There is quite a lot of anecdotal evidence indicating that managers, even those with (shared) responsibility for managing a business area, spent very little of their time thinking strategically about the development challenges they are facing. We define strategy as a pattern of actions and decisions aimed at obtaining a specific objective. The strategy is NOT the goal, but the proposed steps to reach that goal.
There is no guarantee for reaching the goal even if time is spent on strategy analysis, but the chances of succeeding increase. Individuals and organizations that spent time on strategy increase their chances of success for three reasons;
- Having a defined a goal and a strategy to reach it, decreases the risk of “ZigZagging”. Without a medium to long term goal and objective organisations and individuals may work in one direction for one period, change their ideas and then work in another direction. ZigZagging often leads to wasting resources in the form of investments and time.
- In organisations, having clear and shared goals and strategies increase the chance of working TOGETHER towards these goals. Without sharing, there is the risk that some people and organizational units will work in one direction while others might take a different direction. This decrease the chance of making an impact. Strategy can work both as a coordination mechanism for units and as a type of heuristics system to combat bounded rationality on individual manager and employee level
- People are motivated by purpose. Knowing where we are going and why we are executing certain plans increase the chance that managers and the employee will commit.
We normally associate 4 fundaments for good strategies and strategists:
- The Strategist need to have the ability to formulate clear and future-oriented goals and objectives
- The Strategist needs to have a profound understanding of the competitive environment
- The Strategist needs to be able to objectively appraise own (the company’s) resources and capabilities
- The strategy needs to be accompanied with effective implementation systems
As most strategists are not “born” with all of the above, analysis normally play an important role in the strategy formulation process, wherefore we often refer to “strategy analysis” and “strategic management” to describe the activities associated with strategy formulation and planning.
The teaching in the foundations of strategy course gravitates around a simple strategy formulation model and the analytical tools and models supporting each step of the process.
This article is written by Prof. Mikkel Draebye in which he talks about why strategy is important and introduces the model which helps to formulate a strategy. The model is covered in Foundations of Strategy class in IEMB, International Executive Masters In Business which is an 18-month program for senior level executives in Mumbai.