Chapter 11
Building the Vision*
“We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.”
T.S. ELIOT, FOUR QUARTETS
Vision has become one of the most overused—and least understood—words in the language. The word vision conjures up all kinds of images. We think of outstanding achievement. We think of deeply held values that bond people in a society together. We think of audacious, exhilarating goals that galvanize people. We think of something eternal—the underlying reasons for an organization’s existence. We think of something that reaches inside us and pulls out our best efforts. We think of the dreams of what we want to be. And therein lies a problem. All of us know vision is important, but what exactly is it?
In this new chapter for the paperback edition, we present a conceptual framework that defines vision, adds clarity and rigor to the vague and fuzzy set of concepts swirling around that trendy term, and gives practical guidance for articulating a coherent vision within an organization. It is a prescriptive framework rooted in the six-year research project on visionary companies that led to our book and refined and tested by our ongoing work with hard-nosed executives from organizations of all types and sizes from around the world. In the following pages we thoroughly describe this framework. Some of the key ideas that compose the framework overlap with some of our research findings from earlier chapters. Therefore parts of this chapter might seem a bit redundant, but we want this to be effective as a stand-alone chapter. Additionally, this chapter provides substantial practical guidance about how to apply the ideas, along with illustrative examples drawn not only from the visionary companies but others we’ve worked with or studied beyond our original research for the book.
Again, to reiterate the key finding from our Built to Last research, the fundamental distinguishing characteristic of the most enduring and successful corporations is that they preserve a cherished core ideology while simultaneously stimulating progress and change in everything that is not part of their core ideology. Put another way, they distinguish their timeless core values and enduring core purpose (which should never change) from their operating practices and business strategies (which should be changing constantly in response to a changing world). In truly great companies, change is a constant, but not the only constant. They understand the difference between what should never change and what should be open for change, between what is truly sacred and what is not. And by being clear about what should never change, they are better able to stimulate change and progress in everything else. Articulating a vision using the framework presented in this chapter provides the guiding context for implementing the “preserve the core/stimulate progress” concept in an organization.
THE VISION FRAMEWORK
Figure 11.A Articulating a Vision
A well-conceived vision consists of two major components—core ideology and an envisioned future. Notice the direct parallel to the fundamental “preserve the core/stimulate progress” dynamic. A good vision builds on the interplay between these two complementary yin-and-yang forces: it defines “what we stand for and why we exist” that does not change (the core ideology) and sets forth “what we aspire to become, to achieve, to create” that will require significant change and progress to attain (the envisioned future).
To pursue the vision means to create organizational and strategic alignment to preserve the core ideology and stimulate progress toward the envisioned future. Alignment brings the vision to life, translating it from good intentions to concrete reality.
CORE IDEOLOGY
Core ideology, as we described in Chapter 3, defines the enduring character of an organization—its self-identity that remains consistent through time and transcends product/market life cycles, technological breakthroughs, management fads, and individual leaders. In fact, the most lasting and significant contribution of the architects of visionary companies is the core ideology. As Bill Hewlett said about his long-time friend and business partner David Packard upon Packard’s death in 1996, “As far as the company is concerned, the greatest thing he left behind him was a code of ethics known as the HP Way.1 HP’s core ideology, which has guided the company since its inception in 1938, includes a deep respect for the individual as a moral tenet, a dedication to affordable quality and reliability, a commitment to community responsibility (Packard bequeathed his $4.3 billion of HP stock to a charitable foundation), and a view that the company exists to make technical contributions for the advancement and welfare of humanity. Company builders like David Packard, Masaru Ibuka of Sony, George Merck of Merck, William McKnight of 3M, and Paul Galvin of Motorola understood that it is far more important to know who you are than where you are going, for where you are going will certainly change as the world about you changes. Leaders die, products become obsolete, markets change, new technologies emerge, management fads come and go; but core ideology in a great company endures as a source of guidance and inspiration.
Core ideology provides the bonding glue that holds an organization together as it grows, decentralizes, diversifies, expands globally, and attains diversity within. Think of core ideology as analogous to the principles of Judaism that held the Jewish people together for centuries without a homeland, even as they spread in the Diaspora. Or think of it as like the truths held to be “self-evident” in the United States Declaration of Independence, or the enduring ideals and principles of the scientific community that bond scientists from every nationality together with the common purpose of advancing human knowledge.
Any effective vision must embody the core ideology of the organization, which in turn consists of two distinct sub-components: core values and core purpose.
Core Values
Core values are the organization’s essential and enduring tenets—a small set of timeless guiding principles that require no external justification; they have intrinsic value and importance to those inside the organization. Disney’s core values of imagination and wholesomeness stem not from a market requirement, but from an inner belief that imagination and wholesomeness should be nurtured for their own sake. William Procter and James Gamble didn’t instill product excellence as a mere “strategy” for success, but as an almost religious tenet held for over fifteen decades by P&G people. Subservience to the customer as a way of life at Nordstrom traces its roots back to 1901—eight decades before customer service programs became stylish in business. Bill Hewlett and David Packard held respect for the individual first and foremost as a deep personal belief; they didn’t read it in a book somewhere or hear it from a management guru. Ralph Larson, CEO of Johnson & Johnson, put it this way: “The core values embodied in our Credo might be a competitive advantage, but that is not why we have them. We have them because they define for us what we stand for, and we would hold them even if they became a competitive disadvantage in certain situations.”2
The key point is that an enduring great company decides for itself what values it holds to be core, largely independent of the current environment, competitive requirements, or management fads. Clearly, then, there is no universally “right” set of core values. A company need not have customer service as a core value (Sony doesn’t), or respect for the individual (Disney doesn’t), or quality (Wal-Mart doesn’t), or market responsiveness (HP doesn’t), or teamwork (Nordstrom doesn’t). (Of course, these companies might have practices or strategies based around these dimensions.) Again, to emphasize a fundamental finding of our research, the key is not what core values an organization has, but that it has core values.
In identifying the core values of your own organization, push with relentless self-honesty for truly core values. If you articulate more than five or six, there’s a good chance you’re not getting down to the essentials, and probably confusing core values (which do not change) with operating practices, business strategies, and cultural norms (which should be open for change). Remember, these values must stand the test of time. After you’ve drafted a preliminary list of the core values, ask about each one: “If the circumstances changed and penalized us for holding this core value, would we still keep it?” If you can’t honestly answer yes, then it’s not core and should be dropped.
For example, a high technology company we worked with wondered whether it should put “quality” on its list of core values. The CEO asked: “Suppose in ten years quality doesn’t make a hoot of difference in our markets. Suppose the only thing that matters is sheer speed and horsepower, but not quality. Would we still want to put quality on our list of core values?” The members of the management team looked around at each other and finally said, “To be honest, no.” Quality stayed off the list as a core value. Quality stayed in the current strategy of the company—and quality improvement programs remained in place as a mechanism for stimulating progress—but it did not make the list of core values. Remember, strategies change as market conditions change, but core values remain intact in a visionary company. This same group of executives then wrestled with whether it should put “leading-edge innovation” on its list of core values. The CEO asked the same question: “Would we keep it on the list as a core value, no matter how the world around us changes?” This time, the management team gave a resounding, “Yes! We always want to do leading-edge innovation. That’s who we are. It’s really important to us, and always will be. No matter what. And if our current markets don’t value it, we will find markets that value it.” Leading-edge innovation went on the list of core values, and will stay there forever. A company should not change its core values in response to market changes; rather, it should change markets—if necessary—in order to remain true to its core values.
Who should be involved in articulating the core values varies depending on the size, age, and geographic dispersion of the company, but in many situations we like to suggest a “Mars Group.” It works like this: Imagine you’ve been asked to recreate the very best attributes of your organization on another planet, but you only have seats on the rocket ship for five to seven people. Who would you send? They are the people who likely have a gut-level understanding of your core values, have the highest level of credibility with their peers, and the highest level of competence. We’ll often ask a group of people brought together to work on core values to nominate a Mars Group of five to seven individuals. Invariably, they end up selecting a powerful, credible group that does a super job of articulating the core values precisely because they are exemplars of the core values—a representative slice of the company’s “genetic code.” (The “Mars Group” can also be used effectively to articulate core purpose, described below.)
We’ve never encountered an organization, even a global organization composed of people from widely diverse cultures, that could not identify a set of shared core values. The key is to work from the individual to the organization. Those involved in articulating the core values should wrestle with such questions as: What core values do you personally bring to your work—core values you hold to be so fundamental that you would keep them regardless of whether they are rewarded? What would you say if asked to describe to your children and/or other loved ones the core values you stand for in your work, values that you hope they would stand for when they become working adults? If you awoke tomorrow morning with enough money to retire for the rest of your life, would you continue to live according to these core values? Can you envision these core values being equally valid for you 100 years from now as they are today? Would you want to hold these core values, even if at some point one or more of them became a competitive disadvantage? If you were to start a new organization tomorrow in a different line of work, what core values would you build into the new organization regardless of its industry? The last three questions are particularly important, as they make the crucial distinction between enduring core values that should not change and practices and strategies that should be changing all the time.
Core Purpose
Core purpose, the second component of core ideology, is the organization’s fundamental reason for being. In our hardcover edition of Built to Last, we did not give enough attention to purpose as distinct from core values and we under-emphasized its importance. Pushed to choose between core purpose and core values, we would likely choose core purpose as the more important of the two for guiding and inspiring an organization. It is also more difficult to identify than core values.
An effective purpose reflects the importance people attach to the company’s work—it taps their idealistic motivations—rather than just describing the organization’s output or target customers. It captures the soul of the organization. (See Table 11.1 for examples of purpose.) Purpose gets at the deeper reasons for an organization’s existence beyond just making money, as illustrated by a 1960 speech by David Packard, wherein he said: “I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being.”
Purpose (which should last at least 100 years) should not be confused with specific goals or business strategies (which should change many times in 100 years). Whereas you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it is like a guiding star on the horizon—forever pursued, but never reached. Yet while purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress in order to live more fully to its purpose.
Table 11.1
Examples of Core Purpose
| 3M: | To solve unsolved problems innovatively |
| Cargill: | To improve the standard of living around the world |
| Fannie Mae: | To strengthen the social fabric by continually democratizing home ownership |
| Hewlett-Packard: | To make technical contributions for the advancement and welfare of humanity |
| Israel: | To provide a secure place on Earth for the Jewish people |
| Lost Arrow Corporation: | To be a role model and tool for social change |
| Pacific Theatres: | To provide a place for people to flourish and to enhance the community |
| Mary Kay: | To give unlimited opportunity to women |
| McKinsey: | To help leading corporations and governments be more successful |
| Merck: | To preserve and improve human life |
| Nike: | To experience the emotion of competition, winning, and crushing competitors |
| Sony: | To experience the joy of advancing and applying technology for the benefit of the public |
| Telecare: | To help people with mental impairments realize their full potential |
| Wal-Mart: | To give ordinary folk the chance to buy the same things as rich people |
| Walt Disney: | To make people happy |
In identifying purpose, some companies make the mistake of simply describing their current product lines or customer segments. We do not consider the following to be an effective purpose: “We exist to fulfill our government charter and participate in the secondary mortgage market by packaging mortgages into investment securities.” It is merely descriptive. A far more effective statement of purpose would be that expressed by the executives at Fannie Mae: “To strengthen the social fabric by continually democratizing home ownership.” The secondary mortgage market as we know it might not even exist in 100 years, but strengthening the social fabric by continually democratizing home ownership can be an enduring purpose, no matter how much the world changes. Guided and inspired by this purpose, Fannie Mae launched in the early 1990s a series of bold initiatives, including a program to develop new systems for reducing mortgage underwriting costs by 40 percent in five years, programs to eliminate discrimination in the lending process backed by $5 billion in underwriting experiments, and an audacious goal to provide $1 trillion (with a “t”) targeted at ten million families that had traditionally been shut out of home ownership—minorities, immigrants, and low-income groups—by the year 2000.
Similarly, 3M doesn’t define its purpose in terms of adhesives and abrasives, but as the perpetual quest to solve unsolved problems innovatively—a purpose the leads 3M continually into a vast array of new fields. McKinsey’s purpose is not to do management consulting, but to help corporations and governments be more successful, which might in 100 years involve methods other than consulting. HP doesn’t exist to make electronic test and measurement equipment, but to make technical contributions that somehow make people’s lives better—a purpose that has led the company far afield from its origins in electronic instruments. Imagine if Walt Disney had conceived of his company’s purpose as to make cartoons, rather than to make people happy; we probably wouldn’t have Disneyland, EPCOT Center, or the Anaheim Mighty Ducks hockey team!
A pharmaceutical company we worked with considered stating their purpose as “To make drugs for human therapy.” We asked: “Would that purpose still hold a hundred years from now?” One manager pointed out that the company might well discover or invent new ways of improving human therapy besides traditional drugs. Another pointed out that the company would likely invent solutions for animal therapy sometime in the next few decades. A third executive pointed out that “Well, I’m not here just to make stuff for therapy. I’m here to make significant improvements in therapy—to leave a mark beyond what everyone else has done. Otherwise, what’s the point?” Ultimately, the company captured its purpose as: “We exist to provide significant improvements in therapy.” This purpose can guide and inspire the company for the next hundred years.
One powerful method for getting at purpose is the “Five Whys.” Start with the descriptive statement, “We make X products” or “we deliver X services,” and then ask “why is that important?” five times. After a few whys, you’ll find that you’re getting down to the fundamental purpose of the organization. We used this method to deepen and enrich a purpose discussion in some work we did with a market research company. The executive team first met for several hours and generated the following statement of purpose for their organization: “To provide the best market research data available.” We then asked, “Why is it important to provide the best market research data available?” After some discussion, their answer reflected a deeper sense of this organization’s purpose: “To provide the best market-research data available so that our customers will understand their markets better than they could otherwise.” A further discussion led the team to realize that their sense of self-worth comes not just from selling market-research data but in actually making a contribution to their customers’ success. This line of self-questioning eventually led the company to identify its purpose as: “To contribute to our customers” success by helping them understand their markets.” With this purpose in mind, the company now frames its product decisions not with the question “Will it sell?” but with the question “Will it make a contribution to our customers’ success?”
The “five whys” can help companies in “mundane” industries frame their work in a more meaningful way. For example, an asphalt and gravel company might begin with “We make gravel and asphalt products.” After a few whys it could conclude that asphalt and gravel is important because the quality of the underlying infrastructure plays a vital role in people’s safety and experience; driving on a pitted road is annoying and dangerous; 747s cannot land safely on runways built with poor workmanship or inferior concrete; buildings with substandard materials weaken with time and crumble in earthquakes. From this introspection may emerge the purpose: “To make people’s lives better by improving the quality of man-made structures.” With a sense of purpose very much along these lines, Granite Rock Company of Watsonville, California, won the Malcolm Baldrige Quality Award—not an easy feat for a small rock quarry and asphalt company—and has become one of the most progressive and exciting companies we’ve encountered in any industry.
You’ll notice that none of the core purposes discussed in this chapter fall into the category “maximize shareholder wealth.” A key role of core purpose is to guide and inspire. “Maximize shareholder wealth” does not inspire people at all levels of an organization, and it provides precious little guidance. “Maximize shareholder wealth” is the standard “off-the-shelf” purpose for those organizations that have not yet identified their true core purpose. It is a substitute ideology, and a weak substitute at that. Listen to people in great organizations talk about their achievements and you’ll hear very little about earnings per share. Motorola people talk about impressive quality improvements and the effects of the products they create on the world. HP people talk with pride about the technical contributions their products have made to the marketplace. Nordstrom people talk about heroic customer service and remarkable individual performance by star sales people. When a Boeing engineer talks about launching an exciting and revolutionary 777 aircraft she doesn’t say, “I put my heart and soul into this project because it would add 37 cents to our earnings per share.”
One way to get at the purpose that lies beyond just maximizing shareholder wealth is to play the “Random Corporate Serial Killer” game. It works like this: Suppose you could sell the company to an individual who would pay a price that everyone inside and outside the company agrees is more than fair, taking into account a very generous set of assumptions about the expected future cash flows of the company. Suppose further that the individual will guarantee stable employment at the same pay scale for all employees after the purchase, but with no guarantee that those jobs will be in the same industry. Finally, suppose the buyer plans to “kill” the company after the purchase—its products or services will be discontinued, its operations will be shut down, its brand-names will be shelved forever, and so on. The company will utterly and completely cease to exist, wiped completely from the face of the Earth. Would you accept the offer? Why or why not? What would be lost if the company ceased to exist? Why is it important that the company continue to exist, now and in the future? We’ve found this exercise to be very powerful for helping hard-nosed, financially-focused executives to reflect on the deeper reasons for being of their organization.
Another approach is to ask each member of the Mars Group to answer the following questions: If you woke up tomorrow morning with enough money in the bank that you would never need to work again, how could we frame the purpose of this organization such that you would want to continue working anyway? What deeper sense of purpose would motivate you to continue to dedicate your precious creative energies to this company’s efforts?
As we move into the 21st century, companies will need to draw on the full creative energy and talent of their people. But why should people give this level of commitment and devotion? As Peter Drucker has pointed out, the best and most dedicated people are ultimately volunteers, for they have the opportunity to do something else with their lives. With an increasingly mobile society, cynicism about corporate life, and an expanding entrepreneurial segment of the economy, companies need more than ever to have a clear understanding of their purpose in order to make work meaningful and thereby attract, retain, and motivate outstanding people.
A Few Key Points on Core Ideology
A very important point: You do not “create” or “set” core ideology. You discover core ideology. It is not derived by looking to the external environment; you get at it by looking inside. It has to be authentic. You can’t fake an ideology. Nor can you just “intellectualize” it. Do not ask, “What core values should we hold?” Ask instead: “What core values do we actually hold?” Core values and purpose must be passionately-held on a gut level or they are not core. Values you think the organization “ought” to have, but that you cannot honestly say that it does have, should not be mixed into the authentic core values. To do so creates cynicism throughout the organization (Who are they trying to kid? We all know that isn’t a core value around here!”). Such aspirations of what you’d like to become are more appropriate as part of your envisioned future (to be discussed later) or as part of your strategy, not part of the core ideology. (Authentic core values that once were a vibrant part of the organization but have become feeble over time can, however, be considered a legitimate part of the core ideology as long as you acknowledge to the organization that you have a lot of work to do to bring them back to life.)
The role of core ideology is to guide and inspire, not to differentiate; it’s entirely possible that two companies can have the same core values or purpose. Many companies could have the purpose “to make technical contributions,” but few live it as passionately as HP. Many companies could have the purpose “to preserve and improve human life,” but few hold it as deeply as Merck. Many companies could have the core value of “heroic customer service,” but few create an intense cult-like culture around that value like Nordstrom does. Many companies could have the core value of “innovation,” but few create the powerful alignment mechanisms that stimulate innovation that we see at 3M. Again, it’s not the content of the ideology that makes a company visionary, it’s the authenticity, discipline, and consistency with which the ideology is lived—the degree of alignment—that differentiates visionary companies from the rest of the pack. It’s not what you believe that sets you apart so much as that you believe in something, that you believe in it deeply, that you preserve it over time, and that you bring it to life with consistent alignment.
Core ideology need only be meaningful and inspirational to people inside the organization; it need not be exciting to all outsiders. It’s the people inside the organization that need to be compelled by the core values and purpose to generate long-term commitment to the organization’s success. The effect your core ideology has on people outside the organization is less important and should not be the determining factor in identifying the core ideology. Core ideology therefore plays an essential role in determining who’s inside and who’s outside the organization. A clear and well-articulated ideology attracts people to the company whose personal values are compatible with the company’s core values and, conversely, repels those whose personal values are contradictory.
You cannot “install” new core values or purpose into people. Core values and purpose are not something people “buy in” to. People must already have a predisposition to holding them. Executives often ask, “How do we get people to share our core ideology?” You don’t. You can’t! Instead, the task is to find people who already have a predisposition to share your core values and purpose, attract and retain these people, and let those who aren’t disposed to share your core values go elsewhere. Indeed, the very process of articulating core ideology may result in some individuals choosing to leave when it becomes clear that they are not personally compatible with the organization’s core—a positive cathartic outcome, not one to be avoided. Of course, you can (indeed should) still have diversity within the tight core ideology; just because people share the same core values or purpose does not mean that they all think or look the same.
Don’t confuse core ideology with “statements” of the core ideology. A company can have a very strong core ideology without a formal statement. For example, Nike has not (to our knowledge) formally articulated a statement of its core purpose. Yet, from our observations, Nike has a powerful core purpose that permeates the entire organization with a cult-like fervor: To experience the emotion of competition, winning, and crushing competitors. Nike has a campus that seems more like a shrine to the competitive spirit than a corporate office complex; giant photos of Nike heroes cover the walls, bronze plaques of Nike athletes hang along the Nike “Walk of Fame,” statues of Nike athletes stand along side the running track that rings the campus, and buildings are named after champions like Olympic marathon champion Joan Benoit, basketball superstar Michael Jordan, and tennis player John McEnroe. Nike people who do not feel stimulated by the competitive spirit and the urge to “be ferocious” simply don’t last long in the culture. Even the company’s name (Nike is the Greek goddess of victory) reflects a sense of competition. Thus, although Nike has not formally articulated its purpose, it clearly has a strong one.
Identifying core values and purpose is therefore not a wordsmithing exercise. An organization will generate a variety of statements over time to describe the core ideology. In HP’s archives, we found more than half a dozen distinct versions of the “HP Way” drafted by David Packard over the years 1956 to 1972; all stated the same principles, but the words used varied depending upon the era and circumstances. Similarly, Sony’s core ideology has been stated many different ways over its history. At the founding of the company, Masaru Ibuka described two key elements of Sony’s ideology: “We shall welcome technical difficulties and focus on highly sophisticated technical products that have great usefulness for society regardless of the quantity involved; we shall place our main emphasis on ability, performance, and personal character so that each individual can show the best in ability and skill.” Four decades later, this same ideology appeared in the “Sony Pioneer Spirit”: “Sony is a pioneer and never intends to follow others. Through progress, Sony wants to serve the whole world. It shall be always a seeker of the unknown. . . . Sony has a principle of respecting and encouraging one’s ability. . . and always tries to bring out the best in a person. This is the vital force of Sony.”3 Same core values; different words.
You should therefore focus on getting the content right—on capturing the essence of the core values and purpose—not on wordsmithing the perfect statement to be etched in stone. The point is not to create a perfect “statement,” but to gain a deep understanding of your organization’s core values and purpose which can then be expressed in a multitude of ways. In fact, once the core has been identified, we like to suggest that every manager generate his or her own statement of the core values and purpose to share with his or her people.
Finally, don’t confuse “core ideology” with the concept of “core competence.” Here’s the difference: Core competence is a strategic concept that captures your organization’s capabilities—what you are particularly good at—whereas core ideology captures what you stand for and why you exist. Core competencies should be well aligned with a company’s core ideology—and are often rooted in its core ideology—but are not the same as its ideology. For example, Sony has a core competence of miniaturization—a strength that can be strategically applied to a wide array of products and markets—but does not have a core ideology of miniaturization. Sony might not even have miniaturization as part of its strategy in 100 years, but to remain a great company it will still have the same core values captured in the Sony Pioneer Spirit and have the same fundamental reason for being of advancing technology for the benefit of the general public. In a visionary company like Sony, core competencies change over the decades, whereas core ideology does not.
Once you’re clear about the core ideology, you should feel free to change absolutely anything that is not part of the core ideology. From then on, anytime someone says something shouldn’t change because “It’s part of our culture” or “We’ve always done it that way” or any of the other excuses for resisting change, remind them of this simple rule: If it’s not core, it’s up for change. Or, the strong version of this rule: If it’s not core, change it! Of course, articulating core ideology is just a starting point. You also must determine what type of progress you want to stimulate, which brings us to the second component of the vision framework.
ENVISIONED FUTURE
Envisioned future—the second primary component of the vision framework—consists of two parts: a ten- to thirty-year “Big Hairy Audacious Goal” and vivid descriptions of what it will be like when the organization achieves the BHAG. We selected the phrase “envisioned future,” recognizing that it contains a paradox. On the one hand, it conveys a sense of concreteness—something vivid and real; you can see it, touch it, feel it. On the other hand, it portrays a time yet unrealized—a dream, hope, or aspiration.
Vision-level BHAG
Although organizations may have many BHAGs at different levels operating all at the same time, vision requires a special type of BHAG—a “vision-level” BHAG that applies to the entire organization and requires ten to thirty years of effort to complete. (See chapter 5 for a full discussion of BHAGs.) Setting the BHAG ten to thirty years into the future requires thinking beyond the current capabilities of the organization and current environmental trends, forces, and conditions. Indeed, inventing such a goal forces an executive team to be visionary, rather than just strategic or tactical. A BHAG should not be a sure bet—perhaps only 50 to 70 percent probability of success—but the organization must believe “we can do it anyway.” It should require extraordinary effort, and perhaps a little luck.
In creating such a vision-level BHAG we suggest thinking about the following four categories: target, common enemy, role model, or internal transformation.
Target BHAGs can be quantitative or qualitative. Examples:
• Become a $125 billion company by the year 2000. (Wal-Mart, 1990)
• Democratize the automobile. (Ford, early 1900s)
• Become the company that most changes the worldwide image of Japanese products as being of poor quality. (Sony, early 1950s)
• To become the most powerful, the most serviceable, the most far-reaching world financial institution that has ever been. (City Bank, predecessor to Citicorp, 1915)
• Become the dominant player in commercial aircraft, and bring the world into the jet age. (Boeing, 1950)
Common-enemy BHAGs involve focusing on beating a common enemy—a David versus Goliath BHAG. Examples:
• Knock off RJR as the number one tobacco company in the world. (Philip Morris, 1950s)
• Crush Adidas. (Nike, 1960s)
• Yamaha Wo tsubusu! (We will crush, squash, slaughter Yamaha!) (Honda, 1970s)
Role-model BHAGs are particularly effective for up-and-coming organizations with bright prospects. Examples:
• Become the Nike of the cycling industry. (Giro Sport Design, 1986)
• Become as respected in twenty years as Hewlett-Packard is today. (Watkins-Johnson, 1996)
• Become the Harvard of the West. (Stanford University, 1940s)
Internal Transformation BHAGs tend to be effective in old or large organizations in need of internal transformation. Examples:
• Become number one or two in every market we serve and revolutionize this company to have the strengths of a big company combined with the leanness and agility of a small company. (General Electric, 1980s)
• Transform this company from a defense contractor into the best diversified high-technology company in the world. (Rockwell, 1995)
• Transform this division from a poorly respected internal products supplier to one of the most respected, exciting, and sought-after divisions in the company. (components support division of a computer products company, 1989)
Vivid Descriptions
Vivid description, the second component of envisioned future, is a vibrant, engaging, and specific description of what it will be like to achieve the BHAG. Think of it as translating the vision from words into pictures, of creating an image that people can carry around in their heads. We call this “painting a picture with your words.” This “picture-painting” is essential for making the ten- to thirty-year BHAG tangible in people’s minds.
For example, recall how Henry Ford brought to life the BHAG to democratize the automobile with the vivid description: “I will build a motor car for the great multitude. . . . It will be so low in price that no man making a good salary will be unable to own one—and enjoy with his family the blessing of hours of pleasure in God’s great open spaces. . . . When I’m through everybody will be able to afford one, and everyone will have one. The horse will have disappeared from our highways, the automobile will be taken for granted . . . [and we will] give a large number of men employment at good wages.”
In the example above of the components support division, the general manager vividly described the BHAG: “We will be respected and admired by our peers. . . . Our solutions will be actively sought by the end-product divisions, who will achieve significant product “hits” in the marketplace largely due to our technical contribution. . . . We will have pride in ourselves. . . . The best up-and-coming people in the company will seek to work in our division. . . . People will give unsolicited feedback that they love what they are doing . . . People will walk on the balls of their feet. . . . People will willingly work hard because they want to. . . . Both employees and customers will feel that our division has contributed to their life in a positive way.”4
Passion, emotion, and conviction are essential parts of the vivid description. Some managers are uncomfortable with expressing emotion about their dreams, but it’s the passion and emotion that will attract and motivate others. Winston Churchill understood this when he described the BHAG facing Great Britain in 1940. He didn’t just say “Beat Hitler.” He said:
Hitler knows he will have to break us on this island or lose the war. If we can stand up to him all Europe may be free and the life of the world may move forward into broad, sunlit uplands. But if we fail, the whole world including the United States, including all we have known and cared for, will sink into the abyss of a new Dark Age, made more sinister, and perhaps more protracted, by the lights of perverted science. Let us therefore brace ourselves to our duties, and so bear ourselves that if the British Empire and its Commonwealth last for a thousand years, men will still say, “This was their finest hour.”5
A Few Key Points on Envisioned Future
Don’t confuse core ideology and envisioned future, as managers often do. In particular, we see managers confuse core purpose and BHAGs, exchanging one for the other, mixing the two together, or failing to articulate both as distinct items. Purpose is the organization’s fundamental reason for existence, which like a star on the horizon can never be reached; it guides and inspires forever. A BHAG, on the other hand, is a specific goal which, like a specific mountain to climb, has a specific time frame and can be achieved. Whereas identifying core ideology is a discovery process, setting the envisioned future is a creative process.
We find that executives often have a great deal of difficulty coming up with exciting BHAGs; they want to “analyze” their way into the future. We’ve found, therefore, that some executives make more progress by starting first with the vivid description and backing from there into the BHAG. This approach involves starting with questions like: “We’re sitting here in twenty years; what would we love to see? What would this company look like? What would it feel like to employees? What would it have achieved? If someone wrote an article for a major business magazine about this company in twenty years, what would it say?” One biotechnology company we worked with had trouble envisioning its future. Said one member of the executive team, “Every time we come up with something for the entire company it is just too generic to be exciting—something banal like “advance biotechnology worldwide.” Asked to paint a picture of the company in twenty years, they described such things as: “the cover of Business Week as a model success story . . . the Fortune most-admired top ten list. . . the best science and business graduates want to work here . . . people on airplanes rave about one of our products to captive seatmates . . . twenty consecutive years of profitable growth . . . an entrepreneurial culture that has spawned half-a-dozen new divisions from within. . . management gurus use us as an example of excellent management and progressive thinking . . .” and so on. From this, they imputed the BHAG to become the first biotechnology firm as well-respected as Merck and Johnson & Johnson.
It makes no sense to analyze whether an envisioned future is the “right” one. With a creation—and the task is to create a future, not to predict the future—there can be no right answer. Did Beethoven create the “right” Ninth Symphony? Did Shakespeare create the “right” Hamlet? We can’t answer these questions; they’re nonsense. The essential questions about the envisioned future involve such questions as: “Does it get our juices flowing? Do we find it stimulating? Does it stimulate forward momentum? Does it get people going?” The envisioned future must be truly exciting to those inside the organization, otherwise it’s just not a full-fledged BHAG. Indeed, the envisioned future should produce a bit of “the gulp factor” when it dawns on people what it will take to achieve the goal and the level of commitment to the goal, there should be an almost audible “gulp.”
But what about failure in realizing the envisioned future? We found that the visionary companies display a remarkable ability to achieve even their most audacious goals. Philip Morris did rise from sixth to first and beat R.J. Reynolds worldwide; Ford did democratize the automobile; Boeing did become the dominant commercial aircraft company; Citicorp did become the most far-reaching bank in the world; and it looks like Wal-Mart will achieve its $125 billion goal, even without Sam Walton. In contrast, the comparison companies in our research frequently did not achieve their BHAGs, in the cases where they set them. The difference lies not in setting easier goals, as the visionary companies tended to have even more audacious ambitions than the comparison companies. Nor does the difference lie in charismatic visionary leadership, as the visionary companies often achieved their BHAGs without such larger-than-life leaders at the helm. Nor does the difference lie in better strategy, as the visionary companies often realized their goals more by an organic process of “try a lot of stuff and keep what works” than by well-laid strategic plans. Rather, the source of their success lies in building the organization as their primary means of creating the future.
Finally, in thinking about envisioned future, beware the “we’ve arrived syndrome”—complacent lethargy that arises once an organization has achieved a BHAG and fails to replace it with another. NASA suffered from the we’ve arrived syndrome after the successful moon landings; after you’ve landed on the moon, what do you do for an encore? Apple Computer suffered from the we’ve arrived syndrome when it achieved the goal of creating a computer that non-techies could use. Start-up companies frequently suffer from the we’ve arrived syndrome after going public or reaching a stage where survival no longer seems in question. An envisioned future only helps an organization so long as it hasn’t yet been achieved. In our work with companies, we frequently hear executives say, “It’s just not as exciting around here as it used to be; we seem to have lost our momentum.” Usually, this signals that the organization has climbed one mountain, and not yet picked a new mountain to climb.
PUTTING IT ALL TOGETHER
To further illustrate the vision framework, we give in Tables 11.2 and 11.3 two examples of all the elements fitting together into a complete vision: Merck at its time of transition from a chemical company to a pharmaceutical company during the 1930s and Sony as a small, entrepreneurial company in the 1950s.
Table 11.2
Example of Complete Vision
| Merck, 1930s | |
| CORE IDEOLOGY | |
| Core Values | • Corporate social responsibility |
| • Unequivocal excellence in all aspects of the company | |
| • Science-based innovation | |
| • Honesty and integrity | |
| • Profit, but profit from work that benefits humanity | |
| Purpose | To preserve and improve human life. |
| ENVISIONED FUTURE | |
| BHAG | To transform this company from a chemical manufacturer into one of the preeminent drug-making companies in the world, with a research capability that rivals any major university. |
| Vivid Descriptions | With the tools we have supplied, science will be advanced, knowledge increased, and human life win ever a greater freedom from suffering and disease. . . . We pledge our every aid that this enterprise shall merit the faith we have in it. Let your light so shine—that those who seek the Truth, that those who toil that this world may be a better place to live in, that those who hold aloft that torch of Science and Knowledge through these social and economic dark ages, shall take new courage and feel their hands supported. |
Table 11.3
Example of Complete Vision
| Sony, 1950s | |
| CORE IDEOLOGY | |
| Core Values | • Elevation of the Japanese national culture and status |
| • Being a pioneer—not following others, but doing the impossible | |
| • Respect and encouragement of individual ability and creativity | |
| Purpose | To experience the sheer joy of innovation and the application of technology for the benefit and pleasure of the general public. |
| ENVISIONED FUTURE | |
| BHAG | Become the company most known for changing the worldwide image of Japanese products as being of poor quality. |
| Vivid Descriptions | We will create products that become pervasive around the world. . . . We will be the first Japanese company to go into the American market and distribute directly. . . . We will succeed with innovations like the transistor radio that American companies have failed at. . . . Fifty years from now, our brand-name will be as well known as any on Earth . . . and will signify innovation and quality that rivals the most innovative companies anywhere. . . . “Made in Japan” will mean something fine, not shoddy. |
Many executives have thrashed about with “mission statements” and “vision statements.” Unfortunately, most of these turn out to be a muddled stew of values, goals, purposes, philosophies, beliefs, aspirations, norms, strategies, practices, and descriptions. Even more problematic, seldom do these statements rigorously link to the fundamental dynamic of visionary companies that we discovered in Built to Last: preserve the core/stimulate progress. Keep in mind that this dynamic, not vision or mission statements, is the primary engine of enduring great companies, and that vision simply provides the guiding context for bringing this dynamic to life. With this deeper understanding, we urge a rigorous application of the concepts in this chapter to recast your vision or mission into an effective guiding context for building a visionary company. If you do it right, you shouldn’t have to do it again for at least a decade, and you can get on with the most important work: creating alignment.
Creating alignment, which is a key part of our ongoing work to help companies transform themselves into visionary companies, requires two key processes: 1) developing new alignments to preserve the core and stimulate progress, and 2) eliminating misalignments—those that drive the company away from the core ideology and those that impede progress toward the envisioned future.
The first process is a creative process, requiring the invention of new mechanisms, processes, and strategies to bring the core values and purpose to life and to stimulate progress toward the envisioned future. In Chapter 7, for example, we describe how 3M has installed multiple mechanisms to preserve its core ideology of innovation and internal entrepreneurship.
The second part of alignment is an analytic process, requiring a disciplined analysis of the organization—its processes, structures, and strategies—to uncover misalignments that promote behavior inconsistent with the core ideology or that impede progress. Most managers we’ve worked with fall short in eliminating misalignments. If you state teamwork as a core value, but you compensate primarily on individual performance, then you’ve got to change the compensation structure. If you state innovation as a core value, yet have market share as the dominant strategic objective, then you’ve got to change your strategy. If you want to encourage people to try a lot of stuff and keep what works, then you have to remove penalties for honest mistakes. Keep in mind that this is a never-ending process. When misalignments crop up you’ve got to kill them as quickly as possible. Think of misalignments as cancer cells. It’s best to get in there and cut them out before they spread too far.
If you go off-site to articulate a vision, then you should come back with at least a half dozen specific, concrete changes to make in your organization to increase alignment. What can you add to the organization to better preserve the core and stimulate progress? And, just as important, what should you obliterate in your organization that’s currently driving you away from the core and/or blocking progress? If you do this right, you will spend only a small percentage of your time articulating the vision. The vast majority of your time will be spent bringing the organization into alignment. Yes, it’s very important to stop and think about vision. But even more important, you have to align the organization to preserve the core ideology and stimulate progress toward the envisioned future, not merely write a statement. Keep in mind that there is a big difference between being an organization with a vision statement and becoming a truly visionary organization. When you have superb alignment, a visitor could drop into your organization from another planet and infer the vision without having to read it on paper. This is the primary work of the clock-builder.
* This chapter first appeared as the lead article in the September/October 1996 issue of Harvard Business Review.