The strategic management process is the steps that you’ll go through to figure out where you want to take your organization, how you’re going to get there and whether or not you’re succeeding. Even more so, the strategic management process is a blueprint for the culture you want to instil in your business.
There are tons of great articles on the web which describe the key elements of the strategic management process. Most of them agree that there are essentially 6 key elements:
- Define Your Vision
- Understand Your Environment
- Formulate Strategy
- Execute Strategy
- Analyze Progress
These 5 elements can actually be distilled even further to the following simple strategic management process:
Plan >> Manage >> Track.
The Strategic Management Process = Culture
Before we dive into the key elements of the strategic management process, let’s take a moment to reflect why we should bother implementing such a process at all. The answer to that question can be delivered in one word: culture.
We all know that having a plan is important. The implementation of a full strategic management process goes much further than the mere formulation of a strategic plan. The true benefits of the process come from the behavioural changes that you’ll drive throughout your organization. Behaviours including:
- Thoughtful, fact-informed planning
- Collaborative ideation
- Realistic but ambitious goal-setting
- Reflection on the reasons behind successes and failiures
To be effective in your implementation of a strategic management process, you also need to commit to certain core values in your organizational culture:
Transparency: You need to be willing to be open with your employees and colleagues. If people feel as though you’re only giving them half the story when it comes to the strategy or the results, it’s unlikely that they’ll fully embrace the new strategic management process.
Empowerment: You’ll also need to be willing to trust people to formulate and execute on their own parts of the strategy. Micro-managing every level of the strategic plan is going to be increasingly unworkable as your organization grows.
Collaboration: It sounds obvious, but your strategic management process can only succeed when coupled with a culture of collaboration and sharing. People need to be willing (and also have the tools) to share information efficiently and with clarity.
Phase 1: Plan
The first phase of the strategic management process is all about planning. Figuring out what you want to achieve and whether or not you have the capability to achieve it.
1.1 Define your vision
It all starts with a vision. The organizations who are the most successful are those who are able to clearly articulate what they’re trying to achieve. They’ll also stand almost dogmatically behind that vision throughout everything they do. We’ve written extensively on how to create your vision so check out that article for how to go about this. Briefly, the main reasons why defining your vision is so critical for the strategic management process are:
A) It gets all parties on the same page about what the organization is ultimately trying to achieve.
B) It helps to create an identity around your brand, product, people and customers.
C) It serves as the anchor-point to ‘sense check’ your actual deliverables against when you get to the strategy formulation stage (1.3).
There is a reason why defining your vision is the first thing you should do in your strategic management process. Every single step that follows should flow back to delivery of this vision. Your vision is what’s going to keep you honest and consistent as you move through the strategic management journey.
1.2 Understand your environment
Now that you’ve got a high level vision for your organization, it’s time for a quick reality check. You need to make sure that you have the capabilities to actually execute on that vision. One of the most famous ways of doing this, is through a SWOT Analysis. This technique forces you to go through an exercise which considers:
(S)trengths: What are you good at? What skills do you have as an organization? You should be looking to amplify these skills throughout your strategic management process.
(W)eaknesses: What aren’t you good at? Why have you failed in the past? You should be looking either to solve for these weaknesses or worst-case, avoid situations where they could hurt you.
(O)pportunities: What are the unique opportunities that you can exploit in the market? Which of the strengths that you’ve outlined give you an edge and how will utilize them? You should be looking to rapidly capitalize of these types of opportunities.
(T)hreats: What aspects are there in your environment that could hurt your ability to exploit opportunities? Are there are any macro or micro economic issues that you need to be aware of? You should be looking to mitigate for these threats wherever possible.
Generally speaking – understanding your strengths and weaknesses are internal exercises. Understanding your opportunities and threats involves looking outside of your organization – at things like the economic and political climate, competitors, market dynamics, etc.
Understanding your environment (internally and externally) is another critical prerequisite to strategy formulation. It might even cause you to revisit your vision to ensure that it’s realistically achievable.
1.3 Formulate strategy
Now that you have a clear vision, as well as a good understanding of your environment, you’re ready to move onto strategy formulation. This is where you craft a detailed plan about how you’re actually going to achieve your goals.
Strategy formulation is a huge topic in itself, and I strongly encourage you to down our free strategic planning 101 ebooks on the topic to learn more. Typically, a strategic plan will consist of a number of elements:
- A Vision – to articulate where you ultimately want to land.
- Values – to define how you’ll get to that vision on a human behavioral level.
- Focus Areas – to help you break your vision down into more tangible areas of activity.
- Organizational Goals – which sit under each focus area, and have specific targets and timeframes for what you want to achieve.
- Goals, Projects and KPIs – to state explicitly what you will work on, who will be responsible for it, how long will it take and how will you measure success.
More than any other phase of the strategic management process – strategy formulation is where you need to embrace the organizational values we talked about above. That means that you need to be 100% open with your team about your goals. You need to involve them in the goal-setting, and you need to work together to ensure everyone in the organization (not just senior management) is part of the process at the appropriate level.
By the end of the strategy formulate stage, you should have a clear and specific strategic plan covering at least the next 3 years of activity (if not longer) for your organization.
Phase 2: Manage
Now that you have a plan, it’s time to start the hard work of actually executing it. There’s only one stage in this phase, but it’s a big one…
2.1 Execute strategy
OK, so how do you go about actually delivering on the ambitious plan that you’ve created? There is of course no easy answer to that question, but there are a few things you can do that will make a huge difference to your success.
Ideally this should have been covered as the final part of creating your strategic plan, but it’s so important that I’m going to repeat it here. The biggest bane of any strategic management process is a lack of accountability. This is the situation where people throughout the organization all seem to generally agree with the strategic plan, but no-one really changes anything about their behaviors to make it happen.
The typical reasons for this include:
- The lack of a single named individual for ownership of goals, projects and KPIs. Teamwork is awesome, but by naming one clear ‘Goal Owner’ you avoid any confusion about who ultimately is responsible for delivering the different aspects of your strategic plan.
- Inconsistent reporting structures and processes. You need to implement regular meetings throughout the organization that focus specifically on the outcomes of the strategy. This includes reviewing the KPIs and project statuses regularly and in a consistent format throughout every level of the business.
- The lack of easy data availability. This is really more of an excuse that an issue in most cases, but nevertheless should be addressed. You need to give people a set of tools where they can access the KPI data (both lead and lag) that has been created to measure the success of the strategy.
- Linking reward to strategic success. How many times have you been at an organization where the ‘end of year review process’ involves a box-ticking exercise against a list of goals that you creating in some HR system, simply because you were told by your boss that you had to? There needs to be a clear linkage between the success of the organization’s strategy and the reward and recognition given to employees.
By tackling the four common issues around accountability above, you’ll be going a long way towards ensuring the success of your strategy.
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Phase 3: Track
Let’s fast-forward into the future. 3 years down the road, you’ve been executing your strategy for a while now, and you’re finally ready to start tracking and analyzing it…….
……which is 100% the wrong way to go about this part of the strategic management process.
Tracking your strategy needs to start on the same day which execution does. Not only that, but you need to have considered the mechanisms for how you’ll be tracking your strategy as far back as in phase 1! More specifically, you should already have a clear set of KPIs for each of your strategic focus areas. Let’s dive in…
3.1 Analyze progress
To be able to efficiency analyze the progress of your strategic plan, you need to do a number of things:
A) Implement KPIs
We’ve mentioned this a couple of times, and that’s because it’s absolutely critical. As part of your strategy formulation, you need to ensure that each of your strategic focus areas has at least 1 KPI against it. This will tell you whether or not you’re making progress against that part of your strategy. More specifically, you need to ensure that you have at least one lagging KPI for each focus area, mostly likely supported by a number of leading KPIs alongside. If you’re not 100% clear about the difference between leading and lagging KPIs, check out this article which we wrote recently on that very topic.
B) Automate Reporting
Once you’ve got your KPIs in place, it’s time to do whatever it takes to automate reporting against them. That means setting up live integrations between the data source (e.g. your CRM system) and your dashboard / tracking tool of choice (e.g. Cascade). Automating reporting against your KPIs is a critical part of the strategic management process as it forces your organization to be accountable for the results of your strategic efforts, and removes and king of excuse around the lack of availability of data.
C) Implement a Strategy Tracking Tool
Whilst we’re on the subject of tools, you should seriously considering implementing a platform that makes the tracking of your strategy as easy as possible. That tool should integrate seamlessly with your data sources and be available for as many people in the organization as possible to access. This is a #ShamelessPlug, but this is the very reason that we built our own platform Cascade – and I can hand-on-heart say that without Cascade, we wouldn’t have been able to grow our business as rapidly as we have done. There are other tools out there which can deliver the same thing, so whatever you do, don’t miss out on this critical step.
D) Apply Different Strategic Frameworks
Strategic frameworks such as the Balanced Scorecard and McKinsey’s Strategic Horizons can add value to your strategic management process in many different ways – both in terms of strategy formulation, execution and analysis. When it comes to analysis, it’s a great idea to overlay a tool such as McKinsey’s Strategic Horizons to your plan, to ensure that you have a healthy mix of short, medium and long-term goals in your strategy (and that you’re delivering successfully on each of them).
Of course, analyzing your strategic success if one thing, but actually doing something about any shortcomings is the real key to success, and that’s where the final stage of our strategic management process kicks in.
Right at the top of the page, you may remember that we had a graphic of the Plan > Manage > Track process that was actually a wheel. The reason why is simple – the strategic management process is never-ending. It’s a culture which defines your organization, rather than something which you do once and move on from. That means constant iteration, constant test-and-learn and constant frank assessments of what has gone well, what has not – and what needs to be changed.
Remember those regular strategy meetings that you setup in stage 2.1? They’re the perfect opportunity to make tweaks to elements of your plan that aren’t working out the way you’d hoped. That doesn’t mean making huge changes to your strategy every month. That would be a disaster and would seriously hurt the credibility of your strategic management process. Rather this is about making small micro-adjustments to keep your plan realistic and relevant. Tweaking a KPI here, adding a new project there, etc. We wrote an article around how exactly to iterate on your strategic plan – so check that out for more information on this stage.
Hopefully, you’ve found this guide to the strategic management process useful. If you remember only one thing from this article, it should be that Plan > Manage > Track is the best way to think about strategic management. In fact, it’s such a good framework that we built our entire strategy execution software platform around it. When you use Cascade, you’ll find the features neatly divided into these three key phases of the strategic management process. If you haven’t already given it a try, we have a great 14-day free trial available so that you can see if it fits your needs.
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