Designing An Effective Model For Business Strategy

By M. Isi Eromosele

All global businesses have the imperative need to make strategic decisions that lead to taking specific market actions. These decisions frequently require commitment of the company’s valuable resources as well as capital. Without an appropriate framework for making strategic decisions in place, key investments in human and financial capital are placed at risk.

A strategic architecture represents how the values, purpose and operating principles in an organization are connected to its vision and strategy. To avoid a misalignment between the planning and reality, strategic objectives must be tied to the everyday operating environment. Performance measurement systems, including economic value measures, financial measures, such as cash flow from return on investment and a combination of methods for linking non-financial and financial measures, must be put in place. This will tie or translate the strategic objectives of an organization to performance measure. Performance measurement allows an organization to express the intent of its strategy and how that strategy connects with its operations.

Companies need to better understand the basic strategic decision making process itself. This process should address three key questions:

• How should the fundamental questions and hypothesis in the strategic planning process be framed?
• On which information intelligence will key strategic planning decisions be based?
• What processes are going to be applied to ensure that sound judgments are made in the planning process?
• How will the company monitor its strategic decisions over time to ensure their effectiveness?

The following are cognitive factors that limit organizations’ ability to fully answer the above questions.

• Lack of understanding of business drivers and outcomes. This involves the whole issue of understanding cause and effect relationships such as ‘What are the key business drivers and the desired outcomes and how they correlate is a critical dimension of strategy.”
• The wrong business intelligence serving as the informational basis. Frequently, much of the knowledge collected does not focus on the real strategic needs of the organization. It is imperative that the knowledge collected is channeled appropriately.
• Inability to connect strategic objectives to operating activities. This occurs when management cannot translate the grand strategic themes into business reality at the operating level of the organization. Performance measurement management systems provide the capability of ensuring that strategies and performance are closely linked.
• Poor analytical tools to support strategic decisions. Frequently, organizations do not possess adequate analytical tools to apply the information it has as a knowledge enhancement. This could be resolved through effective use of scenario planning and simulation techniques.
• Narrow organizational and human capital utilization. Strategic decisions are often impaired because firms fail to appreciate the value of inputs from a wide variety of employees in favor of a top down approach. This leads to a vast number of employees becoming underleveraged resources.
• Failure to emphasize differentiation. In exploring desired competitive differentiation, one of the most critical elements of strategic decision making, organizations fail to answer the question, “How are we truly different from other organizations in our industry?”

Improving Strategic Decisions

In order to correct the above cognitive factors, companies would have to do the following:

• Succinctly identify the fundamental logic of the strategic planning process they have defined. Is it comprehensive, objective, timely and broad-based, with input from various parts of the organization?
• Closely link the strategic plan to business operations to ensure effective implementation
• Support the whole implementation of the process through learning and informational activities that are focused on the strategic objectives and their benefits to the organization

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group