Crafting and executing strategy are the heart and soul of managing a business enterprise. But exactly what is involved in developing a strategy and executing it proficiently?
Strategy formulation is the process by which an organization chooses the most appropriate courses of action to achieve its defined goals. The managerial process of crafting and executing a company’s strategy is an ongoing, continuous process consisting of five integrated stages.
The first three stages of the strategic management process make up a strategic plan. A strategic plan maps out where a company is headed, establishes strategic and financial targets, and outlines the competitive moves and approaches to be used in achieving the desired business results.
A strategic vision describes “where we are going” - the course and direction management has charted and the company’s future. A strategic vision has little value to the organization unless it’s effectively communicated down the line to lower-level managers and employees.
An effectively communicated vision is a valuable management tool for enlisting the commitment of company personnel to engage in actions that move the company in the intended direction. A mission statement typically describes the present and purpose of an organization (“who we are, what we do, and why we are here”).
A mission statement that provides scant indication of “who we are and what we do” has no apparent value. A company’s values are the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company’s business and pursuing its strategic vision and mission.
At such values-driven companies, executives “walk the talk” and company personnel are held accountable for displaying the stated values. Objectives are an organization’s performance targets - the results management wants to achieve.
The balanced scorecard is a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.
Objective setting is thus a top-down process that must extend to the lowest organizational levels. And it means that each organizational unit must take care to set performance targets that support - rather than conflict with or negate - the achievement of companywide strategic and financial objectives.
In most companies, crafting strategy is a collaborative team effort that includes managers in various positions and at various organizational levels. Crafting strategy is rarely something only high-level executives do.
Crafting a full-fledged strategy involves four distinct types of strategic actions and initiatives, each undertaken at different levels of the organization and partially or wholly crafted by managers at different organizational levels. The larger and more diverse the operations of an enterprise, the more points of strategic initiative it will have and the more managers at different organizational levels will have a relevant strategy-making role.
The task of implementing and executing the strategy also necessitates an ongoing analysis of the efficiency and effectiveness of a company’s internal activities and a managerial awareness of new technological developments that might improve business processes. Successful organizations achieve operating excellence and execute strategy proficiently.
Strategy execution is about getting your strategy done - the successful implementation of a strategic plan. A company’s vision, objectives, strategy, and approach to strategy execution are never final; managing strategy is an ongoing process, not an every-now-and-then task.