Here’s the challenge: On the one hand, entrepreneurs and leaders are expected to be very crisp about what problem they are solving and execute on the value they deliver “here and now.” On the other hand, investors, potential employees, and other stakeholders want to hear the vision of how that can lead to building a substantial company they can bet on for the future.
Think about it from a potential investor or employee’s viewpoint. Why would they invest their dollars or, more importantly, their life in something that either doesn’t deliver value now or doesn’t have a real future? And the balance is vital, too, as too much of one or the other can leave either a sense of nearsightedness or of not being grounded in reality.
Twitter, among others, is struggling with this very problem right now and has seen hundreds of millions of dollars of value and some key executives disappear in the process.
Clearly, vision AND execution are vital to building an enduring company. How do you balance them in the formulation of your business and succeed in the process? And is there any kind of roadmap to success?
The answers to these questions could take up a couple of posts. For today, let’ s start with why vision is so important.
Here are just 3 examples:
1. Market leadership
Market leaders are usually disproportionately more highly valued versus the number two or three in a category and usually capture an unfair share of the market. Think Uber vs. Hailo, Google vs. Yahoo, or Cisco vs. 3Com … or pick your favorite.
Here’s a simple framework to get you thinking:
Comparisons are rarely apples to apples (and no one seems to compare to AAPL themselves these days!). But joking aside, where would you place Facebook vs. Twitter, vs. the myriad other social networking tools and services? It’s hard to argue with a nearly 10x market cap difference between Facebook and Twitter at $215 billion and $23 billion respectively today.
However you look at it, you’ll find Winners take ~60% of the value, Challengers hope to vie for ~30%, and Wannabees fight it out for the rest. And, unfortunately, with fast follower entrepreneurs and lemming money, there are many losers who get zero. And this is not about getting “first mover advantage.” That advantage can easily and indeed often does slip away if execution doesn’t back it up or if vision is too far ahead of the market. So market leaders need to do just that — “lead” the market, but not by too much!
Keep your eyes on the stars and your feet on the ground.” — Franklin D. Roosevelt
Think about that. It means by definition, that you have to have vision beyond where the market is today in order to lead it, but you also have to be sure that vision is well enough grounded in reality. How will you ensure that? That’s why Vision isn’t just a one-line tweet.
Faced with this challenge as a CEO, one of my favorite mantras was, “listen, lead and validate.” That is to say, few customers are visionaries, but if you seek out and listen to enough of them and to market needs, you can gain the critical insights to take a visionary but informed stance. This will enable you to develop long range radar around customer thinking and lead a market. But to be sure it’s not hallucinatory, remember the difference between hallucination and vision is just two letters. P.O. (purchase order). The ability to ultimately get sales from products derived from your vision is often the only validation that really counts.That brings us to customers.
2. Customer stewardship
Visionary and early adopter customers want to find new leaders. They specifically want to gain competitive advantage from them. And while you can only make money from your current deliverables, your vision and roadmap will help customers see your potential for leadership. And customers often need to buy into the future even when writing a P.O. for the present. Likely, the more they pay, the more they want to know about your vision for the future.
Visionary customers also know that large legacy vendors cannot be as responsive to their needs as nimble startups. So the pace of your roadmap will excite them. Even if it’s in small increments, just be sure to consistently deliver rather than over promise so your roadmap gains credibility. Again, that’s the balance of vision vs execution.
(I’ve seen great entrepreneurs like the team at Salsify, get dollars from customers before they even have a product, based on their compelling vision. It helped me make diligence calls before I invested and, more importantly, because they delivered on their vision, they’re building even greater trust with customers and winning even bigger deals now. Customer revenue is the best funding.)
One obvious way to bridge vision and execution between market and customer leadership is to form a Customer Advisory Board. No matter how informal at first, these are invaluable in my experience and can help not only get customer viewpoints and input but also get their buy-in to your vision and roadmap.
A couple of tips: Do NOT compensate in any way for advisory board membership. Some customers can feel compromised or, worse still, even prevented from the conflict of purchasing from you if they have a compensated arrangement. And there’s no need; most love the participation — especially visionary early adopters. Yet you also want to include a balance of the early, major, and later adopters, etc. so you’ve got a real representation of your market.
Of course, immerse them in your product and company roadmap around your Vision. But then really actively listen while you ask real and hard questions like:
- What has to change for you to adopt this vision?
- What don’t we understand about your job and how we work with you?
- Why would this vision actually make a material, measurable difference to your company and why do you care?
(In my framework for building killer Value Propositions, I touch on a lot of this in the evaluation of the gain/pain ratio that you can find here.)
There are many questions like these I have built up over the years, but there’s only one measure for success: Customers think it’s their vision in the end!
3. Overnight success is a many-year journey
This is a marathon not a sprint.
The average period from investment to exit of venture-backed companies during the last decade was nearly eight years. Even ignoring exit, it usually takes several years to build a sustainable business or an independent public company like Twitter. Given that long lead time, investors need to hear your vision of how the market will evolve and what leadership will look like. And as you can hear from Twitter’s struggles, it doesn’t stop when you go public. Vision and execution are always important.
My simple advice with an eye to the long-term sustainable execution that it takes to build an enduring company is to turn this into a RELAY. That is, break down your execution into stages. And, of course, hire and develop a great team that can run the relay and win the race in stages.
I look forward to hearing your vision in the comments below.
Michael Skok partners with entrepreneurs, helping them from inception to market leader. He is fortunate to have backed and built teams that have created billions of dollars of value while focusing on large, market-changing technologies and disruptive business models such as SaaS, cloud computing, open source, and mobile. Current representative investments include Acquia, Apperian, Cazena, Demandware, Salsify, RIFTio and Unidesk, as well as Actifio and Revolution Analytics. He also develops classes and workshops on entrepreneurship for institutions like Harvard. You can follow him on LinkedIn, Twitter and on his website and in his Harvard Innovation Lab class, Startup Secrets.