Monday, February 7, 2011

Fundamentals - Goals and Vision Part 2

In the previous article I said that every major company today faces failure of their vision in the long run. To understand the reason for that, let’s look at the start of a vision:

One of the great curiosities about vision is that, with very few exceptions, the great visions are almost always the “children” of older men. I have mentioned a few exceptions – Microsoft, Apple, Ford – but most of the great visions are from people in their 50’s.

Why? Because a vision must have substance before it can be accepted by anyone other than its creator. Because it takes time to integrate the various issues and possibilities until they come together and offer a new reality. What you will often find is that many of these visions are really the “children” of several parents. Thus, while the Wright Brothers saw the way to make powered, heavier than air flight, a host of people had spoken of the idea for, literally, centuries, and in their own time quite a few inventors, to include Cayley, Lilienthal, Langley, Chanute, and Maxim had pursued a host of engineering solutions to the problem. The Wright’s had the engineering vision to produce the solution, but, arguably, the vision of flight existed well before them and they adopted that great vision as theirs. The vision of flight had arguably been ‘maturing’ for thousands of years. (The legend of Daedalus and Icarus is 2500 years old.) In the case of McDonalds, how old was Ray Kroc when he bought the hamburger stand in 1961? -- 52 (Died in 1984 at 82)

And take a look at their competitor of the early 1960’s: Howard Johnson’s: Howard Johnson's had been started in 1925 in Massachusetts by Howard Johnson, and by the mid-1960s its sales exceeded Burger King, Kentucky Fried Chicken and McDonald's combined. There would eventually be more than 1,000 Howard Johnson restaurants and 500 motor lodges. But, after Johnson's death in 1972, the company lost its raison d'etre. The restaurants became obsolete; the food quality deteriorated.

Meanwhile, Ray Kroc's obsession on Quality, Service, Cleanliness and Value — the fixed criteria of control of McDonald's--was gathering momentum. Kroc identified a real trend in the US, a nation where people wanted to eat out, not at home. He also saw an opportunity for change away from old restaurants and he created that new way to eat – the fast food restaurant where you ate with your hands, with inexpensive food, served quickly by friendly people.

Kroc gave people what he ‘knew’ they really wanted. He said, "The definition of salesmanship is the gentle art of letting the customer have it your way." He was McDonald’s real lead salesman and Public Relations officer, and was the chairman from 1968 until 1984.

Another Ray Kroc quote is instructive: "I was 52 years old. I had diabetes and incipient arthritis. I had lost my gall bladder and most of my thyroid gland in earlier campaigns, but I was convinced that the best was ahead of me." Obviously, as he paid $2.7 million to the McDonalds Brothers in 1961. Two years later he opened his 500th restaurant.

Now, Ray Kroc died in 1984, and while the company is still doing well in a number of countries, McDonald's being found in over 100 countries, arguably it has gone through a number of struggles. Part of that reason, I would suggest, is just what happened with Howard Johnson’s – the guy with the real vision is no longer there to keep the vision alive, to tweak it, to refresh it, to keep it fresh and real. They have had good managers and the company has a great deal of assets and an excellent market position. But, will it survive without a real vision? That will be dependent on the development and refinement of a new vision, one with real substance. (I would, by the way, recommend you read about Ray Kroc, because he was a fascinating guy who did address many of the issues we face today in business leadership or any leadership. I suggest you read an article about Kroc by the chef Jacques Pepin for Time Magazine, it’s a good place to start.)

To make that point again, take a look at how many aircraft production and aircraft engine production companies existed in the 1930’s and 1940’s. How many remain today? These were huge firms, but they lost their way when leadership changed.

There are a few exceptions to this, but they are remarkable mostly because there are so few. We all know that interesting statistic that there is only one company – GE – that has been on the DJIA since the average began. All those other ‘great companies’ have folded or been absorbed, etc.

While it is not my point to get into lectures on any specific corporation, take a look at the incredible history of Boeing, how the leadership was a very narrow group of folks up until the mid-1980’s, a vision passed from one long-time believer to another; and how they have had some hard times as they have adjusted their vision since the early 1990’s. Boeing recently regained its vision as a great maker of aircraft, and is doing very well. Their survival for the next 20 years or so seems certain.

A final point about visions: they must be narrowly focused. Ronald Reagan may have seen a future world without communism, with everyone free and living in some type of western style democracy, with a great deal of private enterprise, and reduced trade barriers and low taxes, etc., etc. But, what he talked about was freedom. Henry Ford talked about cars. Ford may have bought iron mines and steel smelters, but the point was cars. Microsoft writes software. Microsoft doesn’t compete with Intel and try to make ships, Intel doesn’t write software, Dell doesn’t make either software or chips. The vision is necked down because you can manage a narrow vision. If your company is trying to do 5 things at once, you will, almost to a certainty, do most of them poorly. Your core will probably continue to perform well, but the rest will not.

In conclusion, focus on your vision. Work on it, massage it, and remember to let it mature, like wine. Also, don’t be afraid to ‘steal’ your vision. Perhaps the greatest icon of leadership in the ancient world – Alexander the Great – ‘stole’ his vision of a world empire based with leadership based on merit from his tutor. That his tutor happened to Aristotle and encouraged him in this ‘theft’ was beneficial. For those of us who can’t have the benefit of one of the perhaps ten great minds of all time as a tutor and mentor, we can get around that by reading and listening; the ideas are out there already. “All” you need to do is find the right idea, the right goal and redirect it.


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