Here is an excerpt from an article written by Vijay Govindarajan for the HBR Blog Network. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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Gary Hamel and C.K. Prahalad’s 1989 HBR article “Strategic Intent” brought about a discontinuous shift in my career — from a professor of accounting to a researcher on strategy and innovation. As an idea, strategic intent is about setting a bold and ambitious goal, out of all proportion to a firm’s current resources and capabilities. Strategic intent takes the long view: the act of such intent is to operate from the future backward, disregarding the resource scarcity of the present.

In the early 1970s, for instance, an upstart company called Canon set out a bold intent: “Beat Xerox.” Xerox at that time was the undisputed leader of the copier industry, leasing a wide range of copiers to corporate copy centers through a huge sales force. Canon standardized copy machines and components to reduce costs and sold its offerings through office-product dealers, appealing to people who wanted to own the machines outright. By developing very different capabilities than Xerox’s, Canon created a new recipe for success, and in the process short-circuited Xerox’s ability to retaliate quickly.

There are two views on strategy. The conventional view is that the firm should assess its resources and match resources with opportunities. If Canon had followed that advice in the early 1970s, it would have never taken on Xerox. Hamel and Prahalad have an entirely different point of view. According to them, the firm should expand its resource base to meet its ambition. This latter view has strongly influenced my work. I did my chartered accountancy degree in India (the equivalent of a CPA), got my doctorate in accounting at HBS, and was teaching financial and managerial accounting at Dartmouth’s Tuck School of Business when I read the “Strategic Intent” article. In accounting, we always argued that “realistic” goals are the best, since they are achievable and as such are better motivators. I’ve even contributed to this literature on goal setting. But according to Prahalad and Hamel, firms should set unrealistic goals, not realistic goals.

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To read the complete article, please click here.

Vijay Govindarajan is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth, Chris Trimble, Reverse Innovation: Create Far From Home, Win Everywhere (HBR Press, April 2012).