It is not good enough to communicate a vague sense of direction—to talk, for example, about being the world leader in your industry. People want a more focused vision:
- What is the future your company wants to create?
- How will you revolutionize how your customers live, work, or play?
- How specifically will you make the world a better place?
Sharpening the focus is not easy. It requires difficult, sometimes painful choices. But a sharp strategic focus will build trust (and generate spark). Research has shown that the more focused the vision is, the more people will dedicate themselves to achieving it.
Example of Sharpening the Focus
IBM’s former CEO Louis Gerstner orchestrated a remarkable turnaround of IBM. How did he do it? By sharpening the focus. Gerstner’s vision for IBM was to fulfill customers’ needs instead of create the next new technology. A simple idea, but a revolution at IBM.
When Gerstner arrived, he saw IBM’s problem as a lack of focus on the one thing that matters: customers and the value you provide them. He saw the breakup of IBM as a big mistake. He thought it would destroy IBM’s ability to provide integrated solutions on a global scale.
Gerstner became preoccupied with understanding IBM’s customers and their changing needs. Over a six-month period, he logged more than a million miles of air travel as part of this quest. As a result of Gerstner’s leadership, IBM focused on providing customers with solutions, regardless of whether those solutions were proprietary to IBM. Its vaunted operating systems division was closed down, and a new global services division erected in its place.
Effective leaders give their organizations this kind of sharp strategic vision. When Gerstner said, “We’re going to shed any part of our company that doesn’t put customers first,” he was serious. When employees asked where they would fit in the new organizational chart, he told them, “You’re asking the wrong question. You should be focused on customers, not yourself.” And then he shut down the department responsible for making organizational charts!
As a result of Gerstner’s zeal, IBM’s revenues climbed steadily, reversing what had been a moribund course. From 1992 to 2001, Gerstner’s strategy resulted in something on the order of $152 billion in value, if one looks at the rise in IBM’s market capitalization over that period.
Sharpening the focus will fuel your organization’s success, too.
In my experience, organizations with a sharp focus will always outperform the rest. From Google to Starbucks, from Curves to Southwest Airlines, organizations that operate with a sense of focus deliver higher value to their customers and shareholders and create an environment in which employees feel high levels of trust and spark. By definition, when people are focused, they’re less likely to get distracted by the petty stuff.
How do you do this? How do you enable your people to see exactly what they need to accomplish and how they fit into the big picture? That’s what we look at in this chapter. As I did in the last chapter, I’ll take you through the process step by step…
Step 1: Define the Vision
Defining the vision and capturing it in writing is simple to say, but hard to do. Begin by asking the following:
- Who do we want to engage in this process of defining our vision?
- What’s the brain trust I need?
- Do we need outside resources to help stimulate our thinking and keep us on track?
In many cases, this planning team consists of the CEO and his or her executive team. In others, it may involve members of your board of directors or outside stakeholders. You want people with thoughtful insights into your industry, people with different points of view who can listen and change minds. Above all, you want the key people in your company who will follow through and champion the vision and the resulting plan.
Step 2: Sharpen the Vision
Nothing can be a priority if everything is. To sharpen the focus, you need to make clear what the organization will not do and what is not a priority. A nationwide chain of auto parts stores planned to open an average of one new store a month for two years. The CEO told his managers:
“We are not considering any mergers or acquisitions. We need to devote all our energy to supporting the new stores.”
Some leaders prefer not to sharpen the focus, assuming it gives them increased flexibility to respond to opportunities. But when vision is fuzzy, trust goes in the tank. Major conflicts go unaddressed. Politics can supersede performance. Bureaucracy can trump innovation. People’s cheater meters are constantly going off as they sense a lack of real leadership.
To be successful, a vision must meet five “tests”:
- It must capture what the company can be great at.
- It must make clear how the organization will deliver values to its customers in compelling and different ways from the competition.
- It must be measurable—people need to know whether the company is on course to achieve the vision.
- It must translate into a clear and compelling message, both in writing and when spoken. If it’s not easy to communicate, if you can’t create a clear mental picture of it, you need to work more.
- It must be achievable— translate it into a plan of action.
Successful visions meet this five-way test. Google’s founders, Larry Page and Sergey Brin, published an “owner’s manual” in conjunction with the company’s initial public offering in 2004. They began by saying:
“Google is not a conventional company. We do not intend to become one.”
They concluded with this vision:
“We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short-term gains.”
Step 3: Communicate the Vision
Once you’ve defined the vision, you need to communicate it across the organization and align every business unit. A strong vision is inevitably based on certain assumptions about the future. The leader’s job is to explain those assumptions and then lay out the vision and the benefits associated with it, and contrast them to the consequences of inaction.
In communicating vision, you have to satisfy five critical concerns:
- The leaders are committed and engaged in achieving the vision
- No one is exempt from change; everyone is part of the effort
- The benefits are large
- The risk of failure is shared
- There is a plan
Avoid the trap of having too many goals at once. This saps the focus and dulls people’s energies. One CEO had fourteen goals for her company. When asked why, she remarked:
“It’s important to me that everyone have a goal that reflects what they do.”
Talk about fuzzy focus! Sharpening the focus means establishing priorities not recognizing everyone’s pet project.
Step 4: Develop a Scorecard
A strong vision is tied to a specific plan with clear goals, objectives, and timetables. For example, if the vision is to enter a new market, then the plan might be to establish a beachhead office there, or to introduce a product that will attract sales in that market. If your vision is to become more vertically integrated, then one goal might be to make acquisitions to complete your vertical portfolio. What’s important is using the vision as a litmus test to plan the use of the organization’s resources. When every manager is using the vision to set business goals and budgets, then you’ll know you’ve successfully sharpened the focus.
To make the vision real, people need quantifiable measures and targets to aim for. They need a scorecard. Real trust can only grow when people know how the organization’s performance will be judged. In my experience, people align themselves around whatever is being measured like particles of iron around a magnet. That’s why the scorecard is such a critical part of sharpening the focus.
A scorecard needs to capture three different dimensions:
- What will be measured (the metric)
- What you’ll aim for (the target)
- The current performance (the baseline)
When measuring success, distinguish between inputs, activities, outputs, and outcomes. Outcomes measure the actual value you’re creating, like satisfied customers or financial profitability, and they are the key to high performance. This is shown here in the “stairway to performance.”
We began with the story of how Louis Gerstner sharpened the focus for IBM by visiting with customers for six months. He was on the road every week, listening to what customers had to say. His zeal translated into specific goals in the four main divisions of IBM. Each goal was linked to measurable performance objectives. When you consider IBM had 140,000 employees at the time, finding focus took a lot of hard work. But it paid off for him, just as it can pay off for you.
There are four key dimensions to developing high-performing organizations: strategic focus, leadership development, process improvement, and performance measurement. We focused on sharpening the strategic focus and measuring performance. As we move into the next practices, we’ll look at how to get the right people in place and further mold a leadership culture. But remember, it all begins with these first two steps: aligning people around the core values and sharpening the focus. Without those steps, you won’t know what leadership capabilities you need or how to effectively measure performance.