Charting a Companys

Direction: Vision and

Mission, Objectives, and
Strategy
Chapter 2

IF YOU DONT KNOW WHERE YOU ARE

GOING, ANY ROAD WILL TAKE YOU THERE.
This is my favorite business related quotewhere do you think
it came from?

Cheshire Cat to Alice, Alice in Wonderland

Learning Objectives
1. Grasp why it is critical for company managers to have
a clear strategic vision of where a company needs to
head and why.
2. Understand the importance of setting both strategic
and financial objectives.
3. Understand why the strategic initiatives taken at
various organizational levels must be tightly
coordinated to achieve companywide performance
targets.
4. Become aware of what a company must do to achieve
operating excellence and to execute its strategy
proficiently.

Strategy Making, Strategy

Executing Process

Stage 1: Developing a Strategic Vision, Mission, and

a Set of Core Values
Strategic Vision: What is it?
Describes the route a company intends to take in developing
and strengthening its business. It lays out the companys
strategic course in preparing for the future.
Key Elements
Outlines where top management wants an organization to go
Charts strategic path
Distinctive and specific to a particular organization
Avoids generic language that is dull/boring and could be used by any
organization

Captures emotions of employees and steers them in a common direction

Is challenging and a bit beyond a companys immediate reach

Stage 1: Developing a Strategic Vision, Mission, and

a Set of Core Values
Characteristics of an Effectively Worded Vision Statement
1. Graphic: paints a picture of the kind of company that management
wants to create and the market positions the company strives to earn
2. Directional: forward looking; describes the strategic course that
management has charted and the changes that will help the
organization prepare for the future
3. Focused: specific enough to provide managers guidance in making
tough decisions and allocating resources
4. Flexible: may be adjusted over time as circumstances change
5. Feasible: within the reasonable reach of the organization
6. Desirable: indicates why the direction makes sense
7. Easy to Communicate: is explainable in minutes and can be reduced to
a simple, memorable slogan *most important?

Stage 1: Developing a Strategic Vision, Mission, and

a Set of Core Values
Common Shortcomings in Company Vision Statements
1. Vague or incomplete: short on specifics about where the
company is headed
2. Not forward looking: does not identify if/how current focus will
be altered
3. Too broad: so inclusive that the organization could head in
many directions
4. Bland, uninspiring, BORING: provides no motivation for people
to get behind the vision
5. Not distinctive: provides no unique company identity
6. Reliant on superlatives: sounds good, but says nothing; Global
leader, Most successful, First choice of customers

Examples of Strategic Visions

Be the global leader in customer value
Graphic
Directional

Vague/incomplete
Not forward looking

Focused
Flexible

Too broad
Bland or uninspiring

Feasible
Desirable

Not distinctive
Too reliant on superlatives *this too

Easy to Communicate

Examples of Strategic Visions

Our vision is to be earth's most customer centric company;
to build a place where people can come to find and discover
anything they might want to buy online.
Graphic
Directional

Vague/incomplete
Not forward looking

Focused
Flexible

Too broad
Bland or uninspiring

Feasible
Desirable

Not distinctive
Too reliant on superlatives

Easy to Communicate

Amazon Products

Amazon Products

Amazon Products

Amazon Products

Amazon Products

Examples of Strategic Visions

What do you think of this one..
Through all of our products, services and relationships, we
will add to lifes enjoyment. Enrich and entertain a global
audience. Deliver superior returns to our Shareholders.
Graphic
Directional

Vague/incomplete
Not forward looking

Focused
Flexible

Too broad
Bland or uninspiring

Feasible
Desirable

Not distinctive
Too reliant on superlatives

Easy to Communicate

Communicating the Strategic Vision

Winning support for the vision includes:
Putting where are we going and why in writing
Distributing the vision company-wide
Executive explanation of the vision (townhall type meeting works well
people can ask questions and feel included in it, email easy but not
effective)

An engaging, inspirational vision

Challenges and motivates workforce
Articulates a compelling case for where the company is headed
Evokes positive support and excitement
Arouses a committed organizational effort to move in a common direction

Slogan!
MBNA: Think of Yourself as a Customer

Payoffs of a Clear Vision Statement

Crystalizes an organizations long term direction
Reduces risk of rudderless decision-making (it should guide
management when they make decisions tf decisions more
aligned among company)
Creates a committed enterprise where organization members
enthusiastically pursue efforts to make the vision a reality
Provides a beacon to keep strategy-related actions of all
managers on common path
Helps an organization prepare for the future

Exercise
In groups of 3 or 4, write a Vision Statement
for any organizationreal or theoretical.
We will discuss these and you will get
feedback from your peers.
Graphic
Directional
Focused
Flexible
Feasible
Desirable
Easy to Communicate

Vague/incomplete
Not forward looking
Too broad
Bland or uninspiring
Not distinctive
Too reliant on superlatives

Mission Statement
The Mission Statement:
Identifies the firms product or services.
Specifies the buyer needs it seeks to satisfy.
Identifies the customer groups or markets it is endeavoring to serve.
Specifies its approach to pleasing customers.
Sets the firm apart from its rivals.
Clarifies the firms business to stakeholders.

Example:
Dole Food Company, Inc. is committed to supplying the
consumer and our customers with the finest, high-quality
products and to leading the industry in nutrition research and
education. Dole supports these goals with a corporate
philosophy of adhering to the highest ethical conduct in all its
business dealings, treatment of its employees, and social and
environmental policies.

Strategic Vision vs. Mission Statement

Mission: NOW
Present business purpose; who we are and what we do

Vision: FUTURE
Where are we going?
What markets do we want to serve?

Phase 2: Setting Objectives

Purpose of setting objectives
Convert strategic vision into specific performance targets
Creates yardstick for measuring performance

SMART Goals
Spell out how much of what kind of performance by when

Setting Stretch Objectives

Objectives should be set at levels that stretch an
organization to:
Perform at its fullest potential, delivering the best possible results
Push firm to be more inventive
Exhibit more urgency to improve its business position
Be intentional and focused in its actions
Theres no better way to avoid ho-hum results than by setting stretch
objectives and using compensation incentives to motivate organization
members to achieve the stretch performance targets.
-Mitchell Leibovitz: former Pep Boys CEO

Types of Objectives
Types ofObjectives
Objectives
Financial
Strategic Objectives
Outcomes focused
on improving financial
performance

Outcomes focused on improving

competitive strength and
market standing

Financial Objectives: rarely

overlooked
Annual revenue growth / after tax profits of x%
Annual increase in earnings per share of x%
Annual dividend increases of x%
Profit margins of x%
Annual stock price increase of x%
Bond and credit ratings of x

Strategic Objectives: often

overlooked
Winning x% market share
Achieving lower overall costs than rivals
Overtaking key competitors on product performance / quality
/ customer services
Achieving customer satisfaction rates of x
Consistently beating rivals to market
Having wider product line than rivals

Your Financial and Strategic

Objectives
What are some of your objectives? You might
call these personal goals.
Some of mine..
Money coming in is greater than money going out at least 9
months of every year
Complete all Doctorate courses during 2015
I will train for and complete an Olympic distance triathlon in 2015,
and a half Ironman in 2016. (NoteId like to do a full ironman in
2017, but I havent convinced myself that this is realistic yet).

Strategic Performance = Financial Performance

Achieving good financial performance is not enough
Current financial results are lagging indicators reflecting results of past
decisions and actions good profitability now does not translate into stronger
capability for delivering even better financial results later
Michael Eisner: 1996, paid >$570M due to excellent Disney performance (his
salary was performance based. Disney shareholders took him to court and he won
but gave money bacl)

Setting well-chosen strategic objectives and achieving them signals

Growing competitiveness
Growing strength in the marketplace

A company that is growing competitively stronger is developing the

capability for better financial performance in the years ahead
Good strategic performance is thus a leading indicator of a companys
capability to deliver improved future financial performance

Balanced Scorecard: organizations must set

both strategic and financial objectives!

Phase 3: Crafting a Strategy

Once you determine what you want to do, its
time to figure out how youre going to do it!
Developing a winning strategy involves

Diagnosing the direction and force of the market changes

underway and making timely strategic adjustments

Spotting new or better ways to satisfy customer needs

Figuring out how to outwit and outmaneuver competitors

Pursuing ways to strengthen the firms competitive capabilities

Proactively trying to out-innovate rivals

ENTREPRENEURSHIP!

The Hows that Define a Firms

Strategy
How to grow the business
How to please customers
How to outcompete rivals
How to respond to changing market conditions
How to manage each functional piece of the business (R&D,
marketing, production, HR, finance, etc.)
How to develop needed competencies and capabilities
How to achieve strategic and financial objectives

Who is Involved in Strategy Making

CorporateLevel
Managers
BusinessLevel
Managers
Function
al
Manager
s
Operating
Managers

Corporate
Strategy
Two-Way Influence

Business
Strategies
Two-Way Influence

Functional Strategies
Two-Way Influence

Operating
Strategies

Phase 4: Executing the Strategy

Plan your work, work your plan!
Operations oriented activity aimed at performing core
business functions in a strategy supportive manner
Tougher and more time consuming than crafting strategy
Key tasks include
Improving efficiency with which the strategy is executed
Showing measurable progress in achieving both operating excellence and
targeted results
Build a capable organization
Allocate resources to strategy supportive policies
Installing information, communication, and operating systems
Tying rewards to achievement of results / Motivating people

Phase 5: Evaluating Performance and Adjusting

How are we doing? Is it working? If not, why not? What do
we need to change?
Is the organization passing the 3 tests?
Strategic Fit, Competitive Advantage, Performance

Crafting and implementing strategy is not a one-time activity

Customer needs and competitive conditions change
New opportunities appear; technologies change; other outside
developments occur
One or more aspects of the strategy may not be going well
New managers with different ideas
Organizational learning

Taking action to adjust tends to result in

Altering long term direction and/or redefining the mission/vision
Raising, lowering, or changing performance objectives
Modifying the strategy
Improving strategy execution

Next Classes
Read Chapter 3
We will also introduce the group assignments and
you will organize into teams. If you want any
control over who will be in your team, you need to
be in class. Anyone not in class will be assigned to
a team.