Because this definition is so vague and vision development processes are generally based on emotion and intuition rather than on an informed thinking process, many vision statements could use a reality check.
We want to show you how to do just that. Or, if you are trying to develop a vision, how to make sure it is grounded in reality.
The source of all visions: dominant strategy
The source of all visions is found in dominant strategy for the organization.
Vision statements become flawed when folks try to develop them as a first step in the strategic planning process without understanding dominant strategy. It should be the last step, a crisp sound bite that reflects where we want the organization’s dominant strategy to take us.
Think of strategy as choice of action. There are 8 choices, or strategies, common to every type of organization from for-profits and non-profits to public sector ones. They are always present and are being implemented even if there is no strategic plan.
Henri Fayol identified six of them on page one of the first book written on modern strategic management: General and Industrial Management. Peter Drucker identified the other two, growth and business definition, in The Practice of Management.
Any one of these eight strategies can be the dominant strategy, also known as “core competency” of an organization.
Banks have financial management as their dominant strategy. Insurers, regulators, and pension funds will have risk as dominant strategy. Many retailers will have marketing/sales; while any organization creating proprietary products will typically have R&D/technology. Other organizations, such as Walmart, have chosen growth. There are many organizations that have service delivery as the dominant strategy. Service delivery is also known as production or as manufacturing, depending on the nature of the business.
The first step in strategic planning should not be about crafting vision statements. It should be about developing a deep understanding of each of the 8 strategies and how they are actually being implemented. That understanding then drives insight into what external factors are impacting each of the eight. It will also identify which of the eight is presently dominant strategy for the organization.
Vision statements go horribly wrong when they cannot be reconciled with dominant strategy. We define a vision statement as being a description of the hoped-for outcome of long term successful pursuit of dominant strategy.
In other words, before you can develop a vision statement, you have to know which strategy is the dominant one in your organization. Then you can think through the hoped-for outcomes that might be possible from long term pursuit of that dominant strategy.
When vision is not aligned with dominant strategy...
What happens when you don’t know what dominant strategy is? Let’s look at some examples that should make you cringe.
First up is a large government social housing agency whose vision statement was “to become the largest social housing agency in North America”. What’s wrong with this vision? Well, for starters, the legislation in which the agency’s mandate (being the term nonprofits and government organizations use for the business definition strategy) is described, says nothing about growth. But the legislation says a great deal about being a landlord and providing housing for folks in need of housing. In other words, the mandate points to service delivery as the dominant strategy, not growth.
Fortunately, a new board and executive team for the agency made it their first order of business to change to vision to being about “landlord excellence”. In other words, they aligned the vision correctly with the organization’s dominant strategy of service delivery.
Or, how about the airport that retained a branding firm to develop its strategic plan? You guessed it. Branding firms are all about marketing/sales strategy. So it should come as no surprise that the airport ended up with a fancy new logo and a vision statement that looked like a marketing/sales strategy. It read something like: “to be a portal to the world”.
This vision statement sure had airport employees scratching their heads. They were thinking, correctly we might add, that running an airport is all about service delivery, heavily influenced by risk, another of the eight strategies. As a frequent flyer, I know that I want airport management focused on service delivery, not marketing/sales. A new CEO came in and immediately changed the vision to being about service excellence.
Let’s look at one more example. This one is really interesting. The vision for a government-run new home warranty program was “No more defects; no more claims”. It was explained to us that the intent was to reach for a vision that would put the organization out of business, if achieved.
The good news is that the first phrase, “no more defects” clearly addresses risk, the dominant strategy for any insurer. The bad news is that builders will never be perfect. They will always make mistakes. This means the only way to achieve the vision is to stop all builders from building new homes. That’s not going to be acceptable to builders, new home buyers, or to anyone else in the new home building industry.
Just as bad, though, is the second phrase in the vision, “no more claims”. This confuses the focus on risk by suggesting an equal focus on the financial management strategy, being the obligation of the warranty company to pay claims. Is the vision based on the risk strategy or the financial management strategy?
The takeaways on vision statements
- If you must have a vision statement, make sure it is aligned with the organization’s dominant strategy
- Vision statements don’t come from thin air. They are a description of the hoped-for outcome from long-term successful pursuit of dominant strategy
- There are 8 strategies common to all organizations and one of them is dominant strategy of the organization
For more on strategy, read The Alpha Strategies: Understanding Strategy, Risk, and Values in Any Organization available online everywhere.