Strategic management relies on some important components.
Management is a strategic function that occurs at every organization regardless of its size, or regardless of whether the function is formalized. By formally considering the strategy behind managing an organization, division or department, business leaders can increase the odds of their success. Three critical components come into play: environmental scanning, strategy formulation and implementation and strategy evaluation.
Environmental Scanning
The first step in the strategic management process is environmental scanning. This involves a review of both internal and external impacts that may influence the organization and its success. Internal impacts may include employee turnover, sales data, productive data and quality data. External information may include industry data, economic data, information about the target market or information about competitors. All of these inputs become part of the SWOT analysis, which is a review of the organization's strengths, weaknesses, opportunities and threats.
Strategy Formulation and Implementation
Strategy formulation is based on the inputs gathered through the environmental analysis, and specifically the strengths, weaknesses, opportunities and threats generated through the SWOT analysis. Strategies will be developed to leverage or capitalize on the identified strengths and opportunities, and to overcome or minimize the identified weaknesses and threats. Once strategies are developed, they will be supported through tactics or action plans that will be assigned to individuals who will be accountable for successful outcomes.
Strategy Evaluation
Once strategies are implemented, it is important that results are gathered, evaluated and adjusted as needed to ensure success. Identifying specific metrics, assigning them to individuals and having regular reporting periods where progress can be assessed will ensure that nothing falls through the cracks. The results of strategy evaluation may lead to the identification of actions that should be increased or strengthened, as well as actions that should be modified or eliminated. The learning that occurs through this process becomes an important input into the next cycle of strategy development.
Ongoing Communication
In addition to the three components of strategies management, ongoing communication is critical to ensure that management strategies are achieved. Communication should occur with all stakeholders -- internal and external - -and should provide the opportunity for two-way communication and input. Internal stakeholders will include employees; external stakeholders will include vendors, community members, customers, and sometimes legislators and industry leaders. The many communication tools available today from the traditional (meetings, reports and newsletters) to the new media (social media and blogs) make it easier than ever before to cast a wide net in terms of communicating with key constituencies.
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