Although poorly understood and explored, one of the most fascinating approaches to strategy management for me is “Strategic Intent,” developed by Gary Hamel of the London Business School and CK Prahalad of the University of Michigan and published in the May-June 1989 issue of Harvard Business Review.
Strategic intent represents the leverage of all essential resources, capabilities and competencies of an organization, in order to achieve its strategic objectives.
Strategic intent is fundamental, in that it takes into account a company’s ideology and its corporate declarations, i.e., the fundamentals of its strategy, namely: the business, the vision, the mission, and the values of the organization.
It is important to note that every organization must have a strategic intent, but it is not limited to the mission statement, the one the company president puts on a banner hung at the front door. According to Vijay Govindarajan, a strong strategic intent must pass three tests that the traditionally formulated mission usually fails: direction, motivation and challenge.
Direction — Knowing where we want to go and where we do not want to go; having the perception of the whole, without losing sight of the details.
Motivation — How passionate are we really about “maximizing shareholder wealth?” We must come up with a reason for existing that not only convinces, but compels.
Challenge — Good employees do not always want to do the same thing. They like to be challenged. A mediocre job does not excite anyone.
Once a clear strategic intent that passes the “three tests” has been formulated, the organization is ready to begin to define its essential purpose, taking due care to not get lost in generic ideas, or to mimic marketing slogans or propositions of value. A broad, vague purpose does not get the job done.
As the meanings of mission, vision, values and purpose are commonly confused, it is important to understand the differences between them, so that they can be used in a complementary way to establish the organizational identity of the company.
The mission is its commitment to society; what you want to do, how you want to do it, and why.
The vision expresses where the company is heading; its destiny.
Values explain company culture; they consist of principles and behaviors that determine how a company is managed.
The essential purpose is the fundamental reason justifying a company’s existence. It declares what you are trying to accomplish in the world and is connected with something positive, significant, greater than the company itself. It is the company’s raison-d’être.
Why do we exist?
Why do we need to exist?
What relevant contribution do we want to make to the world and society?
When mission, vision, values and purpose are aligned, the team aligns itself with the company – its reason for existence, its purpose, its goals, and what needs to be done to achieve them. This should inspire you and your collaborators.
And that’s why when your employees, customers, and suppliers understand the reason behind your organization’s existence, and why your organization is important, they will connect with it consistently and support its survival, awakening the creativity, commitment, loyalty, collaboration and passion of all involved.
The preparation and communication of the purpose of your organization is a simple task, but an important step towards its sustainability. So, get your team together, talk to each other, and discover and declare your organization’s purpose.
If individuals have a purpose in life, it is natural to suppose that corporations formed by individuals have a purpose vis-à-vis society. What would society lose if your company ceased to exist? What difference does your company make in people’s lives? By answering these questions, you will discover the purpose of your company.
As Denise Santos, CEO of Beneficência Portuguesa de São Paulo, said in a recent article in HBR, “we resignified our purpose so as to value life, and we translate it into actions that promote attention, well-being and warmth in all our relationships.”
The well-crafted declaration of purpose becomes a vibrant guide to strategic initiatives and action plans.