Strategy Development: What It Is, Why Important, How to Develop, Evaluate, Advantages, Report and Much More...!
Abstract:
Strategy development is a process that helps organizations determine their direction and how to achieve their goals:
Analyze the environment: Consider both internal and external factors to understand the organization's position.
Define goals: Set measurable goals and objectives that are aligned with the organization's mission, vision, and values.
Create a plan: Develop a strategic roadmap that includes a plan for allocating resources and a way to mitigate risks.
Implement and monitor: Put the plan into action and track progress.
Communicate: Clearly communicate the plan and how it will be executed.
Engage stakeholders: Identify key stakeholders and develop strategies to communicate with them.
Some key questions to consider when developing a strategy include: What business are we in, Where do we want to be, How are we doing, What options are open to us, and What might hinder us from getting there.
Some tools that can help with strategy development include:
PEST Analysis: A tool that can help analyze the environment and identify where the organization has a strong position and where it may have issues
Porter's Diamond: A tool that can help analyze the environment
Porter's Five Forces: A tool that can help analyze the environment
RAID Log: A tool that can help manage risks by identifying them, analyzing their impact, and developing strategies to mitigate them
Keywords:
Strategy development, SWOT analysis, Organization performance, Evaluation, Vision, Mission, Core values
Learning Outcomes:
After undergoing this article you will be able to understand the following
1. What's Strategy Development?
2. Why strategies development is important?
3. Components of strategy development
4. Types of strategy development
5. Stages of strategic planning
6. Methods for strategy development
7. Steps of strategy development
8. Factors contributing to the success of a strategy
9. Strategy development advantages and disadvantages
10. Perfecting the strategy development process
11. Evaluation of strategy development
12. Strategy development evaluation criteria
13. Strategy development Reporting
14. Strategy development Budgeting
15. Conclusions
16. FAQs
References
1. What's Strategy Development?
Strategy development is the process of creating a plan to help an organization achieve its goals. It involves:
Researching: Identifying strategic options and assessing the organization's internal and external environment
Selecting: Choosing the most promising options
Allocating resources: Deciding how to distribute resources across the organization
Communicating: Clearly communicating and executing plans using defined goals and success metrics
Considering risks: Creating mitigation plans based on identified risks, scenarios, and trade-offs
Strategy development can help organizations stay competitive and successful by adjusting their direction in response to changing conditions.
2. Why strategies development is important?
Development strategies can be important for a number of reasons, including:
Focusing efforts: A development strategy can help you focus your efforts and determine how to get things done.
Taking advantage of opportunities: A development strategy can help you take advantage of emerging opportunities and resources.
Responding to challenges: A development strategy can help you respond effectively to barriers and resistance.
Using resources efficiently: A development strategy can help you use your time, energy, and resources more efficiently.
Upskilling your workforce: A development strategy can help upskill your workforce.
Improving productivity: A development strategy can help increase productivity.
Improving employee satisfaction: A development strategy can help improve employee satisfaction.
Increasing employee retention: A development strategy can help increase employee retention.
Enriching company culture: A development strategy can help enrich your company culture.
Strengthening feedback culture: A development strategy can help strengthen your feedback culture.
3. Components of strategy development
Some components of strategy development include:
Mission statement
A mission statement defines what your organization does, why it does it, and who it does it for.
SWOT analysis
A SWOT analysis is a tool that helps define a company's strengths, weaknesses, opportunities, and threats.
Objectives
Objectives are the intended result of an effort and are the foundation for tracking progress.
Action plan
A successful action plan is SMART: Specific, Measurable, Actionable, Relevant, and Timely.
Core values
Core values are the basis of a company's culture and help define its purpose.
Vision
A vision is a key component of a business strategy that helps define aspirations, core values, and the operating domain.
Key performance indicators (KPIs)
KPIs measure the success or failure of strategies and objectives by comparing target states to actual data over time.
4. Types of strategy development
There are several types of strategy development, including:
Business-level strategy
This strategy focuses on how a company will compete in specific markets. It involves creating unique value propositions and competitive advantages.
Corporate-level strategy
This strategy is related to the decisions made by top-level management to establish the company's overall direction and scope. This includes decisions about mergers and acquisitions, diversifying, and allocating resources.
Functional strategy
This strategy is aimed at improving business operations. Some examples of functional strategies include research and development, human resources, production, marketing, and financial strategies.
Product development strategy
This strategy is a high-level plan that describes the actions needed to develop new products or upgrade existing ones.
Diversification strategy
This strategy involves developing new products and services, or entering new markets, beyond a company's existing ones.
Growth strategy
This strategy helps businesses increase market share, expand into new territories, and reach new target audiences.
Global strategy
This strategy emphasizes efficiency, sacrificing responsiveness to local requirements within each of its markets.
Some considerations for strategy development include: Understanding the market and competition, Evaluating threats and challenges, Projecting into the next three to five years, and Documenting your strategy.
5. Stages of strategic planning
The steps of strategic planning are as follows:
Define your vision
Assess your current situation
Set goals and objectives
Define tactics and responsibilities
Manage, measure, and evaluate
Here are some more details about each stage:
Define your vision
Define your organization's mission and vision statement
Assess your current situation
Evaluate your organization's internal and external environment, including its strengths, weaknesses, opportunities, and threats
Set goals and objectives
Identify common goals and objectives from your organization's mission and vision statement
Define tactics and responsibilities
Determine how to implement your plan, including who is accountable and how to allocate resources
Manage, measure, and evaluate
Review your plan's performance and ensure it's achieving the desired results
6. Methods for strategy development
Here are some methods for strategy development: SWOT analysis
A portfolio analysis method that lists the strengths, weaknesses, opportunities, and threats of an organization
Market research
A critical part of a business development plan, market research involves gathering and analyzing data about the target market, competitors, and industry patterns
Balanced scorecard
A strategic management and planning tool that helps organizations identify and track metrics that are most important to their success
Product development
A subset of corporate strategy that sets the direction for new products by establishing goals and funding decisions
Diversification
A business development strategy that involves developing new products and services, or entering new markets
Financial strategy
An approach for the planned development of the finance function that focuses on opportunities that create value
Some other considerations for strategy development include: Understanding the market and competition, Evaluating threats and challenges, Projecting into the next three to five years, and Documenting your strategy
7. Steps of strategy development
The steps of strategy development can include:
Assess your current situation: Evaluate your business and environment to understand where you are.
Identify your goals: Consider your current position and what you want to achieve.
Develop your plan: Create a plan and determine how you will measure your performance.
Implement and share: Put your plan into action and share it with others.
Revise and restructure: Review your plan and make changes as needed.
Define roles and responsibilities: Make sure everyone knows what's expected of them so they can contribute to achieving your goals.
Analyze your environment: Use strategic frameworks to analyze your internal and external environments.
Gather and analyze information: Gather data and information that will help you understand your business's needs and strategic direction.
Consider feedback: Compile feedback from customers and employees and use it to develop strategies.
Develop core values: Create a list of values that are specific, memorable, and shared by your organization.
8. Factors contributing to the success of a strategy
There are several factors that can contribute to the success of a strategy, including:
Strategic focus: An organization's leadership and strategy should be aligned with its corporate goals.
People: An organization's employees are an essential part of its success, and effective people management can ensure that the organization has the right talent and skills.
Operations: Efficient operations are essential for delivering products or services reliably and cost-effectively.
Commitment: A commitment to the strategy is important.
Alignment: The strategy should be aligned with the organization's structure and culture.
Realistic targets: Realistic targets for delivery across a set time period are important.
Learning from success and failure: Lessons from each success and failure should be fed back into the process.
Ongoing adjustments: The plan should be adjusted on an ongoing basis.
Culture: Building a high-performance culture is important.
Other factors that can affect strategy execution include: business conditions, emerging competition, resource allocation, market dynamics, and technological advancements.
9. Strategy development advantages and disadvantages
Strategy development has both advantages and disadvantages, including:
Advantages of Strategy development
Improves decision-making: Strategy development acts as a roadmap for decision-making and resource allocation, which can help businesses become more competitive, efficient, and effective.
Helps identify priorities: Strategic planning can help businesses identify their priorities and allocate resources accordingly.
Helps identify competitive advantages: Identifying a company's competitive advantages can help define what needs to be improved and what needs to be put in place to achieve goals.
Disadvantages of Strategy development
Can be complex and time-consuming: Strategic management can be a complex and time-consuming process that can be difficult to implement properly if the future doesn't unfold as anticipated.
Can impede flexible decision-making: Strategic management can impede the flexibility of an organization.
Can be disruptive if vision and direction change too often: If the vision and direction are changed too often, it can create ambiguity or be disruptive.
10. Perfecting the strategy development process
Here are some tips for perfecting the strategy development process:
Understand the market
Research the market and competition to understand the environment in which your company operates.
Evaluate threats and challenges
Consider the threats and challenges your organization may face, and invite different perspectives to contribute ideas.
Project into the future
Plan for the next three to five years, as longer-term plans can be affected by external forces.
Communicate your strategy
Clearly and concisely communicate your strategy so that everyone understands it and can help meet your goals.
Review and refine
Review and refine your strategy evaluation process to ensure it's relevant, efficient, and effective.
Choose investments
Identify capability gaps and create projects to close them. Sequence investments to create the most value in the shortest amount of time.
Combine strategies
Combining different strategies can be effective, as the strengths of one strategy can compensate for the weaknesses of another.
Some other steps in the strategy development process include:
Determining your strategic position
Defining your vision
Prioritizing your strategic objectives
Deciding who to involve in strategy development
Figuring out how to allocate your resources
Rolling out the execution
11. Evaluation of strategy development
The evaluation of a strategy development process can be done by following these steps:
Define objectives and standards: Set clear, measurable goals to define what success looks like.
Collect and measure data: Gather relevant data and feedback to assess performance.
Analyze data: Compare actual performance to expected results to identify gaps and deviations.
Turn insights into action: Determine what the business will do to fix problems.
Establish an ongoing cadence: Review and iterate the strategy on a regular basis.
Consider internal consistency: Compare the strategy to other existing policies to ensure it doesn't contradict them.
Consider external and internal forces: Be flexible and consider how external and internal forces may change the strategy.
12. Strategy development evaluation criteria
When evaluating a strategy, you can consider criteria like:
Internal consistency: Whether the strategy is internally consistent
Consistency with the environment: Whether the strategy is consistent with the environment
Resource appropriateness: Whether the strategy is appropriate for the available resources
Risk level: Whether the strategy has an acceptable level of risk
Time horizon: Whether the strategy has an appropriate time horizon
Workability: Whether the strategy is workable
Market potential: Whether the strategy has good market potential
Competitive advantage: Whether the strategy gives the company a competitive advantage
Financial viability: Whether the strategy is financially viable
Alignment with core values: Whether the strategy aligns with the company's core values
Resource requirements: Whether the strategy meets the company's resource requirements
Strategy evaluation is the final stage of the strategy management process. It can help businesses understand their strengths and weaknesses, and make changes to improve their strategy.
13. Strategy development Reporting
Strategy reporting is the process of communicating an organization's progress and performance towards its strategic goals. It helps organizations evaluate their current state and create a plan to achieve their objectives.
Here are some things to consider when reporting on strategy development:
What to include
A strategy report typically includes financial and operational metrics, key performance indicators (KPIs), charts, tables, surveys, reviews, historical data, and future projections.
When to report
Strategy reporting is usually done regularly, such as quarterly or annually.
Who to present to
Strategy reports are typically presented to senior management and the board of directors.
How to write a strategy report
A strategy report should include a title, introduction, the company's mission statement and core values, an explanation of the market, a list of competitors, SMART goals, a prioritization, and a description of how to achieve the goals.
How to define goals
Use the SMART goals technique to define goals that are specific, measurable, attainable, realistic, and timely.
How to gather data
Use robotic automation to gather data from external applications, or use freeform searching on text like Elasticsearch.
What tools to use
Use business intelligence platforms like Tableau, Power BI, or Qlik, or reporting and dashboarding tools like Crystal Reports, Oracle BI Publisher, or Jaspersoft.
14. Budgeting for strategy development
Strategic budgeting is a process that uses multi-year planning and quantified results to help an organization achieve specific goals. It can help organizations improve their spend management and follow a long-term plan.
Here are some steps you can take to budget for strategy development:
Set goals: Define your organization's long-term goals and objectives.
Identify initiatives: Identify key initiatives that will help you achieve your goals.
Develop financial projections: Use projected cash flow figures to understand your organization's predicted financial state.
Allocate resources: Allocate resources to help you achieve your goals.
Monitor progress: Track your budget performance indicators to ensure you're spending within your limits.
Review and update: Regularly review and update your budget to reflect spending patterns and changing goals.
Strategic budgeting can help you:
Increase revenue by tracking expenses in terms of your organization's goals
Advocate for your department's funding by highlighting how it contributes to the company's overall growth
Develop efficiency across your supply chain
15. Conclusions
The conclusions can be drawn on strategy development including the following points:
Benefits
Strategy development can help a business stay relevant, grow, and succeed. It can also help a business adapt to changing environments and promote innovation.
Evaluation
When evaluating a strategy, it's important to consider how well it's based on facts and how acceptable it is to those who will execute it.
SWOT framework
The SWOT framework can be used to identify key strategic issues, opportunities, and threats. This information can help a business determine what needs to be addressed and resolved.
Strategic report
If a report focuses on a strategy that has already taken place, the conclusion can predict the outcomes of that strategy. This can include financial forecasts, sales expectations, and growth predictions.
16. FAQs
Q. What's the difference between strategy development and strategy management?
Ans
While both terms are related to strategic planning, "strategy development" focuses on the initial process of creating a strategic plan by analyzing the environment, identifying opportunities, and choosing the best course of action, while "strategy management" involves the ongoing process of implementing and monitoring that strategy, making adjustments as needed to ensure the organization reaches its goals effectively; essentially, development is about creating the plan, and management is about executing and adapting it over time.
Key points of difference:
Focus:
Strategy development is primarily concerned with identifying the best strategic direction for the organization, while strategy management focuses on putting that strategy into action and making necessary adjustments along the way.
Timeline:
Strategy development is typically a more concentrated period of analysis and decision-making, while strategy management is a continuous process that involves monitoring and adapting to changing circumstances.
Activities:
Strategy development involves activities like market research, SWOT analysis, identifying strategic options, and selecting the best course of action. Strategy management involves activities like resource allocation, performance monitoring, communication, and making necessary adjustments to the strategy.
References
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