to transform the Principal Financial Group, a global investment management company, into a digital-first company over the course of 11 years, despite all the distractions and change that came from tenures from three different CEOs.
Scholten began advocating a digital-first approach in 2011, when he was the company’s corporate chief information officer. Even as the company made impressive strides toward that vision in the beginning, each business unit reacted differently, so that performance was uneven. For example, the global company embraced mobile faster than its US counterpart, as many of its customers had better access to cell phones than computers.
Several years later, now as head of corporate strategy and as CIO, Scholten established a digital strategy committee to oversee these efforts (the group included the corporate CMO, the business unit CIOs, and their senior business leaders). Together, they identified dozens of digital experiments already underway at various levels of the company. They reviewed them all and identified six where the company should double down and invest proactively because of the clear sense that they would lead to faster growth or better efficiency or scalability than competitors. These include pension enrollment tools to help employees save at a higher rate, robo-advice embedded in life events, and AI-based investment research tools. By the end of 2020, when Scholten retired, these investments (and others added later in a similar process) had an internal rate of return of more than 20%, with two-thirds of the benefits coming from revenue growth — and the company had indeed moved a large part of its activities to digital platforms.
Training and education
The third approach is to invest in an educational process that gives people in the organization a deep understanding of what the vision actually means and how it could change their work.
An example of this approach is illustrated by the work of Dr. Mieko Nishimizu, former Vice President for South Asia Region at the World Bank. When Nishimizu took on the role in the late 1990s, the World Bank focused primarily on economic development and poverty reduction through a top-down approach of expert technical analysis, policy adjustment, and lending. Her vision, however, was that local communities and societies would take ownership of their own economic destiny and that institutions like the World Bank would act more as partners, catalysts and providers of resources to help them do so.
This vision required a profound shift in what the Bank did and the way its employees interacted with local individuals. For years, World Bank employees would parachute into countries from Washington and tell governments what to do. Now they should learn to listen not only to government officials, but also to those who have experienced poverty, and then work with them, side by side, to develop solutions.
To help them make the switch, Nishimizu created what was later called the “village immersion program,” in which members of her team would lead the lives of the poor in their villages for two weeks. Her goal was not only for her employees to understand the new role of the organization intellectually, but also to help them develop an emotional understanding that would ultimately lead to behavioral changes. Ultimately, Nishimizu made this program mandatory for certain categories of employees in her region, and over 200 employees participated over the years.
As this program evolved, Nishimizu continued to meet annual requirements for pre-existing projects and loans, but gradually, with the changed sensitivities of its staff, she changed the nature of the region’s projects – and the image of the World Bank.
Of course, none of these approaches is easy, and they all require adjustments along the way. Benioff is still working with his team on the tradeoffs between long-term vision and short-term results. Scholten was able to successfully encourage digital experimentation, but they didn’t come together in the full vision until he learned that the company would need to double down on a few company-wide investments. Likewise, Nishimizu made progress in changing the World Bank’s approach to poverty alleviation, not only by giving senior leaders an opportunity to experience village life, but also by gradually leveraging the new understanding to understand the nature of the Bank’s projects. to reform.
Converting a vision into a new reality does not happen overnight. But if you have perseverance and stay true to your vision, this may be the most important contribution you will ever make as a leader.
This post Keeping an eye on your company’s long-term vision was original published at “https://hbr.org/2022/04/keeping-sight-of-your-companys-long-term-vision”