An organizational strategy is crucial for future growth regardless of whether you are an entrepreneur, small-business owner, or corporate firm. An organizational strategy is one of the most important things an organization should have. Companies should have the strategy, not just for its sake but to put it into an organization's action plans. It has been my observation that most start-up companies or SMEs are operating without an organization strategy, some have the strategy, but it is not being implemented as it should. Other organizations have only conducted the strategy and never reviewed the strategy.
If you want to start a business or own a business, you might need to consider having this tool if you don't have a business strategy. Someone once told me that if you need to get to a certain destination, do you first walk around and try to get to your destination blindsided when holding a map? Or do you first open your map and begin your journey guided by your map, following the route and instructions on getting to your destination?
In this article, we define organizational strategy, talk about the essential elements of organizational strategy, and list the existing strategy types. We also briefly discuss why your company requires an organizational strategy.
What is an Organizational Strategy?
Now think of an organizational strategy as a tool which aids organizations of all sizes to be competitive and grow. In other words, the future of an organization depends on this tool. An organizational strategy is a plan of action for how a business will reach its long-term objectives. It outlines how a corporation intends to employ its resources to support its operations over the long term. It offers direction on how a business might accomplish its goals. These action plans are used by businesses to fulfil their objectives and create strategic plans. Organizational strategies frequently contain thorough assessments detailing the company's goals and objectives.
Ansoff (1965) defines organizational strategy as a conscious plan to align an organization with the opportunities and difficulties posed by its environment. The ability of any company to develop within its environment is frequently reliant on economies of scope in production (goods or services), learning curves, and process innovation, and this necessitates the alignment of the business's strategy to be able to do this. This frequently necessitates organizations to understand the environment in which they are currently operating, their current resources, and the possibility of using these to overcome threats and seize opportunities.
A company's mission, which defines why it is in business, must inform organizational strategy. Every activity in the organization should strive to fulfil this aim, with the mission guiding all strategic decisions. A corporation's vision outlines what the company will have accomplished in accomplishing its purpose. The long-term goals of an organizational strategy flow from the vision. In your organizational strategy, you can identify many business objectives, each with its own set of procedures to assist you in reaching them.
Levels of an Organizational Strategy
When creating your organizational strategy, you need to consider your company's three main organizational levels and their different roles in your overall plan.
Think of these levels as building blocks, the corporate-level plan being the most comprehensive and flexible strategy, while the functional strategy is the most immediately implementable. The levels apply to all organizations, whether small or large organizations.
As the saying goes, "A journey of a thousand miles begins with one step." Of course, success isn't always guaranteed, even with a solid (or excellent) strategy, but if you want to succeed, you should start somewhere. A key component of producing quality work is comprehending the many levels of strategy.
Each of these three types is important in formulating a comprehensive organizational strategy. Let us try to grasp all three strategies in simple terms.
Corporate level strategy:
This level provides an answer to the fundamental question of your aim. Is it expansion, stability, or contraction? Corporate strategies have a broad reach and are intended to reflect the overall goals and mission of the organization. Diversification, differentiating, and growth strategies are all part of corporate strategies, which include high-level objectives for accomplishing strategic goals. It directs the creation of the business level and functional level strategies. The corporate-level strategy represents the main objective of your organization and the general direction it should be taking. A company's mission, which defines why it is in business, must inform organizational strategy. Every activity in the organization should strive to fulfil this aim, with the mission guiding all strategic decisions.
Business level strategy:
This level focuses on your strategy for competing. Differentiation and what is the basis for the differentiation? Will it be accomplished by close ties to customers, innovation in products or services, or the lowest overall cost?
This is where the rubber meets the road, where the corporate strategy is reduced to a set of measurable objectives are the business strategies. The departmental objectives for corporate strategies are broken down under this area. Examples of business-level strategy include exploring new markets, introducing new goods, or rebranding the company. A business strategy is necessary because successful businesses must integrate the idealism of a mission statement with the decision-making realities of day-to-day operations. Entrepreneurs who devote much creative energy to innovation risk failure if they rely on generic business management strategies rather than creating strategies tailored to their competitive market's particulars. You owe it to yourself to create a business plan worthy of your financial and emotional investment in your business.
Functional level strategy:
Think of the functional strategy as the operating end of an organization. Functional strategies take on next-level specificity and provide action plans for team members to make strategic decisions. Functional strategies could involve minute details like making new landing pages or fixing problems or bugs in specific code.
According to Cascade, the most crucial level of strategy is the functional strategy level. The functional strategy will guide employees' daily work and keep your company moving properly. The most sophisticated corporate-level strategies won't produce results if a functional-level plan is neglected, mismatched, or poorly carried out. Without practical strategies, your business may rapidly lose momentum and "become stuck" as the competition advances.
Elements of an Organizational Strategy
It is not enough to state that you want your company to "improve." Think about it, better in what sense? Services or sales? Public opinion? Cost reductions?
A good organizational strategy provides specific methods for achieving corporate objectives. An ambiguous approach to strategy management leads to confusion and waste of resources. Instead, be as specific as possible about your plan. Incorporate numbers into your approach, such as achieving 75% customer happiness.
How will you know when you've achieved your goal? You won't unless you create observable metrics that you can use to monitor your development.
Goals should be stated in a way that enables data collection and analysis and focuses on particular aspects of your organization. Don't just focus on quantitative information. You can gather qualitative data to assess progress that is less likely to show up on spreadsheets if you take the proper method.
While we advise you to aim high when setting your goals make practical and attainable goals. Realistic goals are more likely to be accomplished. A series of modest objectives that build on one another is more effective than a single, bombastic objective. When deciding which future goals to strive towards, consider the accomplishments your business has made in the past. If, for instance, your business increased its profits from $40,000 to $60,000 last year, think about aiming for $80,000 rather than $100,000, which may be outside of your existing trends.
Organizational strategies are time-bound or time-limited, which means they have a deadline. Businesses decide how long they will work toward a specific objective. This enables users to monitor their progress toward their goals and ensures that activities are completed.
Types of Organizational Strategy
A focus strategy matches a company's products and marketing to its target market. A company can develop items its customers will buy and find useful by understanding their wants and needs and developing a successful focus strategy. Finding a niche market group is a key step in the focus strategy. Businesses that use this strategy cater to a small, specific audience. To foster consumer loyalty, offering top-notch goods and services is important. For instance, a company that sells almond milk focuses on vegans and lactose-intolerant people.
A corporation with a differentiation strategy aspires to be the best in its industry. They do this by providing innovative goods and services with distinctive qualities. Market research is required. For instance, a business selling designer handbags can establish exclusivity and a waiting list for customers wishing to purchase their most recent model.
Growth strategies are ones that a business uses to grow. This can entail expanding their customer base or sales volume. Buying or acquiring a rival company is another form of growth strategy. A shoe company expanding its line of goods to include sportswear would be an example of a growth plan.
Concentrating on what is best for the firm frequently involves reducing the number of employees or business outlets. When a company reorganizes to increase efficiency, this is referred to as a rationalization strategy. After implementing a growth strategy, businesses often utilize this technique when their operations become more complicated. For instance, a food outlet may resolve to launch 20 new sites but then determine it would be more economical to concentrate on fewer. This might force them to close some of their brand-new locations and fire staff, which will be a rationalization strategy.
Why Your Company Needs an Organizational Strategy
I had to take it back home on this one. Michael Chamunorwa Tigere and Research scholar Simbarahe Masamba did a study to assess the impact of strategy implementation on company performance in Zimbabwe. They found a positive relationship between how organizations implement their strategy and the performance of that company. Their paper also stated that several organizations in Zimbabwe have failed to generate profits, increase market share, and increase sales volume due to poor vision and strategy implementation.
Another paper by Katsvamutima and Jeevananda investigates business-level strategies and the impact of strategy formation, content, and implementation on competitive performance in Zimbabwe's food manufacturing sector. The study's findings demonstrated that strategy formulation and implementation improve efficiency, profitability, and competitive advantage.
In short, business owners need to know about an organizational strategy to plan and implement it well. Strategy helps in aligning departments and teams towards business goals, provides a framework for better decision-making processes, helps with sustainability and gaining competitive advantage, and clarifies direction and priorities. If you do not know how to do it, outsource people who can. An organizational strategy is a map you need to get to the destination desired by your firm.
You must first create an organizational strategy in order to guarantee that your company reaches all of its objectives. Your organizational strategy must include more general corporate goals, mid-level business goals, and specific functional goals if you want to create a workable strategy. In order to ensure that your business is set up for long-term success, don't forget to evaluate and modify your plan frequently. With this information, “zviri kwauri mwene wejira kufuka kana kuwarira.”
"Business strategy is the battle plan for a better future."
Kelin Kundai Zvomuya is a psychology graduate and an HR Consultant.