Strategy: Where to begin?

Strategy: Where to begin?

Strategy formulation is the selection of the best course of action in order to achieve the organization’s vision. Strategy formulation can also be thought of as a series of one to three-year goals. Strategy formulation defines how the organization is going to achieve its vision and direction, or how to close the gap between where it is now and where it wants to be. In other words, it identifies the correct road map to follow in order to arrive at the desired destination.

Once an organization has clarified where it is going in the future, it needs to clarify where it is now, in the present. Practitioners argue about the starting point in the business planning process. Some believe it is better to start with where you are now, and others believe it is better to start with where you want to be. We believe that it doesn’t make much difference because you have to do both. We prefer to analyse where an organization wants to be first, because it is better to deploy lateral creativity and imagination before restricting the organization to the reality of where it is now.

As Stewart Liff and Pamela A. Posey state in their book: Seeing is believing: How the new art of visual management can boost performance throughout your organization, Amacom (2004) p.47

From the early thinking about strategy in organizations to more recent concerns with building competitive advantage and developing learning organizations, leaders and managers have continued to focus their attention and resources on developing and clarifying why their organizations exist and what they are in business to do. No matter what the language used to describe and explain the latest strategic model or theory may be, good leaders understand that the best and most effective organizations have a clear strategic focus and have aligned their operating systems to best meet the goals of their strategies and the needs of their customers.

The SWOT analysis is a simple but very effective technique to help you assess where you are now in terms of the strengths and weaknesses the organization possesses in the internal environment, and the opportunities and threats it faces in the external environment. The word SWOT is an acronym for Strengths and Weaknesses in the internal environment and Opportunities and Threats in the external environment.

The SWOT analysis has two targets: to help you identify where you are now; and secondly, to prepare you to develop a strategy that will utilize your organization’s strengths, manage its weaknesses, take advantage of opportunities, and minimize the impact of those threats that become real. For some additional insights on how to develop the strategy and in particular leveraging competitive advantage, I refer you to my blog on Organisation Strategy, and our EBook on Business Planning.

If the organization is to perform, the people who have expectations or place demands on that system have to be satisfied. These people’s expectations may be different, even conflicting. For example, customer demands may differ from employee demands; shareholder demands may conflict with the demands of environmental groups, and so on. A system is required to identify, and give due weight to all the relevant stakeholders in the organization. Many organizations focus on one group of stakeholders at the expense of other groups.

Organizations are now arriving at the concept of total stakeholder satisfaction which is defined as satisfying the demands and expectations of all the stakeholders of a given organization or team.

To optimise the organization system there needs to be an emphasis on the rigorously measured demands and expectations of all stakeholders. Many individuals don’t achieve optimal results because they often don’t know who they are really working for, or what outputs or expectations are being placed on them by their stakeholders.

Without this understanding, it is impossible to perform according to stakeholder expectations. It is vital, therefore, to first and foremost identify these stakeholders. Once this has been done, the organization should find out what stakeholders expect, in the clearest measurable terms, so that these expectations can be met.

In fact, increasingly, the stakeholder approach reflects the practicalities of how to raise business performance. The importance of improving business relationships is the main lesson of supply chain management, total quality management, investor relations, employee relations and relationship marketing. The reciprocity and partnership which increasingly typifies contemporary business relationships is based partly on the more open communication now prevalent, which makes it difficult for companies to sustain the practice of upholding different messages and values for different audiences.

Thomas Clarke and Stewart Clegg, Changing Paradigms: The transformation of management knowledge for the 21st century, Harper Collins Business (1998) p.7 

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