Aligning your short and long term vision should not be a marriage of convenience

During my recent engagements with distressed companies, and fellow BRPs, the issue of analysis paralysis often comes up. Companies have five year projection plans that go back as far as 2020. However, these were done in 2019 and the shock of the Covid-19 Pandemic has placed many companies into panic mode.

Companies are unable to overcome the impact that the Pandemic is having on them and they are struggling to implement a one year plan that both ensures survival and is in line with their greater five year plan.

This problem is not uncommon but was experienced at a much more muted level in years outside of the Pandemic. Implementing a multiyear strategy can be complex and difficult. I recently read an article on the Harvard Business Review Website whish discusses this.

Three pillars of success
The article points out that There are three approaches that we have seen leaders use successfully to deal with these challenges and realize a multi-year vision — either singly or in combination:

• plan based on the vision. Drive a structured yearly planning process that connects the long-term vision to short-term action;
• focus your experimentation. Encourage projects that iterate towards the vision; and
• train your people. Develop training and education that makes the vision come alive over time.

Let’s look at each of these more closely.

Vision-Based Planning Process
The article points out that most companies engage in a yearly planning process to define corporate objectives and budgets and then cascade these into goals for the business unit, department, and so forth. The starting point of this exercise is often financial, based on questions such as what numbers do we need to satisfy investors? and how much improvement is possible over last year’s performance? But this approach forces short-term thinking. While the longer-term vision might be cited during the process, it isn’t the driver for strategy, resource allocation, or individual action.

Instead, begin your planning process with the longer-term vision. That’s what Jack Welch did as CEO of GE when he insisted that his leaders begin their planning process with “dreaming” sessions. His team would identify longer-term possibilities for what their businesses could become, and then shape their yearly plans with those opportunities in mind.

The HBR article adds that, similarly, for over 20 years Salesforce CEO Marc Benioff has been using a planning method that begins with his steady overall vision for the firm and its software-as-a-service approach. He calls his method the V2MOM — vision, values, methods, obstacles, and measures. At the beginning of each year, Benioff drafts a one-pager for the entire company which, as the acronym suggests, first articulates the firm’s overall vision and then spells out his thoughts about the key steps needed to move towards it. (The vision stays largely steady from year to year while the implementation priorities and methods change.) He then gives the document to each of his direct reports and asks them to work with their teams to create a V2MOM document for their own groups. The leadership team then goes through all the V2MOMs to achieve full enterprise-wide alignment and commitment to their strategic intent for the next 12 months. Doing this ensures that every unit of the company understands and has agreed to the balance between short term goals and the longer-term vision in their daily work.

Focused Experimentation
The article points out that, of course, not everyone is a founder or CEO who can drive vision-realization from the top. Leaders at other levels can also drive deliberately toward a large-scale goal over time, particularly if they hone experimentation that is already happening in the company specifically to iterate towards that vision.

More often than not, visions don’t become reality in straight lines; and we don’t always know what it will take to get there. That’s where experimentation comes in — shaping small tests to find out what will work and what will not on the path towards the vision, while also building support for it along the way. But without a focused approach, this experimentation may not lead to the ultimate goal you are trying to reach.

Take the story of Gary Scholten, an executive who led a successful effort to transform the Principal Financial Group, a global investment management firm, into a digital-first enterprise over the course of 11 years, despite all the distractions and change that came from the tenures of three different CEOs.

The article adds that Scholten began advocating for a digital-first approach in 2011, when he was the company’s corporate chief information officer. Even as the company made impressive initial advances toward that vision, each business unit responded differently, so those achievements were uneven. For example, the international business embraced mobile more quickly than its US counterpart because many of their customers had better access to cell phones than to computers.

Several years later, now as head of corporate strategy as well as CIO, Scholten formed a digital strategy committee to oversee these efforts (the group included the corporate CMO, the business unit CIOs, and their senior business leaders). Together they identified dozens of digital experiments already underway at various levels of the company. Assessing each one, they identified six where the company should double down and invest proactively because of a clear sense that they would lead to faster growth or better efficiency or scalability than competitors. These included retirement enrolment tools to help employees save at a higher rate, robo advice embedded into life events, and AI based investment research tools. By the end of 2020, when Scholten retired, these investments (and others that were added subsequently in a similar process) had an internal rate of return exceeding 20%, with two-thirds of the benefits coming from top-line growth — and the firm had indeed shifted much of its business to digital platforms.

Training and Education
The HBR article points out that the third approach is to invest in an educational process that gives people in the organization a deep understanding of what the vision actually means and how it could transform their work.

An example of this approach is illustrated by the work of Dr. Mieko Nishimizu, a former vice president for the South Asia region at the World Bank. When Nishimizu took on the role in the late 1990’s, the World Bank addressed economic development and poverty-reduction largely through a top-down approach of expert technical analysis, policy adjustment, and lending. Her vision, however, was for local communities and societies to take ownership of their own economic destinies and for institutions like the World Bank to function as more as partners, catalysts, and providers of resources to help them do that.

This vision required a profound shift in what the Bank did and in how its staff worked with local individuals. For years, World Bank staff would parachute into countries from Washington and tell governments what to do. Now they would need to learn how to listen not just to officials, but to those who experienced poverty and then work with them, side by side, to develop solutions.

The article adds that, to help them make the shift, Nishimizu created what came to be called the village immersion program in which members of her team would live the lives of the poor, in their villages, for two weeks. Her goal was not only for her staff members to understand the new role of the organization intellectually, but to help them develop an emotional understanding that would eventually lead to changes in behaviour. Eventually, Nishimizu made this program mandatory for certain categories of staff in her region, and over the course of several years, over 200 staff members participated.

While this program was evolving, Nishimizu did continue to meet the yearly requirements for already-established projects and lending, but gradually, with the altered sensitivities of her staff, she changed the nature of the region’s projects — and the image of the World Bank.

A tough undertaking
The article points out that, of course, none of these approaches is easy, and they all require adjustments along the way. Benioff still works with his team to deal with tradeoffs between long term vision and short term-results. Scholten was able to successfully encourage digital experiments, but they didn’t coalesce into the full vision until he figured out that the company would need to double down on a few, company-wide investments. Similarly, Nishimizu made progress in changing the World Bank’s approach to poverty reduction not only by giving senior leaders an opportunity to experience village life, but also by gradually leveraging the new-found understanding to reshape the nature of the Bank’s projects.

Turning a vision into a new reality doesn’t happen overnight. But if you have persistence and stay true to your vision, it may be the most important contribution you’ll ever make as a leader.

Robin Nicholson is a Director at Corporate-911 and is a Senior Business Rescue Practitioner.