Mastering Strategic Management: Models and Steps You Need to Know

 

Strategic management is your blueprint for navigating the complexities of business and ensuring long-term success. It’s not just about setting goals; it’s about aligning your actions with a clear vision and adapting as you go. Here’s a straightforward guide to the key models and steps in strategic management, helping you turn theory into practice.

What are the 7 steps of the strategic management process?

Think of the 7 steps of strategic management as your detailed roadmap to guide your business to success. Here’s how to effectively work through each step:

1. Understanding the context: Start by examining the internal and external environments affecting your business. Look at market trends, competitive landscape, and internal capabilities. This comprehensive understanding helps you identify the current position of your organization and prepare for strategic decision-making.
2. Strategic analysis: Dive into a detailed analysis of your business environment. This includes SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), market research, and competitor analysis. The insights gained here will inform the development of strategies that leverage your strengths and address weaknesses.
3. Setting business objectives: Define what you want to achieve at the top-level in clear and specific terms. Objectives should be SMART—Specific, Measurable, Achievable, Relevant, and Time-bound. This clarity ensures that your goals are actionable and provides a benchmark for measuring success.
4. Strategy formulation and planning: Based on your analysis, develop strategies that align with your objectives. This involves brainstorming and evaluating different strategic options and choosing the ones that best fit your goals and resources. Formulate strategies that are innovative and practical, considering both short-term and long-term impacts.
5. Strategy execution: Put your strategies into action. This involves allocating resources, assigning responsibilities, and establishing timelines. Effective implementation requires coordination across various departments and ensuring that everyone is on board with the strategic plan. To learn more have a look at our related article: Strategy Execution in 4 Steps: Keys to Successful Strategy.
6. Monitoring and evaluation: Track the performance of your strategies using key performance indicators (KPIs) and regular reviews. Assess whether your strategies are delivering the desired outcomes and make adjustments as needed. This ongoing evaluation helps ensure that you stay on track toward your goals.
7. Closing the loop and feedback: Gather feedback from various stakeholders and use it to refine your strategies. Continuous improvement is key to staying competitive and responsive to changes. Looping in feedback helps you adapt and evolve your strategies based on real-world experiences and changing circumstances.

For further insights into each of these steps, explore detailed articles and resources on strategy in our resource library (use the search function). Note that HBR also has a rich library of academic and practical articles on strategy management.

Streamlined strategic management process

For a more streamlined approach, here’s a breakdown of the 5 steps of strategic management that you can follow:

1. Business objectives: Begin by defining clear, specific, and actionable objectives for the strategy cycle you want to scope. This involves understanding what you want to achieve in terms of growth, market position, or other business outcomes. Setting these goals provides a direction for your strategic planning and execution.
2. Analysis: Conduct a thorough analysis of both your internal capabilities and external environment. This includes reviewing your organization’s strengths and weaknesses and understanding market opportunities and threats. This analysis forms the foundation for developing effective strategies.
3. Strategic planning: Based on the insights from your analysis, create strategic plans that address your goals and challenges. Evaluate different strategic options and select the ones that best fit your business needs and resources. This step involves drafting detailed plans and considering various scenarios.
4. Strategy execution: Execute your strategies with precision. This step involves putting plans into action, coordinating efforts across departments, and managing resources effectively. Ensure that your implementation plan includes specific actions, timelines, and responsible parties.
5. Evaluation and optimization: Regularly assess the performance of your strategies using metrics and KPIs. Review progress towards goals, identify any issues or deviations, and make necessary adjustments. This step helps you stay aligned with your objectives and improve your strategic approach over time.

These steps provide a solid framework for effective strategic management.

What are the 5 models of strategic management?

Understanding different models of strategic management can help you choose the best approach for your business. Here’s a closer look at the 5 models of strategic management:

1. Traditional or Linear Model: This model follows a sequential process where strategy formulation, implementation, and evaluation are done in a linear fashion. It’s a straightforward approach that works well in stable environments but may need adjustments in more dynamic settings.
2. Always-On Strategy model: Bridges the strategy execution gap using a continuous, rapid, and iterative loop of strategy development, execution, and evaluation. Its connected, data-driven, and agile nature encourages informed strategic decisions, faster execution and time to value, and ongoing alignment with market demands.  
3. Interpretive model: Centers on understanding and interpreting the organizational context, including stakeholder perspectives and internal culture. This model helps in crafting strategies that align with the organization’s unique context and values.
4. Transformational model: Aims for significant change and innovation within the organization. It focuses on transforming business processes, cultures, or products to achieve substantial growth and differentiation.
5. Radical model: Challenges conventional practices and seeks to make disruptive changes. This model is about pushing boundaries and rethinking the business model to drive major shifts and breakthroughs.

Opinion: best model for strategy management

At Quantive, we believe that the Always-On Strategy model is the most suited to today’s market dynamics. At its core, it embraces the fluidity of the market, customer preferences, and macroeconomic changes that are the reality for most businesses today. It acknowledges that change is not just continuous but fast. Rather than depending on dated, set-term plans, this model empowers businesses to tweak their strategy using real-time insights. Its inherent feedback cycles refine and optimize strategy continuously, ensuring it stays relevant and timely. 

To adopt an Always-On Strategy successfully, consider leveraging AI-powered solutions specifically designed for dynamic strategy management. The right solution can optimize the management of your Always-On Strategy, enabling you to wholly and effectively deliver all of your business’ potential. 

Quantive StrategyAI pairs AI with your business data to design, deploy, and continually enhance an Always-On Strategy for your business. 

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Strategic Management. Everything You Need to Know

 

Alexey Cherkasov

The book “The quintessence of strategic management. What you really need to know to survive in business” by Philip Kotler, Roland Berger, and Nils Bickhoff provides a basic understanding of strategy, what kinds of strategies are the most basic, and how they interact.

Strategic management book consists of three main chapters.

The first chapter is an introduction

It describes the basics of strategy and strategic management. The authors give a definition of the strategy, while asking to perceive the definition of “as basic, not final”, and describe the process of strategic planning, which is divided into four components.

• General planning
• Strategic planning
• Operational planning
• Operational planning management

The second chapter deals with the key tools of strategy development, the principles of their interaction and combination

The chapter begins with a description of the SWOT analysis as the basis of all strategy development tools. SWOT analysis consists of 4 categories: Strengths; Weaknesses; Opportunities; Threats. The task of the SWOT analysis is to give a structured description of the situation on which you need to make a decision.

The following chapter presents the main tools for strategy development

Ansoff’s Product/Market Matrix. The Ansoff’s Product/Market Matrix helps to choose one of the typical strategies that is most suitable under these market conditions.  The matrix consists of 2 axes (product and market), which divide the field into 4 squares, each of which corresponds to one of the 4 possible marketing strategies:

• Market penetration (coordinates existing products / existing markets);
• Market development (coordinates existing products / new markets);
• Product development (coordinates new products / existing markets);
• Diversification (coordinates new products / new markets).

Ansoff’s Product/Market Matrix

Portfolio Management: Portfolio Analysis (Matrix). Portfolio analysis – a set of measures aimed at evaluating the work of the enterprise for the subsequent analysis of the current strategy and making adjustments to it. Several methods based on the construction of 2-dimensional matrices will be used in the portfolio analysis.

Matrix BCG (Boston Consulting Group). Each of the quadrants in the BCG model is given a figurative name:

“Stars”. These include, as a rule, new business areas, which occupy a relatively large share of the booming market, in which operations generate high profits.

“Cash cows”. These are business areas that in the past have gained a relatively large market share.

“Question marks”. These business areas compete in growing industries, but occupy a relatively small market share.

“Dogs”. These are business areas with a relatively small market share in slow-growing industries.

Matrix BCG

Analyzing Business Strategies. The task of business strategies is to determine competitive advantages in each strategic segment. They are designed to answer the question: “Which competitive advantages do we need or do we have?”

The Market-Based View: The structure-conduct-performance paradigm and Porter’s five forces

The Structure-Conduct-Performance Paradigm is based on the fact that the industry and its structure are the decisive factors that determine the behavior of players in the market and the potential of the market.

Based on the Structure-Conduct-Performance Paradigm, Michael Porter developed his concept of the five forces, designed to show companies exactly what positioning and strategy options are at their disposal  in the context of opportunities and threats in a particular market.

Porter’s five forces are:

• Rivalry among existing competitors;
• Bargaining power of suppliers;
• Bargaining power of buyers;
• Threat of new entrants;
• Threat of substitute products.

Porter Five Forces

The Resource -Based View: The core competency approach

The core competency – a competency that provides a competitive advantage. These core competencies may be resources, skills, general assets and etc.

Dynamic markets: the simple rules approach. These simple rules according to Kathleen Eisenhardt can be broken down into five categories:

1. How-to rules – determine how a company should carry out its key processes and how to make them unique;

2. Boundary rules help you to determine which business opportunity managers need to grasp, and what – not;

3. Priority rules help managers rank emerging business opportunities;

4. Timing rules help to synchronize the dynamics of markets and business opportunities with internal processes — such as the development of new products;

5. Exit rules teach managers to give up outdated business opportunities at the right time.

Network Approaches: the business model – an integrative frame of reference for describing a strategy

The method of building business models emerged in the mid-1990s. as a response to the phenomena occurring in and around network savings (the technological process brought by the Internet, and the globalization of companies and economic processes).

Three components:

• The choice of product / market combinations;
• The determination of the revenue mechanism;
• The configuration and execution of value adding activities.

The third chapter is devoted to the four most important concepts in the field of strategic management

1. Growth strategy

Seven successful growth strategies:

• Innovation and branding;
• Imposing new rules on other players;
• Globalization;
• A focused portfolio is a growth strategy;
• Reducing vertical integration through outsourcing;
• Market presence and consolidation through mergers and acquisitions through mergers and acquisitions ensures dominance in the industry by buying up the main competitors;
• Network / partnership / virtualization

2. Business Process Reengineering (BPO)

4 basic requirements for reengineering:

• fundamentality,
• radicalism,
• scale,
• processes

Business Processes

3. Strategic brand management

The purpose of branding is to maintain customer loyalty to the company in the long term and strengthen the brand.

5 elements of brand value:

• brand loyalty,
• recognition,
• perceived quality,
• associations,
• other advantages of the brand.

4. Strategic games

Game theory is a mathematical theory of strategic behavior that analyzes situations in which a decision is required. Conceptually, strategic games are dynamic modeling of real situations in business.

The book allows in a concise manner to get acquainted with the most important theoretical knowledge in the field of strategic management. The authors clearly and consistently help the reader to understand what a strategy is, what are the main tools for developing a strategy and how they are interconnected.

Most of the tools being analyzed are accompanied by explanatory examples, which makes reading and understanding of the material easier.

Also in the book there are many recommendations and references to the literature, revealing the topic of strategic management in more detail. In the final part of the book discusses the practical aspects of strategy development.

The authors also pay attention to the fact that even the best strategies will not always be correct and optimal in various situations. You can, using a book and your knowledge, reduce risks when making a strategic decision.

The book is recommended for beginners in matters of strategy, as well as for all who develop successful strategies for their company and its employees.

PS: I also recommend to read another great book by Philip Kotler – Lateral Marketing: New Techniques for Finding Breakthrough Ideas

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The 5 stages of the strategic management

 

Achieving ambitious goals requires more than just determination; it demands an adaptable approach to navigating market complexities and internal capabilities.

As a leader, understanding and implementing strategic management is essential for driving your organization toward success. At Quantive, our mission is to empower companies to surpass their expectations by providing robust strategy management solutions. But what exactly is strategic management, and why is it crucial?

What is strategic management?

Strategic management is the comprehensive process of setting goals, developing plans, and executing strategies to achieve an organization's long-term strategic objectives. It involves a continuous cycle of analysis, planning, implementation, and evaluation to ensure that the company adapts to changing environments and maintains a competitive edge. This modern approach helps organizations align their resources and actions with their vision and mission.

Why is strategic management important?

Strategic management is important, because without a strategic plan, companies can waste time, money, and resources, without reaching their goals. 

Constructing a building without a blueprint would be chaotic and inefficient. The blueprint provides a clear plan, detailing every aspect of the construction process. 
In strategic management, your strategic plan is your blueprint; strategies, top-level goals, and action steps. It serves as a guide for the entire organization, ensuring that every effort contributes to the overall success of the business.

The five stages of the strategic management process

1. Business objectives
2. Analysis
3. Strategic planning
4. Strategy execution
5. Evaluation and optimization

Business objectives

In order to successfully frame your strategic cycle, you will need your company mission, vision, and long-term business objectives. Start by revisiting the essence of what your business is and what it aspires to be. Then think about what goals could realistically advance these fundamental principles in the medium term. From there, define clear, specific, and actionable business objectives for your strategy cycle. You can set top-level objectives related to growth, market position, or other business outcomes, providing a direction for your strategic planning and execution.

Setting objectives:

• Growth: Determine your targets for revenue growth, market expansion, or customer acquisition
• Market position: Decide on your desired market share or industry ranking
• Business outcomes: Define other key outcomes, such as product innovation, operational efficiency, or customer satisfaction

Analysis

Conduct a thorough analysis of your internal capabilities and external environment. Quantive's solutions help you review your organization's strengths and weaknesses and understand market opportunities and threats, forming the foundation for effective strategies.

Internal analysis:

• Strengths: Identify your company’s core competencies and unique advantages
• Weaknesses: Recognize areas where your company lacks capabilities or resources

External analysis:

• Opportunities: Look for market trends, customer needs, and emerging technologies that your company can capitalize on
• Threats: Be aware of competitive pressures, regulatory changes, and economic fluctuations that could impact your business

Strategic planning

Create strategic plans based on insights from your analysis. Note that the insights from your analysis may lead you to revisit your top-level goals for your strategic cycle. Creating strategic plans from an analysis of your business context is no easy fit. It requires you to frame your decisions and plans effectively. Various strategic frameworks exist to strengthen your strategic decision-making. Quantive StrategyAI helps you evaluate different strategic options and select the ones that best fit your business needs and resources, drafting detailed plans and considering various scenarios.

Strategic planning process:

Evaluate options: Consider various strategic pathways and assess their potential impact
Select strategies: Choose the strategies that align with your business ambitions and leverage your strengths

• Draft plans: Develop detailed plans that outline the actions, timelines, and resources required for execution
• Scenario planning: Anticipate possible future scenarios and prepare contingency plans

Strategy execution

Execute your strategies with precision. This step involves putting plans into action, coordinating efforts across departments, and managing resources effectively. Ensure that your strategy implementation plan includes specific actions, timelines, and responsible parties.

Execution framework:

• Action plans: Break down strategic plans into specific actions with clear timelines and responsibilities
• Alignment: Ensure cross-departmental collaboration and communication
• Resource management: Allocate resources efficiently to support strategic initiatives
• Monitoring: Keep track of progress and make adjustments as needed

Evaluation and optimization

Regularly assess the performance of your strategies using metrics and KPIs. Review progress towards goals, identify any issues or deviations, and make necessary adjustments. This step helps you stay aligned with your objectives and improve your strategic approach over time.

Evaluation Process:

• Performance metrics: Use KPIs to measure progress towards your goals
• Review: Conduct regular reviews to identify issues or deviations from the plan
• Adjustments: Make necessary adjustments to optimize strategy execution
• Continuous improvement: Foster a culture of continuous improvement by encouraging feedback and learning

Always-on strategic management

If your business is a high-performance racing car on a never-ending track, you likely aren’t relying on a single, rigid plan you laid out at the start of the race. Instead, you’re using your tech stack to monitor conditions, anticipate changes, and make instant decisions. You’re adjusting your strategy when necessary.

Strategic management must be an ongoing, rapidly iterative cycle that allows organizations to remain agile and responsive instead of a linear, step-by-step process. The speed at which businesses need to adapt and respond to market changes necessitates a more dynamic approach. This is where the concept of an "Always-On" strategy becomes crucial. 

An agile approach ensures that your organization can quickly pivot and adjust its course as new opportunities and challenges arise. By implementing a fast loop around the traditional strategic management process, you can benefit from its theoretical foundations while effectively navigating the complexities of the modern market.

The combination of AI, data connectivity, and digital collaboration tools makes this nimble approach possible:

• AI can analyze vast amounts of information at unprecedented speed, providing insights that inform strategic decisions
• Data connectivity ensures that these insights are accessible across the organization
• Digital collaboration tools facilitate seamless communication and coordination among teams

Harnessing strategic management for organizational success

Strategic management is not just a theoretical concept; it's a practical tool for achieving business excellence. Bringing strategic management to your organization will align teams and ensure everyone contributes effectively to your business’ success. 

• Informed decision-making: strategic management provides executives with a comprehensive understanding of their organization's strengths, weaknesses, opportunities, and threats. This analysis is vital for making informed decisions that drive growth and mitigate risks
• Clear objectives and direction: by defining clear business objectives, teams move with a sense of purpose and direction
• Effective resource allocation: invest in initiatives that offer the highest returns and align with the company's long-term vision
• Enhanced execution and coordination: executing strategies with precision requires coordinated efforts across various departments. Strategic management ensures that implementation plans are well-defined, timelines are set, and responsibilities are assigned, leading to seamless execution
• Continuous improvement: the evaluation and optimization step allows stakeholders to monitor progress, identify deviations, and make necessary adjustments

This iterative process fosters continuous improvement, helping the company stay agile and responsive to changes.

How do I enforce a strategic management process within my organization?

Enforcing strategic management starts with ensuring that your strategic vision permeates every level of the organization. Quantive helps you embed this context by integrating strategic goals into daily operations, making sure that every team member understands how their work aligns with the company’s top-level objectives. This alignment fosters a sense of ownership and commitment, ensuring that everyone is working towards the same objectives. 
With real-time tracking tools and dashboards that offer insights into performance metrics and KPIs, continuous visibility allows you to identify and address any deviations from the plan promptly, keeping your strategy on course.

Strategic agility is crucial

Strategic agility is essential for organizational success. Imagine your brand as a grand ship embarking on a transformative voyage across a vast ocean. The goal is to explore new territories, evolve your offerings, and adapt to the ever-changing tides of customer habits, competition, and market dynamics. With strategic management, you have a well-prepared expedition–you chart the course by studying maps, understanding weather patterns, and assessing the ship’s strengths and weaknesses. The crew prepares for different conditions and challenges, ensuring they have the necessary supplies and contingencies in place.

Without strategic management, your team sets off on an aimless drift. They face unforeseen storms and obstacles, leading to a chaotic and unprepared journey.

Strategic management needs to go beyond the traditional step-after-step model, which stretches planning over months and execution over quarters with little to no evaluation and optimization in between.

By implementing an Always-On Strategy, you empower your teams to execute your vision flawlessly whilst empowering them to navigate market changes. With the help of Quantive StrategyAI, you can identify hidden trends and uncover previously unseen opportunities at any stage to gain a decisive strategic advantage.

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