We observed that one of the components of ERM was strategy and objective setting. To better understand what strategy is, let’s discuss a company’s mission, vision, and core values. A company’s mission, vision, and core values are tightly interconnected.

As an example, let’s consider a hypothetical driverless car company called Hands-Off Cars First, let’s discuss the mission. The mission is why the company exists. The mission for Hands-Off Cars is to revolutionize the transportation industry by implementing driverless cars.

Next, let’s discuss vision. A company’s vision is the future picture of where the company aspires to be. For instance, the vision for Hands-Off Cars could be a society in which no one is in the driver’s seat.

Next, let’s discuss core values. Core values define what is important to a company. For Hands-Off Cars, their core values might include providing high-quality customer service, emphasizing transparency, and cooperating with like-minded businesses.

Now that we’ve discussed a company’s mission, vision, and core values, how are they related to strategy? A strategy is how a company plans to reach its vision. Let’s say that our strategy for Hands-Off Cars is to partner with every major car manufacturer to co-produce driverless cars.

Lastly, there are business objectives. Business objectives are specific and quantifiable measures of how a company plans to successfully implement its strategy. For example, the strategy for Hands-Off Cars is to partner with car manufacturers, but we need to make it more specific.

Imagine that the company has these business objectives:
• Enter into five partnership agreements within three years
• Submit one patent per year on driverless technology
• Increase spending on research and development by 25% within two years

Let’s say the management of Hands-Off Cars decided to implement a new strategy—investing more in marketing to outperform our competitors and boost our sales. While this strategy may increase sales, it contradicts our core value of cooperating with like-minded businesses. Therefore, we need to keep our strategy in alignment with our mission, our vision, and our core values.