Collins and Porras, 2008-2_9bffa6c39ed78c44331b1ca7c7670965.pdf

CMR CLASSICS: Organizational Vision and VisionaryOrganizations James C. Collins JerryI. Porras Thebasicquestionis,whatvisiondo youaspireto? - AbrahamMaslow1 fewtrulygreatcompa...

CMR CLASSICS: Organizational Vision and VisionaryOrganizations James C. Collins JerryI. Porras Thebasicquestionis,whatvisiondo youaspireto? - AbrahamMaslow1 fewtrulygreatcompanieshave knownforyears - in somecases, forovera hundredyears- theimportance ofhavinga vision. Recently, a widerrangeofcompanies(thosewho wantto attain greatness)have cometo believein theimportance ofthiselusive, yetvitallyimportant, of component corporate success.One factordriving this newfoundinterest is thatan increasing numberofcompanieshavebecome decentralized: theyhavepusheddecisionsoutofcorporate headquarters into divisions,outofdivisionsintodepartments, and so on downtheline.In many cases,thisflattening oforganizations appearsto have stimulated innovation, accelerateddecision making,and publishedin California Originally increasedthesenseofresponsibility forprovidingtotal Management Review,Volume 34, Number1, Fall 1991. qualityon thepartofpeopleat all levels.However,this also createsa problem:How can a companydecentralize and at thesametimehave coherent, coordinatedeffort?How can peoplein the farreachesoftheseflatter organizations knowwhereitis heading?The develop- mentofa sharedorganizational visionrepresentsa crucialresponseto this problem. Thepurposeofthisarticleis to presenta framework thatdefinesorgani- zationalvision,thatremovesthe"fuzziness" the surrounding topicyetat the sametimepreserves - - themagic thespark thatis an essentialqualityofvision. The Need For a Framework on organizations Ifwe lookat theliterature and strategy, we findnumer- ous termsfor"vision"thatsometimes are used synonymously,sometimeshave CALIFORNIA MANAGEMENTREVIEW VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU 117  Visionand Visionary Organizational Organizations partially overlapping meanings, and sometimes are intendedto be totallydistinct fromeach other.As one CEO toldus: Tve cometo believethatwe need a vision to guideus,butI can'tseemto getmyhandson what'vision'is. I've heardlots oftermslike'mission/'purpose/'values/'strategic intent/ butno-onehas given me a satisfactory of way looking at vision that willhelpme to sortout thismorassofwordsand seta coherentvisionformycompany.It'sreally frustrating!" Mostorganizations respondto theneed forvisionbycreating something theytypically calla "missionstatement." Whilethisis a stepin therightdirec- tion,mostmissionstatements are terribly James C. Collinshas authoredor co-authored ineffectiveas a compelling, guidingforce. fourbooks, includingBuiltto Last: Successful In fact,mostcorporate statementswe've Habits of VisionaryCompanies and Good to encountered - be theycalledmission,vision, Greatand has previouslytaughtat the GraduateSchool of Business at Stanford purpose,philosophy, credo,or thecompany - way are oflittlevalue.Theydon'thave the University. intendedeffect. Theydon'tgrabpeoplein JerryI. Porrasis the Lane Professorof OrganizationalBehaviorand Change, Emeritus the gut and motivate themto worktoward at the GraduateSchool of Business at Stanford a commonend.Theydon'tfocusattention. and co-authorof Builtto Last: University Successful Habits of VisionaryCompanies. Theydon'tgalvanizepeopleto putforth their besteffortstowarda compelling goal.They don'tmeansomething to peopleall up and downtheorganization. In fact,theyare usuallynothingmorethana boring streamofwords.Followingare sometypicalexamplesofstatements fromactual companies: The Corporationis committed to providing innovative engineeringsolutionsto specializedproblemswheretechnologyand closeattentionto customerservice can differentiate itfromcommodity ofproduction orjob shopoperations. We provideourcustomers withretailbanking, realestate,finance, and corporate which bankingproducts, willmeettheircredit, investment, and liquidity security, needs. [Thecompany]is in thebusinessofapplying microelectronics and computer tech- nologyin twogeneralareas:computer-related hardware;and computerenhanc- whichincludecomputation, ingservices, education,and finance.2 information, What'swrongwiththese?They'renotcompelling, norare theyexciting. They'renotclear,crisp,and gut-grabbing.Likemanypoorguidingstatements, they'renothingmorethana description - and a blandone at that- oftheopera- tionsofthecompany. Here'sone that'sbetterbutstillsubstantially missesthemark: [We]arethebestin thebusiness.We are madea uniquecompanythrough employeeinvolvement. We promotefromwithinregardlessofrace,religion, creed,oreducationalbackground. Onlythrough Pride,and Enthusiasm Attitude, willbothouremployeesand ourcompanyprosperand grow.We notonly demandexcellenceofourselves, we demandexcellenceofouremployeesas well. I 18 UNIVERSITYOF CALIFORNIA,BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand VisionaryOrganizations Organizational [Our]explosivegrowthis due to thepartnership betweentheemployeesand the company.[We] are committed to rewardingemployeeswho "Makeithappen!" This statementis betterbecause it containssome inspirationalwords,but it isn't coherent.Like all too many such statements,it's a muddled stew of val- ues, goals, purposes,philosophies,beliefs,and descriptions.A primaryreason for the developmentof ineffective statementslike those describedabove is a lack of clear conceptsand usefultools. WhoShouldSet theVision? Who has the responsibility forsettingthe organization'svision? Is vision settingonly forCEOs? We don't thinkso. Vision settingshould take place at all levels of an organizationand each group should set its own vision- consistent, of course,with the overall vision of the corporation.And what ifthereis no overall vision fromabove thatcan be latched onto? All the more reason to do it! In fact,one of the benefitsof middle managers settinga vision is thatit often encourages upper managementto initiatethe same process. As one manager pointed out: "Thinkingabout vision at my level forcesmy peers, those who reportto me, and those above me to also thinkabout those things,which is verypositiveforthe entirecompany."Indeed, we've observed situationswhere middle managementinitiatedits own vision-settingprocess and then virtually demanded thatthe top executivesof the company do the same forthe entire organization. Towarda Framework Our understandingof vision has been enrichedboth by our research and by workingwith a varietyof organizations.At the time of thisarticle,over seventy-fiveorganizations- big and small,young and old, for-profitand not-for- - have influencedthe developmentof our framework.We have paid par- profit ticularattentionto twentycompanies identified(in a studywe are conducting) as some of the world'smost visionary- i.e., organizationsthathave behaved in visionaryways over long periods of time. To identifythese companies,we asked the ChiefExecutive Officersof the leading companies in America,3since it appeared to us thattheywould be the most knowledgeableabout the typeof company we were tryingto identify. We wrote to the CEOs of a selected sample of companies askingthem to identify fivecompanies theyperceivedto be the most visionary.Twenty-threepercentof the surveyedCEOs responded4and fromthe companies theylistedwe identified the 20 most frequentlymentioned (see Table 1). The frameworkpresentedhere is based on the evolution of these companies fromfoundingto the present. The Vision Framework Visionis an over-archingconcept under which a varietyof otherconcepts are subsumed. One of the primarycauses of frustration forthose and difficulty CALIFORNIA MANAGEMENTREVIEW VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU I 19  Visionand Visionary Organizational Organizations attempting to seta visionis thatmanyofthewordsusedto describetheprocess ofproviding directionto an organization havebeen under-defined and confused witheach other.Manyoftheterms» commonly considered synonymous are not and,mostimportant, theyrepresent distinct concepts related to each other in significant ways. Atthebroadestlevel,visionconsistsoftwomajorcomponents - a Guiding Philosophythat,in thecontextofexpectedfutureenvironments, leadsto a Tangi- bleImage.It is bydefining and guidingphilosophy tangibleimagethatwe begin to see how thecommonly usedtermsare relatedto each otheryetdistinct.Fig- ure 1 showsan overviewoftheframework and itsvariouscomponents. Guiding Philosophy Theguidingphilosophy is wherevisionbegins.It thenpermeatesan organization - itsdecisions,itspolicies,itsactions - throughout all phasesof theorganization's evolution.Theguidingphilosophy is a systemoffundamental motivating assumptions, principles, values,and tenets.It can be thoughtofas analogousto the"philosophy oflife"thatan individualmighthave. The guidingphilosophy comes fromtheearlyleaderswho originally TABLE I. Visionary CompanySample shapetheorganization and who imprint theorganization withtheirown per- Industry Company sonalphilosophies oflifeand business. They instill the philosophy notvia AirplaneManufacturing Boeing rhetoric,butratherthroughtheirdaily AutomobileManufacturing Ford actions.Theguidingphilosophy serves _^^om?f?*e 3M as theorganization's "genetic code"- in Computer/Electronic Apple thebackground, butalwayspresentas a Compaq IBM shapingforce. Hewlett-Packard The guidingphilosophy tendsto Motorola be relatively clearas longas theearly _ Sony leadersare activein theenterprise. Electrical GeneralElectric However,as theorganization matures Entertainment Walt Disney and theoriginalleadersare no longer Financial Services AmericanExpress present to function as rolemodelsof Citicorp thephilosophy, subsequentleaders Food/Hotel Marriott musttakeituponthemselves to rein- Household& Personal Care Consumables Proctorand Gamble forcefundamental partsoftheoriginal philosophy in order to maintainit. Pharmaceuticals Johnson& Johnson Merck To becomea visionary organiza- Retail Nordstrom tion(ratherthanan organization with Wal-Mart a leader on whom just singlevisionary Tobacco/Food PhillipMorris everything depends),theguidingphi- losophymusttranscend thefounders. 120 UNIVERSITY OF CALIFORNIA, BERKELEYVOL 50,NO.2 WINTER2008 CMR.BERKELEYEDU  Visionand VisionaryOrganizations Organizational FIGURE I. Organizational Vision In 1971, ProcterErGamble presidentEd Harness,talked about how thisprocess was essentialto his company'sgreatness: "Wearebuilton soundprinciples and practices and are notdominated bya group ofindividuals.... Thoughourgreatest assetis ourpeople,itis theconsistency of and policywhichgivesus direction principle.... thecompanyitselfhas devel- opeda strongtradition ofcharacter.Honesty, integrity, and a respectand fairness, concernforothershavebeencharacteristics ofP&Gpeopleand companyactivities eversinceourfounding in 1837."5 All companies progressthroughstages of evolution. One of the most challengingfora companyis to progresspast excessive dependence on one or a few key individuals.Only when an organizationinstitutionalizesits core phi- losophy so thatthe philosophybecomes identifiedprimarilywith the organiza- tion,ratherthan with certainindividualsrunningthe organization,can it evolve into an enduring,self-renewinginstitution. Granted,the philosophywill graduallyevolve and inevitablybe modified as subsequent leaders expresstheirown personal views. However- and thisis crucial- care should be taken to preservethe core, "magical" elementsof the originalphilosophy. CoreValuesand Beliefs Thomas J.Watson Jr.,CEO of IBM from1956 to 1971, identifiedthe firstelement of a guidingphilosophy,its core values and beliefs,and eloquently describedits role in the lifeof an organization: I firmly believethatanyorganization,in orderto surviveand achievesuccess, musthavea soundsetofbeliefson whichitpremisesall itspoliciesand actions. Next,I believethatthemostimportant singlefactorin corporatesuccessis faith- I believe[theorganization] fuladherenceto thosebeliefs.And,finally, mustbe CALIFORNIA MANAGEMENTREVIEW VOL 50, NO. 2 WINTER 2008 CMR.BERKELEY.EDU 12 1  Visionand Visionary Organizational Organizations willingto change everythingabout itselfexcept those beliefsas it moves through corporatelife.6 Core values and beliefsare the organization'sbasic preceptsabout what is importantin both business and life,how business should be conducted,itsview of humanity,its role in society,the way the world works,and what is to be held inviolate.In outstandingorganizations,the values and beliefsare deeply feltand reinforcedby key individualsat criticaljuncturesin the organization'shistory. Two powerfulexamples of thiscome fromcentralfiguresat Hewlett-Packard and IBM. Bill Hewlett,co-founderof HP, describedthe "HP Way" in the follow- ing terms: "I thinkfundamentally theHP Wayis 'respectfortheindividual.' Ifyougivehim a chance,theindividual willdo a lotmorethanyouthinkhe can. So yougive himthefreedom. - notjustemployees[but]cus-... Respectfortheindividual tomersand theworks." Thomas J.Watson Jr.,in his 1963 book on IBM, elaboratedon the core values he held so dearly: I wantto beginwithwhatI thinkis themostimportant [belief]:ourrespectfor theindividual... Thisbeliefwas bonedeepin myfather. Somepeoplewho start outin modestcircumstances havea certaincontemptfortheaveragemanwhen theyareable to riseabovehim.Others,bythetimetheybecomeleaders,have builtup a uniquerespectand understanding fortheaveragemanand a sympathy forhisproblems.7 These statementsare not particularlyrevolutionaryor unusual. That's not the point.The point is thatthese prominentbusiness leaders believed deeply in these values and throughtheiractionspassed them on to the organizationsthey led. It was as naturalto them as breathing.As Bill Hewlettnoted: "The HP Way was never reallywrittendown.... It reallyseemed builtin and understood.... [You keep the values alive] by example. Do as I do, not as I say." Most companies- includingIBM and HP- have more than one core value and belief.Tom Watson listsIBM's threemost fundamentalvalues as: respectforthe individual,unparalleledcustomerservice,and the pursuitof superiorityin all thatthe companyundertakes.8Some companies,like the Herman Miller Company,have specifieda more extensiveset of core beliefs: We believe in being a researchand productdrivencompany. We believe in good designin everyaspect of our business. We believe thatwe should make a contributionto society. We believe in qualityin all partsof our business (product,service,rela- tionships,etc.) We believe in helpingour people realize theirfullpotential. We believe thatprofit,which is essential,is an outgrowthof makinga contribution.9 122 UNIVERSITYOF CALIFORNIA,BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand VisionaryOrganizations Organizational Johnson& Johnson, withitsfamous"J&JCredo/'notonlycoversmulti- ple categories withitsvalues,itputsthemin a hierarchy. RobertW.Johnson, Jr., who tookoverthebusinessfromhisfather, wrotetheCredoin 1943.In it,he specified thatJ&J'sfirst is to itscustomers; responsibility itssecondresponsibility is to employees;itsthirdresponsibility is to management; itsfourth responsibil- ityis to thecommunity; and itsfifth and lastresponsibility is to its shareholders.10 Indeed,corevaluesand beliefscan spanacrossa widerangeofcategories, including: people,customers, products, management and business,society, ethi- cal conduct,and theroleofprofitability. Butin all caseswherethevisionis effective as a guidingforce,thevaluesare clearand authentic.Some additional examplesofcorevaluesand beliefsfroma rangeofcompanieswe've studiedor workedwithare givenin Table2. Thekeyquestionin articulating corevalues and beliefsis not,"Whatvaluesand beliefsshouldwe have?"Instead,thekey questionis,"Whatvaluesand beliefsdo we actuallyholdin ourgut?"Other- wise,rhetorical statements ratherthanauthenticvalue-driven behaviorwill result,and peoplewillrespondwithjustifiable cynicism. Theremaybe timeswhencorevaluesneed to be balancedagainsteach other,butunderno circumstances shoulda corevaluebe breachedin response to outsidepressures. Paul Galvin,founderofMotorola,providesan excellent exampleofhow thisprinciple worksin practice.He believedfiercely in forth- righthonestyin all ofthecompany'sdealings.Duringtheearly1930s,in the depthsofthedepression, itwas commonpracticeforradiomanufacturers to misrepresent company financial healthand product benefits to distributors. Pressured to do thesame,Galvinrespondedthathe didn'tcareaboutstandard industry practices."Tellthemthetruth," he said,"firstbecauseit'stheright thing to do and second they'll findout anyway."11 Purpose Purpose,thesecondpartofguidingphilosophy, is an outgrowth ofthe corevaluesand beliefs.Everyorganization organization's shouldbe able to artic- ulateitspurposesuccinctly- in one or twosentences.A statement ofpurpose shouldquicklyand clearlyconvey how the organizationfillsbasichuman needs. A goodpurposestatement is broad,fundamental, inspirational,and enduring; itshouldserveto guidean organization forat least100 years.A goodpurpose statement mustbe able to grabthe"soul"ofeach organizational member.For example,Merck'spurpose, containedin its 1989 "Statement ofCorporatePur- pose,"is: Weareinthebusiness ofpreserving humanlife.Allofouractions andimproving mustbe measured byour in success this. achieving To examinethehistorical ofMerck'spurpose,we delvedinto consistency Merck'searlyarchivesand foundnumerouscomments byGeorgeMerckII that demonstratea fundamental,enduringpurpose.Forexample,in 1935 he said: CALIFORNIA MANAGEMENTREVIEW VOL. 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU 123  Organizational Vision and Visionary Organizations TABLE 2. Examplesof Core Values and Beliefs About People * About Products GE: "A sound manpowerprogramshouldbe designed 3M: "The I Ithcommandment:Thou shaltnot killa to helpeveryonedevelopto hismaximumcapacity;it new productidea." shouldnot be designedto he onlythe chosenfew." "Manygreatproductideas come fromstumbling,but ManagementinGeneralElectric,1955, [Professional you can only stumble ifyou're moving." ManagementinGeneralElectric, Professional an internal GE and [pau| Carleton,President,1931.MinnesotaMining, document,p. 2.] training Manufacturing Company,OurStorySo Far(St.Paul,MN: Minnesota, Mining, Company,1977), p. 65.] and Manufacturing Marriott: "See the good in people, and tryto develop those qualities." Disney: "There is no cynicismin me and none is [One of 15 principles writtendown forBillJrfromBillSr allowed in our work." ascendancyto the presidency. uponJr.'s RobertO'Brien, [Walt Disney,FounderChristopherFinch,WaltDisney's MarriottTheJ.Willard MarriottStory(Salt Lake City,UT: America(New York,NY: AbbevillePress,Inc.,1978), p. 292.] Desenet Book Company,1987),pp.265-267.] Sony: "We should always be the pioneers with our Telecare: "We believe in growth and building;we want products- out frontleading the market.We believe in to personally grow as individualsand we want to grow ,eadjng the pub,ic with new products ratherthan and build our organization forthe long term." them what kjnd of products they want;. ^^ 1990] [TelecareStatementof Philosophy, [AkioMorjtaiFounder] About Customers About Management and Business MIPS Computer: "Once you makea commitment, Hewlett-Packard: "Alllevelsshouldworkinunison you keep it...You neverstoptrying to meet a towardcommonobjectives, thatitis only recognizing commitment unlessthe otherpersonreleasesyou througheffective,cooperativeeffort thatthe uttmate fromitAlllevelsinthiscompany, whenwe makea ¡n efficienCy and achievementcan be obtained." commitment, we keepr it Itdoesn'thaveto be written nin_ _,..... _.. , _ ,..., u/l , , ir [HP CorporateObjectives.Hewlett-Packard Company, down in a legal document We ve had a couple of 1987.] Corporate Objectives, situationswhere we've lost money on verbal commitments made by salespeople who didn't have McKinsey & Company: "Every member of the Firm the authorityto make such agreements, but we've has a responsibilityto question Firmdecisions that he kept the commitments." or she disagrees with." CEO MIPSComputer 1989. JamesC. Collinsand [Bob Miller, MarvinBowerMarvinBower;Perspective [McKinseyPrinciples, C. Krenz,"MIPS StanfordBusinessSchool ComputerSystems," on McKinsey(New York,NY: McKinsey & Company,Inc., CaseS-SB-112.] 1979), p. 234.] L.L. Bean: "Sell good merchandise at a reasonable Motorola: "Everythingwillturn out alrightifwe just price;treat your customers like you would your keep in motion,forever moving forward." friends,and the business willtake care of itself." CEOi 1945. HarryMarkPetrakis, [Pau| Galvirii TheFounders [Lean Bean, 1947. C. Leightonand F.Tucker,"LL Bean Touch:TheUfeofPaulGalvinofMotorola(New York,NY: Incorporated,"HarvardBusinessSchool Case 9-366-013.] McGraw-HillBook Company,1965), p. I I I.] Johnson & Johnson: "We believe our first Patagonia: "I believe in blurringthe distinction responsibilityis to the doctors, nurses,and patients, between work and play.Ifyou can't get up in the to mothers and all others who use our products,who morningand look forwardto going to work,then use our services. In meeting their needs, everythingwe you're doing something wrong." do must be of highquality.We must constantlystrive [YvonChouinard,FounderPatagonia,1987.]. to reduce our costs in order to maintainreasonable prices. Customer orders must be serviced promptly and accurately.Our suppliers and distributorsmust have an opportunityto make a fairprofit" O&JCredo. LawrenceG. GostenA CompanythatCares: One Hundred YearIllustrated History & Johnson ofJohnson (New BrunswickNJ:Johnson& JohnsonCompany,1986), p. 108.] 124 UNIVERSITYOF CALIFORNIA,BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand VisionaryOrganizations Organizational " [We]areworkers inindustry whoaregenuinely bytheidealsof inspired advancement ofmedical and science, ofservice tohumanity."12 Sure,one couldsay,it'seasyforMerckto articulate an inspirational pur- - pose itmakesmedicine.Whataboutcompaniesin other,"lessnoble"indus- tries?The factis thatthereis an extremely widerangeofindustries thatcan and do have inspirationalpurposes.Disney'spurpose is "tomake peoplehappy."Lost ArrowCorporation, parentofoutdoorclothingcompanyPatagonia,definesits purposeas: "toserveas botha rolemodeland a toolforsocialchange." Schlage LockCompany'spurposeis "tomaketheworldmoresecure." A commonerrormadebycompaniestrying to articulatepurposeis to simplywritea specific description ofthecompany's current productlinesor customer segments. "Weexistto makecomputers forknowledgeworkers"is not a goodpurposestatement. It is neithercompellingnorflexibleenoughto lastfor 100 years.It is merelydescriptive ofwhata certaincompanycurrently does.A farbetterpurposewouldbe Apple's,as expressedby SteveJobsin 1980: totheworldbymaking Tomakea contribution toolsforthemindthatadvance humankind. Does thismeanthatan organization shouldalwaysavoidmentioning its products or customers in itspurposestatement? Yes and no. Yes,it should avoid steriledescriptions like"Weexistto makeX productsand sellthemto Y cus- tomers."On theotherhand,ifan organization can tieitsproductsto a more fundamental need,thestatement ofpurposecan be quiteeffective. In fact,some are to companiesare veryclearthatthey onlygoing participate in certainlines ofbusiness,and theyfindithelpfulto delineatethisin theirpurpose.Butthey alwaysask,"Whatfundamental need are we filling?" CeltrixLaboratories, a smallbiotechnology firm, intendsto onlyproduce humantherapeutics The products. company could have thusbeen temptedto statetheirpurposeas "todevelop,manufacture, and sellhumantherapeutics products." Wisely, however,Celtrixleadershiprealizedthatthisis nottheirpur- pose and askeda basicquestion:"Whydo we wantto dedicateourselvesto pro- ducingtheseproducts?" The following purposestatement resulted: Ourpurpose istoimprove thequalityoflifethroughinnovativehumantherapeu- tics.- BrucePharriss,CEO Othercompanies,suchas TelecareCorporation (a California-based mental healthcareprovider)and McKinsey& Company(themanagement consulting customersegments, firm),specify yetmanageto keepthepurposefundamental and inspirational: Telecare tohelppeoplewithmental exists realizetheir impairments fullpotential. - AnnBakar,CEO ofMcKinsey Thepurpose & Company istohelpleading andgovern- corporations bemoresuccessful.13 ments MANAGEMENT CALIFORNIA REVIEW VOL 50,NO.2 WINTER2008 CMR.BERKELEYEDU 125  Visionand Visionary Organizational Organizations Ratherthanjustdescribing outputortargetcustomers, theorganization's an effective purpose statementnot only the reflects importance peopleattachto thecompany'swork,buttapstheiridealisticefforts.Goodpurposestatements capturethesouloftheorganization. Goodpurposestatements are developedby askingquestionssuchas: Whatwouldtheworldlose ifourcompanyceasedto exist?Whydon'twe justshutthedoorsdownand selloffall theassets?Why do we wantto dedicateourpreciouscreativeenergiesto thiscompany'sefforts? Whatare thepersonalpurposeswe feelforourown lives,and how can our unitedeffort fitwiththese? Thesequestionswereusedto deepenand enricha purposestatement in someworkwe didwithone seniormanagerofa supportservicesgroup.14 The managerand membersofhisteammetforseveralhoursand generatedthefol- lowingstatement ofpurposefortheirorganization: Tobetheundisputedleaderinproviding thebestestimating, and control, project management services. support We thenmetwiththemanagerand,whenpresented withthestatement above, askedthefollowing question,"Whyis itimportant to providethebestestimat- and management ing,projectcontrol, supportservicesto yourorganization?" Aftersomediscussion,hisanswerreflected a deepersenseofhisorganization's purpose: Toprovidethebestestimating, andmanagement control, project services so that we canhelpourcompany deliver highqualitycompletedworksto ourcustomers. A further seriesofquestionsyieldedan evengreaterdepth,one thattheman- agerfoundmostcompelling: Tobethelifeblood andconscienceofallthosewe serve. Withthedevelopment ofthisstatement, themanager'seyeslitup and he becamequiteexcitedaboutthethoughtofleadinga groupthatexistedforthis reason.Later,afterextendeddiscussion, hisstaff sharedthesameexcitement. We have notpresented thisexampleto demonstrate how one goes aboutgenerating a statement ofpurpose.Thatis beyondthescopeofthisarticle. Rather,theimportant pointhereis to recognizethatpurposestatements are not to easy develop and must be worked on One carefully. should notexpectto be able to generatea broadlysupported and deeplymeaningful statementwitha groupofpeoplein one ortwohours.Accurately capturing theorganization's purposerequiresanswering a widevarietyofquestionsand havinglengthy discussions. Purposeplaysan essentialrolein determining who'sinsideand who's outsidetheorganization. A clearpurposeattracts (to the company)people whosepersonalpurposesfitwiththecompany'spurposeand,conversely, repels thosewhosepersonalpurposesare contradictory. Indeed,eventhroughthe processofarticulating purpose,someemployeesand keyexecutivesmaychoose to leavewhenitbecomesclearthattheyare notpersonally alignedwiththe organization's purpose. This is a goodoutcome,and notone to be avoided. 126 UNIVERSITYOF CALIFORNIA,BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand Visionary Organizational Organizations Purposeneed onlybe meaningful and inspirationalto peopleinsidethe organization; it need notbe exciting to all outsiders. It'sthe peopleinsidethe organization that need to be compelledbythepurposeto generatelong-term commitment to theorganization's success. Each company'spurposeneed notbe unique;itis entirely possiblethat twocan have thesamepurpose.Purposeis a motivating nota differenti- factor, atingfactor. Everyorganization has a purpose,it'sjustthatmostcompanieshave neversuccessfully articulatedit.Purposeis in thewoodworkoftheorganization and is notsetor createdas muchas itis recognizedor discovered. Mostentre- preneurs"grope" theirway into the startof theirbusiness, normally feelinga strongneed to executea specific idea rather thanto fulfill a broad,enduring purpose.It is usuallyonlylater- ifever- thattheyare able to articulate the deeper motivations behind their work. Steve Jobsdescribed the originalimpulse to launchApple: "Wedesigned ourfirst computer becausewe couldn't affordtobuyone.Wedidn't havethewholeideaaboutmaking a computer company untilwe'dbuiltourfirst computer, andwe sawhowneatitwasforourfriends. Asthepeopleitwasneat forexpanded, wegotmoreexcited. Wedidn'tsitina chaironedayandthink, 'MyGod,tenyearsfrom noweveryone isgoingtobe usingpersonalcomputers!' Itdidn'thappenthatway.Itwasmoreofa gradual process." thatJobswas able to describe Itwasn'tuntilseveralyearslater,upon reflection, a morefundamental drive: "WhatApplehasreally isan opportunity been... toexpresssomedeepfeeling aboutwanting tocontribute something.I really believethatpeoplehavea desire back." toputsomething Itwas outofthisperspective thatthepurposestatement describedearlier ("Tomake a contributionto the world bymaking toolsfor themindthat advancehumankind.") was then able to flow. The point here is notthatApple had no purposewhenitwas founded,butratherthatthepurposewas implicit and hiddenbehindJobsand Wozniak'soriginalimpulseto makea computerfor themselves and theirfriends. A companymightprogress fordecadeswithoutan explicitly statedpur- pose,yetnonetheless have a verystrongone. Duringourinterview withBill Hewlett,we askedwhetherhe and co-founder Dave Packardhad a purposein mindduringtheearlydaysofHP.He responded: "I don'tthink thosearequestions weaskedourselves... Wehada goodeduca- tionandwefeltwe oughttobe abletodo something it,andtherewerenot with manyjobsaround.So whynottryourwings?... Hell,wewanted toknowwere weweregoingtogetourbreadthenextday.So thequestion you comes ask aboutmuchlater.And I thinkwe felt that we werea major factorinhelpingthe electronics. industry.. thatwe had a to responsibilityprovide good instrumenta- tionforthecountry.That'sa veryidealized statement.I don'tknowifwe'vemade itornot." CALIFORNIA MANAGEMENTREVIEW VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU 127  Visionand Visionary Organizational Organizations However,eventhoughpurposeis alwayspresent- in thewoodwork - and manysuccessful companieshave notexplicitly articulatedit,we firmly believethatanycompanywillbenefittremendouslybytheexerciseofidentify- ingand writingdowna concise,completestatement ofpurpose. Tangible Image Tangibleimage,thesecondmajorcomponentofourframework, consists ofa missionthatclearlyfocusestheeffortsoftheorganization and a vividdescrip- tionthroughwhichthemissionis mademorealiveand engaging. We'vechosen thephrase"tangible to image" convey both a senseofconcreteness- something vividand real- and a pictureofthefuture- dreams,hopes,and aspirations. Whereasguidingphilosophy residesin thebackground, ever-presentand "inthe woodwork," tangibleimageis in theforeground, focusingpeople'sattentionon a specific is goal.Guidingphilosophy deep and serene; is tangibleimage bold, and emotionally exciting, charged. Mission A missionis a clearand compelling goalthatservesto unifyan organiza- tion'sefforts. An effective missionmuststretch and challengetheorganization, yetbe achievable.It translatestheabstractnessofphilosophy intoa tangible, energizing,highlyfocusedgoalthatdrawstheorganization forward. It is crisp, clear,engaging-itreachesoutand grabspeoplein thegut.People"getit"right away,* itrequireslittleor no explanation.A missionhas a finishlineand a spe- cifictimeframeforitsachievement. A goodmissionis risky, in thegrey falling area wherereasonsays,"Thisis unreasonable," and intuitionsays,"butwe believethatwe can do itnonetheless." We liketo use thephrase"big,hairy, audaciousgoal"whendescribing mission.TheNASAmoonmission,as articu- latedbyPresident Kennedyin 1961,providesa goodexampleoftheconcept: thegoal,before Achieving thisdecadeisout,oflandinga manonthemoonand him returning safely toearth.15 Thereare fourapproachesto setting a mission:Targeting, Common Enemy, RoleModel,and InternalTransformation. Targeting meanssetting Targeting a clear,definabletargetand aimingforit (e.g., theNASAmoonmission).Targetmissionscan be quantitative or non-quantita- tive.Forexample,in 1977,Wal-Mart's founderSam Waltonsettheprecisetar- getofbeinga $1 billioncompanyin fouryears(a morethandoublingofthe company'ssize).Wal-Martachievedthemissionon schedulewithsalesof$1.2 billionin 1980.Wal-Martdidn'tstopthere,however.The companycontinuedto setnew targetmissionsforitself, and itachievedthem.In 1990,afterWal-Mart had grownto over1,500storesand $25.8 billionin sales,thecompanyrefused tobecomecomplacent. Atthe 1990 annualshareholder's meeting, attendedby 128 UNIVERSITYOF CALIFORNIA,BERKELEY VOL. 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand Visionary Organizational Organizations over 8,000 employees,Walton articulatedthe next target:to double the number 16 of storesand increase the dollar volume per square foot60% by the year 2000. Quantitativemissions,such as Wal-Mart's,have the advantage of being preciseand specific.However,theyare oftennot as compellingas qualitative missions- missionsthatcreatevivid images of what success would look like. Ifthe company has a charismaticleader thatgeneratesexcitementaround the numbers (like Sam Walton), then a quantitativetargetmissioncan be effective. If,on the otherhand, the company does not have such a leader- and most companies do not- then non-quantitativetargetscan be more compelling.For example, the missionset at Ford Motor Company in 1909, as expressedby HenryFord,was qualitativebut nonethelessverycompelling:"To democratize the automobile."17In Ford's case, the missionis picturesqueand exhilarating. Anothernon-quantitativetargetexample comes fromMIPS Computer Company,a high-endcomputerworkstationmanufacturer.Instead of setting its missionin termsof sales dollars or number of units sold, it set the following missionin 1987: themostpervasivein theworld architecture To maketheMIPS microprocessor by themid-1990s. Every is decision to thataim.- Bob Miller,CEO subservient This is an excellenttargetmission.It's bold and audacious (MIPS must surpass companies such as Sun, IBM, and HP) and it's excitingto the people at MIPS. It has a timeframe,yetit's not definedby numbers. (MIPS will undoubtedlyuse numbersto measure where it is relativeto achievementof the mission,but the goal is the pervasiveness,not the specificnumber.) Some targetmissionsare highlygeneral,but nonethelessverypowerful. Typically,these non-quantitativemissionsare definedin termsof takingthe companyto an entirelynew level of overall prestige,success, dominance, or industryposition.Here are threeillustrativeexamples: Merckas thepreeminent To establish worldwidein the 1980s, drug-maker -set byMerckin 197918 Tobecomethedominantlocksupplierin theUnitedStatesbytheyear2000. -set bySchlageLockin 1990 To becomethefirst company, trulygreatbiopharmaceutical in 1990 -set byCeltrixLaboratories Finally,thereis a special case of imprecisetargetmissionscommonly foundin start-upcompanies: "To reach a point where survivalis no longerin question." For many start-upcompanies,thisis indeed "big,hairy,audacious." However,many early-stagecompanies flounderbecause theynever botherto reseta new big, challengingmissiononce survivalis no longera question, and theylose the sense of excitementpresentin the earlydays. We call thisthe "we've arrivedsyndrome,"and it is dangerous. A new missionmustbe set to refocusthe organization. CALIFORNIA MANAGEMENTREVIEW VOL. 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU 129  Visionand Visionary Organizational Organizations Common Enemy A secondpowerful formofmissionis to createa goalfocusedon defeating a commonenemy.Pepsi'smissionat one pointwas to "BeatCoke!"JohnScul- ley,who was presidentofPepsipriortojoiningApple,described theimpactof havingthismission: Wealwaysbelieved, sincetheearlyseventies, whenPepsiwaswidely viewedas theperennial thatwecoulddoit.Allofus started also-ran, outwiththatobjec- tive,andwenevertookoureyesoffit.... Itputus ona search-and-destroy mis- sionagainst a Goliath.19 Honda,whenfacedwithYamaha'shavingovertaken themas thenumber one motorcycle in theworld,respondedwith: manufacturer Yamahawotsubusul [Wewillcrush, 20 Yamaha!] squash,slaughter TheyearafterHondaestablished thismission,itintroduced115 new models ofmotorcycles and so thoroughlydefeatedYamahathatYamahalaterpublicly apologized to Honda for havingclaimed thatitwoulddominateHonda. Nikehas thrived foryearson commonenemymissions.First,itsetout to beatAdidasin theUnitedStates.It didso. Then,aftertheunexpectedriseof Reebok,Nikeestablished themissionofcrushing Reebok,whichresultedin the highlycompetitive "sneakerwars."21 Commonenemymissionsare typically setbycompaniesthatare striving to becomenumberone,buthave notyetachievedit;theyplaynicelyintoa DavidversusGoliathmotivation. One extremely powerful effect ofcommon enemymissionsis thattheycan transform an organizationwhosebackis against thewalland thatis concernedaboutitsverysurvival.However,peopledon't liketo "justsurvive,"theyliketo win.A commonenemymissiontapsintothis basichumanmotivation. MicronTechnology, a smallsemi-conductorcompany, providesan excellentillustration. In 1985,Japanesecompanies'illegaldumping ofproducts belowcostnearlyputMicronoutofbusiness.CEO JosephParkinson usedtheexistenceofan outsidefoeas a unifying forceto pullthecompany through whathe calls"thedarkdays."Parkinson recalled: "Whenthingsweregoingbad,I was trying to keepeveryonemotivated to keepus alive.Atfirst, I wasn'tscoringa lotofpoints,butthenitoccurred to me to keyoff thefactthatpeopleliketo win.I mean,who likestojustsurvive?So withour backsto thewall,we wenton theoffensive. Yes,itwas a tremendous advantage to havea bitterenemy.Butitwas morethanthat.We wereswornto prevailover thatenemy.Andthisshiftfroma survivalmodeto a 'we shallprevail'mode- beatingtheoddsas theunderdog - is somethingevery-one can getbehindfrom assembly-lineworkers to VPs."22 However,in spiteofitsobviousadvantages, thereare negativeaspectsto commonenemymissions.Mostobviousis thatitis difficult to spendyourentire life"atwar."Andwhatdo you do whenyou'vedefeatedtheenemyand become numberone? Whathappenswhenyou are no longerDavid,and havebecome Goliath?Nike,forexample,wentintoa slumpafteritdefeatedAdidas.It didn't 130 UNIVERSITY OF CALIFORNIA, BERKELEYVOL 50,NO.2 WINTER2008 CMR.BERKELEYEDU  Visionand VisionaryOrganizations Organizational reboundfromthatslumpuntilReebokhad slippedbythemand becamea wor- orientation. thytargetofNike'scompetitive RoleModel Lesscommonthantargeting and commonenemymissionsare rolemodel missions.Theseare usuallysetbypromising smallto mid-sizedcompanieswith brightprospects in their During earlyyears,therealestatecom- industries. its panyTrammell Crowhad themission:"Tobe theIBM oftherealestateindus- Bythis,Trammell try/'23 Crowmeantto dominateitsmarketsthewayIBM does, to have thelevelofemployeeprideofIBM, and to possessa similarreputation forbusinessexcellence.GiroSportDesign,a five-year old California-based bicy- clingproductscompany, used a combinationofbothtargeting and rolemodels in settingsitsmission: Tobe a greatcompany bytheyear2000- tobe tothecycling whatNike industry - Jim shoesandAppleistocomputers. Curtis, istoathletic CEO to thedegreetheorganizations Rolemodelmissionsare effective selected as rolemodelsgeneratepowerful imagesforcompanymembers.Sometimes, the imagesgeneratedmay be so complexthattheydo notmean the same thing to forcerequiredofan all membersand,as such,don'tprovidetheintegrative mission. effective InternalTransformation Internaltransformation in old organizations missionstendto be effective thatneed to dramaticallychangethemselves in orderto remain competitive and healthy(or,sometimes, to regaintheirhealth).StanfordUniversityis an exam- ple ofan organizationfocusing on an transformation. internal In 1990, itsetthe missionto createa new,uniqueblendofteachingand researchbytheyear 2010. As Stanford presidentDonaldKennedyputit: ofthestrength a convergence "Tocontrive withthe venture ofourresearch of teaching our undergraduates/'24 ofitssizeby GeneralElectrichas soughtto copewiththeinefficiencies focused an internally creating mission. In 1986,GE's CEO JackWelch articulated it: tothestrength, Inaddition andreachofa bigcompany, resources, whichwehave we built, already arecommittedto the the developing sensitivity, leanness,the and simplicity, the of agility a small company.We want the of best both... [a] big-company/small-companyhybrid.25 In itsearlyyears,Procterand Gambleestablishedan internalmission:to reacha point where it couldprovidesteadyemployment foritsworkers, rather thanthehire-and-fire swingsforcedbyseasonaldemands.(Theseswingswere causedbythedemandsofwholesalers, who orderedin largequantitiesand then,like a snake a digesting largemeal, wouldlie dormant.)To achievethe mission,P&G tookthe audacious of step settingup a salesforceto selldirectly CALIFORNIA MANAGEMENTREVIEW VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU 13 1  Visionand Visionary Organizational Organizations to retailers. Thissmootheddemandand allowedthecompanyto announce, in 1923,thatithad achieveditslong-standing goalofsteadyemployment.26 Environment As shownin Figure1,theguidingphilosophy oftheorganization becomesoperationalized in thetangibleimage,butitbecomesso takingthe organization'sexpectedfutureenvironment intoaccount.In thissense,environ- mentservesa moderating rolein thetranslationofpurposeintomission.Byits is verynature,guidingphilosophy generatedrelatively freeofcurrent environ- - mentalconditions itcomesfromwithinpeople.Missions,on theotherhand, willbe affectedbytheenvironment - theyare affectedbytiming, trends, tech- nology, and other externalfactors.Ford'sdemocratizationmission and NASA's spacemissioncouldnothavebeen donein the 19thcentury. Nonetheless, set- tinga missionis a creativeprocess,and shouldnotbe undulydampenedor lim- itedbythepervasivehumantendency to say"we can't."A missionshouldwalk theboundarybetweenpossibleand impossible; settinga missionrequiresan intuitivesenseforthatboundary. Finally,missionsshouldnotbe limitedbytheconstraints ofstrategic analysis.Missionsetting shouldbe proactive,notreactive.Strategy is subservient to missionand strategicanalysisshouldbe doneafter- notduring - themission- settingprocess. Vivid Description Vividdescription, thesecondelementoftangibleimage,represents a vibrant,engaging, and specificdescriptionofwhatitwillbe likewhenthemis- sionis achieved.It provokesemotionand generatesexcitement. It transforms themissionfromwordsintopictures - it'sa wayofconveying themissionso thatpeoplecarryarounda clear,compelling imagein theirheads.Thevivid descriptionbringsthemissionto life.We callthis"painting a picturewithyour words." Fornon-quantitative missions,"picture painting"is essentialformaking themissiontangiblein people'sminds.Witha targetsuchas "tobecomea great company," it'sessentialto vividlydescribethegoal.Forexample,Celtrix's defini- tionof"great"involvessuchthingsas havingmultipleprofitable products,state- of-the-artfacilities, proudemployees, and beingon thecoverofTimemagazine. Thepeopleat Celtrixpainteda picturewiththeirwordsofwhat"great"would looklikeand said,in essence,"Ourmissionis to makethathappen." As noted,Ford'smissionin itsearlydayswas to "democratize" theauto- mobile.HenryFordbroughtthismissionto lifewithstatements suchas: I will build a motorcar forthe greatmultitude.... it will be so low in price that no man makinga good salarywill be unable to own one- and enjoy with his familythe blessingof hours of pleasure in God's greatopen spaces... When I'm througheverybodywill be able to affordone, and everyonewill have one. The 132 UNIVERSITYOF CALIFORNIA,BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEY.EDU  Visionand Visionary Organizational Organizations ourhighways, from horsewillhavedisappeared willbe takenfor theautomobile we a [and will]give large granted... of number men atgoodwages.27 employment You couldsaythatitwas easyforFordto createsucha vividdescriptionbecause he was an entrepreneurat thecenterofone ofthemostexcitingmomentsin industrial history.Butwhataboutlarge,established companies?Can theygener- ate as muchexcitement? JackWelchat GE providesthebestexamplewe have foundofbringing a their"bigcompany/small In describing missionto lifethroughvividdescription. companyhybrid" mission,he statedin 1986: Aswe succeed inriddingourcompany ofthetentacles andbureaucracy/ ofritual wearenowbetter abletoattackthefinal,andperhapsmostdifficult challengeof all.Andthatistheempowering oftheir ofour300,000people,thereleasing cre- andambition, ativity thedirectcouplingoftheirjobswithsomepositive on effect thequalityofa product Wewanteachmanandwomaninthiscom- orservice. panytoseea connection between whathe orshedoesalldayandwinning inthe market Their place. roles, and responsibilities, rewardsmustbecome to clear them andtoeveryone. Smallcompanies thriveandgrowonthatsenseofcontribution andreward. Wewantitas well,andeverything we dotoevolveourmanagement systemwillbe consistentwith it.28 getting Thephrase"tentacles ofritualand bureaucracy" is a perfectexampleofvivid description-you canjustsee thoseslimy, longtentacleswrappingpowerfully aroundthecompanyand slowlysqueezingthelifeout ofit. Vividdescriptionscan be articulatedbymanagersotherthantheCEO. For example,one middle-levelmanagerconveyedthefollowing description ofwhat his achieving group's mission would be like: "Wewillbe respectedandadmired byourpeers.. willbe actively.Oursolutions soughtby[the]product divisions... endproduct Therewillbe significant 'hits'that duetoourcontribution... succeedlargely Wewillhaveprideinourselves... People thattheylovewhattheyaredoing... Peoplewill feedback willgiveunsolicited alwaysthink'we'ratherthanT...Noonewillbe deceitfulorprotectiveofinfor- Peoplewillwalkontheballsoftheir mation... feet...People workhard willingly becausetheywantto... Peoplefeelthat[ourgroup]hascontributed totheir life ina positive way/'29 As demonstrated bytheseexamples,passion,emotion,and conviction are essentialpartsofthevividdescription.Somemanagersare uncomfortable with expressing emotionabouttheirdreams,butit'sthepassionand emotionthat willgrabothers.We mustdisposeofthewidelyacceptednormthatrationality shouldreinsupreme,and thatemotionshouldbe keptin check.Creating the rightmission and it describing with vivid should detail releasepeople'spassion and generatethecommitment need to achievehighperformance. organizations TheNeedforBothPurposeand Mission someorganizations missioncan be so compelling, Becausea specific make themistakeofthinkingthattheirmissionis theirpurpose.Fortheseorganiza- REVIEW VOL 50,NO.2 WINTER2008 CMKBERKELEYEDU MANAGEMENT CALIFORNIA 133  Visionand Visionary Organizational Organizations tions,theproblemeventually becomes:whatdoes theorganization do onceit has completedthemission?Withouta broader,moreenduring purposefrom whichto derivethenextmission,therewillbe a crisisofdirection oncethemis- sionis accomplished. Fordsufferedfromthisin itsearlydays.Afterithad achievedthemission ofdemocratizing theautomobile, Fordhad no broadlyunderstood organiza- tionalpurposeto fallbackon as thebasisofa new missionand was leftwith no clearidea ofwhatto do next.Thiscontributed to Ford'ssticking doggedly to theModelT strategy too long,givingGeneralMotorsthefoothold itneededto becomethedominantcarmaker. Had Fordseta new compelling missionafter ithad achieveddemocratization, we suspectthatGM wouldhave had a much toughertimebeatingoutFordforthenumberone spot,ifiteverwouldhave. It appears,however,thatFord'spurposehad notbeen clearlyarticulated at that timeand,as a consequence,theorganization was notable to lookto itspurpose forguidancein establishing a new mission. NASAalso appearsto have suffered frombeingso missiondriventhat,for yearsafterthemoonlanding,itfloundered aimlesslywhileitsearchedfora new mission.Thelackofa clearoverallpurposehas keptNASAfromdeveloping a new missionas compelling as itsearlierone. PuttingIt All Together Twoexamplesillustrate theentirevisionframework in action:GiroSport Design,a smallmanufacturer ofbicycleproducts;and Merck,thegiantdrug manufacturer thathas now beenFortune magazine's"MostAdmired"Corpora- tionforfiveyearsin a row.Tables3 and 4 present, foreach ofthesecompanies, a descriptionoftheirorganizational visionusingthefourbasicelementsin our framework. Giro,a youngcompanyconsciously focusing on creatingan integrated vision,has systematicallydeveloped all ofitscomponents and collectedthem in one document.Merck,on theotherhand,represents an evolutionary process in whichtheorganization has "unconsciously" createditsvision.By studying a varietyofMerckdocuments, we wereable to ferret outthevariouspiecesand have organizedthemintothecomprehensive setofstatements shownin Table4. Organizations such as Merck would getgreaterleveragefromwhattheyalready do iftheyweremoreconsciousaboutintegrating theirvisionintoone document - a documentthatcouldbe used as thebasisforcommunicating theideasguid- ing the organization. In conclusion,we'd liketo dispelone ofthegreatmythsofmodernman- the that agement: myth buildinga visionary organization requiresthepresence ofa charismatic leaderwho is somehowblessedwithalmostmystical or super- humanvisionary qualities.Indeed,manymanagersrespondto thenotionof visionbythinking itis notforthembecausetheydo notfitthestereotypical moldofa "visionary." Charisma's rolein settingvisionis vastlyoverrated.In fact,attemptingto substitute charismaforsubstanceis destructive. Thefunction 134 UNIVERSITYOF CALIFORNIA,BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand VisionaryOrganizations Organizational TABLE 3. Exampleof OrganizationalVision:Giro Sport Design Guiding Philosoph/ Valuesand Beliefs - Customersatisfaction is firstand foremost - Ittakesgreatproductsto be a greatcompany. - Integrity is notto be compromised; be honest,consistent, and fair - Commitments made are to be fulfilled. - Nevercut corners; the details get right. - The Golden Ruleappliesto peers,customers, and employees. - Teamworkshouldprevail; think"we,"not"I." - There is no reasonto do anyproductthatis not innovative and highquality. - Styleis important; all of our productsshouldlook great. Purpose - Giroexiststo makea positive impacton society-tomakepeople's livesbetter-through innovative, products. high-quality Tangible Image Mission - Our missionisto become a greatcompanybythe year2000-to be to the bicycling what industry Nikeisto athleticshoes and Apple isto computers. VividDescription - The best ridersinthe worldwillbe usingour productsinworld-classcompetition. Winnersofthe Tourde France,theWorld Championships, and the OlympicGold MedalwillwinwhilewearingGiro helmets.We willreceiveunsolicited phone callsand lettersfromcustomerswho say,"Thank-you for beinginbusiness;one ofyourhelmetssaved mylife." Our employeeswillfeelthatthisisthe best place they'veeverworked.When you ask people to namethe top companyinthe cycling business,the vast majoritywillsay,"Giro." 1991. Source:CorporateVisionStatement, ofa leader- theone universalrequirement ofeffective - is to catalyze leadership a clearand sharedvisionoftheorganization and to securecommitment to and vigorouspursuitofthatvision.Thiscan be accomplished witha varietyofstyles and does notrequirecharisma.The keyis to buildan organizationwithvision, notsimplyto have a singlecharismaticindividualwithvisionas theCEO. And withoutvision,organizationshave no chanceofcreating theirfuture,theycan onlyreactto it. Notes 1. Edward Hoffman,TheRighttobe Human:A Biography ofAbrahamMaslow (Los Angeles, CA: JeremyP. Tardier,Inc., 1988), p. 280. 2. F. David, "How Companies Define TheirMission," LongRangePlanning,22/1 (February 1989): 90-92. CALIFORNIA MANAGEMENTREVIEW VOL 50, NO. 2 WINTER 2008 CMR.BERKELEY.EDU 135  Visionand Visionary Organizational Organizations TABLE 4. Vision:Merck,1979 Exampleof Organizational Guiding Philosophy Valuesand Beliefs - We valueabove all our ability to servethe patient. - We are committed to the higheststandardsof ethicsand integrity. - We are responsibleto our customers, to our employees,and to the societieswe serve Our withall segmentsof society interactions - customers, suppliers, governments, and the general public-mustreflectthe highstandardswe profess. - We expect profit, butprofitfromworkthatbenefitshumanity. - We are committedto researchthatmatchesscienceto the needs of humanity. - Sinceour futureas a companyrestssquarelyon the knowledge, skills, imagination, and teamwork, of our employees,we valuethese qualitiesmosthighly.3 integrity Purpose - We are inthe businessof preserving and improving humanlife.Allof our actionsmustbe measured byour success inachievingthis.b Tangible Image Mission - To establishMerckas the preeminent worldwideinthe 1980s.c drug-maker VividDescription - We willbe the firstdrugmakerwithadvancedresearchineverydisease Our researchwill category.0 be as good as the sciencebeingdone anywhereinthe world.6Our drugswon'tbe used bya single personwho doesn'tneed them/Merckwillcontinueto growon a steadybasis,bringing forth worthwhile products.We willbe at the leadingedge of concern,makingcontributions to the problems societyis struggling with- givingBlacksa moreeffective role inour economy,righting the sexual imbalancesthathaveexistedinthe past,and makinga contribution to the environmentinwhichwe live.8 - The Chemical Industryand Medicine" a. George W. Merck,"An EssentialPartnership speech presented to the Division of MedicinalChemistry, American Chemical Society,April 22, 1935. b. Ibid. c. R Gibson,"Being Good Isn'tEnoughAnymore,"Forbes,November 26, 1979, p. 40. d. Ibid. e. Wall StreetJournal, "Merck & Co.," June23, l989,p.A33. f. S. Harvey,"JohnHoran: Leading Merck into the New Age," PharmaceuticalExecutive(February 198 1). g. T.Jaffe,"AStitchinTime,"Forbes,November 22, 1982, p. 1 14. 3. We defined"leadingcompanies" as those firmsin the two Fortune500 lists(Industrialand Servicecompanies) forlarge corporationsand the Inc.500 (Private)and Inc. 100 (Public) lists forsmall ones. Since we didn'twish to surveyall 1600 firms,we carefullyselecteda repre- sentativesample fromeach of these populations stratifiedby industryand size. From each of the two Fortune500 lists,we selecteda 50% sample. From the Inc.500 listwe selected approximatelya 20% sample and fromthe Inc. 100 listwe selecteda 100% sample. Our total sample size was 700. The privatelyheld companies thatmake up the Inc.500 listare rela- tivelyunstableand thus were quite difficult to locate. Given thisfact,we concluded thatwe 136 UNIVERSITY OF CALIFORNIA, BERKELEY VOL 50, NO. 2 WINTER 2008 CMR.BERKELEYEDU  Visionand Visionary Organizational Organizations should tryto surveyan equal numberof privatelyheld (Inc.500) and publiclyheld (Inc. 100) small companies. Afterlaborious search we trackeddown 102 of the privatelyheld small companies and included them in our sample. We were only able to survey98 of the publicly held small companies because two of them were no longerin business. 4. Companies fromeach of the foursources of names responded at approximatelythe same rate (Fortune500 Service,22%; Fortune500 Industrial23%; Inc.500 Private,27%; Inc. 100 Public,25%). An analysisto determineifthe responsesreceived were representativeof the sample drawn foreach group yieldedno significantbiases in response patterns. 5. Oscar Schisgall,Eyeson Tomorrow: TheEvolutionofProctor & Gamble(Chicago, IL: J.G.Fergu- son PublishingCompany,1981), p. 260. 6. Thomas J.Watson,Jr.,A Businessand ItsBeliefs(New York,NY: McGraw-HillBook Company, Inc., 1963), pp. 4-5. 7. Ibid., pp. 13-14. 8. Ibid. 9. Max DePree, Leadershipis an Art(New York,NY: Doubleday Dell PublishingGroup,Inc., 1989), pp. 4-80. 10. Lawrence G. Foster,A CompanythatCares:OneHundredYearIllustrated History ofJohnson& Johnson(New Brunswick,NJ:Johnson& JohnsonCompany, 1986), p. 108. 11. HarryMark Petrakis,TheFounder'sTouch:TheLifeofPaul GalvinofMotorola(New York,NY: McGraw-HillBook Company, 1965), p. 111. 12. George W. Merck,"An EssentialPartnership - The Chemical Industryand Medicine," speech presentedto the Division of Medicinal Chemistry,American Chemical Society,April22, 1935. 13. Marvin Bower, Perspective on McKinsey(New York,NY: McKinsey & Company,Inc., 1979), p. 234. 14. CliffSchopf,Manager of ProductControls,Bechtel Corporation,San Francisco,1990. 15. Daniel J. Boorstin,TheAmericans: TheDemocratic (New York,NY: VintageBooks, Experience 1974), p. 596. 16. Wal-Martillustratesone crucialaspect of missions:a compellingmission,once achieved, mustbe followedby a new mission.This is imperative.It is a grave errorto achieve a mis- sion and not immediatelyset a new one. Failingto set new missionscauses companies to flounder,drift,and wander aimlessly,which eventuallyproduces internalmalaise and poor overallperformance.Vance H. Trimble,Sam Walton(New York,NY: Penguin Books USA, Inc., 1990), p. 306. 17. Boorstin,op. cit.,p. 548. 18. P. Gibson,"Being Good Isn't Enough Anymore,"Forbes,November26, 1979, p. 40. 19. John Sculley,Odyssey (New York,NY: Harper& Row Publishers,1987), pp. 4-5. 20. G. Stalk,Jr.,"Time-TheNext Source of CompetitiveAdvantage,"HarvardBusinessReview, 661A (July/ August 1988): 44. 21. Duringa televisedinterviewon ABC's "20/20" show on August 19, 1988, in a storyon the "Sneaker Wars,"Nike CEO Phil Knightwas asked ifhe knew the Presidentof Reebok. Knightsaid, "Yes." The interviewerthen asked ifhe liked the Presidentof Reebok. Knight replied,"No. And I don't want to like him." A similarexample comes froman anonymous board memberof Nike who was interviewedby one of the authors in 1990; he remarked, "Our idea of a perfectday is to get up in the morningand throwrocksat our competitors." 22. JamesC. Collins,"Passion Can Providea PropellingPurpose," San JoseMercury News,August 7, 1988, p. PC 1. 23. N. Aldrich,"The Real Artof the Deal," Inc.Magazine(November 1988), p. 82. 24. Donald Kennedy,President,StanfordUniversity, froma speech given to the StanfordUni- versitystaffand faculty,April7, 1990. 25. General ElectricCompany,TheGeneralElectric Story(Schenectady,NY: General ElectricCom- pany, 1989), p. 128. 26. Schisgall,op. cit.,pp. 87-98. 27. RobertLacey,Ford:TheMen and theMachine(New York,NY: Bailamme Books, 1986), p. 93. 28. General ElectricCompany,op. cit.,p. 128. 29. Fred Schwettmann,Hewlett-Packard,froman interviewwith one of the authors, 1990. CALIFORNIA REVIEW VOL 50,NO.2 WINTER2008 CMR.BERKELEYEDU MANAGEMENT 137 Copyright of California Management Review is the property of California Management Review and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.