This is the first in a three-part strategy series called “Saying what your Strategy Is.” This post focuses on “objective,” while the second and third focus respectively on “scope” and “advantage.”
“What does Cicero do again?”
“Consulting,” I reply.
“That’s right, you’ve told me that before…but what does that mean you actually do?”
“Our focus is helping our clients develop a strategy.”
“Dad, I love ya, and I appreciate your showing interest in what I do, but we’ve been over this… let’s just chat about your upcoming cruise or something.”
My dad isn’t the only one confused about what strategy consultants do… I’ve had variations of this conversation numerous times. I think one of the easiest ways to understand what we mean by strategy consulting is to define what it DOESN’T mean. First, it doesn’t mean that we walk in the door and tell companies how they should run their business – executives we work with already perform this function masterfully. What we do is help inform management’s decisions about specific actions to take that will help their organization realize their mission in the context of specific, time-bound objectives. We provide data, analysis, and best practices to help clients develop a sound strategy. To help explain the often ambiguous industry of strategy consulting, I will draw on insights from the seminal HBR article on strategy: “Can You Say What Your Strategy Is.”
In this article, David J. Collins and Michael G. Rukstad discuss commonly-used statements that define a company’s culture and establish goals that guide decisions at all levels of the business. Many of us are familiar with a company’s mission, values, and vision statements. They may grace the walls of a lobby or conference room and it may even be suggested for employees to memorize them to guide customer interactions. But more overlooked—and often misunderstood—is the strategy statement. While a company’s mission statement is usually broad and often similar to others in the same industry, a strategy statement will almost certainly differ from the competition’s.
Collins and Rukstad contend that there are three distinct elements that should be tied into each (~35-word) strategy statement. The three elements that set strategy statements apart from the more commonly-cited (and often platitudinous) mission statements are:
The objective portion of a strategy statement states what a company wants to accomplish in the next few years as a result of the strategy (and, as such, the objective should be revisited once every few years or so). The objective needs to be specific, measurable, and time-bound. For instance, a business that is entering a new market may develop an objective such as “to grow market share by 30% in the next three years.” A company that has already achieved their market share goal may want to focus their attention on becoming more cost effective by stating their objective is “to decrease operating costs by 10% over the next two years.” Conversely, a mission statement may sound something like this, “Build the best product and provide the friendliest service enhancing both our customer’s and employee’s lives.”
Establishing the right objective is crucial in fulfilling an overall strategy, and the most fascinating aspect of Cicero, in my opinion, is our experience helping clients do this in so many different industries. Pinpointing an objective is not just crucial in the private sector, it is equally important for public and non-profit entities to establish a strategic plan. One example that sticks out to me is our team’s work to build an enrollment model for an online university to determine how many students it could expect to matriculate in a five-year period. Armed with enrollment numbers, the university’s management team is then able to accurately set expectations for a growth plan; even stating clearly, “To grow to ### students within the next five years by… [insert scope and advantage].” Other ways we’ve helped our clients answer this type of question can be found here.
My intent with this post is to not overcomplicate strategy consulting, so if it appears that an objective is simply a goal – it is! What makes it unique is when you couple it with the scope and advantage, which take into consideration the firm’s offerings, geographic location and differentiating factors. Too often, managers set goals without considering the entire strategy or more importantly, they don’t use enough data to drive their decision. That is exactly where strategy consulting becomes extremely valuable – not to develop the strategy—that should be done by firm management to ensure all employees are bought-in to the strategy and to increase its staying power—but to provide useful primary and secondary research, benchmarks, best practices, and feasibility to inform the strategy. The more informed the objective, the more effective the overall strategy will be to ensure the firm is successful in increasing profitability, obtaining more market share, improving operations, or even just tutoring more students.
Objectives can, and should, change. That is what is so intriguing about objectives and what distinguishes them from a mission or value statement, which are typically more timeless. As managers react to market forces, successes, and failures, the firm’s priorities may change. The flexibility to adjust the objective creates an environment where a new direction is defined and communicated to the entire company and relevant stakeholders.
Again, the objective is just one of three elements of an effective strategy. In future posts I’ll discuss scope and advantage.