In an ever-changing business world, it’s imperative to have strategic goals and a plan to guide organizational efforts. Yet, crafting strategic goals can be a daunting task. How do you decide which goals are vital to your company? Which ones are actionable and measurable? Which goals to prioritize?
To help you answer these questions, here’s a breakdown of what strategic planning is, what characterizes strategic goals, and how to select organizational goals to pursue.
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Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees, and ensure organizational goals are backed by data and sound reasoning.
Research in the Harvard Business Review cautions against getting locked into your strategic plan and forgetting that strategy involves inherent risk and discomfort. A good strategic plan evolves and shifts as opportunities and threats arise.
“Most people think of strategy as an event, but that’s not the way the world works,” says Harvard Business School Professor Clayton Christensen in the online course Disruptive Strategy. “When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry."
To craft a strategic plan for your organization, you first need to determine the goals you’re trying to reach. Strategic goals are an organization’s measurable objectives that are indicative of its long-term vision.
Here are four characteristics of strategic goals to keep in mind when setting them for your organization.
The starting point for crafting strategic goals is asking yourself what your company’s purpose and values are. What are you striving for, and why is it important to set these objectives? Let the answers to these questions guide the development of your organization’s strategic goals.
“You don’t have to leave your values at the door when you come to work,” says HBS Professor Rebecca Henderson in the online course Sustainable Business Strategy.
Henderson, whose work focuses on reimagining capitalism for a just and sustainable world, also explains that leading with purpose can drive business performance.
“Adopting a purpose will not hurt your performance if you do it authentically and well,” Henderson says in a lecture streamed via Facebook Live. “If you’re able to link your purpose to the strategic vision of the company in a way that really gets people aligned and facing in the right direction, then you have the possibility of outperforming your competitors.”
While strategic goals are the long-term objectives of your organization, operational goals are the daily milestones that need to be reached to achieve them. When setting strategic goals, think of your company’s values and long-term vision, and ensure you’re not confusing strategic and operational goals.
For instance, your organization’s goal could be to create a new marketing strategy; however, this is an operational goal in service of a long-term vision. The strategic goal, in this case, could be breaking into a new market segment, to which the creation of a new marketing strategy would contribute.
Keep a forward-focused vision to ensure you’re setting challenging objectives that can have a lasting impact on your organization.
Strong strategic goals are not only long-term and forward-focused—they’re actionable. If there aren’t operational goals that your team can complete to reach the strategic goal, your organization is better off spending time and resources elsewhere.
When formulating strategic goals, think about the operational goals that fall under them. Do they make up an action plan your team can take to achieve your organization’s objective? If so, the goal could be a worthwhile endeavor for your business.
When crafting strategic goals, it’s important to define how progress and success will be measured.
According to the online course Strategy Execution, an effective tool you can use to create measurable goals is a balanced scorecard—a tool to help you track and measure non-financial variables.
“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” says HBS Professor Robert Simons in the online course Strategy Execution. “These additional perspectives help businesses measure all the activities essential to creating value.”
The four perspectives are:
The most important element of a balanced scorecard is its alignment with your business strategy.
“Ask yourself,” Simons says, “‘If I picked up a scorecard and examined the measures on it, could I infer what the business's strategy was? If you've designed measures well, the answer should be yes.”
Whatever your business goals and objectives, they must have all four of the characteristics listed above.
For instance, the goal “become a household name” is valid but vague. Consider the intended timeframe to reach this goal and how you’ll operationally define “a household name.” The method of obtaining data must also be taken into account.
An appropriate revision to the original goal could be: “Increase brand recognition by 80 percent among surveyed Americans by 2030.” By setting a more specific goal, you can better equip your organization to reach it and ensure that employees and shareholders have a clear definition of success and how it will be measured.
If your organization is focused on becoming more sustainable and eco-conscious, you may need to assess your strategic goals. For example, you may have a goal of becoming a carbon neutral company, but without defining a realistic timeline and baseline for this initiative, the probability of failure is much higher.
A stronger goal might be: “Implement a comprehensive carbon neutrality strategy by 2030.” From there, you can determine the operational goals that will make this strategic goal possible.
No matter what goal you choose to pursue, it’s important to avoid those that lack clarity, detail, specific targets or timeframes, or clear parameters for success. Without these specific elements in place, you’ll have a difficult time making your goals actionable and measurable.
Once you’ve identified several strategic goals, determine which are worth pursuing. This can be a lengthy process, especially if other decision-makers have differing priorities and opinions.
To set the stage, ensure everyone is aware of the purpose behind each strategic goal. This calls back to Henderson’s point that employees’ alignment on purpose can set your organization up to outperform its competitors.
Next, calculate the estimated return on investment (ROI) of the operational goals tied to each strategic objective. For example, if the strategic goal is “reach carbon-neutral status by 2030,” you need to break that down into actionable sub-tasks—such as “determine how much CO2 our company produces each year” and “craft a marketing and public relations strategy”—and calculate the expected cost and return for each.
The ROI formula is typically written as:
ROI = (Net Profit / Cost of Investment) x 100
In project management, the formula uses slightly different terms:
ROI = [(Financial Value - Project Cost) / Project Cost] x 100
An estimate can be a valuable piece of information when deciding which goals to pursue. Although not all strategic goals need to yield a high return on investment, it’s in your best interest to calculate each objective's anticipated ROI so you can compare them.
Finally, when deciding which strategic goal to prioritize, the importance of the present moment can’t be overlooked. What’s happening in the world that could impact the timeliness of each goal?
For example, the coronavirus (COVID-19) pandemic and the ever-intensifying climate change crisis have impacted many organizations’ strategic goals in 2020. Often, the goals that are timely and pressing are those that earn priority.
As you set and prioritize strategic goals, remember that your strategy should always be evolving. As circumstances and challenges shift, so must your organizational strategy.
If you lead with purpose, a measurable and actionable vision, and an awareness of current events, you can set strategic goals worth striving for.
Do you want to learn more about strategic planning? Explore our online strategy courses and download our free flowchart to determine which is right for you and your goals.
This post was updated on November 16, 2023. It was originally published on October 29, 2020.
Catherine Cote is a marketing coordinator at Harvard Business School Online. Prior to joining HBS Online, she worked at an early-stage SaaS startup where she found her passion for writing content, and at a digital consulting agency, where she specialized in SEO. Catherine holds a B.A. from Holy Cross, where she studied psychology, education, and Mandarin Chinese. When not at work, you can find her hiking, performing or watching theatre, or hunting for the best burger in Boston.
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