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Developing Strategy

AUTHOR

Michelle Elliot

PUBLISHED

31st October 2019

FILED UNDER

It has been said that in strategy everything is simple but nothing is easy. At times of economic turbulence, environmental uncertainty and growing complexity, the question of how organisations can best set their direction for the future certainly remains an enduring subject of debate and interest.

Action Plan

1. Understand the current position

Start with an assessment of the organisation’s current position. This involves looking at recent performance and position in the marketplace.

Questions to ask include:
• What is our vision and how well placed are we to deliver it?
• How is the organisation performing?
• What is going well and what is not going so well?
• What is our market share?
• How are we placed in relation to our competitors?
• How do our customers see us?
• Are we on an upward or a downward curve? Try to form a balanced view of the organisation, so not just the rosy side. Don’t make assumptions – seek evidence so that decisions and future plans are based on reality.

2. Reflect on how you got there 

Based on analysis of the current position consider the reasons behind successes and also failures. Are these a result of market forces, for example, or are they the result of internal strengths or weaknesses?

Questions to ask included:
• What did you do right (wrong) to get there?
• What have we done well (or badly)?
• Were we in the right place at the right time?
• What was a consequence of market circumstances?
• What was a result of good planning, bad planning, or maybe lack of planning?

3. Be clear about your corporate identity (mission, vision and values)

Revisit any existing statements of the organisation’s mission – its purpose and what it exists for, its vision – what it aspires to achieve and its values – the manner in which it believes it should do business. Are these still appropriate and valid? Consider whether your perspective needs to broaden in order to take advantage of fresh opportunities or be narrowed to maintain focus and effectiveness.

Try to gain a clear sense of identity by asking questions such as:
• What kind of organisation are we?
• Does our vision indicate what we need to focus on?
• What kind of values do we have?
• Are we living them out or have we lost track of them?
• Peoples strengths (or weaknesses)?
• What kind of leadership do we have?
• Is there a level of morale?

4. Analyse your strengths and weaknesses

SWOT analysis, which focuses on assessing organisational strengths and weaknesses, as well as threats and opportunities, is a popular tool which can help to focus attention on an organisation’s capabilities and identify factors which could limit its achievements. For more information look at our checklist on SWOT analysis’. A review of the strengths and weaknesses of the current portfolio of products and/or services offered by the organisation should also be included. The Boston Matrix provides a framework for assessing the current and potential performance of products or services and can therefore help to guide decisions on which are worth investing in for the future.

5. Analyse the business environment

The PEST analysis tool which is used by many organisations to help them get an overview of the current and future business environment in which they are operating, traditionally focused on political, economic, social and also technological factors. A number of variants such as PESTLE and PEST-C have evolved to include additional factors such as legal, environmental and cultural.

Questions to ask include:
• What are the major trends likely to affect our business?
• What new technologies are available?
• How are customer needs and attitudes changing and evolving?

Pay particular attention to identifying the driving forces in your sector. These are the major underlying causes of changing competitive conditions. The most common of these are:
• Changes in long term industry growth rates
• Increasing globalisation product innovation
• The strength and number of existing and emerging competitors.
• Entry or exit of major firms in the sector.
Porter’s Five Forces is a tool which can help assess the factors affecting the competitive position of an organisation.

6. Identify and evaluate strategic options

A clear understanding of the current position should generate insights which will help the organisation to identify the most promising strategic choices for the organisation. Factors to be considered include:
• How performance can be improved
• Changes or adjustments needed
• Whether the situation calls for a widening or narrowing of focus
• Whether it is feasible to expand into new markets
• Which market areas offer the best chances of success
• Whether existing products and services can be improved or updated
• When new products and services need to be introduced
• What scope there is for innovation in processes                                                                                                                                               • How the competition can best be tackled
• What organisation development initiatives may be needed.

When evaluating strategic options, consider the conditions which must be true for the strategy to be successful and identify barriers to success. In some cases it may be possible to conduct tests to gauge the likelihood of specific scenarios, but bear in mind that the future is never certain. In recent years there has been a growing emphasis on the benefits of combining the results of rational analysis with the experience and also intuition of strategic leaders. It is important for organisational strategies to take account of identified weaknesses and to provide a framework for addressing them, as well as capitalising on organisational strengths.

For each option, consider the investment and resources which will be required and also their availability. This should include:
• People skills which will need to be developed or maybe brought in
• Equipment and technology infrastructure
• Production and distribution capacity.
Time-frames should also be discussed. These vary hugely from sector to sector. For example, Internet businesses are evolving fast, but companies in the energy sector need to take a much longer term view. Although it takes time to change thinking and shift resources, in general, tighter time frames are being set for targets than in the past.

7. Set objectives

Once the strategic direction has been agreed, it is vital to translate this into specific objectives. These need to be firm without being so rigid that any modifications will result in failure. Objectives should therefore be set by considering how the strategy is to be realised and what, in measurable terms, needs to happen if it is to be successful.
Cover the following aspects:
• Profitability and return on investment
• Market share and market needs
• Product/service quality and customer service
• Changes needed to organisational processes, activities and culture social responsibility
• People participation and commitment

8. Communicate the strategy

Communicate details of the thinking which is emerging throughout the organisation. This will involve clearly documenting strategic decisions and adjustments as they are made. All employees, and especially managers, need to be fully aware of organisational strategy and to understand how their own job roles contribute to the achievement of organisational objectives. Widespread consultation and feedback will help to gain commitment, but will also facilitate the gathering of additional information on threats and opportunities from those who work on the front line.

9. Implement the strategy

In recent years there has been a growing awareness that it is one thing to formulate a strategy but another to implement it. Unless the practical implications are worked out and acted on, the strategy will be no more than a statement of hopes and aspirations for the future. Outline a clear route map with time frames and staging posts. To achieve objectives, everyone in the organisation should have a clear understanding of what needs doing, when, and by whom. Depending on the size of the organisation, the implications of the strategy for business and operational plans, marketing plans, financial plans and budgets, project plans and personal development plans need to be clarified.

10. Review progress

Finally, the end point of strategic action is a combination of products and services, employees, customers and technologies that produce results. The one constant is the need to stay close to the market – that continuing measurement of progress against objectives, continuing assessment of the market and business environment or the needs and requirements of stakeholders, and continuing adjustment to changing circumstances to take advantage of changing technologies and explore new opportunities as they become apparent.

Download the Manager’s Quick Guide to learn more.