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Visionary leadership: preparing today for tomorrow's tomorrow.

Visionary Leadership: Preparing Today for Tomorrow's Tomorrow

Most managers, including those who make it to the top, have a tendency to be preoccupied with the present and immediate future. Their perceptual fields are composed primarily of existing markets, customers, technology, competitors, capabilities, strengths, and weaknesses. Most of their time is spent implementing and modifying plans that were developed years earlier, under very different conditions. They also spend their time reacting to unexpected circumstances, situations, and threats.

Executives preoccupied with what is immediately within their reach are prone to develop corporate strategies that merely "fine tune" past and present products and practices. This has considerable opportunity cost because it keeps them from identifying, cultivating, and capitalizing on emerging opportunities. This "management by Braille" is like a cancer. Its consequences were not noticeable during the 1960s when there were almost unlimited domestic and global growth opportunities. The world economy "pie" was growing so dramatically that any company with a piece of it grew unless top management blew it. The remainder of this century will continue to offer a myriad of opportunities. Companies will succeed only to the extent they are led by executives who have vision to see the opportunities and the ability to strategically position their companies to harvest them.

Executives must develop a corporate vision to broaden the myopic and narrow perspectives plaguing most companies. Only then will executives be able to design corporate strategies to enable their companies to capitalize on emerging opportunities and actualize their potential. Without vision, executives will continue to be hopelessly caught in a perpetual quicksand type of existence. Executives are sealing their company's fate if they assume what worked well yesterday, when fine tuned today, will work tomorrow.

Managers who continue their myopic perspective of trying to improve this year's profits rather than cultivating tomorrow's opportunities are accelerating their company's slide into mediocrity. By concentrating almost solely on improving the annual report and impressing the financial community, executives may actually be accelerating their company's demise.

Visionary thinking can be characterized as the process whereby executives are encouraged to extend their time horizons beyond the typical five year planning cycle. Executives with visionary thinking contemplate the world at least twice as far into the future as the long-range plan. Quite a few executives are quick to exclaim, "Things are changing so quickly it is too hard to plan that far ahead." It is because of the rate and magnitude of change that managers need to spend more time thinking about and preparing for the future. If not, they are destined to operate from a reactive fire fighting stance. This will impede their ability to identify, cultivate and capitalize on emerging opportunities.

If times were stable and conditions certain, then life would be fairly predictable. Under these circumstances, there would be little need for planning, risk taking, or innovation. But as Alvin Toffler indicated in "Future Shock," the rate of change is accelerating. This means managers have less time to anticipate, prepare for, and initiate change.

In "Megatrends," John Naisbitt reinforced Toffler when he said the future has a habit of invading the present. Hickman and Silva note, "Technical innovations, global communications, and fierce competition can bring changes overnight that once took decades or even centuries to manifest themselves."

Visionary executives direct more of their attention from the known present to the less known future. Visionary executives regularly ponder what the world may be like in 10 to 20 years. They have avoided wearing the blinders that limit most executives' perceptual fields to their own companies, industry, country, training, and experiences.

The liberally educated and broadly experienced executive is best suited for visionary thinking. Technical training and in-depth operational knowledge of one industry may have helped managers move up the corporate hierarchy, but the narrowness of their perspective and background undermine their propensity and ability to think strategically. The higher the position in the organization, the more the job involves conceptual rather than technical matters, a long-term rather than a short-term time horizon, and issues of the type of business the company should be, rather than how the company should do business.

The more executives think about the future, the more comfortable they feel about it and the challenges it will bring. After a while, strategic thinking becomes second nature. The future becomes something one welcomes rather than something ominous that evokes considerable anxiety. Once executives recognize change is merely a fact of corporate life, they will be in a position to develop a corporate culture and commensurate strategy where change is the company's way of life.

In periods of rapid change, extending one's time horizon encourages executives to contemplate what may be beyond the horizon. Attention needs to be directed to changes in demographics, population movement, shifting values, changing lifestyles, emerging consumer demands, technological breakthroughs, etc. Visionary executives try to identify the major factors and forces that may affect the overall environment in the future. These factors may be sociological, economic, technological, international, and/or legal in nature. The company then initiates a deliberate and continuous effort to monitor these factors and forces.

Environmental scanning and key factor monitoring are essential if management is to be aware of emerging opportunities and threats at the earliest possible moment. The importance of early "awareness" cannot be overemphasized. Coming up with good ideas has always been an important part of corporate strategy. In the years ahead, having sufficient lead time to capitalize on emerging opportunities will be an essential part of visionary leadership. As Kanter indicated, "Staying ahead of change means anticipating the new actions that external events will eventually require and taking them early, before others, before being forced, while there is still time to exercise choice about how and what-and time to influence, shape, or redirect the external events themselves."

Most executives consider their jobs to be coming up with the answers to various questions. Visionary leaders illustrate the benefits of operating from an anticipatory stance. They go two steps beyond "coming up with the answers." Visionary leaders realize higher positions of management involve identifying the questions that will have to be answered. They also know lasting success comes to those who have the answers before anyone else is even aware of the questions.

Lasting success is contingent on having innovative market offerings to capitalize on emerging market opportunities. Anything less will make being a day late and a dollar short an understatement. The rapidly changing global arena will show no mercy for laggard and reactive companies. Fluidity and leanness have been heralded as essential qualities in the past few years. Timing will be even more important in the years ahead. It will not matter how flexible a company can be if it isn't in the right place at the right time with the right capabilities; it will not be in a position to harvest the myriad of opportunities that will surface. Windows of opportunity do not stay open forever. Leadership, after all, means being out in front. Leadership means not waiting to be invited.

By asking "What if?" questions and formulating a list of possible scenarios, visionary executives may gain insights into what may be over the horizon. In many cases, they recognize certain events are no longer in the "whether or not" category. Certain events or situations are almost inevitable. If so, visionary executives focus their attention on (1) "when" they are likely to occur, (2) what will be the leading indicators, and (3) how they can position their companies to benefit from the situations.

The realization that certain situations may be inevitable and the development of new insights are significant steps in visionary leadership. With a better understanding of what the future may hold, executives can then shift their attention to identifying ways the company may be able to capitalize on the challenges that lie ahead.

Executives with a long-term horizon and mental dexterity are able to develop different perceptions of the future. They may not have a crystal clear picture of what the future may hold, but they will be alert to various possibilities. They are able to gain insights into potential opportunities and threats. For example, by thinking on a global basis, executives will be in a better position to identify the following:

* Emerging needs and wants.

* What products and services will need

to be developed.

* What technologies, capabilities, and

resources will be needed.

* What organizational designs and

managerial approaches will be

appropriate.

Being aware of these problems and opportunities enables executives to operate from an entrepreneurial stance. As someone once said, "Within every problem is a disguised opportunity." With lead time, flexibility, and resourcefulness, executives may be able to be initiators and participants in charge rather than just recipients of change. A dynamic global environment means the marketplace will also be changing. Consumers and institutions will be looking for new ways to do things and new things to do. There will be millions of consumers in search of businesses which will have the technological and managerial capabilities to meet the marketplace's evolving needs.

The visionary executive recognizes that the future will offer an almost unlimited number of opportunities. No company, no matter how large, will have the capability to meet all the needs in the global marketplace. At this point, executives need to develop a list of possible advantageous positions for the company.

The concept of positioning the company has received considerable attention lately. Unfortunately, most of the literature has amounted to intermediate-term or tactical positioning. Too many executives utilize a short-term "incremental" approach to positioning. They may identify where they want the company to be in three years, but when they implement the first year's plan of action, they merely extend their positioning horizon by another year.

When executives are contemplating what business the company should be in, they tend to use their company's present position as the foundation for building its future residence. Executives must be willing as Drucker noted, "to slough off yesterday." Too many corporate strategies are nothing more than minor modifications of existing product lines, efforts to expand sales territories, and attempts to fine tune operations to improve efficiency. As Drucker so aptly put it, "A ship that spends long periods at sea needs to be cleansed of its barnacles or their drag will deprive it of speed and maneuverability." Drucker adds, "Far too few businesses are willing to slough off yesterday, and as a result, far too few have resources available for tomorrow."

Most companies are simply trying to "squeeze" financial results from the same market life cycle they have been in for the last two or more decades. Naisbitt asserts, "We have to release this death grip on the past and deal with the future." Ten years of an "incremental" approach may lead to a completely different and probably less advantageous position. It takes time to position the company to cultivate and capitalize on emerging opportunities. The incremental approach may miss them altogether.

The issue of visionary leadership raises the question of what is short term and what is long term? Short term in one industry may be long term in another industry. Nevertheless, short term is basically dealing in the here and now...almost everything is given...few things can be changed. To the manager, it means making the best out of what is presently available.

Medium term means certain resources can be substituted such as machines for labor, products modified, etc., and "new ways of doing things" can be initiated. Long term opens the door to all sorts of possibilities. Everything can be changed. Not only can the company change its products, locations and processes, it can find "new things to do" including moving into emerging industries.

The long term means almost anything is possible and almost any obstacle can be overcome. Executives need to (1) review the various future scenarios, (2) focus on emerging opportunities, and (3) identify the strategic positions that may be possible. When executives recognize there is no future in the status quo and are willing to slough off yesterday, they can direct their attention to envisioning what the company should become.

All too often, top management is composed of executives who are within a few years of retirement and tend to be tired from their climb to the top. These executives concentrate their attention on making sure nothing goes wrong rather than laying the groundwork for the next decade. They see the light at the end of the tunnel, so they adopt the attitude, "If I don't make any mistakes, I'm home free" or "I won't be around to benefit from new proposals, so why should I take the time or the chance?" The same executives also tend to look for quick fixes or cosmetic solutions for problem situations that require far more comprehensive action.

Unfortunately, the play it safe approach to managing is not limited to executives nearing retirement. The "MBA Syndrome" of risk minimization that stresses running the numbers has become the standard operating procedure for many companies. The "numbers" may be important, but visionary leadership in particular requires a willingness to confront the unknown. To paraphrase the prelude to Star Trek, visionary leaders must willing to, "boldly go where no one has gone before."

The desire to minimize risk is natural, but it has a cost. It undermines entrepreneurial pursuits which are an integral part of visionary leadership. As someone once noted, "If you stay in one business long enough, you'll be out of business."

Visionary leadership, whether it is by founding entrepreneurs or key executives in established companies, obviously means being excited about the future and preparing the company to cultivate the opportunities it will bring.

Visionary leadership is proactive management at its best. The proactive approach to management is based on two fundamental premises. First, executives should attempt to influence the environment as much as possible. Second, if the company is to be subjected to change, then executives should strive to be the initiators of the change. Visionary leaders demonstrate Alan Kay's statement, "The best way to predict the future is to invent it."

Managers have used the product life cycle concept for years in the planning process. This is a misnomer because the product life cycle really refers to the industry life cycle for that type of product. Managers tend to think about the industry as a whole, rather than particular markets. Numerous markets emerge, grow, decline, and die within the industry life cycle. Managers who use the product life cycle as the basis for making strategic decisions tend to believe the industry will last forever. They tend to take the market for granted and operate from a reactive stance. The market life cycle concept stresses the need to identify durable opportunities within one or more industries. Emphasis is placed on identifying windows of opportunity within existing markets as well as capitalizing on emerging markets. The concept resembles the old Maginot line built by the French. The "line" was massive, expensive, and visually impressive, but it also was rendered useless when the Axis planes flew over it and dropped paratroopers in strategic locations.

Companies once were able to keep pace with changing times and evolving opportunities. Companies not in tune with changing market conditions and positioned strategically are destined to fall by the wayside. As someone once noted, "Only two types of people try to dance with elephants: the quick and the dead." Companies will need to be quicker in the years ahead because the elephant (the global marketplace and competitive corporate arena) is becoming more lean and hungry.

The "market" life cycle concept has direct application to visionary leadership. Selecting the target strategic position is a deliberate effort to identify the markets the company will be in, where it expects to be in each life cycle, what segments will be its target markets, what will be the geographic territories it will operate in, and the configuration of the company in financial and structural terms.

The irony of the situation is that the company's target strategic position may place the company in a completely different industry. Executives need to acknowledge that what worked well yesterday may not be effective today. They also need to recognize that what works well today will probably be obsolete tomorrow. They must be prepared to reallocate valuable and limited resources to reposition the company to capitalize on tomorrow's opportunities. Drucker offered an interesting approach to addressing the appropriateness of a company's present position. He encourages managers to take a good hard look at what the company is involved in doing and ask, "If we were not committed to this today, would we go into it?" If the answer is no, then the next question should be, "How can we get out--fast?"

This may explain why John Welch recommended General Electric sell its consumer appliance business to Black and Decker. Quite a few observers thought Welch was selling out the company's heritage. Welch, however, recognized that G.E.'s resources should be redeployed and invested in emerging industries rather than trying to squeeze a profit out of a highly saturated and mature market. Welch believes G.E. must strive to be the leader in each industry it is in. To be the leader G.E. must be number one or number two in everything the company does. According to Welch, companies that refuse to think likewise, who hang on to losing or stagnant operations, won't survive the decade. He realized that if you stay in a business long enough, you will go out of business.

By adopting a long-term horizon and identifying various advantageous strategic positions which will enable the company to capitalize on emerging opportunities, executives will be more willing to slough off yesterday and commit themselves to a challenging and different future. Too many executives wait until their markets are saturated and industries in decline before they start looking for ways to keep their companies afloat. They tend to adopt one of two approaches for dealing with their predicament.

They may take the "wishful thinking" approach where they try to rationalize away recent sales declines and losses as nothing more than temporary consequences of a cyclical economy. Other executives take the "throw more resources at it" approach. They try to increase advertising budgets, engage in price wars, and make minor modifications in product design to reverse their slide. Neither of these approaches has lasting value. They are similar to the actions someone might take after falling overboard at sea in the dark of night. The "wishful thinker" treads water hoping the ship will turn around and rescue him before he drowns. The "throw more resources at it" swims after the ship, but at a speed slower than the ship. In both cases, the swimmer is likely to drown. Wearing a life jacket and learning to swim may be helpful, but they are not enough.

Executives, like the passengers, must position themselves so they do not fall overboard. They need to have the foresight to position their companies to capitalize on emerging opportunities while preventing their companies from getting caught in "no-win" situations. Executives need to take a good hard look at the expected longevity and profit potential of their present market's life cycle. When executives operate with a short-term time horizon, they are unlikely to see the need for major repositioning until it is too late.

The laggard company reflects the typical company that may make minor modifications, but fails to realize it is totally out of position. After two years of declining sales, its executives acknowledge the company has no future if it stays in its present market. The executives undertake crisis-type efforts in a state of "red alert." Their actions will be fruitless; they are too late. Strategic repositioning requires substantial lead time and resources most laggard companies lack. In a final act of desperation, these companies seek a savior to bail them out. Unfortunately, most of these companies cannot be revived.

Executives in the reactive company realize their market may have peaked after sales fail to increase. They are prepared to stay in their market to capitalize on their present position a little longer but they recognize the need to redeploy some of the company's resources to reposition the company to a more advantageous market or industry. The executives realize it may take years to prepare for new markets, develop new technology, and redesign facilities. They also recognize that even by starting now their company may experience a lean period as it undergoes the transition.

The proactive company has a different approach to strategic positioning. The major difference between this type of company and the moderately reactive company is one of timing. Proactive executives recognize the need to start thinking about repositioning the company earlier in the market life cycle. Even during the growth stage, these executives monitor the rate of growth. At the point of inflection, the market may still be growing but it is now growing at a slower rate. By starting the repositioning strategy earlier, their companies have additional time to search for emerging market opportunities. This lead time permits them to develop strategic plans before jumping into new markets with both feet.

Even though the proactive company will undergo major repositioning, it will be evolutionary in nature. The proactive company may be able to grow because it is a jump ahead of the reactive companies that try to get a piece of the action in their attempt to make up for declining revenue in their original market.

Executives in the visionary company are constantly contemplating what the future may hold, searching for lasting opportunities, and moving toward the target strategic position.

The visionary company operates with twice as long a time horizon as even the proactive company. While the proactive company is preparing for the next market life cycle, the visionary company is directing some of its attention beyond the next market life cycle. Its executives are looking for markets it can cultivate and industries it can create.

Quite a few executives have difficulty conceiving of how visionary executives can think that far ahead. Interestingly enough, when a champion pool player was interviewed about his approach to the game, he indicated when he is taking his first shot to break the rack, he is already planning where he wants the ball to be positioned when he breaks the next rack so that when he finishes that rack he will be in the best position to start the third rack. The visionary executive is similar to the pool player who thinks two "racks" ahead. Visionary executives concentrate some of their attention on tomorrow's tomorrow by thinking two markets ahead. Visionary executives and champion pool players have a clear vision of the type of game they want to play and where they want to be.

The targeted strategic position clarifies where executives want the company to be a decade or more in the future. Once the "where" has been targeted, attention can be directed to "how" to get to the desired destination. If the company plans to initiate a major repositioning effort, it should be apparent that fine-tuning existing products and processes will not be enough. If executives want to move their company from where it is to where it should be, then they must establish an atmosphere that encourages innovativeness and unleashes entrepreneurial endeavors.

Executives need to concentrate their attention on activities that require substantial lead time. If executives want to transform their companies, then new markets will need to be researched, new prototypes will have to be created and test marketed, new technologies will need to be adopted, new production and distribution capabilities will need to be developed, new skills will need to be learned, and financial reserves will have to be set aside.

Most of these efforts will take at least 10 years lead time before they will be commercially viable. Executives already acknowledge the need to develop sinking funds for major capital acquisitions or for replacing expensive equipment when it wears out. The same logic needs to be adopted for the company's strategic initiatives.

DuPont provides a good example of committing today's resources to tomorrow's markets. DuPont allocates over $200 million each year to fuel its efforts to position the company to be a leader in the emerging biotechnology field. This commitment is easy to justify because biotechnology in the year 2000 is expected to have at least as revolutionary an impact on the way people live as computer technology has had on the way people work.

Identifying strategic initiatives means the company will no longer "do business as usual." Executives must accept the need to plant the seeds for tomorrow's success rather than focus their attention solely on this year's bottom line. For an organization to be future oriented, its management systems must be designed to direct everyone's attention to doing the things that will move the company to its desired strategic position. Its performance appraisal and reward systems are particularly important. In most companies, these systems tend to concentrate on short-term contribution.

Emhart, Sears, and numerous other companies are now beginning to experiment with new ways to reward executives for adopting a longer-term approach to managing. Louis J. Brindisi Jr., a senior vice-president at Booz, Allen & Hamilton Inc., indicated in Bisiness Week, "CEOs who have implemented long-term incentives are discovering that they can be a powerful management tool."

Research and development is an essential component of the company's mix of strategic initiatives. Few companies can match the track record for new product development set by 3M. Top executives at 3M not only encourage new product development, they set the goal that 25 percent of sales five years from now must come from products that don't exist today. By setting new product development goals and tying rewards to them, managers are committed to sloughing off yesterday and preparing for tomorrow today. IBM is also noted for its fellows program where people are given five years without interference to come up with innovative products and processes.

An Ohio-based manufacturing company recognized the need to have a readily available pool of management talent. Management established the policy that any manager who has not developed at least one person capable of taking his or her place will be terminated. They recognized that a company that does not have a succession plan and a supply of people who are ready, willing, and able to advance will not be able to meet the challenges ahead. This policy made it clear that developing the its human resources is an integral part of its strategic management system and an essential part of each manager's job.

Executives who want to transform their companies need to recognize that strategic initiatives must be identified and implemented for nearly every dimension of the company. They will also have to adopt a balanced perspective. In their zeal to prepare for the future, they cannot afford to ignore the present. Long-term success will require a commitment to the future and the efficient use of the company's present resources. Preparing for tomorrow does not mean immediately dropping everything. It means charting an evolutionary course of action.

Recent management theory suggests that if executives are to choose between trying to change the company's strategy or its culture to reposition, they should concentrate their initial effort on changing the company's strategy. Most corporate cultures are considered to be relatively inflexible in the short run.

One of the advantages of the strategic management process is executives can work on changing the company's culture and its strategy. If executives adopt a longer term time horizon, then they can also direct their attention to changing the company's culture to be consistent with its target strategic position. For the company to be successful in its repositioning efforts, executives must not only recognize the interrelatedness of strategy and culture, their efforts to change both must be carefully synchronized. Failure to synchronize both change efforts can result in a situation similar to when the human mind and body do not work together--there is tremendous frustration and little performance.

Executives have been too myopic and narrow in perspective when directing corporate activities. Instead of operating from a reactive stance and trying to cope with change, they should adopt a visionary stance which will permit them to be innovative and initiate change. If executives are truly committed to achieving excellence, then they must realize that excellence cannot be achieved overnight nor can it be purchased.

Excellence cannot be achieved via merger or a leveraged buyout. In most cases, mergers and acquisitions are merely reactive stopgap measures. They are desperate attempts to "buy" a future for a company that was reactive, myopic, and/or complacent. Executives can longer afford to be seduced by short-term opportunities or tempted to jump start their companies with the balance sheet gymnastics associated with most mergers.

Executives need to recognize that success cannot be bought from outside--it must be built from within. True excellence is more than a one-hundred meter sprint to impress the financial community; it is a marathon where only the companies that are prepared both mentally and physically for the long haul and the sea of change will have the strength and stamina to remain in the game.

Lasting success will only come to the companies that are visionary and committed to developing excellence rather than buying it. Visionary executives identify the company's desired strategic position, develop innovative approaches for making the right things happen, and are willing to commit resources to them even though such actions may reduce short-term profitability. They also have the patience to not be seduced by short-term quick fixes.

If efforts to transform organizations are to be successful, then a deliberate effort needs to be made to develop leaders who are visionary. This effort should not be directed to a few people nor should it be directed solely to the highest levels of management. Warren Bennis stressed the urgency of this matter, "If there was ever a movement in history when a comprehensive strategic view of leadership was needed, not just by a few leaders in high office but by large numbers of leaders in every job, from the factory floor to the executive suite, this is certainly it." As the nature and rate of change accelerates, executives at all levels will need to spend more time thinking about the future, enlisting the ideas of people throughout the company about what it should be, and committing resources to fulfilling the vision.

Visionary leadership calls for a new way of managing. If companies are to be transformed to the visionary mode, then everyone in the organization will need to do the following:

* Be liberated from mundane jobs.

* Be provided with the time and resources to think about the future.

* Have their ideas solicited, recognized, and implemented on an ongoing basis.

Unfortunately, changes in the nature of authority, organizational structure, performance review, and rewards are so foreign to what most managers consider to be "managing", the change may be too great.

As George Gilder once said "In every economy, there is one crucial and definitive conflict...the struggle between the past and the future, between the existing configuration of industries and the industries that will someday replace them."

Dr. Stephen C. Harper is professor of management at the University of North Carolina at Wilmington, and president of Harper and Associates, Inc., a firm specializing in executive seminars. Dr. Harper is the editor and co-author of "Management: Who Ever Said It Would Be Easy?" His latest book, "The McGraw-Hill Guide To Starting Your Own Business," was published last year.
COPYRIGHT 1991 Institute of Industrial Engineers, Inc. (IIE)
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Harper, Stephen C.
Publication:Industrial Management
Date:Mar 1, 1991
Words:5260
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