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Strategic Intent

Strategic Intent.
Purpose the Organisation strives for. Could be in form of Vision and Mission statement for the Organisation as a whole Corporate. On one hand, Strategic Intent envisions a desired leadership position and establishes the criterion the organisation will use to chart its progress, at the same time, Strategic Intent is more than simply unfettered ambition. The concept also encompasses a active management process that includes : focusing the organisations attention on the essence of winning, motivating people by communicating the value of the target, leaving space for individual and team contributions, sustaining enthusiasm by providing new operational definitions as circumstances change and using intent consistently to guide resource allocation. At Business level, may be expressed as Business Definition and Business Model. Overall, Strategic Intent points to what a firm should set to achieve. Stretch, Leverage and Fit are 3 important concepts of Strategic Intent.

Cont
Stretch : Misfit between Resources and Aspirations. Leverage : Refers to concentrating, accumulating, complementing, conserving and recovering resources in such a manner that the base of meagre resources is stretched to meet the aspirations of the Organisations. Fit : Positioning the Organisation by matching its Resources to its Environment.

Strategy thus becomes a compromise between what the Environment has to offer in terms of opportunities and the counter offer that firm makes in form of its capabilities.

Cont
Ideas of Stretch and Leverage : Where capabilities are not seen as constraints to achieving and environment is perceived not as something which is considered as given, but as something which can be created and moulded. Under Fit, Strategic Intent would seem to be more Realistic; under Stretch and Leverage, it would be Idealistic. Strategic Intent is expressed through a series of formulations on Vision, Mission, Objectives, Strategies.

Vision
Vision : Mental perception of the kind of environment an
individual, or an Organisation aspires to create within a broad time horizon and underlying conditions for the actualisation of perception. In other words, it is what the firm would ultimately like to become. Category of intentions that are broad, all-inclusive and forward thinking. Should be : Organisational charter of core Values and Principles. Ultimate source of our priorities, plans and goals. A determination what makes us unique. Articulates the position that a firm would like to attain in the distant future.

Benefits of Good Vision.


Good Visions are inspiring. Represent a discontinuity, step function and a jump ahead so that the Organisation knows what it is to be. Help in creation of Common identity and shared sense of purpose. Are competitive, unique and practical. Foster risk taking and experimentation. Foster long term thinking. Represent Integrity.

Process of Envisioning.

Mission.
Mission : Essential purpose of an
Organisation, concerning particularly why it is in existence, nature of business it is in and the customers it seeks to serve and satisfy (What is our business? What will it be? What should it be? ) Organisations derive their Mission Statements from a particular set of tasks they are called upon to perform in the light of their individual, national or global priorities.

Formulation of Mission Statements


Whether derived from set of priorities or not, could be formulated formally or informally. Corporate philosophy may not be consciously and formally stated but may gradually evolve due to actions. Could be formulated on basis of the Vision that an entrepreneur decides on in the initial stages of Organisational growth. Consultants may also be called upon to suggest an appropriate Mission Statement. However a Mission Statement may become unclear as Organisation grows and adds new products, markets and technologies to its activities.

Characteristics
Should be feasible. Should be precise. Should be clear. Should be motivating. Should be distinctive. Should indicate major components of Strategy. Should indicate how Objectives are to be accomplished.

Goals and Objectives

Goals and Objectives.


Goals denote what an Organisation hopes to accomplish in a future period of time. Represent the future state or outcome of effort put in now. Objectives are the ends that state specifically how the goals are achieved. Objectives make the Goals Operational. While Goals may be Qualitative, Objectives are mainly Quantitative. Goals are mostly Generalised whereas Objectives are Concrete and Specific.

Role of Objectives.
Defines Organisations relationship with environment. Helps Organisation to pursue Vision and Mission. Provides basis for Strategic Decision making. Provides standards for performance appraisal.

Characteristics of Objectives
Should be understandable. Should be concrete and specific. Should be related to time frame. Should be measurable and controllable. Should be challenging. Different objectives should corelate with each other. Objectives should be set within constraints.

Issues in Objective Setting.


Specificity (Related to Organisational level for which
goals are stated).

Multiplicity (Deals with different types of Objectives


with respect to Organisational Levels, Importance, Ends, Functions).

Periodicity. Verifiability (Basis for Quantification). Reality. Quality (For providing a specific direction and a tangible
basis for Evaluation).

Setting of Objectives.
As Per Drucker, Objectives need to be set in the following Vital areas:
Market Standing. Innovation. Productivity. Resources (Physical / Financial). Profitability. Manager Performance and Development. Worker Performance. Public Responsibility.

ContGeneral Objectives
Profit (ROI, Return on Share holders Capital, Net Profit
as % of Sales).

Marketing (Increase in Sales Volume, Market


development for existing products, new product development, reduction in Marketing Costs, Improving Customer Services).

Growth (Sales Turnover, Investment). Employees (Industrial Relations, Welfare and


development).

Social Responsibility (Community Service, Rural


Development).

ContExamples (In addition to Financials).


Advertisement Agency : Billings achieved per year. 2 Wheeler Company : Vehicles manufactured per annum, Market Share, Fuel efficiency of Vehicles, Cost per vehicle. Insurance Company : No. of Policies executed, Sum assured, Percentage of Insurable population covered. Railways : Passenger Traffic, Freight handled.

Formulation of Objectives.
Factors that need to be considered are : Forces in the Environment. Reality of Enterprise Resources and Internal Power Relationships. Value System of the Top Executive. Awareness by the Management. Whole exercise is a Complex process and is based on consensus and has no precise end or beginning. Vision and Mission just bind together the whole process. In Practice, Organisations differ widely in this regard.

Balanced Score Card.

Preview
Balanced Score Card is a Performance
Management system that seeks to do away with over emphasis on short term financial objectives and seeks to improve Organsational performance by focusing on

Non financial, Operational Objectives also. BSC advocates a top-down approach to Performance
Measuring and Managing wide range of

Management, starting with Strategic Intent being expressed through the Organisation, down to operationally relevant targets.

Cont
Evaluation on following perspectives :
Financial Perspective (Revenues, Earnings, Cash Flow, Return on Capital) Customer Perspective (Quality Goods and Services, Effective delivery, Overall Customer satisfaction) Internal Business Perspective (Internal Business results against measures that lead to financial success and satisfied customers like Quality measures, Efficiency, Productivity Indices) Learning and Growth Perspective (Morale, Knowledge, employee turnover, best practices) These 4 perspectives can help an Organisation to set Objectives. Utility of BSC lies in prioritisation of key strategic objectives that can be allocated to each perspectives and identify associated measures that can be used to evaluate Organisational progress.

Working of BSC
Begins with establishment of Strategic Intent, including Vision and Mission. Identify specific measures related to the 4 perspectives. Then Strategies are formulated. Mapping the Strategy through the identification of Organisational activities that are derived from Strategies. Like : Achieving financial growth ay be expressed in terms of sales growth and revenue growth. Metrics that can be used to accurately measure performance of Organisation in specific areas are established.

Findings of BSC use


Financial Perspective > Customer Perspective > Shareholders Perspective > Internal Business Perspective > Learning and Growth perspective. Assigning Weightage to different perspectives and establishing Cause and Effect Relationships among perspectives has been found to be most critical aspect.