Strategic Corporate Objectives Analysis

Building an organization according to your corporate vision is a very important endeavor. However, it is more of the means rather than the end. The ‘end’, the fundamental business management objective, the reason why an entrepreneur starts the business, is still to make money. A lot of money.

Making money is done in two stages – creating shareholders’ value (or financial value) and monetizing this value (turning it into a cold, hard cash). Therefore, your fundamental corporate objectives are financial – (1) the amount of financial value to be created; (2) time period during which this amount must be created and (3) the specific way in which this financial value must be monetized. The latter, though, is actually a financial value monetization strategy, rather than an objective – but still needs to be specified.

For a publicly traded company, the corporate stock price and the amount of dividends replace the financial value as the fundamental corporate objective. All other strategic corporate objectives are exactly the means to this very end.  

There are technically five ways to monetize financial value: (1) Initial Public Offering on a major stock exchange; (2) sale of the company to another company – strategic buyer; (3) payment of dividends to shareholders; (4) buyback of corporate shares from its shareholders by a company and (5) management buyout.

The first three are by far the most common. Some companies choose a combination of dividends and some other monetization method (e.g. IPO or a strategic sale). Or maybe even dividends, IPO and a strategic sale afterwards.

The key requirement for these strategic objectives (or for any other objective, for that matter) is the optimal degree of ‘stretch’. In other words, your strategic objectives must be neither impossibly hard, nor way too easy to achieve.

The best objective is the one that seems to be impossible to achieve and thus require everyone in the company to maximize his or her performance (and the company to optimize its corporate structure) to achieve this demanding and ambitious objective. Therefore, such an objective is the single most powerful drive for maximizing the aggregate corporate performance.

Obviously, your strategic objectives must fit/match your KEF, your corporate vision statement and your corporate strategies (all of them). Your most important objectives-related KPI are (1) the gap between desired and actual financial value and (2) the amount of time your company needs to close this gap.

Like any other corporate objective (or statement, for that matter), your strategic objectives by themselves are useless. To be useful and valuable to your company they must be tightly integrated into your strategic and operational planning and overall decision-making – to make sure that every decision and action in your company fits your corporate objectives and brings you closer to reaching these objectives. In other words, you need to develop and deploy a highly efficient corporate process of using your strategic corporate objectives in your strategic and operational management.

Likewise, your strategic corporate objectives are not set in stone. Significant changes in your external environment may require making changes (possibly significant) to your strategic corporate objectives. It must be noted, that all these changes must make these objectives more challenging and ambitious. In other words, no matter what happens, you must raise your bar, not lower it.