MIT Sloan Management Review — 12/02/2018 at 11:00

Six Steps to Communicating Strategic Priorities Effectively

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strategy

Leaders can signal their commitment to a strategy by clearly communicating their strategic priorities to external stakeholders.

To drive execution, leaders often translate strategy into a handful of strategic priorities designed to increase alignment throughout the organization. When it comes to communicating their objectives, most executives focus inward, on getting their message out to managers and employees through town hall meetings, emails, and other forms of corporate communication.

In many cases, however, it’s just as important for leaders to communicate their strategy externally, to key stakeholders, including investors, customers, suppliers, regulators, and the media. By committing to a handful of priorities that matter most over the next few years, an organization can signal its intended strategic direction. A clear strategy can attract potential investors, employees, or external partners who buy into that direction and are willing to bet on its success. When strategic priorities are linked to explicit metrics, furthermore, they have a framework for evaluating a company’s progress toward its desired destination, in a way that more abstract guidelines, like a vision or mission, cannot.

Many large organizations do, indeed, publicly communicate their strategies. As part of a broader research project on strategy execution, we analyzed the annual reports and Form 10-Ks of all companies in the Standard & Poor’s 500 index (S&P 500). (Our blog post “How to Recognize a Strategic Priority When You See One” describes this research.) We found that 71% of S&P 500 companies reported their strategic priorities.

Although public statements of strategic priorities are common, they don’t always do a good job of clearly signaling a company’s future direction. Many S&P 500 companies list strategic priorities that are too numerous, vague, difficult to measure, or untethered from an underlying view of how the management team will create and capture economic value.

Based on our analysis of S&P 500 companies and our work with organizations trying to communicate their strategic priorities, we identified six characteristics that increase the clarity and credibility of external communications. Leaders communicate strategic priorities most effectively when they do the following:

1. Limit strategic priorities to a handful. A narrow set of clear objectives indicates that the top leadership team has done the hard work of making trade-offs among competing objectives. This effort of making choices — rather than publishing a laundry list of goals — signals the top leaders’ commitment to those objectives. A handful of strategic priorities makes it easier for external stakeholders to assess what matters most to the company.

2. Provide a concise explanation of what a priority means. Some companies listed short strategic priorities like “invest in infrastructure” or “international expansion” without elaborating on the meaning of these objectives. Other companies, in contrast, provided concise descriptions that fleshed out their priorities. Salesforce.com, for instance, elaborated on its priority of “expanding into new horizontal markets” by explaining that as “part of our growth strategy, we are delivering innovative solutions in new categories, including analytics, commerce, and IoT [internet of things].”

3. Clarify how a priority will be accomplished. Another way to flesh out what a strategic priority means in practice is to give concrete examples of how the company intends to achieve that objective. Salesforce.com listed “extending existing service offerings” as another of its strategic priorities and provided an example: “We have invested heavily in artificial intelligence capabilities to create Salesforce Einstein, which will allow users of our products to deliver more predictive customer experiences.”2 Concrete examples assure stakeholders that the company understands what it will take to reach its goals.


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