Strategic management guide for business

Beyond simple tasks: The real challenge of management

Business management isn’t hard; it’s complex. Any business facet is easy enough to understand—reducing operating costs, keeping turnover low, making clients happy, increasing profitability, etc. However, the challenge that business managers face is balancing each of these tasks within the context of keeping a company afloat. That’s hard.

Say you need to reduce quarterly bonuses for some reason. Employees who don’t like your choice of cuts might leave to find a different job. If their clients want to keep working with them, they might leave too, turning that one budget cut into a Pandora’s Box that can only be solved by more cuts!

Reacting to every problem alone is costly, both in time and money. A wiser, more economical business strategy is to embrace a single governing philosophy under which your other operating decisions fall—a management strategy, in other words.

What is strategic management?

Business never sleeps. While agility is vital to capitalizing on new opportunities, planning is your best guarantee for long-term success. Why? Because while yesterday’s plan worked yesterday, it might not work tomorrow—look at Blockbuster’s loss to Netflix. Failing to have a Plan B leaves you exposed to changes when they inevitably occur.

Strategic management is the ongoing cycle of planning, implementing, and evaluating how to achieve organizational goals. It’s ongoing work meant to keep your focus trained on improvement. People use the origin of acronyms like SWOT, SMART goals, KPIs, etc., to navigate the business world.

Why great companies swear by it

What do Bill Gates, Steve Jobs, and Jeff Bezos have in common? The billion-dollar companies they started are all run by someone else now.

Rockstar personalities are great for finding investors, but they can only run a company for so long before actual policy is needed to provide real, enduring stability.

That’s what strategic management does—it ensures the power moves that put your company on the map are embedded into the company’s vision for the future, not just as ideas but permanently enshrined as strategy.

Strategic management looks ahead decades or even centuries into the future, envisioning not if but how pivots will happen when needed. This can involve planning strategic objectives such as:

• Capitalizing on new opportunities
  
  
• Maintaining a competitive advantage
  
  
• Long-term organizational structure
  
  
• Thought leadership
  
  
• Branding strategy

Strategic management helps a company endure using the skills of its current leaders and personnel. It’s how you make an organization bigger than the sum of its parts.

What it looks like in action

You’ve seen strategic management at work before. A new client relationship with a project management overview is beginning. It could be a SWOT analysis to identify internal strengths and weaknesses or setting SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound—to guide your efforts. Implementation plans are also part of strategic management, clarifying how resources will be allocated to keep team members working on specific tasks.

This systematic approach toward long-term objectives is what typifies strategic management.

Basics of strategic management

Regarding understanding strategic management, slow and steady wins the race. It’s easy enough to point out flawed processes, but finding a solution—and persistently executing it—takes more than a critical lens.

Strategic management plans empower businesses of all sizes to choose and stick with a course of action. The tools should already be familiar, but let’s examine how and why they work.

Mission, vision & values

New hire paperwork is filled with references to the company’s vision and purpose in hopes that the trainee will adopt the right mindset for contributing to the organization’s goals. Does it work? Sometimes.

A well-thought-out philosophy can play a role in workplace culture. People who agree with the big picture are more likely to keep trying. Here’s how each piece fits in:

• Mission statement: This defines the organization’s purpose. Starbucks’ mission, for example, is to inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.
  
  
• Vision: This is the desired future state of the organization. A clear vision statement helps align team members’ efforts toward a shared goal. Carmaker Tesla’s vision is “To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.”
  
  
• Values: These are the guiding principles that influence the decision-making process and behavior within the organization. Identifying values will help to establish the organization’s culture, such as Patagonia’s values of:
  
  1) Build the best product.
  2) Cause no unnecessary harm.
  3) Use business to inspire and implement solutions to the environmental crisis.

The examples show that the company’s actions match its promises. Employees who understand their organization’s strategy will better understand how they can contribute.

SWOT analysis

A valuable first step in plotting out management strategies is a SWOT analysis. Here, you assess your organization’s internal environment for strengths and weaknesses while exploring the external environment for opportunities and threats. Why? Knowing your priorities and limitations is vital to using time wisely. Here’s how a SWOT analysis breaks down:

• Strengths: What does the organization do well? This could be strong brand recognition or a loyal customer base.
  
  
• Weaknesses: What areas are lacking? This might include limited resources or low employee morale.
  
  
• Opportunities: What new opportunities or market trends exist? This could involve new technological advancements or emerging markets.
  
  
• Threats: What external factors could negatively impact the organization? Consider market changes, competition, or new regulations.

An effective SWOT analysis will lead to more transparent decision-making and inform more effective strategies for meeting objectives.

Goal setting

Anyone who has set a goal and achieved it knows how robust the process of goal setting can be. Setting a target helps you pinpoint what you want to do and provides a benchmark for measuring progress.

After you complete your SWOT analysis, set some goals. Use the SMART criteria to transform vague goals like “increase sales” into specific goals, like “increase sales by 15% over the next fiscal year.”

Goals are vital to the entire organization. Share them with your teams, and celebrate when they are achieved.

Strategy formulation

Do you know where your strengths are? Which weaknesses might pose a problem down the road? These comprise the bedrock of your strategy.

Once you set goals, the next question is how to achieve them. For example, if you have innovative product development but a weak marketing department, your action plan should reflect that—put more effort into robust marketing campaigns to better promote products.

Strategy implementation requires allocating resources, assigning roles to team members, and setting timelines. An implementation plan should also outline the actionable steps to execute strategies effectively.

Your implementation plan should include timelines for product development, marketing strategies, and sales initiatives. You’ll also need to map out the allocation of the necessary financial, human, and technological resources for your goals.

Evaluation and control

The final hurdle of the strategic planning process is evaluation and control—measuring progress to ensure one spends one’s energies in the right direction.

KPIs (key performance indicators) are the crux of progress and aren’t easy to refine. For example, setting a goal for more sales is undoubtedly good unless there’s no focus on customer retention. In that case, your sales teams could give customers stuff they don’t want to get more sales.

Evaluation and control are ongoing processes. Your KPIs will change over time, and you should be wary if they don’t.

Challenges to getting started

There’s a lot of jargon in this blog—jargon that could put more skeptical minds on edge (or asleep). One of the main challenges to strategic management is convincing your teams to do regular, plain old business stuff.

Ideological roadblocks

The necessary day-to-day drivel of working toward a goal isn’t always exciting. You may need help from veteran employees to persuade your teams to follow the company strategy. You will likely face:

• Resistance to change: Some people don’t like to change direction. Furthermore, some employees worry that strategic changes may jeopardize their jobs or shake up the status quo.
  
  
• Lack of awareness: Strategy is a long game, and not all professionals understand the necessity of their contributions in achieving big goals.
  
  
• Resource limitations: Strategic planning takes time and some resources. Smaller businesses may feel unmotivated to think too far ahead.

Overcoming hurdles

Having a plan makes your goals real, but while management may feel excited about the road ahead, motivating everyone else is equally important.

Start small. Create goals that are easy to achieve, and allow your teams to build success habits. From there, you can work to include more people in the company’s vision:

• Educate team members: Hold training sessions to explain strategic management concepts clearly.
  
  
• Engage stakeholders: Let team members from different departments participate in planning. Their insights not only refine strategic management but also help foster a sense of ownership among more team members.
  
  
• Utilize templates: You don’t have to reinvent the wheel. Businesses like yours have already solved problems currently stumping you, and they have found helpful tools you can use with your teams.

Strategic management has a learning curve. You might make mistakes, but challenging your instincts helps you become a better leader and more visionary thinker.

Conclusion

Strategic management isn’t just a theoretical concept reserved for large corporations—it’s a vital process from which every business, regardless of size, can benefit.

By embracing strategic management, you improve your decision-making while positioning your organization for long-term success. Start thinking strategically today and set your business on continual improvement.

More resources:
Digital age workplace: Why soft skills matter more than ever
Talent shortage: Addressing the growing gap in the workplace
Employee skill gaps: What they are and how to address them

Want more insights like these? Visit Dallin Nelson’s author page to explore his other articles and expertise in business management.