The Strategy Formulation Process

Overview

Importance of Strategy Formulation Process

Causes strategic Thinking

Mechanism to ease the communication of ideas

Co-ordinate the efforts of those involved in the

process Inject structure into the thinking without rigidity

Characteristics of good strategy

Judged by the results achieved NOT by the

process Process must match:

business needs Culture Specific issues of the context

Process must be: Original Creative Easy to implement

Nature of the formulation process

Can be both:
formal and informal
simple and complex

Analytical and qualitative

Involve many people or just a few

Strategic Thinking Should

Consider the enterprise as a whole

Be about the long term and not the immediate

Address the organisations relationship with

the environment and its capabilities and resources Be based on fact and reality with some imagination Have a good understanding of the present Be able to think imaginatively about the future

The 3 Interlocking aspects of the Strategy Formulation Process

Strategic Intent

Strategic Assessment

Strategic Choice

The 3 Aspects of Strategy Formulation Strategic Intent

Driver of Strategy Formulation Process Provides direction for strategy Answers question Where do we want to go?

The 3 Aspects of Strategy Formulation Strategic Assessment

Provides relevant knowledge of strategic context Anchors future strategies in reality Answers question Where are we now?

The 3 Aspects of Strategy Formulation Strategic Choice

If no choice - no strategy needed The link to action

Answers question How to get from where we are to

where we want to be?

Activities and Results of Process

Activities in Process Intending Assessing Choosing

Results from Process Intent Assessment Choice

Effective strategy formulation processes

Customer awareness Supplier relationships Stakeholder influences Understanding of competence Awareness of technological change and innovation Mix of people involved in process Encouragement and understanding of top management Communication of results and reaction to feedback Sound logic and balance to the process

Process design but not over-design

Considered role of external support

Results from the strategy formulation process

Goals that are simple, consistent and

long term. Profound understanding of the competitive environment Objective appraisal of resources Effective implementation