When companies look to enact a strategic plan, they often get confused between properly identifying the company’s goals, the objectives to attain those goals and ultimately how to link the company’s resources to attain those objectives. Now, a number of you reading this might immediately be confused between goals, objectives and resources. That’s fine. It’s common for companies to confuse all three. However, proper strategic planning means to clearly distinguish between goals and objectives, and to properly align the company’s resources in order to have the most cost efficient use of both time and manpower. So, what are the differences between goals and objectives and how can a company best align their resources to the successful completion of both?
Understand the Difference Between Goals, Objectives and Resources
In order to make this as simple as possible, I’ll cut immediately to providing the distinction between these three. First, goals are broad in scope, represent an end result and are always set out in advance. For instance, a company may have a goal to be an industry leader in innovation and product design, and become the preeminent market leader.
Second, objectives are far more specific and lay out the specific benchmarks and points of measurement where the company can assess its progress. Third, resources are those items the company has at its disposal to reach their objectives.
When looking at resources, look at the company's assets. As such, these resources could be the company's business knowledge & intelligence, its expertise, its management & employees, its machinery and equipment, the company's inventory, or even its receivables.
- Goals: Broad in scope and define ultimate purpose of company and initiative.
- Objectives: Specific points of measurement where the company assess its progress.
- Resources: These are the company wide assets the company has that will allow it to attain its objectives.
Understanding the Process of Strategic Planning Success
Successfully adopting strategic plans is quite an involved process. However, the first aspect of success is to be able to make a clear distinction between these three variables. A number of companies mix up their goals and objectives and confuse the message they deliver to their market, their customers and to their own management and employees.
It’s perhaps for this reason that a number of companies misalign their efforts and resources between departments. In the end, this does nothing more than clutter work processes and lead to conflicting and contradictory departmental objectives where one department works against another. What’s an example of misaligned objectives between departments?
A perfect example of misaligned departmental objectives occurs when sales has one set of objectives and inventory has another. Sales is given the responsibility of growing sales and market share and therefore needs inventory to capture customer orders. Their objectives are incentivized around building sales. However, procurement is given the objective of reduced inventory levels and reduced costs. Inventory’s objective is to minimize inventory.
Inevitably, the demands, needs and objectives of the sales department will contradict with the objectives of inventory management if, and only if, they don’t have one all encompassing goal for the entire company.
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