Chapter Two

Hierarchy of Strategic Intent: Establishing the Organization’s Direction

In the preceding chapter we have discussed the concepts of business policy, strategy, vision,
mission and objectives. In this chapter we will discuss in some detail the concept of strategic
intent, the role played by vision, mission statements and how to craft the vision and mission
statements.
2.1. The Meaning of Strategic Intent
Strategic intent refers to the purposes the organization strives for. These may be expressed in
terms of a hierarchy of strategic intent. Broadly stated, these could be in the form of a vision
and mission statement for the organization as a corporate whole. At the business level of a
firm these could be expressed as the business definition. When stated in precise terms, as an
expression of the aims to be achieved operationally, these may be the goals and objectives.
Here we take the position that strategic intent lays down the framework within which firms
would operate, adopt a predetermined direction, and attempt to achieve their goals. But the
term 'strategic intent' has a definite meaning in strategic management. Let's first see the
meaning and some associated concepts before we learn about the hierarchy of strategic intent.

Business
Vision Definition Strategies Goals and
 What we  What societal
want to Mission need we can
 How we will Objectives
 Who we are? achieve our  How we will
become? satisfy?
 What we vision? gauge our
degree of
value? success?

Figure 2.1. Hirarchy of Strategic Intent

Hamel and Prahalad coined the term ‘strategic intent’ which they believe is an obsession
(passion) with an organization (passion with having ambitions that may even be out of
proportion to their resources and capabilities.) This obsession is to win at all levels of the
organization while sustaining that obsession in the quest for global leadership.

Vision
“Vision is the art of seeing things invisible”...........Jonathan Swift
“The very essence of leadership is that you have vision. You can’t blow an uncertain
trumpet” ....Theodore Hesburgh
Vision is a picture of what the firm wants to be and, in broad terms, what it wants to
ultimately achieve. It articulates the ideal description of an organization and gives shape to its
intended future. The vision statement points the firm in the direction of where it would
eventually like to be in the years to come. Vision is “big picture” thinking with passion that
helps people feel what they are supposed to be doing. A vision stretches and challenges
people and evokes emotions and dreams.

Vision statement reflects a firm’s values and aspirations and is intended to capture the heart
and mind of each employee, and hopefully, many of its other stakeholders. A firm’s vision
tends to be enduring while its mission can change in light of changing environmental
conditions.

While a vision statement doesn’t tell you how you’re going to get there, it does set the
direction for your business planning. That’s why it’s important when crafting a vision
statement to let your imagination go and dare to dream – and why it’s important that a vision
statement captures your passion. Unlike the mission statement, a vision statement is for you
and the other members of your company, not for your customers or clients.

When writing a vision statement, your mission statement and your core competencies can be
a valuable starting point for articulating your values. Be sure when you’re creating one not to
fall into the trap of only thinking ahead a year or two. Once you have one, your vision
statement will have a huge influence on decision making and the way you allocate resources.

Mission
While the essence of vision is a forward-looking view of what an organization wishes to
become, mission is what an organization is and why- it exists. Peter F. Drucker raised
important philosophical questions related to business: What is our business? What will it be?
and what should it be? These three questions, though simply worded, are in reality the most
fundamental questions that any organization can put to itself. The answers are based on the
analysis of the underlying needs of the society that any organization serves to fulfill. The
satisfaction of that need is, then, the business of the organization.

Thompson (1997) defines mission as the "essential purpose of the organization, concerning
particularly why it is in existence, the nature of the business (es) it is in, and the customers
it seeks to serve and satisfy"." Hunger and Wheelen (1999) say that mission is the "purpose
or reason for the organization's existence. Some examples of mission statements are shown
below:
 Ethiopian Airlines has the following missions:

 To create value to our customers and stakeholders by providing safe and

reliable passenger and cargo air transport service. (Ethiopian Airlines)

 To provide aircraft maintenance, training and other aviation-related services.

 To become a market leader as a World Class African Airline.

 To invest in the latest aviation technology and a highly trained and motivated
human resource.
 To play a visible role in the development of trade and tourism in Ethiopia and
Africa.

 Dashen Bank has the following mission statement:

 Provide Efficient and Customer Focused Domestic and International
Banking Services, overcoming the continuous Challenges for excellence
through the Application of Appropriate Technology.
 Alpha Agribusiness
 We are a market- and customer-driven cooperative committed to
optimizing the value of our members' dairy, crop and livestock production.
 Our mission is to operate a dairy farm that will provide:
 Financial success through the marketing of high quality milk
 A high standard of living for our family and a comfortable
retirement for family farm participants
 A rural family living environment with ample time for recreation
and personal growth for all involved
 Opportunities for family member involvement and advancement in
the farm business
 Recognition for accomplishment
 Comfortable to work around, labor efficient, a happy work
environment, and express a high degree of pride.
From above examples we can see that mission statements include:
 Social responsibility
 Quality
  Commitment to survival, growth, and profitability
 Identify customers and market
 Identify products and/or services
 Family values

Value Statements
Values are the beliefs of an individual or group, and in this case the organization, in which
they are emotionally invested. The Starbucks mission statement describes six guiding
principles that, as you can see, also communicate the organization’s values:
1. Provide a great work environment and treat each other with respect and dignity.
2. Embrace diversity as an essential component in the way we do business.
3. Apply the highest standards of excellence to the purchasing, roasting and fresh
delivery of our coffee.
4. Develop enthusiastically satisfied customers all of the time.
5. Contribute positively to our communities and our environment.
6. Recognize that profitability is essential to our future success.

Business Definitions
Understanding business definition is vital for answering the question “What is our business?”
that defines the mission statement of the firm. Business definition is also pointer to answer
the question “What will be our business?” and “What should it be?” Mission statements use
the ideas generated in business definition

Defining Business
A metal procession company can define itself as ‘Nation Industrializer.’ Exhibit 2.1 show
several alternatives for a firm in industrial products.
An illustrative diagram in exhibit 2.1 is helpful in understanding business. The diagram
attempts to show relation that exists between societal needs (the business of feeding the
society) and various alternative business opportunities available. Each category in exhibit 2.1
depicts alternative ways through which society could be satisfied.
 Society
Business Organization
Products
Industrial Products
Textiles

Metals
Ferrous Metals
Cast Iron

Mild Steel

Carbon Steel

Nonferrous Metals

Alloys

Chemicals

Construction Equipments

Automotive

Machine Tools

Agricultural Products

Services

Other Organization

Exhibit 2.1. Business Definition: Nation Industrializer

Dimensions of Business Definitions

Derek Abell suggested Business definitions along three dimensions:
 Customer group,
 Customer function and
 Alternative technologies
Customer group: particular set of customers whose need is to be satisfied (e.g. children
under 18 years, middle class, lower class, upper class etc.-market segment)
Customer function: particular customer need to be satisfied (e.g. need for
education/information)
Alternative technology: ways to satisfy that particular need (e.g. manufacturing, education
materials-paper and pulp manufacturing technologies)
 Alterative technologies

Custom Customer functions

er
groups
Exhibit 2.1: Three dimensions for defining business

Customer groups are created according to the identity of the customers. Customer functions
are based-on what the products or services provide to the customers. Alternative technologies
describe the manner in which a particular function can be performed for a customer.
Business definition is helpful for strategic management in many ways. For instance, business
definition can indicate the choice of objectives, help in exercising a choice among different
strategic alternatives, facilitate functional policy implementation, and suggest appropriate
organizational structure.

2.2. Roles Played by Mission and Vision

Mission and vision statements play three critical roles: (1) communicate the purpose of the
organization to stakeholders, (2) inform strategy development, and (3) develop the measurable
goals and objectives by which to gauge the success of the organization’s strategy.

First, mission and vision provide a vehicle for communicating an organization’s purpose and
values to all key stakeholders. Stakeholders are those key parties who have some influence
over the organization or stake in its future. Some key stakeholders are employees, customers,
investors, suppliers, and institutions such as governments. Typically, these statements would
be widely circulated and discussed often so that their meaning is widely understood, shared,
and internalized. The better employees understand an organization’s purpose, through its
mission and vision, the better able they will be to understand the strategy and its
implementation.

Second, mission and vision create a target for strategy development . That is, one criterion of a
good strategy is how well it helps the firm achieve its mission and vision. To better
understand the relationship among mission, vision, and strategy, it is sometimes helpful to
visualize them collectively as a funnel. At the broadest part of the funnel, you find the inputs
into the mission statement. Toward the narrower part of the funnel, you find the vision
statement, which has distilled down the mission in a way that it can guide the development of
the strategy. In the narrowest part of the funnel you find the strategy —it is clear and explicit
about what the firm will do, and not do, to achieve the vision.

Vision statements also provide a bridge between the mission and the strategy . In that sense the
best vision statements create a tension and restlessness with regard to the status quo—that is,
they should foster a spirit of continuous innovation and improvement. For instance, in the
case of Toyota, its “moving forward” vision urges managers to find newer and more
environmentally friendly ways of delighting the purchaser of their cars. London Business
School professors Gary Hamel and C. K. Prahalad describe this tense relationship between
vision and strategy as stretch and ambition. Indeed, in a study of such able competitors as
CNN, British Airways, and Sony, they found that these firms displaced competitors with
stronger reputations and deeper pockets through their ambition to stretch their organizations
in more innovative ways.

Third, mission and vision provide a high-level guide, and the strategy provides a specific
guide, to the goals and objectives showing success or failure of the strategy and satisfaction
of the larger set of objectives stated in the mission. In the cases of both Starbucks and Toyota,
you would expect to see profitability goals, in addition to metrics on customer and employee
satisfaction, and social and environmental responsibility.

To sum up, mission and vision both relate to an organization’s purpose and aspirations, and
are typically communicated in some form of brief written statements. A mission statement
communicates the organization’s reason for being and how it aspires to serve its key
stakeholders. The vision statement is a narrower, future-oriented declaration of the
organization’s purpose and aspirations. Together, mission and vision guide strategy
development, help communicate the organization’s purpose to stakeholders, and inform the
goals and objectives set to determine whether the strategy is on track.

2.3. Crafting Vision and Mission: Development Process

Vision and mission development are analogous to “P” (planning) in the P-O-L-C framework.
To the greatest extent possible, people responsible for executing the mission and vision drive
the development of vision and mission. Sometimes this means soliciting their input and
guiding them through the development of the actual statements, but ideally, it means teaching
them how to craft those statements themselves. Participating or involving different key
stakeholder during vision and mission statement is vital during strategy implementation
phase. The strategist should assign responsibility to each stakeholder so that it’s clear how
each person can contribute to mission and vision statements. The following points are
important to understand while developing vision and mission of an organization:

Context

 Let the business drive the mission and vision.

 Involve all stakeholders in its development; otherwise, they won’t consider it theirs.
 Assign responsibility so that it’s clear how each person, including each stakeholder,
can contribute.
 Seek expert facilitation to reach a vision supported by all.
 Revise and reiterate; you’ll likely go through multiple iterations before you’re
satisfied.

Content
The content of the mission and vision statements are analogous to the O (organizing) part of
the P-O-L-C framework. Begin by describing the best possible business future for your
company, using a target of five to ten years in the future. Your written goals should be
dreams, but they should be achievable dreams. Jim Collins (author of Good to Great)
suggests that the vision be very bold, or what he likes to call a BHAG—a big, hairy,
audacious goal:
For example:
 To go to the moon by the end of the decade-NASA, 1960
  Nonracist America- Martin Luther King

Recognizing that the vision statement is derived from aspects of the mission statement, it is
helpful to start there. Richard O’ Hallaron and his son, David R. O’ Hallaron, in The Mission
Primer: Four Steps to an Effective Mission Statement, suggest that you consider a range of
objectives, both financial and nonfinancial. Specifically, the O’Hallarons find that the best
mission statements have given attention to the following six areas:

1. What “want-satisfying” service or commodity do we produce and work constantly to

improve?
2. How do we increase the wealth or quality of life of society?
3. How do we provide opportunities for the productive employment of people?
4. How are we creating a high-quality and meaningful work experience for employees?
5. How do we live up to the obligation to provide fair and just wages?
6. How do we fulfill the obligation to provide a fair and just return on capital?

When writing your statements, use the present tense, speaking as if your business has
already become what you are describing. Use descriptive statements describing what the
business looks like, feels like, using words that describe all of a person’s senses. Your
words will be a clear written motivation for where your business organization is headed.
Mission statements, because they cover more ground, tend to be longer than vision
statements, but you should aim to write no more than a page. Your words can be as long
as you would like them to be, but a shorter vision statement may be easier to remember.

 Start from where you are to get to where you want to go.
 Build in the values of the organization: Every organization has a soul. Tap into
yours, and adjust as needed. Mission and vision built on your values will not just hold
promise but also deliver on it.
 Build on the core competencies of the organization: A mission and vision are
useless if they can’t be put into operation. This requires recognition of your
organization’s strengths and weaknesses.
 Factor in your style: A mission and vision must reflect the leader’s style. You can’t
sustain action that goes against it.
 Make it visual: A picture is worth a thousand words.
 Make it simple to understand: Complex language and disconnected statements have
little impact—people can’t implement what they don’t understand.
 Make it achievable: A mission and vision are an organization’s dreams for the future.
Unachievable goals discourage people.
 Phase it in: Reach for the sky—in stages.
 Make it actionable: If it’s too abstract, no one knows what to do next.
Communications

The communications step of the mission and vision statements development process is
analogous to the “L” (leading) part of the P-O-L-C framework. Communicate often: Internal
communications are the key to success. People need to see the vision, identify with it, and
know that leadership is serious about it. Managers must evaluate both the need and the
necessary tactics for persuasively communicating a strategy in four different directions:
upward, downward, across, and outward.

Communicating Upward

Increasingly, firms rely on bottom-up innovation processes that encourage and empower
middle-level and division managers to take ownership of mission and vision and propose new
strategies to achieve them. Communicating upward means that someone or some group has
championed the vision internally and has succeeded in convincing top management of its
merits and feasibility.

Communicating Downward

Communicating downward means enlisting the support of the people who’ll be needed to
implement the mission and vision. Too often, managers undertake this task only after a
strategy has been set in stone, thereby running the risk of undermining both the strategy and
any culture of trust and cooperation that may have existed previously. Starting on the
communication process early is the best way to identify and overcome obstacles, and it
usually ensures that a management team is working with a common purpose and intensity
that will be important when it’s time to implement the strategy.

Communicating Across and Outward

The need to communicate across and outward reflects the fact that realization of a mission
and vision will probably require cooperation from other units of the firm (across) and from
key external stakeholders, such as material and capital providers, complementors, and
customers (outward). Internally, for example, the strategy may call for raw materials or
services to be provided by another subsidiary; perhaps it depends on sales leads from other
units.
  Communicate often: Internal communications are the key to success. People need to
see the mission and vision, identify with them, and know that leadership is serious
about it.
 Create messages that relate to the audience: To adopt a mission and vision, people
must see how they can achieve it, and what’s in it for them.
 Create messages that inspire action: It’s not what you say, but how you say it

Application

It is the successful execution of this step—actually using the mission and vision statements—
that eludes most organizations. Even the most enthusiastic proponents acknowledge that
mission statements are often viewed cynically by organizations and their constituents. That is
usually due to large and obvious gaps between a company’s words and deeds. “Mission
statements are tools, and tools can be used or abused or ignored…Management must lead by
example. It’s the only way employees can live up to the company’s mission statement.

Use it: Beyond printing it, posting it, and preaching it, you also need to practice what is laid
out in the mission and vision…“walk the talk”

Live it: Management must lead by example.

Be real: It’s better to adjust the mission statement as needed than to not live up to the
standards it sets.

Monitoring

The monitoring step of the mission and vision statements development process is analogous
to the “C” (controlling) part of the P-O-L-C framework. Identify key milestones that are
implied or explicit in the mission and vision. Since mission and vision act like a compass for
a long trip to a new land, as Information Week’s Hajela suggests, “while traveling to your
destination, acknowledge the milestones along the way. With these milestones you can
monitor your progress: A strategic audit, combined with key metrics, can be used to measure
progress against goals and objectives. To keep the process moving, try using an external audit
team. One benefit is that an external team brings objectivity, plus a fresh perspective.” It also
helps motivate your team to stay on track.

 Identify key milestones: While traveling to your destination, acknowledge the

milestones along the way.
 Monitor your progress: A strategic audit, combined with key metrics, can be used to
measure progress against goals and objectives.
  Use external audit team: An external team brings objectivity, plus a fresh
perspective.

To sum up, this section described some of the basic inputs into crafting mission and vision
statements. It explored how mission and vision involved initiation, determination of content,
communication, application, and then monitoring to be sure if and how the mission and
vision were being followed and realized. In many ways, you learned how the development of
mission and vision mirrors the P-O-L-C framework itself—from planning to control
(monitoring).

2.4. Goals and Objectives

Goals and objectives play an important role in translating the vision and mission into
outcomes or manifestations. In this section we attempt to clarify more the concept of goals
and objectives that we have discussed in former chapter.

Goals and objectives provide the foundation for measurement. Goals are the outcome
statements that define what an organization is trying to accomplish, both programmatically
and organizationally. Goals are usually a collection of related programs, a reflection of major
actions of the organization, and provide rallying points for managers. For example, Wal-Mart
might state a financial goal of growing its revenues 20% per year or have a goal of growing
the international parts of its empire. Try to think of each goal as a large umbrella with several
spokes coming out from the center. The umbrella itself is a goal.

In contrast to goals, objectives are very precise, time-based, measurable actions that support
the completion of a goal. Objectives typically must (1) be related directly to the goal; (2) be
clear, concise, and understandable; (3) be stated in terms of results; (4) begin with an action
verb; (5) specify a date for accomplishment; and (6) be measurable. Apply our umbrella
analogy and think of each spoke as an objective. Going back to the Wal-Mart example, and in
support of the company’s 20% revenue growth goal, one objective might be to “open 20 new
stores in the next six months.” Without specific objectives, the general goal could not be
accomplished—just as an umbrella cannot be put up or down without the spokes.
Importantly, goals and objectives become less useful when they are unrealistic or ignored.
For instance, if your university has set goals and objectives related to class sizes but is unable
to ever achieve them, then their effectiveness as a management tool is significantly
decreased.
Measures are the actual metrics used to gauge performance on objectives. For instance, the
objective of improved financial performance can be measured using a number metrics,
ranging from improvement in total sales, profitability, efficiencies, or stock price. You have
probably heard the saying, “what gets measured, gets done.” Measurement is critical to
today’s organizations. It is a fundamental requirement and an integral part of strategic
planning and of principles of management more generally. Without measurement, you cannot
tell where you have been, where you are now, or if you are heading in the direction you are
intending to go. While such statements may sound obvious, the way that most organizations
have set and managed goals and objectives has generally not kept up with this commonsense
view.

Goals and objectives are an essential part of planning. They also have cascading implications
for all the aspects of organizing, leading, and controlling. Broadly speaking, goals and
objectives serve to:

 Gauge and report performance

 Improve performance
 Align effort
 Manage accountabilities

Planning typically starts with a vision and a mission. Then managers develop a strategy for
realizing the vision and mission; their success and progress in achieving vision and mission
will be indicated by how well the underlying goals and objectives are achieved.

However, unless the organization consists of only a single person, there are typically many
working parts in terms of functional areas and product or service areas. Functional areas like
accounting and marketing will need to have goals and objectives that, if measured and
tracked, help show if and how those functions are contributing to the organization’s goals and
objectives. Similarly, product and service areas will likely have goals and objectives. Goals
and objectives can also be set for the way that functions and product or service areas interact.
For instance, are the accounting and marketing functions interacting in a way that is
productive? Similarly, is marketing delivering value to product or service initiatives?
Obviously, the role of goals and objectives does not stop in the planning stage. If goals and
objectives are to be achieved and actually improve the competitive position of the firm, then
the organizing, leading, and controlling stages must address goals and objectives as well.

The way that the firm is organized can affect goals and objectives in a number of ways. For
instance, a functional organizational structure, where departments are broken out by finance,
marketing, operations, and so on, will likely want to track the performance of each
department, but exactly what constitutes performance will probably vary from function to
function.

In terms of leadership, it is usually top managers who set goals and objectives for the entire
organization. Ideally, then, lower-level managers would set or have input into the goals and
objectives relevant to their respective parts of the business. For example, a CEO might
believe that the company can achieve a sales growth goal of 20% per year. With this
organizational goal, the marketing manager can then set specific product sales goals, as well
as pricing, volume, and other objectives, throughout the year that show how marketing is on
track to deliver its part of organizational sales growth. Goal setting is thus a primary function
of leadership, along with holding others accountable for their respective goals and objectives.

To sum up, goals are typically outcome statements, while objectives are very precise, time-
based, and measurable actions that support the completion of goals. Goals and objectives are
an essential element in planning and are a key referent point in many aspects of organizing,
leading, and controlling. Broadly speaking, within the P-O-L-C framework, goals and
objectives serve to (1) gauge and report performance, (2) improve performance, (3) align
effort and, (4) manage accountabilities.