Twenty years from now some of the most recognized companies in the world will not exist. Consider the fact that some household name brands become footnotes in history such as Toys-R-Us, Blockbuster, Plymouth, or Palm. External factors unfolded or perhaps company leaders did not understand the dynamics of the environments in which their companies operated. Either way, these companies did not address the problem of diminishing relevance.
Though many factors contribute to corporate success and longevity, perhaps none is more important than relevance. What is organizational relevance and why should it matter to actuaries? In a business setting, relevance refers to an organization’s pertinence, meaningfulness, and importance to employees, customers, and stakeholders. Because organizational relevance has a finite shelf life, it must be renewed continuously.
An Innosight study on corporate longevity concludes that the average tenure of companies on the S&P 500 was 33 years in 1964 but only 24 years in 2016. It is expected to be 12 years by 2027.
Losing relevance is unintentional and that’s part of the problem—lack of intention to sustain relevance. Out of sight, out of mind. Leaders often keep long lists of important priorities yet overlook the essential elements of earning and sustaining relevance with their stakeholders.
How do Organizations Earn and Sustain Relevance?
One of the most important responsibilities of business leaders is to steer their organizations towards a desired future. Without a clear vision, activities, processes, and management drift toward irrelevance. Conversely, a clear picture of what companies are expected to contribute to society and why it matters helps develop a plan to reach the desired destination. Vision leads, everything else—priorities, initiatives, processes, activities, and results—follows.
An actionable vision provides AIM, meaning it is:
- Aspirational—It is a picture that focuses on how your organization will contribute to society and the world,
- Inspirational—It motivates team members to play a role in bringing the vision to life, and
- Meaningful—It promotes aligning team members’ decisions and actions with the company’s vision.
Without a well-defined picture of what the future should look like, organizations can be busy working in urgent activities that lead nowhere. As the Cheshire Cat in Alice in Wonderland, said “if you don’t know where you want to go, it doesn’t matter which path you take.”
Organizational vision answers the question: what do we want our company to be? Vision guides priorities, activities and inspires engagement. What a company does (mission), why they do it (purpose), and how they fulfill the mission (strategy) are informed by the vision. Strategy defines the organization’s path from the current environment to a future state, from today’s reality to the aspirations of tomorrow, with a vision as the target.
It is said that management is about finding answers and that leadership is about asking questions. Perhaps the most important question leaders can ask is: How do we earn and sustain relevance with our stakeholders and fulfill our organization’s vision?
Article was originally published on Society of Actuaries, October 2021
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