Collins' framework
James Collins and Jerry Porras in their pivotal research (
) offer a framework to clarify the various ingredients of a vision.
First, they stress that while a company should adapt its strategy to reflect evolutions and changes in its environment, its vision should remain and sustain over time. According to them, ”Vision” provides guidance about what core to preserve and what future to stimulate progress toward.
The Vision Framework
They also underline that ”Vision” has become one of the most overused and least understood concept. To overcome this shortfall, they suggest that ”Vision” must be approach from two distinct notions: the Core Ideology and the Envisioned future.
The Core Ideology defines a company’s timeless character, its DNA. It is barely impacted by external influences. It represents what the company stands for, its reason for being. It is a consistent identity that transcends current product portfolio and market presence. It is often inherited from the founders of the company. „The core values and purpose, if properly conceived, remain fixed. Everything else – practices, strategies, structures, systems, policies, and procedure – should be open for change. Truly great companies understand what is genuinely sacred, what should never change and what should be open to change.” (Collins) Some company have formal core ideology statement, while other despite having a very strong and authentic Core ideology have not formally articulated it.
The Envisioned Future corresponds to what the company aspires to become. to achieve, to create. Reaching the envisioned future usually involves significant changes and progress will span over several years or decades.
Core Ideology
Core Value
Core Value corresponds to the few (typically three to five) principles by which a company navigates. These principles don’t require external justification and are not an attempt to match specific characteristics of the ecosystem
There is no idea of moral sense associated with the concept of Core Value. An organization should identify what it really is. A terrorist organization will as well have (usually very strong) core value.
According to Collins it can be difficult to identify core value: „ you cannot ”set” organizational values, you can only discover them.” ([Collins and Porras, 1996])
„A great company decides for itself what values it holds to be core, largely independently from the current environment, competitive requirements or management fads” ([Collins and Porras, 1996]). For instance, Collins stresses that a company don’t necessarily need to have among its Core Values:
’customer service’ [Sony doesn’t],
‘respect for the individuals’ [Disney doesn’t],
‘quality’ [Wal-Mart doesn’t],
‘market focus’ [HP doesn’t]
‘teamwork’ [Nodstrom doesn’t]
One of the rule of thumb suggested by Collins is that a company would rather stop its current business and seek out different customers in order to remain true to its core value.
In fact we can often intuitively determine wether of not a business or practice fits with a company’s core values.
Core Purpose
The Core Purpose is „the most fundamental reason for being. It reflects people’s idealistic motivation for doing the company working.” (Collins and Porras)
For instance, Collins stresses that David Packard, one of the founders of HP was used to declare: „Why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reason for our being.” (Packard)
More often than not, a core purpose has impact on the lives of the company’s customers and whomever they are trying to serve. However, a core purpose should not be confused with a business goal (not even with bold hairy audacious goals). Indeed unlike goals, purpose can never be completely fulfilled. The core Purpose should remain constant during at least a century „like a north star on the horizon that is forever pursued but never reached.” (Collins and Porras)
The following examples illustrate Core Purposes:
3M innovate to solve unsolved problems
ING Empowering people to stay a step ahead in life and in business
IAG Insurance To help people manage risks and recover from hardship of unexpected loss.
Fannie Mae To strengthen the social fabric by continually democratizing home ownership
McKinsey&Company to help leading corporations and governments be more successful
The Five whys method (asking five times Why ) can help getting down the fundamental : start with a description of the current products/services (we deliver service xxx) and ask why it is important. For instance, Collins provides the following example :
[first iteration] We provide the best market-research data available
[second iteration] We provide the best market-research data so that our customers will understand their markets better than they could otherwise
[core purpose] We contribute to our customers’ success by helping them understand their markets
The Golden Circle
„There are a few leaders who choose to inspire rather than manipulate in order to motivate people. Whether individuals or organisations, every single one of these inspiring leaders, thinks, acts and communicates exactly the same way. And it is the complete opposite of the rest of us” (S. Sinek).
„Most people and organization think, act and communicate from the outside in, from the clearest things to the fuzziest – for them” (S. Sinek). By contrast „inspiring leaders think, act and communicate from the inside out” (S. Sinek).
S. Sinek describes the two communication patterns through what he calls the Golden Circle: three concentric circles.
What represents the products and services a company sells or the activities an individual performs. What is usually easy to identify.
How some companies and people know How they do What they do. They would usually call it their distinctive technology or differentiating process.
Why by contrast, very few people or companies can clearly articulate why they do what they do : what is their purpose, their cause and their belief. Why does the company exists, why should their employees get out of bed every morning and why should anybody care
A classical sale pitch starts from the product and explains why it is better (i.e. how different it is). ACME Computers, for instance, would explain that they make great computers (what) and that they are beautifully designed, simple to use and user-friendly (how).
According to Sinek, Apple’s approach is different. They start by their Why : Everything we do, we believe in challenging the stats quo. We believe in thinking differently. then they explain How they challenge the status quo, for instance by making our products beautifully designed, simple to use and user-friendly. They happen to make great computers (their what). However, unlike with ACME, their products are not the starting point but the materialization of their Why. The products and services they offer, represent a tangible evidence of their purpose : why they are in business.
„People don’t buy what you do, they buy why you are doing it” (S. Sinek)
Everything Apple does, contributes to demonstrating their Why. We perceive Apple as being very authentic. Apple’s WHY (challenge the status quo) has for- med in the early 70’s and hasn’t changed since then. For instance, they have redirected the course of the personal computer industry (Apple II, MacIntosh, MacBook Air). They have reinvented the music industry with the introduction of iTune. They created the momentum for tablets with the iPad. Most other companies in personal computers or small electronics focus on ’what’ and have been commoditized (e.g. IBM or COMPAQ once leaders in personal computers, have left the segment).
Current portfolio vs Core Purpose
The current practices and product portfolio must not be confused with the Core purpose. McKinsey aims at help leading corporations and governments be more successful and offer management consulting. They may decide one day to complement their portfolio of services or even stop management consulting while keeping their core purpose.
In 1996, 3M realised that some of their very mature business (data storage) were lucrative but loosely aligned with their Core Purpose. As a result they divested these businesses and re-invested into activities that were better aligned with their Purpose.
Statements … that ‘suck’
Many statements are bare platitudes or mere assemblies of buzz words. Some become incongruous or even totally meaningless. It reached such a level that famous newspapers (not famous for their sense of humor though) published articled on how to avoid mission statements that ’suck’.
The Wall Street Journal (June 2009) made an experiment. They asked various consultancies and business schools to produce a mission statement for a hypothetical food business. The initial statement we serve the tastiest damn pizza in Wake County (which gives a clear and appealing description of the company purpose) went through various transformations and resulted a completely meaningless statement.
The Financial Times also analyzed (May 2010) a sample of strategy statements among the worst it could find. “Undisputed Marketplace Leadership”, “top-tier value creation” and “portfolio of brands” seems to be the top-3 most frequent buzzwords (mis-)used by statement writers. A lot of imagination can be required to discover in which business some companies operate, from reading their mission statement.
Envisaged future
BEE HAGS
A big hairy audacious goals (read Bee - HAG) is a clearly articulated ambition plan that mobilize the full organization. It typically require several decades to materialize a B-HAG.
B-HAG can be quantitative (e.g. become a $125 billion company by the year 2000 Wall-mart – 1990) or qualitative (e.g. land a man on the moon and return him safely to the earth).
A BHAG is a visionary target that is more strategic and emotionally compelling compared to usual businesses goals. In Collins words „there is a difference between merely having goal and becoming committed to a huge, daunting and energizing challenge.” ([Collins and Porras, 1996])
Usual business goals describe what a company seek to accomplish over the coming days, months or years. Most goals are very tactical. By contrast „ a BHAG is an audacious 10-to-30-year goal to progress towards an envisioned future. It serves as unifying focal point of effort, and acts as a clear catalyst for team spirit. It has a clear finish line, so the organization can know when it has achieved the goal ; people like to shoot for finish lines.” ([Collins and Porras, 2004])
In the 50’s Japan economy wasn’t what it is today and Japan products had a reputation of poor quality and low performance. Sony, a firm created in 1946, set a B-HAG aiming at changing that perception and getting associated to quality and innovation.
Vivid description
To be inspiring for employees and customers, a BHAG must be translated into a vivid description : a compelling description of what it will be like to achieve the goal. It should be inspiring, tangible and engaging.
As Collins put it „Maximizing shareholder wealth doesn’t inspire people at all levels of an organisation and it provides precious little guidance.” (Collins and Porras.)
An B-HAG can be articulated in a one-minute elevator ride or put on a single piece of paper. The goal must be very simple (to understand, not necessarily to achieve) and as crisp as possible.
For instance Henry Ford claimed „I will build a motor car for the great multitude … It will be so low in price that no man making a good salary will be unable to own one and enjoy with his family the blessing of hours of pleasure in God’s great open spaces … The horse will have disappeared from our highways” (H. Ford)
Don’t use jargon, buzzword or techno-geeky stuff. Don’t produce catch phrases or slogans either. In contrast set clear image and include passion, emotion and conviction.
Compare:
„Our mission is to become the international leader in space industry through maximum team-centered innovation and strategically targeted initiatives” (Aerospace company)
with
„Put a man on the moon and return him safely, by the end of the decade” (JFK) (a single idea that has motivated millions of people for a decade
Strategy is about being different
In her recent seminal book ([Montgomery, 2012]) Cynthia Montgomery suggests that Purpose is the cornerstone of strategy and articulating a clear & motivating purpose for the organization is one of the key outcomes for a strategist.
„A CEO must be the steward of a living strategy that defines what the firm is and what it will become” (C. Montgomery)
„Nothing else is more important to the survival and success of a firm than why it exists and what otherwise unmet needs it intends to fill. A good purpose is a commitment – choosing to be one thing and not being something else.
A purpose sets you apart and makes you distinct : the specific reason for which you exist, the specific customers you want to serve, the market needs you want to fill. ” (C. Montgomery)
A good purpose also sets the stage for value creation and capture. Your purpose must give you a difference that matters in your industry.
If your firm disappeared today, would the world be different tomorrow ? In Montgomery’s own words: “When you ask managers to describe their com- panies, most tell you what industry they are in, may be what geographies. If you press them more they might tell you something about their market share, maybe even their profitability. But if you ask them – why does your company matters ? – and I’m not asking here about a firm’s social purpose but also about its economic purpose – they pause. They are not used to thinking about their companies this way. You must be able to describe what your company brings to the world and what would be lost if it weren’t here, why the world needs the business and why it will support it, why enough customers will be willing to pay sufficiently high prices to buy its good and services”.
For short, a purpose outlines what is the organization there to do that makes a difference, on to whom. A well expressed purpose should be easy to grasp. It provides clarity of mind/guidance for employees, investors, customers and suppliers. People can easily relate to it.