Setting long-term goals

Long-term goals translate strategy into a small set of enduring directions. They state what the organisation aims to become or achieve over a horizon long enough to shape investment, capability and choice—often around five years, though the appropriate period depends on the industry.

When to use it

• Set long-term goals after clarifying purpose, strategic position and the external context.
• Use them to align major initiatives, resource allocation and capability development.
• Revisit them when assumptions change, without turning every short-term fluctuation into a new direction.

Origins

Formal goal setting draws from management by objectives, associated with Peter Drucker, and from the goal-setting research of Edwin Locke and Gary Latham. Their work showed that specific, challenging goals can improve performance when people have commitment, feedback, ability and appropriate conditions. Long-term strategic goals add direction and trade-offs beyond individual performance targets.

What it is

Paul Gauguin titled a Tahitian painting D’où Venons Nous? Que Sommes Nous? Où Allons Nous?—Where do we come from? What are we? Where are we going? Strategy addresses the third question after understanding identity, history and current position.

A goal is a directional statement in words; an objective is a measurable target used to assess progress. “Become the low-cost provider in a priority segment” is a goal. Reducing unit operating cost in that segment within three years by 20 per cent is an objective.

Good long-term goals clarify a desired position without prescribing every action. They can address market, customer, operations, people, financial resilience, social impact, ethics or capability. Together they should express the organisation’s actual trade-offs.