Strategic Development: Definition, Process, and Example
Updated August 16, 2023
Strategic development, also known as strategic planning, is fundamental to creating and operating an organization. Developing a strategy involves scanning for influences and setting goals and objectives that can change in response to internal and external shifts. Understanding the value of strategy and its development can help you develop in your career as a leader and manager. In this article, we define strategic development, discuss its considerations for an organization, explain the process of developing a strategy, and provide a strategic planning example for your reference.
What is strategic development?
Strategic development is a process that organizations use to analyze their internal and external environments to determine the resources and actions they require to stay competitive and successful. Setting strategies may help companies reach their objectives by adjusting their direction in response to changing conditions. An organization may develop a strategy for some of the following reasons:
To review operations by looking at what the organization may focus on next
To implement the current strategic direction
To refine the current strategy
To build a strategy for the first time
Considerations for strategy development
Developing a strategy allows organizations of any size to be proactive, set a focus for employees, investors, and leaders, and to communicate organizational direction. Creating a strategy may also enhance efficiency, help increase revenue and profits, reduce costs, develop opportunities for new products and services, and allow organizations to last longer in their market. The following are some considerations for developing a strategy:
Understand the market and competition
Do a thorough analysis of the market where the company you work at operates. This may include exploring target audience characteristics, learning why the company's products or services are useful, and identifying potential obstacles to higher sales or service levels. Analyze the competition by gathering information about their pricing, products, promotional strategies, and placement of their goods and services. Understanding the market and the position of your competitors allows you to place the organization in context within its industry or sector.
Evaluate threats and challenges
Assessing threats and challenges an organization may face gives you and your colleagues, leaders, and other stakeholders the opportunity to contribute ideas from different perspectives. This can allow you to gather information from as many internal and external sources as possible. Take time to talk individually with stakeholders, facilitate group meetings, or ask them to respond to questions virtually to find out about the risks to the organization's success.
Project into the next three to five years
The timeline for strategy development typically projects into the next three to five years as longer-term planning is subject to changing challenges and opportunities from many unknown external forces. An important element of developing a strategy is deciding the steps that you may take to close the gap between where the organization is now and where it may be in three to five years. If the gap seems too large to close in the strategic planning period, a re-evaluation of goals, objectives, and approach might be necessary.
Document your strategy
Outline your strategy for each month for the first year, then quarterly, and annually for the last three years of a five-year plan. Writing down your strategy allows you to assess how all elements work together and determine if any data or other information may be missing. Meet weekly with your management team and employees during the strategy development phase to check what you're documenting against their feedback and input.
Adopt a flexible attitude
Markets and demands change, new competition enters the market, and economies shift with global demand and supply. Create your strategy with a flexible mindset to consider changes you may not expect or world events that can reshape an industry. When your strategy is complete, constantly consider how any external and internal forces may change your action plan or your measurable objectives.
Review information technology (IT)
An organization's strategy often includes IT considerations to identify tools and actions that may make it more efficient and productive. Planning involves noting elements to improve, opportunities to integrate systems, and the need for new technologies. IT technology and processes are critical to most organizations' success and including them in your strategic consideration ensures that technology investments focus on achieving the company's goals and objectives.
The strategy development process
The strategy development process provides a framework to create and implement a strategy for an organization. Going through a planning process is important so everyone within the organization can agree on and understand the strategy. Therefore, it might be a good idea to facilitate a session or multiple brainstorming meetings to gather information among multiple stakeholders. The following steps may assist you in developing a specific strategy relating to a department or unit in a larger organization:
1. Review the current position
The first step sets the foundation for strategic planning by reflecting on how a company got to its current state. For example, a revenue or profit focus may relate to introducing new products, finding new distribution channels, or partnering with other companies. Talk with leaders in the organization, review customer data for insights, and collect market data to better understand the company's position in the market.
Gather information about the company's strengths, weaknesses, opportunities, and threats as a framework for discussion about its current position. For example, consider areas where the organization is a leader and others where it may need improvement. Opportunities refer to possible growth and success areas, while threats often involve discussions about competitive issues.
2. Set measurable objectives
Once you've identified the company's current position in the market, you can determine objectives that may help you achieve your goals. Your objectives typically align with the organization's mission and vision. Prioritize your objectives by asking questions such as the following:
Which initiative may have the most impact on achieving our mission or vision?
Do we have urgent initiatives that we may prioritize?
What actions might we take to achieve our goals?
How might we measure our progress and determine our success?
Make sure your objectives are specific, measurable, achievable, relevant, and time-bound. Defining these elements helps ensure that you can achieve what you've planned within a chosen time frame. For example, you may want the business development team to increase product sales by 10% in 18 months by entering the western provinces as a new market.
3. Develop an action plan
The action planning process in strategy development involves deciding on the tactics a team may use to achieve its measurable objectives. This step includes listing the tactics, creating a timeline, assigning responsibility, and identifying the resources that you require. The action plan is central to strategy development and may involve the commitment and ideas of many team members.
Some organizations may develop an action plan as a simple spreadsheet while others can create a map to visualize their actions. Strategy maps often include four circles or boxes containing financial, customer, internal process, and learning and growth perspectives. You can visualize the connections between these perspectives through the actions you plan to take to achieve your strategy.
4. Monitor progress and revise
Monitoring the strategy involves communicating the plan and then maintaining awareness about its strategic direction among employees, leaders, and other stakeholders. Set up regular reviews with employees and managers to track progress on the strategy. Each quarter, you can produce a scorecard to formally evaluate progress against measurable objectives and then make changes to ensure you achieve the plan.
Example of strategy development
A product manufacturer plans to expand its operations into several new provinces and territories. The company decides to develop a strategy to grow its business, increase its shareholder value, and enhance its brand recognition. The following are the steps its leaders may take to develop a strategy:
Review the current position. The manufacturer has a product line of 12 items in different colours and sizes, and an analysis across the country reveals that these products aren't available among competitors in western provinces.
Set measurable objectives. The company sets an objective to launch three new products by the second quarter of next year with gross revenue growth of 30% and operating margins of at least 10.5%.
Develop an action plan. The company decides on 20 prototype products for marketing testing and plans to choose the top three for release in western provinces.
Monitor progress and revise. The strategy outlines a plan for product managers to increase sales with promotions and updates on new product positioning and market penetration.
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