Instructions for Defining Achievable Business Goals
Business objectives are specific aims that businesses set to guide their decision-making and actions towards success. These objectives are shaped by various factors, including the company's strategy, industry, stage of growth, and changes in the external environment. For instance, a recession might prompt a defensive company to focus on market share, while cyclical companies may prioritize survival.
This write-up tackles different aspects of business objectives, starting with their hierarchy and the factors influencing them.
We've got goals, damn it!
Business objectives are crucial for providing direction, making decisions, measuring performance, and motivating employees. They answer the questions of what the business intends to achieve, how to achieve it, when, and how success is measured.
Objective hierarchy: Levels of objectives
Business objectives come in various levels, including:
- Vision or Aim
- Mission
- Corporate objective
- Departmental objective
- Unit or Individual objectives
In some classifications, levels may also include:
- Strategic objective
- Tactical objective
- Operational objective
The vision thing
The vision represents the company's long-term aspirations, defining the company's desired future state. It's communicated through a vision statement, which act as a guiding star for employees and stakeholders. LinkedIn's vision statement is a good example: "Create economic opportunity for every member of the global workforce."
The mission essential
The mission outlines the purpose and reason for the company's existence. LinkedIn's mission, for example, is "Connect the world's professionals to make them more productive and successful."
Getting shit done: Corporate objectives
Corporate objectives set clear goals to achieve the vision and mission. They cover areas like maximizing profits, profit satisficing, growth, market share, survival, corporate social responsibility (CSR), and maximizing shareholder value.
Departmental and individual objectives
These are short-term objectives for business functions that support and achieve corporate objectives. Examples may include increasing sales volume, reducing operating costs, and generating a higher return on investment.
Operational objectives: It ain't just about profits
There's more to life than just making money. Business objectives vary depending on the stage of development, industry, and values of a company.
- Survival: For startups, the initial focus might be on establishing a customer base and overcoming the challenges of a new venture. This may involve objectives like increasing brand awareness, securing funding, and building a strong customer service reputation.
- Growth: Once established, businesses may aim for growth, increasing revenue, market share, or production capacity.
- Profitability: Profitability can take two forms: maximizing profits for rapid growth or achieving a satisfactory level of profit to ensure stability and reinvestment.
- Market share: Some companies strive to become industry leaders in terms of market share, aggressively expanding their customer base.
- Corporate Social Responsibility (CSR): Integrating social and environmental responsibility into business practices is becoming increasingly important for many organizations. This might involve using sustainable materials, minimizing environmental impact, and giving back to communities.
- Maximizing shareholder value: Publicly traded companies may prioritize increasing shareholder wealth through dividends and stock price appreciation.
The SMART approach
Effective business objectives should be Specific, Measurable, Attainable, Relevant, and Time-bound. This approach makes them easier to understand, track, and achieve.
Strategy and tactics: It's all connected
Various key concepts form the foundation for guiding a company's direction and decision-making processes. From the overarching vision to the day-to-day tactics, they work together to create a cohesive framework for achieving organizational success. Some of these concepts include:
- Vision
- Mission
- Strategy
- Goals
- Objectives
- Tactics
- Core values
Factors affecting objectives
Business objectives can change over time as a result of internal and external factors. These factors include changes in company culture, business size, finance, risk tolerance, economic conditions, competition conditions, government policy, and market conditions.
Ethical considerations
Business ethics are a set of moral principles that guide how businesses are conducted and management responds to stakeholders, the environment, and society. These principles can have a significant impact on a company's reputation, financial performance, and ability to attract and retain talent.
Sources
[1] Bartol, C.C., Martin, L.A., O'Grace, G.P., and Rasheed, M. (2000). Business Ethics: Decision Making for Personal Integrity & Social Responsibility. New York: McGraw Hill.
[2] Lorsch, J.W. (1996). Strategy and Innovation: Shaping the Business of the Future. Boston: Harvard Business School Press.
[3] Porter, M.E., and Kramer, M.R. (2011). Creating Shared Value: How to Reinvent Capitalism—and Unleash a Wave of Innovation and Growth. Harvard Business Review Press.
[4] Sterling, S. (2013). The Art and Science of Nonprofit Strategy. John Wiley & Sons.
What else you might want to know
- Mission Statement: Define Your Company's Purpose (Importance, Examples, How to Write)
- Vision Statement: Chart Your Company's Course (Importance, Examples, How to Write)
- [SMART Business Objectives: Your Roadmap to Business Success Importance, Examples, Criteria
- Corporate Goals: Long-term Aspirations For a Company's Future (vs. Objectives, Benefits, Examples)
- Demystifying Corporate Objectives: Specific, Measurable Targets For Achieving Goals
- Operational Objectives: The Key to Business Efficiency [SMART Criteria, Examples, Steps](https://www.harvardbusinessreview.com/products/operational-objectives-the-essential-guide-to-achieving-goals-with-smart-criteria-examples-and-steps-401115)
- Financial Objectives: Drive Growth and Stability (Importance, Examples, SMART Criteria)
- Human Resource Objectives: Build and Maintain a Winning Team (Engagement, Talent, + More)
- Examples of Business Objectives: From Profit and Market Share to Social and Ethical Objectives
Business objectives provide direction, help in decision-making, measure performance, and motivate employees by answering questions about what, how, when, and success measurement. They come in different levels such as vision, mission, corporate, departmental, and individual objectives, with similar classifications including strategic, tactical, and operational objectives. The vision represents a company's long-term aspirations, which is communicated through a vision statement. The mission outlines the purpose and reason for the company's existence. Corporate objectives are set to achieve the vision and mission, covering areas like profits, growth, market share, CSR, and shareholder value.
Operational objectives, in addition to profits, might focus on survival, growth, profitability, market share, CSR, and shareholder value, depending on the stage of development, industry, and values of a company. These objectives can change over time due to factors like internal culture, business size, finance, risk tolerance, economic conditions, competition, government policy, and market conditions.
Effective business objectives should be Specific, Measurable, Attainable, Relevant, and Time-bound. Different key concepts form the foundation for guiding a company's direction, including vision, mission, strategy, goals, objectives, tactics, and core values. Ethical considerations are important, as business ethics affect a company's reputation, financial performance, and talent attraction.
Business objectives in various fields such as entrepreneurship, finance, real estate, stock market, private equity, venture capital, wealth management, personal finance, and debt management can bring immense benefits. For instance, venture capital may help entrepreneurs grow their businesses, while personal finance objectives like saving, budgeting, and debt management can lead to financial stability and security.
