Business Strategy

What is Strategic Management (and Why is it Important?)

What is Strategic Management and Why is it Important?

“If you don’t know where you’re going how will you get there” I think Yogi Berra, said something similarly illuminating 

A company vision shines a light on aspirations,  strategy illuminates a way to achieve them. 

Let’s briefly define strategy before we look at strategic management.

The most successful companies are able to clearly articulate their vision, and what they're trying to achieve. They harness the passion of their people, creativity, energy and full capacity towards aligned goals, working to deliver on a company vision. When all resources of a business are rowing in the same direction great things happen. 

The path we travel to achieve this is called strategy. We help clients navigate their best strategic path. 

Strategy is an approach taken to achieve a defined set of goals. At a high-level arguably there are 3 main approaches and or combinations a business can adopt to succeed ; Cost (price), Differentiation (creating uniquely desirable products and services) and Focus (offering a specialized service in a niche market). There’s a myriad of strategy frameworks with nuanced approaches to drive the outcomes specifically aligned to a company’s key objectives within the context of a company vision. 

At Lavan, we balance 3 key objectives; Growth top, and bottom line, Equity value, and Operational effectiveness, managed through 18 business drivers.   

A strategic plan outlines a high-level approach to achieving goals. The strategy sets the direction of the organization, with subsequent steps, and business models defining how to get there.

Strategy speed and innovation matter. Winning requires using scarce resources to out-invest the competition where it matters most. Decision making is at the heart of all success and failures. Organizational health is foundational to this, and where a cohesive leadership team operates above the rim.

Strategic management is the process of defining desired outcomes, and how the company will utilize resources to achieve them, combining all phases; the planning, implementation, and iteration. The whole process answering reflective and the practical questions 'how we will get it done'. Without this clarity, a workforce cannot choose buy-in, believe, become aligned, motivated and effective. Successful companies do the work necessary to answer these crucial questions, striving to achieve organizational health and a competitive advantage.

  • Why do we exist - Our core purpose is? 
  • How do we behave - Core values, Company character and principles to define and preserve company personality, behaviors – the company essence   
  • What do we do -  Business definition is crystal clear - clarity from leadership permeates the company and the market-place
  • How will we succeed - determining the strategy and implementation, business model(s)
  • What is most important - Always now, but with an eye on the future
  • Who does what -  Structure, right people in right seats 
  • How do we know it’s working? - Performance management

They repeat and iterate a cycle; plan, run, review and revise to consistently nurture organizational health, and deliver desired outcome(s).

To make strategic management practical it’s easier to apply a management process. A process detailing the steps, in order, that a business will complete to determine where they want to get to, how they're going to get there and if they’re succeeding, or not. 

ROSE℠ is a way of operating that achieves these steps.

Why Strategic Management?

There are a lot of benefits to strategic management. Without it a business is somewhat rudderless. Failing to plan is planning to fail. A strategic plan and practice management should make you better at what you do - It’s a framework that helps an owner and leadership team reach peak performance. Below are 4 of our favorite reasons why every company should apply this approach.

  1. Constant improvement 

Success is not a goal or a finish line to cross, it is the relentless pursuit of improvement.

Strategic management instills a discipline and structure for a constant cycle of  improvement. Plan, run, review results, revise and continue for a process seamlessly formulating, executing and iterating strategy in the pursuit of improvement. Operational excellence and organizational health combine together to drive value and outperformance. The business should feel like a high-performance car when we step on the gas it responds!

  1. Makes hiring decisions easier

A wrong hire is expensive, maybe inevitable but less likely with strategic management. Where core values and vision are aligned and permeate the whole firm including hiring policies making the right hire is easier when you know what you want and can identify capability gaps. Hiring your people, into a right environment, when valued and rewarded leads to motivated and fulfilled teams outperforming. 

  1. Motivating and improving employee performance and retention

Having a commonly understood and appreciated vision with a clear plan of how to get there helps harness the teams’ full mental capacity, creativity, and energy to engage and focus towards the same goal. Greater transparency and alignment across operations management systems that deliver true accountability and improved performance.

  1. Organizational Health drives greater value for competitive advantage

Organizational health is the rising tide that lifts all ships. Healthy companies nurture organizational health to optimize people performance across all activities and business drivers. It is the power of a cohesive leadership team who dare to adopt the behaviors necessary to create an environment to harness the whole organizations’ value, where their right fit people collectively outperform greater than the individual sum of the parts.

This can only happen through disciplined implementation.

Strategy doesn’t typically fail in formulation. It fails most often through implementation, the execution in the trenches, when people don’t have the necessary skills or attitude to perform. Accountabilities are not held , so fail. The where you are going is not effectively turned into the how to support and achieve the goals to deliver the results for desired outcome(s).

Where and How to begin? 

It is helpful to start with the end in mind, and begin with the vision. As we said at the start a company’s vision shines a light on aspirations, strategy illuminates a path to achieve them. 

We typically begin the process with an organizational diagnostic, which is akin to a body scan for the business. Unlike large consultants our process is non-invasive and a helpful place to start moving towards a thorough appreciation of the status quo. 

We have a complete set of simple concepts and practical tools that have helped thousands of entrepreneurs get what they want from their businesses. By mastering this simple way of operating, owners and leadership teams systematically and permanently improve.

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