You need to set a strategic direction for your business…but it’s easier than you think!
In sailing we have a term called ‘velocity made good” or VMG. Simply put, VMG is your speed towards the next mark. The reason why this is not the same as the boat’s forward speed is that boats cannot always sail directly to where the crew wants to go.
If the next mark in a race is directly upwind, the boat will need to plot a zig-zag course, sailing as close to the wind as possible without stalling. At the same time, the boat will be affected by the waves and by ocean currents, either of which might be pushing it away from it’s objective.
VMG is not constant because the conditions impacting the boat are not fixed. For example, the wind direction is constantly changing, usually by only small amounts, but sometimes a large shift can require a major change in tactics by the crew.
In short, VMG tells the skipper and the crew when to hold fast…and when it’s time to change course. Even if the forward speed is good, without good VMG the boat will lose ground on the competition.
This is an excellent analogy for businesses everywhere. Regardless of what industry you are in, businesses are constantly being buffeted by internal and external forces. Ignoring changes in the business environment can result in a firm falling behind the competition…or worse: remember Nokia, Blackberry, Toy ‘R Us or Woolworths?
How do you know when your speed is in the right direction and progress is towards a worthy goal? How do you know when to change tack and when to hold your nerve…even if it looks like others are doing something different?
The answer lies in applying the VMG to business: in this case, it stands for Vision, Mission & values and Goals. Your Vision is the long-term objective of your firm. Your Mission statement sets out how you plan to achieve your Vision. Your Values set parameters around your strategy and tactics. Finally, your Goals are short- and medium-term objectives that give you something to aim at, to determine if you are making progress and to ensure it’s progress in the right direction!
The VMG process enables you to define what success looks like for your business and to set out how success will be achieved. It also forces you to think about what kind of business you want to be. The flipside of this process is that you will also communicate to staff, clients and stakeholders what you DON’T want to do, or to be.
Such parameters are useful when deciding how to react to changes in the market, or if you should take advantage of the various opportunities that come along.
Here’s how you do it.
1. Create Your Vision
Your company’s vision statement should be a bold, clear, short sentence that every single one of your employees knows and understands. It is a roadmap to your idea of success; if you don’t know what that looks like, how will you know when you achieve it?
The vision statement is a short summary of the long-term objective of the company. What the company will look like, produce, achieve; it is how you know the company is “successful.”
Sample Vision Statements
Here are some real examples of corporate vision statements:
A computer on every desk and in every home.” – Microsoft (at its founding)
“Our vision is to create a better everyday life for many people.” – IKEA
“A world without poverty.” – Oxfam
“To enrich people’s lives with programmes and services that inform, educate and entertain.” – BBC
Creating a Vision Statement
The process of creating a vision statement is something that you can work through alone, or in collaboration with your team. It is highly recommended to review the draft vision statement with your employees to ensure they understand and support the goals and objectives of the company.
Keep the following points in mind when crafting your vision statement:
Think big – Why did you start or buy this business? What was your dream or purpose in doing so?
Think long-term – Vision statements should last five to 10 or even 25 years
Be specific – Use numbers, dates, ratings systems and other ways of measuring success
Be succinct – Use clear, short, simple sentences that are easy to repeat and remember
Be proud of your vision. Keep it visible for staff – post it on the wall, include it in internal communications, and connect day to day activities too it as often as possible.
2. Develop Your Mission
Your mission statement is a general description of how you are going to achieve your vision. This is a longer and more detailed statement that should include what your business is, who your customers are, and how you are different from (better than!) the competition.
Here is a recommended process for completing your mission statement:
Step One: List your company’s core strengths and weaknesses; what do you do well? What do you need to work on, or avoid doing?
Step Two: Who are your primary customers? Describe the types of customers you serve – both internal and external.
Step Three: What do your customers think of your strengths? What strengths are most important to them? Go ahead and ask them if you need to.
Step Four: Connect the strength that each customer values with its customer type. Write it in a sentence. Combine any redundancies.
Step Five: Organize your sentences in order of importance
Step Six: Combine your sentences into a paragraph or two. Elaborate on points as needed. This is your draft mission statement.
Step Six: Consult with your staff and customers, and ask for their feedback. Do employees support the statement? Can they act on it? Do customers want to do business with a company with this mission statement? Does it make sense?
Step Seven: Incorporate the feedback received, and refine the statement until you are happy with it. Then publish it – everywhere.
3. Determine Your Values
Your culture or values statement is the next step in the process. It describes how you and your staff will go about taking action (your mission statement) to achieve your objective (your vision statement).
Much like every family has their own belief system and way of doing things – from cooking to cleaning to raising kids – every company has their own set of values when it comes to running a business. It reflects the unique personality of the organisation.
Creating Your Value Statement
Involve your team in creating your company’s culture or values statement. Generally, this is a point-form document that reflects the beliefs of the company, its employees, and its customers.
It can be helpful to think about the type of people you currently employ, as well as the ones you may wish to employ. What are they like? What are their belief systems? What are their most important values?
Remember that the culture or values statement is usually the longest of the three statements – and that’s okay.
Goals are clear targets that are attached to a specific time frame and action plan; they focus your efforts, and drive your motivation in a clear direction. Goals are different from dreams in that they outline a plan of action, while dreams are a conceptual vision of your wish or desired outcome.
Whether you are setting goals for your personal life, your business, or with your employees, goals that have been developed with the SMART principle have a higher probability of being achieved.
Specific goals are clearer and easier to achieve than nonspecific goals. When writing down your goal, ask yourself the five “W” questions to narrow in on what exactly you are aiming for. Who? Where? What? When? Why?
Measurable goals help you clearly see where you are, and where you want to be. You can see change happen as it happens. Measurable goals can also be broken down and managed in smaller pieces. They make it easier to create an action plan or identify the steps required to achieve your goal. You can track your progress, revise your plan, and celebrate each small achievement. For example, instead of aiming to increase revenue in 2009, you can set out to increase revenue by 30% in the next 12 months, and celebrate each 10% along the way.
Goals that are Achievable have a higher chance of being realised. While it is important to think big, and dream big, too often people set goals that are simply beyond their capabilities and wind up disappointed. Goals can stretch you, but they should always be feasible to maintain your motivation and commitment.
Relevant – or realistic – goals are goals that have a logical place in your life or your overall business strategy. The goal’s action plan can be reasonably integrated into your life, with a realistic amount of effort.
It is essential for every goal to be Time-based – otherwise it is merely a dream. Check in to make sure that your time-frame is realistic – not too short, or too long. This will keep you motivated and committed to your action plan, and allow you track your progress.
On the racecourse, a crew that spends too long deciding how to react to the changing conditions, or makes the wrong decisions, will quickly find themselves at the back of the fleet. A quick glance at the VMG makes those decisions easier.
Ensure that you and your crew know when to tack (or hold) by setting your own VMG!