The need for tangible strategic objectives
James Leighton Davis, director of Ironclad Strategy, outlines the difference between a firm’s mission or vision statements and its need for tangible strategic objectives
If I’m asked to boil down the setting of effective strategic objectives into one simple sentence it is this: To make the intangible tangible.
A strategic objective, if it is to be relevant and appropriate for your business, must provide a baseline against which your strategic performance can be measured and monitored. If it doesn’t, how will you know if your strategy is working or more worryingly, not working?
No matter what size of adviser firm you are, it is important for the senior management team to spend some considerable time identifying, defining, agreeing and communicating tangible and measurable objectives for the firm.
Generally, this is easier said than done. A mistake most often made by principals and directors is to try to tie the strategic objective too closely in to their vision/mission for the firm. This approach is almost guaranteed to fail.
The six Ps
Let’s take as an example Coca- Cola, a large and extremely commercial organisation operating in a highly competitive market. It has a vision broken down into six Ps:
People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people’s desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
Profit: Maximise long-term returns to shareholders while being mindful of our overall responsibilities.
Productivity: Be a highly efficient, lean and fast-moving organisation.
Now, while this promotes the company as an apparently good egg, it tells us nothing about its strategy. And if it tells us nothing about its strategy, it also tells the company itself nothing about its strategy either. The organisation’s real strategy, if it has one, will be a much more hard-nosed and closely guarded secret, and one wrapped in tangible objectives.
Where the majority of managers come unstuck is that they confuse the two. A good strategic objective should be SMART:
It should also be mutually exclusive and collectively exhaustive (or MECE if you want another anagram).
So remember, while your Mission, Vision and Values statements can be an important part of communicating your company philosophy to stakeholders, they add very little value to your strategy, and it is important not to confuse the two.
FIVE STEPS TO EFFECTIVE STRATEGY
STRATEGIC SUCCESS RELIES upon exceptional planning, implementation and management.
Step 1: Establish sound strategic governance.
Step 2: Use strategic intelligence to determine your objectives.
Step 3: Explore strategic alternatives and identify the best strategies.
Step 4: Use project management principles to ensure the successful implementation of your strategy.
Step 5: Regularly check that your strategy is still relevant and still working!
For more information on Ironclad Strategy go to: http://www.ironcladstrategy.co.uk