Strategy Development & Strategic Planning

Strategy involves making informed choices about which actions to take and which to avoid to achieve a specific goal. It’s about positioning your organization for success by understanding your strengths, weaknesses, and competitive landscape.

Strategy Development is the process of creating a strategy for your organization. 

It involves a series of key steps:

• Strategy Analysis: Analyzing the past and current situation, including internal factors (corporation) and external factors (all markets) that may impact your organization.
• Strategy Prediction: Forecasting key strategy variables (e.g. market demands, market prices etc.) and potential disruptions to anticipate challenges and opportunities.
• Strategy Options and Alternatives Creation : Generating a range of possible strategic paths and evaluating their potential outcomes.
• Strategy Baseline Selection and Fallbacks Definition: Choosing a primary strategy and identifying alternative options in case of unforeseen circumstances.
• Strategic Targets Definition: Setting specific, measurable goals that align with your chosen strategy.

It also involves setting goals and outlining the steps needed to reach those goals. 

Importantly, strategy development grapples with challenging strategic factors being inherent in today’s business environment:

• Uncertainty: The lack of predictability about future events and outcomes. This could involve unpredictable market shifts, technological disruptions, or changes in consumer behavior.
• Complexity: The presence of many interconnected factors and variables that influence the organization’s environment and decision-making. This can make it difficult to understand the full impact of strategic choices.
• Turbulence: The rate and magnitude of change occurring in the environment. High turbulence means rapid and unpredictable shifts that require organizations to be agile and adaptable.

These factors are hard to manage effectively without professional quantitative methods like advanced analytics, simulation, and optimization.

Strategic Planning focuses on the implementation of your strategy.

 It involves developing detailed plans, assigning resources, and establishing timelines for specific projects and initiatives.

This is where methods like the Balanced Scorecard and OKR (Objectives and Key Results) come into play. While these methods don’t formulate the strategy itself they can be valuable for strategy execution management as they provide frameworks for translating strategic goals into action and tracking progress.

The Relationship: Strategy development provides the „what“ and „why,“ while strategy planning provides the „how.“ They are both essential for achieving organizational goals.

• Strategy development provides the strategy baseline
• Strategic planning translates that strategy baseline into a strategic plan and actionable steps (programmes, projects, processes, policies etc.)
• Both are iterative processes that require ongoing evaluation and adjustment

Effective strategy development and planning are essential for organizations to thrive in today’s dynamic environment.

Strategy Development & Strategic Planning – The Challenges

Developing and implementing a successful strategy is not without its challenges. It requires strong leadership, clear communication, and a willingness to adapt to change.

The challenges are:

• Skipping Strategy Development: In B2B industries, there’s a tendency to jump straight to strategic planning, bypassing the crucial strategy development phase.
• Neglecting Key Drivers: True strategy development requires deep analysis of key drivers like technology pipelines, product pipelines, customer needs, pricing, and competitor activities, which are often overlooked.
• Relying on Opinion: Strategy execution tools like BSC and OKR are often populated based on majority opinion rather than rigorous strategy work.
• Short-Term Focus: Incremental growth and performance targets can create a false sense of security, masking the need for robust strategy development.
• Vulnerability: This approach can leave organizations vulnerable during times of crisis or rapid change, as they lack a strong strategic foundation to navigate uncertainty.
• Execution: Maintaining alignment between strategy and execution.
• Commitment: Securing buy-in and commitment from stakeholders.
• Adapting to unexpected changes in the market or environment.
• Measuring the effectiveness of your strategy.

Overcoming these challenges requires a combination of careful planning, effective communication, and a commitment to effective execution and continuous improvement.

Strategy Development & Strategic Planning – The Benefits

A well-defined strategy provides numerous benefits for organizations of all sizes. It helps to focus efforts, improve decision-making, and drive performance.

The benefits can be:

• Improved clarity and focus.
• Enhanced decision-making.
• Improved competitive advantage.
• Increased efficiency and productivity.
• Greater agility and responsiveness to change.
• Reduced risk
• Optimum profitable growth

By investing time and resources in strategy development and strategy planning, organizations can position themselves for long-term success.