MGT 414 Module 4 Planning, Goals and Strategy Example

Waiting Four Years for Bourbon: Planning, Goals and an Emergent Strategy at a Kentucky Craft Distillery

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Business Administration Program, Aspen University

MGT 414: Principles of Management

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Month Day, Year

Waiting Four Years for Bourbon: Planning, Goals and an Emergent Strategy at a Kentucky Craft Distillery

Elkhorn Creek Distilling, a composite company near Frankfort, Kentucky, was founded in 2024 by two former engineers who wanted to make bourbon. Bourbon must age in new charred oak barrels, and the founders chose a four-year age for their first release, planned for 2028. To cover costs during the wait, their business plan called for selling vodka and gin through liquor stores. Two years in, the plan looks different. Liquor store sales of vodka and gin are below forecast, but tours, tastings and cocktail classes at the distillery, added almost as an afterthought, have grown to 40% of revenue. The founders want a plan that fits what has actually happened.

Intended and Emergent Strategy

Mintzberg and Waters (1985) distinguished intended strategy, what leaders plan, from realized strategy, what actually happens. Some intended strategy is realized as planned, making it deliberate; some is not realized at all. And some realized strategy was never intended but emerged from a pattern of actions. They argued that most real strategies combine deliberate and emergent elements, and that managers should learn from emergent patterns rather than ignore them. At Elkhorn Creek, the plan to sell spirits through stores was intended but only partly realized, while the visitor business emerged from the founders' habit of saying yes to people who stopped by.

Defining a Position

Porter (1996) separated strategy from operational effectiveness, which he described as running the same activities more efficiently than competitors. In his view, a strategy is a deliberate choice of a different set of activities, or of familiar activities done differently, that gives customers a mix of value no rival offers. It forces trade-offs about what the firm will refuse to do, and its activities must strengthen one another. Elkhorn Creek cannot win on liquor store shelves against large distilleries with more shelf space and marketing money. It can offer what large distilleries cannot: a small place where visitors meet the people making the spirits, learn to make cocktails and follow barrels they can return to taste. That position requires trade-offs: less spending on distribution, more on hospitality.

Goals That Work

Locke and Latham (2002) reviewed thirty-five years of studies and concluded that a precise, demanding target beats both a modest one and a general plea to try hard. Such targets focus attention, raise effort, keep people at the task longer and push them to search for smarter ways of working. The gains grow when people genuinely accept the target, can see how far along they are and have the skill to get there; for complicated work, a goal about learning a method often helps more than a goal about output.

Goals at Three Levels

Connecting the Levels

Each operational goal serves a tactical one, and each tactical goal serves the strategic aims. Filling weekend classes builds the visitor numbers and the list of people likely to join the barrel club. The barrel club, in turn, creates buyers for the first bourbon release before it reaches stores. Store distribution of vodka and gin will continue, but with no growth target, freeing money for hospitality.

What the Distillery Will Stop Doing

Porter's emphasis on trade-offs means the plan must name what Elkhorn Creek will give up. It will stop paying for placement in chain liquor stores, which cost about $40,000 last year for modest sales. It will not launch flavored vodkas, which the distributor requested, because they would draw attention away from the bourbon the visitor experience is built around. It will decline large private events on weekends, which crowd out the classes and tastings that build the barrel club. Each of these choices gives up some revenue to protect the position.

Paying for the Wait

The visitor strategy also solves the founders' largest planning problem: cash during the four years before bourbon sales. Visits, classes and spirits sold at the distillery earn far higher margins than bottles sold to distributors, because there is no wholesale markup to share. The founders estimate that visitor revenue, if it reaches the 2027 targets, will cover operating costs and the barrels filled each year, leaving the bank loan for the visitor center as the only new borrowing. If visitor numbers fall short, they will slow the number of barrels filled rather than borrow further, accepting a smaller first release.

Planning Under Uncertainty

A four-year product means plans made today rest on guesses about 2028. Bourbon could age differently than expected, demand for craft spirits may change and tourism could fall in a recession. The plan therefore sets checkpoints. Barrels will be tasted every six months; if the bourbon is not ready at four years, release moves to five, and the barrel club will be told openly. Visitor goals will be reviewed if numbers fall below 80% of target for two quarters.

Building Commitment

Goal-setting research also stresses that a target only motivates people who accept it (Locke & Latham, 2002). The founders will set the operational goals with the staff who own them rather than handing them down. The class coordinator, for example, proposed the 85% target after reviewing last year's bookings, and the tasting room staff chose the rating they would be measured on. Progress on each goal will be posted weekly in the staff room, giving the regular feedback the research shows sustains effort.

Reviewing the Plan

The founders and the two leads will meet each quarter to review progress against every goal, discuss what emerged that was not planned and decide whether to adjust. Following Mintzberg and Waters, they will ask what patterns are forming, not only whether the plan was followed.

Conclusion

Elkhorn Creek's original plan underestimated the visitor business and overestimated store sales. Treating the tasting room as an emergent strategy, Porter's view of strategy as distinct activities and Locke and Latham's research on goals together produce a plan with a clear position, connected goals and a habit of reviewing what is actually happening while the bourbon ages.

References

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717. https://doi.org/10.1037/0003-066X.57.9.705

Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257-272. https://doi.org/10.1002/smj.4250060306

Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.