3 Examples Why Twitter’s Struggle With Vision is a Learning Moment
3 Examples Why Twitter’s Struggle With Vision is a Learning Moment
May 31, 2016Michael Skok
The Importance of Vision
It’s never a good sign when a company’s shares rise on news that the CEO might be ousted. Yet that’s just what happened with Twitter. It’s easy to comment from the sidelines. But sit in on just about any organization meeting to review its strategic Vision and you will see its not as easy as one might think. It doesn’t matter if you are a small startup just trying to articulate where you are heading, or a large public company looking to transform itself or get to the next level of growth — Vision is essential.
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 that 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.
Clearly, vision AND execution are vital to building an enduring company. How does one balance them in the formulation of a business and succeed in the process? And, is there any kind of roadmap to success?
I will divide my answers to these questions into a couple of posts. For today, let’s start with why vision is so important.
Here are just 3 examples of why vision is so important:
1. Market Leadership
Market leaders are usually disproportionately highly valued versus number 2 or 3 in a category, and usually capture an unfair share of the market. Think Uber vs. Hailo, Google vs. Yahoo, or Cisco vs. 3Com, for example.
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 of other social networking tools and services? It’s hard to argue with a nearly 10x market cap difference between Facebook and Twitter at $215bn and $23bn respectively in 2014.
However you look at it, you’ll find winners take ~60% of the value, challengers hope to vie for ~30%, and wanna-be’s fight it out for the rest. Unfortunately with fast-follower entrepreneurs and lemming money, there are many losers who don’t get anything. 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 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 that by definition, one has to have vision beyond where the market is today in order to lead it, but be sure it’s well enough grounded in reality. How will you provide that? That’s why Vision isn’t just a one line tweet.
Image: The Telephone Lines of Manhattan, 1887. Sometimes it pays to look back to see what had to change to get where we are now, before projecting forward. Vectors are good for Vision, but pay close attention to market timing.
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 a hallucination, 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, which brings us to customer interaction.
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. 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 the customer viewpoint 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 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, we touch on a lot of this in the evaluation of the gain/pain ratio that can be found here).
There are many, many questions like these I have built up over the years but only one measure for success: Customers think it’s their vision in the end!
3. Overnight successes are a many, 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 8 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.