Having a strategy—a set of guiding principles and criteria that people in your organization can use to make decisions daily—is really important. It ensures that everyone is paying attention to the right things, blocking out the things that matter less, and that resources are used efficiently to create greater opportunities.
It’s really important, but often organizations don’t even have a strategy. They have a set of projects that they call “the strategy,” but that’s not strategy. Projects are just tactics.
In the previous post in our series on how you can facilitate your own strategic planning conversation, we talked about setting your north star, defining your purpose, and establishing your strategic goals. Now, we’re going to take a closer look at what strategic goals are and how they differ from operational goals.
Operational Goals
An operational goal is a measure of the current health of your organization. This can include metrics like your revenue, your gross margin, your customer net promoter score, your employee engagement, or your turnover levels. All of those things matter, and they matter a lot. But they matter today—and they’re about the current health of your organization.
We could have an organization that’s currently extremely healthy, but not future-proofed. That means that it’s **not ready for the disruption that might be coming. There are so many Harvard Business Review case studies on this. Think Kodak, for example. Just having goals around your operational or your organizational health isn’t enough, and it’s also not going to guide strategic thinking.
Strategic Goals
To plan strategically, you need a set of goals that target the future health of your organization. Those are what I call strategic goals. And when I say health, I’m talking about existential kinds of questions, like, “Are we setting ourselves up to be able to capitalize on the opportunities that will come up in the environment?” and “How can we mitigate threats coming at us?” That’s the sort of thing you want to measure with a strategic goal.
Examples of Strategic Goals
Consider a relatively small business that’s currently paying for things out of cash flow, but is going to need some way to access capital at some point, like an initial public offering. A great strategic goal for this company could be reaching a certain size and scale that makes them ready for an IPO.
Or take a product sales company that sees the world shifting to subscription-based models, so they start thinking, “We make 100% of our revenue selling a product in a box, we should measure how much of our mix should we move to a subscription-based model.”
You can set strategic goals even when you’re in a certain market, like a food company. You might be in a market that is primarily about food for kids, for example, and what you want to do is build out a new business to diversify into the health food or senior citizen space.
The idea is having a small set of strategic goals and using them as critical indicators that your company is future-proofed. You’ll be better prepared to capitalize on opportunities that pop up, and better positioned to mitigate risks.
Setting the Right Goals for Your Strategy
It’s important to recognize that organizational health goals still matter a lot. You should be measuring those all the time. You should have those key performance indicators. But please don’t mistake them for your strategic goals. Strategic goals measure the very small number of things that will make a difference in whether your company is in business in three years time.
Next, we’re going to talk more about the strategic planning process and what to do once we have our goals.
Strategic Planning Series
Common Mistakes in Strategic Planning
Don’t Confuse Strategic and Operational Planning
How Does Strategic Planning Benefit Companies
Video: You Aren’t Strategic Enough