rumelt strategy is not goal setting

Strategy is Not Goal Setting

By Dr. Michael McDermott

mcdermottm1@nku.edu

Addressing Popular Misconception 2: Strategy is Goal Setting

Strategy is

NOT goal setting

© Michael McDermott, 2014 2

Goal Setting

• It’s not wrong to have goals

• But it’s no substitute for strategy

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Goal Setting is Widespread in Society

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One Goal

I want to win the 2012 Presidential race

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Similar Goal

Hey there….I want to be President too.

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But who has genuine

strategy?

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Is this Strategy? We all want to win the European Champions League in 2014

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Is this Strategy?

We all want to win the World Cup in 2014

But goal setting is not strategy

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What’s the problem with goal setting that

masquerades as strategy?

Problem with Goal Setting

It provides no guidance on how these

goals can be achieved

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Goal Setting?

It’s nothing more than wishful thinking

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Bad Strategy is The X-Factor, Pop Idol Approach to Strategy

“Hi Simon, I think I am the next Elvis”

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Is this Strategy? Letter from CEO to Employees

Dear Valued Employee, Recently I met with all eight Vice-Presidents to discuss our way forward as we face unprecedented

challenges. It may not be plain sailing. We will face rough seas and not all ports will receive us well. However, we now have identified our clear path as we embark upon our journey. You have a vital role to play and all of us are united in our common desire to succeed. Our strategy for the next three years is to: 1. Increase sales by 20% per annum 2. Reduce costs by 10% per annum 3. Increase market share by 5% per annum 4. Expand into 20 new markets 5. Develop three new $100m brands

Yours,

© Michael McDermott, 2014 15

Why is Goal Setting so Popular?

• Because for most executives goals are strategy

• Bosses and owners like to get the best from their subordinates;

• Keeps everyone on their toes; – Often they set targets that are ridiculously

ambitious

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How to Spot Goal Setters

• Often they make extensive use of

spreadsheets detailing past performance to determine future goals

• Numerical targets are plucked from thin air without any rationale

• Intolerant of the ‘deadbeats’ who dare point out any obstacles

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Developing a strategy is not an exercise in goal-

setting

Goal Setting vs Strategy

Goal Setting • The goals are

communicated clearly

• But the goals may never be achieved due to a lack of direction or focus

Strategy • The direction is clearly

communicated

• The goals are achieved by following the directions provided

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