What are Strategic Goals?
Put simply Strategic Goals are the connection between high-level aspirational strategy and specific value-driving activities. Done well they give your strategy teeth.
These goals are indispensable. Not only do they distinguish the organization in a competitive market, they also mold priorities, drive innovation, and inform the effective allocation of resources. And becasue they are designed to be measurable they provide the basis for a rational data-led decision-making culture.
Strategic goals, when aligned with organizational priorities, can provide a sustainable strategic advantage. By reducing waste, allocating resources strategically, and implementing efficient processes, companies can consistently outperform their competitors and enhance long-term success.
We'll cover the details of how to build strategic goals below, but let's start with a clear definition of what we're aiming to create:
- Strategic goals are the high level targets needed to achieve your strategic mission. Ideally this is about five key ambitions, where you can confidently say if we land these then we win.
- Strategic goals should be the critical deliverable for your strategic analysis, as they help synthesis the key learnings into the most relevant themes
- Strategic goals should be measurable, but may require additional levels of detail underneath to clarify and quantify them. This lower level are strategic objectives.
- Strategic goals are the lens against which you need to allocate resources. So they must include all the main (legitimate) reasons for funding projects and teams.
- At their best strategic goals are a focal point for driving alignment to help colleagues internalize the strategy in a simple actionable way
Sound useful? Let's learn more.
Stategic Goals: A Key Part of a Broader Process
Strategic goals are simply one step in flow of strategic intent that starts with mission, and ends with measurable outcomes against which you will judge the success of that strategy. Like any step in a process, they rely on quality inputs, and provide the basis for greater alignment in downstream operations.
Strategic Goals are the Foundation of Strategic Execution
When challenging your organization to clarify strategic goals you may hear that "we do this anyway" or "this is just common sense". To some extent their right; strategic goals aren't a novelty solution. But to skip this step to 'save time' is simply a poor decision, becasue the form the bedrock of a well aligned strategy-riven organization.
- Cognitive Bias: Ambiguity in strategic goals allows individuals to interpret them through their own lens, either sub-consciously or cynically. This radically reduces their value as a mechanism for defining an aligned set of objectives. Does your (stupid) idea align to strategy? Yes I think it does, so let's get spending!
- Disagreements on Relative Importance: Different stakeholders may hold contrasting views on the importance of strategic goals. Addressing these discrepancies during planning eases the creation of action plans. Pairwise is a fantastic way to do this.
- Visualizing Success: Just like in sports, visualizing a grand, challenging goal can drive performance in an organizational setting. However, it’s best to limit the number of such goals, as people simply wont remember them if you have too many.
- Alignment with Objectives: Objectives should cascade from strategic goals. A misalignment indicates either incorrect objectives or a flawed strategy.
- Prioritization: Effective prioritization entails making choices, including turning down seemingly appealing opportunities to concentrate on the more aligned goals. ROI should be a hygiene factor for investment; strategic alignment should be the determinant.
- Focus Reporting: Having a single well-defined dashboard to measure progress against strategy is the holy grail of Business Intelligence. By building a set of clearly defined strategic goals you are putting in the foundations for making that possible.
How to Build Strategic Goals
Ideally, strategic goals should flow from a strategic planning process. However, in many large organizations, that process can be imperfect, leaving managers perplexed about how broad strategic statements should influence their departments.
While we discuss the ideal scenario of strategic planning in another section, let’s address the common scenario where the strategic planning process doesn’t effectively cascade through the organization.
There are proactive measures that can be taken to identify departmental strategic goals even if the overarching strategic planning process isn’t yielding the necessary guidance.
Let’s start with what they are NOT.
Strategic goals are not specific projects or initiatives. When we ask managers what their goals are, we often hear answers like, “I need to deliver Project X” or “I need to launch Product Y”. These are deliverables or actions that exist to help you achieve your goals.
Next, if your organization has a set of key performance indicators, they can help you figure out what the overall goals are. But there are limitations here, though, as KPIs can become “set in stone” in many organizations. This means that your KPIs may reflect your goals from several years ago!
One airline I spoke to had a set of KPIs that they used to drive resource allocations. When asked what one of those KPIs actually meant, nobody could answer - no one even knew what this KPI actually meant - it had simply been there for years and was “how we’ve always done it”!
So now let's focus on how to identify strategic goals, or Criteria as we sometimes call them.
If you have a strategy paper or documentation then review it. Can you turn this into a list of goals, such that we can say that if we deliver the goals then we achieve the strategy. The key point is that a goal is measurable.
Looking at the key projects your team is working on is another good place to start identifying the actual goals. By looking at the “goals of the projects,” you often find the goals of the organization. Let me put that another way. If Project X will help you enter the European market, for example, then “Growing sales by entering the European market” might be one of your goals. Delivering Project X is simply one of the things you’re doing to help achieve that goal.
So, take a look at your major projects and ask, “What are the business goals of this project?” - this will give you a good initial list of strategic goals.
Given that your objective is alignment it’s important not to forget the final, most important step. Go talk to your key stakeholders and share your draft criteria. Make sure the language is familiar. Give people the opportunity to shape the outcome. These criteria need to be stable, so make sure everyone is on board.
Examples of Strategic Goals
Strategic goals are as diverse as the organizations that set them. Their language and content should be authentic and relatable, avoiding unnecessary jargon. As a launchpad for ideas, here are ten examples of strategic goals that may inspire your own goal-setting process:
- Market Leadership: Strive to become the foremost player or leader within a specific market or industry segment. Aim for the greatest market share, not just in terms of volume but also in influence and thought leadership.
- Profit Optimization: Seek to maximize revenue streams and profitability, while concurrently managing expenses and resource utilization. This requires a focus on both top-line growth and bottom-line efficiency.
- Innovation Leadership: Foster a culture of innovation and technological advancement to stay competitive and address changing customer demands. Innovative approaches should permeate all areas of the organization, from product development to service delivery.
- Customer Delight: Endeavor to deliver top-notch products, services, and customer experiences that result in superior customer satisfaction and promote loyalty. The goal is to not just meet but exceed customer expectations.
- Strategic Expansion and Growth: Eye expansion into fresh markets, geographical regions, or customer segments as a means to bolster market share and boost revenue. Expansion should be strategic and based on thorough market research.
- Operational Excellence: Enhance operational processes and efficiency to improve productivity, decrease costs, and optimize resource management. This entails continuous process improvement and lean management practices.
- Workforce Empowerment: Invest in employee training, development, and retention programs to cultivate a competent, motivated, and loyal workforce. Prioritize employee satisfaction and engagement as key components of organizational success.
- Sustainability and Social Responsibility: Incorporate sustainable business practices, minimize environmental impact, and contribute positively to the societal causes. This goal addresses the growing consumer preference for businesses that prioritize ESG (Environmental, Social, Governance) criteria.
- Brand Enhancement: Develop a robust brand reputation and equity through proficient marketing, communication strategies, and consistent delivery on brand promises. A strong brand acts as a competitive advantage in the marketplace.
- Strategic Alliances: Forge strategic alliances and partnerships with complementary organizations to tap into shared resources and strengths. Such collaborations can offer synergistic benefits and access to new markets.
In the realm of Decision Science, strategic goals can be referred to as Criteria. For additional insights into formulating criteria, consider our Building Criteria Ultimate Guide. This comprehensive guide will provide a strong foundation as you begin to construct your strategic goals in a focused manner.
What Makes an Effective Strategic Goal
If you're building strategic goals, we recommend to follow this simple check-list for what makes an effective strategic goal.
- Long-Term. Spanning multiple years or decades to build a durable foundation.
- Aligned with Mission and Vision. Ensuring focus on what is truly important.
- S.M.A.R.T. Specific, Measurable, Achievable, Relevant, and Time-Bound.
- Cascaded through the Organization. Supporting a cohesive aligned culture, where everyone knows what the goals are
- Baked into Objectives. Break down into underlying Strategic Objectives, then assign ownership to accountable leaders in the organization.
- Aligned to Prioritization. Make sure resources are allocated to optimize the deliver of strategic goals.
- Flexible. Adaptable to changes in the market, technology, and customer preferences.
To understand more about the nuances of setting and cascading strategic goals, take a look at our Ultimate Guide on Strategic Planning.
Prioritizing Strategic Goals
Now you have a list of your strategic goals, it’s time to work out the relative importance. Why?
In a nutshell, effective strategy requires deciding what NOT to pursue. A strategy where 'everyone gets a balloon' is not effective.
Take Ryanair as an example. Despite criticism for its customer service, the airline's unwavering commitment to low-cost tickets reflects a strategic choice that resonates with its goals. If it tried to also shoe-horn customer service, choice and loyalty into it's objectives then it would have to pay for them with higher prices.
Let's approach this from the point-of-view of our model. We have goals, but not all of these goals are equal. But stakeholders are unlikely to agree on what matters most, as each sees the strategy with their own perspective. This means that one set of goals can spawn a series of unaligned priorities, as different leaders home in on the goals which align best with their own agenda.
So, we need to “weight” our goals, in a way the builds alignment between different stakeholders.
While this sounds like a simple task, it turns out that there are good ways and bad ways to do it. Simply grabbing a whiteboard and asking a room full of people to weight / rank your goals is typically not very effective, for example. That kind of process is open to decision biases creeping in and tends to be poor at building real consensus and buy-in (though you may think you reached consensus if you’re senior enough to close down dissent).
In practical terms this means asking a series of questions which ask people to judge the relative importance of two ‘competing’ criteria. This is called (rather unimaginatively) a pairwise review.
It has two key benefits. Firstly, we’re asking for relative importance not an abstract value. This sounds like a trivial difference, but research shows that humans work far better with relative judgements.
Secondly, we’ve broken the big picture (“the strategy”) into a series of much more specific questions, each of which can draw on the expertise in the room. Taking time to learn from others is a HUGE component of successful alignment, and this is where you get your executive team to do their bit.
So we’ve taken our strategy, structured it into measurable goals, and then built a model to weight these goals. The leadership team should feel pretty good right now, as they have a fantastic platform for driving alignment. But the job is only halfway done.
So, you are all set to build strategic goals: let's now focus on how we're going to use them.
From Strategic Goals to Strategic Execution
Strategic goals serve as a linchpin connecting strategic intent with strategic activities. Put another way it's where you link insights with actions.
Sometime the goals themselves provide clear direction that can provide an actionable framework for allocating resources. But usually they are too high level to offer such precision. This is where strategic objectives come in - they create more specific threads that will drive towards the overall goal. This added level is key for reducing the ambiguity in the model, because as we have seen, any hint of 'wooliness' in terms of reference will enable stakeholders to impose their own bias (purposeful and accidental) thus diminishing the application of the strategy.
Let's think about this from a practical perspective. My strategic goal is to achieve market leadership within 5 years. But how? Let's add strategic objectives to focus the plan, and create more exacting criteria for our model. Perhaps we need a market leading product. That becomes a strategic objective. Then we need a call center with best in class response times. Perhaps our third goal is to have the best partnerships with third party brands. Now these are measurable initiatives that we can use to narrow the field of ideas we'll be prioritizing next. And given the right data we'll be able to measure our progress too.
This extra layer of precision is in fact the “H” the Analytic Hierarchy Process (AHP for short). AHP is a solution for complex decision making in Decision Science, which we'll refer back to throughout this guide.
While it might appear to be overkill to have both strategic goals and objectives, each serves a distinct purpose.
- Strategic goals are high-level declarations that simplify and communicate the overarching intent. They provide a relatable and easily digestible narrative for investors and employees.
- In contrast, strategic objectives have a more operational flavor, embedding measurable targets that create a policy framework cascading through the organization.
Furthermore, strategic objectives are the basis for effective prioritization, as we are able to challenge business cases far more effectively is we have more to work with than "is your project going to help to make us market leader" (answer... yes of course it is!)
Prioritization and Resource Constraints
Strategic objectives form the blueprint needed for evaluating and prioritizing projects. However, it’s essential to acknowledge that not everything can be a priority. Resource constraints necessitate judicious allocation aligned with the most impactful objectives.
From a strategic standpoint, the pivotal question is where to invest for the maximum return. Creating this link can be intricate, requiring agile alignment of departmental funding and project prioritization to avenues that drive strategic value. Achieving this level of agility demands a growth mindset and a rigorous analytical framework. This is vital to ensure that 'strategic value' is objectively modeled and not distorted by inflated business cases competing for resources.
Agile budgeting unlocks a transformational opportunity for organizations to align their budget allocation with strategic objectives. This liberates companies from traditional, rigid processes and empowers them with greater flexibility in resource allocation. By embracing agile budgeting, businesses can dynamically adjust their financial allocations based on evolving priorities, emerging opportunities, and changing market dynamics. This approach fosters an adaptive and responsive allocation of resources, enabling organizations to optimize their investments and deliver maximum value.
If you're currently sitting in an organization with rigid funding silos where resource allocation seems to correlate to who can produce the best slide decks then don't despair. We like to paint a picture of an ideal process, but the reality is that even baby steps made towards better prioritization will have a big impact on performance. We've got a whole Guide dedicated to Prioritization which you can use.
KPIs and Measurement
Key Performance Indicators (KPIs) are invaluable tools for gauging the progress of your Strategic Goals. These quantifiable measurements can help in understanding whether the goals are on track or need attention. This step should be an integral part of the planning process, such that Strategic Goals should only be signed-off if there is a measurement mechanic in place.
Financial KPIs such as revenue growth, profit margin, and return on investment are common and can often be extracted from modern ERP systems, but sometimes, this step may require data that isn't readily available within the organization. In such cases, it might be necessary to invest in new data sources. For instance, if a Strategic Goal involves enhancing customer experience, organizations might need to deploy customer feedback surveys or integrate analytics tools into their websites and applications.
Additionally, having quality data is crucial. Investing in data sources is not just about acquiring new data but ensuring its accuracy and relevance. This might involve training staff on data collection methods, integrating systems for better data flow, or even partnering with external agencies for data gathering. This investment is fundamental for ensuring that the insights generated are reliable and can inform strategic decisions effectively.
Understanding the Role of OKRs
Objectives and Key Results (OKRs) are another framework that organizations use to track progress. While sometimes used interchangeably with KPIs, OKRs serve a subtlety different purpose.
The simplest way to think about this is that KPIs track impact, while OKRs track what has been done. As such your OKRs are best aligned to projects, which themselves are aligned to delivering strategic goals.
Returning to our example above, our goal was to achieve market leadership, and underneath this one objectives was to build a market leading product. Drill into this further, and you have projects designed to increase speed and add new features. Measuring the delivery of these initiatives is an OKR, against which I can hold the product team to account.
This distinction is key for accountability, as it creates a documented set of outputs that (according to the planning process) need to happen to deliver the strategic goal. Therefore scope creep to ensure on-time, on-budget delivery flags as an OKR fail.
OKRs are also key to help build responsiveness. Let's imagine that the engineering team do a brilliant job delivering their OKRs, but the marketing team are flagging that the customer tracker KPIs says their product seems vastly inferior to a rival one. Why? Because they in turn have innovated and set the bar higher. This should trigger a response, not a blame-game, as the reality is that our Plan A wasn't good enough... so time for Plan B.
Tools to Develop Strategic Goals
Traditional tools such as Excel and PowerPoint have been widely used for strategy planning and presentation. However, these tools have limitations, especially in complex environments where real-time collaboration and data integration are essential. Some limitations include:
- Lack of Real-time Collaboration: Traditional tools are often not conducive to real-time collaboration, making it difficult for teams to work together seamlessly.
- Static Data: Data in Excel or PowerPoint may become outdated quickly, and maintaining it can be laborious.
- Complexity: As strategies evolve, traditional tools can become unwieldy and difficult to manage, especially for complex strategies with multiple moving parts.
Modern Solutions for Strategic Alignment
Despite its critical importance, the software market in this space remains relatively new, so there's more to picking a solution than buying the 'standard one'. Firstly it's important to recognize that you can approach this from a number of different angles.
Focus on ideation with Powernoodle for example, or build OKRs up with Viva Goals. There are an array of choices out there, but we (IMHO) believe that TransparentChoice offers the best solution, with a number of key features creating the foundation for a successful strategic implementation:
- Decision Science. The math inherent in AHP has been proven, the methodology refined through 50 years of application. This works, and not by accident.
- Collaborative Planning: Team members can work together in real-time, ensuring that everyone is on the same page and can contribute effectively. Make the process feel fun.
- Dynamic Data Integration: Modern tools can integrate with various data sources, ensuring that the strategy is always based on the latest information.
- Visualizations and Reporting: Advanced visualizations can help in understanding complex data and in communicating the strategy more effectively.
- Connectivity to Resource Allocation. Combine strategic value with estimations of effort to build the portfolio that delivers the most value, while respecting and solving bottlenecks.
- Scalability: These tools can easily scale as your strategy evolves, making them suitable for both small and large organizations.
By using modern solutions, organizations can more effectively align their resources and efforts with their strategic goals, and ensure a more agile and responsive strategy execution process.
Getting Started - Key Takeways
We've covered a lot of ground here, so let's conclude with the five key things we recommend anyone tasked with building strategic goals needs to have front of mind:
- Create Goals with Meaning: Define strategic goals that are aligned with your mission and vision, and cascade them into actionable objectives. Make then accessible and memorable so you can build the organizational muscle memory to embed them,
- Engage Stakeholders: Include key stakeholders in the planning process to ensure buy-in and alignment across the organization. This is a change process as well as an exercise in model building, so the journey is equally important to the destination.
- Measure and Monitor: Use KPIs and OKRs to track progress toward your strategy, and be ready to pivot based on the data. Remember, if it's not measurable it's not a goal, it's a just hope not a plan.
- Invest in Tools: Leverage modern tools and solutions that enable collaboration, data integration, and flexibility in strategy execution. Excel has hidden costs, not least your peace of mind.
- Know Today's Reality: Consider a HealthCheck of what you have today, in terms of strategy, prioritization process, objectives and reporting. You'll probably find elements of what we've described here, the question is where to tweak and where to challenge.
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