Strategic management is a process. It provides a framework or structure for decision-making by company leaders. There are specific characteristics inherent to the strategic management process, and the University of Minnesota is among many universities that teach strategic management to business and non-business majors alike. The strategic management process has four major elements: understanding the fundamentals of strategy, scanning internal and external factors, formulating strategy and implementing strategy.
Understanding Strategy Fundamentals
To engage in strategic management, managers must first have an excellent grasp of what strategy means. Managers must learn the impact of both individual and team contributions on the direction of the organization. Through a process of curiosity, inquiry and knowledge transfer – top-down, bottom-up and lateral – managers learn to understand the actions that further the organizational mission, as well as those actions that detract from the organization's values and principles.
Scanning Outside-In and Inside-Out
There are a variety of analysis tools available that can be used to inform management strategy. The SWOT analysis is a common tool for analyzing external and internal factors. SWOT stands for strengths, weaknesses, opportunities and threats. It is used to examine which environmental and internal factors affect the organization's position and how successfully they are meeting the goals and objectives of the organization and its departments. Characteristics that leaders exhibit during this step in the strategic process include strong analytical skills, as well as the ability to synthesize and present data.
Formulating strategy can only begin once the leadership team has a good understanding of what strategic management entails. Determining the strategic direction for an organization is a major undertaking, and executive leadership is primarily responsible for this task. A strategic plan is only as useful as the quality of information that goes into it. Gathering requirements that are accurate and measurable is key. If executive leadership considers input and feedback from multiple business areas, the organization is far more likely to create a robust, inclusive and feasible strategic plan.
Formulating a strategic plan involves discussions on what constitutes wise business decisions, how to recognize competition and how to respond to it. Also, strategic versus day-to-day business practice must be determined. Leadership characteristics during this phase of strategic management include forward thinking and the rationale to determine what constitutes in-time action. One of the differences between strategic and day-to-day business operations is time – strategy occurs over time and has a long-term impact while day-to-day business operations produce immediate or instant measures that may have a short-term effect.
Implementing the Structure
Putting a structure in place is the fourth step in the strategic management process. The University of Minnesota course on strategic management teaches students to consider corporate culture when constructing an organization's strategic framework. It states that integral components of strategic management are corporate governance, social responsibility and sustainability. At a minimum, leadership characteristics necessary for this stage in the strategic management process include the ability to operationalize strategic plans, craft innovative solutions, consider long-term goals and how leadership's decision-making affects stakeholders.