Strategic Management, Making good ideas and sound strategies happen
Strategic Management is a continuous cognitive strategic decision-making process involving managers focused on managerial tasks within the larger planning, organizing, leading, and controlling (P-O-L-C) framework. Strategic management process is comprised of four (4) managerial functions that define stages - planning, implementation, execution, and control - which correspond to the P-O-L-C framework functions of planning, organizing, leading and controlling respectively.
Strategic Management - Planning Stage
This is decision making function regarding the goals and setting the future course of action from a set of alternatives to reach them. It means determining what the organization's position and the situation should be at some time in the future, and deciding how best to bring about that situation. It produces a plan which helps maintain managerial effectiveness by guiding future actions. It involves deciding what business the company will be in and forming a strategic vision of where the organization needs to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved.
Vision Statement
The vision statement usually describes some broad set of goals - what the organization aspires to look like in the future. Developing a vision requires senior management to develop carefully reasoned answer to the question:
Mission Statement
Management's vision of what the organization seeks to do and to become for its stakeholders is commonly termed the organization's "mission." Mission statements also have stated goals - what the organization aspires to be for its stakeholders. Mission clarifies the long-term future direction of the company and its strategic intent.
The mission statement describes the purpose and reason for the organization to exist. A mission statement establishes the organization's future course and outlines who we are, what we do, and where the organization needs to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved..
Core Values
Core values define the organization in terms of the principles nd values the leaders will follow in carrying out the activities of the organization. Every organization has values, and these values should be coherent with the strategy. The Core Values are the strong enduring beliefs and principles that the company uses as foundation for its decisions; they determine how people will behave and how they think in carrying out their job functions. These values are shared by the Board and staff, strongly held and not easily changed. Values assessment involves looking into the personal values of the members of the organization, organization values, and the organization's operating philosophy. The core values for example business may include::
The core values define the organization in terms of the principles and values the leaders will follow in carrying out the activities of the organization. They are the essence of the company’s culture and expression of its “personality”.
Strategic Management - Planning Stage
This is decision making function regarding the goals and setting the future course of action from a set of alternatives to reach them. It means determining what the organization's position and the situation should be at some time in the future, and deciding how best to bring about that situation. It produces a plan which helps maintain managerial effectiveness by guiding future actions. It involves deciding what business the company will be in and forming a strategic vision of where the organization needs to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved.
Vision Statement
The vision statement usually describes some broad set of goals - what the organization aspires to look like in the future. Developing a vision requires senior management to develop carefully reasoned answer to the question:
- "what is our vision for the company - what are we trying to do and to become?"
Mission Statement
Management's vision of what the organization seeks to do and to become for its stakeholders is commonly termed the organization's "mission." Mission statements also have stated goals - what the organization aspires to be for its stakeholders. Mission clarifies the long-term future direction of the company and its strategic intent.
The mission statement describes the purpose and reason for the organization to exist. A mission statement establishes the organization's future course and outlines who we are, what we do, and where the organization needs to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved..
Core Values
Core values define the organization in terms of the principles nd values the leaders will follow in carrying out the activities of the organization. Every organization has values, and these values should be coherent with the strategy. The Core Values are the strong enduring beliefs and principles that the company uses as foundation for its decisions; they determine how people will behave and how they think in carrying out their job functions. These values are shared by the Board and staff, strongly held and not easily changed. Values assessment involves looking into the personal values of the members of the organization, organization values, and the organization's operating philosophy. The core values for example business may include::
- Integrity - Always doing what we say we will, and striving for excellence and quality in everything we do.
- Honesty - Being open and transparent in all our dealings and maintaining the highest integrity at all times.
- Dedication - Working with urgency and commitment to be successful from individual and company perspectives. Time frames are always met regardless of personal circumstances.
- Reliability - Consistently fulfills obligations in a timely and satisfactory manner; takes responsibility for personal actions and performance.
- Stewardship - We do business in a way that is socially, economically, and environmentally responsible.
- Ownership - Taking ownership of our customer’s needs and being accountable for delivering friendly and professional service
The core values define the organization in terms of the principles and values the leaders will follow in carrying out the activities of the organization. They are the essence of the company’s culture and expression of its “personality”.
-
Formulation
-
Implementation
-
Execution
-
Evaluation
-
Setting Objectives
<
>
Strategy Formulation
Strategy formulation - Strategy Making - is a stage in the strategic management process involved in defining and selecting strategic alternatives to be implemented and executed. This stage involves the following activities and tasks
Successful strategy formulation produces a clear set of recommendations, with supporting justifications, that revise as necessary the organization's mission, its supply of resources and objectives (in meeting the expectations of the stakeholders).
Crafted Intended Strategy
Crafting a strategy is an exercise in entrepreneurship searching for opportunities to (1) do new things, or (2) do existing things in new and better ways. Management develops strategies to guide how the organization conducts its business and how it will achieve its target objectives; and to deal with those identified strategic issues facing the company. The intended strategy is essentially, the pattern of actionable decisions (strategic decisions and actions) managers employ to achieve strategic and financial performance targets. A company's intended/deliberate strategy is a statement of how an organization is going to achieve its mission and realize its vision through achieving mission goals. An intended strategy may be a corporate level strategy or business level strategy.
Corporate and business strategy define a pattern of how the organization will achieve its mission. The how of a strategy tend to be company specific, customized to each company's own situation and performance objectives.
Role of Goals in Defining Intended Strategy
Strategy formulation intentions (non-functional goals) are set in an act of willing, and specifies the intentions to meet a goal or standard. A corporate or business strategy is defined in terms of the goal statements tht represent the desired/expected outcomes. Strategies are developed for each goal. Ideally, each strategy represents a single, distinct approach to achieving all or part of the goal. Like goals, strategies are directional. For example, a strategy for the "Raise Revenue" goal might be to "Bring in more customers." While goals and strategies are directional, objectives are specific, measurable actions that establish how the goals will be achieved. Outcomes create meanings, relationships, and differences: the Why. The attainment of each goal may require a number of objectives to be reached.
Corporate level goals are indications of what the organization as a whole is trying to achieve (mission) and to become (vision). In stating what the organization hopes to achieve, it is necessary to state what it hopes to do with respect to its environment - external "systems" such as markets, industry, the economy, the community, and other social systems. In each case there are unique relationships to observe (e.g., with competitors, municipal leaders, congress, etc.). In stating what the organization hopes to become, it is essential to view this in abstract terms as the satisfaction of the needs of significant groups which cooperate to ensure the organization's continued existence. These groups may include customers, managers, employees, stockholders, etc.
The strategic business goals are outcomes desired by the owners and top management and whose achievement is deemed most important to the current and future health and performance of the business organization. The outcomes are the difference the products and services the business offers to customers make (i.e., benefits the customer receives from the products/services offered). Identifying outcomes starts with understanding customers' needs - their challenges, issues, constraints, and priorities. Outputs are the important products, services, profits, an revenues: the What.
Strategies are developed for each goal. Ideally, each strategy represents a single, distinct approach to achieving all or part of the goal.
Strategy formulation - Strategy Making - is a stage in the strategic management process involved in defining and selecting strategic alternatives to be implemented and executed. This stage involves the following activities and tasks
- Environments Analysis - Analysis of internal and external factors is a key stage in creating the set of goals cascaded to departments and organization units - functions, divisions, etc. that support the organization's operative goals as well as the individual employee goals that support the unit goals. In this stage, gather as much information and data as possible that is relevant to accomplishing your mission and organization's operative goals. The focus of the analysis should be on understanding the needs of the business as a sustainable entity, its strategic direction, and identifying initiatives that will help the organization grow.
- Environmental Scan - The vision, mission, and values drive the ongoing analysis of the organization's external environment to assess its opportunities and threats. Changes in the external environment can have direct impact on the way organizations are run and people are managed. Some of those changes represent opportunities, and some of them represent real threats to the organization.
- Organizational Scan - The vision, mission and values drive the ongoing analysis of the organization's internal environment to assess its strengths and weaknesses with respect to strategic intent and relevant issues. It involves analysis and evaluation of the general economic and industry environment in which the organization operates; this includes a review of the organization's competitive position. It is essential to conduct a qualitative and quantitative review of the organization's existing product line.Internal analysis provides strategic decision makers with an inventory of organizational skills, and resources as well as their performance levels. Many resources can be combined to give organizations competitive advantage. In particular the advantages due to intangible assets including people and service capability provide the most difficult to imitate or copy advantage.
- SWOT Analysis - This involves analyzing the organization's external/internal environments to identify any opportunities and/or threats; and strengths and weaknesses. It involves continuous monitoring of environments conditions for changes in environments' factors that may affect your organizations performance. The SWOT analysis helps executives summarize the major facts and forecasts derived from external and internal analyses. Strengths - The internal positive attributes of your company that are within your control; Weaknesses - These are negative factors that detract from your strengths; Opportunities - These are external factors in your business environment that are likely to contribute to your success; Threats - These are external factors you have no control over that negatively influences your success.
- Strategic Issues Diagnosis and Identification - Strategic issues are fundamental policy questions affecting the organization's mandates, mission and values, product-mix/service-mix, clients, users or payers, cost, financing,management or organization design. Identify and resolve issues facing the organization and prioritize them relative to the relevance and importance to success.
- Crafting strategy - Crafting a strategy is an exercise in entrepreneurship searching for opportunities to (1) do new things, or (2) do existing things in new and better ways. Crafting a strategy is primarily an intellectual and creative act involving developing solutions to known strategic problems identified and defined through diagnosis of strategic issues and events. Crafting strategy brings into play the critical managerial issue of how to achieve the targeted results in light of the organization's situation and prospects. Objectives are the "ends," and strategy is the "means" of achieving them. In effect, strategy is the pattern of actions managers employ to achieve strategic and financial performance targets.
- Strategic Options Development- This involves analyzing strategic issues and crafting strategies to respond to identified problems in areas such as corporate strategy, business/competitive strategies, and possibly operations strategies. Corporate strategy is about domain selection; and includes decisions and choices about the following: (1) What should be the capabilities that distinguish the company? (2) What should be the company's comparative advantage in adding value to its individual businesses? (3) What businesses should the company be in?. These are the fundamental choices that a corporate strategy comprises and they frame and guide all the decisions that a company's corporate executives, functions, and staff make every day. Business/competitive strategy is comprised of answers to fundamental questions such as: (1) Who should be the customers that define our target market? (2) What should be the value proposition that differentiates our products and services with those customers? (3) What should be the capabilities that make our business better than any other in delivering that value proposition? These choices comprising the business strategy should drive the decisions of business units' management teams, functions, and staff that make every day decisions on pricing, R&D, where to manufacture, etc. Options development involves identification of practical and creative alternatives for resolving identified strategic issues. For each of the alternatives, enumerate the barriers to achieving the alternative. Prepare proposals for achieving the alternatives subject to the barriers.
- Choice of Strategy - Selection of strategic options based on evaluation criteria that look at factors such as described in the evaluation section below. Strategic choice refers to the decision-making process of selecting strategic option from a number of alternatives for implementation. Selecting a given approach from "approaches" (or means) among all options and choices that can be made at a given point in time; that "approach" becomes the "strategy" (strategic option). Every decision, every action taken from then on, will be based on (or aligned with) that "strategy". Strategic choice is a set of related options (typically combining options for products/markets and services, and resources) that form a potential strategy. The simplest form of choice is therefore between taking an option or not taking it - doing it or not doing it. Most choices have more shades of possibility than this. An option is a course of action that it appears possible to take. A strategic option is a set of of related options from a options network that address a strategic issue.
Successful strategy formulation produces a clear set of recommendations, with supporting justifications, that revise as necessary the organization's mission, its supply of resources and objectives (in meeting the expectations of the stakeholders).
Crafted Intended Strategy
Crafting a strategy is an exercise in entrepreneurship searching for opportunities to (1) do new things, or (2) do existing things in new and better ways. Management develops strategies to guide how the organization conducts its business and how it will achieve its target objectives; and to deal with those identified strategic issues facing the company. The intended strategy is essentially, the pattern of actionable decisions (strategic decisions and actions) managers employ to achieve strategic and financial performance targets. A company's intended/deliberate strategy is a statement of how an organization is going to achieve its mission and realize its vision through achieving mission goals. An intended strategy may be a corporate level strategy or business level strategy.
- Corporate Strategy - Corporate strategy is concerned with the whole organization and focuses on areas such as portfolio management, diversification, and resource allocation across the business units or the operating units that make up the total enterprise. Corporate strategy decisions involve choices and commitments regarding markets and business to be in, growth strategy, and capabilities that would give the firm comparative enterprise advantage in the business portfolio the firm wants.
- Business Strategy - Business strategy is concerned with choices and commitments regarding competitors, and nature of competition - low cost, innovation, differentiation, etc. Business strategy focuses on products, services, and how to compete in a given industry or market segment. Business strategy is important to the implementation of of corporate strategy.
Corporate and business strategy define a pattern of how the organization will achieve its mission. The how of a strategy tend to be company specific, customized to each company's own situation and performance objectives.
Role of Goals in Defining Intended Strategy
Strategy formulation intentions (non-functional goals) are set in an act of willing, and specifies the intentions to meet a goal or standard. A corporate or business strategy is defined in terms of the goal statements tht represent the desired/expected outcomes. Strategies are developed for each goal. Ideally, each strategy represents a single, distinct approach to achieving all or part of the goal. Like goals, strategies are directional. For example, a strategy for the "Raise Revenue" goal might be to "Bring in more customers." While goals and strategies are directional, objectives are specific, measurable actions that establish how the goals will be achieved. Outcomes create meanings, relationships, and differences: the Why. The attainment of each goal may require a number of objectives to be reached.
Corporate level goals are indications of what the organization as a whole is trying to achieve (mission) and to become (vision). In stating what the organization hopes to achieve, it is necessary to state what it hopes to do with respect to its environment - external "systems" such as markets, industry, the economy, the community, and other social systems. In each case there are unique relationships to observe (e.g., with competitors, municipal leaders, congress, etc.). In stating what the organization hopes to become, it is essential to view this in abstract terms as the satisfaction of the needs of significant groups which cooperate to ensure the organization's continued existence. These groups may include customers, managers, employees, stockholders, etc.
The strategic business goals are outcomes desired by the owners and top management and whose achievement is deemed most important to the current and future health and performance of the business organization. The outcomes are the difference the products and services the business offers to customers make (i.e., benefits the customer receives from the products/services offered). Identifying outcomes starts with understanding customers' needs - their challenges, issues, constraints, and priorities. Outputs are the important products, services, profits, an revenues: the What.
Strategies are developed for each goal. Ideally, each strategy represents a single, distinct approach to achieving all or part of the goal.
Evaluation of Strategic Choices
The evaluation is based on a set of selection criteria that ensures the chosen strategies will be effective. An effective strategy is defined in terms of the degree to which the strategy meets those criteria including:
The whole point about strategy is that the critical factors determining its quality are often not directly observable or simply measured; and by the time strategic opportunities/threats do directly affect operating results, it may well be too late for an effective response.
The evaluation is based on a set of selection criteria that ensures the chosen strategies will be effective. An effective strategy is defined in terms of the degree to which the strategy meets those criteria including:
- Consistency - The strategy must not represent mutually inconsistent goals and policies.
- Suitability (Appropriateness) - Is the strategy consistent with the organization's mission, values, and operating principles? Does it fit with the vision and mission?
- Consonance - The strategy must represent adaptive response to the external environment and to the critical changes occurring within it as defined by the SWOT Analysis information..
- Value - Will the strategy contribute to meeting agreed-upon goals?
- Advantage - The strategy must provide for the creation and/or maintenance of a competitive advantage in the selected areas of activity.
- Feasibility . Is the strategy practical, given personnel and financial resources and capacity? The strategy must neither overtax available resources not create unsolvable sub-problems.
- Acceptability - Does it fit with the values of the company and the employees? Is the strategy acceptable to the Board, key staff, and other stakeholders?
- Flexibility - Can it be adapted and changed as needed?
- Cost-Benefit - Is the strategy likely to lead to sufficient benefits to justify the costs in time and other resources?
- Timing - Can and should the organization implement this strategy at this time, given external factors and competing demands?
The whole point about strategy is that the critical factors determining its quality are often not directly observable or simply measured; and by the time strategic opportunities/threats do directly affect operating results, it may well be too late for an effective response.
Strategy Statement
The strategy statement describes what the organization's competitive game plan will be. A strategy statement communicates the company's intended strategy to everyone within the organization. A well written strategy statement will help employees and the organization to understand their roles when executing the company's strategy. Mixing the deliberate and emergent strategies in some way helps the organization to control its course while encouraging the learning process. The statement consists of three (3) components objective, scope, and competitive advantage.
Defining the objective, scope and competitive advantage requires trade-offs which are fundamental to strategy. The strategy statement is a hypothesis of the means by which strategic goals i.e., sustainable growth, are achieved. Goals and objectives provide the milestones for measuring the success of the strategy in achieving the mission and vision. Goals are statements of what needs to be done to implement the strategy. Objectives are specific milestones for meeting a specified goal. A strategy has to be sound, implemented and executed to have value.
Model-Based Strategy Analysis
.
The key to organization success is its ability to identify the important needs of each of these groups to establish some balance among them, and work out a set of operating policies which permits their satisfaction. This set of policies, as a pattern, identifies what the organization is trying to become. A policy states how goals are to be attained. It tells people what they should and should not do in order to contribute to achievement of corporate goals.
Actual Strategy refers to the proposed active strategy resulting from factors which take place both in the formulation and implementation of strategy.
Planned Change
An intended strategy is the strategy that an organization hopes to execute. When the organization's environment is stable and predictable strategic planning can provide enough of the strategy for the organization to gain and maintain success. The executives leading the organization can simply create a plan and execute it, and they can be confident enough that their will not be undermined by change over time.
Emergent Change
Emergent strategy is an unplanned strategy that arises in response to unexpected opportunities and challenges. Very few executives enjoy a stable and predictable situation; because change affects the strategy of almost all organizations.
Business organizations are entities such as an enterprise, company or firm, each with grouping and arrangement of its parts to form a whole system to put it in good working order to attain its purpose. A business organization is in good working order if it has adequate and sufficient organization, and energy is available in and to the system. Energy in an organization can be in the form of information and resources. Energy in an organization derives from a complex of sources including: physical capacities of its members; social resources such as loyalties, shared sentiments and values, common values; and resources from its environment. Energy is defined as the "capacity for action", action, or power to effect action.
Assumptions are influenced by organization values, culture as well as individual values, and beliefs. Direction setting through the development of goals and objectives, in essence, map out where the organization is headed, its short-range and long-range performance targets, and the competitive moves and internal action approaches to be used in achieving the targeted results.
Strategic plans that establish direction can be modeled as intentional goal models of choices to pursue. Strategy goal intentions (goals model) have the structure of "I intend to reach Z!" whereby Z may relate to certain outcome or behavior to which an individual feels committed. The strategic plan defines a set of strategic alternatives (options) of courses of action that achieves the mission.
[TBD]
Corporate strategy choices - capabilities, enterprise advantage, and business portfolio it wants; and business and competitive strategy choices - customers, value proposition and skills it has chosen to have.
The strategy statement describes what the organization's competitive game plan will be. A strategy statement communicates the company's intended strategy to everyone within the organization. A well written strategy statement will help employees and the organization to understand their roles when executing the company's strategy. Mixing the deliberate and emergent strategies in some way helps the organization to control its course while encouraging the learning process. The statement consists of three (3) components objective, scope, and competitive advantage.
- Objective - The Objective defines the ends that the strategy is designed to achieve within a specific time frame. Objectives are the "ends," and strategy is the "means" of achieving them. The strategic objective is the single, specific objective that will drive your organization. This must not be confused with the company's vision, mission or values. The objective must be specific, measurable and time bound. It must be a single goal (i.e., growth or profitability), although subordinate goals may follow from the strategic objective.
- Scope - The Scope is the domain of the business - the part of the business landscape in which the company will operate. The company's scope revolves around three (3) dimensions - the target customers, location and products. The scope must emphasize where the business direction and focus will go.
- Competitive Advantage - The Competitive Advantage is the essence of your strategy. It determines what you will do differently or better than the competition to achieve your objective. This component describes your strategies on how and why you will succeed and what makes you different from your competitors.
Defining the objective, scope and competitive advantage requires trade-offs which are fundamental to strategy. The strategy statement is a hypothesis of the means by which strategic goals i.e., sustainable growth, are achieved. Goals and objectives provide the milestones for measuring the success of the strategy in achieving the mission and vision. Goals are statements of what needs to be done to implement the strategy. Objectives are specific milestones for meeting a specified goal. A strategy has to be sound, implemented and executed to have value.
Model-Based Strategy Analysis
.
The key to organization success is its ability to identify the important needs of each of these groups to establish some balance among them, and work out a set of operating policies which permits their satisfaction. This set of policies, as a pattern, identifies what the organization is trying to become. A policy states how goals are to be attained. It tells people what they should and should not do in order to contribute to achievement of corporate goals.
Actual Strategy refers to the proposed active strategy resulting from factors which take place both in the formulation and implementation of strategy.
Planned Change
An intended strategy is the strategy that an organization hopes to execute. When the organization's environment is stable and predictable strategic planning can provide enough of the strategy for the organization to gain and maintain success. The executives leading the organization can simply create a plan and execute it, and they can be confident enough that their will not be undermined by change over time.
Emergent Change
Emergent strategy is an unplanned strategy that arises in response to unexpected opportunities and challenges. Very few executives enjoy a stable and predictable situation; because change affects the strategy of almost all organizations.
Business organizations are entities such as an enterprise, company or firm, each with grouping and arrangement of its parts to form a whole system to put it in good working order to attain its purpose. A business organization is in good working order if it has adequate and sufficient organization, and energy is available in and to the system. Energy in an organization can be in the form of information and resources. Energy in an organization derives from a complex of sources including: physical capacities of its members; social resources such as loyalties, shared sentiments and values, common values; and resources from its environment. Energy is defined as the "capacity for action", action, or power to effect action.
Assumptions are influenced by organization values, culture as well as individual values, and beliefs. Direction setting through the development of goals and objectives, in essence, map out where the organization is headed, its short-range and long-range performance targets, and the competitive moves and internal action approaches to be used in achieving the targeted results.
Strategic plans that establish direction can be modeled as intentional goal models of choices to pursue. Strategy goal intentions (goals model) have the structure of "I intend to reach Z!" whereby Z may relate to certain outcome or behavior to which an individual feels committed. The strategic plan defines a set of strategic alternatives (options) of courses of action that achieves the mission.
[TBD]
Corporate strategy choices - capabilities, enterprise advantage, and business portfolio it wants; and business and competitive strategy choices - customers, value proposition and skills it has chosen to have.
Strategy Implementation
Strategy implementation function is a stage in the strategic management process. It provides the connecting loop between strategy formulation and strategy execution. Strategy implementation function viewed within the P-O-L-C framework is an organizing function and provides the process by which established plans are moved closer to realization. It involves determining how activities and resources - human resources and other resources that are identified as necessary by the plan to reach the goals - are to be assembled and coordinated, and establishing an intentional structure of positions or roles of responsibilities for people to fill in an organization.
The structure is intentional in the sense of making sure that all the tasks necessary to accomplish the goals are assigned to people who can do them the best. Staffing is part of organizing, it involves filling and keeping filled the positions in the organization structure. Strategy Implementation consists of all the decisions and actions, and plans required to turn strategic choices into reality, and requires competencies such as leadership skills, precision planning, organizing of resources and activities, as well as motivation to ensure people's commitment to the new strategy.
Strategy Implementation Tasks
Successful strategy implementation involves several tasks including:
Building an Organization Capable of Effective Strategy Execution
[TBD]
Successful implementation may result in changes to one or more of the elements of the organization's operating model, and action plans that realize the organization's goals and objectives. Implementation involves every member of the organization playing an active role in combining efforts and resources to realize the business's common objective. It involves
Implementation System and Role of Goals
The implementation system model is comprised of the organization's operations infrastructure which provides a corporate structure or integration components - the methods used to achieve coordination across key organization units relevant to supporting implementation of corporate and business strategies.
[TBD]
Implementation intentions can be modeled as action plans that specify an anticipated critical situation linked to it and to an instrumental goal-directed response. Implementation intentions (plans) have the structure of "If situation X is encountered, then I will perform the goal-directed response Y!". Holding an implementation intention commits an individual to perform the specified goal-directed response (action) once the critical situation is encountered. The choices to pursue an implementation intentions (plans) that specify an anticipated critical situation linked to it and to an instrumental goal-directed response.
Both strategy formulation and implementation intentions (goals models) are set in an act of willing. The former specifies the intentions to meet a goal or standard; the latter refers to the intention to perform a plan. Commonly, implementation intentions are formed in the service of goal intentions, because they specify the where, when, and how of respective goal-directed responses.
[TBD]
The strategy implementation and execution is the continuous process of closing the gap between where the company is, and what the strategy calls for. Technically, a strategy can never actually be fully implemented because every thing that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There are two (2) parts to strategy implementation;
[TBD]
Implementation involves the following activities/tasks:
Strategy implementation function is a stage in the strategic management process. It provides the connecting loop between strategy formulation and strategy execution. Strategy implementation function viewed within the P-O-L-C framework is an organizing function and provides the process by which established plans are moved closer to realization. It involves determining how activities and resources - human resources and other resources that are identified as necessary by the plan to reach the goals - are to be assembled and coordinated, and establishing an intentional structure of positions or roles of responsibilities for people to fill in an organization.
The structure is intentional in the sense of making sure that all the tasks necessary to accomplish the goals are assigned to people who can do them the best. Staffing is part of organizing, it involves filling and keeping filled the positions in the organization structure. Strategy Implementation consists of all the decisions and actions, and plans required to turn strategic choices into reality, and requires competencies such as leadership skills, precision planning, organizing of resources and activities, as well as motivation to ensure people's commitment to the new strategy.
Strategy Implementation Tasks
Successful strategy implementation involves several tasks including:
- Translating the selected strategic choices into functional strategies and the actions needed over the next one to two years to implement the major proposed strategic options. This involves translating the strategic goals of the selected strategic choices into functional/division goals and functional strategies of the functional areas identified and defined by the operations infrastructure established as a result of the operations strategy design
- Assessing the capacity to build an organization capable of carrying out the strategy successfully, and determine the gaps from the current state,.
- Integrating Functional Strategies - Identify and give due consideration to the cross-functional implications of strategy at implementation when the critical issues of strategy are appraised.
- Developing action plans - The action plans are schedules for actions to be taken, and policies and procedures that guide resource allocation and prioritization decisions. The implementation plan defines the responsibility of top, middle and lower level managers focused on the creation of new strategic assets and/or enhancement and strengthening existing strategic assets needed by the entity in order to build an organization capable of carrying out the strategy and maintaining its ability to achieve future outcomes.
- Developing Operations Plans - The Operations Plan describes milestones, conditions for success and explains how or what portions of a strategic plan will be put into operation during a given operations period. The operations plan is a basic tool that directs the day-to-day activities of organizational staff. An operational plan addresses four basic questions: Where are we now? Where do we want to be? How do we get there? How do we measure our progress?
- Developing Tactical plans for functional areas such as marketing, production, personnel, finance, and plant facilities. Implementation requires outstanding collaboration between all members of the various groups throughout the whole organization from top management to line workers.
- Developing budgets that steer resources into those internal activities critical to strategic success.
- Establishing and developing strategy supportive policies.
- Develop and install internal support systems that enable company personnel to carry out their strategic roles effectively day in and day out
- Finalizing strategic plan with input from all invested parties.
- Aligning the budget to annual goals.
- Producing various versions of the plan for each group.
- Establishing a system for tracking and monitoring the plan.
- Establishing a performance management and reward system.
- Presenting the plan to the entire organization.
- Building annual department plans around the corporate plan.
Building an Organization Capable of Effective Strategy Execution
[TBD]
- Motivating people in ways that stimulate them to pursue the target objectives energetically and, if need be, modifying their duties and job behavior to better fit the requirements of successful strategy execution.
- Tying the reward structure to the achievement of targeted results.
- Creating a company culture and work climate useful for successful strategy implementation.
- Performing best practices and programs for continuous improvement.
- Applying the internal leadership needed to drive implementation.
- Scheduling monthly strategy meeting with established methods for reporting progress.
- Setting annual review dates for new assessments, and annual plan review.
Successful implementation may result in changes to one or more of the elements of the organization's operating model, and action plans that realize the organization's goals and objectives. Implementation involves every member of the organization playing an active role in combining efforts and resources to realize the business's common objective. It involves
Implementation System and Role of Goals
The implementation system model is comprised of the organization's operations infrastructure which provides a corporate structure or integration components - the methods used to achieve coordination across key organization units relevant to supporting implementation of corporate and business strategies.
[TBD]
Implementation intentions can be modeled as action plans that specify an anticipated critical situation linked to it and to an instrumental goal-directed response. Implementation intentions (plans) have the structure of "If situation X is encountered, then I will perform the goal-directed response Y!". Holding an implementation intention commits an individual to perform the specified goal-directed response (action) once the critical situation is encountered. The choices to pursue an implementation intentions (plans) that specify an anticipated critical situation linked to it and to an instrumental goal-directed response.
Both strategy formulation and implementation intentions (goals models) are set in an act of willing. The former specifies the intentions to meet a goal or standard; the latter refers to the intention to perform a plan. Commonly, implementation intentions are formed in the service of goal intentions, because they specify the where, when, and how of respective goal-directed responses.
[TBD]
The strategy implementation and execution is the continuous process of closing the gap between where the company is, and what the strategy calls for. Technically, a strategy can never actually be fully implemented because every thing that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There are two (2) parts to strategy implementation;
- Making sure and appropriate infrastructure is in place prior to starting the cascade of decisions and actions down through the organization,
- Execution, and monitoring performance to make sure the planned results are actually achieved.
-
[TBD]
Implementation involves the following activities/tasks:
Evaluating Implemented Strategy
Strategy evaluation ensures that all key supporting elements of the business systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategies and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan.
The evaluation method is comprised of the activities defined by the process steps below.
Evaluation Process Steps
The implementation evaluation method assists managers in deciding whether or not the chosen strategies are steering the organization in the right direction towards achieving the strategic objectives and mission, It provides an intuitive and model-driven approach to assess the execution feasibility of the chosen strategy implementation. The evaluation method allows an organization to take into consideration a lot of the points that can influence successful implementation before an ideal strategy can be implemented. It is important to note that for a given organization and business environment not all strategies are executable.
Strategy evaluation ensures that all key supporting elements of the business systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategies and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan.
The evaluation method is comprised of the activities defined by the process steps below.
Evaluation Process Steps
- Define the strategy to evaluate - Managers need to specify the implemented strategy and the progress results that need to be evaluated. Such results have to be objectively measurable and consistent; and can be defined using goals modeling.
- Outline Predetermined Standards - Managers need to outline standards according to the chosen implemented strategy. These standards often consist of a tolerance of range which defines adequate variations.
- Obtain data to Map Out Onto Set Standards - Data to obtain consists of results from the actions taken on the chosen strategies.
- Measure Performance - Assess the performance of the mapped out data.
- Performance Match Standards -if the performance of the identified strategy achieves the standards within the tolerance range then the process stops here; otherwise, Take Corrective Action.
- Take Corrective Action - The performance measured does not achieve the standards; managers must take necessary actions to resolve and amend the implementation Process.
The implementation evaluation method assists managers in deciding whether or not the chosen strategies are steering the organization in the right direction towards achieving the strategic objectives and mission, It provides an intuitive and model-driven approach to assess the execution feasibility of the chosen strategy implementation. The evaluation method allows an organization to take into consideration a lot of the points that can influence successful implementation before an ideal strategy can be implemented. It is important to note that for a given organization and business environment not all strategies are executable.
Strategy Execution
Strategy execution is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy implementation. Strategy execution takes place within the context of strategy implementation, and is a change process involving a series of integrated decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy.
Strategy Execution Process
Strategy execution is the continuous process of decisive strategic decisions that occurs at all levels in the organization and drive the actions/activities undertaken at all levels in the organization to turn implemented strategy into commercial/social success as defined by the mission. The strategy Execution process is a complex mix of decisions and actions on managing people, strategy and operations in creating "fits" between the way things are done and what it takes for effective strategy execution to make the strategy work as intended. The execution process includes the following tasks:
A company's actual strategy is typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures. Strategy execution entails the decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers to turn implemented strategy into commercial/social success.
Strategy execution is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy implementation. Strategy execution takes place within the context of strategy implementation, and is a change process involving a series of integrated decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy.
Strategy Execution Process
Strategy execution is the continuous process of decisive strategic decisions that occurs at all levels in the organization and drive the actions/activities undertaken at all levels in the organization to turn implemented strategy into commercial/social success as defined by the mission. The strategy Execution process is a complex mix of decisions and actions on managing people, strategy and operations in creating "fits" between the way things are done and what it takes for effective strategy execution to make the strategy work as intended. The execution process includes the following tasks:
- Visualizing the strategy - This helps users understand what the strategy is. One of the most pressing challenges in strategy management is understanding what the strategy is. An effective way to improve understanding is through visualization methods that illustrate the strategy in terms of its components and how they relate to each other and to the mission and end state (vision).
- Measuring the strategy - Key elements of the visualized strategy are assigned easily understood performance measures - i.e., financial and strategic or health measures. The full complement of financial and strategic measures are organized into a scorecard - a system of performance dashboard, so the management can ascertain if progress is being made towards the desired ends.
- Reporting Progress - Review the strategy regularly to determine if the strategy is producing results in line with expectations, opposed to controlling performance. As part of the regular review, leaders must make ongoing strategic decisions to make adjustments to keep the strategy current and on course.
- Monitoring Environment Factors - Management must remain vigilant, and assess the environment, and make decisions that correct and evolve the strategy as the environment conditions change. It involves the decisions and activities the organization undertakes in order to turn the implemented strategy into commercial success. These decisions and activities encompass the thousands of decisions and actions taken every day by executive, middle and line managers, and employees acting according to information they may have, and their own self-interest as influenced by organizational culture, and constrained by organizational policies and procedures. The strategy execution decisions have to be timely. Timeliness refers to "when" in the evolution of changes in the organization the decisions are made, rather than how much time the decision maker has to make the decision.
- Identify Strategy Projects - Organizations may have scores, if not hundreds, of projects ongoing at any point; to get a firm grasp of the type and range of these projects the organization needs to organize all projects and identify strategy projects in particular to improve project-oriented strategy execution.
- Align Strategy Projects - Once projects are captured, they must then be aligned to the strategies or goals for the organization. Assess all projects - either proposed or ongoing; only those projects that directly impact the strategy should be resources and continued.
- Managing Initiatives - The organization must develop a capability in project management in order to execute the strategy effectively. The full complement of projects in the organization should be coordinated and controlled by a project management office with the responsibility of also monitoring both progress and performance. Monitoring progress creates feedback about the performance of the strategy and its execution allowing organizations to make adjustments accordingly.
- Communicating Strategy - Leadership must communicate visualized strategy to the workforce that will help them understand not only what needs to be done, but why. It is difficult to execute a strategy when it is not well understood, or performance relative to it is not communicated.
- Aligning Individual Roles - Senior leadership must ensure that employees at all levels can articulate and evaluate their personal contribution towards achieving specific strategic goals.
- Rewarding Performance - After explaining the strategy and aligning the workforce to it, senior management institutes the incentives that drive behaviors consistent with the strategy.
A company's actual strategy is typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures. Strategy execution entails the decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers to turn implemented strategy into commercial/social success.
Strategy Execution System
Strategy execution system must possess the required overarching capability to integrate and align the vital strategic management and operations management processes needed for successful strategy execution. The execution system enables the organization to understand the fit between strategy and organizational capabilities, reward structure, internal support systems and culture.
System Tasks
Strategy execution system tasks comprise the thousands of decisions and actions taken every day by executive, middle and line managers, and employees acting according to information they may have, and their own self-interest as influenced by organizational culture, and constrained by organizational policies and procedures, and activities the organization undertakes in order to turn the implemented strategy into commercial success. These decisions and actions include the following decisions areas such as:
To enable effective interplay between strategic management and management of value creation and delivery processes strategy execution system provides an integrated model of strategy (strategy content) as a goals model with implementation and execution refinement and elaboration of the strategy-making goal model. Execution demands ownership at all levels of management and workers at customer touch points. People must commit to and own the process and actions to control effective execution.
Most organizations have management systems that support parts of a strategy management system, such as strategy planning, budgeting, HR planning, or performance reporting.These systems typically function as silos and lack the required capability of execution systems to integrate strategic management and operations management.
Emergent Strategy
Emergent strategy is undertaken by an organization that analyzes its environment constantly and implements its strategy simultaneously (Lynch, 2000; 26). Emergent strategy formulation process is a learning process in which cycles of events are characterized as an ongoing process of experience, reflection, interpretation, and action (Kim, 1993; Kolb, 1976). The emergent approach to strategy formulation is characterized by trial, experimentation, and discussion, that is, by a series of experimental approaches rather than a final objective.
Emergent Strategy Decisions and Actions
Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. The company's strategy may also emerge from the day-to-day decisions and actions in following areas:
An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions. Emergent strategy implies that an organization is learning what works in practice. Emergent strategy is bottoms up, akin to strategic learning through feedback mechanisms to properly respond to and adapt to changes in the business environment in order to be profitable. Emergent strategy is more of a cumulative effect from bottom-up - the ground engineers, sales people, and other executive staff. These are daily tactical operations decisions made by those who are not in the position or state of mind to conceptualize such strategies. Emergent strategy is realized pattern that was not expressly intended or planned that emerged from execution. The emergent approach (also termed realized) states that the three (3) core areas are interrelated and the analysis is in advance of the other two. The different styles/approaches of strategy making complement each other. Emergent strategies rely on the organization's ability to learn from actual experiences of all employees at all levels.
Strategy Execution Model
[TBD]
.
Strategy execution system must possess the required overarching capability to integrate and align the vital strategic management and operations management processes needed for successful strategy execution. The execution system enables the organization to understand the fit between strategy and organizational capabilities, reward structure, internal support systems and culture.
System Tasks
Strategy execution system tasks comprise the thousands of decisions and actions taken every day by executive, middle and line managers, and employees acting according to information they may have, and their own self-interest as influenced by organizational culture, and constrained by organizational policies and procedures, and activities the organization undertakes in order to turn the implemented strategy into commercial success. These decisions and actions include the following decisions areas such as:
- Establishing Annual Objectives - These represent the basis for: allocating resources; providing primary mechanism for evaluating managers; the major instruments for monitoring progress towards achieving long-term objectives; establishing organizational, divisional and functiona/departmental priorities.
- Setting goals
- Prioritization of goals and objectives
- Developing (action) plans for the business
- Continuous allocation of resources - to perform selected organization actions (i.e., projects such as marketing campaigns, product development, strategic initiatives to develop assets, or individual development capability). Resource allocation as expressed in the budget needs to be linked to strategy
- Establishing the right incentives
- Managing initiatives and projects - Prioritize initiatives and projects to drive resource allocation; monitor and evaluate performance.
- Monitoring progress
- Evaluating performance and Change -
To enable effective interplay between strategic management and management of value creation and delivery processes strategy execution system provides an integrated model of strategy (strategy content) as a goals model with implementation and execution refinement and elaboration of the strategy-making goal model. Execution demands ownership at all levels of management and workers at customer touch points. People must commit to and own the process and actions to control effective execution.
Most organizations have management systems that support parts of a strategy management system, such as strategy planning, budgeting, HR planning, or performance reporting.These systems typically function as silos and lack the required capability of execution systems to integrate strategic management and operations management.
Emergent Strategy
Emergent strategy is undertaken by an organization that analyzes its environment constantly and implements its strategy simultaneously (Lynch, 2000; 26). Emergent strategy formulation process is a learning process in which cycles of events are characterized as an ongoing process of experience, reflection, interpretation, and action (Kim, 1993; Kolb, 1976). The emergent approach to strategy formulation is characterized by trial, experimentation, and discussion, that is, by a series of experimental approaches rather than a final objective.
Emergent Strategy Decisions and Actions
Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. The company's strategy may also emerge from the day-to-day decisions and actions in following areas:
- Diversify the company's revenue base; enter new business and/or industries.
- Extend geographically to grow the business.
- Efforts to integrate forwards or backwards.
- Efforts to broaden/narrow the product/service lines, product quality, or modify customer service.
- Actions to capitalize on new opportunities i.e., new technology, product innovation, acquisition,new trade agreements in foreign markets.
- Defensive moves to counter the actions of competitors and defend against external threats.
- Actions to respond to changing industry conditions, i.e., shifting demand patterns, new airport regulations, entry of new competitors.
An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions. Emergent strategy implies that an organization is learning what works in practice. Emergent strategy is bottoms up, akin to strategic learning through feedback mechanisms to properly respond to and adapt to changes in the business environment in order to be profitable. Emergent strategy is more of a cumulative effect from bottom-up - the ground engineers, sales people, and other executive staff. These are daily tactical operations decisions made by those who are not in the position or state of mind to conceptualize such strategies. Emergent strategy is realized pattern that was not expressly intended or planned that emerged from execution. The emergent approach (also termed realized) states that the three (3) core areas are interrelated and the analysis is in advance of the other two. The different styles/approaches of strategy making complement each other. Emergent strategies rely on the organization's ability to learn from actual experiences of all employees at all levels.
Strategy Execution Model
[TBD]
- Feedback (Monitoring & Control) - Monitoring and Learning, Control, and Measurement/Metrics/Evaluation.
- Input (Strategising) - Strategy Formulation, Strategy, Strategic Planning, and Portfolio Analysis
- Structuring - Organizational Structure, Operating Structure
- Goal Setting - Focus/Direction, Purpose/Objectives, Goal break down - long-range goals, mid-range goals, and Operating Objectives
- Alignment - Adjustment/Adapt, Alignment
- S4Ps - Systems, Processes, Projects, Programs, Procedures, and Reward System
- HRM - Human Resources, Tasks, Clarity of Roles, and Performance
- Capacity Building - Capability, Capacity Building, Resource Allocation, and Supportive Budget
- Culture - Culture, Identity, and Commitment. The culture of the organization emerges from the values and beliefs shared by organization members, the company's approach to managing people, rooted behaviors, work practices, and ways of thinking.
- Leadership - Strategic Leadership, Innovation, Communication, and Coordination
- Output - Achieved Objectives
- External Environment - []
.
Evaluation and Control
Performance Evaluation entails the process of evaluating the performance of a strategy, reviewing new developments and initiating corrective action to make adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas, and new opportunities. Strategy evaluation involves the assessment of performance measures collected through monitoring of projects and programs to determine the effectiveness of a strategy in meeting strategic objectives.
Evaluation is about being open to continuing feedback and adjusting your program(s) accordingly. Strategic evaluation can help to assess whether the decisions match the intended strategy requirements. The three main types of evaluation methods are goal based, process based and outcomes based. Goal based evaluations measure if objectives have been achieved. Process based evaluations analyze strengths and weaknesses.
Strategic control involve actions that may include performance measurements, monitoring, consistent review of internal and external issues and factors, and making corrective actions when necessary.
Performance Measurement System
Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function. To evaluate performance, firms' need to establish a set of "desired" outcomes as well as the metrics they will use to monitor how well their organizations delivered against those outcomes. Those outcomes may include: achieving certain levels of productivity, revenues, profits, market share, market penetration, customer satisfaction, etc.
Review Process
The review process relies on a system of measures such as provided by the Balanced Scorecard of metrics to guide review decisions. The review process may be formal periodic reviews or informal, however it is the style and openness of the review process that makes all the difference whether the organization will:
The review meeting can be a control tool as well as problem-solving session where the organization examines what it has learned since the last review, with data (the metrics), that serves as a basis for ongoing adjustments for even better performance. These adjustments are in the form of how resources should be allocated, and how people in the organization will use their time. Determine your progress by measuring the actual results versus the plan.
Monitoring
Monitoring internal and external factors to identify issues will also enable you to react to any substantial change in your business environment. Effective and ongoing monitoring provide organizations early signal that a strategy and/or plan (strategic, tactical/action, and operational) are failing. Monitoring of plans, activities, and results provide information for future action.
Monitoring Premises and Assumptions
These are planning premises and assumptions established early on in the strategic planning process and act as a basis for formulating strategies. The premise control app has been designed to check systematically and continuously whether or not the premises set during the planning and implementation processes are still valid. It involves the checking of environmental conditions. Premises are primarily concerned with two types of factors:
Monitoring Strategic Thrusts and Milestones
Monitoring strategic thrusts and milestones provide an additional source of feed forward information. Implementation control is designed to assess whether the overall strategy should be changed in light of unfolding events and results associated with incremental steps, and actions that implement the overall strategy.
Strategic Surveillance
Monitoring a broad range of events inside and outside the company that are likely to threaten the course of the firm’s strategy is necessary to safeguard the established strategy in a continuous way.
Management Corrective Actions
Managers can use the scorecard information to control organization performance in the following ways:
This involves assessing a firm's effectiveness which may happen at the end and beginning of the planning cycle since the information provided is the input needed for the next cycle.
Performance Evaluation entails the process of evaluating the performance of a strategy, reviewing new developments and initiating corrective action to make adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas, and new opportunities. Strategy evaluation involves the assessment of performance measures collected through monitoring of projects and programs to determine the effectiveness of a strategy in meeting strategic objectives.
Evaluation is about being open to continuing feedback and adjusting your program(s) accordingly. Strategic evaluation can help to assess whether the decisions match the intended strategy requirements. The three main types of evaluation methods are goal based, process based and outcomes based. Goal based evaluations measure if objectives have been achieved. Process based evaluations analyze strengths and weaknesses.
Strategic control involve actions that may include performance measurements, monitoring, consistent review of internal and external issues and factors, and making corrective actions when necessary.
Performance Measurement System
Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function. To evaluate performance, firms' need to establish a set of "desired" outcomes as well as the metrics they will use to monitor how well their organizations delivered against those outcomes. Those outcomes may include: achieving certain levels of productivity, revenues, profits, market share, market penetration, customer satisfaction, etc.
Review Process
The review process relies on a system of measures such as provided by the Balanced Scorecard of metrics to guide review decisions. The review process may be formal periodic reviews or informal, however it is the style and openness of the review process that makes all the difference whether the organization will:
- quickly seek effective course adjustments
- seek excuses or praise with little real direction change
- ignore much of the scorecard (system of measures)
The review meeting can be a control tool as well as problem-solving session where the organization examines what it has learned since the last review, with data (the metrics), that serves as a basis for ongoing adjustments for even better performance. These adjustments are in the form of how resources should be allocated, and how people in the organization will use their time. Determine your progress by measuring the actual results versus the plan.
Monitoring
Monitoring internal and external factors to identify issues will also enable you to react to any substantial change in your business environment. Effective and ongoing monitoring provide organizations early signal that a strategy and/or plan (strategic, tactical/action, and operational) are failing. Monitoring of plans, activities, and results provide information for future action.
Monitoring Premises and Assumptions
These are planning premises and assumptions established early on in the strategic planning process and act as a basis for formulating strategies. The premise control app has been designed to check systematically and continuously whether or not the premises set during the planning and implementation processes are still valid. It involves the checking of environmental conditions. Premises are primarily concerned with two types of factors:
- Environmental factors from PESTEL Analysis for example, inflation, technology, interest rates, regulation, and demographic/social changes.
- Industry factors from Five Forces Analysis and Industry Analysis for example, competitors, suppliers, substitutes, and barriers to entry.
Monitoring Strategic Thrusts and Milestones
Monitoring strategic thrusts and milestones provide an additional source of feed forward information. Implementation control is designed to assess whether the overall strategy should be changed in light of unfolding events and results associated with incremental steps, and actions that implement the overall strategy.
- Monitoring Strategic Thrusts (new or key strategic programs) is useful in enacting implementation controls focused on (1) Early agreement in the planning process on which thrusts are critical in the success of the strategy or of that thrust; (2) Use stop/go assessments linked to a series of meaningful thresholds (time, costs, research and development, success, etc.) associated with particular thrusts.
- Milestone Reviews - Milestones are significant points in the development of a program, such as points where large commitments of resources must be made.
Strategic Surveillance
Monitoring a broad range of events inside and outside the company that are likely to threaten the course of the firm’s strategy is necessary to safeguard the established strategy in a continuous way.
Management Corrective Actions
Managers can use the scorecard information to control organization performance in the following ways:
- Investigating on a regular basis what has been achieved, and what has not.
- Implementing corrective action where tasks are not achieved, or achieved on time.
- Checking that resources will be available when needed.
- Supervising, supporting and motivating the people of the organization to ensure tasks are undertaken.
- Adjusting the operational plan if there is a need.
- Reporting problems to superiors, e.g., directors, committee personnel, the Board members of the organization.
This involves assessing a firm's effectiveness which may happen at the end and beginning of the planning cycle since the information provided is the input needed for the next cycle.
Setting Strategic Goals
The purpose of setting strategic goals is to define the organization's strategic direction in terms of desired outcomes the organization hopes/aims to accomplish. These goals convert managerial statements of business mission and company direction (strategic vision) into goals. There are several areas in which most organizations establish goals including: Market Share, Productivity, Profitability, Innovation, Resources, Management Performance, Employees Performance, and Social Responsibility. Strategic goals are set by and for top management and focus on the organization as a whole. Strategic goals are general statements of what needs to be accomplished to implement a strategy, and may include for example; growing faster than the industry average, overtaking key competitors on product quality, better customer service or increasing market share. Strategic goals define a place - destination or focus area - where the organization wants to be, and they are comprised of corporate level strategic goals, and business level strategic goals.
Performance Goals
These are statements of standards/targets set at which the organization will perform its process goals. These are the actual results the processes produce that affect the bottom line. E.g., not simply making sales calls but actually converting customers to buyers.
Benefits of Goals
Goals are critical to organizational effectiveness as they serve variety of different purposes. Organizations have a variety of different goals, all of which must be appropriately managed. Goals are important for the following reasons:
Objectives
Objectives are very precise, time-based, measurable actions that support the completion of a goal. Objectives are derived from goals, giving more specific ideas on how the organization will achieve its goals. Objectives typically must (1) be related directly to a goal; (2) be clear, concise, and understandable; (3) be stated in terms of results; (4) begin with an action verb; (5) specify a date for accomplishment; and (6) be measurable.
Measures
Measures are the actual metrics used to gauge performance on objectives. For example, the objective"improve financial performance" can be measured using a number of metrics, ranging from improvement in total sales, profitability, efficiencies, or stock prices. Without measurement, you cannot tell where you have been, where you are going now, or if you are heading in the direction you intended to go.
Setting Strategic Objectives
Strategic objectives are derived from strategic goals and serve as yardsticks for tracking the progress of performing the goals. The purpose of setting objectives is to convert managerial statements of business mission and company direction into specific performance targets, something the organization's progress can be measured by. Objective setting implies challenge, establishing performance targets that require stretch and disciplined effort.
The objectives set must ideally embrace a time horizon that is both short-term and contributes to the long-term. Short-term objectives spell out the immediate improvements and outcomes desired by management. These measures make it explicit that management not only must deliver good financial performance but also must deliver on strengthening the organization's long-term business and competitive positions.
An Operative goal model is a layered hierarchy of goals with strategic goals at the top; tactical goals, created and cascaded beginning from the strategic goals to functional areas/departments, it the next layer; and operational goals in the bottom layer. The model allows the organization leadership to set goals reflecting the outcomes (results) they desire, set process goals (behavior) that establish the behaviors or strategies that will help the organization perform well and increase its changes of achieving the desired outcome goals.
The purpose of setting strategic goals is to define the organization's strategic direction in terms of desired outcomes the organization hopes/aims to accomplish. These goals convert managerial statements of business mission and company direction (strategic vision) into goals. There are several areas in which most organizations establish goals including: Market Share, Productivity, Profitability, Innovation, Resources, Management Performance, Employees Performance, and Social Responsibility. Strategic goals are set by and for top management and focus on the organization as a whole. Strategic goals are general statements of what needs to be accomplished to implement a strategy, and may include for example; growing faster than the industry average, overtaking key competitors on product quality, better customer service or increasing market share. Strategic goals define a place - destination or focus area - where the organization wants to be, and they are comprised of corporate level strategic goals, and business level strategic goals.
Performance Goals
These are statements of standards/targets set at which the organization will perform its process goals. These are the actual results the processes produce that affect the bottom line. E.g., not simply making sales calls but actually converting customers to buyers.
Benefits of Goals
Goals are critical to organizational effectiveness as they serve variety of different purposes. Organizations have a variety of different goals, all of which must be appropriately managed. Goals are important for the following reasons:
- Goals provide guidance and direction for action - They show employees where the organization is going and why getting it is important.
- Goals direct and channels employee efforts
- Goals justify a company's activities
- Goals identify development opportunities
- Goals define performance standards - These act as mechanism for control and evaluation; performance can be measured and evaluated in the future in terms of how today's goals are being accomplished.
- Goals provide a basis for allocating resources
- Goals define standards of performance
- Goals provide constraints and parameters
- Goals provide incentives and a source of motivation - Goals should be specific and moderately difficult to inspire people to work harder; especially, if attaining the goal is going to result in a reward. There should be an appropriate reward system in place.
Objectives
Objectives are very precise, time-based, measurable actions that support the completion of a goal. Objectives are derived from goals, giving more specific ideas on how the organization will achieve its goals. Objectives typically must (1) be related directly to a goal; (2) be clear, concise, and understandable; (3) be stated in terms of results; (4) begin with an action verb; (5) specify a date for accomplishment; and (6) be measurable.
Measures
Measures are the actual metrics used to gauge performance on objectives. For example, the objective"improve financial performance" can be measured using a number of metrics, ranging from improvement in total sales, profitability, efficiencies, or stock prices. Without measurement, you cannot tell where you have been, where you are going now, or if you are heading in the direction you intended to go.
Setting Strategic Objectives
Strategic objectives are derived from strategic goals and serve as yardsticks for tracking the progress of performing the goals. The purpose of setting objectives is to convert managerial statements of business mission and company direction into specific performance targets, something the organization's progress can be measured by. Objective setting implies challenge, establishing performance targets that require stretch and disciplined effort.
The objectives set must ideally embrace a time horizon that is both short-term and contributes to the long-term. Short-term objectives spell out the immediate improvements and outcomes desired by management. These measures make it explicit that management not only must deliver good financial performance but also must deliver on strengthening the organization's long-term business and competitive positions.
An Operative goal model is a layered hierarchy of goals with strategic goals at the top; tactical goals, created and cascaded beginning from the strategic goals to functional areas/departments, it the next layer; and operational goals in the bottom layer. The model allows the organization leadership to set goals reflecting the outcomes (results) they desire, set process goals (behavior) that establish the behaviors or strategies that will help the organization perform well and increase its changes of achieving the desired outcome goals.
Copyright Enterprise Design Labs 2005 - 2018