The process of strategy evaluation is often overlooked in the overall strategic management process. After the flurry of activity in the initial planning stages, followed by the reality check of executing your strategy alongside business-as-usual, strategy evaluation is often neglected. When this occurs, strategies quickly become outdated and out-of-sync with the changing face of the organization.
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What is Strategy Evaluation?
The strategy evaluation process involves analyzing your strategic plan and assessing how well you’ve done against achieving the goals in your strategy. A strategy evaluation is an internal analysis tool and should be used as part of a broader strategic analysis for the organization when making decisions about your strategy.
Typically, the strategy evaluation process involves answering questions such as:
How much progress have we made towards our Vision?
Are our Strategic Focus Areas still relevant?
Which of our Objectives have we completed?
Which Objectives are no longer needed?
Do we have sufficient Projects to deliver incomplete Objectives?
Are our KPIs still effective for measuring progress towards our Objectives?
Where we fell short of our targets, why did this happen?
A strategic review is a structured process to identify new value-creating opportunities within a business. This could be about improving the performance of an existing division or taking advantage of a new market adjacency opportunity. Many companies undertake strategic reviews on an annual basis as part of their strategic planning process. Other businesses will undertake them on a more ad hoc basis when presented with a specific opportunity or problem within the business. A change of ownership or appointment of a new CEO can often trigger the need for a strategic review of the business as a way to clarify the key areas of opportunity and challenges within the existing portfolio. Whatever its origins, a strategic review should be a clear fact-based analysis of the business opportunity or issue. It provides an opportunity to step back from day-to-day operations to assess the strategic foundations on which a business is built. The outcome of a strategic review should be a clear set of strategic recommendations and a future roadmap for the business that charts its course and enables increased and sustained performance now and for the future.
Definition: Competitive Advantage means superior performance relative to other competitors in the same industry or superior performance relative to the industry average.
What is competitive advantage?
There is no one answer about what is competitive advantage or one way to measure it, and for the right reason. Nearly everything can be considered as competitive edge, e.g. higher profit margin, greater return on assets, valuable resource such as brand reputation or unique competence in producing jet engines. Every company must have at least one advantage to successfully compete in the market. If a company can’t identify one or just doesn’t possess it, competitors soon outperform it and force the business to leave the market.
There are many ways to achieve the advantage but only two basic types of it: cost or differentiation advantage. A company that is able to achieve superiority in cost or differentiation is able to offer consumers the products at lower costs or with higher degree of differentiation and most importantly, is able to compete with its rivals.
An organization that is capable of outperforming its competitors over a long period of time has sustainable competitive advantage.
The following diagram illustrates the basic competitive advantage model, which is explained below in the article:
How a company can achieve it?
An organization can achieve an edge over its competitors in the following two ways:
Through external changes. When PEST factors change, many opportunities can appear that, if seized upon, could provide many benefits for an organization. A company can also gain an upper hand over its competitors when its capable to respond to external changes faster than other organizations.
By developing them inside the company. A firm can achieve cost or differentiation advantage when it develops VRIO resources, unique competences or through innovative processes and products.
Organizational behavior models help you craft strategies to get employees to perform a certain way in certain situations. As the company leader, providing employees with an environment to succeed helps the business succeed. There are five main management models of organizational behavior in the workplace.
Autocratic Model of Organizational Behavior
The autocratic model of organizational behavior puts the boss in charge and the subordinates in a position to obey commands or be fired. It’s black and white, regarding who is in charge and quickly establishes consequence for insubordination or lack of performance. This environment uses a paycheck as the reward system rarely implementing any other incentive programs.
Loyalty, if it exists, is generally to the boss and not the company. This model can create a fearful workforce, unsure if any mistake could lead to disciplinary action.
Custodial Model of Organizational Behavior
Custodial models seek to make employees feel as if the boss is caring for their personal needs. This is often done through benefits packages such as healthcare, retirement plans and other incentives. An executive visiting various territory offices could get a company car as an incentive.
The custodial model looks to retain quality people by providing incentives that are meaningful to the employee. Loyalty is to the company and not individual company leaders.
Collegial Model of Organizational Behavior
The collegial model works to develop a structure in which managers are more like coaches and employees are team members. Power is shared to some degree. The coach leads through inspiration. In this model, the loyalty is to the bigger goal, and team responsibility rather than to an individual. Employees feel invested in the success of the company and take pride in the successful execution of goals.
Supportive Model of Organizational Behavior
The supportive model seeks to understand what motivates employees and focuses on those things to motivate and inspire. When employees are given opportunities to improve themselves, they often take personal initiative to perform better at their job. Managers support employees as they work toward established personal goals such as promotion or acquisition of new skills. In this model, a manager would ask employees for professional goals and would work with them to establish an action plan to succeed with them.
System Model of Organizational Behavior
The system model is really the foundation of positive corporate cultures. When people think about why LinkedIn is a great place to work, for example, it is because of the incentives, work schedule flexibility and creative encouragement that leadership provides. It is nurturing yet challenging, and so efficiency and productivity increase in a happier work environment that’s loyal to the company and excited to share its vision.
Small business owners don’t need to try to compete with what LinkedIn does, but should develop strategies within their resources to build a positive corporate culture.
Findings from organizational behavior research are used by executives and human relations professionals to better understand a business’s culture, how that culture helps or hinders productivity and employee retention, and how to evaluate candidates’ skills and personality during the hiring process.
Organizational behavior theories inform real-world evaluation and management of groups of people. There are a number of components:
Personality plays a large role in the way a person interacts with groups and produces work. Understanding a candidate’s personality, either through tests or through conversation, helps determine whether they are a good fit for an organization.
Leadership, what it looks like and where it comes from, is a rich topic of debate and study within the field of organizational behavior. Leadership can be broad, focused, centralized or de-centralized, decision-oriented, intrinsic in a person’s personality, or simply a result of a position of authority.
Power, authority, and politics all operate inter-dependently in a workplace. Understanding the appropriate ways these elements are exhibited and used, as agreed upon by workplace rules and ethical guidelines, are key components to running a cohesive business.
The Real World is Here 