Strategic Planning Explained: Vision, Mission, Objectives & Goals

Strategic planning 

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the future direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue particular courses of action. Many organizations view strategic planning as a process for determining where an organization is going over the next year or more typically 3 to 5 years (long term), although some extend their vision to 20 years.

Generally, strategic planning deals with at least one of three key questions 

1.  What do we do?
2. For whom do we do it?
3. How do we excel?

Strategic Planning has Three Attributes

1. Strategic Vision
2. Strategic Mission
3. Strategic Objectives and Goals

Strategic Vision 

A strategic vision is a broad term used to describe one of the essential elements of an overall strategic planning endeavour. Essentially, a vision is a global concept; it paints a picture of the social enterprise’s direction and future. An effective vision statement succinctly communicates an uplifting philosophy that energizes social enterprise stakeholders to embrace challenges in order to successfully accomplish its goals. Within this context, the strategic vision helps to set the parameters for the development of planning specific steps to go about making that vision come true, since it establishes the general direction that the business will pursue. A workable vision clearly looks beyond where the company is today and determines where the owners want the company to be at some point in the future.

• Definition by Kotler “description of something (an organization, corporate culture, a business, a technology, an activity) in the future”
• Definition by Miller and Dess “category of intentions that are broad, all-inclusive and forward thinking”

In order to properly craft a strategic vision, several key elements must be considered in order for that vision to be truly viable. One of those elements is that the vision must be realistic. This means that vision must be somewhat specific rather than a vague idea about the future. Example, setting a vision to become the largest pencil manufacturer in the world may be a bit broad, whereas a vision to capture five percent of the pencil market within a given country within the next ten years does have focus and has the potential to be workable. A vision statement should remain relatively constant well beyond the life of your involvement as an international organization or intermediary in the social enterprise. The normal life span of a vision statement is 10 to 20 years. It articulates the ultimate long-range goal for your social enterprise. The time to revisit your vision statement is the point when your enterprise either has achieved its vision or has substantially moved away from it. For example, Microsoft’s corporate vision since 1975 was “to put a computer on every desk and in Internet, “offering people and businesses the ability to be connected and empowered anytime, anywhere, and on any device.”

The three elements of a strategic vision

1. Coming up with a mission statement that defines what business the company is presently in and conveys the essence of “Who we are and where we are now ?”
2. Using the mission statement as basis for deciding on a long-term course making choices about “Where we are going?”
3. Communicating the strategic vision in clear, exciting terms that arouse organization wide commitment.

What are the components of an effective business vision?

Davidson identifies six requirements for success:

1. Provides future direction
2. Expresses a consumer benefit
3. Is realistic
4. Is motivating
5. Must be fully communicated
6. Consistently followed and measured

How to develop a strategic vision

1. The entrepreneurial challenge in developing a strategic vision is to think creatively about how to prepare a company for the future.
2. Forming a strategic vision is an exercise in intelligent entrepreneurship.
3. Many successful organizations need to change direction not in order to survive but in order to maintain their success.
4. A well-articulated strategic vision creates enthusiasm for the course management has charted and engages members of the organization.
5. The best-worded vision statement clearly and crisply illuminates the direction in which organization is headed.

Advantages of Strategic Vision

1. They foster experimentation
2. Vision promotes long term thinking
3. Visions foster risk taking
4. They can be used for the benefit of people
5. They make organizations competitive, original and unique
6. Good vision represent integrity
7. They are inspiring and motivating to people working in an organization

Mission Statement

A mission statement is a brief description of a company's fundamental purpose. It is typically focused on its present business scope – “who you are and where you are going.” and “Why do we exist?" Mission statements broadly describe organizations present capabilities, customer focus, activities, and business makeup the mission statement articulates the company's purpose both for those in the organization and for the public.

• Definition by Mintzberg “A mission describes the organization’s basic function in society; in terms of the products and services it produces for its customers”.
• Definition by Hynger and Wheelen – “purpose or reason for the organization’s existence”
• Definition by David F. Harvey – “A mission provides the basis of awareness of a sense of purpose, the competitive environment, degree to which the firm’s mission fits its capabilities and the opportunities which the government offers”

For instance –

• The mission statement of Canadian Tire reads (in part): “Canadian Tire is a growing network of interrelated businesses... Canadian Tire continuously strives to meet the needs of its customers for total value by offering a unique package of location, price, service and assortment.”
• The mission statement of River corp., business development consultants in Campbell River, B.C., is: “To provide one stop progressive economic development services through partnerships on behalf of shareholders and the community.”

As you see from these two examples, mission statements are as varied as the companies they describe. However, all mission statements will "broadly describe a business makeup"

Elements of Mission Statement

1. A Purpose
• Why does the business exist?
• Is it to create wealth for shareholders?
• Does it exist to satisfy the needs of all stakeholders including employees, and society at large?
2. A Strategy and Strategic Scope - A mission statement provides the commercial logic for the business and so defines two things:
• The products or services it offers and therefore its competitive position
• The competences through which it tries to succeed and its method of competing.
3. Policies and Standards of Behaviour - A mission needs to be translated into everyday actions. For example, if the business mission includes delivering “outstanding customer service”, then policies and standards should be created and monitored that test delivery.
4. Values and Culture - The values of a business are the basic, often unstated, beliefs of the people who work in the business. These would include:
• Business principles e.g. social policy, commitments to customers.
• Loyalty and commitment e.g. are employees inspired to sacrifice their personal goals for the good of the business as a whole? And does the business demonstrate a high level of commitment and loyalty to its staff?
• Guidance on expected behavior a strong sense of mission helps create a work environment where there is a common purpose

Why organization should have mission?

1. To ensure unanimity of purpose within the organization.
2. To provide a basis for motivating the use of the organization’s resources.
3. To develop a basis, or standard, for allocating organizational resources.
4. To establish a general tone or organizational climate, for example, to suggest a business-like operation.
5. To serve as a focal point for those who can identify with the organization’s purpose and direction, and to deter those who cannot form participating further in the organization’s activities.
6. To facilitate the translation of objective and goals into a work structure involving the assignment of tasks to responsible elements within the organization.

The benefits of having a vision and mission statement are discussed below:

1. Above everything else, vision and mission statements provide unanimity of purpose to organizations and imbue the employees with a sense of belonging and identity. Indeed, vision and mission statements are embodiments of organizational identity and carry the organizations creed and motto. For this purpose, they are also called as statements of creed.
2. Vision and mission statements spell out the context in which the organization operates and provides the employees with a tone that is to be followed in the organizational climate. Since they define the reason for existence of the organization, they are indicators of the direction in which the organization must move to actualize the goals in the vision and mission statements.
3. The vision and mission statements serve as focal points for individuals to identify themselves with the organizational processes and to give them a sense of direction while at the same time deterring those who do not wish to follow them from participating in the organization’s activities.
4. The vision and mission statements help to translate the objectives of the organization into work structures and to assign tasks to the elements in the organization that are responsible for actualizing them in practice. 
5. To specify the core structure on which the organizational edifice stands and to help in the translation of objectives into actionable cost, performance, and time related measures.
6. Finally, vision and mission statements provide a philosophy of existence to the employees, which is very crucial because as humans, we need meaning from the work to do and the vision and mission statements provide the necessary meaning for working in a particular organization.

Mission vs. Purpose 

1. Mission is the societal reasoning while the purpose is the overall reason
2. Mission is external reasoning and relates to external environment. Purpose is internal reasoning and relates to internal environment 
3. Mission is for outsiders while purpose is for its own employees

Objectives and Goals

Business organization translates their vision and mission into objectives. As such the term objectives is synonymous with goals, Objectives refer to the ultimate end results which are to be accomplished by the overall plan over a specified period of time Objectives are organizations performance targets the results and outcomes it wants to achieve. They function as yardstick for tracking an organizations performance and progress.

Importance of Objective and Goals

1. Objectives provide yardstick to measure performance of a department or SBU or organization
2. Objectives serve as a motivating force. All people work to achieve the objectives
3. Objectives help the organization to pursue its vision and mission
4. Objectives define the relationship of organization with internal and external environment
5. Objectives provide a basis for decision making

Characteristics of Objectives and Goals

1. They should be facilitative towards achievement of mission and purpose.
2. They should provide the basis for strategic decision-making
3. They should provide standards for performance appraisal.
4. Objectives should be understandable.
5. Objectives should be concrete and specific
6. Objectives should be related to a time frame
7. Objectives should be measurable and controllable
8. Objectives should be challenging
9. Different objectives should correlate with each other
10. Objectives should be set within constraints

Areas for setting objectives

1. Profit objective – or performance objectives
2. Market objective - increase in market share
3. Productivity objective – cost per unit of production
4. Product objective – product development, product diversification, branding, etc
5. Social objective – tree plantation, provision for drinking water, setting up of community center, etc
6. Financial objective – relates to cash flow, debt equity ratio, working capital, new issues, etc
7. Human resource objective – described in terms of absenteeism, turnover, number of grievances, strikes and lockouts, etc

Difference between objectives and goals 

1. The goals are broad while objectives are specific
2. The goals are set for a relatively longer period of time
3. Goals are more influenced by external environment
4. Goals are not quantified while objectives are quantified

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Sandeep Ghatuary

Finance & Accounting blogger simplifying complex topics.

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