A significant challenge for many organizations is the ability to implement or execute strategic plan initiatives. Once a plan is developed, and accountability assigned, it is important to establish measures of performance that will be reviewed regularly to assess performance. There are a number of methods for evaluating the effectiveness of strategic business initiatives. These include: strategic management and evaluation, SWOT, Porter's Five Forces and the Balanced Scorecard.
Strategic Management and Evaluation
Strategic management evaluation is the process by which organizations put in place measurement processes to evaluate their performance in key areas. The value of strategic planning is not, of course, in the planning -- but in the execution of the plan and the plan's effectiveness. Once a plan is developed, individuals will be assigned accountability for plan elements, metrics of performance will be established based on goals and objectives, and regular reporting periods will provide an opportunity to assess the effectiveness of the plan.
The SWOT (strengths, weaknesses, opportunities, threats) analysis is an evaluation method used by organizations during strategic planning to help them identify and prioritize the internal and external impacts that affect them. Strengths and weaknesses are internal -- weaknesses and threats are external. Organizations will develop strategies to leverage or capitalize on their strengths and opportunities, and minimize or overcome their weaknesses and threats. A brainstorming process is used to develop a list for each of these area; the list is later evaluated and prioritized to identify the top key contributing factors for each.
Porter's Five Forces
Michael Porter is the namesake for the Porter's Five Forces evaluation method used by organizations to help formulate their strategic plans. The five forces include: the threat of new competition, the availability of substitute products or service, the bargaining power of customers, the bargaining power of suppliers and the intensity of competitors. By considering these five forces, organizations are able to detect environmental impacts that could both help and hinder their own strategic planning efforts.
The balanced scorecard is a tool that simplifies the communication aspect of strategic planning evaluation by providing a visual format for indicating whether -- and to what extent -- performance expectations are being met. Scorecards are balanced in that they consider the interplay between financial, customer, learning and growth, and business process activities. Performance is depicted in charts -- or scorecards -- that allow plan reviewers to quickly determine whether measures are underperforming, meeting or exceeding expectations. Scorecards provide a simple summary of performance across all key areas that have been identified as critical to the organization's performance.