Strategic Evaluation Methods

Strategic planning is a road map that helps your business chart a route from where you are to where you want to be. Clear goals provide destinations. Concrete milestones give feedback about whether you're on the right route and whether your journey is progressing as planned. Strategy evaluation helps you to reflect on your progress along this route as well as the destination and milestones themselves because variables inevitably change as your project unfolds.

Tip

Strategic evaluation methods are tools for assessing work in progress in relation to short- and long-term goals.

Techniques of strategic evaluation and control have the best odds of being effective if you lay thoughtful groundwork. The goals themselves should be clear and should strike a balance between being achievable and stretching your capabilities.

Express goals in quantifiable terms to make it easy to measure success. It's more effective to say that you're going to increase revenue by 20 percent over the next two years than to say that you're going to grow your business significantly.

Delegate tasks to able staff members and express your expectations in writing. Include timelines for achieving outcomes as well as a schedule for reporting on progress. Make sure the chain of command is clear and that all employees have the tools they need to get the job done.

Whenever possible, frame upcoming tasks in reference to bigger-picture goals so your staff can see how the big picture relates to day-to-day outcomes.

Set an example for accountability and responsiveness. Provide the support your staff needs and also make your expectations crystal clear. Address difficulties proactively so employees know they're going down the wrong road before they've progressed too far.

If you've expressed your short- and long-term goals effectively at the outset, you'll have clear reference points to use when someone's progress falls short.

Strategic planning is the process of creating short- and long-term goals and then syncing the objectives for different time frames.

• Short-term goals concern tasks for the upcoming few months and may focus on clearing obstacles or laying a foundation for work to come. It is easiest to set concrete goals for short-term objectives because the details graft naturally onto information you already have. You can set sales targets for the upcoming few months more easily than for the upcoming few years because you know how the market is currently trending and how your customers' needs have been recently evolving.
• Medium-term goals bridge the tricky gap between clear short-term objectives and more abstract long-term vision. These goals apply to projects and projections one to three years in the future. They should be built on the relative immediacy of your short-term planning but directed toward the bigger-picture plan. Techniques of strategic evaluation and control should be adjusted as your business transitions from short- to medium-term time frames, taking into account the unforeseen variables that came up after the planning process began.
• Long-term strategy evaluation is more difficult than short-term assessment because it's harder to set goals far into the future. At the same time, it's easier to assess big-picture progress because you've had ample time to move in that direction. When evaluating long-term goals, it's important to reflect on the goals themselves as well as your progress toward them. This process allows you to look at past performance while also preparing your business for future evolution.

A SWOT analysis helps you to plan for the future by strategically evaluating your company's current situation. It maps your internal landscape by listing your strengths and weaknesses and also charts your external situation in terms of opportunities and threats.

• Strengths: It makes sense to build and evaluate company strategy in terms of what your business does well. Build on your core competencies by planning products and campaigns that use your skills, connections and reputation. Don't rest on your laurels but rather use your strengths as the foundation for projects that push you to develop further and expand into areas where you can leverage these assets in new ways.
  
  
• Weaknesses: Your weaknesses may limit your capacity to achieve some objectives, but knowing your limits can also help you avoid dangerous territory. There may also be opportunities to turn a weakness into a strength, as the Avis company did with their classic advertising campaign based on their status as the second-largest car rental agency, using the slogan "We try harder."
  
  
• Opportunities: Your strategic evaluation and planning process should also include taking stock of the possibilities that are currently available. If a competitor is going out of business or a retailer who might carry your products is setting up shop in your neighborhood, this possibility should be part of your strategic plan. Current events can also provide opportunities, such as an outbreak of food-borne illness linked to beef creating an opening for a vegetarian restaurant to promote the safety of its offerings.
  
  
• Threats: Your strategic analysis won't be complete without an assessment of the variables in your landscape that could sabotage your company's short- and long-term well being. This process is the time to consider whether the technologies you market may be becoming outmoded or if you face competition from a sector that doesn't provide exactly the same product but fills essentially the same need, such as the threat to taxi services from ride-sharing companies like Lyft and Uber. Threats don't necessarily doom your company to failure but rather offer you an opportunity to adapt.

The VMOST analysis is a tool developed by Rakesh Sondhi, a professor of global strategy at Hult International Business School. It maps a hierarchy of elements that work in tandem to build an effective strategy for planning and evaluation.

Vision and mission form the core of an effective strategy, providing guiding principles for more practical and tangible aspects of the plan. Vision is an abstract guiding principle, such as making the world a better place or providing world-class customer service. Mission is a more concrete expression of this vision, such as designing and building environmentally friendly technologies or making every customer feel like your only customer.

Objectives are the concrete and measurable part of a plan, the reference points through which you can most clearly and objectively measure success. The measurable aspect of strategic objectives are sometimes referred to as key performance indicators because they provide the framework for gathering the real data that is necessary for assessing progress toward goals. Strong key performance indicators are expressed quantitatively as far as number of units or sales volume to be achieved and also in terms of specific timelines and deadlines for achieving these aims.

Strategy is a course of action unifying benchmarks and vision. It lays out where you want to go and how you want to get there. Strategy can then be broken down into tactics, which are actionable steps that move your business toward the end results you aim to achieve. Tactics may be spread out over different departments, such as creative and financial, for launching a project while also figuring out how to pay for it.

Once you've developed an overall picture of the direction you want your company to take, it's time to create a set of measurable goals. These should be specific outcomes to achieve in the short, medium and long term.

Align the goals for each stage with your long-term vision, such as specifying the amount of carbon reduction you plan for your business to achieve if you've formulated the long-term mission of creating an environmentally friendly company. Whenever possible, express your benchmarks in numerical terms so you can easily see whether you have achieved them and, if not, how far you are off the mark.

Measure your progress toward strategic benchmarks by regularly comparing your progress with the outcomes you've set out to achieve. This evaluation process will be easiest and most straightforward with short-term goals, which are geared toward outcomes that are relatively easy to see from your standpoint in the present. As you move toward medium- and long-term goals, you begin to encounter more variables that could not have been foreseen when you began the planning process. Take these into account when evaluating performance and adjust your original goals as needed.

Evaluating strategic performance is not simply a matter of achieving or not achieving your goals but also of assessing how close or far you were from reaching them. Variance is the degree that your performance deviates from the milestones you set. When setting initial goals, also consider what level of variance will be acceptable or unacceptable. The acceptable level will be higher with medium- and long-term goals than with short-term objectives.

Positive deviation means you exceed your goals. A positive deviation can either indicate that your company has performed especially well compared to expectations or that you set your expectations too low.

Similarly, a worse than projected outcome can either mean that you're not on track to achieve longer-term objectives or that you set your sights too high. The process of analyzing variance involves both assessing your performance relative to your goals and also evaluating your goals relative to variables you could not have anticipated when you originally set them.

As you analyze your company's performance relative to its goals and its goals relative to its performance, you can develop updated milestones taking these observations into account. If your overall strategy is basically sound and new developments haven't made it obsolete, the process of taking corrective action can be mainly a matter of tinkering and attending to details, such as creating new benchmarks for new product lines or new accounts.

However, as you analyze results you may find that your overall strategy no longer makes sense as a way to move toward your mission and vision. If you've sold retail products out of a storefront, but your neighborhood changes and there is no longer sufficient foot traffic, you may decide to either move your shop or transition to servicing wholesale accounts. At this point, it is prudent to conduct an entirely new SWOT analysis and assess your opportunities, threats, strengths and weaknesses from an updated perspective.

The process of assessing results and making necessary corrections isn't necessarily a matter of evaluating whether your company has succeeded or failed in achieving its objectives. Instead, it is a way to creatively and meticulously inquire into when it's necessary to adapt and when your course of action is fundamentally sound. Failure doesn't come from falling short of goals, especially when you set them far in the past. Rather, failure comes from an inability to assess and adapt and an unwillingness to use strategic evaluation as a tool for growth.