The Guiding Policy II

they define a method  of grappling with the situation and ruling out a vast array of possible actions.

Good guiding policies are not goals or visions or images of desirable end states.  Rather, they define a method  of grappling with the situation and ruling out a vast array of possible actions.  For example, Well Fargo's corporate vision is this: "We want to satisfy all of our customers' financial needs, help them succeed financially, be the premier provider of financial services in every one of our markets, and be known as one of America's great companies."

This "vision" communicates an ambition, but it is not a strategy or a guiding policy because there is no information about how this ambition will be accomplished.  Wells Fargo chairman emeritus and former CEO Richard Kovacevich knew this an distinguished between this vision and his company's guiding policy of using network effects of cross-selling.  That is, Kovacevich believed that the more different financial products Wells Fargo could sell to a customer, the more the company would know about that customer and about its whole network of customers.  That information would, in turn, help it create and sell financial products.  This guiding policy, in contrast to Wells Fargo's vision, calls out a way of competing--a way of trying to use the company's large scale to advantage.

ACTION POINT: Understand the distinction between guiding policy and vision.