Businesses could perform better by managing more strategically. The emphasis here, when discussing strategy, should be on managing, and not just on planning. Many companies limit their strategic thinking to their planning cycle. Strategic planning is certainly important, but it is only one part of an overall strategic management process. An effective strategic management process just simply leads to sustained growth and profitability. The purpose of this brief article is to explore one of the key success factors that can make a real difference in performance when implementing a strategic management process. That is, a company will be more successful if it gets all stages of the process working, even if imperfectly.
The structure of a strategic management process can be described as having four major stages:
Definition Stage, which culminates in a defined market strategy.
Translation Stage, which deals with business philosophy.
Building Stage, which has the goal of designing effective performance measurement.
Operating Stage, which sets up an environment for continuous improvement.
In order to get all stages of the process in place, at least to some degree, companies may need to think more broadly, and focus less on perfecting any individual stages in the process. Many companies may find this difficult. Many companies seem to have a tendency to focus on the technical, rather than think broadly about the conceptual. In many cases, that natural tendency may be the correct one. However, when dealing with a strategic management process, it is often the wrong one. The effectiveness of a strategic management process comes from implementing the overall process. Improvements to individual stages can be done after the overall process is implemented.
To understand the need to have all stages of the process working, one needs only to consider the impact on performance if a stage is missing. Two stages that are often missing at companies are the second, or Translation, stage and the fourth, or Operating, stage. Let us consider each of them in a little more depth.
The Translation Stage
Oddly enough, many companies, even companies that do a good job on the first, or Definition, stage, miss the Translation Stage entirely. Those companies may have developed an effective market strategy during the first stage of the process, but they fail to translate it into what it means for their relevant stakeholders, such as customers, suppliers, shareholders, and employees. Consider a company that may have defined an unique, effective, competitive market position, but they have not aligned the way their sales force are approaching customers with that market strategy. In essence, the company is keeping its market strategy a secret from its personnel who are in the market every day. In order to be effective, a market strategy must be well understood and accepted by all stakeholders, and that is accomplished during the Translation Stage.
The Operating Stage
The purpose of the Operating Stage is to create a continuous improvement environment that enhances the overall business strategy of a company and provides feedback to the other stages of the strategic management process. Few companies have implemented a continuous improvement program, and in those cases where they have, it is rarely connected to their strategic management processes. Business strategies become more effective when they are refined and strengthened over time through continuous analysis and development of insights. That is accomplished in the Operating Stage.
When all stages of a strategic management process are in place, even if imperfectly, the results achieved by companies can improve dramatically. Two stages that are often missing from the strategic management processes of many companies are the Translation Stage and the Operating Stage. When one considers the potential impact of these two stages on companies’ performance, it is surprising that there are many companies where they do not exist. For a more effective strategic management process, get all stages of the process working.