Objective (goal), indicator and activity are basic terms in strategic performance management and measurement. Although they seem self-explanatory, it is amazing how often they are mixed up in organizations of all kinds, in politics, or in everyday private matters. This article outlines simple language rules that can help you properly formulate strategic objectives, indicators, and activities.

Objectives, indicators and activities are central elements of strategic planning and strategy execution. With them, an organization determines what it intends to achieve, how it wants to achieve it, and how well it achieves it. These three elements stand in a functional triangular relationship (Figure 1).

An objective can be achieved with one or more activities. The degree of achievement of an objective can be measured or assessed by one or more metrics or indicators.

In practice, it seems easiest to formulate activities. It is enough to ask the question “What should we do …?” to trigger the thinking process and come up with numerous ideas. Formulating objectives and indicators, on the other hand, does not seem to be so simple and trivial. There is a risk of confusing objectives with activities or with indicators. In the worst case, the Management Triangle then becomes the Bermuda Triangle, in which one gets lost, or a single management point: activities or indicators become an end in themselves. Implementing activities or hitting targets is often perceived as a success. However, organizational success is neither one nor the other. It is exclusively the achievement of strategic goals.

In this article, I would like to provide answers and possible solutions to the following questions:

• How can strategic objectives be properly defined?
• What standards can be applied when formulating strategic objectives?
• How can objectives, activities and indicators be distinguished from each other?

Strategic objectives and organizational performance

A strategic objective is a description of a desired future state which an organization is aiming for. Future states are to be formulated at different strategic levels (such as vision, stakeholders, processes, resources, and values) and concerning different strategic elements (such as society, customers, capabilities, intangible resources, or organizational culture). To represent the way organizational performance has been created, or, in other words, to visualize the strategic objectives with their cause-effect relationships can in theory and practice be done with various mapping tools such as Business Model Canvas, Strategy Map, Value Creation Map, Success Map (German: “Erfolgslogik”), Results Map, Logic Model (German: Wirkungslogik) etc. The best way to describe, understand and communicate it is by means of a story (value narrative).

Standards for properly formulating strategic objectives

From my practical experience, I would make the following recommendations for formulating strategic objectives:

• Use specific nouns and adjectives

Avoid generic management terms such as product, service, efficiency, market share, customer satisfaction, employee satisfaction, etc. Instead, look for the appropriate, specific noun. Adjectives are used to describe characteristics. These characteristics will be the basis for building key performance indicators (KPIs) in a further step of the strategy process. Therefore, avoid general, non-specific adjectives such as good/bad, high/low, etc. Look for the adjective that best describes the essential characteristic (see example).

• Use stative verbs instead of dynamic (fientive) verbs

Dynamic verbs are appropriate for expressing activities. Use stative verbs instead – those that describe a static, unchanging state, such as be, have, become, possess, remain, live, can, arise, rule, etc.

• Avoid verbal nouns (gerunds) and their synonyms

The use of verbal nouns (gerunds) and their synonyms such as developing/development, introduction, etc., is a disguised way of expressing actions and, in turn, of formulating activities instead of objectives (see example).

• Do not use numbers

Numbers are clearly the target values of indicators. Therefore, it is imperative to avoid them when formulating strategic objectives.

Examples

Here is an example of poor objective formulation:
“Construction of a refugee camp with 300 houses in one year.”

Here a verbal noun of an activity verb (“construct”) has been used. Thus, an activity has been formulated. The actual objective remains unspoken. Further, using numbers is a hidden way of formulating operational performance indicators (related to time, cost, or quality).

An example of a properly formulated objective is:
“The refugees have decent shelter.”

Here, a stative verb has been used. The state that is aimed for – “decent/humane shelter” – has an essential property: “humane” which can serve as a basis for a KPI. The objective leaves open all activities to achieve it, such as camps with houses, barracks or tents, bunkers, accommodation with private families, or converted public buildings.

Operational objectives versus strategic objectives

The term “operational objectives” appears time and again in management literature. But what does it actually mean?

“Operational objective” is just a synonym for “result of an activity”. “Operational objectives” and operational metrics are indeed linked to a direct result of organizational activities. When an activity has been completed, there is usually a result. The operational objective prescribes or reflects to what extent a task has been completed (output) and what resources (costs, hours) have been invested in its implementation. Here, we talk about the activities’ efficiency. Strategic objectives and strategic indicators, for their part, are related to the mostly indirect and long-term consequences (effect, added value) of organizational activities (outcome and impact). Here, we talk about the activities’ effectiveness (Figure 2).

Conclusion

Strategic objectives can be properly formulated using simple and clear language standards. Management professionals should invest as much time as needed in this exercise. The investment is worthwhile. The better strategic objectives are formulated, the more self-evident they are, at all levels of the organization. Properly formulated objectives require less communication effort because they provide explicit or implicit answers to the question “Why?”. Properly formulated strategic objectives enable the creation of high-quality KPIs and save half of the effort for this. The uncompromising adherence to language standards when formulating strategic objectives is the key to clearly distinguishing between strategic objectives, activities, and indicators. And also the key to escape from the Bermuda Triangle in strategic performance management.

Further reading

– Barr, Stacey. 2021. Why We Struggle With Actions Versus Results. Blog article.
– Marr, Bernard. 2009. Managing and Delivering Performance. How governments, public sector and not-for-profit organizations can measure and manage what really matters. Elsevier.
– PHINEO, 2018. Kursbuch Wirkung. Das Praxishandbuch für alle, die Gutes noch
besser tun wollen.

The original article in German appeared in Management und Qualität (9-10 / 2022) (download)