Absolutely, no sugar coating now. Let’s face the truth. You cannot guarantee success when you embrace uncertainty and venture on your own. We strive and struggle in a competitive business environment, don’t we?
In such a competitive environment, when you and your team put your countless hours of effort, and pump in huge chunks of money, you cannot take a risk to a further extent by moving without a proper strategy. That’s a simple logic to explain the importance of strategic management.
Let’s dig deeper into the subject and try to gain a few insights on why it is extremely important in the current scenario.
So, what is strategic management?
Strategy and management are two words. A strategy can be defined as the initiatives the company undertakes to grow its business. It may include marketing strategy, financial planning, HR management and more. Whereas management is the process of running the day-to-day activities with reference to the future goals of the organisation.
But what’s strategic management? Copying the definition, ‘strategic management is about driving the company’s growth through effective management techniques focused on goal-setting.’
It’s the ‘continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives.’
Know about it more!
Strategy is never a solution to a problem that impacts your organisation. Furthermore, it ensures a road map for your business to travel through and reach the destination called ‘goals.’
As Penelope Roeder, an expert in the domain explains it in one of her blogs, ‘strategy is not a fixed solution, mathematically computed or not. Instead, it is a set of dynamic guidelines that provide the context for a disciplined review of the many factors that affect any organization. It provides a context and process that allows the organization’s managers to make thoughtful decisions about immediate actions, long-term goals, and the terrain to be navigated between them.’
Why does it matter?
Let’s start to understand the importance of strategic management through a detailed explanation in an article in Forbes that was published a few years ago.
In ‘The World’s 10 Most Innovative Companies, And How They Do It’, the writer points out, ‘the best performing companies develop additional capabilities that are very specific to their chosen innovation strategies. Some companies are technology drivers: Their strategy is to develop leading-edge products. They need to be particularly good at understanding emerging technologies and also skilled at managing product lifecycles. These capabilities, however, are less crucial for need seekers, whose strategy is to identify unmet customer needs and innovate to fill them. Need seekers, on the other hand, require world-class consumer-insight skills. The most successful companies, we found, are those that focus on a particular, specifically aligned set of common and distinct capabilities that enable them to better execute their chosen strategies.’
Pretty much explained! It’s absolutely a journey without any clear roadmap without a coherent business strategy for your business. And worse of all, you have no clue where you are heading to, without a clear objective and how to react to it. Is it worthy any? Absolutely no!
As SmallBusiness blog puts it, ‘Without a coherent strategy, your company does not have identifiable business objectives. Your company lacks the focus needed to achieve corporate goals and develop plans that will move the company forward. A lack of objectives means that your company does not have a specific set of tasks it is competent in and it has no vision for the future.’
What research shows us?
Evergreen Project is one of the most rigorously done management research studies to discover the secrets of business success. It examined a clear performance review of 200 management practices. There were 160 companies involved in the study.
One of the findings of the study was, ‘the results showed that the financially successful companies all had a clearly defined and well-articulated strategy. No exceptions. These companies outperformed the losing companies by a 945% to 62% margin in total return to shareholders, had a 415% to 83% advantage in sales, a 358% to 97% advantage in assets, a 326% to 22% advantage in operating income and a 5.45% to -8.52% advantage in return on invested capital.’
Yes, as the market continues to evolve, and consumers become more cautious before they choose your brand, it’s never a wise decision to run a business without a clear-cut strategy. You cannot leave the process to conventional wisdom or gut instincts.
Our recent statistics show that there is a rise among professionals opting to grab a certificate in strategic management. And there’s good demand for a workforce with strategic management certification and skill set. Probably, individuals and organisations have a higher awareness of the importance of strategic management. It’s becoming a necessity now!