Strategic Intent

1. The concept of strategic intent

Strategic intent is one of the three essential elements of the strategy formulation process.
Strategic intent interacts with strategic assessment and strategic choice in the thinking
process from which strategies emerge. Strategic intent is particularly concerned with the
purpose of the enterprise and hence the ends of strategies.

2. Strategic intent in practice

The strategy formulation process should result in the strategic intent becoming clearer,
more developed, and more widely understood. This occurs in practice by a process of
continuing discussion informed by the results of strategic assessment and strategic options.
There are no magic methods to achieve quick results.

The strategic intent has to be acceptable to the various individuals or groups who are
stakeholders in the enterprise. The shareholders are normally the dominant stakeholder
group but they are not the only stakeholders to have a degree of influence on the strategic
intent.
The strategic intent will owe something to the history and culture of the enterprise. For
many enterprises, success will gradually slip away unless the strategic intent stretches the
enterprise to strive beyond its present aspirations and practices.

The strategic intent may be in part based on an inspired guess of what the future will be
like - a combination of evolving trends and deliberate effort to affect the future.

Strategic intent includes both goals and vision. Goals are necessary but not sufficient for a
strategic intent. Goals on their own do not inspire people.
A vision is a picture in the mind. The vision must go beyond defining the future products
or services which the enterprise will offer to conceiving also how the enterprise will operate
as an entity, what its values will be, and what it will be like to work in.

The strategic intent must also outline something unique and inspirational. Great enterprises
seem always to have aspirations beyond producing a profit, something that makes them
unique.

The strategic intent should inspire everyone who works for the enterprise and also have an
effect on customers and suppliers. It follows that there may be benefits if the strategic intent
can be expressed in a memorable form or as a slogan.

An effective strategic intent can usually be expressed in relatively few words - a slogan
may be more effective than a long document. A Mission Statement may be used as a means
of publicizing the strategic intent of an enterprise. Good mission statements are pithy and
credible. When genuine strategic intent exists, everyone is aware of it. Few mission
statements achieve this. Too many mission statements consist of motherhood statements or
are the subject of mild skepticism or even mirth among staff. Some researcher suggested
that the only way for a company to stand out is by not having a mission statement at all as
they all seem to be the same.
3. Influences on strategic intent

3.1. The role of leadership in forming strategic intent

The strategic intent may reflect the views of a single inspirational leader. Such leaders tend
to be highly visible and to surround themselves with people who agree with their vision of
the future. As a result, the strategic intent becomes closely related to the leader but also
widely shared and understood. There are obvious examples of this in Jack Welch and Bill
Gates who are often personally associated with the strategic intents of GE (US General
Electric) and Microsoft respectively.

These examples illustrate the importance of leadership in determining strategic intent.

Leadership has a critical role in forming strategic intent and it may be a force for weakness
as well as for strength.
 3.2. Stakeholders and their ability to influence strategic intent
Stakeholders are any group with an interest in the activities and results of the enterprise.
The most obvious stakeholder groups are shareholders, managers, employees and
customers. Suppliers, bankers and the government may also be significant stakeholders.
Shareholders are generally the dominant stakeholder group.

Different groups of stakeholders tend to differ in their values and hence will tend to have
different views about what the strategic intent of the enterprise should be. Some
stakeholder groups are more powerful than others and some are more inclined to exercise
their power than others. Therefore, it is useful to classify stakeholder groups on this basis.

Analysis of stakeholder power cannot be precise but it is usually useful to identify the main
stakeholder groups and to consider how their values and expectations for the enterprise
may differ. The role of management is to achieve a strategic intent that satisfies most of
the stakeholders or at least ensures that no powerful stakeholders are left too unhappy.
 3.3. Impact of context on strategic intent
In chapter 2, we discussed the importance of the context as defining the background to
strategic management. Context is also a factor in determining strategic intent.
Some of the most common ways in which context matter are as follows:

3.3.1. Organizational history and culture

Every organization has its own culture. This culture affects what is done, why things are
done, and how they are done. Cultures form over time as the result of historical events and
the influence of particular individuals who leave their mark. Culture is of fundamental
importance in defining and often in limiting strategic intent.

3.3.2. Ownership, power structure and corporate value

The ownership of large businesses is usually divided between a mixture of individual and
institutional shareholders. With this form of ownership, the drive of the strategic intent is
likely to be towards increasing shareholder value. The major institutional shareholders
cannot easily dispose of their holdings without lowering the share price. This may lead
them to place specific demands on the management or to seek to replace managers.
Individual shareholder, may vary in the relative value they place on dividends as against
increase in share price. Managers have to understand the mix of ownership and the specific
forces at work.

Other common ownership structures include family firms, entrepreneurial enterprises,

mutuals, and cooperatives. For each of these cases, the owners may have distinctive
purposes that will influence the strategic intent of the enterprise. Family firms are often
concerned to maintain continuity of control within the family. They may be unwilling to
raise capital for attractive investments since this would dilute family shareholdings. Family
firms may not concentrate on maximizing profits since an adequate flow of profits to meet
their own needs may be perfectly acceptable and less risky. Handover of authority from
one generation to another can be a particularly delicate issue and may cause a distortion in
strategic intent and strategy in general over several years.
If the founder (or founders) of the firm is still an active participant in its management, there
is likely to be a close connection between the strategic intent of the firm and the personal
objectives of the entrepreneur for his or her own life aims and style. This may result in
decisions that appear irrational from the point of view of the business as an entity.

Customers, policyholders, or members own mutuals, cooperatives, and associations. The

owners may therefore be a large group of people with no natural way of forming a
consensus or of applying clear pressure on managers. The managers may be free to act in
broad accordance with the principles on which the institution was founded. This sometimes
results in great clarity and simplicity of intent; at other times it seems to lead to stagnation
or sleepiness.

4. So what is strategic intent?

Strategic intent describes what the enterprise means to become the future. Strategic intent
will outline the unique vision of the enterprise in the future and set goals to be achieved.
The strategy formulation process, leaders, stakeholders, and context all influence strategic
intent.

Strategic intent depends on the different aspirations of stakeholder groups particularly the
most powerful. Strategic intent may also be influenced by the history of the enterprise and
its ownership structure.

The strategy formulation process must concern itself with the fundamental purposes for
which the enterprise exists. The purposes always include the need for survival and to make
a profit. Most businesses also aim for growth and to provide their shareholders with value.
Great enterprises need a greater strategic intent than just making money.