Every organization seeking long-term growth will, at some point, need to develop strategies. As Marjorie Cooper explains in her article “Traditional Strategy Models and Theory of Constraints”, a strategy, in the traditional sense, is the method an organization chooses to achieve its set goals. However, the development of strategies and tactics by itself does not guarantee success. In many organizations, strategies suffer from poor planning and execution, preventing them from developing their full potential, or even from having any effect at all. This blog post aims to show some of the most common mistakes and explains how to avoid them.
It goes without saying that strategies are in need of robust planning, yet this aspect is often not given due attention. Many managers consider it to be tedious and overly theoretical, but studies have shown that careful strategic planning leads to superior performance. A good plan forms a solid base for all subsequent steps, ensuring that the strategy actually leads to the desired goal, from creation through implementation to progress monitoring. This begins with a detailed analysis of the initial situation.
A strategy is built on a number of assumptions – about the organization and its strengths, about customer needs and about the marketplace. It seems obvious that if these assumptions are incorrect, the strategy has little chance of success. This is why a thorough analysis of the organization’s competencies and its environment must be the first step of all strategic planning. Known models such as the SWOT analysis can point out which aspects to consider.
It doesn’t end here. A good analysis also takes into account the numerous interdependencies and cause-and-effect relationships in a system. A change in one part of the business will often have repercussions in other areas. That’s why it is important to study undesirable effects and “what if” scenarios, in order to avoid unpleasant surprises further down the line.
Turning this data into a plan
The next crucial step is the successful synthesis of the gathered data into an actual strategy. Having a lot of information is not much use unless you can turn it into an effective strategic plan. At this point, you will need a robust thinking process.
The three questions:
- What to change?
- What to change to?
- How to cause the change?
constitute the necessary framework allowing you to build on the current reality (which you now fully understand, thanks to your thorough analysis) to work out the desired future reality (your goal), as well as the way to get there (your strategies and tactics).
Having established a solid strategic plan, you can move onto the practical aspect: your strategy needs execution, as it will have little effect just on paper. At this stage, many strategic plans lose their momentum: management feels pleased with itself for having come up with a plan, but forgets that it needs to be put into action. This is where the real work begins!
A healthy and robust strategic implementation should comprise the following aspects:
1. All areas of the business must be involved in the strategy. Regulations and procedures must be adjusted to ensure there are no local targets that may obstruct or even damage the strategy.
2. In the same vein, all local metrics and performance assessments must be aligned with the business strategies.
3. All communication within the organization promotes cooperation across all areas in order to strive towards the common goal.
4. Priorities at all levels and across all departments are set in accordance with the business strategies. Adequate mechanisms are put in place to ensure these priorities are followed.
5. Ongoing analysis and internal feedback loops are put in place to keep the business on course, or to adjust the course where necessary.
In the next post, you will learn in more detail what you need to consider during implementation, and how to avoid or eliminate potential pitfalls. Part 2 will be online available here on March, 11th.
Source: Marjorie J. Cooper, “Traditional Strategy Models and Theory of Constraints” in Cox III, James F., und Schleier Jr., John G., Hgg. Theory of Constraints Handbook. New York: The McGraw-Hill Companies Inc., 2010. p. 501-514