As most academics will stress, strategy is not static but a constantly evolving thought process; strategic thinking (however intuitive) underpins everything we do as humans and organisations.
This brief note aims to reduce the mystique surrounding strategic values and objectives and an approach to cascading them down an organisation, in the following short paragraphs:
Strategic values guide investment and determine intangible asset value
At some stage, an organisation must be explicit about its strategic objectives
Only a small number of strategic objectives prevail at any one time
Corporate strategic value objectives are not enough for different business stream managers
Strategic values pervade an organisation, rather than being chosen
Ensuring values cascade down an organisation is difficult and oft-ignored
Strategic values guide investment and determine intangible asset value Investments and hence the assets (including Intellectual Property) that an organisation acquires are driven by its implicit or explicit strategic objectives at the time of the investment opportunity. However, the strategic value of those assets at any future time is driven by its then-current strategic values. For instance:
A is single and buys a sports car using strategic values he held at that time
One year later A is still single, and the car holds the same strategic value for him
Two years later A is married with a small child – consequently, the strategic value of his sports car has fallen
Similarly, a property asset’s strategic value is determined by how it matches the current strategic objectives/values of the organisation, rather than being determined from the objectives/values at the time of its purchase, or being purely intrinsic to the asset itself. In an asset centred business, constant tracking of the current values of its assets, both strategic and financial, is critical to success.
At some stage, an organisation must be explicit about its strategic objectives
Any organisation should be able to recognise the changing strategic objectives or values that it abides by from time to time. These should attempt to shape its business portfolio by constantly optimising investments and efforts towards them. Unfortunately, or fortunately, investments may derive from constantly assessed mission and strategic objectives, or they may be opportunistic and intuitively meet sublimated strategic logic. Either can build successful organisations, but the former is essential at some stage of an organisation’s maturity, to stabilise its future and reduce investment risk.
Only a small number of strategic objectives prevail at any one time
Corporate goals in social housing aim to grow services and business streams by optimising them in line with social objectives, regulatory objectives, business objectives and financial objectives. Ignoring financial objectives - where there are well-established tangible measures - others (social, regulatory, business) can be analysed to determine a small number of ranked corporate objectives or values at any given time – growth, decline, changing environments and management approach, among other things, determine how rapidly these objectives alter.
In day to day operations, strategic drift is difficult to spot or monitor. During mergers and acquisitions, strategic fit comes to the forefront but even then, perceived strategic values carry more weight than the actual values being deployed in day to day operations at various levels.
Corporate strategic value objectives are not enough for different business stream managers
Each business stream inherits some of these umbrella corporate objectives but not all of them – some are imposed via financial budgets, some by senior management activity. The business stream itself is not concerned with optimising the organisation’s balanced business portfolio but with optimising its own investments to maximise the mission its business stream inherits, within its allocated budget.
Strategic values pervade an organisation, rather than being chosen
It is important that business stream investments be influenced appropriately by both strategic objectives (or values) and by financial resources; with organisations, in the case of strategic values, giving varied weights between social, regulatory and business objectives to business stream managers to ensure that corporate objectives and more detailed business stream goals cascade down the organisation. Consequently, whilst there is often common ground when analysing the strategic values that influence business stream investment between different organisations, there are usually differences in both the values and in their ranking.
Ensuring values cascade down an organisation is difficult and oft-ignored
The purpose of an organisation’s mission statement, strategic objectives and corporate management missives is to ensure that business stream managers (and operatives) manage their financial and effort investment to optimise the overall contribution of their business stream (or operation) in line with the organisation’s own optimisation of the corporate business portfolio. It is of some benefit to ensure that the values are occasionally made explicit and ranked to ensure they are interpreted correctly at all levels. However, this is rarely attempted or achieved – we should question why, and it is the abiding purpose of our asset value methodology.