Original Date: 04/01/1993
Revision Date: 01/19/2007
Information : Strategic Business Objectives
Strategic Business Objectives (SBOs) are specific, measurable goals that are participatively developed at all levels of the enterprise or company. Companies develop strategic plans with annual five-year goals. Goals must typically be specific, quantifiable, challenging but "do-able," and tied directly to a reward system. In addition, a method must be established to communicate each level's goals to the next level down (flowdown) and also send feedback (roll-up) to the next level up. The McDonnell Douglas Aerospace (MDA)-West approach uses its vision statement to define the direction for the organization. The vision goal states:
"We are recognized by our customers, employees, supplier, and competitors as the world’s preeminent space systems company. We do things right the first time while continuously striving for improvement...".
To establish SBOs at the enterprise (company) level, the objectives were set in the areas of customer, culture, and financial. At that level, the SBOs were:
To become the preferred supplier in the company's key market segment To be a company that is the embodiment of Total Quality Management (TQM)
By the year 2000, achieve annual sales of $[X] billion, return on sales of [Y]%, and return on investment of [Z]%
The company empowered an executive council to administer the company in terms of ensuring its goals and roles were aligned at all levels of the company, and translated into meaningful, workable, and easily understandable (specific) sub-goals.
This flowdown shows that each level of the company established objectives that must be signed off by the leader of the next higher level in the company to ensure alignment of the objectives with that higher level's objectives. When the entire process is complete, all personnel are synchronized. The purpose of this important exercise was to involve everyone in the process of goal setting and thus create a better operational roadmap from the flowing down of the objectives throughout the organization down to setting goals at the individual level.
While every company has its own method for communicating its goals to its employees, the magnitude of personnel involvement at all levels of the company at MDA-West led to major cultural changes. This effort is evidenced by the company's continued growth over the last few years in the face of a decidedly down-turned market.
The benefits of this approach to setting objectives is that all employees see themselves as setting common objectives and therefore living with a common fate. The process inherently leads to better communications in the company so all employees understand priorities. It is performed in such a way that alignment of the company is assured. The process ensures management accountability and provides a positive team building experience for company personnel.
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