Structured Strategic Management
A Framework for More Effective Management of a Business
By Michael W. Lodato
I've spent most of my business life, as a General Manager and later as a consultant, developing strategic plans or helping others do it. There are a lot of impediments to doing a good job.
For example, there's never enough time to do it right. Not enough time to plan the planning effort; not enough to define the information you need; not enough to gather it; not enough for the depth of thinking necessary for formulating effective strategies; not enough to develop operating plans good enough to implement strategies successfully. There just doesn't seem to be enough time.
Many managers don't like to plan, or they feel uncomfortable doing it. Yet you must have their involve-ment in, indeed commitment to, the planning. Otherwise they will have no identity with the resulting strategy and plan and hence no obligation to implement them.
Further, strategic planning, by itself, is not enough. You must organize and staff the implementation, measure performance against the strategy and plan, and track the key assumptions on which the strategy is based to assure that they remain valid. Otherwise, the strategy and plan are put on the shelf and control is reduced to tracking actual vs. planned financials.
Strategies and plans must be living documents, continuingly being translated into monthly, weekly and day‑to‑day action plans so that daily activity is consistent with those strategies and plans.
None of this happens in the ab-sence of a strategic management culture in the organization, a culture that is symbolized by the presence of a strategic management process that is religiously followed. Such a culture cannot be affected over night; it takes years to develop.
The good news, however, is that the time to establish a strategic management culture can be significantly shortened if the organization follows a structured approach similar to the one discussed below.
Some Benefits of a Structured Approach
The structure gives you a fast start any time you need to initiate planning. Every step you need to take in formulating strategy and developing bus-iness plans is outlined in the order in which it should be done.
The work of planning is more easily assigned to those who will have direct responsibility and authority over implement-ation.
Knowledge of what the planning tasks are and who will do them, makes them easier to schedule, thus reducing the chances of a rush at the end and the frustrations and sloppiness that results from rushing.
The detailed guidance provided shows where you lack market, industry, competition other planning data.
The structure's top‑down discipline makes it possible to establish detailed action plans for which there is a direct link all the way up to the highest level goals.
Following the structure, the organization gradually evolves a dynamic ongoing strategic management process which becomes a part of its culture and results in more effective business strategies and plans.
Developing a Structure for Strategic Management
Over time, you can develop your own strategic management struct-ure. It consists of the following components:
[ ] Annotated outlines for all of the deliverables from the strategic management effort. The deliverables that I've used in client engagements are italic-ized in the following section.
[ ] Written descriptions of the planning and management tasks, each with effort and duration estimates.
[ ] An overall project schedule.
[ ] A financial spreadsheet model of the business.
[ ] Performance (vs. strategic plans) measurement procedures.
I admit that this is more work than most managers want to take on. I know, I've done it -- several times. But it doesn't have to be done all at once. MWL's Second Law, (Best is the Enemy of Better), applies here. Give yourself better management tools, even if you can't give yourself the best.
Overview of Structured Strategic Management
Structured Strategic Management applies to corporations that are in several businesses and integrate the business strategies and plans into an overall corporate strategy, or to smaller companies running a single business. This overview describes the multi‑business situation. The differences for the single business company case are obvious.
Step 1: Planning Seminar. The process starts with a seminar on the strategic planning process. This ensures that contributors understand the objectives, the tasks to be done, their role in it and the planning schedule.
Step 2: Corporate Guidelines Corporate executives elicit the Corporate Ownership Objectives from the board of directors, or the owners themselves; and record the owners' expectations.
For example, venture capitalists have different kinds of expectations and take higher risks than do owners of publicly held companies who expect to see continuingly increasing growth in profits.
The executive staff then (re)defines the businesses of the corporation, and issues Corporate Guidelines to each business unit. The guidelines include the planning process and timetable and perhaps forms, checklists and annotated outlines for the planning documents. It helps if the outlines are in word processing format.
Step 3 Strategic Assumptions Each business builds information about the external and internal environments in which the business must operate and distills it into Strategic Assumptions that become the foundation for the strategy and which can be tracked. Off-site meetings are best for achieving a consensus on the assumptions.
Step 4: Business Strategy Each of the businesses prepares a Business Strategy. This defines the business, (mission, focus, offerings, and objectives); product, pricing, sales and distribution strategies; target markets; positioning and strategic alliances and joint ventures.
Step 5: Corporate Strategy Corporate strategy deals with the businesses the corporation will pursue, allocation of resources and the level of risk that can be tolerated.
Once business strategies are approved, an overall Corporate Strategy is formed. Based on this, the role of each business in the overall corporate scheme is determined and resources are allocated to the businesses.
Step 6: Operating Plans. Operating plans are created to link strategies to programs, schedules and budgets. These plans are of two types: Departmental Plans for sales, marketing, development, and the like; and High Impact Program Plans. The high impact programs define cross-departmental projects which will have the most impact on the success of the strategy. These plans state the expected results, resource requirements, schedules, responsibilities and costs.
The financial projection are prepared during this step.
Step 7: Action Plans. In the Action Plans tasks are defined, assigned and given priority and due dates are set.
Step 8: Implementation The highest performance occurs when the organization "lives the plan" and questions any deviations from it.
Step 9: Measurement and Control. This step makes structured strategic management truly a management process, not merely a planning system. It involves monitoring of daily activity to assure that all factors critical to success of the business are on track.
The assumptions on which the strategy is based must also be tracked. Events at variance with assumptions may give early warning to problems or alert you to opportunities. In high tech industries, tracking assumptions is particularly important.
All of this is described in great detail in my book The Strategic Management Process which is scheduled to be published in 2010.