Importance of Strategy
It is important for an organization, business or department to have strategy in place for the success of the organization, business or department. Strategy is a set of choices that defines the nature, direction and value system of an organization. It is a mindset which should be understood by every person in the organization and used to guide all decision-making within the organization.
Strategy is important to an organization because it can provide an overall strategic direction to the management of the organization and gives a specific direction to areas like financial strategy, marketing strategy, organizational development strategy and human resources strategy, to achieve success in execution.
The importance of strategic planning is that it is planning for the corporate whole, not for its parts. It is not business planning, although it should inform and shape the business plan, it is not production planning, although it should guide what is produced, it is not workforce or technology planning or any other type of partial planning, and it definitely is not marketing, even though it guides who to market to and where to market. It is not coordinating, forecasting or budgeting. It is a process designed to yield a corporate strategic plan – a statement of strategies designed to affect the long term performance of the organization as a corporate whole.
Bottom line is that strategy is fundamental to the success and sustainability of any organisation. Here are few obvious reasons:
Understanding your company and industry
Strategy allows organisations to develop a clearer understanding of their own organisation i.e. who we are, what we do and what’s required for them to succeed. Strategy helps leadership & employees understand their core capabilities, identify and address weaknesses and mitigate risks. It also helps organisations better design themselves so that they are focusing on the right things that are most likely to deliver the best performance, productivity and profit both now and in the future.
In developing strategy, leaders make conscious and informed choices about who they are and what they stand for:
– What are our core values and beliefs?
– What markets and customer groups will we serve?
– What products and services will we offer and how profitable is each one?
– What competitive advantages will cause us to succeed?
– What core competencies must we have to fuel our growth?
– How will we sell our products and services?
– How will we market our products and services?
– What infrastructure, core processes and resources must we have to succeed?
– What financial results will we achieve?
Growing in a changing world
One of the fundamental attribute of strategy is to be contemporary. Strategy planners ensure that strategy evolves with time in response to changing circumstances. Understanding what is taking place within the external environment is important to prepare a strategy that will ensure long-term profit and growth. With the rate of change becoming faster every year, it’s increasingly important that we understand what trends are going to impact on our business and our industry, and how we’re going to respond to them.
Strategy enables us to find opportunities for growth and sustained profitability and it can help us identify and respond to changes that could make us extinct.
Creating a vision and direction for the whole organisation
Strategy creates context for operating decisions. It establishes the playing field and provides guidance for decision-making, the experience and skills needed by employees, positioning of marketing and advertising, the priority of initiatives, how to structure the company, and a many other issues.
Strategy provides the organisation with a common purpose, goals and a set of actions to reach the goal ensures that everyone is working for the same outcome (your organisations success). It is a mindset which should be understood by every person in the organization and used to guide all decision-making within the organization.
While strategy is can be difficult for many organisations to commence, its benefits are far-reaching and many. From creating new business opportunities, to streamlining the operations and engaging staff, a well-formulated strategy will enable increased growth, productivity and profit both now and into the future.
“Efforts and courage are not enough without purpose and direction” – John F Kennedy
“Doing the right thing is more important than doing the thing right” – Peter Drucker