"Vision is not necessary for profitability, neither long term or short term," he said.
At a glance, the numbers certainly bear out his argument. Marketing consultant Kevin J. Clancy has researched this topic before. He found as many as one-third of all Fortune 500 companies do not have a vision statement. And, of those that do, only 22 percent have transformational vision statements, which strive to change the world (or at least the segment of the world in which they operate).
However, the story of visionless Fortune 500 companies is misleading. David Kinard dug up some interesting research last year. One-third of all Fortune 500 companies in 1970 had ceased to exist by 1983 and nearly two-thirds had vanished by 1995. Not surprisingly, he alludes to the idea that of those that failed, most lacked a working strategic plan, which includes a well-defined achievable vision.
So the answer is more of a mixed bag. You can be profitable without a vision (or an outmoded vision). But the real question is for how long? Ten years? Fifteen years? That might work for serial entrepreneurs, but it doesn't do much for a sustainable company.
Given the failure rate of small businesses and upstarts is even greater, it might make you wonder why so many fail or, more appropriately, why do so many fail despite success and profitability.
More than likely, it seems short-term success can be managed with a mission alone but long-term success is the function of operating in a singular transformational direction or frequently updated adaptive direction. Either will do, but companies, much like people, are apt to be pulled in too many directions without one.
Three examples of failings for abandoning or operating without a vision.
1. Focus failure. An advertising agency start-up earns immediate attention because of its cutting-edge creative and begins to grow. As it does, it also begins to solicit larger accounts that have a stronger voice in the creative process, forcing the agency to produce substandard creative work in favor of retaining the larger accounts.
2. Growth failure. A hamburger stand that prides itself on fresh ingredients reaches critical mass and decides to open two more stores. However, the continued growth forces it to streamline its operations to keep up with demand. So, instead of preparing all the ingredients at each site, it decides to centralize prep work with the consequence of losing its proposition.
3. Profitability failure. A frozen dinner manufacturer develops the right recipes and quickly dominates its niche. However, in order to continue growing, the company has to maximize profits, which could mean smaller portions, cheaper ingredients, or inferior packaging. Any number of these decisions could have consequences.
Those are a few examples, but there are plenty to choose from, small and large companies alike. Blockbuster comes to mind in that its struggles were largely related to moving away from a vision that hinged on its diversity and toward a protectist model.
Had the company stayed focused on its vision, it would have led the electronic rental models (Netflix) and developed blue box (Redbox) before either competitor saturated the market. But it didn't. It did have, however, a solid 25-year run.
The simplicity of a vision and the complexity of applying it.
A vision statement is nothing more than knowing what your company is going to be when it grows up (or in 10-30 years if it is already grown up). And its values are the limitations it has adopted while pursuing that vision. While writing a mission statement can be just as important, the vision statement pinpoints the destination you are hoping to arrive at sooner or later.
Nike is hinged on inspiration. Apple is hinged on (simplified) innovation. Toyota Worldwide is hinged on harmony. And the more aligned they remain with their vision statements, the more likely they will still be successful in 10, 20 or 100 years. The more they are driven by outcomes like expansion, profitability, or market share, the less likely they will achieve that destination.
It's not confined to business alone. While it doesn't have to be formalized in writing, most successful people pursue a vision or sense of purpose. And it is on this micro view that the function of a vision might make the most sense. Even if it is not written per se, people tend to have one whether they realize it or not. All movement leads to a destination.
This might even be why it's important not to mistake vision for outcomes like job security. Outcomes are usually the by-product of a vision, not the pursuit of a destination. For example, someone pursuing job security might stay with a job they dislike until their position or company is no longer secure. Someone who pursues to be on the leading edge of a field, however, is likely always to have job security no matter where they work.
Companies operate in similar ways. If a company is always challenging itself to be innovative, it will win. If a company is challenging itself to earn profits, it may enjoy short-term success until someone else delivers an alternative. If a company doesn't have a vision, it may still move in a direction but the destination will be anybody's guess.