Here is a brief summary of the sections in this topic. If you want to see the full topic, you can get a free trial here.
1. Background and potted history
From the Greek word ‘strategos’, strategy was originally associated with the fighting of military campaigns. In the modern world, it has spread to encompass the business arena, where a number of different approaches have been proposed by academics.
2. What is strategy?
Strategy and strategic analysis are applicable to all sorts of organisations. It is a way of thinking about how to bridge the gap between the present and the future. Strategy is about the key choices and manoeuvres that an organisation (or department, team or individual) intends to take in pursuit of its vision, goals and objectives.
3. The vocabulary and hierarchy of strategy
From the top down, a generally-agreed hierarchy of terms is vision, mission, goals, objectives, strategies, actions and tasks. These move from the more general and loosely defined to the detailed and measurable.
Each of these elements supports the one above it, and a ‘good’ strategic approach for an organisation ensures that each level in the organisation has its own elements aligned with the levels above and below it.
4. Strategy and you, the manager
Strategic thinking and effective execution are two of the most important skills a manager can possess in today’s rapidly changing world.
- You will understand more clearly where you want your part of the organisation to be in the future, what you want it to achieve, and how it aligns to the key objectives of the organisation.
- Your plans will be broken down into short-, medium- and long-term perspectives.
- You will have involved your people from the beginning, consulting and involving them at all key points.
- You will have ensured that your team have bought into short-, medium-, and long-term objectives and that their own objectives are aligned to those of both your department and the overall organisation.
- You will know that every activity you and your team are involved in is 100 per cent aligned to the overall business objectives and vision.
- Your department will stand out as a high performing part of the organisation.
- Your heightened focus will build confidence, self-worth and high self-esteem for your team.
5. Strategic direction setting – the team
The three main activities of strategic management are strategic analysis, strategic choice and strategy implementation. To develop an organisation’s strategic direction, it is advisable for a core multidisciplinary development team to be set up to undertake the first two activities. Ideally, the team should have differing experiences and skill-sets and be drawn from all levels of the organisation.
The strategic direction setting process described in this topic follows a structured series of analyses and review, with the outputs from each stage feeding into the next. The core development team calls on others in the organisation to challenge and validate their outputs from each analysis before moving on to the next.
6. Strategic direction setting – a practical process
Taking each of the SDS elements in turn, the team will go through the following process:
- Stakeholder analysis and mission
- Porter’s five forces
- BCG matrix
- Directional policy matrix (DPM)
- Other analyses
- Future products and markets
- Vision and strategic direction
- Goal and objective setting
7. Strategy development
All of the outputs in the SDS process are now reviewed and assimilated, and the key emerging themes are compiled into a list of broad activities and manoeuvres that the organisation and its functions/departments/teams will need to take in order to achieve the vision and fulfil the mission.
- It is generally helpful for the organisation’s core team to recommend the high level strategies, with the lower organisational levels tailoring and amending them to suit their own particular functional area.
- Now is the time to ask, and make sure you have answers to, some searching questions, to reveal possible weaknesses, unconsidered threats, internal and external requirements, budgetary limitations and environmental considerations (politics, technology and so on).
- The crucial question is whether the strategy will deliver the key objectives and goals that will in turn deliver the aspired future position.
- If the numbers don’t stack up in terms of what the strategy consists of and what the future position and key objectives look like, then either the future position has to be reviewed or the strategy, or both.
8. Detailed planning
This is the ‘how to’ element of the strategic process. We know what we need to have in place; we know what objectives and goals we want to achieve, and we also know what our aspired future position looks like. Now we need to decide specifically what we need to do to achieve it. These will range from top level actions right through to finite detail actions, including everything in between.
- Nothing should be considered that doesn’t deliver or support the aspired future position and the key objectives and goals.
- All actions should be measurable.
- Someone should own them, and be accountable for their achievement.
- Creating a time-line is a really useful approach.
9. Review and monitoring
Strategy is fluid, accommodating, flexible and responsive to market conditions, be they global, national or local. Constant review and monitoring will be necessary, with tweaking and adapting where appropriate.
- Changing environmental conditions need to be considered for their impact and their influence on the industry and the business in which managers operate.
- If the plan becomes unworkable, the process can be revisited to revise the plan, perhaps the strategy, and even, in some cases, the vision.
10. Bottom up strategy
Where things are changing fast, aspects of the strategy often bubble up informally from those lower levels where things are actually being done and managers are closer to customers and operations on a day-to-day basis.
- As a manager, you may well be involved in this kind of emergent or bottom up strategy development.
- Strategy ideas will often manifest as complaints from people about the restrictions of a system that stops them serving customers well.
- It may be that the systems do not support the overall strategy, especially at a tactical level.
- It may be that the existing strategy is flawed.
11. More than one strategy?
There can (and should) be a number of strategies operating at any given time. The key is that they all need to align to the overall vision, to the higher level objectives and to each other. The three core strategy headings are
- Corporate strategy, which operates at the most senior level of an organisation and is primarily the concern of senior management and specialists, sitting just below the overall vision, mission, values and purpose of the business
- Competitive strategy, which concerns gaining and sustaining competitive advantage in order to achieve long-term success
- Operational strategy, which is the domain of all business and functional managers and should be directly concerned with how each of the different business functions supports the others’ strategies to deliver the vision and overall high-level business objectives.