The first leadership fundamental
Having played college basketball and later being blessed with two sons who were athletically gifted, I did my share of coaching basketball during their school years. As anyone who has coached children knows, a coach receives young players with a mix of skills and abilities. I was assigned very few naturally gifted basketball players.
Typically these young players arrived for practice with little or no knowledge or skills in the game of basketball. However, regardless of the mix of talent that was given me, I set out to win and we usually did. How did I take ordinary, not especially gifted young boys and build them into a winning team? I taught them the fundamentals of the game: blocking out for rebounding, setting picks, passing for assists, getting steals and taking open shots. They learned the fundamentals of the game of basketball, and as a result, they won games. In fact they won championships.
In a similar manner, the majority of people who take on leadership and management positions are rarely naturally gifted leaders and managers who instinctively understand and use the appropriate strategies and tools required for their roles. In fact, most leaders and managers are never taught the fundamentals of the game.
When we use the word leader, we will be referring strictly to that person within a company who is responsible for determining the vision and overarching strategy for the company, or in some cases, a division or business unit within a company. The term manager will be used for that person tasked with carrying out the vision and the overarching strategy determined by the leader.
The leadership fundamentals we're talking about here will be the responsibility of the CEO, business owner or business unit leader charged with the growth in value of their company or division. For obvious reasons, it is equally important for those who manage or implement the vision of the leader to thoroughly understand the tools used by those they have chosen to follow. Someone effective at implementation may someday become the creator of the vision. And, effective managers must not only understand the leader's vision, but in turn be capable of crafting the vision or direction for their area of responsibility so it will mesh with and support that of the leader.
The fundamentals of leadership are:
Creating the vision
Determining the overarching strategies required to achieve the vision
Outlining the organizational requirements for executing the vision
Selecting competent managers to carry out the vision
Implementing a compensation system that measures performance quantitatively and rewards contributors fairly
Formalizing the vision into a written statement
Leadership Fundamental #1 - Creating a vision for the entity
A leader must establish the direction or vision for their enterprise. They must know where their company is and where they will take it. A clear vision carries with it the essential requirement that success can be understood by those who follow, and that success is aligned with the outcomes sought by the followers. In order to be willing and committed, followers must feel that the leader's success will lead to their own success.
There are literally hundreds of websites that provide instruction on the creation of a vision. Wikipedia's definition of Vision, Mission Statement and Values agrees with our own:
Vision: Defines the desired or intended future state of a specific organization or enterprise in terms of its fundamental objective and/or strategic direction.
Mission: Defines the fundamental purpose of an organization or an enterprise, basically describing why it exists.
Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization's culture and priorities.
A mission statement is often confused with a vision statement, but confusing the two would be an error. A mission statement provides a basic explanation of the values or purpose for the organization. A vision is the expression in quantitative terms of where the leader sees the entity at the moment, and where he intends to take it in the future. The mission statement is meant to be reviewed by customers and clients; the vision statement is used internally to give direction to a company's leaders and managers. The vision defines the overarching strategy that will be employed to realize the objectives, and defines success quantitatively so followers will know when they have achieved their objectives.
Guidelines for creating a vision:
Define the existing environment of your enterprise both internally and externally. Project what that environment will look like in five years and in 10 years. Answer these questions:
o Where is your company or division in terms of quantitative performance? What has been your rate of growth on a percentage over the past five years in revenues, gross profit, net income and residual income?
o If you are growing, how fast? If you are making money, how much? If you are winning or losing, define your wins or loses quantitatively.
o How is your overall market doing? How is your company performing in comparison to your competitors? How doesis your market share performance compare to your competitors?
Broadly identify how your company will capitalize on the opportunities defined by your marketplace.
o How are your key products doing in terms of market share?
o Identify broadly the market targets you must meet with these product and service offerings.
o What are the products and services that will be used to achieve the vision?
o What new products will be developed to capitalize on existing market opportunities, and what is the marginal cost/return for each?
o What are the future market opportunities and the products required to capitalize on them, and what is the marginal cost/return?
Define your success quantitatively.
o What will result in terms of revenues, gross profit, and company value (marginal RI) when the enterprise succeeds?
o How will your ranking in your industry or marketplace change if you succeed?