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Rumelt strategy is not goal setting

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Strategy is Not Goal Setting

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Rumelt strategy is not goal setting

  1. 1. Strategy is Not Goal Setting By Dr. Michael McDermott mcdermottm1@nku.edu
  2. 2. Addressing Popular Misconception 2: Strategy is Goal Setting Strategy is NOT goal setting © Michael McDermott, 2014 2
  3. 3. Goal Setting • It’s not wrong to have goals • But it’s no substitute for strategy © Michael McDermott, 2014 3
  4. 4. Goal Setting is Widespread in Society © Michael McDermott, 2014 4
  5. 5. One Goal I want to win the 2012 Presidential race © Michael McDermott, 2014 5
  6. 6. Similar Goal Hey there….I want to be President too. © Michael McDermott, 2014 6
  7. 7. But who has genuine strategy? © Michael McDermott, 2014 7
  8. 8. Is this Strategy? We all want to win the European Champions League in 2014 © Michael McDermott, 2014 8
  9. 9. Is this Strategy? We all want to win the World Cup in 2014 © Michael McDermott, 2014 9
  10. 10. But goal setting is not strategy © Michael McDermott, 2014 10
  11. 11. What’s the problem with goal setting that masquerades as strategy? © Michael McDermott, 2014 11
  12. 12. Problem with Goal Setting It provides no guidance on how these goals can be achieved © Michael McDermott, 2014 12
  13. 13. Goal Setting? It’s nothing more than wishful thinking © Michael McDermott, 2014 13
  14. 14. Bad Strategy is The XFactor, Pop Idol Approach to Strategy “Hi Simon, I think I am the next Elvis” © Michael McDermott, 2014 14
  15. 15. Is this Strategy? Letter from CEO to Employees Dear Valued Employee, Recently I met with all eight Vice-Presidents to discuss our way forward as we face unprecedented challenges. It may not be plain sailing. We will face rough seas and not all ports will receive us well. However, we now have identified our clear path as we embark upon our journey. You have a vital role to play and all of us are united in our common desire to succeed. Our strategy for the next three years is to: 1. Increase sales by 20% per annum 2. Reduce costs by 10% per annum 3. Increase market share by 5% per annum 4. Expand into 20 new markets 5. Develop three new $100m brands Yours, © Michael McDermott, 2014 15
  16. 16. Why is Goal Setting so Popular? • Because for most executives goals are strategy • Bosses and owners like to get the best from their subordinates; • Keeps everyone on their toes; – Often they set targets that are ridiculously ambitious © Michael McDermott, 2014 16
  17. 17. How to Spot Goal Setters • Often they make extensive use of spreadsheets detailing past performance to determine future goals • Numerical targets are plucked from thin air without any rationale • Intolerant of the ‘deadbeats’ who dare point out any obstacles © Michael McDermott, 2014 17
  18. 18. Developing a strategy is not an exercise in goalsetting © Michael McDermott, 2014 18
  19. 19. Goal Setting vs Strategy Strategy Goal Setting • The goals are communicated clearly • The direction is clearly communicated • But the goals may never be achieved due to a lack of direction or focus • The goals are achieved by following the directions provided © Michael McDermott, 2014 19

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