EP27 How to use your company vision to drive results

In this episode, Mike discusses the importance of having a clear vision for a business and using a structured approach to make it usable. He draws inspiration from Jim Collins' work and emphasizes the need to start with vision before moving on to strategy and planning. Mike explains the three components of a vision: core values, purpose, and a big hairy audacious goal (BHAG). He highlights the significance of authenticity and relevance in defining these components. Mike also emphasizes the need to extract and communicate the vision to align the team and make informed decisions.

Takeaways

Having a clear vision is crucial for the success of a business.
A vision should consist of core values, purpose, and a big hairy audacious goal (BHAG).
Values should be action-oriented and accompanied by clear explanations of their meaning.
Purpose should be authentic and compelling, providing a reason for being.
A BHAG should be challenging and guide the long-term direction of the business.
It is important to extract and communicate the vision to align the team and make informed decisions.
Revisiting the vision periodically can help realign the business and address any deviations.

Chapters

00:00 Introduction and Importance of Vision
03:16 Vision, Strategy, and Planning
04:14 Components of a Vision: Core Values
05:10 Components of a Vision: Purpose
10:33 Components of a Vision: Big Hairy Audacious Goal (BHAG)
18:09 Extracting and Communicating the Vision
20:04 Revisiting the Vision

Find out more about  working with me or about applying to join the ILN.  mike@smbmastery.com.au

 https://www.linkedin.com/in/mikeadamscott/

https://theintentionalleaders.com/

Transcript

Mike (00:01.774)
Hello guys and girls. Yeah, so it's been a good couple of weeks since the last recording. And what I've been doing a lot of this year and the end of last year, interestingly, is working with a lot of my clients around revisiting, in most cases, but in some cases, visiting for the first time, what their actual vision is for their business. And...

I thought it would be a good idea to do an episode on this because I think there is a lot of misunderstanding or at least under appreciation for getting really, really clear on what your vision is. But I think more importantly on using a structure and common language that actually makes it a usable thing to do in your business. So one of my favorite thinkers of all time and business minds and management minds is Jim Collins. And I quote him a lot tonight.

study and read his stuff consistently. He's written a bunch of good books. He's written his early works is actually my favorite, Beyond Entrepreneurship 2.0, Good to Great, Great by Choice. There's a lot of stuff that he's written. Some monographs, he came up with the H-Hog concept. He's really a guy that's very worthwhile studying. And a lot of the work that I do is inspired by a lot of his work. And when he talks about vision, it's certainly not Airy Fairy, Head in the Clouds.

type of thing. It is very concrete and it's one of the things that they discovered in studying the best companies in the world and the enduring great companies of the world that is consistently, let's say, touted as one of the core reasons for their success. And that's really interesting. So one of the things that I'll say by starting, one of the observations that really came through really strongly in his works is that, you know, he talks about companies like IBM and...

I don't know, Procter & Gamble and Intel and I don't know, these massively amazing companies, all these huge names, McKinsey and massive companies. And you know, where I work in the world is I don't work in the corporate space with these massive, massive businesses. And most of you listening to this probably are not running businesses of that size. And you might be sort of thinking, yeah, you know, that stuff's cool for these mega corporates and these enormous businesses. But what about me doing my little thing in my little town with my little business?

Mike (02:21.27)
The interesting thing about these businesses that he studied, like McKinsey, like IBM, like Hewlett-Packard, is that it was when they were very small that they catalyzed these visions and it was from the vision that they grew their success, not the other way around. So their size and scale and growth and success has largely been attributed to this very clear catalyzed vision to bring people along with them. So

Today I want to offer a framework which Jim Collins often in a lot of his work. I'll use my own words for some of the stuff, but if you want to go nerd out on this, you can totally go and check out his work. So what you sort of need to think about when I start talking about this is, we need to start with vision first, then we get to strategy, and then only do we get to tactics and planning. So most businesses, and if you're listening to this, you probably fall into this category.

You set every quarter and you do a bunch of planning and that's good. It's better than not doing it, but what are you planning in service of? Your strategy probably is not actually really clear and concise and in a framework or a common language that is usable and can be interrogated often. And sort of is, is generating a ton of assumptions and hypotheses that you need to garden, validate and test. And then on top of that, your strategy that needs to be serving your vision. Right. So it's vision first.

then strategy, then tactics or planning. So today I'm only gonna speak about vision. Absolutely can be talking more about strategy and I probably will. I love the playing to win framework. So I'll probably do an episode on that quite soon. And then under planning, that's where things like OKRs or rocks or smart goals or whatever you use come into play. But it's vision first, strategy then in service of the vision, planning and tactics in service of executing on the strategy. So what is a vision?

Firstly, what I'll say is if you are a leader or a founder in your business, that is your most primary and critical task or priority is to set and catalyze a compelling vision that is clear and authentic and to bring people along with you for that ride. That is the most important thing that a leader needs to do in my strong, strong opinion. And as one of my friends, who's a very successful entrepreneur, what his mentor said to him is he said to him, listen, Paul.

Mike (04:43.242)
You've only got two jobs as a founder, right? In a growing company. One is what exactly what I've just said, set the vision and bring people along with you. Two, make sure you're never the smartest person in the room. Okay, what does that mean? It means obsess over getting and keeping the best possible people that you can into your organization. I did two episodes on that previously, getting and keeping the best people. You can go and look at those, listen to those, and hopefully you'll get some value. So what is a vision? Well,

If you follow the Jim Collins stuff, which I really do, I've lived this stuff, I've observed a lot of this stuff, and I really love how he breaks it down. There are three parts to a vision, right? It's not just words on a wall. There are three distinct parts. The first part of your vision is your core values. What are core values? Core values are the agreements that everybody in this business, this organization, is prepared to be held accountable to. They are the guides.

to how we show up. They are the attributes to, when demonstrated, give ourselves the best chance of success, the best chance of achieving what we set out to achieve, right? Values in my strong opinion and experience are not just trust, integrity, teamwork, loyalty, excellence, words on a wall, because those things, when you display them like that, they mean very different things to very different people. They can be interpreted. They are not particularly useful, right?

What we did at Nona that worked really, really well is that we displayed our values as, let's say, action-orientated statements. So for example, it wasn't communication. It was communicate often and honestly, no matter what. It wasn't excellence. It was continuous improvement as a way of life. It wasn't teamwork. It was in this case.

be generous with your knowledge. They are much more alive when they are displayed like that. Then that's not enough either though. We need to then take those statements and we need to extrapolate out a sentence or two to really get clear on exactly what it means. On a Tuesday morning at 10 o'clock to a junior person that's sitting with a problem, they need to be able to look at these values and see the statement, but then have a sentence or two underneath it to really make it

Mike (07:09.75)
real for them. Like what does this actually mean in the business? So that's how we want to kind of display them. But how do we how do we discover our values? I think there's a there's a number of mistakes that I see businesses make quite often. Number one, values are internal. They matter to your people. They are the things that you deeply and authentically believe are the most important

Mike (07:38.806)
They are not a marketing tool. They are not for your clients and your customers in the sense that you use them as a marketing platform. By all means, share them with your customers. By all means, put them on your website. By all means, be very proud and show them off. But they are about your internal people. They must be relevant and resonate internally. That is the primary purpose of values. They are not things that get done as sales and marketing tools. You can use them for those, but that's not their primary reason.

Right. The other thing that I see done wrong all the time is that we create values as aspirational things, things that don't exist, but that we want them to exist. Values need to exist in your organization. They need to be there already, right? Usually in the founding or the early team members, you discover them and you articulate them, but they already need to be there. So there's various exercises you can go through. But one of the exercises that can be really useful is, especially if you're a smaller business, you get the whole business in the room.

And you go through a bit of a process saying, hey, think of the person in this room that if you could replicate them 10 times would really give us a much, much better chance of extreme success, et cetera, et cetera. And then you look at like, why that person, what about them is so amazing? What do they do that you wish everybody else did, et cetera, et cetera. And you, you extract what already exists in the organization. It may not be pervasive. It may only exist 10 or 20%. But it does exist. Right. So you discover your values. You don't sort of create them.

as aspirational things that don't actually exist. There's a whole lot that you do with these values once you've created them, but that's what I mean by values. They're not just five or six words that you put on a wall and that's the end of that integrity, trust, loyalty, whatever, because those are gonna mean very different things to different people at different life stages, et cetera. You remove doubt, you remove ambiguity. You have a statement like continuous improvement as a way of life, or be generous with your knowledge.

And then you give a sentence or two underneath that really explains what that actually means in terms of the behaviors that we all believe are necessary and that we expect from each other and that we will hold people accountable for. You need to be willing to fire people if there is a values mismatch, even if they are a high performer. You need to be using these values to every interview you're having, you need to be talking about these values and really getting a sense of whether they are authentic in

Mike (10:02.838)
the people that you're bringing into your organization. And most importantly, as a leader, you need to be modeling these values, not just talking about them. You need to be modeling these values all the time. And you need to be honest with yourself about whether you are doing it or not. Because if you're not, if you're saying one thing, but doing something else, that's gonna be a bad result for you. Okay, so that's the first component of a vision, is setting strong, coherent, clear, relevant values. The second component is your purpose.

Why does this business exist? Right, contrary to management thinking or business school thinking, the ultimate purpose for a business is not to generate profit. Profit is absolutely critically important. The business will not exist without profit. You need to be able to generate cash. You need to have a sustainable business and profit is a absolute critical requirement of any business. But if that's the only reason your business exists, you will not get the kind of

buy-in and loyalty and effort that you want from the people in your organization. As Jim Collins and Jerry Porras talk about, the definition of leadership is the art of getting people to want to do what needs to be done. Not to do what needs to be done, but to want to do what needs to be done. It's about being part of something bigger, part of something more important. So purpose is your reason for being. We can think about this as if you're trying to traverse

massive mountain range. You might get lost a bit. You might go up the wrong mountain, down the wrong mountain, down the wrong path, down another path. But there's this North Star that you can always see at least once a day or once every couple of days that when you go off track, you can replot your course and continue chasing this North Star. And eventually you'll get to where you need to go. You're never going to really get there, but it's always guiding you in the right direction. Something that I see people get hung up on quite a lot here is

They feel like they need to create these massively grandiose, change the world purposes. I don't think that's necessary. I think there are very few businesses that will truly change the world. There are very few businesses that will ever have massive impact on the world or the population or the community. But here's the thing, having a small business that employs 10, 20, 30 people, that provides an amazing environment for them to work, that does really good work for their customers.

Mike (12:29.846)
that generates a healthy profit and is a sustainable business, that is something that is very, very worthwhile and actually very difficult. If you're listening to this as a founder, you'll know how difficult it is to actually just even do that. It is a very meaningful thing in the world. You're touching people's lives in a positive way, customers, employees, suppliers. It's not an easy thing and it's not a small thing. So when you're thinking about your purpose, it doesn't have to be this massive grandiose statement. And in fact, I would say...

If it is a grandiose statement, I would really work on dumbing it down to something that is authentic. The critical element of a purpose, the most important thing is that it is truly and deeply authentic. Right? It needs to be compelling, but it needs to be authentic above all else. You need to believe the purpose for your business, because if you don't as the founder and as the early leadership team and, and founding members of the business.

If you don't truly and authentically believe this, there's no chance the people that you bring into your business will believe this. So it's your North Star, it's the guiding light. You'll probably never get there, but it's your reason for being. It does not describe what you do necessarily. As they talk about in Jim Collins' work, your purpose should be relevant for at least a hundred years. Okay, now that becomes difficult because if you build coffee machines, your purpose needs to be such that even if you changed from building coffee machines to building, I don't know,

pistons for internal combustion engines, the purpose would still be relevant, right? So you're gonna, if you Google how to set a purpose in a business, you're gonna find a million different ways to do it. What matters more than anything is that it is authentic, that you believe it, and that it is compelling, that people can relate to it. And this is your highest form of where you set your strategy for. Everything should be in service of this purpose ultimately. Right, so at Nona, for example, the way we expressed this was,

We want to build software teams and products that are so good that we raise the level of the industry as a whole. Could we measure that? No, we probably couldn't. Would we ever be done and achieve that? Definitely not. Did it help us make a lot of decisions? Absolutely. Did we set strategy from this? Certainly, without a doubt. Did it mean stuff to people that we brought into the business? Sure, absolutely did. So you've got your values, your behaviors and how you'll show up that are real. You've then got your purpose, which is...

Mike (14:53.29)
your ultimate reason for being. And you don't want to try and be too grandiose here. I remember it's about authenticity and it is about compelling. It must be relevant and it must mean something to the people that you want in your organization. You must be willing to not make a hire of somebody who's great on paper, but does not resonate with that vision, that purpose, it needs to be, you need to have people that buy into this. And then the last part is where it starts to become a little bit measurable.

is this beautiful turn that Jim Collins coined, which is your big, hairy, audacious goal, your BHAG. Your BHAG is a long range goal that you have a significant chance of failing at. So you're not talking about something here that you're guaranteed to hit. You're talking about like, hey, 10 years from now, 20 years from now, what would absolutely amazing and excellent look like? Do we think we can hit it?

Jesus, it would be really difficult to hit this. There's a lot of stuff that would have to fundamentally change. We would have to whatever, 10x the size of our team. We would have to 10x the size of our revenue. We'd have to open up new offices in different territories. Like whatever the case may be, it should be a little bit scary, big, hairy, and audacious, right? BHAG, big, hairy, audacious goal. But it's the kind of 10-year or long-range target that...

everything that you're doing right now is orientated around. It's where you're putting all your resource. It's where your focus is. It's the mountain that you are currently climbing in pursuit of getting to that north star. It's the current challenge that you are trying to conquer. It's the current mountain that everybody is working towards conquering. When and if you conquer that, you set your sights on a bigger or different mountain and you start again. And again, this is sometimes referred to as the mission. The BHAG is kind of like the mission.

This is the third component of your vision. It's, you know, 10 years from now, we will be in the top three providers in our country for this service. Or 10 years from now, we will be considered X, Y, and Z. Or 10 years from now, we would have impacted the market like this. Or 15 years from now, because of the work that we've done, the market will change like this. Like whatever the case may be. And this is really important because

Mike (17:10.218)
When you start marrying your values and your purpose and your BHAG, you now have a little bit of like accountability in terms of the decisions and the opportunities that you're going to make. Maybe you don't want to be a massive company, but if you're really good at what you do, you're going to get a ton of opportunities coming at you and you need to be able to say no to stuff. No to stuff that does not fit into your values. No to stuff that does not fit into your purpose, your reason for being. No to stuff that does not fit into your BHAG, even if it's profitable.

And this is really difficult because quite often some businesses don't actually want to grow enormously, but they become really good at what they do. Then they just say yes to everything and they grow themselves into obsolescence or they grow themselves into death. Even more sad. So the combination of these three elements, core values, purpose and DHAG, big hairy audacious goal, long term goal, the combination of those three things make up a compelling and strong and clear vision.

And until this is clear, it's very difficult to get real alignment. It's very difficult to actually set strategy because what are you setting strategy in service of, right? And it's very difficult to build cultures and teams that are truly part of something bigger than themselves. A comment that I'll make here is that quite often this stuff exists in a founder's head, right? But that's the only place it exists. So it's sitting in your head as the entrepreneur or the founder. It's unarticulated.

You know it, you feel it, but that's not very helpful if you're the only one that knows it. If you're the only one that sees it, it is really important that we take the time to extract this out of the founder's head, out of the entrepreneur's head, get it down, really challenge the authenticity, really challenge whether the values actually exist and are exhibited. And if these are actually the things that will help us succeed, really get into this purpose and make it real and meaningful, not grandiose, real and meaningful. And then...

Talk about like, what are we actually trying to do here? 10 years from now, what does ultimate success look like? What does that actually feel like? Is it tangible? Can we articulate it? And to get this stuff down in simple language that is easy to communicate, easy to remember, and it helps us to make our decisions and our strategy from there. So again, just bringing this back into a visual. You've got vision that sits right at the top. That's what I've just been speaking about. From there, you begin to build out your strategy or your various strategies.

Mike (19:37.226)
And only from there then can you get into a planning process that is really contextualized and is in service of something bigger than just that quarterly plans. So yeah, like I said, it's interesting that I've been doing a lot of this, this work over the last sort of two months with teams. Um, and what I find quite interesting is that sometimes when a, when a leader or a founder or a business is sort of experiencing a lot of turmoil and experience, not only adversity.

I'll say to them like, hey guys, we should maybe sit down and just revisit your core, revisit, revisit your vision. They kind of look at me and they go like, why? Like, I don't understand, Mike. I've got like a very practical problem where X, Y, and Z is happening. And I've just found that quite often, in fact, I can think of two instances in the last month where I've sat down with the founders and we've gone really deep into the stuff and they've come out just going, okay, I get it. I totally get it. Why, why that was a good thing to do because I've one of two things will happen. Either you will leave.

that process or that session with such high conviction that what you are doing and your vision is right and you come in with a re-energized, re-infused process or there's a shift and you realize, shit, we've actually deviated from what we set out to do. And that actually makes a lot of sense in terms of culture and attrition and a lack of focus, et cetera, et cetera. So yeah, quite a lot in this episode. Hopefully it's food for thought. Hopefully I've got you thinking a little bit.

And as always, it's a practical application of the stuff that matters. If it's just theory, it's not useful. And as I always say, reach out to me if you want to discuss any of this stuff. I really hope it was valuable. Cheers. Bye.