If I were to ask you, “What is strategic management?” you would probably have an answer. We all know a basic definition of this term.
Strategic management is, of course, the collection of goals, objectives, strategies and tactics that organizations use to coordinate and align resources and actions with the mission, values and vision of the company.
In fact, don’t trust my definition. We can easily come up with a definitive answer by referring to the Business Dictionary, which defines the term strategic management as the following:
The systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities.
So it is pretty safe to say that we know what strategic management is – in principal. However, the problem comes when we try to figure out just how to take that information and turn it into awesome strategies that really lead to the results we want.
Understanding the basics of strategic management and planning is a critical first step to the success of most organizations. However, it, on its own, is not enough. You also need to know how to create a strategy and, perhaps most importantly, how to execute that strategy.
For starters, let’s look at the difference between strategic planning and strategic management.
Strategic planning is the process of determining what we want and where we want to go. It is – as the name suggests – a plan that we create for success. In other words, it is the roadmap you create to guide you towards success.
Chances are, if you are reading this right now, you are familiar with this planning process. You have a strategic plan or are in the process of creating one. You’ve got this part.
However, where businesses seem to have problems is moving on from the planning stage into the strategic management stage.
If planning is the roadmap, then strategic management is the vehicle you take to navigate that map. Without the map, you will probably get lost along the way. However, without the vehicle, you will never go anywhere.
You cannot have one without the other, yet businesses try to skip the strategic management step all the time. That is why people have been saying for 30 years that 90% of plans businesses create fail because of a lack of execution. And while recent experts have been suggesting that things are getting better, it is still clear that the majority of strategies are failing because they aren’t being executed.
There you go. I could literally stop this post right here and have accomplished what I set out to do: if you want to know how to use strategic management to make your business awesome, the answer is very simple: just execute the plans you are creating.
Perhaps. But it is obviously much harder than it sounds on paper – otherwise more people would be doing it and finding success. Thus, if I really want to help you, I should probably keep going.
I once read a great article from consulting firm, Gilmore & Associates Inc., in which they analyzed 12 reasons they saw such a high failure rate in strategic plans. Just to give you an idea, here are some of the biggies in my mind:
When you made your plan, you probably had set reasons for creating said plan. You know what you want to accomplish. You hopefully know what levels of success you want to see from this initiative.
For example, if your plan is to increase sales by 25% over the next two years, then you know what you want (more sales), when you want it (over the course of the next two years), and how you define success (seeing a rise of at least 25%.)
That is the easy part. However, where problems occur is setting the metrics and goal marks that will lead you to that result.
If one and a half years from now you haven’t gotten to a 10% increase in sales, then it is likely you will not get the rest of the way in the next half year. That’s pretty easy to see.
That is why execution of strategic management not only focuses on that ultimate goal, but on the small goals that will get us to that big marker.
When you create a plan, consider setting out smaller, measurable points throughout the process. Then, analyze those results on a consistent schedule. This will make sure that you keep yourself on the path to success and, if you do fall off that path, it will allow you to quickly recover before it is too late.
Another reason it is hard to execute on strategic plans is because we make them too vague. Strategic plan: to become the best in the biz.
Big dreams are great. Have them. But when it comes to creating a plan to success, make your goals more actionable.
How will you determine if you have achieved your goal of ‘becoming the best’? Does that mean your SEO rankings are higher than all of your competitors? Your sales numbers are doubling the competition? When surveyed about your industry, that your potential customers always think of your name first?
When you are creating your plan, make sure that you narrow down your focus to the specifics. Every goal should state at least the following:
Looking at the sales example from above, let us see how this plays out.
The clearer the focus – on both the goals and the metrics used to measure the success of those goals – the easier it is to execute, and that ease of execution makes the strategic management process much easier.
It is easy to tunnel down into your day to day activities and forget about the rest of the team. Business silos are epidemic. In fact, it is so prevalent, that ‘silo mentality’ actually became a phrase with its own definition.
Yet, how can marketing survive without the valuable insights they can glean from sales? And how can sales sell if they don’t fully understand the product the engineers, creators and laborers are making?
Every department effects and relies on every other department. That is why a lack of collaboration leads to multiple, unaligned strategic plans, which are harder to execute and harder to find success with even upon execution.
In order to avoid this, you should do two main things:
The next reason so many plans fail is because there is no accountability. Yes, you have a plan. Great. How will it be accomplished?
Make sure you assign specific actions and tasks to individuals. Make sure everyone knows what they are supposed to be doing, how they are supposed to do it and even why it is important. Then, have a system in place to make sure it is being accomplished.
The final reason I am going to discuss today for improving your strategic management techniques revolves around knowing the difference between a plan and a process.
As Gilmore & Associates, Inc., puts it, “A strategic plan is not an end goal it is the beginning of a process or a cycle.”
In the end, what it boils down to is that strategic planning and management involves three processes:
Strategic planning requires company leaders to analyze the strategic goals against the internal and external operations of the company.
Leaders also have the heavy burden of making strategic decisions in the best interest of the company and to decide how to create a sustainable competitive advantage.
Once you have done all that analysis, it is time to really set out the next step of the strategic management process and figure out how exactly it will be executed.
This is where accountability comes so much into play. Here are a few things you need to do during this stage:
While this steps seems to be where so many people have the most problems with strategic management, if you have already done all of the above in the planning process, the execution portion becomes a lot easier.
Once decisions are made, though, the onus of implementing the strategy still falls to the leaders. It is up to leadership to ensure actions are taken to execute the strategic plan, and a culture of individual accountability has to be in place in order to ensure success in the middle to lower levels of the organization.
Where many organizations go wrong is that they assume once the plan is in place and strategies and tactics have been assigned, everyone in the organization will naturally fulfill their commitments in a timely fashion. Often, day-to-day fires get in the way of short- and long-term plan execution, and strategies and tactics don’t get implemented timely – if at all.
The net result is that the organization fails to achieve its strategic goals and objectives.
That is why, once you have made the detailed plan, you need to follow-though on it.
A plan is nothing if it is not executed. So once you have that roadmap, make sure you get in the driver’s seat and follow the map to success you just created for yourself – this is the strategic management portion that gets to be so tricky.
The AchieveIt Execution Management Platform can help. It gives you a bird’s eye view of your plan and its status in real-time. Not only does it keep people accountable by letting you assign every task to the individual in charge and then requiring updates at the frequency you desire, but it quickly compiles the metrics you are tracking and uses dashboard technology to show you exactly where you are on the path towards achieving your strategic management initiatives.