Vision
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- Date Submitted: 06/23/2014 02:38 PM
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SMOCK STERLING
Strategic Management Consultants
“THE VISION THING” – THE ROLE OF VISION IN ESTABLISHING AND ACHIEVING STRATEGIC DIRECTION
Over the last few years, there has been a substantial body of business research leading to the inescapable conclusion that those companies that specifically state where they are going and why do remarkably better than those who do not. • In probably the best recent business best seller on this topic – Built to Last by James Collins and Jerry Porras – the cumulative stock returns of what the authors called “visionary companies” (those who have a consistent, well communicated vision, direction, and values) were matched against “comparison companies” (good companies in the same industries, but not “visionary”) and the general market. A $1 investment in the general market in 1926 would have returned $415 by 1990, a $1 investment in the “comparison companies” would have returned $955, and a $1 investment in the “visionary companies” would have returned a staggering $6,356. In Corporate Culture and Performance, Harvard Business School professors John Kotter and James Heskett reported on a four-year study of ten firms in each of 20 industries. They found that firms with a strong corporate culture, based on a foundation of shared values, outperformed those who did not have a strong corporate culture by huge margins. Their revenue grew more than four times faster; job creation was seven times higher; their stock price grew 12 times faster; and profit performance was 750% higher. The results of a year-end 1994 study of Business Week 1000 corporations indicate that having a vision or mission statement has a demonstrably positive impact. Corporations with “vision statements” (also known as a creed, purpose, mission, or statement of corporate philosophy or values) were found to have an average return on stockholder equity of 16.1%, while firms without them had only a 7.9% average return.
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WHAT IS VISION? These well documented,...
Strategic Management Consultants
“THE VISION THING” – THE ROLE OF VISION IN ESTABLISHING AND ACHIEVING STRATEGIC DIRECTION
Over the last few years, there has been a substantial body of business research leading to the inescapable conclusion that those companies that specifically state where they are going and why do remarkably better than those who do not. • In probably the best recent business best seller on this topic – Built to Last by James Collins and Jerry Porras – the cumulative stock returns of what the authors called “visionary companies” (those who have a consistent, well communicated vision, direction, and values) were matched against “comparison companies” (good companies in the same industries, but not “visionary”) and the general market. A $1 investment in the general market in 1926 would have returned $415 by 1990, a $1 investment in the “comparison companies” would have returned $955, and a $1 investment in the “visionary companies” would have returned a staggering $6,356. In Corporate Culture and Performance, Harvard Business School professors John Kotter and James Heskett reported on a four-year study of ten firms in each of 20 industries. They found that firms with a strong corporate culture, based on a foundation of shared values, outperformed those who did not have a strong corporate culture by huge margins. Their revenue grew more than four times faster; job creation was seven times higher; their stock price grew 12 times faster; and profit performance was 750% higher. The results of a year-end 1994 study of Business Week 1000 corporations indicate that having a vision or mission statement has a demonstrably positive impact. Corporations with “vision statements” (also known as a creed, purpose, mission, or statement of corporate philosophy or values) were found to have an average return on stockholder equity of 16.1%, while firms without them had only a 7.9% average return.
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•
WHAT IS VISION? These well documented,...