Quick--do you know the difference between a strategy and an objective? Is a mission the same thing as a goal, or a vision? Which, if any of these, can be measured? And how do they all relate to one another?
If you think this is just terminology knit-picking, think again. Confusion over planning terms can reflect a poor understanding of underlying planning processes and desired outcomes. And this can spell bad news for your business.
What's in A Name?
Faulty strategies, inconsistent planning techniques, and poor execution account for much of the misery corporations are feeling today. Fortunately, sobered by the dot-com industry's breathtaking nosedive in recent years, many organizations have gotten religion about the importance of doing careful and thorough strategic planning. For them, it's an absolute survival issue and well worth investing in.
The bad news, however, is that many don't know where to start, how to involve their organizations effectively, or what results to expect as the process unfolds. Much of the problem traces back to a fuzzy grasp of key planning terms, processes and relationships.
Efforts at getting a vigorous and productive planning initiative out of the starting gate quickly become bogged down when members of the same organization can't agree, for example, on what makes a goal different from a strategy, where objectives fit into the mix, or what connection some activity has to the company's core mission. This can quickly take the steam out of even the most well-intentioned efforts and drag organizations back into a dangerous “business as usual” state.
This article discusses strategic planning as a comprehensive hierarchy of integrated elements and processes. Drawn from many different sources and rooted in hard experience, it offers a proven roadmap, based on consistent terminology, for moving an organization successfully from mountaintop vision to measurable results.
Planning for Success
Successful strategic planning is a carefully orchestrated activity that includes an entire group for dedicated periods of time. Everyone involved clearly understands each planning element and the appropriate “flows” among them. Results are predictable, outcomes are measurable, participants are efficient and productive.
The major elements of the planning process--departmental goals, measurable objectives, detailed strategies and tactics--form a hierarchy, where each element has a specific definition and function associated with it (Figure 1). Like tributaries flowing from a single river, every branch in the hierarchy draws from “upstream” sources, going into finer and finer detail as information flows “downstream.” And it all begins with, and is grounded in, the company's mission statement.
Company Mission--Where It All Begins
Ideally, the company's mission, or vision, statement is a relatively short, high-level declaration describing who the company is, what values it embraces and where it fits in its market(s). The mission statement--often the lead-in to a company's business plan--provides a backdrop for everything the company does. It represents the enduring soul of the business, and is both a rallying point for internal employees as well as a clear statement of intent for customers and the market as a whole.
Mission statements set the tone, stake out the territory and guide all planning across the different functions in the organization.
Group Goals--The Way It Will Be
Each group or department in the organization is responsible for specifying how it will help carry out the mission of the company. This is reflected in the department's goals.
Goals describe a desired end state. In themselves they are not measurable or actionable, and they don't have a specific timeframe associated with them. They're like newspaper headlines declaring what the group would like to see happen in the future: “Company achieves market leadership position in the widget industry,” for example, might be one of marketing's goals.
Goals form the foundation layer, spelling out what a particular department plans to achieve. Typically a department will identify no more than 3-5 high level goals.
Once established, these change relatively infrequently. Because the rest of the formal planning process stems from them, goals require careful and thoughtful crafting, with discussion and input from all parts of the business. If the mission statement reflects the soul of the business, goals are its heart, defining its fundamental intentions and directions.
Measurable Objectives--Bringing Goals to Life
Goals become actionable only when they have measurable objectives associated with them. An objective states exactly what needs to be done to achieve the goal, in what timeframe and according to what metrics. Objectives set very specific bars for the group, clearly defining the parameters and measurements for success.
Each goal has a set of objectives associated with it. All objectives must be achieved to claim the goal has been met.
So, for example, to say that the company has achieved its goal of being the dominant player in the widget industry it is determined that by end of Q1, '04 it will have captured at least 35% market share by some standard measure, has been acknowledged as the industry leader by the top 5 analysts for that industry, has achieved revenues of $2.5 billion dollars, and has acquired at least one of its major competitors.
Objectives define the “doneness criteria” for a goal. As such, they need to be complete, realistic and readily measurable. They are also the foundation for a group's action plans, or strategies.
Detailed Strategies--The Paths To Success
Objectives are realized when a set of detailed strategies is linked to them. A strategy describes an approach the group will take to achieve a particular objective.
It states: here's how we're going to achieve the objective given the resources and timeframe available to us. To capture 35% market share, for example, the group will restructure the corporate pricing model in order to go after a whole section of the market it was unable to target previously, thus grabbing additional market share.
Each objective has one or more such strategies linked to it. Together these present a complete picture of exactly how the objective will be met.
Strategies should make explicit the group's assumptions about available resources and critical success factors, including people, funding, economic and market conditions, supporting technologies, and so on.
In short, this is the place in the process for clearly stating the group's needs, flagging risks, and establishing contingencies.
Tactics--Getting the Job Done
Once the group has developed a comprehensive system of goals, objectives and strategies, it has a sound basis for planning and budgeting very specific activities to support them. Tactics are the actual deliverables--programs, materials, presentations, etc.--the group has determined will support the achievement of its goals.
To continue our example, the group will conduct targeted pricing and market research, set up a cross-organizational pricing committee to assess business impact and opportunities, actually put new pricing in place, train the sales force, and so on.
Tactics are the end result of all the planning steps taken prior to them. If the process has been rigorously implemented, it should be possible to trace each tactic all the way back up to the corporate mission and the group's major goals.
At a time when more pressure than ever is being placed on organizations to justify every dollar they spend, having a well-defined and comprehensive strategic planning process is a must. It provides a rational framework for each group's investments and activities, and generally forces accountability and efficiency across the organization.
With a solid understanding of each component in the process and the relationships that exist among them, groups make more intelligent decisions, identify and hit their targets more consistently, and deliver truly measurable value to the company and its customers.
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