Terminology around strategic management

Strategiatyökalu

Onni Matti Manninen

The literature and everyday language on strategic management are involved with the complexity of numerous terms and definitions of different things. Awkward misunderstandings are common as a single phrase is interpreted differently. We do have some amount of practical experience of misunderstandings related to terminology. Thereby we are happy to publish a vocabulary of the terminology of strategic management – at least according to our best understanding. For further information check Five tips for strategy execution and follow-up.

What is a vision? Vision is a summary of the status or target of the organization in the future. Example  ̶  “To help our customers to live a more sustainable life at home”   

What is a mission? The mission is the purpose of the existence of the organization. An example  ̶  “For individual freedom and well-being”.

What is the strategy? A strategy is among the terms with most various perceptions in the definition. The strategy can be defined as the plan of the organization to reach the selected set of targets by goals and actions related to the goals. The strategy is often perceived set of choices, actions, and means to reach the selected goals and objectives. The content of a strategy is often abstracted to a few organization level strategic themes and the most important goals or key projects are listed above the themes. 
 

What is the Action plan? The action plan is a program of organizational goals and actions cascaded to divisions and the areas of responsibility. In many organizations, an action plan is a detailed plan outlining the actions required to reach one or several goals. The action plan is often compiled yearly, but the planning phase can begin way before the execution is set to begin. It is quite typical, that an organization does not have a formal strategy, but a sophisticated action plan exists. For example, the new government of Finland in early 2020 does not have a formal strategy. However, a formal plan of execution exists. 

What is the Strategic Theme? (Synonyms: Must-Win-Battle, Strategic choice, Strategic focus area) The theme is an area in which an organization must excel to achieve its vision. The purpose of the theme is to steer and align goals and targets towards structured and logical unities enabling more efficient monitoring and manageability. A strategic theme can also be described as a simplification for communicating the need for change and targets of a strategic focus area. 

What is a strategic program? (Main objective, Strategic Project, Key Project) 

Program is an entirety of top-level goals and assignments, that consists of sub-goals aligned to several areas of responsibility and the action plans and projects linked to sub-goals. Sub-goals, action plans, and projects aim to execute and promote the program towards its´ target state.    

What is the goal? (synonyms; Aim, Objective, Target) 

The purpose of a goal is to answer the question, where are we going to succeed and what will be shifted on the way. A goal with a functional formulation is typically a sentence, that is easily understood by a reader outside of the context. You should write down 1) doing (verb), 2) the object of doing, and 3) the quality and scale of desirable change (attribute). 

Examples: 

  • We increase the headcount of specialists in service area considerably  
  • We decrease the costs related to disputes over quality tolerances for 0,5 million Euros 
  • We create 15 new corporate clients within client segment Y    

What is the indicator of a goal? (synonyms and related terms; Key Performance Indicator (KPI), Indicator of Change, Output) 

The purpose of an indicator is to verify the progression, change, and current status of desirable issue or change. The indicator and its target value should provide the following, meaningful status information; what status within the predefined timeframe describes the situation indication complementing the goal. The status can be “Ready” or “15 pieces”. Usually, the numeric indicator contains a baseline value, actual value, and target value. The values enable describing the progression in percent values.    
 

What is a sub-goal?  

Subgoal is a minor goal, that is directly related to the goal above. The Subgoal is normally aligned to the next organization level. A sub-goal can be a stage, project, or output-based target, that can be divided further into sub-goals and actions. 

What is a chain of goals? (synonym; the entirety of goals) 

Sub goals and action plans related to the sum up and constitute a chain of goals related to one another or an entirety of goals, that can be monitored as one chained entirety.  

What is the action? (synonym; task)  

Action is a single defined mean, that is likely to enhance the possibility of reaching the goal. Several actions under a goal or a sub-goal form an action plan, the set of means within the plan of reaching the goal. One single action contains the description of the action, responsible people, deadline, and the degree of readiness. It is also worth describing and monitoring the progress using informal comments of progress and discussion threads. 

What is strategy implementation? (synonyms and related terms; strategy execution, planning of execution, delegating the goals, rolling the goals, OKR-management)  

Implementing and executing the strategy stands for splitting the organizational goals and programs to smaller pieces, to sub goals aligned to units and teams, and actions, which are set under the responsibility or people in charge. People in charge are normally responsible for interpreting the sub-goals and planning a functional action plan for reaching the target. 

What is a performance agreement?  

The performance agreement is a mutually negotiated agreement between ministries and governmental agencies on a strategic yearly plan including functional and performance-based goals. Performance agreement sets agencies a strategic framework including organizational goals and programs, that are to be implemented, executed, and monitored by the governmental agency. 

What is strategy monitoring? (synonyms; Strategy Management, Managing Execution, Monitoring Execution) 

Strategy monitoring is a practice of rolling strategic management with regular checks and evaluation of the progress and possible challenges of strategy and action plan. Every counterpart within the organization carries the responsibility of regular monitoring of strategy and action plan. Board is responsible for checking the status and progression in line with the frequency of the board meetings. Management team checks the status´ and concludes normally once per month. In the case of unit and team meetings, the frequency can be higher, such as twice a month. Executives and managers have the possibility of checking and promoting the goals assigned to their subordinates whenever necessary. 

What is a Score Card?  

Score Card is a strategy performance management tool in a form of a structured report, that is used in perceiving a helicopter view to the current operational status of the execution and activities. The concept is often used related to the framework of Kaplan and Norton, but the term is related also to other summary reports.  

What are OKR and OKR-management?  

OKR stands for Objectives & Key Results. OKR is a method for setting and dividing goals, in line with Balance Scorecard above. The idea is to set the main goals from strategy (Objectives), sub-goals related to main goals (Key Results), and actions related to Key Results (Initiatives), which are set to the responsibility of units, teams, and people for a defined period (season). The outcome, how well the Goals are achieved, can be evaluated during and at the end of the season. The OKR philosophy is based on the experience and a book by John Doerr.  

OKR management implies setting the strategic top-level goals (Objective), defining their sub-goals and indicators (Key Results), defining the required goal-related actions (Initiatives), and checking the status by a suitable group of people. Despite some amount of recently founded terminology, the method itself is very much in line with established strategy implementation practices of established organizations. 

Are you struggling around these themes? Try LATO strategy tool for free here!

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