Define your strategic goals and objectives well

 

If you are writing business strategy you will need to answer questions „to whom“, „what“ and „how“ somewhere in the document. It means:

  • Description of target customers and their specific needs related to your products and services.
  • Description of products and services you want to offer and how they differ from direct competitors as well as substitutes.
  • Planned route to target customers.

Keep in mind that external forces such as competition, state of economy and regulation among others could overpower internal capabilities and ambition when shaping strategy. During the process it is necessary to come to a definition(s) of the desired state and position of your company within all aspects of its environment in the specific point of time in future. Those definitions then become your Strategic Goals. They provide a common direction for employees and managers for all their actions during the specified period. In addition Strategic Goals provide owners and other stakeholders with the reference to compare with and evaluate progress at any time.

Strategic Goal is specific, clearly defined and quantified state and/or market position of your company in future. It paves the road for developing strategy plans which need to take you there. After reaching the destination you need to replace the old goal with new one which is usually part of the next strategy planning period.

Strategy plans must be logical, feasible and executable, with quantified targets and check points, and defined in time. They differ from strategy as they depend more on internal capabilities and less on external forces. Key challenges of this phase are: (a) how to maximise utilisation of available resources, (b) set priorities and sequence of activities, and (c) set execution dynamics. In order to pave the road to a desired state precisely and enable successful strategy execution you will need Strategic Objectives.

Strategic Objective is specific, clearly defined change of internal or market capability of your company (action) towards achieving specific new state of affairs (target) within a specific time.

As activities of any company don’t only make impact on its financials and customers but also on its employees, environment and community, company’s performance must be evaluated against all these perspectives. For this purpose I usually use the Norton-Kaplan concept of 4 perspectives. It makes the job of strategy execution easier for managers and all interested parties as it provides best balance and transparency of performance among very different criteria. Norton and Kaplan ask the following questions:

  1. How good is company in achieving its financial targets?
  2. How good is company in satisfying needs of its customers?
  3. How efficient are its internal processes?
  4. How well organised, technology equipped, motivated, skilled and innovative is its workforce?

The best way is to use the Norton-Kaplan framework from the very beginning by defining Strategic Objectives and rolling up Strategic Plans within it. To give you an idea how it works in practice I will present an example from own experience (partially modified to protect sensitive information).

The SME consumer goods distributor in Western Balkans which targets specific market segment by performing marketing, wholesale and retail of its medium range of brands worked and agreed on the next 4-year strategy as follows.

 

Strategic Goals:

  1. Focus on developing own brands and increase their stake in total sales to 25%,
  2. Analyse and revise the brand portfolio to secure targeted average sales margin and sales growth towards 20% market share,
  3. Open one new shopping mall retail outlet each year but don’t exceed the agreed overall debt limit,
  4. Grow and nurture loyalty programme subscribers to achieve their share in retail sales of 25%,
  5. Become a leader in e-commerce for target market segment,
  6. Increase efficiency of project teams.

 

Strategic Objectives:

Financial perspective

  1. Complete cash flow consolidation to achieve its maximum potential in the course of next 9 months in order to compliment finance of future new shop developments,
  2. Increase borrowing (including creditors) up to ¾ of annual turnover to finance new shop outlets,
  3. Grow own web site sales by 50% pa.

Customer perspective

  1. Double the number of loyalty programme subscribers and increase their individual average annual purchase by 25%,
  2. Reduce wrong deliveries to under 1%.

Internal process perspective

  1. Achieve 2 visits to each wholesale customer per month,
  2. Establish position of Brand Manager within 3 months to work with Finance on reviewing the existing brand portfolio and searching for new brands in order to achieve pre-agreed targets in overall wholesale and retail margins,
  3. Introduce loyalty cards with chips and new CRM software within 12 months,
  4. Reduce time to open new retail outlets by 25%.

Learning perspective

  1. Revise bonus system for managers to be based 50% on team success and 50% on achieving individual targets,
  2. Train store managers in organisational and HR skills and give them more power in attracting, developing and retaining best sales assistants. Reduce shop staff turnover by half.

It should be 2-4 Strategic Objectives under each perspective. Base them on strategy and not on your industry.

It is important to delegate each Objective to a specific person in your organisation. Depending on company size it is possible for one person to take care of more than one Objective especially within a single perspective (e.g. Financial Director is responsible for achieving all financial Objectives). As one person in a company always carries responsibility for achieving strategy as a whole (e.g. CEO, entrepreneur-owner) delegating each Objective to an additional co-worker means both individual and shared responsibility in the same time, widening a circle of strategy owners and better buy-in from managers.

If you are the one who is responsible for writing strategy don’t try to do it on your own behind a closed door. Involve whole management team a.s.a.p. as well as other stakeholders and external advisers if necessary. Compile a work-in-progress copy, then organise a strategy workshop to include all relevant people (besides your management team) and discuss all aspects – especially risk. Hopefully you will come to few new ideas, discover some risks that you overlooked before and compile a new version of the strategy document. Another round of casual talks, sometimes a new workshop will be necessary to crystallise a final version of strategy.

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