The Importance of Vision in Business
If you’ve ever started a business that failed before, you’re already familiar with the cycle I’m about to layout.
Say you are struck by the most important idea that will revolutionize business in a particular industry. You’re strongly convinced that by the time you execute your idea in the world, ‘it will change everything’. You can already see the long lines of people waiting outside your head office on the day of the launch, all waiting to be among the first to buy your product and show it off to their friends. You can see how all this will happen in a matter of weeks, and how your life will literally be uprooted by the storm of new things to do and all the big media houses calling your office to try to get an interview. You return to real life and you’re sitting in a small uncomfortable cubicle at work. You hate your job, and you can’t wait to get to the end of the month so you can hand in your resignation. You’ve been saving up and now that you’ve struck idea gold, it’s finally time to quit this horrible job and go on the adventure of your lifetime.
And let’s say that you were right. Let’s say, in fact, that everything proceeded just as you envisaged it, the market loved your product, and almost instantly you became a sensation around the people who cared about your offering and you even developed a cult following. So now your new company is making hundreds of thousands of dollars daily in revenue, and it doesn’t seem to be slowing down. You’re working so hard that your family has not seen you in weeks, and everything is going fine. Perhaps on one of the television interviews, the presenter asked you about what your vision for your company in the future was, and you answered something noble and grandiose. He seemed impressed by your answer and even remarked it. As you left the studio, you had that smug smile on your face. This is it. You’ve worked out the life of your dreams; the company of your dreams, and from here on out, everything is going to be fine. Or so it seems.
One thing that separates a business that last hundreds of years, with thousands of dedicated staff around the country and consistent profits from the business that shoots off in a fiery blaze, but is soon extinguished like a cigar, is a vision. Sometimes it’s easy to forget that a company is like a boat at sea. It may be a simple fishing boat with three uneducated fishermen or a cruiser ship with state of the art navigation and the most experienced crew, but in the end, it is a contraption on the sea. To the sea, it does not much matter the size of the boat. Both fishing boat and cruise ship are at the mercy of the sea, and will only be sure to get to their destination if they play by the rules of the sea. The sea, in this analogy, represents the forces of the market. In today’s ever-changing business landscape, it is perhaps more pertinent than ever, that businesses and business leaders pay attention to the market forces now more than ever before. It is your ability to recognise a change in the sea that determines whether your business survives the next big unexpected wave and comes out stronger, with an influx of new customers, or disappears totally, a whole million-dollar company becoming almost immediately obsolete.
Keeping all other factors constant, the agility of the management of a company, or the ease with which they can pivot sensibly, backed up by data, is the single most important metric of survival today. In 1955, Fortune Magazine listed 500 companies as the most successful companies of their day. 60 years later, only 71 of these companies still existed. It tells clearly the importance of vision, focus and agility to a company lasting and staying valuable through many fiscal years. We will take a look at some instances of businesses that have spectacularly failed fro not paying attention to the concept of vision. One of the most popular startup statistics on the web says that trying to scale too fast too soon is the number one reason a startup will fail. We can trace this desperation back to the lack of a proper vision. Having a vision is not just putting down a motivational vision statement.
This company was the industry leader for movie rental industry in a time before the advent of the internet. It became a nighttime tradition for most families. Young people now probably cannot recognise the name, because as big as Blockbuster was, and with the monopoly, it had on the market, and all the love it enjoyed from its customers, it was hard to envisage that such a behemoth business could misstep, not to talk of tripping and falling flat. A small company that was called Netflix challenged their model. In 2000, Reed Hastings, CEO of Netflix proposed a partnership with John Antioco, CEO of Blockbuster. Netflix was to manage their online brand in exchange for publicity at all Blockbuster stores. The story is that he was laughed out of the room. Blockbuster had a significant percentage of its revenue coming from late fees. In other words, it made some of its profit from punishing its customers. But with thousands of stores nationwide and millions of customers, Antioco just didn’t see how his business could fail. The bottom line was simple. The market was moving online and the emergence of companies like Netflix was proof of that. But a leadership issue saw Blockbuster shut down its online initiative because the new leader thought it was too expensive to venture. In retrospect, it is easy to see that pulling the plug on their online store marked the death of the company. A new captain came on board and decided to make all his decisions without considering the sea, and that was all it took.
Xerox established a think tank known as the Palo Alto Research Company (PARC) in 1970 and staffed it with some of the smartest men and women in technology at the time. The purpose of this new organisation was to innovate and invent new equipment that Xerox could consider for commercial production and sales. By every stretch of the imagination, this was a good move for Xerox, the biggest seller of business equipment in the world at the time. The company had just started producing the 914, a photocopier that revolutionized the way documents were copied. Prior to the 914, businesses had to make carbon copies in a process that was both messy and time-consuming. Then the 914 was born, and Xerox welcomed their new cash cow. It saved time, was much cleaner and easier to use and (the best part for Xerox) could not be outrightly purchased by businesses. Businesses had to lease the machine from Xerox, every single one of them, and pay Xerox for every single document that was copied on it. Talk about a real cash cow! Perhaps it was this quick rushing inflow of money that blinded the leadership of Xerox to a new invention by PARC that potentially had ground-breaking implication for the young tech industry in Palo Alto. PARC is credited to have been the first to invent what we know today as the Personal Computer. They called it the Xerox Alto. It was complete with a mouse, graphic user interface, and internal memory. Xerox only made about 2000 units of this machine. At this time, Steve Jobs led a small new tech company called Apple. He had heard talk of the creative work going on at PARC and was interested in taking a look. PARC was offering to show Jobs these newly developed technologies for a chance to invest in his company pre-IPO. The young Apple CEO could hardly restrain his enthusiasm. He was said to have gone the tour with a small notepad, constantly nodding, scribbling in his notepad and pacing. And in his response to the Xerox Alto, he is quoted as saying “You are sitting on a goldmine.’ The rest is history. Jobs took that fascinating experience back to Apple’s labs and created the computer that came before the Mac: the Lisa. Powered by essentially the same technologies, the Xerox Alto made only 2000 units, while Apple went on to sell up to 100,000 units of the Lisa. In this case, Jobs had a clear vision for his company and when he saw something he would need, he recognised it immediately and tasked his engineers in that direction.
Before 2006, when the phone wars began, no other company was offering a device with solid security, email and tens of millions of loyal customers except Blackberry. The company was the world leader in secure communication and smartphones. Corporate America, the US government and even the younger demographic all adopted it as the go-to product. And the US had the definitive influence on the rest of the world in picking technology. So if the US embraced Blackberry, every other consumer territory in the world would stretch forth their hands to receive the new device. And they did. There was one thing though. Blackberry did not envisage that the market was ready for a different form of text input. And for good reason. The physical keyboard on Blackberry phones was competent and reliable. And the millions of Blackberry users around the world were evidence to them that their text input method was the best for the time, and was not about to go away. But companies like Google and Apple were hard at work perfecting their full-screen prototypes. Google had nothing to lose, and Apple was pretty confident about the success of the soon to be launched iPhone, as they already had an enormous following with their iPod. 2006 was the year in which Blackberry’s nightmare became a reality, but they did not know it yet. These days, the company is more invested in their enterprise and software services, which keep the lights on. They have officially discontinued their hardware program.
In business, the leader must maintain a very clear vision at every point.
The sea of market forces and the ever-changing needs of the customers is tough and utterly unpredictable. Therefore it must be a matter of the topmost priority for the leader to be focused not only on the smooth running of the business as it currently is but also on the possibilities that each new day brings, what is now possible and where the customers are likely to lean in the near future. Like the hypothetical CEO we described above, without paying close attention not just to your business but to your industry, and frankly, listening to the world and what is happening each day, a successful startup by all current standards can take a nosedive so quickly that you may be too stunned to react. And to react to market changes is the last thing you want to do. It is crucial that the business leadership stay humble and always willing to learn new concepts, technologies, and changes in the business horizon. Because without having a vision that transcends your current hot-off-the-shelf product, you’re basically sailing blind on a very rough sea. There’s only a slim chance, a small probability that you will last much longer. Innovation is the holy call to all founders and business owners. It is what will be the determining metric between companies that will spring up like a shooting star and lack the humility to innovate and move with the market, and companies that will stay active on the playing field, stay agile and stay around for generations. And innovation will only be found when a company is focused, extremely, ruthlessly focused on serving their customers even before they know what they want.