Strategic Management Process: Practical 12-Step-by-Step Method
Strategic Management Process is a vital process for any organization aiming to achieve long-term success. This essential activity involves a sequence of steps designed to create a strategic plan by analyzing both the external and internal environments, defining strategic goals, and developing approaches to achieve them.
The stages of strategic planning can either be episodic or continuous. While episodic strategy development is common, continuous strategic planning is far more effective. We highly recommend integrating these essential steps into your management processes to ensure a continuous effort towards goal achievement. This approach not only enhances management quality but also significantly increases the likelihood of successful strategy implementation.
Organizations that adopt continuous strategic planning are better equipped to:
- Analyze market conditions and trends.
- Identify opportunities while recognizing potential threats.
- Objectively assess internal capabilities and resource availability.
- Choose better growth paths and establish realistic long-term goals.
- Develop detailed action plans to achieve the company’s vision.
In this article, we will explore the essential steps and methods necessary for successful strategic planning, their sequence, and the best approaches to implementation.
Table of Contents
The Science of Strategic Management Process
Numerous methods exist for strategic planning, typically involving the sequential use of various tools for strategic analysis and planning. Companies often mistakenly rely on a single method for strategy development. This approach can lead to strategies that are beautifully documented but lack actionable, detailed plans for achieving goals. Effective strategic planning must consider multiple factors influencing its implementation success.
To address this gap, we conducted extensive research to identify the crucial stages of strategic planning that ensure the highest probability of successful implementation. Given the increasing market dynamics and organizational changes in recent decades, we developed the Strategium method. This scientifically grounded approach ensures the highest quality strategic planning and allows for quick adjustments in response to changing conditions.
Our Strategy Navigator Matrix includes over 100 methods and tools for strategic planning, but not all are used simultaneously. There are foundational steps that must be taken first, which we will outline below.
The stages of strategy development in the Strategium framework are designed to be systematic, ensuring each step builds on the previous one. The illustration below outlines the composition of these stages.
By following these steps, organizations can develop robust strategic plans that are not only well-documented but also actionable and adaptable, ensuring long-term success in a rapidly changing market.
In the next sections, we will delve deeper into each stage, providing detailed guidance on how to effectively execute each step within the Strategium framework.
Strategy Management Process and Strategic Sessions
By adopting continuous strategic planning and utilizing the Strategium Space methodology, managers at all levels can enhance their strategic planning efforts and drive their organizations towards sustained success.
Our course on strategic planning equips your team with the expertise to conduct a series of strategic sessions—integral components of the strategic planning and management process. The course offers detailed instructions and templates to help you and your team systematically develop a high-quality development strategy.
Each stage of the methodology is designed as a distinct strategic session, executed by an individual employee or a working group. The methodology emphasizes fast, structured work akin to sprints in the Scrum method, thus accelerating the development of complex strategies and enhancing the quality of outcomes. These stages, commonly referred to as strategic sessions, are comprehensively covered in our strategy development course, detailing their purpose, goals, participant composition, procedures, formats, and templates.
This article provides a concise overview of each stage of the methodology to prepare for strategic planning, facilitate discussions with team members, and schedule the appropriate sprints (strategic sessions). While the accompanying video offers an overview of the methodology’s composition, the text below elucidates some aspects more clearly.
Integrating Strategic Planning into the Management System
Before detailing the stages of strategic planning, it is essential to understand how to embed these stages into the company’s management system. This integration is achieved through the implementation project of the company’s strategic management system, as shown in the diagram below.
The diagram illustrates the sequence of tasks for implementing a strategic management system, ensuring high-quality, rapid strategy development and timely adjustments. This project can run concurrently with the initial strategy development, with necessary processes integrated into the company’s routines during subsequent strategy updates.
Our course on implementing a strategic management system provides detailed instructions and a structured sequence for project implementation. Let’s now explore the stages of strategic planning, their sequence, and interconnections in the subsequent chapter.
Strategic Management Process: 12 Interrelated Stages
Each session employs one or more development tools, yielding intermediate, yet cohesive results used in subsequent sessions.
Each step in this methodology represents a distinct strategy session, enabling the execution of one or more crucial activities to develop a comprehensive strategic plan for your company. Each session employs one or more tools, yielding intermediate, yet cohesive results used in subsequent sessions.
Below, you will find a summary of each stage in the methodology. If an open (free) lesson or article related to any stage is available on our website, a corresponding link will be provided. For convenience, we refer to these strategy sessions as ‘sprints,’ emphasizing that these activities are conducted in a structured, fast-paced manner within a single working group.
Strategic Session 1: PESTLE Analysis – Examining the Outer Contour
The development of a winning strategy hinges on understanding the external environment. A key tool for this is the PESTLE analysis. Let’s break down what it is and why it’s crucial:
PESTLE analysis is a framework that helps businesses assess the macro-environment in which they operate. It stands for:
- Political: This factor examines the influence of government policies, regulations, and political stability on your business. Think about potential changes in tax laws, trade agreements, or political instability.
- Economic: This factor delves into economic conditions like inflation, interest rates, exchange rates, and consumer spending. How do these impact your business’s costs, pricing, and customer demand?
- Social: This factor explores societal trends and values. Consider demographics, consumer preferences, lifestyle changes, and cultural influences. How will these impact your target audience and marketing strategies?
- Technological: This factor focuses on technological advancements and innovations. What new technologies are emerging, and how will they disrupt your industry?
- Legal: This factor examines laws and regulations that directly affect your business. Think about employment law, consumer protection, environmental regulations, and intellectual property rights.
- Environmental: This factor considers environmental issues like climate change, pollution, and resource scarcity. How are these impacting your operations, supply chain, and consumer behavior?
Remember:
- Regularly Update: The external environment is constantly changing, so you need to conduct PESTLE analysis regularly to stay informed.
- Consider All Factors: Don’t overlook any factors, as even seemingly insignificant ones can have a significant impact in the long run.
- Team Effort: Involving different departments and perspectives in your analysis can lead to a more comprehensive and insightful understanding.
Strategic Session 2: SWOT Analysis – A Deeper Dive into Your Strengths & Weaknesses
SWOT analysis is a fundamental strategic tool, but it’s crucial to understand its role within a larger strategic process. SWOT stands for:
- Strengths: Internal capabilities and assets that give you an advantage. Think about your unique skills, resources, expertise, and brand recognition.
- Weaknesses: Internal limitations or disadvantages that hinder your performance. This could include lack of resources, outdated technology, or a weak brand image.
- Opportunities: Favorable external factors that present potential for growth. Think about emerging markets, changing customer needs, or technological advancements.
- Threats: Unfavorable external factors that could negatively impact your business. This includes competition, economic downturns, regulatory changes, or changing customer preferences.
SWOT Analysis in Sprint 2:
- Building on PESTLE: The SWOT analysis builds on the insights gained from your PESTLE analysis. It takes those external factors and examines how they impact your company’s strengths, weaknesses, opportunities, and threats.
- Internal Focus: While PESTLE focuses on the macro-environment, SWOT delves deeper into your company’s internal environment. It’s about understanding your specific capabilities, limitations, and how they relate to the external landscape.
- Strategic Insights: The real power of SWOT lies in the insights it provides. By combining your internal strengths and weaknesses with external opportunities and threats, you can identify strategic options for your business.
SWOT for Units & Departments:
It’s important to remember that SWOT analysis can be applied at various levels, not just the company-wide level. Units or departments can conduct their own SWOT analyses, taking into consideration their specific internal environment and the environment within the larger company.
SWOT analysis is a powerful tool for strategic planning. By understanding your company’s strengths, weaknesses, opportunities, and threats, you can position yourself for success.
Strategic Session 3: Protostrategies – Crafting Initial Solutions
This sprint is all about transforming your SWOT analysis insights into concrete ideas, called “protostrategies”. These are the initial building blocks for your strategy.
Protostrategies go beyond a simple SWOT:
- SWOT analysis is the basis to analyze the connections between your strengths, weaknesses, opportunities, and threats, developing actionable strategies.
- Don’t just list factor: explore the nuances of each one. For example, how does a specific weakness impact your ability to capitalize on an opportunity?
- Involve Multiple Perspectives: Engage different departments and stakeholders in the analysis to get a holistic view of your company’s situation.
What are Protostrategies?
- Preliminary Solutions: Protostrategies are essentially rough drafts of strategic solutions. They are not fully developed or tested, but they represent your initial thinking about how to address the opportunities and threats you identified in your SWOT analysis.
- Problem-Focused: Protostrategies address specific problems or combinations of problems. For example, if you have a weakness in technology and an opportunity in a new market, a protostrategy might focus on investing in new technology to enter that market.
- Actionable Ideas: Protostrategies are not just concepts; they are concrete ideas for action. They should be specific enough to be implemented, but flexible enough to be adapted as you gather more information.
Protostrategies spark innovation, set the stage for further development, and foster collaboration. They encourage brainstorming, pushing for creative solutions while staying grounded in your company’s realities. By generating creative ideas and exploring potential solutions, you lay the foundation for a successful strategic plan.
Key Considerations for Developing Protostrategies:
- Link to SWOT: Each protostrategy should connect to a specific element of your SWOT analysis.
- Feasibility: Consider resources, capabilities, and timelines when creating your protostrategies.
- Combine Ideas: Don’t be afraid to merge different protostrategies to address multiple challenges or opportunities.
Strategic Session 4: Business Model – A Dynamic Force for Change
While the previous sprints focused on analysis, Sprint 4 takes a crucial step towards action: building and analyzing your business model. This is where you move beyond static strategies and embrace the dynamic interplay between your company and the external environment.
Why Business Modeling Matters:
- Beyond Static Strategies: Traditional strategic planning often gets stuck in a single, unchanging business model. But in today’s rapidly evolving world you need a model that adapts to changing markets, technologies, and consumer preferences.
- Analyzing the Logic of Business: A business model helps you understand the core logic of how your company creates value, captures revenue, and interacts with its environment. This analysis is crucial for identifying opportunities and challenges in the evolving landscape.
- Embracing Change: New technologies, internet development, and shifts in consumer behavior require companies to constantly analyze and adapt their business models.
The Power of Business Model Innovation:
- Don’t Settle for the Status Quo: If you’re not actively evaluating and adapting your business model, you’re missing out on opportunities for growth and innovation.
- Think Differently: Business model innovation can lead to new revenue streams, improved efficiency, and competitive advantage.
- Be Proactive, Not Reactive: By actively analyzing and adapting your business model, you can become proactive in shaping your future, rather than just reacting to changes.
The Process of Business Model Building:
- Document the Existing Model: Start by creating a detailed map of your current business model.
- Develop a Target Model: Create a new, ideal business model that addresses the challenges and opportunities you’ve identified.
- Compare and Analyze: Compare your existing model to your target model, identifying key differences and areas for change.
Strategic Session 5: Mission – Defining Your Purpose in the World
This strategic session marks a crucial turning point in your strategy development process. We’ve analyzed the external environment, assessed our strengths and weaknesses, and explored potential solutions. Now it’s time to define your company’s mission – your core purpose and role in the world.
Why Define Mission Now?
- Foundation for Action: Your mission statement provides the foundation for all your subsequent strategic decisions. It’s the guiding light that helps you make choices aligned with your core purpose.
- Link to Business Model: Defining your mission after you’ve established your business model ensures that your purpose is grounded in reality. It clarifies how your company will operate and create value in the world.
- External Focus: The mission statement acts as a bridge between your company and the external environment. It defines your role and impact within the wider ecosystem.
The Essence of Mission:
- Purpose: A mission statement articulates the fundamental reason for your company’s existence. It answers the question: “Why do we exist?”
- Meaning and Value: It defines the core values and principles that guide your actions and decisions.
- External Alignment: It clarifies your role within the broader society and industry, establishing your impact and contribution.
Mission vs. Vision:
While mission focuses on your purpose, vision outlines your desired future state. Mission is the “why,” while vision is the “what.” You’ll define your vision later.
Mission as a Functional Requirement:
Your mission statement acts as a blueprint for defining your company’s functionality. It sets the stage for the next step: determining the specific capabilities and actions needed to achieve your mission.
Your mission statement is a powerful tool for guiding your strategic decisions and inspiring action. It’s the North Star that will guide your company towards a successful future.
Strategic Session 6: Operationalizing Your Mission Through Functional Mapping
Strategic session 6 is where we bridge the gap between your company’s mission and its day-to-day operations. It’s about defining the specific functions and processes that will bring your mission to life.
Why Functionality Matters?
Your mission statement is a powerful statement of intent, but it needs a tangible roadmap to guide your daily operations. Functionality defines the specific functions and processes that will bring your mission to life. It’s about ensuring that your company’s actions are consistently aligned with its core purpose.
Most organizations are not perfectly aligned with their mission. This sprint helps identify areas where your existing structure and processes need to evolve to better support your core purpose.
Structuring functionality for impact has to go beyond business processes. While business processes are a key element of functionality, we also need to consider the broader organizational structure. This includes:
- Projections: These are the overarching areas of focus for your organization, such as finance, customers, processes, and development.
- Areas of Influence: These represent the different departments or teams that contribute to achieving your mission.
- Functional Tasks: These are the specific activities performed within each sphere of influence to support your mission.
Key Benefits of Functionality Mapping:
- Clarity and Alignment: It creates a clear understanding of how each function contributes to your overall mission.
- Process Improvement: It helps identify areas where processes can be improved or streamlined to optimize efficiency.
- Strategic Cascading: It provides a foundation for cascading strategic goals throughout the organization, ensuring everyone is aligned with the mission.
A well-defined functionality map is essential for translating your mission into a reality. It provides a roadmap for strategic action, ensuring your company’s daily operations are consistently aligned with its core purpose.
Strategic Session 7: Vision – Shaping Your Company’s Future
During this strategic session we envision the future of your company. We’ve defined your purpose (mission) and mapped out your operational framework (functionality). Now, it’s time to paint a clear picture of what you want to achieve and where you want to be in the years to come.
Why Define a Vision?
- A Guiding Star: Vision provides a clear direction for your strategic decisions. It’s the inspiring picture of your company’s future state that motivates and aligns everyone towards a shared goal.
- Beyond Today: Vision helps you think beyond the immediate challenges and opportunities. It encourages you to consider the long-term potential of your company and the impact you want to make.
- Setting the Stage for Goals: Vision sets the stage for setting specific goals and objectives. It provides a framework for creating actionable plans to turn your vision into reality.
Key Elements of a Vision Statement:
- Desired Future State: Your vision should describe the specific state you want your company to be in 5, 10, or even 25 years. This could include market leadership, product innovation, customer impact, or social responsibility goals.
- Clear and Inspiring: Your vision should be clear, concise, and inspiring. It should capture the imagination of your employees, stakeholders, and customers.
- Alignment with Mission: Your vision should align with your company’s mission. It should be a natural extension of your core purpose and values.
Vision is a powerful tool for driving growth and transformation. By defining a compelling vision, you create a roadmap for success and inspire everyone to strive towards a shared future.
Strategic Session 8: Goal Map – Breaking Down Your Vision into Actionable Сomponents
During strategic session 8 we take our ambitious vision and transform it into a measurable and understandable sequence. We’ll define specific goals, outlining the steps needed to achieve our vision over time.
Why a Goal Map is Essential:
- From Vision to Action: The goal map serves as the bridge between your company’s vision and the specific actions you need to take to achieve it.
- Strategic Alignment: It ensures that all your goals are interconnected and aligned with your vision and mission.
- Logical Framework: It provides a logical framework for your strategic plan, ensuring that all your efforts are focused and coordinated.
Key Elements of a Goal Map:
- Specific Goals: Each goal should clearly define a desired state for your company in the future. For example, instead of “Expand into international markets,” you might set a goal of “Enter three new European markets by 2025.”
- Time Horizons: Each goal should be tied to a specific time horizon, whether it’s a short-term goal to be achieved in the next year or a long-term goal to be achieved in 5-10 years.
- Cause-and-Effect Relationships: Each goal should be justified and linked to a specific cause-and-effect relationship. This ensures that your goals are strategically aligned and contribute to achieving your vision.
Benefits of a Well-Defined Goal Map:
- Focus and Clarity: It provides a clear understanding of what you need to achieve and when.
- Accountability: It helps hold your team accountable for reaching specific goals.
- Resource Allocation: It helps prioritize your resources and efforts, ensuring that you’re investing in the right areas.
The goal map is the foundation for your strategic plan.
Strategic Session 9: Strategic Projects – Turning Goals into Actionable Plans
Strategic project is where the rubber meets the road. We’ve defined our vision, mapped out our goals, and now it’s time to translate those goals into concrete action plans. These are our strategic projects, the building blocks of our strategy execution.
From Goals to Projects:
- Actionable Steps: Strategic projects are the specific initiatives we’ll undertake to achieve our goals. They outline the specific steps, activities, and resources needed to make our vision a reality.
- Alignment with Goals: Each project should be directly linked to one or more of our strategic goals. This ensures that all our efforts are focused and aligned with our overall vision.
- Resource Allocation: We need to consider the resources available including budget, personnel, time, and other critical resources.
Balancing Strategic Projects:
- Prioritization: Not all projects are created equal. We need to prioritize projects based on their impact, urgency, and feasibility.
- Resource Constraints: We need to consider the company’s overall resource constraints and ensure that we’re not taking on more projects than we can effectively manage.
- Flexibility: Strategic projects should be flexible enough to adapt to changing circumstances.
Sprint 9 in Action:
- Identify Strategic Projects: Develop a list of potential strategic projects that will help us achieve our goals.
- Prioritize and Select: Prioritize projects based on impact, urgency, and resource availability.
- Develop Project Plans: Create detailed project plans, outlining objectives, timelines, milestones, resources, and responsibilities.
Strategic projects are the key to putting our vision into action. By creating a portfolio of well-defined projects, we can ensure that our resources are aligned with our goals and we’re making progress towards achieving our vision.
Strategic Session 10: Resources – Securing the Foundations for Success
This session takes a critical look at the resources needed to execute your strategic plan. We’ve defined our vision, set goals, and outlined projects, but now it’s time to ensure we have the necessary tools to make it all happen.
Beyond Tangible Resources:
- The Broader Picture: Resources aren’t just money, materials, and people. They also encompass knowledge, skills, relationships, and dynamic capabilities. These intangible resources are often crucial for turning strategic plans into reality.
- The “How” of Execution: This sprint explores how the lack of essential resources could hinder your strategy’s implementation. We identify potential gaps and develop plans to address them.
Key Considerations for Resource Planning:
- Identify Critical Resources: What knowledge, skills, relationships, or capabilities are essential for the success of your strategic projects?
- Assess Resource Availability: Do you have the necessary resources in place? If not, how can you acquire them?
- Develop Plans for Resource Acquisition: This might involve training employees, forging new partnerships, or investing in new technologies.
- Align Resources with Projects: Ensure that your resources are aligned with your strategic projects, and that you’re not spreading them too thin.
Why Resource Planning Matters:
- Avoiding Roadblocks: Addressing resource gaps early can prevent major delays or setbacks in your strategic implementation.
- Maximizing Impact: By strategically allocating resources, you can maximize the impact of your projects and achieve your goals more effectively.
- Building a Sustainable Future: Investing in the development of crucial resources ensures your company is well-positioned for long-term success.
Resource planning is a crucial step in translating your strategic plan into action. After we’ve addressed our resource needs, we’ll move into Sprint 11, where we’ll finalize our strategy and ensure alignment with all stakeholders.
Strategic Session 11: Synchronization – Aligning Your Strategy across the Organization
We’ve defined our vision, set goals, outlined projects, and secured the necessary resources. Now it’s time to bring it all together and ensure that our strategy is aligned, approved, and ready for implementation.
Synchronization: Aligning Across Levels:
- Top-Down and Bottom-Up: Synchronization involves a two-way process of aligning your strategy across different levels of your organization. It ensures that the overall strategy is consistent with the goals and plans of individual departments, teams, and individuals.
- Harmonization and Adjustment: This process involves comparing the main provisions of strategic plans at different levels. Any inconsistencies or gaps are addressed through adjustments and clarifications, ensuring a cohesive and workable strategy.
Why Synchronization is Crucial:
- Realizability: Synchronization helps ensure that your strategy is truly achievable by aligning it with the capabilities and resources of your entire organization.
- Collaboration and Buy-In: It fosters collaboration and builds buy-in among stakeholders, as they understand their role in implementing the strategy.
- Accountability and Success: By aligning your strategy with the resources and capabilities of your organization, you increase the likelihood of successful implementation.
Key Steps in Synchronization:
- Share the Strategy: Communicate your strategic plan to all relevant stakeholders, including departments, teams, and individuals.
- Gather Feedback and Make Adjustments: Refine your strategy based on the feedback received, ensuring that it is aligned with the capabilities and resources of your organization.
- Translating to Lower Levels: The synchronization process also involves cascading the strategy to lower levels of your organization.
Synchronization is a critical step in ensuring the success of your strategic plan. By aligning your strategy across all levels of your organization, you create a unified force, ready to move forward and achieve your vision.
Strategic Managemen Process Stage 12: Monitoring Implementation – The Continuous Cycle of Improvement
While Sprint 12 is not formally part of the strategy development process, it’s a crucial step in ensuring the success. This is where we move from planning to execution and continuous refinement.
Why Monitoring Implementation Matters:
- Feedback Loop: Monitoring implementation provides critical feedback that allows us to adjust our strategic plan, methods, and even the underlying assumptions.
- Flexibility and Adaptability: In today’s dynamic world, strategies need to be flexible. Monitoring allows us to adapt to changing circumstances and ensure our plans remain relevant.
- Learning and Improvement: Monitoring helps us understand what’s working and what’s not. It allows us to identify areas for improvement and develop new insights that can drive future strategic decisions.
Key Elements of Implementation Monitoring:
- Tracking Progress: We need to track the progress of our strategic projects against defined goals and timelines.
- Analyzing Deviations: Identify any deviations from our plans and analyze their root causes.
- Corrective Action: Develop and implement corrective actions to address any significant deviations.
- Continuous Improvement: Use the insights gained from monitoring to refine our strategies, processes, and practices.
Benefits of Effective Implementation Monitoring:
- Increased Efficiency: By identifying and addressing bottlenecks early, we can improve our efficiency and productivity.
- Enhanced Performance: Regular monitoring allows us to track progress, identify areas for improvement, and enhance our overall performance.
- Competitive Advantage: Companies that actively monitor their implementation are better equipped to adapt to changing conditions and stay ahead of the competition.
Implementation monitoring is not a one-time event; it’s an ongoing process. By regularly evaluating our progress and making adjustments as needed, we can ensure that our strategy is constantly evolving and driving us towards our goals. This iterative process keeps us agile, adaptable, and competitive in the ever-changing landscape of business.
Strategic Management Process: A Scientific Approach to Success
You’ve just explored a comprehensive methodology for continuous strategizing, grounded in the fundamental principles of strategic management theory. This method, built on scientific insights and real-world experience, ensures a robust and adaptable strategy for your company.
Key Takeaways:
- Scientific Foundations: The method incorporates key principles from various schools of strategic thought, including the principle of bounded intentionality, which acknowledges the limitations of our knowledge and planning.
- Purposeful Stages: Each sprint within this methodology is carefully designed to fulfill a specific purpose, ensuring a comprehensive and well-rounded strategy.
- Continuous Improvement: The final stage, monitoring implementation, creates a feedback loop that allows you to adapt and refine your strategy as needed.
Putting the Methodology to Work:
Now it’s time to put this knowledge into action. There are several ways to apply this methodology:
- Business Strategy Course: Enroll in our program to learn and apply this method in your real-world business environment.
- Personal Strategy Course: Take advantage of our personal strategy course to apply this method to your life strategy and get real-world training to apply it to any business later.
Taking Control of Your Strategy:
- Analyze the Method: Examine the composition of our set of strategy sessions. Identify the tasks each sprint addresses.
- Tailor the Approach: Determine the required composition of sprints for YOUR specific strategy development project.
- Evaluate the Completeness: Determine if the Strategium method has all the necessary stages for your company. It’s important to consider if any additional steps might be beneficial for your specific situation.
Remember: While you may decide to skip certain sprints, understand that doing so could potentially create challenges during implementation. The more comprehensive your strategic planning process, the more likely you are to achieve success.
