THE STRATEGY REQUIRES VISION
Core ideas
- There are several types of vision the company must follow in order to know where it wants to go and how it will get there, but there are also visions where it can fail. (CSV) Definition and Features
Summary
The Product Strategy is like a path, and the path is used when you know where you want to go.
It is called (Core Strategy Vision, CSV) which provides the destination and the direction where the company wants to go and what are the hopes to get there.
The CSV knows where the company wants to go, how it will get there and why it must be successful and the benefits it will generate.
Some of the greatest successes in the history of the industry were created by people with exceptional vision.
IMPAIRED VISIONS
There are several types of vision that companies employ to have better strategies, but some of them fail in CSV. Before mentioning the characteristics of the CSV, the types of vision that have failed will be shown.
Tunnel Vision
It is a company that has a very narrow view of the future that does not see opportunities or threats due to its small vision. Not in the impact of new technologies and new perspectives to go to markets.
Vision blindness
Some companies appear to be blind or asleep to walk. Because they don't have a vision of where they want to go, they seem to be blind to what is happening. As long as companies don't know where they want to go and how they will get there, they will go in several directions without focusing on the one that can generate the most benefits for them.
Short vision
Some companies have a very small vision of the future, they are good at reacting in short times but for the long term they have no future vision. One of the short vision companies was Ampex Corporation as it was very successful in short-time video tape recorder (VTR) but had no long-term vision to be able to participate in the VCR market.
Mirage vision
Some companies see many opportunities in the future to be able to generate profits that become illusions. They have a vision of the future but sometimes it never materializes. Because they focus on illusions that remain only being a mirage that the company cannot reach.
Exceptional Vision
There are many types of vision that can give companies profits.
Vision 20-20
It represents the percentage of anticipation that the company must have. With this type of vision, the company can see far enough in the future to decide where it wants to go, how and what tools it will use to get there, incorporating technology and market opportunities, to formulate an appropriate CSV that even with vision 20- 20, it is difficult to formulate a good CSV for the company.
Peripheric vision
Companies with peripheral vision are more aware of taking advantage of technology and the opportunities that arise than companies that do not have this vision. They see opportunities in technology to be able to enter new markets in this way
Foresight vision
By using this vision, these companies can take opportunities that no one else can see, they can stay ahead of competitors by generating new products and new tools that they can use in the future.
CENTRAL STRATEGIC VISION
There are many characteristics to be able to establish the strategic central vision.
Focus
A good strategic central vision must be sufficiently focused on where it should go and how it should be done, since otherwise it can be interpreted as a mission and not as a real one since to establish it you must have your objectives well established.
Totality
A good one (CSV) has to be complete. We know that complete means that vision can answer three questions:
- Where do we want to go? How will we get there? Why will we be successful?
Although it seems obvious that CSV needs to describe where the company wants to go, many visions have been revised that fail to answer this question.
The desired destination needs to be as specific as possible, without restricting the company too much. "We aspire to take advantage of growing opportunities" does not answer the question; nor does it mark the direction where the product strategy should be directed. It's kind of like telling friends that you'll find them at a restaurant somewhere in New York City sometime next week.
On the other hand, statements like "We aspire to provide manual diagnostic tests for tuberculosis" limit the company to a single production line. This may be appropriate if the company does not want to expand into other markets, but it is very restrictive otherwise.
The key to answering the question Where do we want to go? it's about finding the right balance between short-term goals and long-term opportunities. Compaq achieved that balance in 1993: "We want to be the leading provider of PCs and PC servers in all consumer segments around the world." Another very successful company, Intel, also found out where it wanted to go in the mid-1990s. He wanted to dominate the growing market for microprocessors and related devices. Wal-Mart is an example outside of the high-tech industry. It wanted to be the largest and most successful discount warehouse chain in the world.
The following from Compaq in 1993- is a good example of a vision that clearly defines the state where the company wants to go:
“We want to be one of the top three companies supplying computer based tools to improve programmer productivity. These tools will take advantage of the increase in computing power to provide ease of use. ”
The first part of the vision describes in reasonably specific terms "where the company wants to go" what it wants to achieve - without restricting it to a specific type of tool. Products could include tools for automated design, systems analysis, or object-oriented programming. The vision also emphasizes the software productivity niche. This provides a common theme for new products indicated in terms of customer value. Note that the vision intentionally bypasses any computing platform restriction "Tools for Software Development on UNIX" would be a completely different vision. The vision outlined here provides strategic flexibility regarding computing platforms.
The second question one needs to answer is "how does the company expect to get where it wants to go." Compaq's vision statement does a very good job describing how it would get there: For having a better process for developing products than its competitors, for competing strongly with a price-based strategy, for effectively managing costs, and for having good support for client. Here again, there is value in being specific, without being too restrictive.
"For taking advantage of the new 386 microprocessor," for example, would be limited insight. It describes how to get it now, but does not provide any guidance on how to get it later. Intel also clearly knows how it could get where it wants to go. I would take advantage of Moore's Law. In sum, Intel would create new users and uses for the microprocessors. Wal-Mart would go on to establish discount stores with a wide range of merchandise at a low price and friendly service.
The ingredient - "how" - needs to be robust enough beyond the following product, as illustrated by the middle part of our example vision statement: "These tools will take advantage of increased computing power." This vision provides the direction to develop these productivity tools. Computing power is increasing rapidly, and the company plans to take advantage of this trend in its products. When combined with the initial ingredient of the vision, this defines the opportunity: Increased computing power will provide new uses, perhaps new markets, for software productivity tools.
The third question "why will we be successful" is usually based on a unique value that will be provided to the customer. This ingredient of the vision is the basis of the competitiveness strategy. For a company competing on price, the core strategic vision should include things like "being a price leader and low cost producer." For a company using a differentiation strategy, the vision should provide direction for that differentiation.
Compaq's vision provides direction for your future successes: because you will understand the dynamics of the industry. While not very specific, it is probably appropriate for an industry with rapid technological change. The vision also indicates how Compaq expects to handle those changes in technology better than its competitors. This will give direction for the expected performance.
The basis of competitive advantage needs to be reasonably specific. "Our products will use appropriate technology to meet customer needs and provide them with the highest quality" does not instill much confidence that the company really knows how it will be successful.
Intel clearly knew why it would be successful: by continually improving the design of the microprocessor faster than its competitors, by building the state of the art of the microprocessor in large numbers, and by adjusting industry standards. She did all of that in the 90's. Wal-Mart attempted to create the most efficient and sophisticated distribution system and institutionalize friendly services. Note the emphasis on their attempt to institutionalize friendly service.
The last part of our company example, to provide ease of use, declares that feature as a company differential for each of its markets. Every platform and individual product will be positioned as "user friendly", and the company will segment the market based on this vector.
Feasibility
It's all easier for a company to achieve and define a CSV than impossible. It looks good on paper, and company executives are hopeful they will be able to have it. But in effect, a CSV is as good as possible to be implemented. Creating an effective CSV is not the end of the product or the strategy; it is only the beginning. Here is an interesting example of this problem in a known company. The CEO (Chief Executive Officer) of a software company has a clear vision of the future for his company. He knew that the company had to change. It had to develop a low-cost platform to separate itself from the competition and enter into growing market segments. However, he had no idea how to carry out his vision using the platform strategy. Nothing happened.Out of frustration, he wrote a 53-page memo for all employees to read his vision. Needless to say, that didn't work either. The problem was not disagreeing with the CEO's vision. Each of them agreed and shared their frustration. The problem was that the company did not understand the strategy for the product and did not have a process to link the CEO's vision with new products.
WHO IS RESPONSIBLE FOR THE VISION?
Our poor CEO is a good example of another recurring problem in high-tech companies: the question is who is responsible for the strategic vision.
Is it the group of directors, the CEO or the executive team?
After 6 months on the job, Lou Gerstner, CEO of IBM in 1993, was pressured to give his vision for IBM. He didn't go far when he said, "Our mission is to be the most successful Information Technology company in the world… OK, you wanted a vision statement. Well, we have it, now we are going to work ». As time passed, it became apparent that Gerstner was actually formulating a CSV for IBM that was entirely focused on e-business. It was not immediately clear how e-business represented a market opportunity and that the best role was for IBM. Gerstner began to position IBM to take advantage of this opportunity, but was unable to immediately articulate a credible vision. If he had described this prematurely he would have been attacked.
THE RESPONSIBILITY OF THE FOR A BUSINESS UNIT RESTS CLEARLY ON THE CEO OR GENERAL ADMINISTRATOR OF THAT UNIT.
We specify the business unit, because, in a large diversified business, each unit needs a different strategy and its own vision to guide it. Successful companies are led by CEOs who have the ability to effectively formulate and communicate a CSV. There are very few exceptions to this rule. Instead, there is a significant correlation between failing companies and CEOs who lack these skills or simply ignore the Strategic Vision. This does not mean that every CEO needs to be a visionary. He or she simply needs to touch on the visionary skills of others within or outside of your company. But the CEO needs to make sure that the CSV is the best possible.
Sometimes the philosophy of a CEO can serve as the basis for a CSV of the product strategy. For example, TJ Rogers of Cypress Semiconductor has never left anyone in the dark about what he thinks, and his philosophy is clear: "If you don't do it quickly, satisfied customers, or more motivated employees, we don't spend a nickel on it.". Although this does not provide a complete vision, it is certainly a clear philosophy, which satisfies many of the purposes of the strategic vision.
A CEO can and should expand on the vision of the company and explain it from time to time to its employees, in strategic sessions and annual reports. The brief vision statement becomes the subject for further explanation. These explanations may vary when circumstances change, some views frequently need to be reinterpreted each time. Vision is a living thing.
The CEO must rely on the executive team to develop the CSV. It is a mistake to develop a vision in a vacuum. We have found that the team of executives of a business collaboratively develop the most effective CSV with their CEO. Each member contributes with different points of view. Friendly debate ensures broad support in implementation. However, executive consensus does not mean political commitment, where anyone gets a share of what they want. This is certainly a recipe for disaster.
What if the CEO cannot formulate a successful strategic vision? Company management needs to take action. If the directors are not satisfied with the CSV created by the CEO and his executive team, then it is the job of the board to change direction or replace the CEO.
WHEN SHOULD THE VISION CHANGE?
Even a successful CSV eventually becomes obsolete. It needs to change as technology, competition, and customer expectations change. Maintaining an outdated vision for too long is almost always the reason why a successful company falls. At the other extreme, changing a vision is often destructive: "… I changed my mind again, I believe that everything you have done is a waste, let me try going in this direction while." This does not instill confidence in leadership. But knowing when and how to change a CSV is perhaps the most important skill of CEOs who are successful for a long time. A CSV can be changed in different ways.
CLARIFICATION NEED
A clarification of the CSV does not mean a change of address. It is only a way to bring the clearest and most focused vision, so the company can better achieve it. Typically with clarification, one item will change slightly, but generally the direction will remain the same.
NEED FOR EVOLUTION
CSV is also evolving. If it evolves appropriately, companies can adjust the where, how, or why, while still maintaining momentum. Companies deliberately try to change direction, but the change should not be too abrupt.
OBSOLESCENCE
A company needs to change its vision when it becomes obsolete, preferably before it becomes completely obsolete. By changing the vision and leading the company in a new direction, the change can be traumatic.
HOW VISION GUIDES STRATEGY
An effective CSV provides the necessary starting point to be successful in the following ways:
- Establishing a framework for the strategic product platform. Generally, it is the CSV that starts with high impact activities to replace or add a new product platform. Without a strategic vision, the strategy platform has no guide; A company may be lost in deciding when to launch the development of a nine product platform. A CSV can also be a trigger to expand into new markets. Focus efforts to identify new product opportunities.The CSV indicates the direction in which the product strategists team should seek new opportunities. With a strategic vision, they begin to consider more opportunities almost subconsciously, because they generally know where to look. Without the vision, they will generate various ideas for new products that may not be consistent with the direction of the company. Align other strategies and initiatives.A CSV is the main point for strategic alignment, this is where the alignments begin. Every critical function, process, and activity has to be aligned, especially if the company wants to change the direction of its strategy. If there is no such alignment, different functions and initiatives go in different directions and the company usually does not go very far. In today's changing world, a company cannot take long to change direction, let alone take years to align each function to its strategy. Guide product development. People working directly on new products are more successful if the company knows where it is going and how it expects to get there. Guide the technological strategy.A CSV helps set the general agenda for technological development. Suggest core competencies that will lead the company to success. It presents expectations for clients, employees and investors. Various groups help the company achieve its goal. Employees contribute their effort, investors provide financial support, and customers buy the product. A CSV is the best way to communicate to each of these groups where the company is going, if these groups believe in the vision, they will support the company, otherwise they will abandon it. An effective CSV can motivate people to work hard.
The dilemma is how to communicate CSV. If the company tells anyone about its strategic vision, competitors may learn from it. This point marks one of the differences between CSV and product strategy. Vision does not describe specific details, although it may be helpful for competition, it is not specific in intelligence to compete.
CENTRAL STRATEGIC VISION (Core Strategic Vision) IN ACTION
The three case studies that follow are all from the computer industry. Each of these three companies achieved success with a right-handed CSV, but they had to readjust when the vision was no longer working. Each case study presents how that adjustment was difficult for them.
There are some interesting similarities in these examples. All emphasize the point that the effects of a strategy are transitory. Most companies are surprised by the need for change. Furthermore (CSV) changed only when the company changed CEOs, the fate of the company rested on the success of such a vision of the new CEO.
Digital Team Corporation: Wandering without a Vision.
40 years ago Digital Equipment (DE) had a clear vision of strategy. The vision of Ken Olsen, one of the first intrepid, created a complete new market that brought computing power, in mini computers, directly to users in their own locations. They were the first to make such technology available to midsize companies. For 2 decades his strategic vision was successful. In the 1970s he was considered the apparent heir to IBM.
In the 1980s his strategic vision developed a blind spot. They were obviously warned of the coming of the personal computer, and failed to understand the implications of these trends for their strategic vision and did not adjust their vision or create a new one. For the 90's they drifted without a vision as such, and losses of 4 billion compared to other periods. Bob Palmer is promoted as CEO, by 1996 he invests time and effort in developing and defending the following vision:
- Assist clients to create greater value for their clients and shared holders. Build cooperative and mutually beneficial relationships without partners. Create a rewarding environment for your employees. Achieve long-term, sustained growth and profitability for Digital and increase value for Shared forks.
This is not reflected as Palmer saw Digital, but a vision that applies to a business in general. It does not describe how Digital will get where it wants to go, or how it will do it.
Without a strategic vision, Digital wandered in all directions, developing all kinds of new products. Many that were technologically interesting but with little potential. One of the challenges of change for the strategic vision is to change while your business is still strong.
Compaq Computers: Changing your CEO to change your Vision.
In 1983 they had a crystal clear key strategic vision: to have the best laptop. It worked so well that it set the record for the company with the highest profits (Profitability) recovered in the first year. Her vision for 1988 involved being the first to incorporate on-board guidance, high-performance technology into personal computers. But in 1991 everything began to fall apart for Compaq. Her was no longer useful. Unlike Digital, Compaq executives reacted by replacing the CEO in 1992, Pfeiffer.
Compaq changed its strategy to align it with the new vision. He immediately developed a low-cost platform strategy to replace his higher-cost platform. Henceforth, a new emphasis is placed on Productivity (doing more with less, or with the same resources). Compaq faltered as he chased his vision. In an attempt to achieve this vision, Compaq made strong acquisitions (Including Tandem Computer, August, 1997, and Digital Equipment, January, 1998). Pfeiffer said "We want to do it all, and we want to do it now"
The Compaq example demonstrates the importance of the role that the board of directors plays to ensure that the company has an effective Central Strategic Vision.
Apple Computer, Confusing Strategy with Vision.
Founded in 1976 by Steve Jobs and Others, Apple was pursuing a short (narrow) vision. Make some money by selling assembled computer components to the Apple I motherboard. After the success of the Apple II and the failure of the Apple III and the Lisa, it settled on a successful strategic vision that took shape around the Macintosh Computer. His vision was to create a business with the motto: "A computer for the rest of us", with ease of use as a clear differentiation. This key strategic vision was not only clear, it was also strongly aligned with all of Apple's strategies. I also develop software that made it easy to connect Macintoshs on a network.
Apple continued to prosper for the next decade. Even though it was not the formal central strategic vision, implicitly around the vision the Macintosh long supported Apple. Under Jon Sculley's direction, Apple paid no attention to its Strategic Business Vision. At the same time, Apple tried to establish a shared vision of the future with a series of meetings and conferences called New Company (Company). Instead, Apple organized the following strategies:
- Market Sharing StrategyEnterprise Computing StrategyEmerging Technologies Strategy
It is now clear that behind these goals there is no vision. They are only reasonable strategic objectives. Sculley made a bigger mistake in 1990, when he declared himself CTO (Chief Technology Officer), Apple's Chief Technology Officer, despite his lack of experience. Under the leadership of John Sculley, there was an approximate 20 to 8 percent decline in the market. This is why a central strategic vision is important to be safe in thinking about where you want to go.
Bibliographic reference:
- "Product Strategy for high Technology Companies". Chapter one. Strategy requires Vision. McGrath, Michael E. 2004.
