Strategic Objectives
Strategic objectives turn a passive strategy into an active one. An active strategy is one that motivates and drives people to do their best while they are doing their day job. It is not an additional or separate set of activities bolted on the side or something to be done when time allows.
In the book, The Institute Way, Howard Rolm describes the balanced scorecard method and sums up Strategic Objectives by saying:
“Strategic Objectives are considered the DNA of the Balanced Scorecard system”
They recognise that in any strategic planning process, the way to bring a strategy alive is to create meaningful Strategic Objectives.
Do not be fooled into thinking strategic objectives are just part of corporate strategic thinking. Strategic objectives apply to all levels of an organisation. The statements used may be different in nature, but their impact will be the same. A corporate strategic objective may be more encompassing, for example, ‘Improve Customer Satisfaction’. Whereas a business unit or department level may be more specific for example, ‘Improve customer satisfaction through better customer contact’. And finally, at an individual level, the strategic objective may be more specific still, for example, ‘Improve customer satisfaction by spending at least 40% time on the customer site’.
There is an interesting side note to be pointed out here concerning this ‘personal objective’. An assumption has been made that spending 40% of their time on a customer site is a desirable activity. That is, it will improve customer satisfaction. This may be a valid assumption based on previous conversations with customers. However, it does raise the important question of how to measure success in this case. Clearly, there must be a relationship between improved customer satisfaction and spending time on a customer site. There must be a relationship between the two measurements to determine the success of the strategic objective. They cannot be treated or measured in isolation. For more information on this subject see our white paper ‘Developing Meaningful Key Performance Indicators’.
One of the most common pitfalls organisations fall into when creating Strategic Objectives is to describe activities rather than objectives. Projects and programmes fall into this area. For example, it may be a strategic imperative to “Create a new CRM system and roll it out”. This, however, is not a Strategic Objective. The Strategic Objective that might include this project could be “Improve customer service through tools and technology”. This is not a case of semantics either! “Create a new CRM system and roll it out” is an activity that will come to an end; it is not a continuous improvement objective. The only way to measure it is to check milestones have been achieved and the project has been completed. There is nothing about the project that demonstrates a performance improvement. It is the outcome of the activity, that is, the results of putting the CRM in place, that might (or might not) demonstrate a performance improvement.
Projects and initiatives have a place in performance improvement. It is important however to ensure we are not doing projects for project sake. The reason for the project must be clear and the ‘outcomes’ of the project must be clearly measurable. In this way, they can relate back to strategic objectives.
Strategic objectives are the building blocks of a good strategy. They give clear guidance to the organisation as to what is important. Through description and cascade, they provide the means to ensure everyone is involved and aligned.