It is not enough for organizations to outline their vision. They also need to outline their strategic objectives (how they plan to make their vision a reality) and then measure performance toward achieving these objectives.
Measuring strategic objectives is crucial to organizational success because it allows you to track progress, make informed decisions, and ensure your organization is moving in the right direction.
But how do you measure strategic objectives? This article will answer this question.
At the end of this article, you’ll be one step closer to driving your organization forward and achieving the objectives set out in the overall plan.
Steps to measure strategic objectives
The steps to measure strategic objectives effectively are:
Identify Key Performance Indicators
Set targets for KPIs
Select data sources and collect data
Analyze data
Report and communicate the result
Continuously improve
Identify Key Performance Indicators (KPIs)
Once you have clear objectives, the next step is to identify metrics that will help you measure progress toward achieving your objectives. These metrics are called Key Performance Indicators, or KPIs for short.
KPIs should be directly related to each strategic objective. For example, if your strategic objective is to increase revenue, you should use financial KPIs like revenue growth.
Choosing the right KPIs for objectives is easier said than done. It can be a long and tedious process that involves examining countless documents and meeting with heads of departments and key operatives.
This can cost you thousands of management hours and thousands of dollars.
Worse still, this does not guarantee selecting the right metrics for your objectives. Tracking inaccurate or irrelevant KPIs can make you focus on the wrong things and derail your organization.
This is where implementing the right strategy management system comes in.
Kippy is the ultimate strategy management software. It helps you to choose accurate KPIs for your objectives.
You enter your objectives, and Kippy will automatically generate a series of matching KPIs in a few seconds, saving you the time and stress of finding accurate KPIs and the risk of choosing inaccurate or irrelevant KPIs.
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Set targets for KPIs
After identifying KPIs relevant to your objectives, the next step is to set targets for each KPI. Targets are basically desired outcomes, and having them gives you something to measure performance against to assess whether you are on track to achieve your strategic objectives.
Measure historical and current performance levels to set realistic and achievable targets. If you don’t have historical data, you may use industry benchmarks.
Select data sources and collect data
You need data to measure the success of your strategic objectives. Therefore, after identifying KPIs and setting your targets, the next step is to choose your data sources and regularly collect data.
The best data source depends on your objectives and the KPI selected to measure it.
You can collect data from internal sources (like financial reports, staff feedback, etc.) or external sources (like competitor analysis, industry reports, etc.).
The frequency of data collection may vary depending on your KPI and the strategic objective it relates to.
For example, some KPIs may be measured daily and require daily data collection, while others may be measured monthly or quarterly and require less frequent data collection.
Analyze data
After collecting data for your KPI, analyze it to assess progress toward your strategic objective.
Analyzing data involves looking for patterns and trends in the data, measuring deviations targets and benchmarks from your target/ benchmark, etc.
Report and communicate the result
Relevant stakeholders within the organization should be aware of progress. So, after analyzing KPI data, you should share the result with relevant stakeholders (teams, top management, investors, etc.).
Highlight areas where you are not meeting your targets and take corrective actions.
When everyone is aware of where the organization is with regard to goal attainment, it is easier to gain their full support when corrective actions are taken.
However, don’t be the boss who says nothing when you do well as an organization, only to hound your workers when you fall short.
Communicating KPIs results is an opportunity to celebrate achievement when you reach or exceed targets. This can boost morale and motivate everyone to do more.
Continuously improve
Use the insights obtained from data analysis to continuously improve your strategies and processes. For example, you can identify areas where you are doing well and then choose to optimize performance by shifting resources there to achieve better results.
You may also consider implementing a new strategy to lift poor performance areas or adjusting targets to make them more achievable.
What are the types of strategic objectives?
Strategic objectives are often grouped into the following categories:
Financial strategic objectives
Growth strategic objectives
Training/ learning strategic objectives
Business processes/ operations strategic objectives
Customer strategic objectives
Financial strategic objectives
Financial strategic objectives are specific financial targets that organizations set to support their overall strategic plan. They focus on aspects related to revenue, profitability, cost management, and financial stability.
These strategic objectives are essential for the financial health and sustainability of the organization. Organizations use financial strategic objectives to make profit projections, shape budgets, etc.
Examples of financial strategic objectives
Strategic objectives to help you manage your organization's financial health and sustainability include:
Revenue growth: Increase revenue by a certain percentage.
Cost reduction: Decrease operating expenses by a certain percentage.
Debt management: Reduce debt levels or achieve a target debt-to-equity ratio.
Investment and capital allocation: Increase investment portfolio.
Growth strategic objectives
Growth strategic objectives are expansion targets that organizations set to support their overall success. They are actionable statements that organizations make about expanding and increasing their influence in the market.
Strategic objectives for growth are a fundamental part of strategic planning. It involves affecting various aspects of an organization’s operations to drive sustainable growth over the short, medium, and long term.
Examples of growth strategic objectives
Strategic objectives to support your expansion plans include:
Market expansion: Enter new geographical markets to reach a broader customer base.
Product expansion: Introduce new products/ services to cater to different customer needs.
Mergers and acquisition: Acquire a small but competitive company to gain its market share.
Scaling operations: Expand production capacity, facilities, or infrastructure to meet increased demand.
Training/ learning strategic objectives
Training/ learning strategic objectives are targets that organizations set to develop and enhance their employees' knowledge, skills, and capabilities.
These objectives are an integral part of talent development and human resource management strategies.
Strategic objectives for training/ learning aim to invest in employees as a way to improve their performance, increase productivity, and drive organizational success.
Examples of training/learning strategic objectives
Strategic objectives that support your talent development needs include:
Skill enhancement: Improve employee’s technical or job-specific skills to enhance their ability to perform their roles effectively.
Technical and IT training: Equip teams with the technical skills required to use specific software and programs
Leadership development: Identify and groom high-potential employees for leadership roles within the organization.
Onboarding: Create an effective onboarding process to help new hires integrate quickly into the organization and be able to do their jobs well.
Professional development: Support employees in obtaining higher degrees or relevant professional certifications.
Business processes/operations strategic objectives
Business processes or operations strategic objectives are targets that organizations set to optimize internal processes and operations.
These targets are essential for improving efficiency, enhancing quality, reducing costs, and ensuring an organization can deliver its products or services effectively.
Examples of business processes' strategic objectives
Strategic objectives to help you optimize your internal processes include:
Operational efficiency: Streamlining processes to reduce waste and minimize bottlenecks.
Cost reduction: Implement cost-saving measures.
Quality improvement: Implement quality control measures to enhance the quality of products or services.
Supply chain optimization: Minimize supply chain disruptions.
Customer strategic objectives
Customer strategic objectives are targets that organizations set to create exceptional customer experiences, build strong customer relationships, and drive customer satisfaction and loyalty.
Customer-centric strategic objectives are crucial for organizations seeking to use outstanding customer service to acquire new customers and retain existing ones toward achieving sustaining growth.
Examples of customer strategic objectives
Strategic objectives to help you improve the customer experience include:
Customer satisfaction: Maintain a high level of customer satisfaction by consistently delivering quality products.
Customer retention: Implement customer loyalty programs.
Customer acquisition: Attract new customers by offering competitive prices.
Customer engagement: Actively engage customers through personalized interactions and feedback channels.
Criteria for strategic objectives
For your strategic objectives to be effective, they should meet specific criteria, such as:
SMART
Ensure your objectives are specific (clearly defined), measurable (capable of being measured), achievable (attainable/not overly ambitious), relevant (aligned with the organization’s vision), and timebound (have a specific time frame for achieving).
Strategic alignment
Objectives should align with the overarching strategy.
Complementary
Objectives across the different areas of your organization (such as financial, operations, etc.) should complement each other and support overall success.
Challenging
Objectives should be challenging enough to inspire effort and motivation but still realistic and achievable.
Flexible
Objectives should allow for adapting to changing circumstances.
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Effective tips for setting strategic objectives
Some tips to help you set strategic objectives effectively include:
Start with a clear vision.
Use the SMART model, ensuring your objectives are Specific, Measurable, Achievable, Relevant, and Timebound.
Prioritize objectives, focusing on the most critical objectives and leading indicators (to avoid spreading resources too thin on pursuing too many objectives).
Ensure your objectives align with your organization’s overall goals.
Engage relevant stakeholders within the organization when setting strategic objectives.
Cascade objectives down to all levels of the organization, so everyone is on the same page.
Establish KPIs for each objective to measure success towards achieving the objective.
Set challenging but achievable targets.
Regularly review progress and adjust objectives as needed based on changing circumstances or new insights.
Takeaway: Measure strategic objectives toward achieving organizational goals
After an organization has defined its vision and set strategic objectives that show the high-level steps it will take to achieve the vision, it needs to track progress toward the achievement of those objectives.
Measuring progress tells you if you are moving in the right direction and empowers you to make the right decisions toward achieving your objectives.
Steps to measuring strategic objectives include selecting KPIs, setting targets for KPIs, collecting data, analyzing the data, communicating the result, and continuously improving.
Measuring strategic objectives effectively starts with selecting the right metrics, calling for using a strategy management tool that helps you get the best KPIs for your objectives. This is where Kippy comes in!
Kippy is a B2B SaaS that helps organizations manage their strategy, objectives, KPIs, and targets, then allows managers to use all that information to appraise their team.
It automatically furnishes users with accurate KPIs for their objectives.
Using Kippy saves you hundreds of hours in research and meetings to find the right KPIs for your objectives and helps you avoid the risk of choosing inaccurate or irrelevant KPIs.
Ready to start measuring your strategic objectives like a Pro and driving better results? Schedule a demo today and see how Kippy can help.