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Strategic Planning is one of the most important aspects of business management and also unfortunately one that is very commonly neglected or overlooked.  A good, balanced Business Strategy gives structure to your vision and mission.  It is the way to realize your dream.

So what is a Strategy?

Someone once said: "If you don't know where you are going, then any road will get you there."

A Strategy is the pattern or plan that integrates an organizationís major goals, policies and action sequences in a cohesive whole.
Simplified: Strategy is deciding where your company is today, where it should be tomorrow and how it will get there.

 

Strategy therefore is that which gives direction to an organization.  This includes the foresight to anticipate changes; in fact to initiate changes.

It is a high level action plan ... always with the end result in mind and structured in such a way that it can be broken down into lower strategies and action plans that can be understood and executed at all levels in the organization.

A well formulated strategy will always answer the following questions:

bulletWHO is responsible?
bulletWHAT is he/she responsible for?
bulletBy WHEN does it have to be done?
bulletWHERE is it going to happen?
bulletHOW is it going to be done?

The importance of this is clearly illustrated by the famous Swiss watch industry.  There was a young technician who discovered that quartz could be used as a very accurate timing device.  However, the masters of the industry thought it an unacceptable idea, until the Japanese, with their foresight and vision, grabbed the idea, perfected it and captured the watch industry of the world.

The Benefits of a Strategic Approach to Managing

Today's managers have to think strategically about their company's position and about the impact of changing conditions.  They have to monitor the external situation closely enough to know when to institute strategy change.  They have to know the business well enough to know what kind of strategy changes to initiate.  The fundamentals of strategic management need to drive the whole approach to managing organizations.

The advantages of first rate strategic thinking and conscious strategy management (as opposed to freewheeling improvisation, gut feel and drifting along) include:
bulletProviding better guidance to the entire organization on the critical point of "what it is we are trying to do and to achieve".
bulletMaking managers more alert to the winds of change, opportunities and threatening developments.
bulletProviding managers with the rationale to evaluate competing budget requests for investment capital and new staff - a rationale that argues strongly for steering resources into strategy-supportive, results-producing areas.
bulletHelping to unify the numerous strategy-related decisions by managers across the organization.
bulletCreating a more pro-active management posture and counteracting tendencies for decisions to be reactive and defensive.

The advantage of being proactive rather than reactive is that trail-blazing strategies can be the key to better long-term performance.  Business history shows that high-performing enterprises often initiate and lead, not just react and defend.  Aggressive pursuit of a creative, opportunistic strategy can propel a firm into a leadership position, paving the way for its products/services to become the industry standard.

 

How to formulate your Business Strategy

An organization's strategy is nearly always a blend of prior moves, approaches already in place and new actions being mapped out.  Crafting strategy is an exercise in entrepreneurship - risk-taking, venturesomeness, business creativity, and an eye for spotting emerging market opportunities are all involved in crafting a strategic action plan.

There are four basic approaches to strategy formulation:
bulletThe Master Strategist Approach.  Here the manager personally functions as chief strategist and chief entrepreneur, exercising strong influence over the strategy alternatives that are explored and over the details of the strategy.  This does not mean that the manager does all the work; the manager becomes the chief architect and initiator of strategic action.
bulletDelegate-It-to-Others Approach.  The manager delegates the strategy making exercise to others, and stays off to one side.  He keeps in touch via reports and conversations, offers guidance, reacts to recommendations, and puts a stamp of approval on the strategic plan after it has been formally presented.  It has the advantage that the manager can pick and choose from the strategic ideas that bubble up from below, but has the weakness that the manager can end up so detached from the process of formal strategy-making that he or she exercised no real strategic leadership.
bulletThe Collaborative Approach.  This is the middle approach whereby the manager enlists the help of key subordinates in hammering out a consensus strategy that all key players will back and do their best to implement successfully.  The biggest strength of this approach is that those who helped crafting it, also have to implement it.  The "I told you it's a bad idea" alibi won't fly.
bulletThe Champion Approach.  In this style, the manager is interested in neither in personally crafting the details of strategy nor in the time-consuming task of leading a group to brainstorm a consensus strategy.  This approach works best in large diversified corporations where the CEO cannot personally orchestrate strategy making in each business division.

Of the four basic approaches managers can use in crafting strategy, none stands out as inherently superior - each has strengths and weaknesses.

 

The Strategic Process

A successful strategy is analytical and fact based.  It must be built on consensus and practical implementation.  These two dimensions therefore need to be emphasized during the process.  It is now possible to integrate these into the following matrix:

All Form/No Substance

This is the type of strategy developed by completing forms compiled by corporate staff.  They lack facts, analysis and perspective.  They can look impressive through elaborate reports, with little commitment to making them work.

Business-as-Usual

This is a typical approach adopted when key managers and board members retreat away from corporate headquarters.  The strategy is formulated through a lot of brainstorming, yet giving little attention to numbers or other relevant data.  This renders the strategy difficult to interpret and more so to implement.

Ivory Tower

Management has little involvement and therefore there is low awareness of implementation issues.  This approach is typically adopted by "professional strategic planners" using specialized statistic techniques.  They are statistically correct and well motivated, but do not take organizational issues like corporate culture or the ability to carry them out, into account.

The Winning Combination

In this approach, high levels of management involvement and awareness of implementation issues are combined with in-depth, objective analyses.  This is best done trough a combination of managers, corporate staff and professional strategic planners, together formulating strategies.  It usually results in the strongest and most applicable strategies which stand the best chance of successful implementation. 

 

Implementing and managing Strategy

Click here for some techniques for Strategy Implementation.

 
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Last modified: May 25, 2007