Businesses struggle to find their place in a field full of competition. Price wars and marketing campaigns attempt to win customers and business, but all too often find the increased sales to be fleeting and fair-weather. In order to avoid losing customers unnecessarily, we recommend you take the time to develop a passionate vision statement for your business.
There are several benefits of having a quality vision statement at the core of a business. From direction for decision-making to change-resistant consumer loyalty, we will list some of the most important benefits a company can see from having a powerful vision statement.
An effective vision statement is the bedrock of any company. Yes, every company worth their salt will have a comprehensive business plan. But, without knowing what you’re trying to accomplish — what impact you aspire to achieve — your business plan would be lacking the essence of why the company exists in the first place.
What are the goals you wish to accomplish through your company? What would it mean if those goals were realized? That is, above and beyond the financial success, what do you envision the success of your company meaning to the world?
This may sound a bit “head in the clouds,” but being able to articulate the spirit of your company will have a lasting business-wide impact. This is simply because the vision statement puts each decision through a quality test. Does this decision exemplify what we are trying to accomplish, or are we just going for a quick fix? Some of the areas of your business that are most affected by this quality test are hiring processes, what products are created and why, and what mergers should be pursued. Here, we will touch on each of these topics to gain a better understanding of what a business can gain by spending the necessary time to develop an effective vision statement.
For the majority of companies, the hiring process is expensive, time-consuming, and oftentimes inaccurate. It’s estimated that the cost of a turnover and hire can range from 30% up to 400% depending on the level of the position. Need to replace a $50,000/year mid-level staff member? Expect to spend at least that much on advertising, time spent interviewing, hiring bonuses, training, and the HR onboarding process.
Sadly, one major reason turnover is as high as it can be in some companies is because of this very issue of not quality checking the hiring decisions. Most notably, making the mistake of hiring skillset over character. automated searches through hiring pools focus on keywords associated with the skills prospective staff already have. But learning a new skill is easier than ever. Online degrees, educational programs like Quora, and CEU opportunities, and even corporate mentorships can easily make up for any lack of skills.
But learning a new skill is easier than ever. Online degrees, educational programs like Udemy and Coursera, and CEU opportunities, and even corporate mentorships can easily make up for any lack of skills. What can’t be taught, however, is the right spirit to mesh well with the team.
When you hire by character, you are able to make the decision based on whether or not the individual was driven by the same motivations as the company itself. Matched purpose is the greatest driver and greatest indicator of longevity in a position. If the staff truly feel that they are working toward something they believe in then quitting an agency becomes connected to a sense that they are quitting on their beliefs. Furthermore, if the articulated vision statement resonates with the staff, then they, in turn, become advocates and coaches to their peers.
The quality test that’s based on a well-articulated vision statement will also help navigate a company through the often treacherous geography of product development. You’re not only deciding what products and business mergers to pursue, you’re deciding how they will be pursued, what they will look like, and how they will function. A perfect example of this is the difference between Microsoft and Apple products.
Microsoft’s vision was to see computers in every home. This means they needed to be affordable and functional for any user. They created an operating system and allowed other companies to create hardware for the OS to function on. This created competition and lowered prices.
Apple’s vision was to see computers as an experience. Sleek, simple, and clean. Something that made a statement. So, they focused on developing a computer product only created by themselves. This way, they would control the quality of the product and make sure that each product spoke to the identity they were striving to achieve.
Using a vision statement to navigate business decisions isn’t just limited to what products are created, but also lends wisdom to potential mergers and products are left on the table.
Several years ago, I worked for a moderate-sized mental health agency. At the time of my hire, they were in the middle of a very large merger with another agency. This potential merger would have taken two moderately-large agencies and combined them into one power-house that would command a large amount of business in the metro area which they served.
In the final weeks of talks, our leadership staff decided to pull out of the merger due to differing visions. While the potential for increased business was enticing, our leadership recognized that if the two boards could not agree on the vision of their shared future, then each decision going forward would be met with unnecessary arguments, undermining, and even dissension. All of which would cost time, money, and the hard-earned reputation my agency had built.
The agency had to leave a lot of potential money on the table when they walked away from the merger, but they realized that other opportunities would come that would not risk reputation or integrity. Without a powerful vision statement — one owned by each member of the leadership — this awareness of risks would not have been possible. The potential for increased profits would have been the only driving force behind the decisions made.
The choices made by the leadership at that mental health agency made a greater impact than what was seen on the surface. The decision showed the industry in their area how important their integrity was, what their vision statement actually meant to the leadership, but most importantly it inspired the staff at the agency. This decision acted as a rallying cry to us as employees, announcing that what we do is more important than the profits we make. Who we are as an agency is more important than a pay-out. We, the employees, were more important than any share of the industry.
This decision inspired staff. We were proud of what we did and who were working for.
Lastly, a Vision Statement provides customers with a visceral connection to the efforts and spirit of the company.
Why does this matter? Because it provides what Warren Buffett refers to as a Moat (an aspect of the business which makes them resistant to competition) within their field. Creating the best product or charging the lowest price are common methods of commanding sales, but those Moats are more fragile than what a powerful Vision Statement can provide. When a business has a Moat based on their vision, it means that their customers feel compelled to purchase from them. No matter the cost or quality difference, customers will give their loyalty to the purpose of the company.
A company can compete with other businesses on several levels. The most important and long-lasting level is customer loyalty.