Tuesday, June 24, 2008

What's the difference between a policy, an objective, and a strategy?

The CMMI's GP2.1 requires a policy for each process area. Can a strategy serve as as a policy? What is the difference between a policy, an objective, and a strategy? Are they related?

An appropriate strategy should depict something that an organization"executes." It probably should relate to a set of goals that are "achieved"and objectives that are "met", and maybe even "mega-process" steps to meet them for a particular company, organization, or individual.

A policy doesn't have to be time-bound, but it should set expectations for the people involved in the execution of a strategy. For instance, the policy may be that employees are not to focus on ANYTHING but meeting a specific objective.For instance a company may have a goal to dominate the market in software for calibrating automobile engines. Their strategy for achieving that goal may be to 1) buy up all of the competition; 2) combine all of the best features of the software; 3) send every customer a $10,000 check. Their objectives could be 1) purchase all of the competitors close to home in year one, then the rest in North America in year two, and rest of world after that. They may also have and objective to raid the pension funds of the companies they buy so they have enough money to send each customer $10,000.

If they meet objective 1 and 2, they have partly executed on the strategy,but not completely. They may or may not achieve their goals. It's possible they didn't meet their objectives because SOMEONE didn't adhere to the policy that they should ONLY work on meeting a specific objective. A lot of the employees, feeling a bit ethical and ashamed, decided that instead of raiding the pension funds of the competition, they helped each employee setup a IRA to help them with their retirement. The employees didn't adhere to the policy, therefore the objectives were not met, the goal was not achieved, and the strategy could not be executed.