Sadly, in many board conversations, the terms “goals” and “strategy” are often thought of as interchangeable probably due to the fact that one can’t exist without the other, yet they represent fundamentally different concepts. If goals are the desired outcomes or targets a company aims to achieve, strategy refers to the plan or approach the company should or thinks about taking to reach those goals. Understanding this distinction is crucial for sustainable growth.

In other words, goals define “what” you want to achieve, and strategy defines “how” you will go about achieving it. This distinction is not just semantic but foundational to effective management and leadership. Setting only goals without strategy might indicate a lack of understanding of the value creation process in the company and an insufficient grasp of the company’s micro and macro context.

Summary

> goals define the ‘what’, strategy defines the ‘how’;

> Managing a company with goals alone, without a strategy often leads to inefficiency or long-term failure;

> To move from mere goals-management to strategic-management, leaders must ask critical questions that delve into the how and why of their business objectives.

The risk of thinking of your company’s goals as being its strategy (or being sufficient to take action) has implications across multiple dimensions, including technological adaptation, competitive positioning and employee engagement. When organizations mistake goal-setting for strategic planning, they often face a range of challenges that can severely impact their growth in the long-term.

For example, driving decisions for resources allocation on goals alone can lead to short-termism, where the focus is on immediate gains and hitting the quarterly targets mentioned by the goals while disregarding long-term success or the long-term implications of how those targets are hit.

Furthermore, managing with goals alone, without asking the strategic intent often results in efforts being scattered or a very low level of coherence in the actions taken. Actions addressing only the most pressing concerns without considering future consequences or sustainability. This can lead to missed opportunities, inefficient use of resources, and ultimately falling short of achieving significant, long-term growth.

Also, goals fail to communicate the ‘why’. Which might lead to a demotivated workforce that feels that it’s only being used to achieve some numbers written on a spreadsheet instead of feeling they are being involved in the strategic conversation. People want to be told the “why” behind an action because it fosters understanding, engagement, and trust. Research from the Harvard Business Review indicates that employees who understand the purpose behind their tasks are more likely to be motivated and perform better (Amabile & Kramer, 2011). Providing the rationale behind decisions builds trust and transparency, as it respects employees’ intelligence and autonomy. It also empowers individuals by giving them the context needed to make informed decisions and take initiative.

Having only goals in place in your company, without a strategy often leads to inefficiency or long-term failure. This was for example the case in Nokia. Once a dominant force in the mobile phone market, Nokia had clear goals but failed to adapt strategically to the shift towards smartphones. Their focus remained on their existing products while competitors like Apple and Android innovated rapidly. This strategic oversight led to Nokia’s decline from market leader to an afterthought in the industry.

Similarly, BlackBerry’s story serves as a cautionary tale. Known for its secure messaging services and physical keyboards, BlackBerry failed to recognize and adapt to the touchscreen revolution and the importance of app ecosystems. Their delayed response and inconsistent strategy ultimately led to a significant loss of market share.

Goals provide direction, but without a clear, actionable plan, progress toward these objectives can be haphazard and reactive. To move from mere goals-management to strategic-management, leaders must ask critical questions that delve into the how and why of their business objectives. Here are some questions we use in our strategy development process that have helped our clients progress from goals based decision making to strategic decision making.

1. What have been the important challenges in technology, competition, and consumer behavior?

Understanding these challenges helps identify the external factors that impact your business. Recognizing these can inform a more effective strategy to navigate them.

2. What about achieving those goals or targets is important for the company?

Clarifying the significance of your goals ensures that everyone understands their purpose and aligns their efforts accordingly.

3. What will be the most important challenge in technology, competition, and consumer behavior for your company in the next 3 to 5 years? Which of these are problems and which are opportunities?

Looking ahead helps anticipate future hurdles and opportunities, allowing for proactive rather than reactive planning.

4. What initiatives undertaken by your company in the past 3 to 5 years would you argue were successful?

Reflecting on past successes can highlight effective strategies and practices worth replicating.

5. What initiatives undertaken by your company in the past 3 to 5 years would you argue weren’t successful? What prevented them from being successful and what could have been done better?

Analyzing past failures provides valuable lessons and helps avoid repeating mistakes.

6. What are currently the priority issues you are trying to solve in the company? What initiatives do you have in place or are currently investing in to deal with these priority issues?

Identifying current priorities ensures that resources and efforts are directed toward the most pressing challenges.

7. What are the issues and difficulties that come from the structure and key policies of the company that deserve attention? Are these critical enough to hinder progress on the things you have identified in the previous questions? Which ones are?

Addressing structural and policy issues within the company can remove internal barriers to strategic success.

Effective leadership requires more than just setting ambitious goals and tracking them. It demands a well-thought-out strategy that considers both the internal and external environment of the business. By asking the right questions and learning from past successes and failures, companies can develop robust strategies that not only aim for immediate targets but also pave the way for long-term growth.

In conclusion, having goals is essential, but they are only one component of your growth. To achieve sustainable success, businesses must pair their goals with clear, actionable strategies that address both current challenges and future opportunities. This balanced approach ensures that efforts are not just directed toward achieving immediate gains but are also aligned with the long-term vision and health of the company.

This article was originally posted on The Corporate Startup.