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foresight/ vol.01, no.04, aug.99the journal of futures studies, strateg ic th inking and policy

Camford

© 1999 Camford Publishing Ltd

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article:visionary management

This art ic le descr ibes a futures-or iented leadership process ca lled visionarym anagem ent as developed in the Finland Futures Research Centre and im plem entedsuccessfully with several m edium-sized com panies in the 1990s. It is regarded as anaddition to advanced m anagem ent processes aim ed at m aking good businessdecisions. The aim of the process is to create new business ideas for the company in theform of a vision. The visionary process enriches the strategic m anagement of thecom pany by m otivating key people to work jointly as a creative team for longer-termsuccess. It starts from finding a com m on understand ing of the future business situation,and discovers the resources and options availab le to the com pany. It ends up with avision, a synthesis of the com m on understanding of success and the w ill to accom plishit. Tools and approaches applied in this com munication process are presented. Insidethe com pany the vision becom es an em powering m eans for d irecting the future courseof the company, and it is an effective way to comm unicate the aim s of the company andattract external interest and support. The exam ples in the article represent real casesw ith the kind perm ission of the com panies invo lved.

Pentti Malaska is Professor at the FinlandFutures Research Centre, Turku School ofEconomics and Business Administration,POBox 110, FIN-20521, Turku, Finland(Tel: +358 2 3383 528; fax: +358 2 2330 755;email: [email protected]). Karin Holstius isProfessor at the Turku School of Economics andBusiness Administration.

pentti malaskaand karin holstius

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visi onarymanagement

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artic le. visionary management.................................

Over the years, different management doctrines and different management styles have beenposited. From a historical perspective we can observe how management has developedfrom its origins in accounting and budgeting management to strategic planning in the early1970s and strategic management in the mid-1970s, to scenario planning in the late 1970sand the 1980s. More recently, management doctrines have been enriched with visionarymanagement in the 1990s. The experience of the authors in strategic managementconsultancy and research extends over three decades. This article describes their recentthoughts and experiences in visionary management in medium-sized companies.

Making good decisionsIrrespective of which management doctrine is in vogue or which management style isbeing used, for the manager it is always a question of making good decisions. A modernview of good decision making can be found already in the teachings and thoughts ofAristotle.The first rule for making a good decision is to define the purpose and objectivesclearly. Two additional requirements are a thorough understanding of the situation inquestion and information about the available means and resources. Finally we have toperceive the future environment and combine it with the three kinds of knowledge athand ± the purpose, situation and resources ± by using sound logic. Thus a decision-maker can reach a good decision only by deliberating the three kinds of knowledge andthe perception of the environment simultaneously (see Figure 1).

Opportunistic, strategic and visionary decisionsWhen studying the characteristics of a good decision we have to recognize that there arethree main variants of decisions: opportunistic, strategic and visionary. When anopportunistic decision is made the situation is known with certainty and it is evaluatedin the short-term, the resources are fixed and the purpose is to maximize immediateprofit and cash flow. In the case of strategic decisions the situation is assumed to bechanging but still predictable in the time frame of the decision. Beneficial reallocation ofresources is a reaction to the predicted changes and the purpose of adaptation is to str ivefor growth and improved return on investment, ie to improve the conditions ofopportunistic management.Visionary decisions become appropriate when the situationis assumed to include discontinuities and be unpredictable in the long term. New skillsare needed to reframe and envision the business, and the purposes aimed at are:maintaining excellence of performance and creating novel options, or survival in thelonger run (See Table 1).

Knowledge aboutpurpose and objectives

Situationalknowledge

Knowledge aboutmeans and resources

A good decision

Perception andsound logic

Figure 1 An Aristotelian view of good decision making

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Table 1 Three kinds of good decisions

Determinants Opportunistic Strategic Visionary of decision decision decision decision

Situation known changing but discontinuous &predictable unpredic table , emergent

Purpose and objectives m axim ize profit adaptation, return exce llence of perform ance,and cash-flow on investm ent, long-term survival,

g rowth finding new options

Means and resources fixed reallocation of new skills, reframingavailable and of business, envisioning,attainable resources creating new capabilities

Management by Control Reallocation Vis ionary renewal

Combining opportunity, strategy and visionOpportunistic, strategic and visionary management are related to each other in anintriguing way. Opportunistic behaviour is always to act in the best possible way giventhe situation at hand. It is designed to achieve immediate results: getting orders, supplyingcustomers, making money and creating cash flow. Opportunistic management can also bethe best possible strategic and even visionary management in specific circumstances, ie ifthe world is static and perfectly known.

However, the world changes and the opportunities are no longer just waiting to be seized.Therefore, strategic management is needed: managers need to prepare for change, look fornew constellations, for better ways to reallocate their resources and position their companiesin the predictable market.The costs incurred in the reallocation process must be balancedagainst the profit increase and growth from the more efficient opportunistic behaviour thatstrategic management facilitates. Thus, strategic management decisions are reactiveresponses, because they are adaptations to anticipated changes in the business environment.

In contrast to these two forms of management, visionary management is alwaysproactive. It str ives to define new business areas for a company and comprises creation ofnew capabilities, organizational development and acquisition of new know-how andskills.Visionary management ends up with a clear vision to renew strategic options andposition the company in future markets.The cost to the company has to be balanced withthe improved opportunistic moves in the longer run.

Figure 2 illustrates the three modes of management in relation to each other. Thetime span of opportunistic management hardly, if ever, surpasses one year.The time spanfor visionary management, however, varies from case to case and can never bedetermined beforehand, as it depends upon the rate of change in the environment andthe company’s intrinsic capability to learn and change.

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+1 year0 +3 years +5 years

Vision

Focus

Opportunistic management

Strategic management

Visionary management

Figure 2 The relation between opportunistic, s tra tegic and visionary management

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Visionary managementVisionary management is the leadership’s response to the fact that the world and thebusiness environment have become more and more complex and turbulent. A reactionto the turbulence has been the emergence of scenario approaches, but in the 1990s newmeans and new concepts of management are needed to cope with the new environmentand unpredictable changes. Since the end of the Cold War the world is being shaped bymany new forces, such as globalization ± including changes in the natural environmentand unprecedented technological development ± new kinds of economic and politicalintegration on each continent, regionalization and fragmentation , and increasingcriminalization.The changes that have occurred have been strong globally as well as locally,with a sectorally and geographically wide scope. Their effects are lasting and moreoverthey are intertwined in an unknown way.

It has already become a precondition for good decision making to take increasinguncertainty into account. Managers should take advantage of the fact that at present andin the future these profound changes in themselves offer more new opportunities thanever before. In a predictable world there is no need for visionary management; strategicmanagement will do the same at less cost.The task of visionary management is preciselyto get to grips with these new opportunities for future business. In effect, the vision itselfis the company’s blueprint for an entrepreneurial success story.The benefits of visionarymanagement will always be realized with successful opportunistic decisions.

The vision The key concept in visionary management is the vision itself. A vision is anentrepreneurial perception which reveals and points to something new and which seesbeyond what is already being utilized to what is emerging and becoming invented. Avision is also an empowering tool, which makes people proactive.A vision created by themanagement team serves as a base for defining the concrete management tasks of astrategic nature. The company vision created as a result of teamwork also leads tocommitment of the key personnel, and thereby facilitates its own realization.

The end product of the envisioning process is clearly defined and the work must beconducted in a disciplined and organized way.The vision shows the company’s future insufficient detail in order to be relevant when making the most important entrepreneurialdecisions in the company. What the visionary blueprint contains depends on thecompany, but a good checklist is indicated in Table 2.

Table 2 Checklist for a visionary blueprint

Company specific I:1. W hat are the company’s strateg ic business areas in the future2. Scale of the com pany and growth directions envisioned3. Portfo lio of different business ideas selected: `How to make m oney’

Business idea specific:4. Product groups, services and technolog ies5. C lients and quality segments6. Marketing channels and networks7. Core com petencies, resources and management systems

Company specific II:8. Company’s synergic core competencies , resources and management systems9. Company culture, values and leadership

The vision speaks the language of the people, the company’s employees. It is a means forthe company to communicate to its own people, its clients and other parties about itsprospects, interests, trust in the future and its way of doing business.

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Communication creates field effectA vision is created by using all three human faculties: the thoughts, emotions andwillpower of the members of the envisioning team. It is not a result of outside expertanalysis.What each person in the team wants for themselves in their company has to bedisciplined so that the vision also serves as a personal success story.Thoughts are neededfor knowing and understanding the world around us, emotions bring commitment toobjectives, choices and achievement, and willpower is needed to make it all happen (seeFigure 3). When the three faculties are coherently orientated towards success, thecontributions of individuals are enhanced. Company experiences confirm that thishappens in visionary teamwork and communication; however, this is not the only benefitof a visionary process.

When consulting a company in visionary management the mode of operation is toinspire the team members to communicate openly and extensively during creativesessions so that their communication results in new self-understanding and a sharedorientation.What is generated is a synergistic field effect, which is illustrated in Figure 3.Each of the jointed arrows represents a team member with the three faculties more orless bent in the same direction.The striving in a common direction towards the visionand towards a shared orientation appears as a field effect. At the onset of the visioningsessions the arrows, instead of str iving towards a common goal, might go in diversedirections. In the worst case the company’s benefits from its management team areminimal.Visionary management stretches the individual arrows in Figure 3 and orientatesthem in a common direction defined by the vision.

Note: A three-fraction arrow represents a team member and the dashed arrows the field created by team comm unication.

According to the authors’ exprience with many medium-sized companies, thecommunication field effect is crucial for the success of the process. To realize visionarymanagement, special communication tools are needed and var ious team-workapproaches must be used.The goal of the envisioning process must be clearly defined andthe work in the sessions must be conducted in a disciplined and organized way. In thissense the vision of the company is an end product of the team-work process, whichdirects the company into the future.

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Thoughts Emotions Willpower

to know and understand

the world and yourself

(x)

to comm it yourself to

choose and achieve

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Sharedorientationcreated withvisionarymanagement

to make it happen

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Figure 3 Com munication field effect on each m ember and the team in visionary management

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Management by next stepWhat is visionary management all about? Having a vision is not enough. First of all weneed to focus on the vision. Then we have to reflect the present situation against thefocused vision.This enables two basic observations to be made.The first is to realize howthe company’s present performance differs from the vision. The differences are thenadopted as new objectives for the company. Present performance has been possible bymeans of the company’s current core competencies, skills and resources.With these it willnot be possible to achieve the objectives of the vision. For this purpose we have todevelop new core competencies, skills and resources, and this is what is called visionarydevelopment (see Figure 4). The objectives contained in the vision are on the verticalaxis, and the horizontal axis represents the development of skills and resources needed forachieving the objectives.

Visionary development is always an ambitious reframing of the company’s business,which cannot be made in one step. Instead the company’s visionary development has tobe built step by step. When the development tasks have been defined they have to beprioritized and the most important next steps are chosen strategically.This is the interfaceof strategic management and visionary management, the next steps being part of both.Figure 4 demonstrates this logic graphically.

Present state

and performance

Present resources,

skills and knowledge

Vision and focus

Objectivesfor futureachievements

Next step

Visionary targets

New skills, knowledge

and resources demanded

by the vision

Visionary development task

Figure 4 Visionary developm ent

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Tools and approachesThere are many useful tools and approaches which help to get communication in theteam started, maintained and focused on new options:

Trend libraryA trend library documents relevant trends in the business environment. These trendsshould be discussed and appraised from the company’s point of view.

Business reframing toolsLeading management literature provides us with good tools for reframing the company’sbusiness. Examples are Ansoff ’s product-market matrix, Porter’s value chain and his fivecompetitive forces, Ohmae’s three C’s, etc.

Appraisal of companyWith a questionnaire to the management team members and other employees thecompany’s present strategic position and performance can be assessed.The results are thenevaluated by the team.

Appraisal of the team members’ social styleCompanies can benefit from a diversity of social styles.With a rather simple test we canassess the social style of each member and form a pattern of the styles represented by theteam.The differences in style may indicate communication difficulties in the team. Figure 5illustrates the spread of social styles in a case company.

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Assertive

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eero

timo

tuija

kalevi

matti

mari

Team member

reino

jussi

jukkapekkaY

pekkaH ilkka

janolli

Analytical Driver

Amiable Expressive

Figure 5 Social sty les in the team of a case com pany

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Appraisal of the team’s creative problem solving capabilityWith another simple test, which is adequate enough for the purpose of communicationwithin the team, we can assess each member’s specific way of problem solving andcreative thinking and discuss the possible lack of problem solving capability in the team.The differences in style may indicate hidden resources. Figure 6 illustrates the results ofthis kind of appraisal in a case company.

Visionary workshopThe most crucial part of the visionary working process is an intensive workshop, typicallylasting two days, during which the team creates a stockpile of ideas for the vision.Theideas are then integrated by applying Thomas A. Edison’s advice, that when there are twogood ideas, a better third one can be generated from them. Major opportunities for thecompany should thus emerge. The merits of each opportunity as an objective for thecompany are scored. The opportunities are assessed and scored also as a challenge: howdemanding are they for the company if used for reframing? The team then chooses themost promising opportunities for further evaluation. The next step strategy is thendecided upon by prioritizing. Figure 7 graphically illustrates the assessment of opportunitiesin a case company.

Analyst

Synthesizer Administrator

Interactor

Each tetragon representsone person’s profile

Figure 6 Creative problem so lving pro files o f the team mem bers in a case company

In conclusion, the power of strategic vision is demonstrated through its ability to add valueto strategic management, to convey the totality of the needed company reframing, tochange the way the company operates and thinks of itself, to energize action throughoutthe company, to restore the balance between managing and leading, to improveperformance, profitability and external and internal trust in the company. Visionarymanagement is a tool which no company with its eye on the future can afford to ignore.

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ReferencesJohn R. Darl ing, ` Improving comm unication in organizational leadersh ip: effective use of the social style model’,

Psychology, Vol 2, 1991.

Ma laska, Malmivirta, Meristö , Hansen, `Scenarios in Europe: who uses them and why?’, Long Range P lanning , Vol 17,

No 5, 1984, pp 45-49.

Heikki Ma laska, Problem Solving A ssessm ent Tool, G lobal Ingenium Enterprise.

Pentti Malaska, `Multip le scenario approach and strateg ic behaviour in European com panies’, Strateg ic Managem ent

Journal, Vol 4, 1985.

Pro futures, Scenario Building , Convergences and Differences, Proceedings of Pro futures Workshop, IPTS, Technical

Report Se ries EUR-17298-E, European Comm ission Joint Research Centre, 1995.

Ian Wilson, `Rea lizing the power of strategic vision’, Long Range Planning , Vol 25, 1992.

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Promisingopportunities

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Figure 7 Assessm ent of opportunities in a case com pany

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