The Strategy Formulation Process

1
The Strategy Formulation Process

• Chapter 6
• Overview

2
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

3
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

4
Nature of the formulation process

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

5
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

6
The 3 Interlocking aspects of the Strategy
Formulation Process
Strategic Intent
Strategic Assessment
Strategic Choice
7
The 3 Aspects of Strategy FormulationStrategic
Intent

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

8
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?

9
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?

10
Activities and Results of Process
Activities in Process Intending Assessing Choo
sing
Results from Process Intent Assessment Choice
11
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

12
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