Strategic Intent

Strategic Intent1
LEARNING OBJECTIVES
♦ To understand the hierarchy of strategic intent.
♦ To appreciate the nuances of vision, mission, core values, and goals.
♦ To understand the way a firm’s strategic intent is determined.
♦ To learn how to define and describe an organization’s strategic intent in the form of a
strategy diamond.
♦ To understand the concept of strategic dissonance, and its implication for a firm’s strategic
intent
INTRODUCTION
Effective strategic management begins with the organization clearly articulating its vision for
the future. The concept of strategic intent, popularized by Gary Hamel and C.K. Prahalad, refers
to the purpose of the organization and the ends it wishes to pursue. The strategic intent of the
firm represents the organization’s belief about its state of the future. The purpose or ends the
organization wishes to pursue vary from being really broad and long-term (vision and mission),
to being narrow, with a focus on the short or near-term (objectives or goals).
It is important to realize that achieving the narrow intentions is a necessary condition towards
achieving the broader intentions, and therefore, there needs to be a careful alignment between
these various levels of intentions. For instance, in manufacturing organizations, maintaining
high standards of quality might not be related to profitability. When an organization states
quality and profitability as two sets of intentions, it is also important to specify the relationship
between quality and profitability, i.e., quality is a prerequisite for increased profitability.
In a case where such alignment is lacking, it is possible that the organization and its employees
expend considerable time and effort in pursuing a particular set of narrow objectives that do not
necessarily take them towards their intended state of the future (for example, focusing
excessively on quality and manufacturing a product that is so expensive and unaffordable, at the
cost of profitability). Therefore, it is the broader intentions that define the specific milestones
(the short-term intentions) that the organization needs to cross in order to reach the long-term
intent. The operationalization of the longer-term intentions (for example, profitability through
quality, as opposed to profitability through high-volume production or exploiting economies of
scale) also provides the parameters and criteria that are used by the firm to evaluate their
progress towards the achievement of the firm’s long-term purpose (for example, the way
profitability is defined could vary across firms, such as net profits, return on net assets, and
return on investments).
Consider the vision statement of the Indian state of Andhra Pradesh:
‘Our vision of Andhra Pradesh is a state where poverty is totally eradicated;
where every man, woman and child has access to not just the basic minimum
needs, but to all the opportunities to lead a happy and fulfilling life; a knowledge
and learning society built on the values of hard work, honesty, discipline and a
collective sense of purpose’2.
In the above statement, there are three levels of intentions—‘creating a knowledge and learning
1
This note has been written on the basis of published sources only.
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society’, ‘providing opportunities beyond basic minimum needs’, and ‘eradication of poverty’.
One can see that the broader intention of ‘creating a knowledge society’ is achieved through the
narrow intention of ‘providing opportunity to every citizen of the state’. And both of these will
be achieved through the primary ‘attempt at totally eradicating poverty’. This kind of an
alignment between the broad and narrow intentions provides the government and its officers
with clear directions on how to create a knowledge society—the first step is to ‘eradicate
poverty’; and then focus the attention towards ‘providing opportunity to every person’. As the
State moves towards eradication of poverty, and providing opportunities to all, the larger
purpose must be kept in mind—‘to create a knowledge and learning society’.
HIERARCHY OF STRATEGIC INTENT
The specific relationship between the long-term and short-term intentions is described in the
hierarchy of strategic intent (See Figure 1).

Figure 1 Hierarchy of Strategic Intent

Vision
The vision of the organization refers to the broad category of long-term intentions that the
organization wishes to pursue. It is broad, all inclusive, and futuristic. As the word ‘vision’
suggests, it is an image of how the organization sees itself. It is in most cases, a dream; the
aspirations the organization holds for its future; a mental image of the future state. It might
therefore be difficult for the organization to actually achieve its vision even in the long-term, but
it provides the direction and energy to work towards it. Take for instance the vision statement of
the National Thermal Power Corporation (NTPC), India: ‘To be one of the world’s largest and
best power utilities, powering India’s growth. It can be seen that this statement clearly specifies
the larger purpose of the organization (powering India’s growth), and describes the future state
of the organization (world’s largest and best power utilities). It might not clearly define in what
terms NTPC seeks to be the ‘largest’ or the ‘best’ power utilities in the world, but it definitely
provides the direction to NTPC that it needs to work towards becoming ‘big’.
When people talk about shared vision in organizations, it is expected that members of the
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organization share a common mental image of the future, which integrates their efforts towards
that future state. The vision statement clearly and crisply illuminates the direction in which the
organization is headed. It should be highly motivating, inspiring, and challenging. Good vision
statements act like slogans that drive people towards a dream. They should make people believe
that they are ‘building the cathedral’ rather than just ‘laying stones’. Take the case of NASA’s
vision5: ‘To improve life here; to extend life to there; to find life beyond.’ It conveys a larger
sense of contribution to the people involved with NASA—‘to improve life’, rather than just
‘launching a satellite’ or something like that. This larger purpose binds people together and
creates enthusiasm for performing the set of activities that are required to reach the chartered
ends.
Hamel and Prahalad (1989) suggest that having a broader strategic intent might drive
organizations and people to seek/deploy additional resources to achieve the stated intent, which
would have been otherwise dismissed as beyond the capabilities of the organization. “The
concept [of strategic intent] encompasses an active management process that includes focusing
the organization’s attention on the essence of winning, motivating people by communicating the
value of the target, leaving room for individual and team contributions, sustaining enthusiasm
by providing new operational definitions as circumstances change, and using intent consistently
to guide resource allocations” (Hamel and Prahalad, 1989: p. 4). In defining the strategic intent,
the top management is quite specific about the ends, but leaves room for the employees with
respect to the means, thereby stretching the organization, and setting corporate challenges to
create new sources of competitive advantages. Whereas defining such an intent might not
necessarily require organizations to deploy additional resources, it would definitely stress on
more efficient utilization of the supposedly meagre resources available.
Good vision statements specify the category of intentions that are:
♦ Broad, all inclusive, forward thinking.
♦ Aspirations for the future—ends rather than the means.
♦ Mental image of the future state.
♦ A dream that is shared across the entire organization.
An ideal vision statement should be:
♦ Inspiring, motivating, and challenging.
♦ ‘
A slogan’—it could be encapsulated in an actionable slogan.
♦ Easily communicated and shared among the whole organization and its stakeholders.
Mission
The mission statement makes the vision statement more tangible and comprehensible. In most
cases, the vision statement is just a slogan, a war cry, or even a short phrase containing
superlatives. Managers, especially in large organizations, may find it difficult to relate to broad,
ephemeral vision statements, and seek buy-in/commitment from all the related stakeholders. In
order to make the strategic intent of the organization more articulate and clear, a mission
statement is used. A mission statement clearly specifies (a) why the organization exists, or the
purpose; (b) what differentiates the organization from others, or the identity; and (c) the basic
beliefs, values, and philosophy of the organization.
The purpose of an organization should typically include the various stakeholders and its
obligations towards them. Stakeholders may include customers, employees, governments, and
owners (stockholders). Even though it is acknowledged that the organization needs to honor
obligations to a wide variety of stakeholders, the mission statement establishes the relative
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priority/emphasis placed on meeting the specific requirements of significant stakeholders, by

specifying the specific value added by the firm. The sequence of the statements in the mission
typically signifies the relative priority of the various values added.
The identity of the organization delimits the scope of the business and identifies the key sources
of competitive advantage for that business. In delimiting the scope of the business, the
organization answers the question, ‘what business are we in?’ In doing so, it defines the breadth
of products/markets/target customers served/technology applied by the firm. The scope of this
definition typically serves as the basis of further decisions on corporate strategy and
competition. The mission statement, apart from stating what the organization intends to achieve,
also describes how it is going to do it—by stating the key forms and sources of competitive
advantage.
Mission statements also specify the state of the future (in a more tangible way than the vision
statement), and the role/position of the firm in that future state. The anticipated state of
macroeconomic environment, regulation, market dynamics, competitive forces, and changes in
customer tastes and preferences form the basis of this mapping of the future state of the
organization, and its environment. This again helps the organization in anticipating the broad
changes in the environment and preparing its responses to deal with them appropriately, in tune
with the intended vision.
A fine example of a mission statement is that of the Employees’ Provident Fund
Organization, India. Our mission is to extend the reach and quality of publicly
managed old-age income security programmes through consistent and ever-
improving standards of compliance and benefit delivery in a manner that wins the
approval and confidence of Indians in our methods fairness, honesty and integrity
thereby contributing to the economic and social wellbeing of Indians.
As one can see, this mission statement clearly specifies the purpose of the organization
(contributing to the economic and social well-being of Indians, and extending the reach and
quality of old-age income security programmes), the identity of the organization (publicly
managed old-aged income security programmes), and philosophy of the organization (fairness,
honesty and integrity).
 Therefore, good mission statements provide the organization its own special identity,
business emphasis—and path for development—one that typically sets it apart from
other similarly situated companies—and reveal the value the organization adds to its
stakeholders (what need is being satisfied; who is being satisfied, and how does the
organization go about creating and delivering value).
The Mission of the India Post7 is to provide high quality mail, parcel, and related
services in India and throughout the world; to be recognized as an efficient and
excellent organization exceeding the expectations of the customers, employees,
and the society; to perform the task by:
 total dedication to understanding and fulfilling customer needs,
 total devotion to providing efficient and reliable services, which the customers consider
to be valuable for money,
 total commitment to providing challenging and rewarding career for every employee,
 total recognition of the responsibilities as a part of the social, industrial, and commercial
life of the country, and
 total enthusiasm to be forward-looking and innovative in all areas.

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We can see that the mission statement of India Post clearly defines what value it provides to the
customers (high quality mail, parcel, and related services in India and throughout the world),
who are being satisfied (customers, employees, and the society), and how it is going to satisfy
their needs (customers—through understanding customer needs, providing efficient and reliable
services with value for money; employees—providing a challenging and rewarding career;
society—recognition of the responsibilities of India Post towards social, industrial, and
commercial life of the country).
Therefore, the key elements of a mission statement include:
 Obligations the firm holds to its stakeholders.
 The scope of the business.
 Sources of competitive advantage.
 The organization’s view of the future.
Core values
Core values of the organization represent the commonly held beliefs, mindsets, and assumptions
that shape how work is done in an organization. They clearly specify the organization’s and its
members’ enduring preference for a mode of conduct (in both their business processes, and their
relationship with business partners). Core values are derived out of the organization’s mission
statement(s), and aid in differentiating the organization from others, apart from spelling out the
organization’s expectations and intended behaviors of people
The Indian telecommunications consulting and engineering company,
Telecommunications Consultants India Limited (TCIL) defines its vision as8—‘to
excel in providing communication solutions globally by anticipating
opportunities in technology’. The company also specifies the ‘TCIL Way’—
which the company employees pride as the reason why TCIL is such a high
performer, in spite of being a Public Sector Undertaking (PSU)—as follows.
Probing things which others take for granted. Approaching a problem from an
altogether new direction. Providing solutions where others just see a problem.
That’s the TCIL way of doing things.
Something, which has helped us provide ingenious solutions to clients as diverse
as a remote village in India, to a country in Europe. Perform with distinction
under the most trying conditions. And do the country proud in over 50 countries
around the world.
This definition of the ‘TCIL Way’ provides its employees with a clear direction of what is
expected of them in terms of behavior in their consulting or project execution operations, in
dealing with a variety of clients, in their commitment to work under trying conditions, and in
doing their country proud in the world.
Good core value statements clearly delineate the observable norms of behavior that reflect the
desired core values of the organization. For instance, an organization might have ‘customer
responsiveness’ as its core value, but without proper operationalization in terms of observable
norms of behavior, it might mean different things to different people. Therefore, organizations
strive to operationalize abstract core values into behavioral norms like ‘greeting every customer
when he/she enters or exits the premises’. These core values and the related norms of behavior
reflect the culture of the organization.
Consider, for example, the pharmaceutical company, Aventis India.9 Its core
values have been clearly operationalized into observable norms of behavior, so
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that they can be understood in the same way by all members of the organization,
and practiced in day-to-day behavior.
♦ Respect for People
 Demonstrate respect by developing our people and helping them set and
achieve high performance standards.
 Reward performance.
 Respect diversity.
 Treat all people with dignity.
♦ Integrity
 Walk the talk.
 Honesty.
 Resist politics.
I ♦ Sense of Urgency
 Strive for speed and simplicity in everything we do.
 Fight bureaucracy.
 Focus on delivery.
♦ Networking
 Reach out beyond boundaries to share information and ideas
 Promote collaboration and break down silos
 Positive networking requires courage, discipline and integrity, and refuses
to engage in political workarounds at the cost of transparency
♦ Creativity
 Restless with the status quo
 Think out of the box
 Seek out and adapt best practices. Extend to all areas of work
♦ Empowerment
 Achieve through powerful missions and transparent processes
 Encourage and reward self-confidence and initiative
 Require accountability
♦ Courage
 Invite open and challenging discussion up front
 Face reality, make timely difficult decisions and follow through on them
 Set demanding targets and standards for ourselves and others
Goals
As we have seen, mission statements make vision statements more tangible. Similarly, goals
provide the basis for action towards the achievement of the organization’s mission, in the form
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of specific milestones. Goals are both financial and non-financial, and specify the route the
organization takes to achieve its vision and mission. It is often seen that organizations pursue a
range of financial and non-financial goals, which are not always perfectly consistent with one
another. The goals statement(s) also specify the relative priorities and trade-offs between the
various goals the organization intends to pursue. Goals that make the organization ‘stretch’ in
order to achieve them are called stretch goals, and are considered to be more effective in
extracting the best out of the people and the resources in control of the organization.
In 1995, Council for Scientific and Industrial Research (CSIR), India set the
following goals for the years 200110
♦ Move towards the path of self-financing by generating over Rs. 7 billion from
external sources, as against Rs. 1.35 billion in 1994-95, of which at least 50%
will be from industrial customers (up from 15% in 1994-95); develop at least ten
exclusive and globally competitive technologies in niche areas;
♦ Hold a patent bank of 500 foreign patents (up from 50);
♦ Realize 10% of operational expenditure from intellectual property licensing (up
from < 1%) and
♦ Derive annual earnings of $ 40 million from overseas R&D work and services
(up from < $ 2 million).
These goals set by the CSIR for the year 2001 pushed scientists in the various laboratories and
institutions of CSIR to stretch themselves and patent their inventions. At the head of the
institution level, these goals were instrumental in communicating the need and extent of self-
financing that is expected of them and their laboratories, especially from licensing of
intellectual property, thereby inspiring them to commercialize their intellectual properties.
These stretch goals also pushed scientists who would have otherwise focused their energies on
basic research, to also lay sufficient emphasis on commercially viable research.
Objectives
Objectives are operational definitions of the organization's goals. They provide the measurable
parameters for monitoring/evaluating the performance of the organization. Objectives also
include a time dimension that delineates the specific goals the organization intends to achieve in
defined periods. By providing a series of time-bound objectives, the organization demonstrates
how it can move towards achievement of its goals, through consistently and periodically
achieving its objectives.
Plans
Plans indicate the specific actions that will be taken by the organization in order to achieve the
objectives. Plans specify the roles members of the organization will perform, the resource
allocation across different organizational sub-units and departments, and prioritize and schedule
the various activities.
Determination of a Firm’s Strategic Intent
Even though it is believed that the strategic intent of the firm is a relatively long-term concept, it
needs to be updated with changes in the business environment, broader corporate strategy, or
even changes in ownership or leadership. For instance, a firm that has been traditionally in a
single business could grow into multiple businesses, and suddenly find its business environment
broader and more complex. These are situations where the organization needs to look back and
redefine its strategic intent. We should also acknowledge the danger in redefining the strategic
intent of the firm too frequently. People might lack the commitment to the intent that is variable
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and seems to be not long-term.

The strategic intent of the organization is determined by a continuous interplay of various
forces—the assessment of the strategic options the organization has in front of it, the interests of
various stakeholders associated with the organization, the industry context the firm operates in,
its leadership, history, and culture, and the state of the future as perceived by the organization’s
dominant coalition.
The primary determinant of an organization’s strategic intent is the way the organization sees
itself in the future as represented by its scope of businesses/domains/activities. Some examples
of business scope definitions include FMCG (Fast Moving Consumer Goods) companies,
marketing companies, integrated energy companies, and logistics companies. The firm begins by
asking itself, ‘What business we are in?’ and ‘What do we want to be known for/as in the
future?’
Various stakeholders might have different views about the strategic intent of the organization.
Some of the most dominant stakeholders are the stockholders (shareholders), senior managers,
employees, customers, business partners (vendors, technology partners), the government, and
the society at large. These stakeholders vary in the values and interests and therefore, their
expectations from the organization. These stakeholders also vary in their extent of power they
exercise over the organization, and their inclination to use this power to shape the organization's
intent and strategy. Shareholders are generally the most powerful of these stakeholders.
Therefore, the organization specifies ‘In what way will the organization serve the interests of the
various stakeholders?’
The economic/industry context the firm operates in also has a significant impact on the
organization’s strategic intent. In emerging markets like India, most firms have their intents
limited to market leadership in domestic markets, whereas in industrialized markets, firms might
intend to capture a much larger share of the world market. Moreover the specific industry
context also affects the organization’s outlook to the future—in fast growing emerging
industries like telecommunications, no firm would want to restrict their intent to a specific
technology/product scope due to the anticipated speed of technology innovation and
obsolescence. In mature industries like manufacturing, most firms would want to limit their
product scope, but would want to expand their geographic/customer segment scopes. Depending
on the nature of the economy and industry the firm is operating in, the firm defines ‘its various
scopes’.
For instance, the strategic intent of AirTel (a mobile telecommunications service
provider) 11 is:
Vision: To make mobile communications a way of life and be the customers’ first
choice.
Mission: We will meet the mobile communication needs of our customers
through (a) Error-free service delivery, (b) Innovative products and services, (c)
Cost efficiency, and (d) Unified messaging solutions.
Notice that the company has not committed itself to any specific technology while formulating
its intent, as the industry is currently caught between multiple technologies competing for
dominance, including the Wireless in Local Loop (WLL) driven limited mobility services.
The history, leadership, and culture of an organization play a significant role in shaping the
intent. The history and culture define the breadth of the organization’s intent. For instance, a
firm that has been successful for long periods of time in its business might have a much
narrower vision than one that has been growing exponentially in short periods of time. The
culture of the firm determines how aggressive will the firm be in its pursuit of the stated intent.
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Leadership also plays a significant impact on the organization’s perception of the impending
future. Usually, owner-managers superimpose their personal vision on the organization, and
play a significant role in shaping the strategic intent and direction of the firm. It is also likely
that powerful leaders transform organizations through infusing new intent into the members of
the organization (for example, Steve Jobs at Apple Computers, Andy Grove at Intel, and Jack
Welch at GE). Thus the history, culture, and leadership of the firm determine how broad,
aggressive, and powerful the strategic intent of the organization will be.
To conclude, the process of determining the strategic intent of the firm can be summarized by
answering the following set of questions:
1. What business we are in?
2. What do we want to be known for/as in the future?
3. In what way will the organization serve the interests of the various stakeholders?
4. How does the organization define its various scopes of businesses?
5. How broad, aggressive, and powerful will the organization's intent be defined?
Limitations of Strategic Intent
Strategic intent as a concept has its own limitations. Strategic intent is not a static concept,
rather it is a dynamic one. When firms relentlessly pursue their strategic intent, it is likely that
they do not adapt themselves to the changes in the business environment, corporate strategy,
and/or leadership for long periods of time. Dorothy Leonard-Burton (1995) has highlighted how
such a pursuit of a firm's strategic intent can create core rigidities that blind the firms to
opportunities/ threats in the business environment. In order to overcome this, firms need to use
strategic intent as a guide and direction to the future, rather than an end in itself.
The strategy diamond is an effective method of specifying and articulating the strategic intent in
terms of a roadmap of priorities and activities. As the firm accomplishes the elements of the
strategy diamond or they become redundant/irrelevant due to changes in the business
environment, the firm needs to revisit and re-evaluate their strategic intent.
Statement of the firm’s strategic intent
Having determined a firm's strategic intent, it is important that the strategy of the firm is
conveyed in the right manner to all the constituents/stakeholders in entirety. Hambrick and
Fredrickson (2001) specify the architecture of strategy in the form of a strategy diamond (see
Figure 2.2).
Arenas
Arenas specify in what businesses the firm will be active. Specifying the arenas is similar to
answering the question ‘what business are we in?’ Responses to this question are typically
general and broad, as ‘a national leader in financial services’. In defining arenas, it is important
to be as specific about the products, market segments, geographic areas, and core technologies,
as the firm is likely to focus on arenas like ‘specialized personal banking and consumer
finance’.
Differentiators
Differentiators define the specific sources of competitive advantage for the firm, i.e., they
specify how the firm will attract and retain its customers, and therefore win in the marketplace.
These differentiators are a result of specific decisions taken by managers to make their
products/service/ information offerings unique and valuable. For instance, the State Bank of
India uses its large branch network (about 7,000 domestic branches, and a large number of

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overseas branches) to serve the needs of its customers in every corner of the country. On the
other hand, banks like the Citibank use telecommunication and information technology to serve
their customers ‘round the clock’, leading to the differentiator, ‘the Citi never sleeps’.
There are two important things to remember when we talk of differentiators—first,
differentiators do not just occur, they are a result of conscious choices made by the managers of
the product/service/information offering. It is very hard to create and maintain a differentiation
by firms. When the sources of differentiation are easily imitable, the differentiator does not reap
the intended value. For instance, even though the Graphic User Interface (GUI) was first
introduced in personal computing by Apple, it is Microsoft who reaped maximum value out of
it, by scaling their operating system DOS to Windows. Second, just having a differentiator is not
sufficient, it is important that the differentiation adds value to the customer. For instance, Indian
watch maker HMT continued its focus on mechanical watches in the name of low prices, when
the industry shifted towards quartz watches. Gradually, the industry matured to provide quartz
watches at the same low prices HMT was offering its mechanical watches at, thereby limiting
the value of HMT to the consumers.

Where will be active?

(and with how much emphasis)
 Which product category?
 Which market segment?
 Which geographic segment?
 Which core technology?
 Which value-creation stages?

How will we get there?

What will be our speed and
 Internal development?
sequence of moves?
 Joint ventures?
 Speed of expansion
 Licensing?
 Sequence of initiatives
 Acquisitions?

How will we obtain our

results?
 Low cost through scale,
scope & replication How will we win?
advantage  Image?
 Premium price due to  Customization?
unmatchable service,  Price?
proprietary product  Styling?
features  Product reliability?

Figure 2 Strategy Diamond

Vehicles
Vehicles define how the firm will reach the intended ends—its arenas, and differentiators. In
other words, the vehicles specify the means the firm will use to reach its ends. If the purpose is
to develop competence in a particular product/market, how the firm goes about developing it—
through internal development, joint ventures, or acquisitions. For example, with the emergence
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of product patent regimes as opposed to process patents, Indian pharmaceutical firms have
decided to focus on basic molecular research in order to compete in branded pharmaceutical
products, rather than generics. Dr. Reddy's Labs has consciously decided to focus on specific
therapeutic segments, and have specifically initiated research programs aimed at new drug
discovery, its clinical trials, and subsequent commercialization.
For instance, consider the strategy statement of ICICI Bank13—‘ICICI Bank is
India’s second largest bank with total assets of about Rs. 1 trillion, and a network
of about 540 branches J and offices and over 1,000 ATMs. ICICI Bank offers a
wide range of banking products and| financial services to corporate and retail
customers, through a variety of delivery channels, and through its specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital, asset management, and information technology.’
Note that the above statement clearly specifies the arenas (investment banking, life and non-life
insurance, venture capital, asset management, and information technology), differentiators
(India’s second largest bank, total assets worth Rs. 1 trillion, and a network of 540 branches and
1 000 ATMs), and the vehicles (a variety of delivery channels, and through its specialized
subsidiaries and affiliates) of the Bank’s strategy.
Staging
Arenas, differentiators, and vehicles specify the content of the firm’s strategy; staging refers to
the speed and sequence of major activities of the firm in the pursuit of its intent. In
implementing a strategy consisting of multiple steps/actions, it is imperative to specify the
sequence/priorities of the various actions. It is not always possible to provide the same kind of
focus and emphasis to every one of the firm’s strategic moves, due to either resources or other
constraints. For instance, the Indian e-commerce firm, Fabmart Pvt. Ltd (www.fabmart.com),
began with an online music store, and grew to become one of India’s largest online
supermarkets14. The promoters consciously decided to focus on aggressive spending up-front in
advertising and promotion for building up its customer base, before adding multiple stores,
including gifts, jewels, watches, books, movies, computers, garments, and groceries. The
sequence of strategic moves (staging) was very clear—Fabmart built up a brand image and thus
a loyal customer base, before expanding its operations (and therefore its logistics).
Economic logic
Economic logic defines the specific business model of the firm—how the firm intends to
generate its revenues and profits. Differentiators specify how the firm is different from that of
its competitors, whereas the economic logic defines how the firm will take advantage of these
differentiators. For instance, The Times of India leverages on its large, national circulation base
to charge a premium from its advertisers, whereas another publication from the same group—
The Economic Times—leverages its premium business clientele to attract focused
advertisements reaching the specific readership segments. Indian FMCG firms like the
Hindustan Lever Limited (HLL) and Proctor and Gamble (P&G) use their marketing strength
and country-wide distribution networks to sell large volumes of their products to various
segments of the market. The business model is based on reducing marginal costs through
exploiting scale and scope economies.
Therefore, arenas specify what business the firm is wishing to be in; differentiators define how
the firm will seek and sustain relative competitive advantage over its competitors; vehicles
specify the specific methods (steps) of achieving these ends; staging outlines the speed and
sequence of the various steps; whereas economic logic defines the business model of the firm—
the various sources of revenue and profitability for the firm.
This comprehensive definition of the firm’s strategy defines all those parts that a firm’s strategy
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is built of—the architecture of the firm’s strategy. Along with the proclamation of the firm’s
intent (including its vision, mission, and core values), the statement of strategy diamond (in the
form of arenas, vehicles, differentiators, staging, and economic logic) helps the organization
chart its course for achieving the intent.
Strategic Dissonance
There are quite a few times for an organization operating in highly dynamic environments,
when there might be divergence between (a) the basis of competition in the industry, (b) the
distinctive competence of the firm, (c) the company’s official corporate strategy (its intent and
strategy statement), (d) the company’s strategic actions, and (e) the company’s internal
selection environment for new strategies, including resource allocation rules and organizational
culture Burgelman and Grove (1996) define these situations as ‘strategic dissonance’15.
For instance, the Indian pharmaceutical industry is characterized by the impending change in
patent regimes from product patents to process patents. The process patent regime forced firms
to build distinctive competencies in process chemistry and reverse engineering of products
whose patents had expired in the international market. As the country readies itself for product
patents, firms have to build new capabilities, viz., basic research, and an integrated process of
new drug discovery. Given the time taken for a molecule from discovery to approval and
commercialization (five to seven years), and the large amounts of money required for new
molecule discovery, it is imperative that companies invest heavily in building these
competencies.
These situations that signal changes in the business environment, shifting the basis of
competition among firms, and redefine the way business is done in an industry, are called
strategic inflection points16. At such points, it is necessary that an organization’s strategic intent
is consciously aligned with the specific strategic actions undertaken by the firm’s middle and
lower managers. Without such an alignment, the firm’s managers might continue doing
business in the same old way despite a conscious change in the strategic intent of the firm.
As the Indian pharmaceutical industry goes through this strategic inflection point (shift from
process to product patents), several firms have initiated basic research on several molecules. In
implementing this shift, it is necessary to shift the mindset of the research scientists who have
traditionally focused on improving the efficiency of the manufacturing process through mastery
in process chemistry. New skills and competencies are required to manage the shift from
manufacture of bulk drugs to marketing of branded formulations. The new drug discovery
process, various stages of clinical trials, and the approval process essential for branded
formulations require close coordination across all functions—research, manufacturing, and
marketing. Dr. Reddy’s Labs has consciously identified the need for this change in mindset and
competencies, and has initiated a systemic reorientation process. This reorientation forces the
employees to update their relevant technical and managerial skills; requires them to appreciate
the need for cross-functional coordination; and promotes a culture of knowledge-sharing rather
than knowledge-hoarding17.
Often organizations are found to redefine their identity in designing and specifying their
strategic intent as they deal with strategic dissonance. The significance of visionary leadership
and senior management’s insight about the future is highly pronounced when redefining the
organization’s strategic intent. As we have seen, it is imperative that the organization not only
redefines its strategic intent in times of strategic dissonance, but also aligns its distinctive
internal competencies and strategic actions with the industry environment in order to sustain its
competitive advantage.
SUMMARY
Strategic management begins with the organization clearly articulating its vision for the future.
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 Strategic Intent

It is also important that the organization clearly defines the various levels of its strategic intent
in the form of its vision, mission, goals, objectives, and plans. This clear proclamation provides
the firm with the criteria to decide its future courses of action in pursuit of its broad vision.
The strategic intent of an organization is determined by a continuous interplay of various forces-
the assessment of the strategic options, the interests of various stakeholders, the firm’s industry
context, its leadership, history and culture, and the state of the future as perceived by the
organization’s dominant coalition.
Along with the strategic intent, it is also imperative that the firm specifies its strategic
architecture (strategy diamond) in the form of arenas, differentiators, vehicles, staging, and
economic logic. This specification of a firm’s strategy defines how the firm is intending to
achieve its strategic intent.
There might also be situations (strategic dissonance) where the firm finds that its strategies are
separated from its intent—either too far ahead or too far behind due to the nature of the industry
the firm operates in. This calls for a reconsideration of the firm's intent and strategies so that
they are in alignment with each other.
KEY TERM
Arenas imply a specification of what businesses the firm wishes to be active in.
Core values signify commonly held beliefs, mindsets, and assumptions that shape how work is
done in an organization.
Differentiators are the specific sources of competitive advantage for a firm.
Economic logic is the business model of a firm that specifies how the firm intends to generate
its revenues and profits.
Goals indicate the route the organization takes to achieve its vision and mission.
Mission is a statement that specifies the purpose, identity, and the basic values of the
organization.
Objectives are the operational definition of organization's goals.
Plans are specific actions that will be taken by an organization in order to achieve its objectives.
Staging indicates the speed and sequence of major activities of a firm in the pursuit of its intent.
Strategic dissonance refers to the divergence between the basis of competition in an industry,
the distinctive competence of a firm, the stated corporate strategy of the firm, the firm's strategic
actions, and the firm's internal environment.
Vehicles are the means a firm uses (strategies) to reach its ends.
Vision is the broad category of long-term intentions that the organization wishes to pursue.

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