How to Envision a Company Vision Statement (Via Traction)
by Matt, on 21 Jan 2020
One book we recommend every entrepreneur (or early-stage/growth-stage business leader) read is Traction: Get a Grip on Your Business by Gino Wickman. It describes the Entrepreneurial Operating System (EOS) that many successful leaders have applied to organize and simplify their businesses and take them to the next level.
Having recently re-read Traction while updating our vision and strategy for Strategic Piece, we decided to dedicate this edition of SPT to summarizing the second chapter. It provides an excellent framework for arriving at a vision statement for your company. And, while you should unquestionably refer to the book itself for more complete guidance, we hope this overview will both whet your appetite and give you some helpful pointers.
WHY DO I NEED A VISION STATEMENT?
Wickman succinctly captures the answer: your vision statement should clearly define who and what your organization is, where it’s going, and what it’s going to take to get there.
When quizzed, the employees at many – if not most – companies struggle to articulate their company’s vision. In fact, they give varied and inconsistent answers to the underlying questions about why the company exists, where it hopes to go, and the game plan for getting there.
This doesn’t necessarily mean that the company’s leader or leadership team lacks a vision. It means they have failed to effectively communicate that vision to a wider audience (which potentially includes shareholders and other stakeholders, not just their employees).
“So, what?”, you might ask. “Provided the leadership team knows where the company is going and has a clear plan for getting there, why does every other Tom, Dick, and Harry need to have it explained to them?”
A popular metaphor referenced by Wickman depicts your employees each rowing a boat, which represents the company. Unless they understand where the company is trying to go, they will likely be rowing in all sorts of different directions, and with varying levels of effort, based on their personal ideas and perceptions of reality.
By committing the company vision to paper, sharing it with employees and stakeholders, and reiterating it frequently to ensure a common understanding, you can harness the vastly superior power of having everyone pulling in the same direction at the same time.
I DON’T HAVE TIME FOR THIS
As with many foundational and strategic elements of company management, we believe crafting a vision statement is non-negotiable. It isn’t something you can set aside in favor of more pressing operational issues – it must be prioritized.
The good news is that, while the start-to-finish exercise of organizing your ideas and synthesizing a coherent vision statement will take several hours across multiple sessions with your team, the output should only occupy a page or two. And, it should last a while before it needs to be reworked.
I DON’T KNOW WHERE TO START
This is where reading Traction can really help. We’re going to summarize the key steps that Wickman recommends in the rest of this blog post, but if you agree that they make sense, please read the full chapter (and book!).
The process involves answering eight questions about your business:
- What are you core values?
- What is your core focus?
- What is your ten-year target?
- What is your marketing strategy?
- What is your three-year picture?
- What is your one-year plan?
- What are your quarterly rocks?
- What are your issues?
ONE / CORE VALUES
Your company’s core values define its culture. They describe who you are as people.
You should use them to hire like-minded people, fire those who don’t fit, and to review and reward individual performance.
Importantly, they already exist within the organization. You just need to (re)discover them.
Begin by asking each of your key team members to write down their ideas for potential company values, then compile them into a master list.
As an icebreaker to get the team’s wheels turning, Wickman suggests asking your team to each name three people (preferably, but not necessarily, from within the organization) that they would like to clone in order to achieve market domination. Then, ask them to list the defining characteristics embodied by those individuals. What is it about them that will propel the company to ultimate success?
Next step: cull the list by grouping like ideas and selecting the ones that the team considers most worthy of core value status. You will probably start with several dozen ideas. Aim to bring that number down to between three and seven.
Once you’ve landed on your 3-7 proto-values, let them soak. Bring the group back together after a week – or a month, if you prefer – to revisit the selection process. Then, finalize your choices.
Lastly, describe each core value using illustrations, examples, and stories and begin living and using them every day. The more tangible you can make them, the more useful your core values will become.
TWO / CORE FOCUS
What is your core focus? This is Wickman’s expression for what we like to call your Mission Statement. Jim Collins calls it your ‘hedgehog.’ It’s the thing your company excels at more than anything else.
Don’t overthink or over-analyze this one. What is your niche? As Orville Redenbacher put it: “Do one thing and do it better than anyone else.”
Be careful not to sabotage it either. It’s easy to get off track, distracted by shiny opportunities. Getting lured into replicating your competitors’ behavior, following poor – and often unsolicited - advice, or simply falling for the old “the grass is greener on the other side” fallacy are all pathways to suboptimal performance.
As the old saying goes, if you chase two rabbits, you catch neither.
Jim Collins puts it this way: “You can only succeed at what the company is genetically encoded to do.”
How does understanding your core focus bring value? It becomes a filter for all your future decisions.
Whether it’s choosing which prospects to target, deciding whether to continue with a problematic contract, making choices about which positions to fill next and with whom, or simply prioritizing your time and other scarce resources, the key determinant becomes: which of the available options aligns best with our core focus.
Wickman summarizes core focus with a nice analogy to the sweet spot on a golf club. If you’re a player, you’ll know that hitting the ball with the central part of the club face – known as its ‘sweet spot’ – results in a more powerful, straighter, smoother-feeling shot. The more times you can hit the ball off the sweet spot, the better you will score. By analogy, the more time your company spends working on things within its business sweet spot – your core focus - the better you will score.
THREE / TEN YEAR TARGET
Where do you want your organization to be in a decade?
Successful organizations always set clear goals. Enduring organizations, as studied by Collins in his book Built to Last: Successful Habits of Visionary Companies, set 10 to 25-year goals he calls “BHAGs” – Big Hairy Audacious Goals.
If thinking ten years out is too much for you, start with five. The point of this step is to set long-range direction for everyone in the company. It requires focusing on the ends rather than the means.
Start by discussing what your team members think the company’s revenue will be in ten years’ time. You’ll probably come up with an interesting range, which will tell you a lot about how your leaders view the business. Explore their reasons for the values they chose and then find a number to which everyone can subscribe.
Next, decide what other metrics and targets are appropriate for your business. They should motivate everyone and be both specific and measurable.
FOUR / MARKETING STRATEGY
Your company cannot be all things to all people. Too many early-stage businesses think it’s essential to say yes to whatever the customer wants and then find a way to deliver. That’s taking ‘the customer is always right’ to an unreasonable end.
Your marketing and sales efforts must be laser focused. Who is your ideal customer? What do you do for them? And, how do you do it?
In his book Get Back in the Box: How Being Great at What You Do is Great for Business, Douglas Rushkoff argues that, to be successful, you must focus acutely on doing the thing you actually do best. Take a rifle approach, not a shotgun.
Your focused marketing strategy should encompass four things:
4.a / Your Target Market
Describe your ideal customers in terms of their demographic (who they are), geographic (where they are located), and psychographic (what they believe, need, and want) characteristics.
For example, Strategic Piece focuses on entrepreneurs and early-stage company CEOs (demographic) in Greater Houston, Austin, and Denver (geographic) who recognize the need for strategic support and guidance to effectively hit their next milestone (psychographic).
4.b / Your three uniques
Describe the three things that set you apart from the competition – what we might also call differentiators or value propositions. These are the reasons your ideal customer will cite for why they think you’re the best.
It’s possible – if not likely – that your competitors will claim one or two of the same features, but they should never be able to claim all three. If they can, you need to dig deeper to find whatever it is that sets you apart from them.
4.c / YOUR proven process
It might sound a bit gimmicky, but you should have a documented process for whatever it is that your company does. This is what got you to where you are.
Write it down on a single page – preferably in not more than seven steps – and give it a name. You can even jazz it up and make it an infographic.
Then, show it to your prospects and customers. Now you will leave them with no doubt about what it is you will do for them, building on the three unique value propositions mentioned earlier.
4.d / YOUR guarantee
Although not every company nails this step right away – only about 50% of EOS users, according to Wickman – try to pinpoint an industry-wide problem that you can promise to solve every time.
Examples include FedEx guaranteeing next-day delivery and Domino’s Pizza promising delivery within 30 minutes or your pizza is free.
This approach obviously doesn’t lend itself to every type and size of business but if you can make it work, it’s a great way to boost your business.
FIVE / Three Year Picture
While it’s essential to have the ten-year target (or whatever timeframe you chose for your company) to give everyone a long-range aimpoint, there’s little value in creating operational strategies and plans more than two to three years out because business simply changes too fast.
However, having a mid-term picture helps your people see and relate to the vision. It also makes annual planning much easier.
Keep it simple. Use 3-7 specific, measurable goals that can be described in bullet points. This will usually include revenue and profit targets, as well as company-specific goals such as number of clients, units shipped, headcount, company locations, products you offer, and so on.
Also take a moment to write down what everyone’s role will be at that time. This helps your team to think in less abstract, human terms and to visualize their own evolution within the company.
SIX / ONE YEAR PLAN
It’s time to bring your vision down to the ground and make it real. What are the most important things you need to get done in the coming year to be on track for your three-year picture?
Once again, less is usually more. The fewer objectives you set, the more you are likely to achieve. And, as always, make sure they are specific, measurable, and achievable.
Finally, make sure your budget supports the plan. This is an important reality check. With the best will in the world, your team won’t be able to hit the company’s objectives if they don’t have the necessary resources.
SEVEN / QUARTERLY ROCKS
In the Entrepreneurial Operating System, rocks are each individual’s specific 90-day goals that must be hit for the company to stay on track for its one- and three-year targets.
Your leadership team should meet once each quarter to debate and set its rocks. This should be a day-long meeting discussing how to allocate resources, after which you can let the dust settle and get on with delivering the business.
By publishing everyone’s rocks and openly discussing progress towards them during regular team meetings, there’s no confusion as to what role each team member is playing, how it contributes to the company’s success, or who should be held accountable for a particular objective getting met.
EIGHT / YOUR ISSUES
Lastly, what issues might you face in trying to deliver the results you’ve written down so far?
Identifying potential obstacles is just as important as knowing where you’re going. In fact, as Wickman points out, your success will be proportional to solving them.
The first and most important step is writing them down. Assemble your team and ask them to list out all the reasons they can think of for why you might struggle to meet your targets. And, no matter how hairy or scary the list might seem, don’t sugar coat the issues! Denying or downplaying them won’t make them go away.
BINGO! A VISION
Congratulations! If you’ve followed the eight-step process described in Traction you’re well on your way to articulating an effective vision for your company.
The next step is to share your vision with everyone in the company. Employees can’t share your vision if they don’t know what it is! Tell it to them like a story, supported by personal examples of what each element means to you.
Be sure to let people challenge the vision and ask questions. Even though you’ve worked for hours with your team to develop and refine the message, it still won’t be perfect. Capture any potential problems that employees identify and add them to your issues list once you’ve decided if they are real or not.
Some people will need to hear the vision several times before they take it seriously. Ignore the initial eye rolls and stick to your guns. Eventually, as they hear you referencing elements of the vision on an ongoing basis, they will accept that it’s for real and begin to buy in.
Also keep in mind that not everyone will share your vision. Your goal should be to inspire as many people as you can. Some of those who remain unconvinced might even leave the company, which is ultimately in the company’s best interest as well as theirs.
- If you haven’t already done so, buy or download a copy of Traction by Gino Wickman and read about the Entrepreneurial Operating System. There are several alternative frameworks out there for organizing and running your business and EOS isn’t for everyone, but we’re sure you’ll take something valuable away from this book even if you don’t end up applying EOS at your company.
- Does your company have a vision statement? If you do, review it against the eight steps and look for areas you might improve. If you don’t, consider scheduling time with your leadership team to work through the process.
- Is your vision statement effective and current? How long ago was the vision crafted? Have you revisited it lately to check for consistency with your business? Are you applying the core values, core focus, and long-term targets when making critical business decisions? Unless you’re completely satisfied with your answers to these questions, schedule time to review, update, and re-share your vision.
- Read more about establishing the fundamental pieces at your company in our guide to Getting Started (even though this can be applied at any phase!).
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