Tuesday, April 21, 2009

Losing sight of your vision

Many companies start with vision and a drive to fundamentally impact their chosen areas of products or services that they offer. The one common factor of high performing companies is that they are driven by the passion of the leaders and the employees. Of course many business books try to extract some fundamental commonalities of successful companies. After this round of turmoil many of the companies that are celebrated in these books will be in danger of extinction or severe contraction.
Yet another danger to companies from the current economic turmoil is that many good companies are in danger of becoming ordinary, primarily due to loosing sight of their vision.
In a difficult time the automatic response of the corporate organism is to police or regulate the organization in different ways. Unfortunately in the process of regulating, the regulator assumes tremendous power. And in most organizations, the regulators are not from the core functional units of an organization. Neither are they the vision behind the success of the organization. As the core teams work over time to rescue their companies in these tumultuous times, the regulators attract the lime light of the investors, since the performance of the company are “clearly not “ due to the regulators while the perceived fixes are due to the actions instituted by the regulators. Slowly but surely, the agenda of the company itself changes. Great companies have become mediocre when they got hijacked by the “regulator” managers in the company. After the hijacking the “regulators” become “activist regulators” thereby corrupting the organization and its vision completely. Finally the company turns into an ordinary company.
You know your company is changing when during expansion, issues like tax breaks and employee termination policies of a region take precedence in the decision making over the kind of core infrastructure and people you require developing your competencies and business. You know that your company is being hijacked when the leadership gets excited about expansion of non core areas over core visionary areas. You know your company has lost sight of its vision when a regulator is now running the company.


Anonymous said...

Enron started as an energy company, with its roots in Northern Natural Gas Company in 1932, and continued as an energy company well into the 1970s. Under Ken lay along with a masterful COO Jeff Skilling, and activist CFO Andrew Fastow an Energy company was turned into a trading, brokerage or investment banking company (depending on how you view the activities of Enron in the 90s) The rest of course is history. (“Anatomy of Greed: The Unshredded Truth from an Enron Insider” makes great reading.)
Essentially the energy company got hijacked by individuals whose vision was to create an energy “market” and to trade in everything. In doing so the fundamentals of the energy company got corrupted. Similarly the situation is now ripe for the hijacking of many companies!

Anuj said...

Sure, regulators or activist regulators running any company can never be good for the economy in general. However, it is not easy to overlook the immense longlasting damage caused by the apparent lack of sensible regulation in the financial sector over the last 4-5 years. I would anyday live with sensible regulation by specialist regulators and steady economic growth rather than have a global economy growing at 3.5% a year ago and in deep recession within 12 months of that...not to mention the forthcoming issues from the immense overcapacity that has been built in most industries that had forecast sterling growth for themselves and expanded accordingly. I think a pragmatic solution that takes into account the aspirations of indusrty yet balances the hurt that people outside the financial sector feel about the pain caused by one sector's excesses, is not lack of regulatory interference but sensible and industry relevant specialist oversight - not interference but oversight.

Mav3rck said...
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Vinay said...

While I do agree that hijacking a company for vested, and often selfish interests do spell doom, the devil's adovcate in me cannot agree with the notion that sticking to a vision over eons is what is right for a company.
Visions get burnt out, and need to change to keep up with the market and the world in general. A famous example of this being Nokia, that started out as a milling company, and ended up being a leading cell phone maker.
Therefore I think realignment of visions is ok. The intent behind the realigners can make or break the long term goal of the company. I can speak for my company too, which had the vision for so long to be a primary player in the EDA model market, and 2 years ago decide to focus on a 'non-core' area such as flash memory firmware. Is this a hijack? Well in our case it would definitely be a no. The same founder decided on the new focus, and it was arrived at after looking at the EDA market, and the budding flash memory market. Its a vision seeking to grow the company by mining the essential talent of engineering minds in the company.
To sum up. Changing your vision is in itself not the issue. The vision might have become outdated, perhaps because it was too narrow a vision (case in point, Kodak and films, having to switch to digital cameras), or market just started to weaken. The intent of the changers is what can decide the future. Is it for short term gains, feeding to the frenzy, or is it because the changer sees the direction the company can take years on into the future.

Chandran Nair said...

This is in reponse to Anuj's comment.
I completely agree with the need to sensibly regulate the industry especially in some critical areas of the economy like banking. My note was with regards to companies losing sight of their vision.

Chandran Nair said...

Vinay, you raised some very valid points. I agree that "not losing sight of your vision" should not equate to not changing. Moving from one technology focus to another is not a "hijack". But imagine if in your case the technology driven vision was changed to say "Tax" driven and the decision which location to do the new R&D was then made based on not where you got the best people for the new focus area, but where you got maximum tax rebates then that could constitute a hijack.