Introductory Thoughts on Strategy in an Organization

What is Strategy?                                                                                                                                

Gerry Johnson and Kevan Scholes in “Exploring Corporate Strategy” define strategy as follows:

 

“Strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of the marketplace and to fulfill stakeholder expectations.”

 

Strategy is about the following:

 

Direction – Where is the organization trying to go in the long-term?

 

Scope – Which markets should an organization compete in, and what kind of activities are involved in such markets? (market = scope)

 

Advantage – How can the organization perform better than the competition in those markets?

 

Resources – What resources (skills, assets, finances, relationships, technical competence, and facilities) are required in order to be able to compete?

 

Environment – What external environmental factors affect the organization’s ability to compete?

 

Stakeholders – Who has the power in and around the organization (typically the CEO, board of directors, principals etc), and what are their values and expectations?

 

 

Strategy Occurs at Different Levels within an Organization

 

Strategies exist at several levels in any organization, ranging from the overall organization (or group of organizations) to individuals working in it.

 

Corporate or Overall Strategy – is concerned with the overall purpose and scope of the organization to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the organization and acts to guide strategic decision-making throughout the organization. Overall strategy is often stated explicitly in one’s mission statement.

 

Operational Strategy is concerned with how each department or part of the organization is organized to deliver overall strategic direction as well as strategic direction for individual organizational units. Operational strategy, therefore, focuses on issues of resources, processes, relationships, people, etc.

 

Organization Product or Service Strategy – is concerned more with how an organization competes successfully in a particular market or scope. It is concerned with strategic decisions about choosing services or products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities, etc.

A Strategic Management System

 

In its broadest sense, strategic management is about making and implementing strategic decisions—decisions that answer the key questions we will address later.

 

In practice, a thorough strategic management system has three main components:

 


1)    Strategic Analysis

 

Strategic Analysis is analyzing the strength of an organizations’ position and understanding the important external factors that may influence that position. The process of strategic analysis can be assisted by a variety of tools:

 

SWOT Analysis – a useful summary technique for summarizing the key issues arising from an assessment of an organization’s “internal” position and “external” environmental influences.

 

PEST Analysis – a technique for understanding the “environment” in which an organization operates.

 

Scenario Planning – a technique that builds various plausible future scenarios for an organization.

 

Five Forces Analysis – a technique for identifying the forces that affect the level of competition in an industry.

 

Market Segmentation – a technique that seeks to identify similarities and differences between groups of customers or users.

 

Competitor Analysis – a wide range of techniques and analyses that seeks to summarize an organization’s overall competitive position.

 

Critical Success Factor Analysis a technique used to identify those areas in which an organization must outperform the competition in order to succeed.

 

2)    Strategic Choice

 

This process involves understanding the nature of stakeholder expectations (the “ground rules”), identifying strategic options, and then evaluating and selecting strategic directions or options surrounding the markets and service/products provided by the organization.

 

3)    Strategy Implementation

 

This is often the hardest part for any organization. When a strategy has been analyzed and selected, the task is then to translate it into an organizational plan of action.

 

 

Creating the PLAN…Strategic Implementation                                        

Thoughts by Connie Salios

 

Strategic plans must be realistic, doable, and always linked and aligned specifically to the mission and vision to be effective and successful.  The strategy should drive activity and behavior at every level of the organization through a relational infrastructure. If it does not, refine it or discard it.

 

One must practice checking the process when building strategies – from the vision down and from the customer up.  If there are bottlenecks anywhere that will prevent smooth, understandable connections and linkages, park there until they are removed.  Deciding what not to do is as important as deciding what to do.

 

(If your organization is a ministry, note that when undertaking an organizational strategy alignment, many of the practices and systems used today come directly out of the marketplace. However with a Christ-centered value base, good strategic practices and processes clearly support faith-based organizations as well.)


Horizontal Organization Themes

 

In any organization one needs to consider four to five key themes that must remain constant and consistent horizontally throughout all departments.  These could include the following:

 

  • department excellence
  • service
  • leadership
  • relational awareness
  • spiritual formation (if the organization is a ministry)

 

Once the themes are defined and outlined, the key question is, “How does each theme, as its ideas, thoughts and systems flow consistently from one department to another, make an organization unique?”  

 

Note that an organization is not competing to be the very best.  Why?  Because there is no true best, nor does this hold value in God’s eyes.  An organization competes to be unique, to be effective, and to offer a clear competitive advantage while running the race of excellence and stewardship.

 

 

Key Questions to Ask  While Creating a Strategic Plan

 

A strong strategic plan should address the following questions:

 

  • What is the assessment of the external environment? 

Let’s use a university as an example:

 

               External                                 Assessment

 

Customers – clients parents and their children
Pricing constraints  tuition
Competitors other universities, on-line programs, certificate programs, junior or community colleges, trade schools
Distribution Issues marketing / sales – mail, online, visits to smaller schools/high schools, conferences, speaking, advertising
Technology IT infrastructure, internet and email availability, wi-fi availability, professional journals and trade readings and research on=line access
Macro economy (current impact?)
Regulations accreditation, safety- OSHA, DFEH-EEOC, DLSE-FLSA, etc.
Work style trends generational, learning style, cultural, age
Major Uncertainties economy, family culture, money availability
Suppliers NA
Potential Partners high schools, community colleges, large professional associations, major corporations, endowments, grant organizations
Other?  

 

  • How well do you understand the existing customers and markets?

 

  • What is the best way to grow the organization profitably and what are the obstacles to growth?

 

  • Who is the competition, both current and emerging?

 

  • Can the organization execute the strategy?

 

  • Are the short-term and long-term balanced?

 

  • What are the important milestones for executing the plan?

 

  • What are the critical issues facing the organization?

 

  • How does the organization earn, or how does it bring in, revenue on a sustainable basis?

 

Pricing at different levels of demand—Will the customer pay a premium for what you claim is a differentiation?
What is our cost and cost structure now and in the future? In 3 years? In 5 years? In 10 years?
How much cash is required for working capital?    Where is it coming from?
What specific actions (systems) and decisions (people) are required to ramp up revenue growth?
What ongoing continued investments are needed in technologies to prepare for the next generation of services/product?   What is the plan for such?
How do our competitors react to our pricing?   If they don’t, why not?

Evaluation Questions to Ask Regarding the Strategic Plan While In-process

 

  • Is the plan plausible and realistic?

 

  • Is it internally consistent?

 

  • Does it align with and/or match the critical issues and the assumptions?

 

  • Are the key people committed to it?

 

  • How well-versed is each contributing team about the plan implementation and competition?

 

  • How strong is the organization’s capability to execute the strategy?

 

  • Is the plan scattered or clearly and strongly focused?

 

  • Are we choosing the right ideas? How do we know?

 

  • Are the linkages between people and operations clear? How do we know?

 

 

Questions to Ask Regarding the Strategic Plan After the First Go-around

 

  • Is each part of the strategic plan connected to and/or aligned with the vision and mission?  One must be able to explain each section specifically.

 

  • Is the strategic plan easy to understand and communicate at all levels of the organization?  Can it be described in 20 minutes or less, simply and in plain language?

 

  • Is the strategic plan constructed and owned by those who will execute it?  If not, are they the right people for the implementation (executive) team?

 

  • How will a successful implementation of the strategic plan achieve the mission?  How will this be measured?  Using what criteria?  How often?    (Consider goals and controls model.)

 

  • How does this strategic plan make our organization different and deliver a unique mix of value?  (Note: The essence of strategy is making choices about what you do differently.)

 

In Summary                                                                                                                                        

by Michael E. Porter – Harvard Organization School 

Five Tests of a Good Strategy

 

1. A unique value proposition compared to other organizations’

2. A differently tailored value chain

 3. Clear tradeoffs, and choosing what not to do

 4. Activities that fit together and reinforce each other

 5. Continuity of strategy with continual improvement in realizing the strategy

 

 

The Role of Leadership in Strategy

 

Lead the process of determining the organization’s unique position. The CEO is the chief strategist. Key players are involved, yet the choice of a good overall plan cannot be entirely democratic.

 

Clearly distinguish the difference between operational effectiveness, improvement and strategy.

 

Communicate the strategy relentlessly to all parties involved.  Harness the moral purpose of strategy.

 

Maintain discipline surrounding the overall plan in the face of ongoing issues and distractions that arise.

 

Once a strategic plan is implemented, decide which new industry changes, technologies, and customer needs to respond to and how the response can be tailored to the organization’s strategy.

 

Measure progress against the strategy using metrics that capture the implications of the strategy for serving customers and performing particular activities promoting stewardship of the plan.

 

Commitment to strategy is tested every day!

 

 

Two Very Different Activities…Creation and Implementation

 

The differences between strategy creation and strategy implementation are profound, even the language:

 

Strategy Creation

Strategy Implementation

Analysis and planning

Execution

Thinking

Doing

Initiate

Follow through

At the top

Top to bottom

Entrepreneurial

Operational

Goal setting

Goal achieving

 

 

What IS Strategy?

What IS NOT Strategy?

A unique value proposition vs. competitors

A vision

Learning

A different tailored value chain

Agility

Flexibility

Activities that fit together and reinforce each other

Innovation

Technology

Continuity of strategy with continual improvement in realizing the strategy

Downsizing

Restructuring

Mergers/consolidation

Alliances/partnering

 

Outsourcing

Bonuses

 

© Synergistic Resource Associates

About the author:

 

Ron Smedley is president of Synergistic Resource Associates, a full-service human resource/development consulting group that works directly with both marketplace and ministry organizations.  As a professional human resource generalist, Ron is often called upon in the area of labor law interpretation and policy/procedure writing with the focus on practically, strategically, and relationally synergizing the systems of the organization with the development of their leadership and employees.  Besides consulting full-time, Ron instructs graduate adult students at Biola University and Claremont Graduate Universities within leadership, performance management, personal and corporate conflict, human resource strategy and ethics courses.

 

Ron’s passion is seeing men, women and organizations grow beyond their paradigm and the “box” they so often place themselves within.  For questions or support surrounding this article or other people development areas, email him at ron.smedley@sraonline.net or call 714.993.5003. His office is located in Placentia, CA.

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