Guest Post By Business Owner: Gaetano De Pisa
The strategic management process is one of, if not the greatest way to boost performance, which in turn boosts shareholder value. This process consists of 3 major parts. Strategy analysis, strategy formulation, and strategy implementation. To give a brief overview of what these 3 steps main objectives are before I go in depth, here are the simple definitions. Strategy analysis, analyzing actions related to the issue at hand, that managers take that impact company performance. Then using this analysis to create a strategy in which creates a competitive advantage through effective management of the strategy-making process. Now comes strategy formulation, formulating a strategy based upon analysis of an organization’s external and internal environments. Hold your seat tight because this is where it gets juicy, strategy implementation. This is where you pull the analysis from your management teams, the analysis from your external and internal environments, to put into action the beneficial strategies to run the organization by. Here’s where you gain the ability to print quicker than stimulus and begin unlocking the ability to write off G-5s left and right as if it were a cost of doing business.
Strategy analysis. This analysis trickles all the way down to the actual business model itself. How the company operates, what defines the company, what do they offer, what are the costs, who are their customers, how do they attain their customers, what is their mission statement, what change are they bringing to that market, the list goes on and on. This ultimately trickles down to the management teams.
The hotshots with the Porsche 911s parked on the sidewalk out front. So, I’m going to rename “strategy analysis” to “management analysis”. When trying to fix a problem and implement a new strategy, you need to go to the chief. The chief and his team need to sit down, analyze their business model, plans and missions. They then need to analyze how they have been executing business and making decisions since this new problem has risen, whether it be loss of sales, product malfunction, customer dissatisfaction, etc.
They then take the analysis from what they have been doing, and compare it directly to their business model, plans and visions and see what is not aligning with who they are and what they stand for. In doing this, many inefficiencies and changes in operation will be portrayed. Take all of this information down and now move onto the next step in the magic eraser of problems.
Strategy formulation. You always wanted to take your double-decker Boeing to France for breakfast, snap a selfie with the Eiffel tower, hop on your chopper, eat some tacos in Madrid for lunch, then hop on your gulf stream to make it to your reservation at 8 pm in Milan. Sounds awesome, but without formulating a concrete plan, you’ll never get the money to live like that, nobody wants that Jr Bacon Cheeseburger 444.
This is why this step of strategy formulation is the most crucial part of the process. This step is where you make your blueprint for success. You take all of the analysis from your management analysis and begin listing the negatives and positives. Now it is time to make a very in-depth SWOT analysis on the entire organization, its leaders, and its workforce. Pinpoint everything. Once this is done, you begin making blueprints for new strategies that avoid the negative pitfalls and embrace the positive aspects.
This step takes lots of brainstorming and coming together as a team to formulate this plan which not only aligns with the company’s business plan but their customers. You can have an outstanding plan to execute business, but if it is not prioritizing customers and improving their experience and loyalty, it will never be a plan that will develop a sustained competitive advantage that enables the company to have above-average profitability for a number of years. Now you have a blueprint that you think is your dream house, let’s get the tools ready.
Strategy implementation. You have your blueprint in your hand, gazing down this 15-acre lot full of shrub and trees. Time to cut all the greenery and start building your masterpiece. Here is where the dreams come to life. Implementing that plan. Begin by letting go of whatever campaigns, employees, projects, contracts, and ideas you had in place that are now deemed a negative. Replace all that needs to be replaced. Now begin implementing your strategic management process in the corporation.
Throughout this period of implementing the new strategy, you will likely run into various obstacles along the way. Stay keen on the business plan and resolve these obstacles with solutions that align with what the company stands for. Implementing this new strategy is far from easy, it will have some getting used to and may result in fluctuations in performance for a bit. Tweak when and where necessary to attain that competitive advantage and sustain it.
This is not an easy step in the strategic management process, but it is the ultimate end of the process. You need to execute the new plan and remain within its boundaries of the new regulations in play. It’s one thing to make a plan to cut bread, pasta, and cheese out of your diet to lean up for the summer. Yet it is a whole other thing to look at that steaming plate of pasta, fresh semolina bread, and block of pecorino cheese on Sunday afternoon and say no. Me personally, I struggle to resist a second plate, forget about the first one.
All jokes aside, the strategic management process works. I myself have done this various times throughout several of my business endeavors. Not one system is perfect because society, customer needs, the customer wants, and the economy are always changing. In order to run a successful business, you need to be able to adapt and change.
When adapting it is easy to slip from the routes of the company. When this happens there tends to be some sort of a ramification in the performance figure of the business. It is best to stay aware of this and nip it before it becomes a larger issue. Go back to square one and analyze everything. Begin with Management analysis, create an in-depth SWAT analysis, formulate a strategy that adapts to the changes while fixing the problem and sticking to the business model, then finally implement that strategy into the company and go back to the blueprint of the strategy whenever it is necessary to review or change things. Strategical moves win the game. Competing with other companies is chess, not checkers.