Further strategy-related definitions
As well as explaining how the term 'financial strategy' is used in this book, to avoid any misunderstanding it is sensible to review words and phrases that are often used when talking about, or in relation to, business strategies. Common business terms that are bandied about, often used loosely and open to different interpretations are: align, goal, mission, motive, objective, tactics, target, values and vision.
Presumably we all understand what they mean but of more relevance is the need to check that the words are understood consistently within and between organizations. Here are definitions with commentary on their proper and improper usage.
- put (things) into correct or appropriate relative positions;
- to get or fall into line.
Both of these definitions indicate the need for deliberate action - alignment is unlikely to happen by chance. The significance of alignment and strategy is that strategies are aligned with objectives (or goals) and tactics are aligned with the strategies they are supposed to achieve or support.
- the terminal point of a race;
- the object of a person's ambition or effort; an aim or desired result.
This might be considered too 'sporty' - a one-off to win or lose. However, using 'goal' may be useful to focus and incentivize. It can be used as a synonym for objective but has the flavour of a 'one-off score, a win. It would be an appropriate term where you have a sales target - a strategy being to score the goal and hit or exceed a sales target.
- a thing aimed at or sought: a goal;
- something towards which effort is directed: an aim, goal.
'Objective' is the word I would choose above goal, aim or target as it has a simple, clear and consistent meaning.
- a strongly felt aim, ambition, or calling;
- a specific task with which a person or a group is charged.
Normally used in the phrase 'mission statement'. Mission statements vary from the succinct and clear to the obscure. Mission statements and their place in supporting financial strategy are often seen as being the guide for the company in the years ahead.
With respect to financial strategy one thing is clear: a mission needs a strategy and supporting tactics, but above all it does need a purpose, an objective (or a goal!).