Transformational Strategy

by Marquis Codjia; Updated September 26, 2017

In the modern-day business environment, formulating a commercial strategy is hardly an easy task. Corporate leadership relies on operations chiefs’ business acumen to plot adequate plans, working with external advisers if necessary. A firm’s senior executives draw up transformational strategies and tactics to adapt the company’s operations to changing economic factors.

Definition

A transformational strategy is a plan of action aimed at shifting a company’s operating course, usually over many years. However, a transformational plan with a short-term horizon is not uncommon. To make the strategy a success, top management seeks the guidance of professionals whose expertise in business and finance fits well with the firm’s tactical vision. Well-defined transformational strategies help companies put steps into place for long-term profitability.

Tools

Department heads and segment chiefs use specific tools to make sure corporate strategies see a groundswell of support from the investment community. These tools also help firms win the backing of public officials, especially if corporate strategies involve highly regulated or sensitive industries (the military, for example). Tools and equipment used to execute strategic tasks include mainframe computers, operating systems and enterprise resource planning software. Other tools include project management, review and optimization software; configuration management applications; and analytical or scientific applications.

Relevance

A transformational strategy is never a fait accompli, an operating blueprint with rules set in stone. This plan generally projects flexibility, giving operations chiefs the latitude to make decisions based on conditions on the ground. By reviewing a company’s operating tactics, the public can see things the firm’s leadership is passionate about: sales growth, market share gain, expense management and profitability. Competitors also take note of corporate strategies to understand how other companies increase sales and eke out profits.

Steps

Drawing up a transformational plan generally involves five steps: goal definition, review of alternatives, strategy formulation and selection, execution and monitoring. Goal definition helps a firm not lose sight of strategic objectives necessary to succeed. The company’s leadership reviews alternative strategies, pinpointing the pros and cons of each strategy. Then, senior executives choose the best plan to reach corporate goals and mull over implementation steps. Monitoring strategic initiatives helps organizations spot potential weaknesses and remedy operating risks.

Personnel Involvement

In the corporate context, many professionals work diligently to evaluate economic conditions and transmit to top leadership their views about transformational strategy. These personnel come from the top echelon -- department chiefs and business-unit heads -- as well as rank-and-file positions in accounting, finance, legal, sales and marketing departments. External advisers, such as investment bankers and financial auditors, also help in strategy formulation.

About the Author

Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.