How does a company, large or small, keep focused on its mission? How does a business coordinate the actions of its disparate staff to achieve its stated goals? Whenever analysts have studied business success stories, there is one ingredient that is always at the top of their list: strategic management.
Strategic planning gained a popular following in the mid-1960s among larger firms as a way to enhance each business unit’s ability to be competitive. Weekend retreats or all-day meetings resulted in binders of material, which may have looked productive but soon ended up on bookcases never to be read or followed.
However, the path to strategic thinking and developing an executable plan for the entire enterprise has evolved over the past few decades. Online MBA programs, such as the one at Aston University, stress the importance of having a dedicated approach to strategic management and encourage students to start developing a process-driven mindset.
What is the modern definition of strategic management?
Simply stated, strategic management is an ongoing process to allocate and manage a firm’s resources to achieve its defined goals and objectives. Its purpose remains to find new ways for the organization to be more competitive in a changing marketplace by guiding employees to embrace the changes necessary to move forward.
Today, strategic management may proceed down two paths. The first one is more analytical, delving into strengths and weaknesses, opportunities and threats, assessing the skillsets and competencies of staff, reviewing structural resistance to change, developing executable plans with benchmarks for accountability, and presiding over a monitoring and evaluation process. The second method proposes strategic guidelines and outlines what the company must do to make the strategies a reality.
Organizational constraints tend to define which process will work best to address change within a competitive environment. The companies that consistently get the formula correct also tend to address these specific questions:
- Was the strategy based upon a clearly defined value proposition for its customers?
- Did the strategy include taking into account a deep understanding of not only employees, but also supporting business partners, suppliers, and investors?
- Did the company have an innate ability and talent for discerning and then monitoring both significant and potential changes in the marketplace?
- Did the plan set a high bar for growth achievement, establishing massive growth expectations for both the core operation and any new business directions?
The plan must be communicated throughout the organization, including business partners and investors, but it must be fine-tuned in line with changes in the marketplace. The core business still remains the primary focus, with ancillary opportunities performing independently and not diverting the firm’s focus. The main reason that ‘management’ is preferred over ‘planning’ is that it connotes an ongoing process, designed to be a part of, not apart from, the company’s daily operations.
How does strategic management help a company achieve its goals?
If a company is in the habit of writing a plan and then filing it away, then there is only one conclusion: the plan is ineffective. There may be a reprint of the vision, mission, and values on the firm’s website, but an effective strategic plan acts as a roadmap with defined steps to achieve each objective.
Successful organizations often reduce the plan to a single page for each employee to know the near-term and long-term directions. Updates are a given, as change is always a given. When done correctly, there are several ways that the strategic management process (SMP) will help an entire enterprise achieve its goals and objectives:
- Focused execution: The three words for success are often stated as ‘focus, focus, focus’, followed by ‘execute, execute, execute. It may sound simple enough, but your SMP plan is your best bet for getting there.
- Objective assessment: Scaling any business requires a growth plan, which requires preparation, an assessment of organizational strengths and weaknesses, and thoughts of what to do if things change.
- Decision-making framework: Daily decision-making abounds in a large organization, but SMP can provide boundaries and a framework for making those decisions in line with the direction of the company.
- Organization buy-in and accountability: Involving staff in the planning process leads to ultimate buy-in of the direction taken, the reasons why, and the scorecard for measuring progress.
- Progress management: Successful organizations have learned how to build a culture that is performance-based. The SMP can help you get there with defined stretch goals.
- Change management platform: All businesses need an effective way to identify trends and opportunities, whether they are related to consumers, government, or technology.
- Communication: All relationships originate from good communication. Strategic management provides the tools for maintaining tone and direction after staff buy-in.
Strategic planning has now evolved into a management process tool that can improve communication, accountability, and coordination of a disparate group of employees. As with any tool, business leaders must design the tool to suit the needs of the enterprise and support it.
Concluding remarks
How does a company coordinate its resources, both staff and financial, and keep everyone and everything focused on the mission? Business leaders for small, medium and large companies know that strategic management paves the way to success. It need not be a lengthy, formal and inflexible document placed on a shelf.
The SMP can assist each organization, whether large or small, when dealing with change and its organizational implications:
- When the marketplace throws a curve, it provides the framework for reacting and adapting.
- When new opportunities arise, it provides a platform for discussion and decision-making.
- When diversity is present, it provides a basis for building a performance-oriented culture.
- When conceived correctly, the SMP is ongoing and an integral part of the entity’s way of doing business.
