A common approach to business strategy is for a firm’s management to first develop and mission statements that define what management would like the firm to become. Goals, objectives, and action plans are then developed, and the firm’s “strategy” becomes the collection of these goals and plans.
The problem with this approach is that the firm’s strategy is not grounded in the reality of a competitive environment, and instead represents a consensus of wishful thinking about what management would like the firm to become.
Strategy is less about what you want to be and more about what you can do, given your current resources and capabilities. Good strategies start from an understanding of a firm’s capabilities, including any that are distinctive, its industry (including competition), and its markets. A good strategy harnesses a firm’s capabilities, extends and deepens them where appropriate, compounds their effect with complementary assets, and focuses them onto markets where they have the potential to yield a sustainable competitive advantage.
Vision and mission statements have a role to play within a firm, but it is not in the realm of competitive strategy. Don’t confuse or conflate the two!