Let’s say you are lucky, smart and networked enough to take the reins of the next GE. Don’t just sell off the crown jewels to raise cash. While cash and positive cash flow fundamentally keep a business in business, a leader must have a vision and a strategy to survive.
To create a vision you must first describe your organization’s values and purpose. What do you stand for and why? What is your reason for being? The vision is the organization’s aspirations, expressed as a vivid picture. It is a detailed description of success – something bigger than the company that team members can understand and strive toward.
And what goals will help you achieve that vision? Your goal might be to be the #1 company in your segment. Your goal might be to disrupt your industry and dominate. Amazon has disruptive goals. It might not be the biggest player in every segment it disrupts, but it strives to disrupt every segment. If it cannot succeed, it will drop out and focus efforts elsewhere.
We have worked with many executive teams defining values, purpose, vision, and goals. What comes next is strategy, but many get confused about it. Many companies have a strategy function, but that function often focuses on marketing or product development or something else. A strategy is made up of the steps you take to achieve your goals – the goals that should be very clear before you approach strategy.
For instance, if you are sitting around at Walmart headquarters dreaming up a strategy to beat Amazon, here’s how you might think through it:
- First, revisit who you are as a company. David Glass famously said to a Wall Street reporter who asked him about being the world’s biggest retailer, “We’re a logistics company.”
- So then ask yourself, “Why is a logistics company that owns a lot of physical real estate competing with a company that derives all its profits from cloud computing?” So what does beating Amazon have to do with reaching your goals?
- The answer: Retail is neither the focus of Amazon nor Walmart; the two companies are not actually competing. Walmart manages physical properties, Amazon manages digital property.
- So should the strategy for Walmart then be to provide logistics for Amazon? Should you cooperate, not compete…?
The reason Walmart is not able to – and shouldn’t try to – beat Amazon in online retail is because they are not competing in the same realm. So beating Amazon is not a valid goal. Throwing billions after billions at online retail, like buying jet.com, is more of a reaction than a strategy. As Michael Milken says, digital technologies should accelerate your strategy.
So, in this case, you would step back from strategy and redefine your goals, then move forward again. There’s no point in paving a road to the wrong destination.
Strategy is operational – more than most strategists would like to admit. So, if you want to be #1 in retail, and you’re clear on that goal, what are the right steps to get there? If you’re GE and your goal depends on shrinking the footprint to dominate in only a few segments, what actions must you take? Why continue to invest in a money losing power business? Will that power business help achieve the ultimate goal – like maximizing shareholder value? (With the GE stock price at $14 per share the jury is out.)
A company strategy should lay out a roadmap toward your goal. Goals are the milestones and destination. The vision should paint a picture of what the world will look like when you get there.