Strategy Development is a structured approach for crafting and planning an organization’s strategies to meet its objectives. Key features involve goal orientation, thorough analysis, and defined steps like environmental evaluation and execution planning. Effective strategy development offers competitive edges and optimized resource allocation. Challenges encompass managing uncertainties and aligning strategies with goals. Common tools include SWOT and PESTEL analysis.
Goal-Oriented: At its core, strategy development is a goal-oriented process that seeks to align an organization’s actions with its overarching objectives.
Analytical: It involves a rigorous analysis of both internal and external factors that can influence the organization’s strategic decisions.
Structured: Strategy development follows a structured approach, encompassing various phases and methodologies to ensure a systematic and comprehensive evaluation.
Process Steps in Strategy Development:
Environmental Analysis:
Assessment of External Factors: This phase involves assessing the external environment, including market trends, competition, and regulatory changes.
Opportunity Identification: Organizations identify opportunities and threats that may impact their strategic direction.
Internal Assessment:
Evaluation of Organizational Capabilities: Analyzing internal strengths and weaknesses, including resources, skills, and competencies.
Identifying Core Competencies: Recognizing core competencies that can be leveraged to gain a competitive advantage.
Alignment with Vision and Mission: Ensuring that these goals align with the organization’s broader vision and mission.
Strategy Formulation:
Choosing Strategic Options: Developing a range of strategic options that can help achieve the defined goals.
SWOT and PESTEL Analysis: Employing tools like SWOT (Strengths, Weaknesses, Opportunities, Threats) and PESTEL (Political, Economic, Social, Technological, Environmental, Legal) analysis to inform decision-making.
Execution Planning:
Detailed Planning: Developing detailed plans and initiatives to implement the chosen strategies.
Resource Allocation: Allocating resources such as budgets, personnel, and technology to support execution.
Monitoring and Adaptation:
Performance Tracking: Continuously monitoring the progress of strategic initiatives and key performance indicators.
Adaptive Strategies: Being prepared to adapt strategies in response to changing circumstances or new information.
Importance of Effective Strategy Development:
Competitive Advantage: Well-developed strategies can provide a competitive edge by capitalizing on strengths and opportunities while mitigating weaknesses and threats.
Resource Optimization: Strategic development ensures that resources are allocated efficiently to initiatives that align with organizational goals.
Challenges in Strategy Development:
Uncertainty: Strategy development often occurs in an environment characterized by uncertainty, making it challenging to predict future conditions accurately.
Alignment: Ensuring that developed strategies align seamlessly with the organization’s mission and vision can be complex.
Tools and Models in Strategy Development:
SWOT Analysis: Identifying internal strengths and weaknesses and external opportunities and threats.
PESTEL Analysis: Evaluating the political, economic, social, technological, environmental, and legal factors affecting strategy.
Porter’s Five Forces: Assessing competitive forces in an industry to determine strategy.
Balanced Scorecard: Measuring performance against financial, customer, internal process, and learning and growth perspectives.
Case Studies
Corporate Strategy Development:
A multinational corporation develops a new market entry strategy for a rapidly growing emerging market by analyzing local consumer behavior and competitive dynamics.
Startup Business Strategy:
A tech startup devises a strategy to gain market share by offering innovative features and lower prices compared to established competitors.
Nonprofit Organization Strategy:
A nonprofit organization focuses on strategy development to expand its donor base and increase fundraising efforts to support its humanitarian missions.
Healthcare Strategy:
A hospital develops a patient-centered care strategy aimed at improving patient satisfaction, reducing wait times, and enhancing medical outcomes.
E-commerce Strategy:
An e-commerce company formulates a strategy to enhance the customer shopping experience, including implementing a user-friendly mobile app and personalized recommendations.
Retail Strategy:
A retail chain adjusts its strategy by expanding its online presence and offering a seamless omnichannel shopping experience in response to changing consumer preferences.
Digital Marketing Strategy:
A digital marketing agency develops a strategy to optimize online advertising campaigns, leveraging data analytics and audience segmentation.
Government Strategy:
A municipal government implements a smart city strategy to improve infrastructure, enhance public services, and promote sustainability.
Manufacturing Strategy:
A manufacturing company reevaluates its production processes and supply chain strategy to increase efficiency and reduce costs.
Educational Institution Strategy:
A university develops a strategic plan to attract top faculty, increase research funding, and expand its international student enrollment.
Financial Institution Strategy:
A bank restructures its strategy to embrace digital banking, enhance cybersecurity, and offer innovative financial products and services.
Retail Fashion Brand Strategy:
A fashion brand designs a strategy to maintain brand relevance and appeal to younger demographics through influencer marketing and social media engagement.
Key Highlights
Goal Alignment: Strategy development aligns an organization’s actions and resources with its overarching goals and objectives, ensuring that every effort contributes to the desired outcomes.
Competitive Advantage: A well-crafted strategy can provide a competitive edge by identifying unique selling points, market opportunities, and areas where the organization can outperform rivals.
Adaptability: Effective strategy development includes flexibility to adapt to changing market conditions, technological advancements, and evolving customer preferences.
Resource Optimization: It involves efficient allocation and utilization of resources, maximizing productivity and minimizing waste.
Innovation: Strategy development encourages innovative thinking, fostering creativity to solve complex problems and explore new opportunities.
Risk Mitigation: Strategies often include risk assessment and mitigation plans to anticipate and address potential challenges and disruptions.
Measurable Objectives: Clear, quantifiable objectives are established, enabling organizations to track progress and measure success.
Stakeholder Engagement: Effective strategy development involves engaging stakeholders, including employees, customers, investors, and partners, to ensure alignment and support.
Continuous Improvement: Strategies are not static; they evolve over time through ongoing evaluation and adjustment based on performance data and feedback.
Global Perspective: In a globalized world, strategy development considers international markets, competition, and regulatory environments.
Cross-Functional Collaboration: Strategy development often requires collaboration among different departments and teams within an organization to implement initiatives successfully.
Long-Term Vision: It involves setting a long-term vision and direction for the organization, guiding decision-making at all levels.
Ethical Considerations: Ethical principles and social responsibility are integrated into strategies to ensure responsible business practices.
Customer-Centricity: Customer needs and preferences are central to strategy development, driving product/service development and marketing efforts.
Digital Transformation: In the digital age, strategies increasingly incorporate digital technologies and data-driven insights for competitive advantage.
Sustainability: Many organizations include sustainability goals and environmentally responsible practices in their strategies.
Financial Planning: Strategies encompass financial planning, including budgeting, revenue growth, and cost management.
Risk-Taking: While mitigating risks, strategy development also includes calculated risk-taking to seize opportunities for growth.
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.
You can use the Ansoff Matrix as a strategic framework to understand what growthstrategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growthstrategy can be derived from whether the market is new or existing, and whether the product is new or existing.
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
