How to create a good organisational strategyPosted on: August 9, 2021
Having an organisational strategy is vital for a business’s growth and success, whether it’s for a small startup or a large enterprise. By having a well-defined plan that has been created strategically to account for today’s complex business environment, a company has milestones to work towards to ensure they thrive.
But what is an organisational strategy, and how do businesses create a solid plan for success?
What is organisational strategy?
An organisational strategy is a long-term strategic plan that roadmaps the route towards a company’s goals and visions. Often, they encompass goals for the next three to five years – enough time to action plans and see results but short enough that all staff are motivated to reach the goals.
While the business goals may remain the same throughout the lifespan of the strategy, companies must be dynamic and willing to change the strategy at points throughout the journey should it become clear they’re veering away from their original goals or if anything isn’t working as effectively as initially thought.
The plan specifies how a business will allocate resources such as finances, labour and inventory, to support business activities such as infrastructure, production and marketing.
An organisational strategy can be broken down into three categories, corporate level strategy, business level strategy, and functional level strategy. Each of these has their own strategic goals and milestones which feed into the big picture, and each are essential in guiding the business and staff who work there. Together, these building blocks must be well addressed, well aligned, and well executed for overall success.
Corporate level strategy
The corporate strategy is formulated by the top management stakeholders. It is the main purpose of the business and reflects the path towards attaining the vision of the organisation. Most corporate level strategies will be broad in scope and complex, and will include visioning and setting the high-level direction of the company, objective setting, allocation of resources and budgeting to achieve the company’s goals, and strategic trade-offs and risks.
Business level strategy
The business level strategy translates the corporate level strategy into actionable and achievable goals for the business needs above and the workers implementing the functional level strategy beneath. Often created by heads of specific areas of the business, they set and steer the direction for an individual business unit or their team. The activities in the business level strategy will largely be focused on gaining competitive advantage and creating value for the customer base.
Functional level strategy
As the corporate level strategy defines the ‘where’ and the business strategy defines the ‘what’, the functional level strategy defines the ‘how’, often in the form of individual KPIs and targets. The functional level strategies are put in place at the operating level of an organisation, and though all are created to reach the overall long-term goals and vision, they will look a lot different between departments. There will be different strategies created for IT, HR, marketing, and other teams within a business.
Why all businesses need an organisational strategy
Organisational strategies are an important part of a business, especially when the corporate level strategy, business level strategy, and functional level strategy are created and aligned to each other.
When a business has an organisational strategy, directions are set for all staff. It defines the priority of activities, as everyone is working towards a clear and common goal. Teams and departments are also more likely to be aligned when the milestones are set, and decision making is simplified as any decision must be toward the overall goals.
How to create a good organisational strategy
A good organisational strategy should seek the answers to questions like ‘where do we want to be in five years?’, ‘what is going well, and what isn’t working as well as we hoped?’, and ‘what do we need to obtain to achieve our overall goals and vision?’.
When a business creates their organisational strategy, they should ensure that it is flexible to adapt and change when needed, responsive to market conditions, and in line with organisational culture and values.
For goal setting, companies should adopt the SMART goals framework to ensure a clear route to success. SMART goals should have all of the following features:
The goal should be clear and specific to ensure motivation to achieve it. An easy way to make a goal specific is to try to answer the five ‘W’ questions when drafting it. These include:
- What needs to be accomplished?
- Why is this goal important?
- Who is involved?
- Where is it located?
- Which resources are available, and which limits are blocking the way?
Measurable goals ensure progress is tracked and enables people to stay motivated. When progress is assessed, it helps to stay focused, hit deadlines, and feel excited as the goal gets closer to being achieved. To measure goals, ensure a clear route of progression is outlined so everyone knows when it has been accomplished.
To be successful, a goal must be realistic and achievable. It should be challenging, but still remain possible to complete. When assessing whether a goal is achievable, the way it will be accomplished must be outlined. It may be necessary to engage external resources with specialist skills, or acquire a budget for certain tools or equipment.
A relevant goal will align with all three factors within the wider strategy – the corporate level, business level, and functional level. It should be a plan that drives the wider vision forward, should be worthwhile to the business, and should be started at the right time.
Every goal should have a target date and a deadline, so it can be focused on and worked towards.
Learn more about organisational strategy
Our MBA programme has a specialist module on organisational strategy which will introduce you to practical techniques for identifying trends in the business environment and will hone your decision-making ability as you learn to develop and present business plans and strategies. This module is also studied on our MBA Finance, should you wish to specialise in finance as part of your business studies.
As the MBA is studied entirely online and part-time, you can learn while you continue to develop your career, allowing you to put the skills you learn into action in your current work environment.
Take your skills and knowledge to the next level and become highly sought after as a University of Wolverhampton MBA graduate.