What is Strategy Development?
In order to succeed in business, developing a strategy is critical. Your company’s strategy is a road map for employees and partners. Once you have a plan in place, you’ll be able to set goals, identify risks and internal resources that can help or hurt your businesses progress. Strategy development is part of a process known as strategic management that helps organizations develop strategies and monitor their progress over an extended period. It includes goal-setting, strategy-making and implementation. This is because it uses a variety of management techniques to help managers make decisions, solve problems and achieve organizational objectives over time.
Strategy development is the process of creating and developing long-term strategy for a company, and can also include organizations such as non-profit enterprises or public policy planning groups. An important objective of strategy development is to develop a set of long-term goals for the business. These goals should be aligned with the organization’s mission, values and vision. Strategic planning helps managers identify strategies to achieve those goals and monitor progress over an extended period. It also involves identifying the possible outcomes that may happen if no action is taken – known as “the worst thing that can happen” – and plans to avoid those outcomes happening.
Stages of Strategy Development
The stages of Strategy Development can be grouped into four phases: Situation analysis, strategic alternatives, strategic choice and implementation. The first phase is the situation analysis. This is where the organization’s executives come together to learn about their market. They also talk about how they are doing financially and what their long-term goals are for the business. From this information, they will have a “diagnosis” of where they are in relation to their competition.
Strategic alternatives is next. This is where executives outline what strategies could be used to achieve the company’s long-term goals. It starts with their understanding of the environment in which they compete and their knowledge of that competition. The next stage is the development of a set of standard solutions or “strategic options” that can be used to achieve those goals. These options include: creating a new product or service, improving existing products, implementing a manufacturing strategy and so on. When the organization has selected its strategic options, it should move to stage three: choosing which strategy to implement and implementing it. They do this by choosing one option and moving forward with it as fast as possible. This may involve launching just one option or using them all at once as part of an integrated strategy.
Four Key Steps Towards Strategy Development
The traditional strategy development process identifies four steps:
Phase one was the “diagnostic phase”, where executives used qualitative research to find out how well the business is performing in its core markets. Phase two was the “analysis phase”, where they identified critical internal and external factors together with their possible future impacts on the business. Step three involved interpreting these to identify opportunities and threats facing the business. The final step was “formulation of strategy”, where executives evaluated options that could help achieve their long-term goals for the company using information from other phases in the process.
However, this approach did not include how to put strategies into place or monitor to see if they are working. It also did not consider the need to update organizational strategy when circumstances changed. These developments have led to a new process called strategy development, which includes all four steps above.
The main part of strategy development is the situation analysis. The organization’s performance in its core markets is evaluated, along with its financial position and long-term goals for the business. Data about this information is collected from different sources including competitors’ strategies, government statistics and polls of customers. It is then examined using qualitative and quantitative techniques such as trend analysis and the use of metrics and key performance indicators (KPI).
Two Important Stages in a Strategy Development Cycle
The strategic alternatives stage consists of identifying and evaluating the company’s strategic options. The objective is to create a set of standard solutions or “strategic options” that can be used to achieve the company’s long-term goals. These include: creating a new product or service, improving existing products, implementing a manufacturing strategy and so on. An example would be: “If we want to increase our market share, we should develop a new product that will meet consumer demand for healthy food in fast food restaurants.” The options are grouped into a prioritized list, each with a set of advantages and disadvantages. Then, the best-performing options are chosen for implementation.
This stage looks at how the company will fit into its environment and competition’s competitive strategies. How it will implement its chosen strategy will also be assessed as well as financial success required to achieve its long-term goals. The last step is to determine if different strategies should be implemented in all or just some areas of the business. It may be possible to have strategy variation in one area, e.g., coffee bars and restaurants could have a completely different business plan from a large food store chain.
The final stage of the strategy development process is choice. The company’s executives discuss, evaluate and choose the best strategic options for implementation. The chosen option is then implemented as part of the organization’s overall strategy.
The implementation stage involves launching the chosen strategy as quickly as possible so that it can achieve its goals. This involves giving management teams responsibility for implementing the chosen strategy with clear goals, targets, responsibilities and roles. Two key elements are developed at this point: a detailed implementation plan for each management team that includes specific time frames and action plans, and a communication plan to support it that explains why strategies have been developed along with how they relate to business goals.
The monitoring and evaluation stage focuses on all the activities that happen after the strategy has been implemented. It involves measuring whether the chosen strategy is achieving its objectives and identifying changes needed to make it more effective. This stage includes: evaluating the effectiveness of the chosen strategy, such as determining if it is achieving its goals and what improvements can be made, updating or changing it when required, and communicating with top management about the strategy’s effectiveness so they can decide what actions to take next.
Some dos and don’ts when developing a new strategy:
-Identify your strengths
-Identify key stakeholders who would benefit from or be impacted by this new project/strategy (e.g. customers)
-Establish ways of measuring success (e.g. sales dashboards, social media monitoring)
-Take the easy road, trying to create a “one size fits all” strategy.
-Play catch up on changes in your market and adjust your strategy “on the run”.
-Make assumptions about how your competitors will develop their strategies (you might be wrong and this will hurt your business).
-As with any plan or strategy, always seek input from stakeholders and past projects – don’t go over board – repurpose if it makes sense.
While the importance of developing a strategy for an organization cannot be overemphasized, the inherent risk in choosing and implementing the wrong strategy can only be imagined. Strategies are usually of a long-term nature and if it is got wrong during the development stage, the business would be firmly headed in the wrong direction with both time and resources expended. Fintalent offers business managers an opportunity to hire some of the best Strategy Development freelance experts to handle every aspect of your business’ strategy needs.