On Friday, April 20, 2012, the strategy professionals/ peer discussants couldn’t wait to talk about Zombie companies. An assessment of companies that Sydney Finkelstein, Tuck Professor uses to describe companies who were missing out. His list of obvious signs sparked great conversation and opinions were easily expressed in the comfort of the cozy board room of Bank of America’s Chicago offices, our host. In no time we were talking about the responsibility as well as the difficulties associated with changing underlying beliefs and the cultures that perpetuate them.
Ron Heifetz, director of the Leadership Education Project at Harvard University’s John F. Kennedy School of Government expresses the challenge this way.
” in business, vision has come to mean something abstract or even inspirational. But the quality of any vision depends on its accuracy, not just on its appeal or on how imaginative it is….”
An accurate vision fits with wider realities, and as Heifetz says, it helps others around you face that reality too. That’s the challenge, and few leaders seem able to develop and demonstrate both capabilities. Or, perhaps it’s only possible to recognize the failure after the fact?
True enough, some of the same observed behaviors that identify a zombie also represent winning companies, at least in one window of time. Are these companies vampires, resilient in the face of change?
Consider Goldman Sachs, what saves them from becoming a zombie company? Their leadership and culture perceived as arrogant and smug led discussion participants to wonder about their perennial ability to stay on top amidst significant public outrage.
Their record on customer relations is far from stellar. Are they really consistently better at the game than all the other players? Because this is the blog, we can share the link reference example of racy tweets allegedly from the elevator at Goldman Sachs.
In contrast, one of the bubbling realities that companies need to consider is their impact on the community. The measures of success exceed those shared in conversation with and among shareholders. Companies that do consider the community impact in their vision could never continue to behave, or perform, like Goldman.
The one-dimensional success perhaps may be the reason too few companies recognize that they need to keep pushing, reaching and imagining if they wish to also succeed in the future. N-dimensional cultures and visions CAN deliver ROI but they may need some support or latitude.
In celebrating success, its easy to overlook the paradox. As instruments of your success, the values and efforts may lead to myopic thinking. If the goal is to get straight As the ability to acquire the wider learning may get lost. Short term focus also impairs the long-term.
What if any responsibility does investors and public accountability play in the failure of a CEO? Poor fits between stakeholder expectations and company performance often result in shorter CEO tenure. Failure results when CEOs fail to communicate their vision, and spread it within the ranks. Whatever the reason vision plays a central role and performance suffers when it is often poorly conceived, confused with a mission or altogether missing.
Change is hard, but help is available to those leaders willing to learn. Charles Duhigg recounts the story of Paul O’Neill as he took the reigns at Alcoa, and turned the company around based on a vision of safety. There’s more in his book The Power of Habit. For example, such as Charles Duhigg illustrates in his recent book The power of habit. [Note this was a topic the discussion took up earlier this year and notes can be found in the archive.]
Company leadership must be wary of their susceptibility to single dimension focus, the zombie factor. That said, we have to forget that there are always outliers to this rule. For example, one might find these same factors have created vampires or resiliency within some companies. There’s always more to the picture than what the media framing reveals.
How can and do leaders inspire, and manage the natural tension that may arise between strategy and charismatic leadership? Vision and the organizational mission must be shared across stakeholders. Leaders need to recognize their role as stewards of the vision and then cooperate with others, especially outsiders, to make the appropriate adjustments to remain timely, and relevant in the marketplace. Zombie companies, by Finkelstein’s definition, lack a vision; and not victims of a poorly conceived or applied strategy.
How do companies stay relevant amidst the wider turbulence in the environment? Companies lacking a vision altogether represent a different kind of failure. But for those with a vision, their ongoing challenge is to develop and support the vision as their guiding star. Not in an overly dedicated, reverential fashion, but they also need to adjust it from time to time.
Absolutely important for organizations to get their distinctive vision and mission right, but equally important is to pass and communicate them to all stakeholders.
Tough task to balance the creative tension between leader as steward of the vision and holding it at a sufficient distance to also recognize changes on the wider landscape. The skills and strengths to make the course corrections as needed while still driving execution is much more complicated and certainly not an envious task.
How can CEOs be compensated for the vision while being paid to deliver EBITDA?
In closing, we hope you’ll add your thoughts or inspirations, we’d love to keep the conversation going.
Next month the topic is BIG DATA–real challenges to strategy or a just another sheep that we’ve mistaken for a wolf in sheep’s clothing.
Below are the series of articles we reviewed and engendered a valuable discussion. Do feel free to add your comments and/or thoughts.
Perspective from Sydney Finkelstein, a strategy and leadership professor at Dartmouth Tuck, who warns against a culture too insulated and prideful in their success.
How to Spot a Zombie Company (followed by How to Destroy zombie company mentality)
Sydney Finkelstein, Tuck professor of leadership and Strategy.
Forbes, 2-14-12 (and 2/16/12)
Perspectives from Doug Ready and Emily Truelove. Charting a course during Uncertain times, (adapted from the HBR piece they wrote “the power of collective ambition.”)
by Doug Ready and Emily Truelove
Shared Values perspective of Rajeev Peshawaria explains the benefits of creating a vision of what it is that you will give, not just what you aspire to get.
The Three Most Important Questions For Profitable Growth
Finally, if you wonder how to differentiate vision and mission we suggest this post in Fast company
Defining your Company’s Vision
Daniel W. Rasmus, Fast company 2-28-12
 The Leader of the Future, Fast Company 5/31/1999 http://www.fastcompany.com/magazine/25/heifetz.html?page=0%2C0