Key Factors in Defining Objectives for a Company

Access your KPIs online;
Measure your success;

Navigation: All Balanced Scorecard Articles > Strategic Planning

Setting the right goals and objectives is very important for any business. It is impossible to achieve any success unless you know where you're driving to. In this article you will learn more about strategic planning, goal setting and the role of BSC in this process. Check additional information about defining objectives.

The moment business stops in its development is the moment it dies. This is a universal rule applicable to any business, any industry and any market. Of course, it is possible to achieve short-term success and earn immediate cash. However, in the long term such a company will most certainly fail as it thinks only of present and never looks in future. In order to develop company top management, its shareholders and owners, as well as ordinary personnel, should be aware of what goals must be achieved. Let's take a simple example that will be understood for everyone. Imagine you have to drive with the car to another country. You have got GPS navigator with the wrongly set destination. You seem to be driving OK and in the right direction. How much will you be surprised when you get to Italy instead of Sweden, for example?! The same concerns business. If you want to achieve success you have to set the right goals and constantly track whether or not the company is doing everything correctly in order to achieve them. In other words both goal setting and performance evaluation are important elements of strategic planning.

Statistics show very sad figures. It looks like only 20% of managers in the U.S. and European companies are directly involved in strategic planning and discussion of strategy. Moreover, only half of those 20% have the right concept of the strategy. The rest are either ignorant on strategic goals or have their own interpretation. This results in distortion of results obtained by top management and thus, the wrong decisions are made. That's why the defining company objectives and strategic goals is so much important.

It is essential to understand difference between short-term objectives and long-term strategic goals. Very often these notions are confused. Earning much money is neither goal nor objective. Strategic goals work in the long term and they cover very important aspects of business management. By designing strategic goals the company answers the questions "who we are?", "where will we be in several years?", "who are our customers?" and "how will be satisfy our customers' needs?" Sure, these are only a few questions to be answered.

Objectives mostly work in short-term. Two most common objectives we can refer gaining a small portion of market share, improving customer awareness of new products and services, increasing cash flow or net revenue, improve sales growth etc. Short-term objectives and long-term goals have to be coordinated and interrelated. It is impossible to achieve high strategic goals without implementing immediate objectives.

As already said above, goal setting is an important stage of strategic planning with Balanced Scorecard System which was specifically designed to assist top managers and business owners in development of the right strategy and goals as well as evaluation of business performance in order to track company progress on the way to implement the adopted goals. However, there is one common mistake. Some business owners and top managers think that balanced scorecard substitutes strategy and goals. This is not so. Balanced scorecard is a powerful an effective tool in the hand of experienced and professional business managers.

If you are interested in defining objectives, check this link to find out more about defining objectives. Also, you can check other articles in Strategic Planning category.

Balanced Scorecard Toolkit includes step-by-step manuals, documents, presentations, check lists designed to help business professionals with successful development and implementation of Balanced Scorecard. Learn more about BSC Toolkit.