Most organisations have a strategy, but most fail to achieve the strategic changes they hope for. In this feature we look at the components of an effective strategic management process - and find that it comprises just four steps.
You definitely have a strategy - but is it any good?
A strategy describes the path the leadership of an organisation want it to follow so that over time it becomes better at meeting the expectations of its stakeholders. For commercial organisations this may reflect a desire to improve the returns it provides to shareholders, for a public organistion it may reflect political priorities, for an NGO it might reflect the needs of key beneficiaries and / or funders. Having such goals is in the nature of leadership, and so it is unsurprising that most organisations report having a strategy. What is less encouraging is that it has been known for many years that the majority of organisations fail fully to achieve their strategic goals.
To address these weaknesses in strategy execution, about five years ago 2GC introduced its ACME strategy implementation framework - a robust and effective approach based on solid practical and academic foundations. This approach outlines a simple five element process to ensuring effective strategy implementation.
Recently 2GC was asked to contribute to a new paper that extended this thinking to consider what steps constitute an effective strategic management process - one that includes both the development and implementation of a strategy. In this work we identify four elements that are critical components of any strategic management process - you certainly can define more steps (but probably do not need to), but leave one of these elements out and your strategic management process will be ineffective.
Strategic Management: the four key elements
It is important to differentiate between a good strategy and a good strategic management process. Management literature is full of examples of what academics consider to be good strategies, but it rarely makes sense to blindly copy what another organisation has done simply because it appeared to work for them ("cargo culting" in the jargon). Our recent paper identified these four key elements that are essential to success:
- a clear description of the stakeholder expectations being pursued - even simple organisations have multiple stakeholders - including those who provide the assets the organisation uses, those who benefit from the activities of the organisation, and those who work within it. It is the role of leaders in the organisation to identify the expectations of the organisation's stakeholders and reconcile them: it will not always be possible to satisfy all of them all of the time, and where compromises need to be made these compromises need to be identified and agreed as part of the process of determining the organisation's strategic destination. A good strategic management process goes beyond this to ensure that stakeholders are actively engaged in the process by which multiple conflicting expectations are reconciled, and a common time-frame for satisfying these expectations is agreed; 2GC's ERIC framework is helpful for this purpose.
- a strong analyical foundation for strategic goal selection - in universities strategy is often presented as simply the results obtained from a list of strategy analysis tools and gambits, and as this and other articles on this site highlight, there is much more to it than that. However since there are typically many possible ways in which a desired strategic outcome can be achieved, these tools are nonetheless valuable - providing the organisation's leadership with methods that can inform them on the merits of the different strategic paths open to them - allowing them to make sensible choices about how their organisation can go about reaching its strategic destination. By starting with a clear view of the organisation's destination, leaders can ask better strategic questions of their analytical tools and better interpret the answers they give.
- a well understood, robust internal strategic planning process - the first two elements are useful only if they are applied properly within the organisation. Although the leadership team sets the overall direction for the organisation and is ultimately responsible to stakeholders for the performance of their organisation - the strategy is only going to succeed if it is effectively communicated and integrated into the goals and processes of the organisation as a whole - something usually achieved by the organisation's strategic planning process. The process needs to dovetail with the organisation's operational and financial control proceses, and be reflected in the performance goals agreed with units, teams and individuals within the organisation. In our consulting work, 2GC routinely finds that the connections between these key internal processes is poor, and a cause of internal dissonance, where the goals and priorities of one process are in direct conflict with those of another - which can have unintended negative consequences. Fixing these issues is not hard usually, but does require deliberate authority and resource allocation from the leadership team and can take time: to be effective a strategic planning process needs to be a core process of the organisation, not something bolted on as and when needed.
- a formal approach to managing the implementation of the strategy - although this may sound self-evident, it is surprising how poorly strategy implementation is managed. In the 2018 2GC Balance Scorecard Usage survey results, over a quarter of the organisations participating failed to review the progress of their strategy implementation activities often enough to provide good control; a surprise among organisations that had invested in a specific strategy implementation tool. As noted earlier, 2GC's ACME framework represents a clear best-practice approach to managing strategy implementation - and is a good comparison point for deciding how effective the methods used in your own organisation are.
To find out more
This site has many resources you can access that provide further insights into effective strategy execution and implementation activities. Browse the resources section, or use our search feature to find specific materials to meet your needs - the choice is wide, and good places to start are either the new Explainers section, or a search for strategy implementation.
If you have any questions on anything raised in this article, please let us know: we will be happy to answer any questions you have. The best way to reach us is via our contact page or via social media (details of our accounts on the contact page)