A stock analyst recently declared Amazon a "buy," because Jeff Bezos has "a very solid vision of where he wants to take the company." Vision is vital to make a company attractive to investors, and becomes even more important when you're driving improvements to accelerate profit and growth.
A vision provides a clear picture of the future, preferably for the next 1 1/2 to 3 years. Visions that are longer than that aren't very practical since things change so rapidly, particularly in industries driven by innovation. Many companies use visions that extend 5 or even 10 years. Unfortunately, they become stale, which reduces their impact on employees, and such a long-term vision can actually send the company in the wrong direction.
What the Vision Does
- Set clear goals and provide a means for people to establish priorities
- Create context for decision-making
- Serve as a sounding board for managers and employees at every level in the organization
- Keeps the focus on the big picture
- Answer the question, "why are we doing this?'
- Serve as a ruler to help measure urgency, define relevance and apply resources.
- Set a foundation for action, which leads to ownership of results
What the Vision Looks Like
The vision should have three elements. They might look like this:
1. The "Why"
By 2021, ABC Company will be a $55 million dollar company with gross profit margins of 30% serving markets in the Rocky Mountain west. Our brand will be nationally recognized. 75% of our products will be certified organic and non-GMO. We will have built a workforce that sustains our culture while sourcing and producing the best quality products.
2. Strategy and Measures
Our strategy will be one of rapid development of carefully considered new products, which will help achieve:
- Revenue from new products of $20 million
- 20% improvement in gross profit margins
- Inventory turns above 10
- Becoming an employer of choice
- Developing and producing state of the art products that are among the top 5 brands in the west
- Contributing to our community
3. Defining the Working Environment
Our working environment will be characterized by internal teamwork, partnering with customers and suppliers, continuous improvement and appropriate levels of reliance on automation.
In addition to an overall vision for the company, a vision for each department level can tie the operations strategy to the company strategy. In my new book, Moving Into The Express Lane: How to Rapidly Increase the Value of Your Company, I show how aligning operations strategy and vision with your company vision can exponentially increase company value. This can dramatically drive revenue growth, profit, cash flow, capacity and agility.
At the Project Level
Visions can also be used for major projects to ensure that the participants are on the same page. For example, a client recently set a vision for improving a process that would reduce obsolete inventory. It said:
Our vision is to reduce current and potential future obsolete inventory in such a way as to:
- Free up warehouse space for future products by at least 25%
- Improve cash flow
- Reduce SKU count by 20% and decrease inventory complexity
- Reduce cost of holding inventory by 10%
- Provide more options for potential future product additions
- Consolidate suppliers to those that will effectively support our initiatives and help increase margins
That vision, along with a strong set of key performance measures, kept the project team focused on what needed to be done and gave them the tools to know when they had achieved their goals. The result was a 20% inventory reduction and 10% profitability improvement.
As you can see, the vision is not a long document. Most of my clients develop a vision that is one paragraph followed by a brief, bullet-pointed list of strategies and measures. The vision concludes with one short paragraph defining the working environment. The total is less than one page and can easily be communicated to all of your stakeholders.
Jack Welch once said that the CEO's role is to set the vision, and then find the people to implement it. Clearly Jeff Bezos is successful in doing that. If vision can be used to attract investors, it can also help to dramatically accelerate profit and growth.
Source: Rick Pay, Rick Pay's Growth Accelerator