In this short series on strategy we will be uncovering four hygiene conditions that need to be in place for a successful strategy. There are no guarantees in strategy, because we are dealing with wicked problems, not tame ones for which there are true and tested answers.
The four hygiene conditions of strategy are:
- A CLEAR, CONSISTENT, LONG TERM OBJECTIVE,
- A PROFOUND UNDERSTANDING OF the COMPETITIVE ENVIRONMENT,
- AN OBJECTIVE APPRAISAL OF THE RESOURCE BASE, AND
- AN EFFECTIVE IMPLEMENTATION.
In this post we will focus on the first condition: A CLEAR, CONSISTENT, LONG TERM OBJECTIVE.
Few would argue against the need for this… right? An objective which is CLEAR – CONSISTENT and LONG TERM. This functions as an overarching goal for the organisation, which means it governs all our subgoals and thereby influences what we prefer and how we act.
Here’s how you start:
Consider what you want to offer from your customer’s perspective – which problem do you solve and which wrong do you right… Translate this into the objective of your organisation in less than 20 words or so. Make sure to field test your objective with lots of stakeholders and watch their reaction.
Does it move them? And where does it move them?
Does it move them into an hedonic goal frame, a gain goal frame or a normative goal frame?
Goal-framing theory argues that there are three distinctive overarching goals and these goals “frame” the way we process information and act upon it.
You can have an Hedonic Goal – this is the desire to improve or preserve the way you feel;
You can also have a Gain Goal – the desire to improve or preserve your resources; and then
You can have a Normative Goal – this is the desire to act appropriately in the service of a collective entity.
Typically, our motivations are mixed and not either-or. However, goal-framing theory argues one of the three overarching goals will be your goal FRAME and the others will be in the background. Your goal frame will govern what we attend to, and what alternatives we consider.
Sometimes our background goals will be supportive and compatible – but they can also weaken our resolve.
Hedonic goals are the most basic and short term objectives as they are about need satisfaction. Think about avoiding uncertainty, effort, negative thoughts or seeking pleasure, self-esteem and excitement. IF this is considered most important gain goals and normative goals are moved to the background.
Gain goals focus on the medium long term of the “improved future” and imply a strong sensitivity to changes in resources such as making and saving money, and financial security. IF this is considered most important some feel good goals need to be moved to the background. The same could be true for normative goals.
Normative goals focus on behaving the right way and are concerned with the “oughts” – what you ought to do. The way one ought to behave because of personal beliefs and because of the beliefs of others. Typically these normative goals need a stronger external cue as the focus is on long term “joint motivation”.
Normative goals don’t come naturally. It is like turning down the central heating when opening the window even if you don’t have to pay for the heating. In this situation you might not act to improve how you feel or to improve your resources but ‘just because’ it is the right thing to do.
Which… can make you feel better and provide more resources showing that these goals are interconnected. It is all about which of the overarching goals is in the foreground and leading. For organisations a normative goal frame has the highest value potential.
Here are some examples of long term objectives:
Merck: “To discover, develop and provide innovative products and services that save and improve lives around the world.”
Contrast this normative goal with the gain goal of Cooper Tires: “To earn money for its shareholders and increase the value of their investment.”
Another normative goal – this time from Procter & Gamble: “We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers”
Or, would you be more inspired by Dana corporation: “We will grow profitably in the world’s vehicular markets and provide industry leading shareholder value”…
no… Walmart does a much better job: “Our Mission: Saving people money so they can live better.”
In a recent issue of the Harvard Business Review you find interesting examples of the value potential of normative company goals:
- Dow Chemical “Removed 600 million tons of trans fats and saturated fats from the U.S. diet and created a major business with its Nexera sunflower and canola seeds.”
- Nestlé “Helped millions of malnourished families in India and other countries by providing inexpensive micronutrient- reinforced spices, which are a fast- growing, profitable business.”
- Novartis “Provided essential medicines and health services to 42 million people in 33,000 rural villages in India through a social business model that became profitable after 31 months.”
What is your CLEAR, CONSISTENT, LONG TERM OBJECTIVE?