What is an organisational strategy?Posted on: November 9, 2022
A company’s organisational strategy is the long-term plan that guides its decision-making and helps deliver on the organisation’s objectives and strategic goals. It outlines how resources – such as finances, staff, facilities, and inventory – are structured, allocated, and utilised in order to support business activities. It can also:
- Embed transparency within an organisation.
- Help teams and individuals within the business prioritise projects and tasks.
- Create consistency across processes and procedures.
- Offer a common goal and a shared purpose among different teams.
- Future-proof the organisation, ensuring it can react and adapt as necessary to challenges and change.
Whether an organisation is a new startup or a multinational corporation, an organisational strategy is one of the most powerful and effective tools towards making successful strategic decisions.
How are organisational strategies developed?
An organisational strategy is the sum total of a number of important parts. Ideally, it should be developed in collaboration with strategic management and stakeholders across the organisation, and requires a strong foundation of groundwork that should be laid before development. This groundwork includes:
- Internal and external audits that outline the organisation’s current position in terms of its strengths and its weaknesses, its customers, consumer segments, and competitors, and its place within the market, as well as market trends.
- A robust structure that highlights responsibilities, accountability, and key performance indicators.
- A set of core organisational values. These values should reflect the company culture as well as its purpose and vision, and provide guidance on everything from business decisions to employee behaviours.
Armed with this information, a business can then begin its strategic planning. It will plot its long-term journey, defining its priorities and its objectives, and setting out SMART goals, which are:
- Specific. What, exactly, are the company’s goals?
- Measurable. What does success look like, and how will it be measured?
- Achievable. The developing strategy may be ambitious or aspirational, but can it also, realistically, be delivered?
- Relevant. There should be a clear understanding between the goals and the organisational purpose. Is each goal relevant to that purpose?
- Time-bound. How long does the new strategy span? For example, is it effective for five years, or 10?
The building blocks behind successful organisational strategies
Organisational strategies are typically divided into three categories, with each piece feeding into the overarching plan.
1. The corporate-level strategy
The corporate strategy is where a business outlines its purpose, and it influences all other elements of the organisational strategy in order to steer the direction of the business, achieve organisational objectives, and increase profitability. It’s broad in scope and focused on long-term goals and milestones.
2. The business-level strategy
The business strategy is what connects the corporate strategy to the more granular functional strategy. It takes the purpose that’s cemented in the corporate strategy, and translates it into strategic projects and initiatives to be picked up within the functional strategy. It also helps departments, teams, and even individual staff members better understand how their work assists in delivering on the organisation’s objectives and achieving its business goals.
3. The functional-level strategy
The functional strategy outlines the specific tasks and actions that departments and teams need to perform in order to support the requirements outlined in the business strategy, and achieve the goals laid out in the corporate strategy. They are detailed, specific, and give managers a clear direction on what work needs to be assigned and completed by individuals within their teams.
What are the different types of organisational strategies?
Organisational strategies can take one of several forms, depending on the needs and requirements of the business.
Differentiation strategies are utilised by businesses that want to set themselves apart from their competitors by highlighting the unique aspects of their products or services to gain a competitive advantage. A differentiation strategy might include:
- Extensive market research in order to better understand what consumers want, what competitors are offering, and where gaps might exist.
- Fine-tuning processes and procedures to ensure that the products or services in question are, for example, produced with high-quality parts or developed by experts in the field in order to provide a unique selling point.
- Developing marketing campaigns that highlight the organisation’s innovation or quality, and create demand.
Also known as rationalisation, concentration strategies are focused on reorganising a business and creating action plans to increase efficiencies. This might include:
- Reducing staff.
- Reducing facilities, store locations, or business units.
- Reducing product lines.
These strategies are typically employed when an organisation has become too complex and unwieldy, and requires action in order to become more streamlined and profitable.
Growth strategies are often used by businesses that are focused on expansion. This can include strategic efforts into:
- new markets.
- new products.
- acquisitions and mergers with competitors and other businesses.
They act as a roadmap to effectively steer the organisation during the period of growth activity, outlining resource allocation specifically for growth areas, and metrics for success.
What is the difference between organisational strategy and organisational design?
Organisational design is closely tied to organisational strategy, but it’s not the same thing. Instead, organisational design is the process whereby an organisational strategy is developed and delivered according to business needs. According to the Chartered Institute of Personnel and Development (CIPD), it is “the process and outcome of shaping an organisational structure to align it with the business purpose and context in which it exists.”
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