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The Difference Between Goals and Strategies

Achieving goals is one of the primary objectives of any business — whether the goal is defined as growing revenue, improving customer service, or increasing productivity. It’s certainly well understood that organizations achieve goals by implementing strategies.

As a recent Harvard Business Review points out, though, it’s far less well understood how often the articulation of strategies become the articulation of goals. Strategies get lost in the process. Since strategies are the stepping stones toward the achievement of goals, their getting lost can derail the achievement of goals.

Don’t Confuse Strategies and Goals

Here’s how this happens. A group sits down to brainstorm strategies. They brainstorm items that would definitely benefit the company and that are good things to embrace: “Be number 1 in quality,” “Increase revenue 15%,” or “optimize return on investment,” for example.

But for a group whose mission was to brainstorm strategy, what they in fact came up with were goals. Fine goals, sure. But a strategy, as the HBR article points out, needs to provide a set of clear choices. That’s one of the elements that makes it a strategy.

A financial services company wanting to increase revenue 15%, for instance, needs to determine how best to do that. Is the answer “pursue high net worth individuals for value-added services?” Then that pursuit, broken down into how the pursuit should take place, is the strategy.

Effectively, the strategy, broken down into component parts, gives managers and employees clear choices in what to pursue.

The example given is the British company Hornby Railways, a maker of model trains. At one point, facing declining profits, the company had to come up with ways of achieving the goal of growing revenue.

The company decided on a set of three strategies: 1) focus on models, not toys; 2) target sales to adult collectors, not children; 3) appeal based on nostalgia. Construction, sales, marketing, finance, and all departments followed these strategies.

Good focus on goals has to be maintained to achieve them.

How Do You Develop Good Goals and Strategies?

How do managers ensure that they don’t fall into the trap of brainstorming goals when they intend to brainstorm strategies? A 2014 Harvard Business Review article points out that strategies need to follow from an identification of which stakeholders the company needs for the success of its goals.

If the goal is to increase profit, for example, you need to identify which stakeholders are the most important. Customers? Suppliers? Shareholders? For this particular goal, it’s likely that the customer is most important. But it could also be suppliers. If an organization has high-cost suppliers, negotiating a lower set of costs, or developing a lower cost supplier network, could be among the strategies in achieving more profit.

After you’ve determined the most important stakeholder(s) to a goal, the next step is to define what those stakeholders most want from the organization that would make them buy into the goal. Customers, for example, may want a different type of product, a newer version, or a more convenient delivery system. Suppliers may want a guarantee of orders in exchange for a lower cost structure.

Once the stakeholder’s needs have been defined, then specific strategies can be developed to meet what they need, in furtherance of the goals.

Managers need to be sure that the strategies they develop, such as increasing revenue or optimizing ROI, are not in fact goals. Strategies are specific choices and steps an organization takes toward achievement of goals and should be developed after defining the most important stakeholders and what they need from the organization.