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Creating Strategic Objectives

by | May 16, 2017 | Blog, Implementing Strategy

Strategic business objectives are not the same as functional or individual performance objectives. Distinguishing characteristics set them apart, most notably their direct relationship with the current and future health and performance of the company. Creating strategic objectives needn’t be difficult when you understand the key principles and avoid common mistakes.

The purpose of strategic objectives can be described as providing a definitive measure of achievement at some future point and converting the company vision and goals into work streams – and thus, simultaneously, co-ordinating and prioritising projects and the contribution of individuals on a day-to-day basis.


Distinguishing Characteristics

  • Their achievement typically spans more than one financial year
  • They’re multi-functional in the sense their achievement typically involves the concerted efforts of people in different parts of the business
  • They address critical obstacles to forward progress by the company, for example: falling market share
  • They are the principle outcome to the business strategy currently being pursued

An example might be: “Achieve annualised revenue £1M and profit £250K in customer segment ‘x’ by 2020”

Common Areas of Strategic Objectives

  • Market standing – the desired future share of a defined market relative to that of competitors
  • Financial Performance – the achievement of a given return (profit) using an agreed level of assets
  • Innovation – the development of new products and services and the supporting competencies and capabilities
  • Human resources – the identification, selection and development of employees
  • Capital Resources – the identification of sources of capital and their use in the company
  • Assets – the attainment of physical assets required to implement a strategy e.g. equipment, systems
  • Operating Efficiency – the efficient use of resources as measured by the output produced: productivity level

Common Areas of Difficulty

Some common areas of difficulty in creating and achieving strategic objectives are as follows: –

  • Conflicting or Unsupportive objectives – department objectives conflict with each other, for example: an objective to grow market share in a new market segment conflicting with the objective to reduce account management support for new customers where supplier transition is a worry for prospects
  • Not Focused – the objectives fail to address the key issues and challenges confronting the company e.g. falling sales
  • Misalignment – the strategy does not adequately explain how the objective will be achieved. The objective is translated into being an unachievable ambition
  • Measurability – the objective does not have supporting key performance metrics that enable management to plot progress and take corrective action
  • Cascade Blockage – the objective is not cascaded down through the hierarchy of business unit, function, team and individual performance objectives and so doesn’t influence day-to-day decisions and activity
  • Low Levels of Awareness – few people know of or understand the objectives and therefore internal consideration in allocating resources, prioritising activity, etc., is limited

Concluding Thoughts

The strategic objective is the End. The outcome from a strategy, not the strategy itself which is the Ways and Means of achieving the objective. From experience, only big companies overly worry about the distinction between goals and objectives in the same way as mission and vision statements occupy their time. The reality is that strategic objectives serve to support the Business Leader marshal, focus and co-ordinate the company’s finite resources to achieve an outcome they know helps overcome the obstacles to forward progress.