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Strategic Vision: Effective Elements and Shortcomings

Read the overview below and complete the activities that follow.

At the start of the strategy-making process, a company's senior managers must struggle with the issue of what directional path the company should take and whether its market positioning and future performance prospects could be improved by changing the company’s product offerings, the markets in which it participates, the customers it caters to and/or the technologies it employs. Top management's views about the company's long-term direction and future product-customer-market-technology focus constitute a strategic vision for the company.

A clearly articulated strategic vision communicates management's aspirations to stakeholders about "where we are going" and helps steer the energies of company personnel in a common direction. For instance, Henry Ford's vision of a car in every garage had power because it captured the imagination of others, aided internal efforts to mobilize the Ford Motor Company's resources, and served as a reference point for gauging the merits of the company's strategic actions.

Well-conceived visions are distinctive and specific to a particular organization; they avoid generic, feel-good statements such as "We will become a global leader and the first choice of customer's in every market we choose to serve"—which could apply to any of hundreds of organizations. And they are not the product of a committee charged with coming up with an innocuous but well-meaning one-sentence vision that wins consensus approval from various stakeholders. Nicely worded vision statements with no specifics about the company's product-market-customer-technology focus fall well short of what it takes for a vision to measure up.

For a strategic vision to function as a valuable managerial tool, it must provide understanding of what management wants its business to look like and give managers a reference point in making strategic decisions. It must say something definitive about how the company's leaders intend to position the company beyond where it is today.

Table 2.1 presents the "Dos and Don'ts" of wording a vision statement. Illustration Capsule 2.1 provides examples of the strategic visions of several companies with a critique of each, including effective elements and shortcomings. You will be asked to do a similar critique of several other companies' vision statements in this exercise.

Using the information in Table 2.1, critique the adequacy and merit of the following vision statements, listing effective elements and shortcomings.

Identify the effective elements and shortcomings of American Express’s vision statement.

Answer 1

At its simplest, a business case could be a spoken suggestion. Short-term actions leading to immediate, measurable and substantial benefits are generally the easiest to argue. For example, if a restaurant’s manager notices that the business doesn’t make enough money on Sunday evenings to cover operational costs, presenting that fact to the owner may be compelling enough to make the business case for closing the restaurant at 5 p.m. on Sundays.

For more complex issues, a business case should be presented in a carefully constructed document that provides the reader with information about the risks and rewards involved in taking action and, conversely, not taking action. A well-crafted business case explores all feasible approaches to a given problem so that responsible parties can select which option serves the organization best.

While the company’s strategy sets forth an approach to offering superior value, a company’s business model is management’s blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit. In this exercise, you will be asked to evaluate the business model for The New York Times Company.

The two elements of a company’s business model are (1) its customer value proposition and (2) its profit formula. The customer value proposition is established by the company’s overall strategy and lays out the company’s approach to satisfying buyer wants and needs at a price customers will consider a good value. The greater the value provided and the lower the price, the more attractive the value proposition is to customers. The profit formula describes the company’s approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customer value proposition. The lower the costs given the customer value proposition, the greater the ability of the business model to be a moneymaker. The nitty-gritty issue surrounding a company’s business model is whether it can execute its customer value proposition profitably. Just because company managers have crafted a strategy for competing and running the business does not automatically mean that the strategy will lead to profitability—it may or it may not.