How Do We Define Strategy?

Published by on 5. Oct 2012 in category Concepts
How Do We Define Strategy?

Strategy is a clear answer to the question of how an organization positions itself within the market and in comparison to its competitors. The strategy development connected to it is a major, non-delegable managerial task within the company, which enables the differences between present and past to be processed.

 

In this case, we abandon traditional core beliefs of plan determinate company steering and pursue the idea of a constant self-renewal process. In this connection, we perceive organizations as highly complex social systems and thus, during strategy development we take into consideration the social system’s prevailing high dynamics, the organization’s existing self-referentiality as well as the change resistance connected to it.

One of the greatest challenges arising during a strategy development process is to overcome an organization’s established schemas of differences and evaluation pattern. By feeding the elements of variation, selection and re-stabilization into this process, a company is provided with learning stimulus as well as impulses from the outside. This enables them to utilize these impulses in a targeted manner and setting the strategic course at an early stage. Consequently, strategy planning is a targeted intervention in reflection upon existing hypotheses relating to the status and development of those environments relevant to the organization, as well as for reflection of answers to future-oriented questions. The objective is to paint an attractive picture of the company’s future, which in turn, conveys orientation to the responsible persons within the organization.

Strategy planning, as it comprises recurrent processes of reflection and decision, becomes a successful mutual leadership responsibility within a managerial system; shaping the future and overcoming insecurity by involving the organization’s key players.

The results of strategy planning is the company’s tactical positioning within the market and are achieved by answering the following questions:

  • In which markets doe we see our company operating?
  • Which customer segment targets would we like to focus on?
  • Which benefit do we want to offer our customers?
  • How do we want to distinguish ourselves, our products and services from the competition?

A strategy also includes significant, quantitative strategic objectives that should be achieved through the positioning itself as well as through a master plan that covers the essential levers and activities for strategy implementation.

Elements of a strategy process

  • Business Area Segmentation
    This element is the identification of the business areas (market segments) in which the company operates as well as the critical evaluation of its logical organization.
  • Relevant Environments
    We assume that an organization never has all of the existing information in its actual entirety at its disposal, and that the future is uncertain. Therefore, strategy development is initially based on assumptions. These assumptions should be made explicitly and mutualized by the strategy team, allowing decisions to be made based on those assumptions.
  • Innovative Customer Segmentation
    In this phase, the different needs, behaviors and the resulting anticipation of the customers should be identified and characteristic customer clusters structured.
  • Core Competences
    When analyzing core competences, the objective is to identify the skill-bundle that has been nurtured over many years and that rests deeply within the organization, as this is the basic foundation of the company’s competitiveness.
  • Challenges and Crucial Questions
    This is where central strategic challenges are derived as well as of those associated questions of overall orientation take place. It could concern the subject of coping with risks as well as the exploitation of opportunities.
  • Strategic Options
    Strategic options respectively possible future drafts are developed based on existing organizational core competences, identified risks and opportunities. A sustainable strategic option must be capable of addressing all identified strategic challenges and questions of overall orientation.
  • Strategic Positioning and Objectives
    In this phase, a comparison of the option drafts in hand take place in a mutual process of evaluation and discussion and in turn, refined to an attractive picture of the future. The questions of overall orientation are answered and the significant target variable defined. Furthermore, the Value Propositions for the target customer segments are defined.
  • Strategy Map, Masterplan and KPIs
    This phase deals with identifying important levers for the implementation of strategic positioning and for the achievement of objectives. Measures are derived for each identified and examined lever and bundled in the masterplan. In addition, the fundamental tracking and steering variables (KPIs) are elaborated.

Do you want to learn more?

SEDLÁK & PARTNER advises and supports you during the development and review of your strategy. We have years of experience, based on diverse solutions for various types of organizations and suitable for different industries. Do you want to learn more about the topic? Please fill out the following contact form to receive further information or schedule a free, personal online dialog to see our references and practical examples of our current projects.

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