Vision-driven Strategy
An alternative model recommends strategy emerging from corporate vision, the firm’s aspirations. The reasoning is that business opportunities are better envisioned and created since competitive advantage arising from them are inimitable, hence long-lasting. An ideology-driven organization designed for radical thinking and a strategy that exploits new ideas through market development and brand building are suggested as recipe for success.
The difference between the two is obvious: Market-driven firms pursue opportunities in an existing market – they aim to succeed by market positioning and incremental product enhancements. Visionary firms pursue opportunities in revolutionary ideas – they aim to succeed through market development and brand building. Market-driven strategy is safer but has limited profit potential as competition and other market disruptions pose constraints; vision-driven strategy is relatively risky but carries a huge reward potential as it bestows an enduring “almost monopoly” status to the firm.
High-flyers of recent times like Amazon, Netflix, and Starbucks are visionary firms. They have grown to be multi-billion dollar enterprises in a short span of time due to the innovative opportunity their founders conceived and executed. True, these are pioneers that commonly start with a path-breaking idea and continue in that tradition, but can market-driven firms do an about-face and become vision-driven? History suggests they generally do not think out-of-their-box as the current market blindsides them: Xerox invented the desktop computer but failed to see a PC market emerging; Western Union turned down Alexander Graham Bell’s offer of the telephone patent for similar reasons. These market mavens were indeed myopic. But, there are some notable exceptions too in history. Consider Apple, Inc. Started as a designer of user-friendly PCs, it changed course in mid-80s to compete in price-sensitive mass markets and almost died. A bold vision conceived by Steve Jobs in 1998 metamorphosed Apple, from a maker of PCs to a firm with core competence in designing and marketing high-quality consumer electronic devices that offered total product solutions. Effective execution of this vision, evidenced by the launch of uniquely designed products in entertainment and communication, besides saving Apple from bankruptcy, transformed it as a highly valuable company in the world.
From Market-driven to Vision-driven
Shifting the basis for business strategy, from markets to visionary thinking, requires fundamental change. First, managerial mindset must change. Managers must move away from market share and profit mentality when articulating the firm’s long-term ends. Profits bind attention to current products and do not permit exploratory thinking. Instead, managerial hopes and dreams must focus on creating enduring value, through products and technologies that would revolutionize the industry, even if it involves obsoleting current offerings. Apple’s core purpose, declared Jobs, was not creating wealth for its owners but designing breakthrough digital devices that delighted the consumer. Anita Roddick was fervently determined to change the cosmetic industry’s foundation, from false glamour to all natural, when she conceived Body Shop. Profits were not a part of her financial equation. Visionary opportunities for a firm are enterprising ideas that emerge from human imagination. Enlightened thinking from an eclectic perspective is essential for that to happen.
Business strategy selection has historically been market-driven. The belief is that markets hold profit opportunities for a firm. A well-designed market research that identifies attractive segments and a strategy that competitively positions the firm to exploit them are argued as recipe for success.
Problems with Market-driven Strategy
Market-driven strategy makes sense when markets stay stable or change in predictable ways. A firm can align its resources with the market forecast that wins customers, and stay on top by preventing entry. Markets for most goods today are neither stable nor predictable – they change, erratically and discontinuously. Relying on them for sustained success can be treacherous. Discontinuous change abruptly turns a firm’s resources unsuitable for the market, eroding competitive advantage. The painful experience of Kodak, GM, Motorola, and Zenith, yesterday’s iconic leaders in their industry, offer some useful lessons on this point.
Organizational culture and processes too must change. Market-driven firms are organized for consistency and predictability of results on current products. If visionary ideas should be the basis for strategic endeavors, the firm should be organized for creating and exploiting ideas. New ideas emerge from human imagination, not by design, but by serendipity. Experimentation and risk-taking should therefore be permissible features of the organisation. However, idea generation is only part of the story – the firm also needs downstream idea diffusion and implementation capability. A team environment and a product champion culture are additional helpful features. Overall, a skill-based grouping, work teams and product champions competing and collaborating with each other, and a risk-tolerant environment are characteristics of a visionary organisation. Again, Apple is an exemplar here.
Great companies are not market-driven. They do not do market research. Instead, they tell the market what is good for it – by conceiving and executing path-breaking ideas incessantly. They are visionary companies.
