Vision, Objectives and Strategy - What's the difference?
When reading about business strategy and long-term business planning, three of the most common terms encountered are Vision, Objectives and Strategy. These words form part of the general narrative surrounding discussions on how a business should go about determining its future path. Yet for many small business owners and managers, the difference between Vision, Objectives and Strategy is not entirely clear, leading to confusion and even for some to use the terms interchangeably as if they are different words that say the same thing. Whereas in fact these terms have different meanings within the context of strategic thinking.
So this short article sets out to describe what Vision, Objectives and Strategy really mean by way of some simple examples, and how an appreciation of their difference can help business managers think more clearly about the future of their own businesses.
To start with, and to help with understanding, let's take an example from outside the business world. Let's try to define Vision, Objectives and Strategy in relation to an individual's personal health and wellbeing. Many people have an ambition to become fitter and healthier, and in the context of this discussion such an ambition could be described as a Vision. This is because it is clearly describing a future improved state (in relation to one's personal health and fitness), but without making any declaration about how that improved state is to be achieved. In other words, it says nothing about the Objectives or Strategy for creating the new Vision of becoming fitter and healthier.
So taking it a stage further, if someone who creates a Vision to become fitter and healthier decides that they are going to do this by losing weight, they have now added an Objective. This is because losing weight identifies the method by which improved health and fitness is to be achieved. However, we still don't know the means by which the weight loss is to be achieved. This is where Strategy comes in, and in our example it might be that the Objective to lose weight is to be achieved through a combination of diet and more exercise; with the diet being to cut out cakes and biscuits, and the exercise involving running 20 minutes each day.
Our example to differentiate between Vision, Objectives and Strategy can therefore be summarised as follows:
Vision - Get fit and healthy
Objective - lose weight
Diet -cut out cakes and biscuits
Take more exercise - run 20 minutes each day
If we now take the concepts from this example and relate it to a business situation, and imagine a theoretical business that has an ambition to treble profitability within 5 years, their Vision, Objectives and Strategy might look something like the following:
Vision - to treble profitability within 5 years
Double sales revenue
Reduce costs by 20%
Introduce new products
Exit from loss making products
Launch marketing campaign
Rationalise manufacturing facilities
Outsource administration services
It is clear to see in this example how the Vision, Objectives and Strategy not only differ from each other, but also importantly how they relate to each other. The Vision to increase profitability threefold within 5 years will be achieved through the joint Objectives of doubling sales revenue and reducing costs by 20%. There is a Strategy to introduce new products to replace current products that are loss making, and to launch a new marketing campaign to meet the Objective of doubling sales revenue. In parallel with this there is a Strategy to rationalise existing manufacturing facilities and outsource some of the existing administration services to bring about the Objective to reduce costs by 20%.
Hopefully these examples will provide greater clarity on the differences between Vision, Objectives and Strategy, and how they relate to each other within the context of strategic thinking and long-term planning for all business ventures, large or small.
If you are reading this as a business owner or manager it might be useful to think how easily you can identify the Vision, Objectives and Strategy within your own business. And if you would like an informal discussion about your business strategy, with no initial charge and no ongoing obligation, please feel free to get in touch for a chat.