Strategic Management Process | Linking Ideas to Success
Hello reader,
In this edition of Decaf discussions, we’ll talk about the strategic management process. After talking about the definition of strategy last time, I hope you followed my recommendations and identified some strategic decisions from your life, some good and some bad. We’ll leverage those today as we walk through the process of creating strategies.
What do you think makes a good strategy? If you remember the definition we discussed last time, you’d say a set of decisions that offer us a competitive advantage make a good strategy. That’s a good starting point but what factors would you consider when making these decisions? Take a pause here and think about what questions would you ask before making strategic choices.
The process of strategic management is fairly investigative. It forces you to put on your detective hat and question everything that comes ahead, the seen and the unseen. I did a Strategic Management course offered by IIMB last year and it provided a simple framework that highlights the key steps of this process.
A good strategy should first start by defining the Mission and the Objectives/Vision of the organisation/team/individual. What is the big picture goal that you’re striving for? Driving shareholder value? Offering best prices to customers? Bringing a positive change to the world?
Once the mission and vision are clear, we dwell deeper into understanding the demographics. A thorough External Analysis would include identifying not only competitors but also suppliers, buyers, substitutes, industry structure, political, economic, social, technological and legal trends etc. This offers us a view of our opportunities and threats. (Resources: PESTEL framework, Porter’s framework etc.)
While looking outside, it’s also very important to evaluate internally our strengths and weaknesses. Our resources need to be understood comprehensively to identify what we can offer. (Resources: Resource based view, VRIO framework etc.)
Once we identify our Strengths, Weaknesses, Opportunities and Threats (SWOT analysis), we make choices that help us deliver competitive value in the industry. This is followed by the implementation of these choices to attain competitive advantage. Strategy implementation is equally crucial in this framework and requires a complementary arrangement of organization structure, system, processes, culture and people.
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In simple words, we start by Learning about us and the others, followed by identifying our focus areas and then we align on our actions and finally execute them to reap results. Strategic management process requires collaborative involvement of different stakeholders that make up the team/organization to ensure early buy-in, accountability and ownership. This is a must have for any strategic management/planning process.
Each word/activity in this framework can be a subject in itself and I want us to have the opportunity to talk about all of them in detail. We’ll cover each of these steps interactively in the following editions. For now, take a pause and think about these steps in terms of the strategic decisions that you’ve observed in your life. Do you think those decisions covered all of these steps?
Well, now that you’ve had a brief idea of what creates a strategic management process, let’s go back to the flowchart I shared in the beginning of this article. If a consultant/employee reached out to you with this framework in mind for your organization, would you accept it blindly? Do you notice some room for improvement? Does it cover all your bases when making decisions? I want to hear your thoughts on this. (Hint: It DOES require some changes to make it more useful and to identify that you do not need to know the details of each of these steps, just think about the sustainability of your business. At least that’s what William Pietersen did. I guess I’m giving one of the answers away)
I’ll leave you thinking about this question for today. In the future editions, I’ll share more about the strategic management framework and we start talking about all of its elements, one by one. Till then, I hope you keep your determination as strong as your coffee! (I can’t go away without mentioning coffee although I’m not a coffee consumer)
Additional Resources:
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1 年In a world where we sometimes use the word ‘strategy’ so commonly, thank you for breaking it down to what it really should be!
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1 年Buddy, you are a good communicator, so keep up the great work. I think with your articles, you have hit just the right spot. The people who will actually bring change to the organization, find it really hard to understand what a strategy really means.