Strategy: A Pathway to Organizational Success

Running an organization is somewhat intuitive. There are the norms of selling, purchasing, advertising, and so on. Operating an efficient organization is not so intuitive. There are certain fundamentals that must be respected, or an organization will not survive. We’ve recently discussed finance and an organization’s overall financial health. Alongside finance, is its counterpart, strategy. In this blog, we will discuss strategy and why it is important.

Strategy helps managers and leaders, organization’s senior leadership (C-level/Board) answer what the future direction of the organization should be, what the actual plan is for operating the organization and towards producing good outcomes, what performance targets (key performance indicators) they should set, and how the mission or objective will be executed. You can think of strategy as finances’ alter ego. Finance, at its worst, should support the organization’s strategy. At best, finance should increase the wealth and value of the organization’s owners and its stakeholders. Finance and strategy are ‘night and day’, so to speak, but together they display signs of good management to internal and external stakeholders of the organization. Management needs both for a successful outcome.

Figure 1.1 Good Management = Strategy + Finance

So, what is strategy? Strategy is the competitive moves and business approaches that managers employ to attract and please customers, compete successfully, pursue opportunities to grow the business, respond to changing market conditions, conduct operations, and achieve the targeted financial and market performance (Thompson, 2020, p. 2). Strategy answers the how. Crafting a strategy forces management to think about how they are going to capitalize on opportunities to grow their business, how the company will meet or beat their stated performance targets, how they will manage each management function of the organization (sales dept., finance, marketing, etc.), how they will beat rivals or compete with them, how to address business and financial decisions based on the ever-changing market and economic conditions in the best way, how to position the organization in the market in relation to competitors, and how the organization will attract and satisfy its customer base.

Strategic plans are the plans that management departments or managers craft their operational plans around. Marketing develops a marketing plan that supports the marketing components that address all marketing aspects of the strategy. This is applied to each management function of the organization: finance, human resources, etc. Managers and leaders document their strategies in several ways. Analyses such as the commonly referred SWOT analysis are used to craft strategies. Visual maps are an effective method. Strategy maps is the simplest method. Management will develop a strategic plan or even hire a consulting or advisory firm to facilitate their strategic efforts.

But, why is strategy important? It allows managers to be intentional towards their strategic and financial goals. A good, effective strategy shows a pathway to success…that can be measured and tracked for performance.

In conclusion, a strategy without a finance component is simply an idea (or a dream). And financing without an established strategy to achieve an organization’s performance targets can cause unnecessary spending, low profit margins, low employee morale, and/or a host of other problems. Successful leaders and managers monitor these financial and strategic targets on a weekly basis, to ensure the organization or division are on track to meet or beat quarterly performance targets during each quarter, or annually, for strategic and financial strategies to ensure the organization are pace to achieve the organization’s overall goals.

References

Thompson, A. A. (2020). Strategy: Core Concepts and Analytical Approaches, 6th Edition. McGraw-Hill Education.

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Meet Nikia Smith, the Project Management Consultant driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com.