Why Strategy Must Come Before Target-Setting: A Common Misunderstanding

Picture this: You’re sitting in a meeting with your leadership team, and everyone’s ready to set ambitious revenue goals for the year. But there’s one problem: No one can agree on the bigger strategy behind those targets. Why? Because the strategy was never defined in the first place. Sound familiar?

As a strategy and execution advisor, one of the most frequent questions I get from CEOs and executives after our initial strategy sessions is: “Why haven’t we set targets yet?” It’s a question that speaks to a deep-rooted misconception in how many leaders perceive strategy. While setting targets is undoubtedly a crucial part of running any organisation, it’s only one piece of a much larger puzzle. And, more importantly, targets alone are not enough to drive long-term success.

In many organisations, setting targets seems like the obvious first step in the strategic process. After all, if you don’t know where you’re going, how can you get there, right? But in reality, rushing straight to target-setting without understanding the broader strategic context can lead to short-sighted decisions, misaligned efforts, and missed opportunities. So, why do we often delay target-setting in the early stages of strategy development? Let’s dive deeper into why strategy is far more than just setting targets.

1. Strategy Starts with Clarity of Purpose, Not Numbers

Setting targets without understanding the purpose behind them can lead to misalignment. A target, such as increasing revenue by 15% or launching five new products in the next year, is important, but it’s not the starting point for a sound strategy. Effective strategy begins with understanding why the organisation exists, where it wants to go, and how it plans to win in a competitive marketplace.

Consider Kodak. Once a photography giant, it set ambitious sales targets but failed to align them with a forward-thinking strategy. Meanwhile, competitors like Canon and Nikon adapted their strategy to digital photography, leaving Kodak behind.

So before targets can be set, the organisation needs to clarify:

• What are our long-term goals?
• What makes us unique in the marketplace?
• What is the purpose of our existence beyond financial metrics?

Without answers to these critical questions, any targets set will lack direction, purpose and frustrate execution. Strategy is about defining the right path, and targets are merely mile markers along the way. If you rush into target-setting before establishing clarity of vision and purpose, you risk pursuing objectives that are disconnected from the organisation’s true goals.

2. Setting Targets Without a Clear Strategic Direction Is Like Setting Sail Without a Map

Imagine trying to sail to a destination without a map or compass. You might set off with good intentions, but without a clear sense of direction, you’re likely to drift aimlessly or get off course. The same is true for strategy. If you set targets prematurely, without defining the critical elements of your strategic direction, you might hit some short-term wins but miss long-term growth opportunities.

Roger Martin’s “Playing-to-Win” framework emphasizes that strategy involves a series of deliberate choices. It’s not just about setting targets but deciding on the right where to compete, how to win, and what capabilities are necessary to succeed. These are the foundation upon which targets should later be built. Without clarity on these choices, you might set targets that are misaligned with your organisation’s true capabilities or market position.

3. Targets Are Tactical (short-term) — Strategy is Strategic (long-term)

There’s an important distinction between tactics and strategy that often gets blurred. Targets are tactical—they are specific, measurable objectives designed to achieve certain results. But strategy is broader and more long-term. It’s about creating a framework for making decisions that lead to sustainable competitive advantage over time.

Goals like “increase revenue by 20%” or “expand into new markets” are great, but they’re short-term. Strategy, on the other hand, is the roadmap that ensures those targets lead to sustainable success. It’s the difference between chasing quick wins and building lasting market leadership.

By focusing too quickly on targets, executives may inadvertently fall into a tactical mindset, where the immediate goal becomes about hitting numbers rather than creating long-term value. This focus on short-term wins can undermine more fundamental strategic work, such as refining your organisation’s unique value proposition, investing in innovation, or positioning yourself for future market shifts.

Good strategy is about thinking several steps ahead and making the right strategic choices, which provide the foundation for future targets. By spending time in the initial phase of strategy development to define your overarching strategy, you set the stage for targets that are aligned with your long-term aspirations and capabilities.

4. Strategy Involves Alignment, Not Just Accountability

One of the main reasons for deferring target-setting in early strategy sessions is that targets alone do not foster alignment across the organisation. Setting targets is important, but they need to be part of a larger system of alignment. Without a clear strategic vision and plan, setting targets can result in a fragmented, siloed effort where different teams are pulling in different directions. This can lead to inefficiencies, missed opportunities, and even internal conflict.

When strategy comes first, targets naturally align with company-wide initiatives. Think about Amazon—every goal, from Prime membership growth to AWS expansion, is tied to a broader strategy of customer obsession and innovation. When teams aren’t aligned, targets become fragmented, causing inefficiencies and conflicts.

When developing strategy, it’s crucial that everyone understands the why behind the targets, as well as the broader vision and strategic priorities. Targets are much more effective when they are grounded in a shared understanding of the organisation’s strategic direction. That alignment ensures that each team’s objectives support the company’s overall vision, helping to foster greater collaboration and collective focus.

Strategy, in its truest form, is about aligning the organisation around a common vision and purpose and ensuring that every decision made and target set supports that vision and purpose. This alignment, not just the pursuit of numbers, is what ultimately drives sustained success.

Ask Yourself: Does everyone in your organisation understand how their individual targets connect to the bigger strategic vision?

5. Strategy is About Choosing the Right Focus

In the early stages of strategy development, you need to make strategic choices. These choices are what ultimately define how your organisation will succeed in the marketplace. When CEOs and executives push for target-setting prematurely, they risk losing focus on what really matters. Without making these critical decisions—such as where to compete, how to win, and which capabilities to prioritise—target-setting becomes aimless and reactive.

Markets shift, economies fluctuate, and customer demands evolve. Companies that are rigidly fixated on hitting predefined targets without revisiting strategy often struggle to pivot when necessary. Netflix started as a DVD rental service but adapted its strategy toward streaming, aligning its targets with changing consumer behavior. Meanwhile, Blockbuster clung to its old revenue targets and collapsed.

The key to a successful strategy is choosing where to play and how to win. Once you’ve made these choices, you can then set targets that are realistic, aligned, and focused on the right opportunities. Jumping straight to targets before making these decisions can lead to missed opportunities, wasted resources, and targets that don’t reflect the organisation’s true potential.

6. Targets Without Execution Are Meaningless

Setting a target without a clear strategy for how to achieve it is like writing a to-do list without knowing how to get the tasks done. Targets may drive short-term focus, but without a robust execution plan that ties back to your strategy, targets can quickly become meaningless.

Remember WeWork? Its goal was aggressive expansion, but without a solid execution plan, the company burned through cash, failed to deliver value, and ultimately collapsed.

Effective strategy is about ensuring that the right systems, resources, and capabilities are in place to execute on the goals you set. This is why target-setting comes after defining the strategic direction: it’s easier to set achievable targets when you know your capabilities, have the right processes in place, and understand the key levers to drive success.

Conclusion

Remember, strategy isn’t about the numbers—it’s about the vision behind them. Before setting targets, take a step back. Clarify your purpose, define your strategic direction, and make the right choices. Only then can your targets truly help you win.

When CEOs and executives ask why targets haven’t been set in the first strategy session, my response is always the same: “If you don’t fix the issues causing underperformance how are you ever going to achieve the numbers!”

In many cases ‘hope’ becomes the strategy, targets will come, but they need to be grounded in a strategy that is both thoughtful and aligned with the company’s vision, purpose and capabilities. Strategy isn’t about setting targets—it’s about understanding the why, where, and how of your organisation’s future, so the targets you set can be meaningful, achievable, and aligned with your long-term success.

If your targets are failing to drive success, it might be time to step back, refocus, and build a strategy that truly aligns with your company’s purpose. At Strategy & Execution Business Advisors, we help leaders develop clear, actionable strategies that drive real results. Contact us today to start building a strategy that leads to long-term success.

TED BONEL, SCALING UP PRACTITIONER – STRATEGY & EXECUTION BUSINESS ADVISORS

Are you looking to scale your business and execute strategy with clarity and impact? I help CEOs and founders turn big ideas into real-world results, guiding small to mid-market companies through tailored strategic insights that drive growth.

My expertise lies in simplifying complexity—bridging high-level strategic frameworks with the practical realities of running a business. Unlike many consultants who focus solely on theory or execution, I specialise in both—translating strategy into actionable, transformative steps that deliver lasting results.

Let’s explore how I can help your team achieve its objectives. Contact me at tedb@strategyandexecution.com.au to schedule a free 30-minute discovery meeting.

ABOUT STRATEGY & EXECUTION

For over 20 years, Strategy & Execution has supported leaders and organisations in developing and executing winning strategies. We provide expert facilitation, executive education, and hands-on consulting to help businesses refine their strategic direction and implement it effectively.

Using proven methodologies like Scaling Up, E-Myth Mastery, Outthinker, and more, we challenge conventional thinking and equip organisations with the tools to accelerate growth. Our approach is dynamic—combining deep business experience with practical execution. We don’t just advise; we roll up our sleeves and work alongside you to make strategy happen.

If you’re preparing for a strategy development or execution challenge and are committed to creating real value, we’d love to hear from you. Learn more about our work or upcoming workshops.