Strategic management is the ongoing process of strategy formulation, evaluation, and improvement in order to gain a competitive advantage. Learn about the five stages of strategic management and how implementing a strategic management process benefits your organization.
Clear eyes, full hearts, can’t lose. When your team has a clear sense of where you’re going and why, they’re empowered to get their best work done efficiently and effectively.
But building that level of clarity takes time—and effort. That’s where strategic management comes in. In this article, we’ll take a look at what strategic management is and how your team can benefit from the strategic management process.
Strategic management is the organization and execution of business resources in order to achieve your company goals. This isn’t an individual initiative but rather an ongoing process of strategy formulation, evaluation, and improvement in order to gain a competitive advantage.
The strategic management process includes:
Mission and vision statement setting
Long-term, large-scale goal setting, like BHAGs
Internal analysis of your organizational structure
Analysis of your external, competitive environment
Process implementation plans to achieve your organization’s objectives
Competitive strategy implementation
Strategic management might sound similar to several other critical business elements. Here’s how it stacks up in the business environment.
At first glance, strategic management and strategy seem like the same thing. The easiest way to differentiate between the two is to think of strategic management as the implementation of your corporate strategy.
In a business setting, strategy is the process of formulating decisions to hit your organization’s goals. An effective strategy is critical to help your business team understand what your priorities are and where you’re going. But to put the strategy into motion, you need strategic management. Strategic management takes your competitive environment into account and factors in how you’ll execute against your company’s strategy.
A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.
Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success.Read: New to strategic planning? Start here.
Even though the terms are very different, strategic management is often confused with operational management. Operational management is what your company does. This includes your organization’s value chain—in other words, the processes and practices your organization does on a regular basis in order to deliver a final product, good, or service.
If operational management is the “what,” strategic management is the “why” and “how.” To start, strategic management helps you define why you’re prioritizing different business initiatives and what you’re aiming to achieve in the long term. Then, during the implementation and planning phase, strategic management also defines how you’ll achieve your goals.
Like most elements of business strategy, strategic management takes time, energy, and effort. But the effort you put into strategic management benefits every level of your organization.
With effective strategic management, you’re building:
Clear plans on how you’ll reach your organizational goals.
A roadmap and understanding of your competitive advantage and differentiation.
A system for tracking how you’re progressing towards your organizational goals.
Team-wide understanding of what your organizational priorities are, and why.
Strategic alignment across your organization.
A more dynamic business that’s able to react to market changes faster and more effectively.
A proactive—rather than reactive—business strategy.
An ongoing process to analyze and improve your business processes in order to build the best workflows.
In general, it’s helpful to think of strategic management as a five step process:
The first step to the strategic management process is to evaluate where you’re going, and why. Ideally, you already have some goal material in place, including:
Your vision statement
Your mission statement
Your long-term goals and/or BHAGs
Your company’s core competencies
There are additional documents you can consider at this point, including:
It’s critical to identify your goals and plans in order to understand how you’re going to achieve them. Your goals form the basis of your decision making plans.Read: How to set Big Hairy Audacious Goals (BHAGs) to do the impossible
Once you’ve compiled a list of where you want to go, it’s helpful to get a bearing on where you are. The second step of strategic management is to take a look inwards at your current processes. If you haven’t already, run a SWOT analysis to get a better understanding of your organization’s strengths, weaknesses, opportunities, and threats.
What’s currently working?
What competitive advantages does your company have?
What isn’t working?
What, if any, operational issues have you run into?
What is your current market share, and how does it compare to your goals?
What are your current business needs, and are they being met?
What, if anything, could potentially impact your organization’s goals?
How does the external environment (including public opinion and the competitive environment) impact your business?
How does your internal environment (including your operations, employee satisfaction, and team morale) impact your business?
What does your organization need to do in order to achieve profitability?
If you haven’t already, this is the step where you build your strategic plan to describe exactly where you want to go and how you plan to achieve those goals. Depending on your organization, and how long you’ve been in business, this is also when you’d use business process management (BPM) to improve business processes.
Key questions to ask during this stage include:
What steps do you need to take to reach your goals?
How will you measure success?
What are your current processes, and are you able to achieve your goals with your processes?
You’ve identified your strategy—now it’s time to put it into action. The fourth step of the strategic management process takes the longest. This is where you implement your strategic plan and see it come to life.
This step depends largely on your business strategy. Essentially, you’re deciding which processes you need to evaluate, monitor, and improve—and putting those process improvement plans into action. This includes anything from better resource allocation, implementing business process automation (BPA) to streamline processes, or developing a company-wide project management office (PMO). Remember that implementing your strategy is a long-term process. In addition to your long-term strategic goals, make sure to set short-term goals to guide your strategy implementation and make sure you remain on track.
Strategic management isn’t a one-and-done thing. Your strategy also changes as your company matures. Similar to how you should revisit your strategic plan every three to five years, make sure you’re revisiting your overall strategic management plan regularly as well. Take into consideration any new potential threats or opportunities, as well as developing avenues the business may want to pursue.Read: How to use critical success factors (CSFs) to support your strategic plan
Strategic management doesn’t happen in a vacuum. You need key business units and project stakeholders to buy-in to your strategic plan. Effective strategic management permeates all levels of your organizational structure and factors in all of your organization’s resources in order to build the best long-term strategy for your business.
Just like strategic management doesn’t happen in a vacuum, goal setting doesn’t either. Get more goal setting and tracking resources in our goals resource hub.