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The Strategy Formulation Process

Chapter 6

Overview

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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

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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

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Nature of the formulation process

Can be both: formal and informal simple and complex Analytical and qualitative Involve many people or just a few

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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

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The 3 Interlocking aspects of theStrategy Formulation Process

StrategicIntent

StrategicAssessment Strategic

Choice

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The 3 Aspects of Strategy FormulationStrategic Intent

Driver of Strategy Formulation Process

Provides direction for strategy

Answers question “Where do we want to go?”

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The 3 Aspects of Strategy FormulationStrategic Assessment

Provides relevant knowledge of strategic context

Anchors future strategies in reality

Answers question “Where are we now?”

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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?”

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Activities and Results of Process

Activities in Process

Intending

Assessing

Choosing

Results fromProcess

Intent

Assessment

Choice

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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

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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

Source: Robert Grant 1995 “Contemporary Strategy Analysis”