Selecting the best management tool for strategic implementation is not a “one size fits all” decision. The best approach will depend on the industry, company size, management culture and resources. Organizations also face the challenge of selecting approaches that are popular one day, only to be replaced by something else the next. Staying ahead of the competition requires organizations to take a fresh approach and turn strategic implementation into a competitive advantage.
A Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis is the first step in formulating a strategic plan. Strengths are used as a basis for developing a competitive advantage. Weaknesses are those factors that might hamper an organization.
Opportunities and threats are external to an organization. An organization establishes its strategic direction by capitalizing on opportunities for growth, such as an unfulfilled market. Threats represent those environmental factors that can impede a firm's chance of success, such as a new competitor entering the market.
Identifying core competencies is another tool used to formulate strategies. It goes further than identifying strengths. Core competencies are capabilities that add strategic value to an organization’s products or services. They are very difficult for competitors to duplicate. This approach enables companies to develop a long-term competitive advantage, thereby maintaining a leadership position in the market.
Gap analysis is a tool used for the implementation of strategic plans. It looks at an organization’s current position and where it wants to be (its objectives). The operational plan (the implementation phase of the strategic plan) outlines activities and programs designed to close these “gaps.”
Key Performance Indicators
Key Performance Indicators (KPIs) are measures that companies use to assess progress toward strategic objectives. They provide an effective way for organizations to monitor how well they are doing. Which measures to use will depend on the industry and a company’s objectives. KPIs must be meaningful and the business processes must be in place to track these measures over time.
The Balanced Scorecard is another approach that uses performance indicators. However, the Balanced Scorecard selects indicators from different dimensions and groups them to provide a “balance” of financial and non-financial measures. The four dimensions of the Balanced Scorecard are financial, customer, operational and employee (learning and growth).
The Strategic Map integrates the strategic plan with the functional areas of an organization. It is a diagram that links each of the strategic objectives with each of the four dimensions of the Balanced Scorecard objectives—financial, customer, operational and employee. This process aligns the strategic objectives with performance objectives. This process makes the strategic plan easier to understand and communicate, leading to more effective implementation.