A destination statement is a planned indication of where an organisation wishes to be in a specific time horizon.
The ‘Destination Statement’ is a backward looking description of the organisation, as if the strategy had been successfully implemented, and therefore tends to include bullish, positive descriptive statements about what the organisation wants, based on things that are in its control. A typical large organisation might want to reach a revenue target. A smaller entity like an SME owner would perhaps want to be debt free. A typical example of a destination statement for a larger organisation would be…
By 2021 we will:
- Reduce our debt/equity gearing ratio to ‘x’%
- Reach revenue targets of ‘y’ million dollars
- Own 6 major brands at any given time
- Have a single manufacturing plant
- Own distribution outlets in 10 cities
- Become the employer of choice in New Zealand or Australia
- etc
- etc
The destination statement is a statement of intention only and gives no indication of how one needs to achieve the destination. Reaching the destination requires a combination of planning, implementation and performance management.
Destination statements are used in 3G balanced scorecards to articulate the vision of the organisation. Cascading balanced scorecards use destination statements at each level to link the high level strategic objectives of the organisation to the lowest level of staff in the hierarchy. This recognises and links their contribution to the strategic objectives of the organisation.
Key benefits of destination based planning are…
- They permit owners to make their strategic intentions visible making it easier for managers and staff to take ownership of the firm’s strategy.
- They permit organisations to build brand awareness and loyalty as all stakeholders are made aware of the company’s intentions.
- Unlike vision or mission statements they are anchored to a date, and therefore make planning and performance management easier.
- They allow for the efficient design of reward strategies for staff and succession planning for owners.
- They allow the third generation balanced scorecards to link each layer of staff or management and manage performance, by linking the destinations, using appropriate metrics that measure performance at each level.
Allan Rodrigues of The Business Binnacle specialises in third and fourth generation scorecards. You can contact him at allan@theBusinessBinnacle.co.nz [no spam]
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