Chapter 3
Strategic direction
Devotion: 1 Samuel 17:38-40
• Then Saul dressed David in his own tunic. He
put a coat of armor on him and a bronze
helmet on his head. 39 David fastened on his
sword over the tunic and tried walking around,
because he was not used to them.
• “I cannot go in these,” he said to Saul,
“because I am not used to them.” So, he took
them off. 40 Then he took his staff in his hand,
chose five smooth stones from the stream, put
them in the pouch of his shepherd’s bag and,
with his sling in his hand, approached the
Philistine.
Learning outcomes
• Justify the indispensability of a clear strategic direction
for an organisation
• Explain what strategic intent is
• Explain what a vision statement is and justify its role as
the basis of the organisation’s strategy
• Explain what a mission statement is and explain how it
is aligned with the vision statement
• Expound on the components of a mission statement
Learning outcomes (cont.)
• Critically evaluate the way that strategic direction
is expressed by an organisation
• Explain the alignment between an organisation’s
strategic direction and strategic objectives
• Explain the alignment between an organisation’s
strategic direction and its operational level
3.1 Introduction
• Management uses strategic intent, vision, mission,
and value statements to develop and convey
strategic direction
• Strategic intent: a 10- to 20-year quest diffused at
multiple organisational levels
• Vision statement: a top management leadership
tool often ascribed to a single visionary leader
• A mission statement: what an organisation should
be to achieve its purpose
3.1 Introduction (cont.)
• A value statement: reflects the future standing of
organisation and key values or behaviours to which
employees should subscribe
• Values espoused in the vision and mission statements, and
summarised in the value statement
• can act as a powerful pull for people who identify with
them and can motivate them to perform passionately
• The value congruence between the principles of an
organisation and those of its members
• can transform ordinary jobs into a mission, giving
employees a higher-order meaning.
3.1 Introduction (cont.)
• The balanced scorecard:
• Framework to translate strategic direction into
actionable chunks and financial and non-financial
measures
• Creates a shared understanding, consensus and
commitment, which are key for successful
implementation.
3.2 Strategic intent
• Introduced by Hamel and Prahalad to address
different notions of competitive strategy by
Western and Far Eastern organisations
• Western organisations:
• Trimmed ambitions to match resources
• Search for advantages they could sustain (maintaining
strategic fit)
• Far Eastern organisations:
• Leveraged resources by accelerating the pace of
organisational learning to attain seemingly impossible
goals
3.2 Strategic intent (cont.)
Hamel and Prahalad’s observations:
• Organisations started with ambitious that were
way beyond their resources but succeeded due
to an obsession with winning.
• Hamel and Prahalad termed this obsession
“strategic intent”.
• Strategic intent envisions a desired leadership
position and criteria to measure progress
• Strategic intent also includes: focusing
organisation’s attention on winning, motivating
people, individual and team contributions, etc.
3.2 Strategic intent (cont.)
• Strategic intent:
• Captures the essence of winning, and setting out a 10-
to 20-year quest for global leadership
• Informs and shapes how organisations define their
business, and where they find unique strategic
advantage
• Provides a central point of departure for decision
making
• Organisations or governments that lack a clear
strategic intent face:
• Conflicting priorities, wasted resources, etc.
3.3 Vision statements
• A vision statement:
• Similarly to strategic intent, vision statement also goes
beyond mere planning and strategy by challenging
organizational members to go beyond the status quo in
pursuit of a long-term goal.
• Is similar to strategic intent in its emotional effect but
differs in the degree of collectivity
• It goes further as it has connotations of encouraging
strong corporate values in the strategic process.
• Strategic intent is a phenomenon diffused at
multiple organizational levels, while a vision is more
clearly a top management leadership tool
3.3 Vision statements
• A vision statement:
• Vision provides a reason for an action that need to be
taken
• If an organisation wants its employees to give their
best performance, it should provide them with the
proper reason for doing so.
• The role of the leader is to
• set a vision and ensure that people not only see it but
also live and breathe it in their actions.
3.3 Vision statements
• Such shared purpose could be fostered through a
vision statement,
• which serves as a guide to an organisation by providing
direction of progress and indicates core ideology to be
preserved.
• The core ideology defines the enduring character or
consistent identity of the organisation, and comprises
the core values and core purpose (reason for being).
3.3 Vision statements
• Vision
• in involves answering questions about the organisation’s identity
• such as; who it is, where it is going, and what its guiding values
are
• is considered to be a picture of what the organisation wants to be
and, in broad terms, what it ultimately wants to achieve.
• The vision statement should
• Therefore articulate the ideal description of the organisation and
give shape to its intended future.
• Vision
• Stretches and challenges people by motivating staff to contribute to
a bigger picture
3.3.1 The visionary process
• There are disagreements about the process to develop
a vision statement.
• You may dislike a company’s vision but it does not
mean it is wrong.
• What it matters is whether it works for the organisation or
not
• It is the responsibility of the organisation’s most
important and prominent strategic leader (in most
cases the CEO) to develop a vision
• Experience show that effective vision statement results
• When the CEO involves a host of people to develop it, and
• When the statement is tied to the conditions in the
organisation’s external and internal environment.
3.3.1 The visionary process:
Approaches
• The intuitive approach:
• is based primarily on structured introspection.
• The resultant visions can take many different shapes due to
differences in leaders and in leadership styles.
• The analytical approach:
• focuses on gathering information from various individuals
about the direction of the organisation.
• Owing to the complexity of individual perceptions, this
participative approach requires strong leadership in the
process, and
• in the promotion and support of that vision.
• The benchmark approach:
• looks to the competition for standards, and creates a vision
based on subsequent findings
3.3.2 The vision content
• Foster and Akdere’s attributes and content of visions:
• Attributes necessary for a vision to be effective:
brevity; clarity; abstractness; challenge; future
orientation; focus; understandability to all
employees; ability to aspire.
• Key content of an organization’s vision:
• Organisation’s core ideology and Organisation’s values
• are identified as the key ingredients in the vision statement.
• A vision statement should be short and concise to
facilitate relatability
• Meaning – so that stakeholders can relate to it and use it to
direct daily decions
3.3.3 Vision implementation
• Requires an extremely clear vision, or someone
who can decode or translate the vision
• Vision must make people excited about the future
• Use stories and metaphors to get people to buy
into the vision
• Must be careful of the ‘We have arrived!’ syndrome
• Visions are expected to be achieved, and by the time
this happens, the next vision should have been
timeously set
• Visions must be aligned at all levels in the
organisation
Myles Munroe
• “I think that the greatest gift God ever gave man is
not the gift of sight but the gift of vision. Sight is a
function of the eyes, but vision is a function of the
heart. You weren't born just to live a life and to die;
you were born to accomplish something
specifically”
3.4 Mission statements
• A mission statement:
• A fundamental step in the strategic management
process
• Changes in light of changing environmental conditions
• Gives direction to develop strategies in line with
changing trends
• Is more concrete than a vision statement but similar in
establishing the organisation’s individuality
• All members and stakeholders are usually involved in its
development
3.4.1 Formulating a mission
statement
• To convey a clear message
Mission statement to reach the target
requirement audience
• Why is this organisation in
business?
• What are our economic
goals?
• What is our operating
philosophy in terms of
A mission statement quality, organisational
answers one or more of the image and self-concept?
following questions: • What are our core
competencies and
competitive advantage
• What customers do and
can we serve?
• How do we view our
responsibilities to all
stakeholders?
3.4.2 Adoption and practice of
vision and mission statements in the
South African business environment
• Van der Walt, Kroon, and Fourie’s study in South
Africa found that:
• 90% of businesses had both vision and mission
statements while 5% of businesses were still formulating
them
• The vision and mission statements were relatively short
• The vision and mission statements were generally not
older than five years, indicating continuous renewal
• Vision and mission statements were used as a strategic
planning tool
3.5 Value statements
• Values statements:
• Usually appear in the mission statement
• Reflect the basic beliefs, values, aspirations, and
philosophical priorities to which strategic
decision-makers are committed in managing the
organisation
• Set behavioural standards
• Provide guidelines as to how business is done in the
organisation
3.6 Benefits of clear strategic
direction
• Guides human behaviour and defines working
relationships
• Shapes employee relationships with each other and
all stakeholders
• Leads to better performance
• Serves as a benchmark for resource allocation
• Creates confidence that the intended strategies will
not compromise the interests of all stakeholders
• Inspires employees
3.7 Challenges of creating a clear
strategic direction
• Vision and mission statements have little tangible
value if:
• They are not accompanied by corresponding manager
behaviour
• They are not communicated to all stakeholders and if
they do not buy in
• They are not coupled with an overall strategic education
process
3.8 Translating strategic direction
into
operational terms
• All statements should be expressed and
communicated as sets of objectives and measures
that describe the long-term drivers of success
• Objectives need to set clear guidelines and assign
responsibilities
• Objectives assist in converting strategic direction
into performance targets
• Balanced scorecards aid in translating strategic
direction into operational objectives
3.9 Balanced scorecard
• Tool for guiding, controlling, and challenging an
organisation towards realising a shared conception
of the future
• The four perspectives of balanced scorecards:
• Financial perspective
• Customer perspective
• Internal business processes
• Learning and growth perspectives
3.9.1 Clarifying and translating
vision into strategy
• Translating the vision into objectives and measures
helps build consensus on the vision and strategy
• Clarification of success in the perspectives of the
scorecards and their weighting provides more
meaning for employees
• Scorecards identify gaps in employee skills and
other resources
3.9.2 Communicating and
linking strategic objectives and
measures
• Communicating and linking; allows for
communication of strategy and to link strategy to
departmental and individual objectives
• The three levels of information contained in
scorecards:
• First level: corporate objectives, measures, and targets
• Second Level: corporate targets to be translated into
targets for each business unit
• Third level: converts business units and corporate
objectives to objectives that set targets for each
measure and allows performance measures per
objective
3.9.3 Planning, setting targets
and aligning strategic initiatives
• Organisations have separate procedures and units
for strategic planning, resource allocation, and
budgeting
• Senior management sets strategic plan and
financial department allocates resources, budgets,
etc.
• Budget produced generally bears little relation to
the targets in the strategic plan
• Balanced scorecard forces an organisation to
integrate its strategic planning and budgeting
processes
3.9.4 Enhancing strategic
feedback and learning
• Strategies may lose their validity as business
conditions change
• Organisations use balanced scorecards to monitor
short-term results and evaluate strategies
• Scorecards enable companies to modify strategies
to reflect real-time learning
• Strategic learning occurs when feedback is used to
test the assumptions on which the strategy was
based
General guide when setting a
strategic direction:
❑ Consider your vision for the company
❑ Reflect on the company's mission
❑ Develop a plan
❑ Set periodic goals
❑ Set quantifiable goals
❑ Adjust your strategic direction as necessary
[Link]
3.10 Summary
• Setting the strategic direction is the first step in
strategic planning and management
• Organisations generally apply an individual approach in
setting strategic direction
• The strategic leader plays an important role in setting
the strategic direction
• Leaders are expected to walk the talk, and their
behaviour should embody the core values of the
organisation
• The executive team should communicate the strategic
direction to all stakeholders
• Scorecards add meaning to the various statements