Implementing a strategic decisioning environment requires establishing a framework of key processes and the associated enabling technology. This month we will discuss strategy management, the first topic in a series which examines the core processes comprising the decision process management framework.
Growth is number one on the CEO's agenda. After nearly a decade of pressure to get efficiencies, CEOs are now emphasizing revenue growth extending into new markets and services on a global scale to drive top-line improvement. On a related front, Wall Street continues to influence the executive suite. Research conducted by Ernst & Young finds that stock analysts now base an increasing number of their buy-or-sell recommendations on nonfinancial criteria. At the top of this list is "execution of corporate strategy." These factors and many others are adding renewed urgency for the reformulation and implementation of business strategy. With decisions being made at Internet speed, companies must ensure their business strategy is effectively operationalized. Companies must connect their organization through its strategy, initiatives and information. To accomplish this goal, a process for strategy management and strategy management systems is required.
Decisions which affect how the business strategy is implemented are made throughout the organization. To fully put the strategy into action, decision making must be aligned and connected as shown in Figure 1. Recall a statement made in my column in the April 1999 issue of DM Review: "Under-performing companies are less often the result of grand strategic mistakes than they are the sum total of hundreds or thousands of decisions, made by individuals throughout the organization." Strengthening strategic management requires adding value to the decision support environment by integrating planning, performance management and reporting processes. Strategy management is fueled by enterprise information, but it is not simply about leveraging information better. Nor is developing a performance scorecard the same as strategy management. An effective strategy management process is enabled by leading-edge decision support technologies. This includes real-time data warehouses, Web-enabled performance dashboards and specialized strategy management tools. These tools are explicitly designed to support the translation of the organization's strategic direction into specific initiatives, key result areas and risk management approaches. They support drill down from executive issues to projects and actions, and link the planning, performance measurement and reporting processes in an online environment to create an integrated strategic management and decisionmaking capability. An effective strategy management system enhances your organization's chances of implementing business strategy by introducing several crucial characteristics:
Drives behavior in line with the strategy. This allows each individual to answer questions such as: How do I fit into the strategy? How does my business unit deliver on the strategy? When the strategy changes, how do I change with it? The strategy management process enables the organization to implement change in light of a strategy, not simply implement change.
Reduces ambiguity around who is accountable for achieving the strategy. The strategy management process connects initiatives with the strategy. This provides an effective context to review all initiatives to determine if they are targeted on driving toward specific strategic outcomes. Accountabilities are easily visible because gaps in supporting the strategy can be quickly identified. Also, related initiatives which support a given objective, such as all revenue initiatives, HR initiatives or growth initiatives, can be effectively communicated and monitored as an integrated portfolio.
Integrates strategy with the operations of the business. This allows the organization to align around key objectives and direct energies on how things get done, not just the results themselves. Performance measures alone do not provide sufficient guidance about what need to happen to improve future performance or competitive position. Strategy management disciplines capture learnings on what happened yesterday which needs to be fixed and examples of what happened yesterday which should be replicated.
Enables continuous management of the organization's strategy rather than a periodic exercise. This is achieved through a number of factors, an important one being linking strategic planning with key recurring financial processes such as budgeting, forecasting and investment planning. This allows the continuous evaluation of short-term targets to help determine if the strategy is valid and if it is being effectively carried out. In this light, executives can monitor not only operational performance, but also achievement of the strategy.
Innovative companies with the intent and commitment to sustain competitive advantage in the Internet economy will adopt specialized decision support systems which enable real-time, insightful analysis of the firm's strategy, operational and financial performance. Faster decision making is better decision making only if it is in line with the company's strategic agenda.
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