Strategic measures serve to realize strategic objectives on corporate level or business unit level. They may comprise actions, projects, programs, and initiatives. As such, they have a medium to long-term impact on the business. Often they go hand in hand with significant investments and thus, bear significant risks.
Hence, strategic measures should be based on a thorough decision process. In most cases, such a process is not part of day-to-day business activities. This follows the nature of strategy, which is long-term orientated. It raises the question when to develop strategic measures. More precisely: with which frequency and on which occasions should they be developed.
It is the old dilemma that, ideally, strategic planning should be a continuous process that is incorporated in the ongoing activities. However, all too often managers are too busy with their day-to-day duties and ad-hoc demands of their business. In most businesses there is an annual strategic planning cycle. So it can be tempting to postpone any thoughts about strategy until that occasion.
This article describes how it should be done, how it should not be done, and what could be done between these two extremes:
How strategic measures should not be developed
In most cases, the responsibility for developing strategic measures lies with the management at corporate level and strategic business unit level. These managers normally are more than busy with other tasks and duties, and not all of them are sufficiently experienced in strategic thinking. In the worst case, they do not dedicate much time to that aspect of their job, until they are forced to by some corporate strategic planning event.
Than they virtually sit down with a blank sheet of paper (or screen) and try to come up with some more or less groundbreaking ideas. With luck, there will be a gold nugget among their findings. But chances for that are fairly rare. It is more likely that strategic measures that are developed this way are in the nature of
- An update of last year’s strategy
- Marketing initiatives
- Investment proposals
- Old ideas with an updated and re-launched packaging
- Requests for additional resources
- More short-term oriented initiatives
How it could be done better
It is understandable that managers do not work on strategic plans continuously. Firstly, they have other things to do. Secondly, a strategy is a medium- to long-term thing and should not be changed every few weeks.
However, business drivers, internal and external conditions change continuously. A good manager keeps at least a mental list of strategic issues that come up over time. When it comes to preparation of the strategic planning meeting, he can take the time and come back to this compilation of unfinished thoughts and ideas. He can organize structure and prioritize them and evaluate the most promising (or most pressing) ideas in more detail.
Thus he has a good basis to think about the relevant issues that really drive his business. He is more likely to come up with strategic measures that are
- More long-term orientated
- Focused on the most relevant drivers of change
How strategic measures would be developed in an ideal world
From a strategic planning perspective, the ideal manager has incorporated a strategic mindset into his day-to-day activities. He continuously scans his internal and external environment for developments that could potentially impact the strategy of his area of responsibility. Every new event of piece of information is instantly evaluated in a strategic context:
- Is it something that could become important or not?
- Should we keep an eye on that trend for some time?
- Does it require immediate action?
- Is it worth to do (or have somebody do) a preliminary short analysis of its potential impact?
- Does it have an impact on any short-term business decisions?
- Are any decisions we had taken before still valid with this new knowledge?
Such considerations would implicitly be part of all day-to-day decisions and of discussions with colleagues, board members, and other business partners. Thus, the manager is able to incrementally adjust his businesses strategy as part of his regular business routine.
The result is what Mintzberg calls ’emergent strategy’: the overall strategy is still valid and unchanged. It is not intended to be changed unless it is really unavoidable. There are, however, smaller adjustments. Some aspects are abandoned since they don’t fit the expected medium- to long-term development any more. Other new aspects are incorporated to the strategy. Hence, minor strategic measures are developed all the time, as the need for them arises.
When it comes to the strategic planning meeting, such a manager is well equipped with a good overview of his businesses situation, potential development, drivers of change, and potential disruptions. On this basis he can take the time for some thoughts about the businesses long-term strategic direction. He is not distracted by minor short-term strategy adjustments or investment proposals that could be labeled as strategy. This is the time to evaluate the overall strategic foundation of the business. This is also a good occasion to develop some scenarios.
- Are we still in the right business?
- Will the way we are doing things right now still be the right way in three to five years?
- Will our value proposition still meet customers’ expectations within this timeframe?
- Should we dedicate some resources to explore some vague future developments in more detail?
- Is there any potential disruption for our industry on the way and what could we do to prepare for it?
The strategic measures that are developed that way are likely to be
- Much smaller in numbers
- Medium- to long-term orientated
- Related to long-term trends and developments
- Potentially leading to significant investments and changes in the businesses activities
Hence, these decisions may have an enormous impact on the future performance of the business. Thus they also bear higher risks if they are taken wrongly.
What businesses can do to improve the development of strategic measures
Not every manager is born as a brilliant strategist and not all managers will become one, even with the best training. Nevertheless, companies can help managers to do better with this aspect of their job.
First, they can send managers to various trainings and management education courses like an MBA. This will improve the basis of theoretical knowledge about strategic planning. It will, however, not be enough to enable managers to take good strategic decisions in practice. This would require a good deal of practical exercise and experience. To gain this experience takes time. Hence, companies should think long-term and strategically on this process of personnel development. They should give managers some time to improve their strategic skills and learn from others.
Companies can support this process in various ways:
- Establish a sort of mentoring system in which managers with experience in strategic planning help those less experienced
- Encourage knowledge and best practice transfer in ways that best fit the corporate culture
- Circulate some ‘Lessons learned’ after each strategic planning cycle.
Another helpful approach is to have at least one person or a small team in a ‘strategy department’. These people can support managers by
- Continuously scanning megatrends and industry-relevant trends
- On that basis providing managers with relevant, structured and partly analyzed information on drivers and trends
- Regularly discussing upcoming issues with managers in a strategic context – thus helping them to improve their strategic thinking
- Providing tools and processes for the strategic planning – without preventing any free thinking by forcing the process into too rigid structures
- Acting as a sparring partner for managers – questioning their analysis and strategic measures, finding weaknesses in their line of reasoning and helping to make it better
Strategic measures are not to be developed in a one-off exercise at a particular date every year. They are based on the businesses long-term vision as well as on a continuous scan of internal and external developments, driving forces and trends. Smaller strategic decisions that adjust an existing strategy but not change it entirely are taken more frequently. Significant, long-term orientated measures that will alter the businesses strategic direction are developed less often. Such measures should be based on a thorough strategic analysis, which is often undertaken at the occasion of an (annual) strategic planning meeting. Businesses are well advised to invest into that process by helping their managers to become better strategic planners.
By Dagmar Recklies