This article by Ron Ashkenas and Peter D. Moore is another great example of how brand vision impacts growth.
The article was published on Harvard Business Review.
One of the most visible and essential elements of your job as a leader is to create an exciting, unified vision of the longer-term future for your company or unit. (We discuss this imperative in more detail in Ron’s book The Harvard Business Review Leader’s Handbook and in earlier articles.) This is difficult enough, but even once a vision is in place, many leaders fail to execute on it over the many years that it may require.
For example, a 2018 study by McKinsey found that only 16% of companies that were committed to a multi-year process of digital transformation reported sustainable performance improvement.
Based on many years of consulting work on large-scale change at dozens of firms across many industries, we are convinced that what holds most leaders back is that they don’t translate the vision into a structured plan that they keep in focus over time. Of course leaders know how to set goals, create measurable KPIs, use dashboards, and hold people accountable in the short-term. When change efforts require years, however, tracking often gets fuzzy, falling away in the face of rapidly changing business and economic conditions that force constant adaptation to produce day-to-day results.
Take a large technology firm we worked with. Its senior leaders laid out a five-year aspiration to shift from hardware to software and services. In the first two years after the vision was announced, however, the senior team spent most of its time on activities associated with getting results from hardware products so that the current business wouldn’t suffer. Meanwhile the transformation of the core, while often mentioned in strategic updates and stakeholder reviews, still has not been fully realized.
In contrast, in 2013, Adobe Systems, with revenues of $4 billion, embarked on a major transition from a license sales model to a cloud-based subscription model. The company’s revenue shrank 8% in the first year and was flat in the second year. Skeptics’ and naysayers’ voices rang loud and clear. Bolstered by the resolve of CEO Shantanu Narayen, however, the senior team stayed true to their longer-term strategic intent. Adobe’s recurring revenues reached $6 billion in 2016 and $14 billion today; 80% of those revenues now come from subscriptions and associated sources.
What did Narayen and the Adobe team do right? How do you execute on a vision over time while coping with unanticipated distractions and the pressure to produce short-term results?
There are three approaches that we have seen leaders use successfully to deal with these challenges and realize a multi-year vision — either singly or in combination:
Plan based on the vision. Drive a structured yearly planning process that connects the long-term vision to short-term action
Focus your experimentation. Encourage projects that iterate towards the vision.
Train your people. Develop training and education that makes the vision come alive over time
Let’s look at each of these more closely.
Vision-Based Planning Process
Most companies engage in a yearly planning process to define corporate objectives and budgets and then cascade these into goals for the business unit, department, and so forth. 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 over last year’s performance? But this approach forces short-term thinking. While the longer-term vision might be cited during the process, it isn’t the driver for strategy, resource allocation, or individual action.
Instead, begin your planning process with the longer-term vision. That’s what Jack Welch did as CEO of GE when he insisted that his leaders begin their planning process with “dreaming” sessions. His team would identify longer-term possibilities for what their businesses could become, and then shape their yearly plans with those opportunities in mind.
Similarly, for over 20 years Salesforce CEO Marc Benioff has been using a planning method that begins with his steady overall vision for the firm and its 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 one-pager for the entire company which, as the acronym suggests, first articulates the firm’s overall vision and then spells out his thoughts about the key steps needed to move towards it. (The vision stays largely steady from year to year while the implementation priorities and methods change.) He then gives the document to each of his direct reports and asks them to work with their teams to create a V2MOM document for their own groups. The leadership team then goes through all the V2MOMs to achieve full enterprise-wide alignment and commitment to their strategic intent for the next 12 months. Doing this ensures that every unit of the company understands and has agreed to the balance between short term goals and the longer-term vision in their daily work.
Of course, not everyone is a founder or CEO who can drive vision-realization from the top. Leaders at other levels can also drive deliberately toward a large-scale goal over time, particularly if they hone experimentation that is already happening in the company specifically to iterate towards that vision.
More often than not, visions don’t become reality in straight lines; and we don’t always know what it will take to get there. That’s where experimentation comes in — shaping small tests to find out what will work and what will not on the path towards 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 reach.
Take the story of Gary Scholten, an executive who led a successful effort to transform the Principal Financial Group, a global investment management firm, into a digital-first enterprise over the course of 11 years, despite all the distractions and change that came from the tenures of three different CEOs.
Scholten began advocating for a digital-first approach in 2011, when he was the company’s corporate chief information officer. Even as the company made impressive initial advances toward that vision, each business unit responded differently, so those achievements were uneven. For example, the international business embraced mobile more quickly than its US counterpart because many of their customers had better access to cell phones than to computers.
Several years later, now as head of corporate strategy as well as CIO, Scholten formed 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. Assessing each one, they identified six where the company should double down and invest proactively because of a clear sense that they would lead to faster growth or better efficiency or scalability than competitors. These included retirement enrollment tools to help employees save at a higher rate, robo advice embedded into life events, and AI based investment research tools. By the end of 2020, when Scholten retired, these investments (and others that were added subsequently in a similar process) had an internal rate of return exceeding 20%, with two-thirds of the benefits coming from top-line growth — and the firm had indeed shifted much of its business 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 transform their work.
An example of this approach is illustrated by the work of Dr. Mieko Nishimizu, a former vice president for the South Asia region at the World Bank. When Nishimizu took on the role in the late 1990’s, the World Bank addressed economic development and poverty-reduction largely through a top-down approach of expert technical analysis, policy adjustment, and lending. Her vision, however, was for local communities and societies to take ownership of their own economic destinies and for institutions like the World Bank to function as more as partners, catalysts, and providers of resources to help them do that.
This vision required a profound shift in what the Bank did and in how its staff worked with local individuals. For years, World Bank staff would parachute into countries from Washington and tell governments what to do. Now they would need to learn how to listen not just to officials, but to those who experienced poverty and then work with them, side by side, to develop solutions.
To help them make the shift, Nishimizu created what came to be called the “village immersion program” in which members of her team would live the lives of the poor, in their villages, for two weeks. Her goal was not only for her staff members to understand the new role of the organization intellectually, but to help them develop an emotional understanding that would eventually lead to changes in behavior. Eventually, Nishimizu made this program mandatory for certain categories of staff in her region, and over the course of several years, over 200 staff members participated.
While this program was evolving, Nishimizu did continue to meet the yearly requirements for already-established projects and lending, but gradually, with the altered sensitivities of her 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 still works with his team to deal with tradeoffs between long term vision and short term-results. Scholten was able to successfully encourage digital experiments, but they didn’t coalesce into the full vision until he figured out that the company would need to double down on a few, company-wide investments. Similarly, Nishimizu made progress in changing the World Bank’s approach to poverty reduction not only by giving senior leaders an opportunity to experience village life, but also by gradually leveraging the new-found understanding to reshape the nature of the Bank’s projects.
Turning a vision into a new reality doesn’t happen overnight. But if you have persistence and stay true to your vision, it may be the most important contribution you’ll ever make as a leader.