The strategic objectives of publicly traded companies are communicated to investors and the general public. Websites, annual financial reports, and the Form 10-K are crucial resources for understanding a company's core offerings, competitive advantage, and market position.
Research on available documents of publicly traded companies reveals crucial information regarding their Strategies and Strategic Priorities. In 2014, MIT Sloan Management Review performed research on Strategy Implementation. The research included 494 companies, which already had a place in the S&P 500 Index. Examining how these companies presented their Strategic Priorities in annual and other reports was the objective of the study.
The following public documents were reviewed to determine the study's Strategic Priorities:
- Fiscal year’s Form 10-K report
- Description of business from Part 1, Item 1 of 10-K report
- Management’s description of company operations (Part 2, Item 7)
- Any mention of “strategy,” “strategic,” “focus,” or “imperatives.”
- Companies’ annual reports—especially letter from the CEO or chairman
- Investor Relations page of respective organizations’ websites.
A few corporations from the study did not disclose their Strategic Priorities in any of the aforementioned reports, intentionally. These companies did not meet the study's criteria, so they were excluded.
To identify an organization's prioritized actions to implement Strategy, the MIT Sloan study evaluated the viability of strategic goals using 5 critical filters.
To be designated as viable "Strategic Priorities," all documents reviewed as part of the research process needed to pass the 5 filters below.
- Clearly Labeled – According to the study, strategic objectives were only considered well-defined when they were labeled as "strategies," "strategic objectives/initiatives," listed as a separate section, highlighted in bold, or presented as bullet points.
- Ranked – From a lengthy list of objectives, the study identified only those for which six or fewer ranked objectives appeared in public documents as Strategic Priorities. In 321 instances (or 91%), there were no more than 6 listed strategic objectives.
- Goal-Directed – In the public reports, strategic objectives that qualified for the study were expressed with action verbs (e.g., grow, improve, increase) or a gerund (achieving, cutting) to indicate how they will be accomplished.
- Mentioning Implementation Approach – Priorities were considered strategic if a description of the means to implement a company's strategy was included in the "business overview" or "management discussion" sections of the 10-K or Annual Report.
- Differentiating Priorities from Annual / Quarterly Objectives – Since achieving strategic initiatives takes time, they were labeled separately from annual or quarterly objectives.
The study identified a total of 1,508 Strategic Priorities based on the information gathered from the annual and 10-K reports of 311 organizations.
The Strategic Priorities were then classified into four distinct categories:
- Dominant Logic – This type of Strategic Priorities addresses factors such as products, costs, Innovation, customers, platforms, Operational Excellence, and growth. This category of strategic priorities is intended to improve the business portfolio.
- Market Positioning – This type of Strategic Priorities pertains to markets, geographic expansion, positioning, discounted offerings, and pricing. This course focuses on market position enhancement, geographic expansion, and growth.
- Resources and Capabilities – This category of strategic priorities consists of key talent, values, technological, Sales, Marketing, Distribution, Branding, and Supply Chain resources and competencies.
- Stakeholder Theory – This Strategic Priorities category addresses shareholder value, social, environmental, regulatory and safety goals. The primary objective of this category of strategic priorities is to increase shareholder value.
Interested in learning more about the categories of Strategic Priorities and how to communicate them across the organization? You can download an editable PowerPoint on the Strategic Priorities Identification & Analysis here on the Flevy documents marketplace.
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