It’s hard to develop winning strategies, and even harder to execute them while making the right decisions at the right time.
That’s why Chief Strategy Officers (CSOs) need a solid strategic management process that supports both the CSO and their organization in these efforts. It helps them go beyond strategic planning and deliver desired outcomes like the company's stability and growth.
In this article, you’ll learn how to optimize each phase of the strategic management process to ensure you have a rock-hard foundation for all future strategic endeavors.
But first, let’s make sure we’re on the same page…
What Is The Strategic Management Process?
The strategic management process is an iterative approach used by organizations to formulate, execute, and evaluate strategies for achieving and maintaining a competitive advantage in their industry.
It involves setting short-term and long-term objectives, analyzing the competitive environment, evaluating the organization’s resources, developing strategic plans, executing business strategies, and continuously monitoring and adapting these strategies to meet the changing market and business conditions.
Note: This definition may seem clear, but many companies excel in either strategizing without effectively translating strategies into concrete roadmaps, OR they execute well but lack direction due to inadequate strategizing and iteration.
To turn strategic management into an organization’s competitive advantage, CSOs should use a structured and systematic approach. (We’ll outline key steps later in this article)
During the process, they should seek clear answers to these questions:
- Where do we want to go?
- Why do we want to go there?
- How are we going to get there?
- Are we succeeding or not?
Why Is Strategic Management Important?
An old Japanese proverb answers this question perfectly:
“When you’re dying of thirst, it's too late to start thinking about digging a well.”
Throughout this article, we will delve into these reasons in detail, but broadly, strategic management is important for:
- Adaptability and continuous improvement: It enables regular review and adaptation of strategies to changing external and internal conditions. This is key to improving important business metrics like market share, profitability, and competitiveness.
- Decision-making framework: Provides a structured process for strategic decision-making, ensuring decisions are based on thorough analysis and align with the organization's best interests.
- Risk mitigation: Helps CSOs anticipate potential risks and challenges, allowing for the development of contingency plans, thus preventing crises and minimizing the impact of unforeseen events.
- Employee engagement: Having a defined set of strategic goals, as well as a clear plan of how to get there, is far more motivating for employees than simply showing up and working for the sake of it.
- Interest in your organization: A strategic plan makes it easier for outside parties, such as potential investors, to understand and get interested in the organization’s efforts. That makes your life much easier when you need access to the services those parties provide.
What Are The Key Elements In The Strategic Management Process?
The strategic management process can be distilled into three fundamental elements:
Plan > Execute > Track
Each represents a crucial phase in the lifecycle of strategic management, with distinct roles and demands on time and effort.
While the strategic planning process constitutes about 10% of the total effort in strategic management, it's the Execute and Track phases that consume the remaining 90%, encompassing the bulk of the work and challenges.
💡Planning is essential, but its value is realized only through effective execution and ongoing monitoring.
What Are The Key Steps In The Strategic Management Process?
Let's take a closer look at what CSOs need to consider during each phase of strategic management:
Note: Before starting with the Plan phase, you need to have a firm grasp of the core metrics driving your business and what you want to accomplish. This understanding forms the bedrock of all strategic decisions. Ask yourself: What are the KPIs that matter most to our success? This answer will directly influence the effectiveness of the planning and execution phases that follow.
The Plan Phase
The first part involves figuring out how you are going to impact the core metrics identified earlier. The Plan phase can be further broken down into the following steps:
Strategic analysis of your internal and external environment
Start with identifying and understanding your organization’s current situation to map the best possible path to the desired future. This should include:
Evaluate the organization’s internal environment, focusing on its resources, capabilities, and overall performance. Typically, at least one of these types of analyses is included:
- Resource analysis (reviewing financial, human, and technological assets)
- Capabilities assessment (evaluating core competencies and skills)
- Value chain analysis (analyzing internal processes for value addition)
- SWOT analysis (identifying internal strengths and weaknesses, and external opportunities and threats)
Examine the broader business environment in which your organization operates to evaluate its competitive position.
- PESTLE analysis (evaluating political, economic, social, technological, legal, and environmental factors),
- Industry analysis (using tools like Porter's Five Forces)
- Competitor analysis (assessing competitors' strategies and strengths)
The insights you get in this step will lay the groundwork for the next step. 👇
Once you understand the business problem you need to solve, you move on to in-depth strategy formulation.
This is where you craft a detailed plan about how you're going to impact your core business metrics and achieve the organization’s goals. Make your strategic choices and build a roadmap to turn them into results.
We’ve written an in-depth guide on how to write a strategic plan, so we will explain these steps here briefly to give you a glimpse of what you should cover:
- Focus areas: These represent strategic priorities and high-level areas that your organization needs to focus on to achieve desired business outcomes. Choose 4-6 of them. If you’re using the balanced scorecard framework, you can set the four perspectives—Financial performance, Customer satisfaction, Business processes, Learning and growth—as your focus areas.
- Key metrics: Think about business metrics that will help you measure progress and success. These metrics should provide a quantifiable way to track the strategy's impact.
- Strategic objectives: Objectives are outcomes that will drive the strategy’s success. Define between 3 and 6 strategic objectives per each of your Focus Areas.
- Action plans: For each objective, build action plans. Allocate resources and clearly outline the initiatives and actions, who owns each, and when they should be completed.
Here’s an example of a strategic plan in Cascade—our strategy execution platform:
💡Use our free strategic planning template, which is industry-agnostic, pre-filled with examples, and includes all elements outlined above to streamline your strategic plan.
Note: Other guides often emphasize the importance of crafting a vision statement and setting company values at this stage. However, this process can be time-consuming and resource-intensive. In scenarios requiring quick reaction, it's better to allocate these resources towards immediate operational and strategic priorities.
The Execute Phase
Studies show that 9 out of 10 organizations fail to execute their strategy. Likewise, only 29% of executives surveyed by Harvard Business Review Analytic Services say their company is executing its go-to-market strategy well.
This is a huge topic on its own but here’s what you should consider to ensure an effective strategy execution process:
In our World Strategy Day 2023 survey, 121 out of 236 business leaders reported that alignment is something they struggle with most.
To do that, you need to cascade goals set at a corporate level to the business, functional, and operational levels. For example, each business unit needs to create objectives that are aligned with the overarching corporate goals. This approach should then be replicated at the functional and operational levels.
Note: “Business unit” can mean different things based on your organizational structure. In smaller or medium-sized organizations, business unit and functional-level strategies often overlap due to fewer layers of management and limited resources.
The approach described above is an example of vertical alignment, where goals align from top to bottom. However, it’s also important to focus on horizontal alignment, ensuring different business units, departments, or functions work well together.
This may sound complicated, but strategy execution platforms like Cascade make the process easy by visualizing how different plans work together to form your strategy.
Such alignment guarantees that every part of the organization works together towards the same overarching goals. At the same time, when each level understands its role in the broader business strategy, adjustments can be made quickly and effectively across the organization.
MIT Sloan Management Review's research found that the C-suite often overestimates alignment. In their study of 124 organizations, only 28% of executives and middle managers knew three of their company's strategic priorities.
This gap isn't surprising, as many companies neglect or underestimate the importance of communication, undermining their strategies.
The traditional way of communicating the organization’s strategy through strategy presentations doesn't work. This approach rarely creates engagement and maintains the momentum required to drive results.
Instead, strategies should be easily accessible to all employees, promoting active engagement where staff can interact with and refine the company’s strategy.
- Regular town halls and announcements from the senior leadership
- Intranet sites
- Regular meetings
- Daily standups
💜As an example of stakeholder engagement and real-time communication, a healthcare organization Perley Health uses Cascade to keep strategy front and center every day.
Accountability and transparency
Clarity in goals, responsibilities, and expectations is the foundation of accountability.
For example, instead of telling a salesperson to simply increase sales, set a specific target like "increase sales by 10% this quarter." Then, connect these targets to the larger strategy, such as entering a new market or launching a new product.
Tools like Cascade can show how these individual goals help achieve the overall strategy, making it clearer for everyone how their work contributes to the company's success.
The Track Phase
To know if you’re getting closer to your strategic goals, you need to measure your key performance indicators (KPIs).
Melvine Manchau, Digital Strategy Director at Salesforce, emphasizes this point by saying:
“Business transformation, or any other initiative, fails when an organization doesn’t have a clear view of where it’s going—in terms of time, budget, or progress toward specific goals.”
Progress monitoring and reporting
Relying on disconnected tools and manual methods for tracking and reviewing progress can lead to late responses to changes, missed opportunities, and failed strategies.
Automating this process is more efficient. This means setting up live integrations between your data sources (like a CRM system or BI tool) and your tracking tool (such as Cascade).
In Cascade, you can monitor the progress of key initiatives and metrics in one central hub, enabling you to make informed decisions quickly and adjust to changing circumstances.
- Consolidate all your business tools under one roof to ensure real-time information with over 1,000 integrations.
- Connect metrics or initiatives with expected results (e.g. your strategic and long-term goals).
- Monitor progress with interactive dashboards to identify risk before it’s too late.
- Use reports to share progress during strategy reviews with your stakeholders or send vendor updates.
- Get automatic updates when information in your data source changes.
Your strategy evaluation should recognize what’s working and what isn’t, leading to incremental adjustments rather than massive overhauls. This approach avoids disruption and maintains the credibility of your strategic management process. It's about fine-tuning—adjusting a KPI here, adding a project there—to keep your plan realistic and relevant.
💡Read this article on how to run an effective strategy review and what to cover during your meetings.
Strategic Management Examples To Inspire
Example 1: Focused strategic planning in strategic management
When Bob Iger became the CEO of The Walt Disney Company in 2005, the company had already been struggling for a decade.
To revive the entertainment giant, he formulated a strategy focusing on Disney's core strength: animation. He proposed a corporate strategy with three main priorities to the board:
- Creating top-tier branded content.
- Embracing cutting-edge technology for content creation and distribution.
- Expanding globally like never before.
Iger’s deep understanding of the industry and Disney’s capabilities informed these clear, simple strategic priorities. He considered the competitive environment and a forward-looking view of the industry. This strategic management approach exemplified comprehensive planning, setting the stage for Disney’s revival.
Example 2: Effective strategy implementation in strategic management
Bob Iger's strategy execution at Disney showcases a successful transition from planning to implementation.
Recognizing Disney's lag behind competitors in technology and storytelling, Iger focused on two major decisions:
- Acquiring top brands and companies.
- Restructuring and reorganizing Disney to create original content.
Key acquisitions like Pixar, Marvel, and Star Wars positioned Disney at the forefront of the industry, combining storytelling excellence with technological innovation. Additionally, acquiring BAMTech propelled Disney into the streaming market with Disney+, emphasizing the need for unique, original content.
Iger's belief in in-house development led to internal changes, including revising the incentive system to foster collaboration among studio heads.
This example highlights that while developing a plan is crucial, the real challenge lies in effective execution and follow-through, a feat Bob Iger achieved with notable success.
📚Keep reading: How Disney Became The World's Entertainment Leader
Culture: A Missing Block You Shouldn’t Ignore
Discussing the strategic management process without emphasizing the role of organizational culture is a significant oversight.
PwC's Global Culture Survey highlights this importance:
The true power of a solid strategic management process lies not just in following the steps outlined but in fostering transformative behavioral changes across your entire organization. These changes are not only about adopting new practices but also about nurturing a culture that drives strategic success.
Key behaviors to cultivate include:
- Data-driven decision-making aligned with strategic priorities
- Collaborative ideation and experimentation
- Realistic but ambitious goal-setting
- Being comfortable with risk
- Prioritizing the right initiatives aligned with strategic priorities
- Abandoning old and useless practices that aren’t driving results
To achieve that, you need to embed a certain set of values into your organizational culture:
You need to be willing to be open with your employees and colleagues. If people feel you're only giving them half the story when it comes to the strategy or the results, it's unlikely that they'll fully embrace the new strategy or process.
Melvin Manchau says, “When you start to roadmap, you need to bring in all the players, all the stakeholders, so that people can talk and say: ‘Hey, changing, this is going to change a ton of things in the organization. We need to have a plan for that. And this is what I see that's going to take time.”
This approach will also give you a clear view of the challenges you must tackle and the objectives you can realistically achieve. Additionally, it reveals new opportunities that you might miss otherwise.
However, Amnah Ajmal, Group Executive at Mastercard, cautions against sharing all information with everyone. Despite valuing transparency, she highlights the importance of recognizing that individuals differ in their capacity to manage stress. You should consider individual personalities when discussing problems that impact them.
You'll also need to be willing to trust people to make the right decision and execute their parts of the strategy.
“Middle managers in global corporations need to have data and access to information so they can provide strong recommendations to the executives and be accountable for decisions. At the same time, they need to have this information to effectively distill priorities and communicate clearly with their respective teams.”
This autonomy enables middle management to handle day-to-day and minor decisions, reducing the burden on leadership to micromanage.
It sounds obvious, but your strategic management process can only succeed when coupled with a culture of collaboration and sharing. People need to be willing (and have the tools) to share information efficiently and clearly.
Collaboration ensures that different parts of the organization are working in sync, which is crucial for the consistent execution of strategic plans across various departments and teams.
It also allows for better resource allocation. With centralized strategy and collaboration, organizations can avoid duplication of efforts and use the available resources more efficiently.
Deliver Results With An Effective Strategic Management Process 🚀
The best way to think about strategic management is Plan > Execute > Track. By breaking down the process into these three distinct phases, it becomes easier to understand and implement.
We’ve built Cascade to help Chief Strategy Officers at each of these phases. You can centralize your strategy, collaborate easily on shared goals, and execute faster.
We hope this guide made strategic management easier to understand and gave you some ideas to improve yours.
Curious about how our strategy execution platform can help you? Book a demo with one of our experts and see it in action!