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The Complete Guide to Strategy Evaluation

Updated on: 4 November 2022

All organizational strategies are constantly reviewed and revised. As the internal and external environments of an organization change, so should the company strategy to aid in the survival and growth of an organization. A standard process to evaluate the effectiveness of an organizational strategy is therefore essential. It ensures that the organization is on the right path and is constantly adapting in a dynamic market.   

In this post, we will be explaining what strategy evaluation is and how to effectively implement the process.

What is Strategy Evaluation

Strategic evaluation constitutes the final stage of strategic management and is considered one of the most vital steps in the process.

Strategy evaluation is the process by which the management assesses how well a chosen strategy has been implemented and how successful or otherwise the strategy is. To simply put, strategy evaluation entails reviewing and appraising the strategy implementation process and measuring organizational performance. 

In the instance, the implementation of the strategy is not taking place as planned, say due to the limitations in the strategy that are blocking the achievement of organizational goals, necessary corrective actions should be identified and applied.     

At the end of the evaluation, you’ll have gathered insight to either reformulate the strategy or to plan and develop new ones.

Evaluating the strategy helps improve it, distinguish between what works and what doesn’t, and contribute to the ongoing development and adaptation of the strategy to the changing conditions and complexities in the industry. 

Strategy evaluation operates at two levels; strategic and operational. At the strategic level, the focus is given to the consistency of the strategy with the environment, and at the operational level, how well the organization is pursuing the strategy is assessed. 

Through the process of strategy evaluation, strategists can make sure that the,

• Premises made during strategy formulation are correct
• Strategy is guiding the organization towards accomplishing its objectives
• Managers are doing what they are supposed to be doing to effectively implement the strategy
• The organization is performing well, schedules are being followed, and resources are being properly utilized 
• Whether there’s a need to reformulate or change the strategy

Participants of the Strategy Evaluation 

The stage of strategy evaluation requires the contribution of several participants who will be playing different roles throughout the process.

The board of directors: takes on the formal role of reviewing and screening the executive decisions in light of their environmental, business, and organizational implications. Although they are not directly involved in the evaluation and control of the strategy implementation process, they periodically take part in reviewing the organization’s performance and results. 

Chief executives: are responsible for all the administrative tasks of strategy evaluation and control. 

The SBU or profit-center heads: monitor strategy implementation at the business unit level and give feedback to the corporate parent who can intervene as necessary.  

Financial controller, company secretaries, and external and internal auditors: responsible for operational control based on financial analysis, budgeting, and reporting. 

Middle-level managers: carry out tasks assigned to them by SBU heads or the strategic planning group, and provide them with feedback and information. They will also be participating in the corrective actions, in the case of mid-term revisions in the implementation process.

Importance of Strategic Evaluation

The phase of strategy evaluation helps ensure that the implementation of the particular strategy will help the organization achieve its objectives. Without this step in the strategy management process, it would prove difficult to identify whether the strategy implemented is generating the desired effect. In addition, strategy evaluation also helps,

• Check the validity of the strategic choices the organization makes
• Assess whether the decisions made during the strategy implementation stage meet the intended strategy requirements
• Provide insight and experience into the strategists that can be used in reformulating or planning new strategies 
• Shed light on issues caused by changes in the internal and external environment and take precautions and avoid making wrong decisions 

Strategy Evaluation Process

The strategy evaluation is carried out in order to determine that the strategy is helping the organization achieve its objectives. It compares the actual performance of the organization with desired results and provides the necessary insight into the corrective action that needs to be taken to improve the performance of the organization. Following are the steps in the process of evaluating strategy.

Establish standards 

This step starts with determining what standards to set, how to set them, and the terms used to express the standards. To do this, 

• Identify the key areas of performance which are usually based on the key managerial tasks pertaining to strategic requirements. Standards should be set within these identified key performance areas. 
• The special requirements needed to perform each of these key tasks can be used to determine the type of standard to be set. 
• Performance indicators that can satisfy these special requirements can then be identified for evaluation.

Performance indicators have to be set on the basis of quantitative or qualitative criteria in order to make measuring performance easier.

• Quantitative criteria – on the basis of this criteria, performance can be evaluated in two ways: Either by comparing how the company has performed against its past achievements or against the performance of the industry average or that of the competitors.   
• Consistency (evaluating strategy against company objectives, environmental assumptions, and internal conditions)
• Appropriateness (evaluating strategy with regard to resource capabilities, risk preference, and time horizon)
• Workability (evaluating the feasibility and simulation of the strategy)

Measure Performance

The standards of performance set will serve as the benchmark against which the actual performance will be evaluated. Based on these standards, managers should decide how to measure the performance and how often to do so. 

The methods used to measure performance may vary on the standard set; usually, data such as the number of materials used, units produced, the monetary amount of services utilized, the number of defects found, processes followed, quality of output, and return on investment, are used. 

Once the methods of measuring performance are identified, how often it should be done for control purposes needs to be then decided.  Whether it should be on a daily, weekly, monthly, or annual basis is decided on factors such as how important the objective is to the organization, how quickly the situation might change, and how difficult or costly it would be to fix a problem once it has actually occurred.

Analyze Variances

Evaluating the actual performance against the standards of performance will reveal whether; 

• The actual performance matches the budgeted performance 
• The actual performance differs from the budgeted performance in a positive way 
• The actual performance differs from the budgeted performance in a negative way

A predetermined set range of tolerance limits can be used to determine whether the results can be accepted satisfactorily. If the actual performance deviates from the budgeted performance within the set tolerance limit, the performance can be considered acceptable and the variance insignificant. 

On the other hand, if the performance is below standards, effort must be directed to finding the root causes of the deviation and coming up with corrective action to fix it.

Take Corrective Action  

In the case the actual performance falls out of the tolerance limit, corrective action must be taken to solve it. The deviation can be caused internally or externally, predicted or random, or temporary or permanent. 

If the actual performance is below the standards consistently, a thorough analysis should be carried out to find the root causes. If the organizational potential can’t meet the performance requirements, consider adopting attainable performance standards. In the case of an extreme deviation, you might have to consider formulating the strategy, which might require you to start from the beginning of the strategic management process.

Strategic Evaluation Technique 

Evaluating the effectiveness of a strategy entails assessing the internal and external forces that affect strategy implementation . Following are a few techniques that you can use to examine these factors and make well-informed strategic decisions.

Gap analysis

A gap analysis is performed to identify and measure the gap between your current state of organizational performance and the desired state. It can be utilized to evaluate various aspects of the business from production to marketing. 

Learn more on how to conduct a gap analysis and the tools you can use to accelerate the process and the gap analysis templates to simplify the steps.

SWOT analysis

A SWOT analysis is another helpful tool that strategists use to assess the current situation -both internal and external environments – of an organization. It helps you gain insight into your internal landscape by analyzing strengths and weaknesses, and insight into your external landscape by scanning opportunities and threats.

Learn how to effectively use a SWOT analysis .   

Value chain analysis

This analysis examines the set of activities the company performs to produce and market a product or service. It helps identify which activities are most valuable to the company and which needs to be improved to help perform better. 

Ready to Evaluate Your Strategy? 

Strategy evaluation plays a significant role in assessing the effectiveness of a strategy in achieving organizational objectives and helping in the successful culmination of the strategic management process.

This guide gives an introduction to strategy evaluation and the steps to evaluating a strategy effectively, and we hope it will help you carry out the process seamlessly. 

Let us know your experience in the comments section below.

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Strategy Evaluation Process: Comprehensive Guide + Examples

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 happens, strategies quickly become outdated and out-of-sync with the changing face of the organization.

On the contrary, when an efficient strategy evaluation process is set in place, businesses can benefit from insights and learnings from past performance to inform more efficient decision-making .

What Is Strategy Evaluation?

Strategy evaluation is the process of analyzing a strategy to assess how well it's been implemented and executed. It’s an internal analysis tool and should be used as part of a broader strategic analysis for the organization when making strategic decisions.  

Typically, the strategy evaluation process involves answering questions such as:

• Are we moving forward towards achieving our core business metrics ?
• How much progress have we made towards our Vision ?
• Are our Strategic Focus Areas still relevant?
• Which of our Objectives have we completed?
• Do we have sufficient Projects to deliver incomplete Objectives?
• Are our KPIs still effective for measuring progress towards our Objectives?
• Where did we fall short of our targets? Why did this happen?

At the very least, you need to evaluate your strategy twice a year—or better yet, every quarter. Even if you feel as though your existing company strategy is 'too far gone' and needs a fresh start, you'll want to perform a thorough strategy evaluation to understand what went wrong and use this information for your new strategy.

The mistake that people often make when it comes to strategy execution , is thinking of their strategy as a linear set of steps. In reality, the strategic planning process requires constant iteration and evolution, with strategy evaluation serving as a pivotal factor in shaping strategy formulation.

💡 Pro Tip: A good strategy should never really 'end'. Rather, it should morph into something more ambitious and sophisticated as goals are met.

Steps For a Successful Strategy Evaluation Process

There is no one-size-fits-all in terms of strategy evaluation, so we encourage you to think about how your own process would look like. However, after working on countless strategies with our customers, these are the steps we suggest you follow for a successful evaluation process.

Step 1: Evaluation starts at the start

It may sound counter-intuitive, but ideally, you'll be kicking off your strategy evaluation process back in the planning stage . Strategy evaluation is essentially the process of figuring out:

• What did we do well?
• How can we improve upon what we did well?
• What did we learn about ourselves and the external environment along the way?

One of the best ways to answer these questions is by setting effective KPIs (Key Performance Indicators) in your planning stage so you’ll be able to clearly measure performance in the following stages.

Let’s look at an example:

Imagine "EcoWise," a company with a vision to lead global sustainable living. One of their core business metrics is market share , and they aim to expand their eco-friendly products into new international markets.

One of their focus areas could be “International Market Expansion” driven by the following objectives:

• Enter and secure a 5% market share in Europe.
• Launch at least five new eco-friendly products annually.

To understand progress towards the objectives, they set the following KPIs:

• Market Share Growth
• Product Adoption Rate
• Sustainability Ratings

By having clear KPIs that set a benchmark and allow to measure actual results, EcoWise will be able to answer fundamental questions during the strategy evaluation process:

• Did we meet our KPI?
• Why did we fall short?
• Was this even the right KPI?

👉🏻 How Cascade can help?

With Cascade’s planner feature, you can ensure you set all the important elements of your strategic plan with structure and ease and assign measurable targets at the initiative and project levels.

Step 2: Implement consistent processes and tools

Not to sound too much like a broken record, but effective strategy evaluation requires planning that goes beyond the setting of good KPIs. You'll also need to plan out your 'strategy rhythm'—things like:

• How often will we measure progress against our goals?
• What standardized set of reports will be used throughout the business?
• What level of detail shall we capture in our written commentary on progress against the plan?

💡 Pro Tip: It’s important to determine these types of things up front and implement a regime of meetings and reports throughout the organization.

We like to call this process your ' strategy rhythm ' as it should form the backbone of your organization's activities, and be maintained regularly and consistently throughout the year.

Here is an example you can use provided by Cascade’s team of experts:

Step 3: Empower teams to evaluate their own strategies

Empowerment plays a critical role in the strategy evaluation process. Rather than have the leadership team alone participate in your strategy evaluation, invite stakeholders from different areas and departments to prepare their own evaluation of how the team performed against the strategy.

Provide them with a simple framework to conduct the analysis and address essential questions like:

• Did we meet our goals?
• What was it that helped us to succeed?
• What challenges made us fall short?
• Were our goals well set, and have they brought us closer to achieving our overall vision?

Ideally, you'll have your teams present using the tools you defined in step 2 . This includes any strategic dashboards or standardized reports that you agreed on previously.

Cascade’s dashboards and reports in real-time give you and your teams an accurate picture of the strategic performance to aid in your strategy evaluation process.

Step 4: Take corrective action

Steps 4 and 5 (below) are somewhat intertwined and should be performed largely in conjunction with each other. If you find that you're not meeting one of your goals, you'll want to do two things:

• Start by figuring out if the goal is still the right one.
• If it is, take corrective action to address any shortcomings.

Assuming you're still convinced the goal you've set is the right one, you need to implement an action plan to get yourself back on track.

There are many reasons why you might be struggling to hit your goals, ranging from relatively simple issues such as:

• Lack of resource allocation (human or financial)
• Conflicting priorities
• Ineffective tracking of targets
• Misalignment or understanding of the goal

Or your challenges may be more complex and relate to:

• Increased competition
• A significant capital shortfall
• Regulatory pressures
• Lack of internal innovation

Whatever the case, the sooner you can identify these issues, the sooner you can start to take corrective action to ensure a more effective strategy implementation that will get you closer to achieving your desired results.

How to identify the issue?

There are tools and frameworks you can use during the strategy evaluation process that can give you more information about internal and/or external factors that may be hindering your progress.

For example, a SWOT analysis can be useful to reveal what you excel at and where you need improvement. Identifying your weaknesses is key to understanding what might be holding your strategy back.

Another best practice is conducting a competitive analysis to gain insights into what your competitors are doing better. By comparing your strengths and weaknesses against theirs, you can understand where you hold the competitive advantage and where you have gaps that need addressing.

Step 5: Iterate your plan

There are two scenarios where you'll want to iterate your plan as part of your strategy evaluation—one being significantly more positive than the other:

Scenario 1: When you achieve your goals

In an ideal world, your plan evolves because you've successfully checked off some or all of your strategic goals. Your plan isn't set in stone; it's flexible and can take unexpected turns.

For instance, you might reach certain goals much earlier than anticipated. When that happens, you shouldn't wait around for the entire plan to play out. Instead:

• If you've met all your goals, it's time to ask if your broader focus area is complete. If not, it's time for new goals within that focus area.
• Or, if you've successfully nailed all your focus areas, it's time to ponder if you're closer to your vision. If not, new focus areas should come into play.

Scenario 2: When you fall short of your goals

Now, let's consider a different scenario, where you didn't quite hit all your goals. But here's the thing: just because you missed a goal doesn't automatically mean you need to take immediate corrective action.

One of the key outcomes of effective strategy evaluations is the recalibration of Key Performance Indicators (KPIs).

Going back to the example in step 1 , let’s say that EcoWise effectively launched 5 new products, but this did not effectively translate into them gaining significant market share (which was the key metric they were aiming for).  

In this case, it suggests the original KPI might not have been quite right. But you wouldn't have known that without either the KPI in the first place or the process of strategic evaluation.

The platform allows for a flexible setup of your strategy to easily make changes to the plan if needed after the insights learned from your strategic evaluation process. By providing full visibility, your teams and other stakeholders will be aware of the changes in real-time!

Step 6: Celebrate successes

We've saved the most fun part of the strategy evaluation process for last—celebrating success.

Given that your strategy will never ‘finish,’ it’s important to celebrate the successes along the way to keep your teams motivated and engaged. The first time you achieve a KPI or even focus areas— enjoy it!

Celebrating the success of a strategic goal is not only great for morale, but it also sends a strong message that the execution of the plan really really matters .

Strategy Evaluation Framework Example

Let's imagine how a supply chain company could tackle the evaluation of its quarterly supply chain plan:

• KPIs analysis : First, they examine their KPIs to decipher which goals they've attained and which ones are still a work in progress.
• Team performance report : The teams get to work on crafting performance reports, offering insights into their achievements and areas requiring additional focus.
• Further analysis : When certain KPIs fall short, they conduct a deeper analysis to uncover the root causes of these performance gaps. In some cases, they even realize that the initial KPIs might not have been the best fit.
• KPI evolution : If they’ve successfully met a KPI, they adapt and introduce a new one to further advance toward key business metrics.
• Evolving the plan : With insights and learnings from their strategy evaluation, they refine their strategic plan, making tweaks and adjustments as needed.

Centralized Observability: The Key To Effective Strategy Evaluation

In the realm of strategic business management, the journey to success is all about adaptability, evolution, and continuous improvement. A pivotal aspect of this journey is the capability to gain a holistic, centralized view of your strategy.

Centralized observability plays a pivotal role in successful strategy evaluation, empowering organizations to:

• Monitor KPIs and goals in real time.
• Understand how teams work together toward achieving the overarching business goals.
• Quickly spot areas that may need adjustments.
• Foster a culture of transparency and accountability, as teams can see how their efforts impact the broader strategy.

This unified perspective simplifies the process of assessing strategy effectiveness and provides invaluable insights for more effective decision-making.

This is where Cascade , the world’s leading Strategy Execution Platform , comes into play as your strategic ally. Cascade enables centralized observability by offering key features for goal management, performance tracking, and strategy alignment. It streamlines the strategy evaluation process, providing real-time data for confident decision-making.

Discover how Cascade can help! Sign up today for free or book a guided 1:1 product tour with one of Cascade’s in-house strategy execution experts.

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How to Measure Your Business Strategy's Success

• 04 Jan 2024

Measuring your business strategy’s success is vital to strategy execution .

Despite its importance, research by SurveyMonkey shows that only 35 percent of business owners set benchmarks or goals. Among those who set them, 90 percent consider themselves successful. Of those who don't, only 71 percent report the same.

If you want to achieve organizational objectives and avoid common strategic planning pitfalls , here’s why it’s important to evaluate your strategy.

Access your free e-book today.

Why Is It Important to Evaluate Your Strategy?

Evaluating your strategy can help your organization achieve its goals and objectives while highlighting necessary adjustments for long-term success.

Its benefits include:

• Ensuring organizational alignment
• Establishing accountability
• Optimizing operations

Assessing your business strategy is an ongoing process. To ensure it’s set up to succeed, you must evaluate it pre-, during, and post-implementation. Here’s how to do so.

How to Measure Your Strategy’s Success

1. revisit goals and objectives.

Every business strategy needs clearly defined performance goals. Without them, it can be difficult to identify harmful deviations, streamline the execution process, and recognize achievements.

After establishing goals and objectives, plan to revisit them during and after implementing your strategy. According to Harvard Business School Professor Robert Simons in the online course Strategy Execution , the best way to do so is by comparing them to critical performance variables —the factors you must achieve or implement to make your strategy succeed.

For example, if your company’s value comes from customer loyalty, one of your critical performance variables could be customer satisfaction. When customers no longer receive value from your products or services, that could impact your company’s bottom line.

The best way to verify critical performance variables is by analyzing them against your strategy map —a visual tool outlining the cause-and-effect relationships underpinning your strategy. Those variables should also receive high importance on your balanced scorecard , which translates your strategy into goals and objectives.

By taking these steps, you can identify performance measures worth reviewing.

2. Review Measures

Evaluating business performance requires measures —quantitative values you can scale and use for comparison—and they must tell the right story.

According to Strategy Execution , you should ask three questions when reviewing measures:

• Do they align with my strategy?
• Are they objective, complete, and responsive?
• Do they link to economic value?

For example, if you want to improve your company’s brand loyalty, metrics worth monitoring include the number of new customers, average purchases per customer, and the number of social media followers.

A balanced scorecard can provide a holistic view of your business performance measures—ensuring all your employees are on the same page.

“You can have the best strategy in the world,” Simons says in Strategy Execution . “But at the end of the day, what everyone pays attention to is what they're measured on. So, you need to be sure that measures throughout the business reflect your strategy, so that every employee will devote their efforts to implementing that strategy.”

3. Supervise Monitoring Systems

While balanced scorecards are powerful diagnostic control systems —formal information systems used to monitor organizational outcomes—they don’t provide visibility into all measures of success. That’s why you need additional systems to streamline strategic plans’ evaluation.

For example, you can use customer relationship management systems’ analytics tools to generate reports that align with business goals and objectives. To boost customer loyalty, you can automate reports on:

• Purchasing patterns
• Purchase frequency
• Customer survey scores

“But to ensure that these systems are effective, you need to invest considerable time and attention in their design,” Simons says in Strategy Execution . “You must not only spend time negotiating and setting goals—as we've discussed—you must also design measures for these goals and then align performance incentives.”

4. Talk to Employees

Employee feedback and buy-in are other useful tools for measuring success.

For example, creative software company Adobe is known for its loyal employee base. That was put to the test when the company shifted to a subscription-based model, launching Adobe Creative Cloud .

Company leaders briefed employees on strategic changes and how they provided value to customers. They also encouraged employees to contribute ideas and feedback throughout the transition. With minimal internal pushback and a boost in collaboration, Adobe knew its strategy would succeed and ensure relevance in a constantly evolving market.

“The best businesses motivate their employees to be creative, entrepreneurial, and willing to work with others to find customer solutions,” Simons says in Strategy Execution .

Related: How to Create a Culture of Strategy Execution

5. Reach Out to Customers

Customer feedback is a key measure of your strategy’s success. According to a recent report by Zendesk , 73 percent of business leaders believe customer service directly links with business performance—with 64 percent attributing customer service to positive business growth.

Feedback can also reflect how well initiatives align with customer needs and expectations when it comes to value creation , making it important to consistently seek out ways to monitor attitudes toward your company and its strategy.

In Strategy Execution , Tom Siebel, CEO of C3 AI, shares his thoughts on customer satisfaction when measuring success.

“Everything that's important to the business, we have a KPI and we measure it,” Siebel says. “And what could be more important than customer satisfaction?”

Unlike your company’s reputation, measuring customer satisfaction has a more personal touch in identifying what they love and how to capitalize on it.

“We do anonymous customer satisfaction surveys every quarter to see how we're measuring up to our customer expectations,” Siebel says in the course.

Your customer satisfaction measures should reflect your desired market position and focus on creating additional value. When customers are happy, profit margins tend to rise, highlighting why this should be the final step in measuring your strategy’s success.

Success Is within Reach

Measuring your strategy’s success is a continuous process that requires understanding your company’s goals and objectives.

By taking an online strategy course , you can develop strategy execution skills to measure performance effectively. Strategy Execution provides an interactive learning experience featuring organizational leaders who share their successes and failures to help you apply course concepts and excel in your career.

Want to learn how to measure your strategy’s success? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to begin your journey toward implementing strategy successfully.

About the Author

What is an evaluation of a strategic plan?

Navigating the strategy maze: Why and how to evaluate your strategic plan

Picture this: You've put together a strategic plan that's as detailed and ambitious as a blueprint for a moon landing. But here's the kicker – how do you ensure this plan isn't just a piece of high-fantasy fiction for your business? That's where the art and science of evaluating your strategic plan come into play. It's about making sure your strategy isn't just good on paper but is actually taking you where you need to go.

What does the evaluation of a strategic plan mean, really?

Think of evaluating your strategic plan as doing a reality check. It's about diving deep into what you've done, measuring it against what you hoped to achieve, and being brutally honest about what worked and what didn't. This isn't just ticking boxes next to your goals; it's about assessing if your strategic moves are truly aligning with the big-picture objectives, understanding the impact of your actions, and recalibrating your course as needed.

Why bother with strategic plan evaluation?

Simple – because you don't want to blindly follow a map that leads nowhere. Regular evaluations keep you agile, allowing you to pivot as needed in response to unexpected challenges or new opportunities. They help ensure your resources are spent wisely, foster a culture where everyone is accountable for outcomes, and ultimately, keep your business competitive and on track for success.

Timing is everything: When to evaluate your strategic plan

The million-dollar question is, when do you actually sit down to do this evaluation? Well, it's not a once-a-year, end-of-the-year kind of deal. Strategic plan evaluation is more of a pulse check that should happen at key moments:

Before full implementation: Once your plan is laid out, do a preliminary review before you go full steam ahead. This is a sanity check to ensure everything aligns and is feasible.

During implementation: Schedule regular check-ins, perhaps quarterly or even monthly, depending on the pace of your operations and the dynamics of your industry. These check-ins allow you to adjust tactics in real time, responding to internal shifts or external market pressures.

After major milestones: Whenever you hit a significant milestone, pause and evaluate. This could be after launching a new product, entering a new market, or at the end of a major campaign.

End of the strategic period: When your strategic timeframe has concluded, conduct a thorough evaluation to gather insights for future planning. This is about learning from your journey – the good, the bad, and the ugly.

The how: Evaluating your strategic plan in 5 steps

Set clear metrics: Define what success looks like with specific, measurable goals.

Gather your data: Look at your performance, gather feedback, and get the numbers.

Compare reality to goals: How did you actually do compared to what you hoped to achieve?

Listen to the crowd: What are your customers, employees, and stakeholders saying? Their feedback is gold.

Plan your next moves: Based on your findings, what needs to change, continue, or stop?

Frameworks to guide you

Pick your evaluation toolkit wisely. Whether it's the Balanced Scorecard for a 360° view, SWOT Analysis for a quick health check, or PESTEL Analysis for scanning the external environment, each framework offers unique insights to help steer your strategy in the right direction.

Let's delve into the details of the Balanced Scorecard, SWOT Analysis, and PESTEL Analysis to understand how they can illuminate different aspects of your strategic journey.

Balanced Scorecard: A 360° view on performance

The Balanced Scorecard is your go-to for a comprehensive, bird's-eye view of your organization. It breaks down your strategic objectives into four key perspectives:

Financial: How do we look to our shareholders? This perspective focuses on financial performance metrics such as revenue growth, margins, and return on investment (ROI).

Customer: How do our customers see us? Here, you measure customer satisfaction, retention, and market share.

Internal Processes: What must we excel at? It evaluates the efficiency and effectiveness of the processes that create value for customers and shareholders.

Learning and Growth: Can we continue to improve and create value? This angle looks at the organization's ability to innovate and improve, measuring employee satisfaction and retention and the pace of improvement in internal processes.

Using a balanced scorecard template , you can ensure that your strategic plan addresses all critical aspects of your business, not just the bottom line.

SWOT Analysis: Identifying strengths, weaknesses, opportunities, and threats

SWOT Analysis is like taking a hard, honest look in the mirror. It helps you understand your organization's internal strengths and weaknesses, external opportunities and threats. Here's how it breaks down:

Strengths: What advantages does your organization have? Consider your unique resources, capabilities, and technology.

Weaknesses: What areas need improvement? Look at the gaps in your resources, processes, or capabilities.

Opportunities: What external factors can you leverage? Think about market trends, regulatory changes, or technological advancements that could benefit your strategy.

Threats: What challenges could you face? These could be competitors, economic downturns, or changes in consumer preferences.

By conducting a SWOT Analysis , you can craft a strategy that plays to your strengths, addresses your weaknesses, capitalizes on opportunities, and mitigates threats.

PESTEL Analysis: Scanning the external environment

PESTEL Analysis allows you to scan the horizon for external forces that could impact your strategy. It stands for:

Political: What political factors could influence your strategy? This includes government policies, trade restrictions, and political stability.

Economic: How do economic growth, exchange rates, and inflation affect your business?

Social: What social trends could impact your strategy? Demographic shifts, lifestyle changes, and consumer behaviors fall into this category.

Technological: How could technological advancements or disruptions affect your business?

Environmental: Could environmental concerns (like climate change or sustainability issues) influence your strategy?

Legal: What legal and regulatory frameworks could impact your operations?

PESTEL Analysis helps you anticipate external changes, ensuring your strategy remains relevant and resilient in the face of uncertainty.

By employing these frameworks, you can gain a multi-dimensional view of your strategic plan's performance. Each framework offers unique insights, helping you identify where you excel and where adjustments are needed. Whether looking at the broad picture with the Balanced Scorecard, taking a reflective look with SWOT, or scanning the horizon with PESTEL, these tools empower you to evaluate and refine your strategic plan effectively. Remember, the goal is not just to execute a strategy but to navigate your business toward long-term success and resilience.

Why Miro is your strategic planning tool

And here's where Miro comes into play. Imagine a strategic tool that helps you map out these sophisticated strategic plans and becomes your central hub for ongoing evaluation and collaboration. With Miro, you can visually track your progress, brainstorm adjustments, and engage your team every step of the way. It's like having a GPS for your strategy, ensuring you're always on the right path and making course corrections in real time.

In wrapping up, evaluating your strategic plan isn't about going through the motions; it's about ensuring your strategy lives and breathes along with your business. It keeps you aligned, adaptable, and ahead of the curve. With the right approach and Miro in your arsenal, you're not just planning for success; you're actively navigating your way toward it.

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What is a strategic roadmap?

The goal setting process for strategic planning

A guide to key performance indicators (KPI)

What is an OKR?

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The importance of knowing how to evaluate a strategic plan

Now that you know more precisely what strategic planning is and what it is for – with the help of Peter Drucker’s ideas – let’s take a look at some strategic planning objectives.

3 main objectives of strategic planning

Below are the main objectives and benefits of monitoring your organization’s strategic plan:

1- Ensuring that activities are being performed within the defined parameters

During the development of strategic planning, for each activity planned for the organization, necessary parameters for their accomplishment are considered.

Costs, execution time, financial, material and human resources needed, among others.

Now, while the plan is being put in place, the manager must make sure that all activities are being carried out within the proper parameters.

Rather than assessing, the manager must look at whether a change of course is required, and whether the parameters for any activity need to be rethought.

Ensuring activity progress helps set performance standards that indicate progress towards long-term goals, assesses people’s performance, and provides input for feedback.

2- Ensuring activities are consistent with company DNA

The soul of the organization is closely linked to its vision, mission and values.

Monitoring strategic planning is also a way to ensure that activities are being developed in accordance with the values that guide the organization and its organizational culture.

Since they are directly related to the organizational climate and the corporate image of the company.

Check out this unique Siteware infographic that shows the consequences of a misaligned organizational culture of strategic planning:

3- Assessing ability to achieve goals and identify problems

Analyzing both the internal and external workforce and the exchange of ideas is also important in measuring how well a company is able to achieve what was set for the period.

By comparing performance data with established standards, it is possible to visualize or anticipate possible bottlenecks in corporate daily life.

Why is monitoring strategic planning important?

When a company monitors its strategic planning closely, it ensures that its teams are doing a good job, committed to maintaining progress, and with proper records so they can be evaluated.

Here is another quote from a master, Ram Charan , to illustrate how monitoring strategic planning is critical.

“ 70% of strategies fail due to ineffectiveness. They rarely fail due to lack of intelligence or vision.”

That is, at the time of executing the plan, it is crucial to carry out strategic monitoring and evaluation of the planning systematically and constantly.

After all, if 70% of planning activities fail in execution, only strategic planning control and evaluation – with metrics – will allow errors to be detected and adjustments made.

The metrics a company uses to measure also indicate the quality of the year or period the company is in.

If necessary, from what is evaluated, it is possible to correct the current path, make investments, hire staff, seek technological tools, build partnerships, among many other solutions.

Monitoring is part of the strategic planning system primarily to keep track of what is happening.

And this is usually done through an analysis of regular operational and financial reports on a company’s activities.

The results of a strategic planning follow-up are:

• Incentive for continuous improvement;
• Provision of data on the impact of activities;
• Information for decision making.

The monitoring of strategic planning should be carried out based on the same indicators used when preparing strategic planning.

This also allows for process review as the company realizes that activities, internal and external relationships, customer approaches, etc. need to be modified.

Is it clear to you how important strategic planning and the control of action plans and activities are?

Examples of strategic planning indicators

You have seen that there is no way to monitor strategic planning without the use of indicators.

There are actually three types of indicators to consider in a company:

• Strategic Indicators:  They point to the future, the path the company is expected to follow, and are linked to the mission and vision of the business. They will be reached in the long term, between 3 and 5 years. After an analysis of internal and external scenarios and company differentials, with the help of SWOT analysis, strategic indicators are usually defined.
• Tactical Indicators:  are related to the actions of each area of the company. They make up an action plan that is effective in a shorter period than the strategic objectives, but should contribute to it. If tactical indicators are being met, there is a good chance that strategic objectives will also be met successfully.
• Operational Indicators:  short term. They are directly linked to the day-to-day operations in a company and the progress of the processes. Operational indicators are assigned to each employee to achieve the desired performance level that will make it possible to achieve tactical and strategic goals.

How do you define strategic planning indicators, anyway?

We have seen in the paragraphs above that strategic indicators have the following characteristics:

• Point to the future
• Achieved in the long term
• Linked to a company’s mission and vision
• Based on competitive differences

So, for example, it would make no sense to define strategic indicators like the following:

• Improve the efficiency of our production line by 15% next year.
• Increase sales by 10% by the end of June
• Hire new talent to fill 6 positions on the board by year’s end

These are typical examples of tactical indicators.

To get examples of strategic planning indicators, one must think of changes more linked to the company’s DNA, its mission to society.

Here is a short list of examples of strategic planning indicators:

• Launch 3 new product lines each year over the next 4 years to gain 35% more Share in Market X.
• Create a corporate university that meets our needs within a maximum of 2 years and institute university study support plans to enable our employees to have 85% of the workforce with a college degree and 50% with a postgraduate degree. 5 years.
• Deactivate business units with less than 20% profitability and use the proceeds from the sale of these assets to start an international expansion project by opening 1 unit in countries X, Y and Z and 3 units in country W within 4 years.

Challenges of following strategic planning

Now that it’s clear to you how to evaluate a strategic plan, let’s look at the challenges inherent in doing it.

If we consider that strategic planning is the consolidation of ideas, it is in the implementation of these ideas that the organization will obtain its results, as Charan pointed out.

That’s why it needs to be constantly reevaluated and rethought as corporate progresses.

The biggest challenge of strategic management is related to the ability to move the organization and keep it connected with what was proposed by the strategic plan, with the adaptability that this process requires.

Like every management function, this presupposes a permanent dynamic of planning, execution, monitoring, evaluation, adjustments and readjustments.

And if you want to know how to evaluate a strategic plan even more quickly and assertively, check out STRATWs One strategic planning software.

It enables a friendly view of your strategy map, making it easy to track indicators and goals and creating action plans for each one.

It makes it much easier to understand how to evaluate a strategic plan and monitor internal activities.

Revolutionize the management of your company with STRATWs One

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Strategy Evaluation: Process | Importance | Example

Strategy evaluation is the process of assessing the effectiveness and efficiency of a strategic plan or initiative. It is an integral part of the strategic management process, serving as a critical feedback mechanism to determine whether the strategy has achieved its intended objectives.

Strategy evaluation aims to ensure that the strategic plan is yielding the desired outcomes and, if not, identify where and why performance is falling short. It involves verifying whether the strategy is helping the organization navigate its internal and external environments successfully and if it’s contributing to the growth and success of the business.

Strategic Management Process

Strategy evaluation process

The strategy evaluation process involves several interconnected steps that are continuously repeated to ensure the strategy remains effective and relevant. Here are the main stages in the strategy evaluation process:

• Setting Objectives:  The first step in any strategic evaluation is clearly defining what you hope to achieve with your strategy. These objectives should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.
• Developing Key Performance Indicators (KPIs):  Once the objectives are clear, the organization needs to define the KPIs to measure the strategy’s effectiveness. KPIs are quantifiable measurements that reflect the critical success factors of an organization.
• Data Collection:  This stage involves gathering data on the previously established KPIs. This data could be quantitative (e.g., sales figures, customer retention rate) or qualitative (e.g., customer satisfaction surveys, employee feedback).
• Analysis:  In this stage, the collected data is analyzed to see if the strategy is working as intended. This may involve comparing actual results to projected results, benchmarking against industry standards, or using statistical methods to identify trends and patterns.
• Interpretation:  Based on the analysis, evaluators interpret the results to understand the strategy’s performance. This is where the evaluators can conclude whether the strategy is meeting its objectives, where it’s failing, and what might be the causes.
• Action:  If the interpretation of the data reveals that the strategy isn’t effective or if there are areas that could be improved, this is where adjustments are made. Actions could include modifying the strategy, developing new tactics, providing employee training, or reallocating resources.
• Reporting:  Finally, the evaluation results and proposed actions are reported to decision-makers and other relevant stakeholders. This ensures transparency and allows for further input and discussion.
• Review:  Regularly scheduled strategy reviews should be conducted to ensure its continued relevance and effectiveness. This helps an organization adapt to changes in its internal and external environment.

This entire process is iterative and should be repeated periodically, not only when the strategy fails to meet objectives but also as part of a proactive and continuous improvement approach to strategic management.

Importance of strategy evaluation

Strategy evaluation plays a pivotal role in strategic management for several reasons:

• Measuring Performance:  Through the evaluation process, organizations can measure their performance against the established objectives. This allows them to identify if they are on track or if adjustments need to be made.
• Identifying Areas for Improvement:  Regular strategy evaluations can help pinpoint areas where the organization is not performing as well as expected or areas that can be improved. It highlights strengths and weaknesses and provides direction for future strategy formulation.
• Resource Allocation:  Strategy evaluation can inform effective resource allocation by identifying which strategic initiatives are performing well and deserve more investment and which ones are underperforming and may need to be deprioritized.
• Responding to Change:  Markets and competitive environments are dynamic. Regular evaluation of strategy helps organizations stay agile and adapt to changes in market trends, customer behavior, regulatory changes, and competitive activity.
• Reducing Risk:  By regularly evaluating strategy and making necessary adjustments, organizations can reduce the risk of strategic failure and improve their chances of achieving their objectives.
• Ensuring Accountability:  Strategy evaluation ensures accountability by monitoring performance against the strategic plan. This helps keep everyone focused and aligned with the strategic objectives.
• Improving Decision-Making:  The insights gained from strategy evaluation can greatly improve decision-making. By knowing what is working and what is not, leaders can make informed decisions about the organization’s future course.

Regular strategy evaluation is crucial for ensuring that a strategy is effective, objectives are met, and the organization is responsive to changing conditions. It contributes to better decision-making, improved performance, and increased likelihood of achieving strategic objectives.

Strategy evaluation example

Let’s consider an example of strategy evaluation in the context of a tech startup that has set a strategic goal of increasing its market share by 25% in the next two years.

• Setting Objectives:  The startup’s strategic objective is to increase its market share by 25% within two years.
• Developing Key Performance Indicators (KPIs):  KPIs could include the number of new customers acquired, the retention rate of existing customers, the company’s net promoter score (NPS), and its revenue growth rate.
• Data Collection:  The company begins gathering data. This might involve tracking the number of new customer sign-ups, conducting surveys to calculate the NPS, monitoring revenue growth, and tracking customer churn rate.
• Analysis:  After a year, the startup analyzes the data. They find that while new customer sign-ups are increasing and revenue growth is on track, the churn rate is higher than the industry average, and the NPS score has declined slightly.
• Interpretation:  The startup concludes that while attracting new customers, they’re not retaining existing ones satisfactorily, which might impact their NPS. This could hinder their progress towards the 25% market share increase.
• Action:  The startup decides to invest in improving its customer service and enhancing its product based on feedback from existing customers to reduce the churn rate and improve the NPS. They also tweak their marketing strategy to target better potential customers who are more likely to stay with the service long-term.
• Reporting:  The results of the evaluation and the subsequent decisions are then communicated to the startup’s stakeholders, including employees, investors, and board members.
• Review:  The startup continues to monitor their KPIs and conduct regular strategy evaluations, tweaking their approach based on the insights they gain.

This example demonstrates how strategy evaluation can help a business identify potential issues, make informed decisions, and stay on track toward achieving its strategic goals.

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Your Complete Guide To Strategy Evaluation Tips & Techniques

You’ve created your strategy… but how do you evaluate your progress?

So you’ve created your organizational strategy and have a good idea of where your company should be going in the next five years. Awesome.

‍ But… now what? How do you actually evaluate your progress toward your strategy?

‍ We get calls regularly from people who have finished their strategic planning process and are suddenly confronted with the fact that their executive team (or board of directors, city council, etc.) wants regular updates on their progress.

If you’ve been struggling to evaluate your strategy, goals, measures, and initiatives, you’re in the right place. We have outlined the techniques you should use to get your strategy evaluation process whipped into shape below. (After all, your executive team is right—evaluating strategy is simply critical to executing on it!)

6 Strategy Evaluation Tips & Techniques

1. ensure that the most important components are in place..

In order for your strategy evaluation framework to work effectively, you need to have a few things in place first:

‍ Accountability : First, you need to have a clear owner for all of your goals, measures, and projects. But you don’t want to make your leadership team accountable for everything in your strategy—only the big-picture goals.

• Pro Tip: Measure analysts and project owners should provide updates on everything so executives can then take that data and work with it instead of wasting time tracking it down.

Responsiveness : Measure and project owners need to respond to requests in a timely manner. If you’re reporting quarterly, owners should have a 2-3 day window for turnaround—but if you’re reporting monthly, owners should only have a one-day turnaround.

• Pro Tip: Celebrate those who turn in their work on time, and let those who are not as quick to respond fail once. If this happens again, you can take action—but more likely than not, those who did not turn in their work in the appropriate time will act accordingly and get things turned in at the right time the next month or the next quarter.

Leadership : It’s absolutely crucial that your executive team is on board with your strategy evaluation framework. Leadership should ensure that they take the time each month or quarter and review the strategy. They should communicate the importance that this document and process have in the organization, and should constantly interact with staff about key elements of the strategy and draw the connection back to the strategy. This speaks volumes to the criticality of your strategy.

• Pro Tip: When you’re getting started with strategy evaluation, you’ll likely have one person on the leadership team who is heavily involved—and the rest of the leadership may not be. This individual should focus on translating the strategy evaluation process into a valuable scenario for every leadership team member. For example, someone in HR needs to know how this process supports their strategic values in HR.

Strategy Review Calendar: Your strategy review calendar ensures everyone is on the same page. It should list when your report meetings will be scheduled so you can work backward and evaluate your strategy at a measured pace.

• Pro Tip: Having a complete strategy review calendar will increase your transparency. This means everyone can see when strategic elements are due on a day-to-day basis, and everyone understands fully that in order for the process to continue, they need to stay up-to-date with their deadlines.

2. Update your measures and projects first.

Your measures and projects are the building blocks of a successful strategy. If you run active reporting meetings, you might also have action items that need updating—but at a minimum, you need to know the current status of each of your projects and the current data for each of your measures. This can and should be done by a data analyst (if it isn’t automatically updating using a tool like ClearPoint’s Data Loader).

• Pro Tip For Updating & Evaluating Measures: Keep all of your measure charts consistent so those involved can evaluate the status quickly and easily. You may consider using a uniform color code throughout. For example, blue would indicate actual results and orange would indicate your target.
• Pro Tip For Updating & Evaluating Projects : Consider how you can summarize key project milestones to best suit the needs of the executive team. This summary may include a status indicator, percentage complete, and a paragraph summary. If you want to include details of the project that may be important to you but aren’t so important to the leadership team, include a link to those details in your software or add the details in an attachment.

3. Evaluate your measures and projects second.

Once you’ve gotten an update on the percentage that each project is complete and you’ve collected data for all measures, you need to evaluate the RAG status of each. Depending on your organization, you may have defined the rules for a red, an amber, and a green status, or the information might be completed manually. The latter is often the case for initiatives, because you could have a project that is on track but over budget or a project that is on budget but off track with quality. Whatever you choose, the key is consistency in your evaluations.

• Pro Tip : Depending on where data lives in your organization, you may want to have one person gathering and updating data and another person evaluating that data. For example, the information technology department may update their measure and project data, and someone from marketing may be tasked with evaluating that data.

4. Update your goals.

Goals are based on the performance of your projects and measures, so once those are updated, your goal update will become much easier. Your goals can be automatically evaluated based on project and measure performance, but most companies—particularly those in the U.S.—manually evaluate their goals. To evaluate your goals successfully, you should be sure appropriate members of the leadership team provide a RAG status for quick evaluation and a qualitative assessment (which is sometimes referred to as the “analysis and recommendations”).

• Pro Tip: You’ll have several measures and projects that tie into your goals. The best way to present this information is to highlight the data that best tells the story of how you’re doing during that reporting period. You don’t need to repeat evaluations of the measures and projects supporting each goal.

5. Determine the “strategy story” for the reporting period.

Once you’ve looked at your goals, you can start determining the key changes and drivers in your strategy for this reporting period. Are you doing well in innovation for a new product but struggling to manage costs? Are you seeing high turnover on your customer management team that is affecting customer satisfaction? By examining such situations, you start to determine the “strategy story” that hits on the key changes—including both major challenges and successes—over the month or the quarter. Additionally, once you’ve decided what needs to be highlighted, you can go back and gather more data and details.

While the goal is to hone in on areas you may need to improve on, your team is going to react best if you can celebrate a success. So if you’ve fixed a manufacturing issue, which caused your quality and sales to rise from last quarter, you’ll want to make that very clear to help cheer everyone involved on.

• Pro Tip: While going through this strategy evaluation process, you may begin noticing that one person is charged with coordinating the entire effort—from goals, to measures, to projects. This can be very overwhelming. If this is the case, start figuring out ways to involve analysis from additional individuals.

6. Create your report.

Depending on your organization and structure, this report could be for your stakeholders (shareholders, council, board of directors, etc.) or it could be for an internal strategy meeting. Your report template should allow you to add information consistently on a month-to-month or quarter-to-quarter basis. ClearPoint, for example, has a wide template library so you can create reports for varied audiences. Regardless of format, be sure your report shows how you have evaluated your strategy and highlights both successes and key action steps. In simple terms, it should show the good, the bad, and the ugly so you can use it to make an on-target action plan.

• Pro Tip : Keep in mind, your report may be a bit more generic, while your strategy story will be the place to highlight an executive summary and some details on successes and challenges.

The importance of strategy evaluation cannot be understated. You need the right support and parameters in place to allow you to carry out the process above. Your leadership team should understand, value, and appreciate the impact this technique can have on your organization—and once they do, they will be far more likely to follow through with it.

And while this process is a lot of work, there are tools that can help make it easier. Software like ClearPoint is designed to support you in your efforts from start to finish.

What is strategy evaluation?

Strategy evaluation is the process of assessing the effectiveness of a strategic plan in achieving organizational objectives. It involves analyzing performance metrics, identifying gaps, and making necessary adjustments to ensure the strategy remains aligned with the organization's goals.

What is strategy evaluation and control?

Strategy evaluation and control refers to the continuous process of monitoring and adjusting strategies to ensure they meet organizational goals. This involves setting performance standards, measuring actual performance, comparing it against the standards, and taking corrective actions when necessary to stay on course.

What is a strategy evaluation framework?

A strategy evaluation framework is a structured approach used to assess the effectiveness of a strategic plan. It typically includes key components such as setting evaluation criteria, measuring performance, analyzing results, and making necessary adjustments. ClearPoint Strategy offers tools to help organizations implement comprehensive strategy evaluation frameworks.

What is the strategy evaluation process?

The strategy evaluation process involves several key steps: defining evaluation criteria, collecting and analyzing data, comparing actual performance against the criteria, identifying deviations, and making necessary adjustments to improve strategic outcomes. This process ensures that the strategy remains relevant and effective in achieving organizational goals.

Ted Jackson

Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.

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What is strategic planning? A 5-step guide

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

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What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

Related resources

15 creative elevator pitch examples for every scenario

How Asana streamlines strategic planning with work management

How to create a CRM strategy: 6 steps (with examples)

What is management by objectives (MBO)?

Strategy Evaluation and Control

Evaluation and control in strategic management (adsbygoogle = window.adsbygoogle || []).push({});.

The strategic management process results in decisions that can have significant, long-lasting consequences. Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse.

Thus, these strategic decisions must be evaluated and controlled properly. Successful strategies combine patience with a willingness to promptly take corrective actions when necessary. There always comes a time when corrective actions are needed in an organization.

Strategy evaluation and control are essential to ensure that stated business objectives are being achieved. It is vital to an organization’s well-being.

In many organizations, strategy evaluation is simply an appraisal of how well an organization has performed. Timely evaluation and control can alert management to problems or potential problems before a situation becomes critical.

Strategy evaluation and control are important because organizations face dynamic environments in which key external and internal factors often change quickly and dramatically.

An organization should never be lulled into complacency with success. Countless firms have thrived one year only to struggle for survival the following year.

If not careful, strategy evaluation and control can provide no better result than the information on which it is based. Strategy evaluation can be a complex and sensitive undertaking and is becoming increasingly difficult with the passage of time. The reasons are as follows.

First, domestic and world economies were more stable in years past, product life cycles were longer, product development cycles were longer, technological advancement was slower, changes occurred less frequently, there were fewer competitors, foreign companies were weak, and there were more regulated industries.

Second, strategy evaluation and control are more difficult today because of the following trends: (1) A dramatic increase in the environment’s complexity; (2) The increasing difficulty of predicting the future with accuracy; (3) The increasing number of variables; (4) The rapid rate of obsolescence of even the best plans; (5) The increase in the number of both domestic and world events affecting organizations; and (6) The decreasing time span for which planning can be done with any degree of certainty.

Evaluation and control in strategic management consist of performance data and activity reports.

If undesired performance results because the strategic management processes are inappropriately used, operation management must know about it so that they can correct the employee activity whereas top management would not have to involve. 

If undesired performance results from the processes themselves, top management must know about it so they can develop new implementation programs or procedures.

Adequate and timely feedback is the cornerstone of effective strategy evaluation.  However, too much emphasis on evaluating strategies may be expensive and counterproductive. 

Too much pressure from top managers may result in lower managers contriving numbers they think will be satisfactory. The more managers attempt to evaluate the behavior of others, the less control they have.

Yet too little or no evaluation and control can create even worse problems.

It is impossible to demonstrate conclusively that a particular strategy is optimal or even to guarantee that it will work. 

One can, however, evaluate it for critical flaws. There are four criteria that could be used to evaluate a strategy: consistency, consonance, feasibility, and advantage.

Consonance and advantage are mostly based on a firm’s external assessment, whereas consistency and feasibility are largely based on an internal assessment.

One of the obstacles to effective control is the difficulty in developing appropriate measures of important activities and outputs.

The Process of Strategy Evaluation and Control (adsbygoogle = window.adsbygoogle || []).push({});

Strategy evaluation and control are necessary for all sizes and kinds of organizations.

Strategy evaluation  and control process should  (1) initiate managerial questioning of expectations and assumptions,  (2) trigger a review of objectives and values, and  (3) stimulate creativity in generating alternatives and formulating criteria of evaluation.

If assumptions and expectations deviate significantly from forecasts, then the firm should renew strategy formulation activities, perhaps sooner than planned.

During the implementation of strategy evaluation and control, firms look to answer certain questions.

Have the firm’s assets increased? Has there been an increase in profitability? Have sales increased? Have productivity levels increased? Have profit margin, return on investment, and earnings-per-share ratios increased? 

Even when the answers to these types of questions are affirmative, there is no guarantee that these strategies are correct.

The strategy or strategies may have been correct, but this type of reasoning can be misleading because strategy evaluation must have both a long-run and short-run focus. Strategies often do not affect short-term operating results until it is too late to make needed changes.

Strategy evaluation activities should be performed on a continuing basis, rather than at the end of specified periods of time or just after problems occur.

Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored.

Some strategies take years to implement; consequently, associated results may not become apparent for years.

In strategy evaluation and control processes, like strategy formulation and strategy implementation, people make a difference.

As critical success factors change, organizational members should be involved in determining appropriate corrective actions.

Regardless of the size of the organization, a certain amount of management by wandering around at all levels is essential to effective strategy evaluation.

Through involvement in the process of evaluating strategies, managers and employees become committed to keeping the firm moving steadily toward achieving objectives.

Managers and employees of the firm should be continually aware of progress being made toward achieving the firm’s objectives.

Characteristics of an Effective Evaluation System (adsbygoogle = window.adsbygoogle || []).push({});

Strategy evaluation and control must meet several basic requirements to be effective. 

There is no one ideal strategy evaluation system. The unique characteristics of an organization, including its size, management style, purpose, problems, and strengths, can determine a strategy evaluation and control system’s final design.

Strategy evaluation and control activities must be economical.

Too much information can be just as bad as too little information; and too many controls can do more harm than good. 

Strategy evaluation and control activities also should be meaningful.

They should specifically relate to a firm’s objectives. They should provide managers with useful information about tasks over which they have control and influence. 

Strategy evaluation and control activities should provide timely information.

On occasion and in some areas, managers may daily need information. Approximate information that is timely is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present. Frequent measurement and rapid reporting may frustrate control rather than give better control. The time dimension of control must coincide with the time span of the event being measured.

Strategy evaluation and control should be designed to provide a true picture of what is happening.

Information derived from the strategy evaluation process should facilitate action and should be directed to those individuals in the organization who need to take action based on it. Controls need to be action-oriented rather than information-oriented.

Strategy evaluation and control process should not dominate decisions. 

It should foster mutual understanding, trust, and common sense. No department should fail to cooperate with another in evaluating strategies. Strategy evaluations should be simple, not too cumbersome, and not too restrictive. Complex strategy evaluation systems often confuse people and accomplish little. The test of an effective evaluation system is its usefulness, not its complexity.

Large organizations require a more elaborate and detailed strategy evaluation system because it is more difficult to coordinate efforts among different divisions and functional areas. Managers in small companies often communicate daily with each other and their employees and do not need extensive evaluative reporting systems. 

Familiarity with local environments usually makes gathering and evaluating information much easier for small organizations than for large businesses. But the key to an effective strategy evaluation system may be the ability to convince participants that failure to accomplish certain objectives within a prescribed time is not necessarily a reflection of their performance.

A Strategy Evaluation and Control Framework (adsbygoogle = window.adsbygoogle || []).push({});

Strategy evaluation and control include 3 basic activities.

They are: (1) examining the underlying bases of a firm’s strategy, (2) comparing expected results with actual results, and (3) taking corrective actions to ensure that performance conforms to plans.

Activity 1: Reviewing Bases of Strategy

Reviewing the underlying bases of an organization’s strategy could be approached by developing a revised  (1) EFE Matrix and  (2) IFE Matrix.

Numerous external and internal factors can prevent firms from achieving long-term and annual objectives. 

A revised EFE Matrix should indicate how effective a firm’s strategies have been in response to key opportunities and threats.

This analysis could also address such questions as the following: (1) How have competitors reacted to our strategies? (2) How have competitors’ strategies changed? (3) Have major competitors’ strengths and weaknesses changed? (4) Why are competitors making certain strategic changes? (5) Why are some competitors’ strategies more successful than others? (6) How satisfied are our competitors with their present market positions and profitability? (7) How far can our major competitors be pushed before retaliating? and (8) How could we more effectively cooperate with our competitors?

Externally, actions by competitors, changes in demand, changes in technology, economic changes, demographic shifts, and governmental actions may prevent objectives from being accomplished. 

A revised IFE Matrix should focus on changes in the organization’s management, marketing, finance/accounting, production/operations, R&D, and management information systems strengths and weaknesses.

Internally, ineffective strategies may have been chosen or implementation activities may have been poor.

Business objectives may have been too optimistic.

Thus, failure to achieve objectives may not be the result of unsatisfactory work by managers and employees. All organizational members need to know this to encourage their support for strategy evaluation activities.

Organizations desperately need to know as soon as possible when their strategies are not effective. Sometimes managers and employees on the front lines discover this well before strategists.

External opportunities and threats and internal strengths and weaknesses that represent the bases of current strategies should continually be monitored for change.

It is not really a question of whether these factors will change but rather when they will change and in what ways.

Here are some key questions to address in evaluating and controlling strategies: (1) Are our internal strengths still strengths? (2) Have we added other internal strengths? If so, what are they? (3) Are our internal weaknesses still weaknesses? (4) Do we now have other internal weaknesses? If so, what are they? (5) Are our external opportunities still opportunities? (6) Are there now other external opportunities? If so, what are they? (7) Are our external threats still threats? (8) Are there now other external threats? If so, what are they? and (9) Are we vulnerable to a hostile takeover?

Activity 2: Measuring Organizational Performance

Another important strategy evaluation  and control activity is measuring organizational performance. 

This activity includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives. Both long-term and annual objectives are commonly used in this process. 

Criteria for evaluating and controlling strategies should be measurable and easily verifiable. Criteria that predict results may be more important than those that reveal what already has happened.

Failure to make satisfactory progress toward accomplishing long-term or annual objectives signals a need for corrective actions.

Determining which objectives are most important in the evaluation of strategies can be difficult.

Many factors, such as unreasonable policies, unexpected turns in the economy, unreliable suppliers or distributors, or ineffective strategies, can result in unsatisfactory progress toward meeting objectives. Problems can result from ineffectiveness (not doing the right things) or inefficiency (poorly doing the right things).

Strategy evaluation is based on both quantitative and qualitative criteria. Selecting the exact set of criteria for evaluating strategies depends on a particular organization’s size, industry, strategies, and management philosophy. 

Quantitative criteria are commonly used to evaluate strategies.

They are financial ratios, which management uses to make three critical comparisons: (1) comparing the firm’s performance over different time periods, (2) comparing the firm’s performance to competitors, and (3) comparing the firm’s performance to industry averages.

But some potential problems are associated with using quantitative criteria for evaluating strategies: (1) most quantitative criteria are geared to annual objectives rather than long-term objectives; (2) different accounting methods can provide different results on many quantitative criteria; and (3) intuitive judgments are almost always involved in deriving quantitative criteria. 

Qualitative criteria are also important in evaluating strategies. 

Human factors such as high absenteeism and turnover rates, poor production quality and quantity rates, or low employee satisfaction can be underlying causes of declining performance. Marketing, finance/accounting, R&D, or management information systems factors can also cause financial problems.

Some additional key questions that reveal the need for qualitative or intuitive judgments in strategy evaluation are as follows: (1) How good is the firm’s balance of investments between high-risk and low-risk projects? (2) How good is the firm’s balance of investments between long-term and short-term projects? (3) How good is the firm’s balance of investments between slow-growing markets and fast-growing markets? (4) How good is the firm’s balance of investments among different divisions? (5) To what extent are the firm’s alternative strategies socially responsible? (6) What are the relationships among the firm’s key internal and external strategic factors? and (7) How are major competitors likely to respond to particular strategies?

Activity 3: Taking Corrective Actions

The final strategy evaluation activity, taking corrective actions, requires making changes to competitively reposition a firm for the future. 

Changes that may be needed are altering an organization’s structure, replacing one or more key individuals, selling a division, or revising a business mission.

Other changes could include establishing or revising objectives, devising new policies, issuing stock to raise capital, adding additional salespersons, differently allocating resources, or developing new performance incentives. 

Taking corrective actions does not necessarily mean that existing strategies will be abandoned or even that new strategies must be formulated.

The probabilities and possibilities for incorrect or inappropriate actions increase geometrically with an arithmetic increase in personnel. Any person directing an overall undertaking must check on the actions of the participants as well as the results that they have achieved. If either the actions or results do not comply with preconceived or planned achievements, then corrective actions are needed.

Taking corrective actions is necessary to keep an organization on track toward achieving stated objectives.

Strategy evaluation enhances an organization’s ability to adapt successfully to changing circumstances.

Taking corrective actions raises employees’ and managers’ anxieties.

Participation in strategy evaluation activities is one of the best ways to overcome individuals’ resistance to change. Individuals accept change best when they have a cognitive understanding of the changes, a sense of control over the situation, and an awareness that necessary actions are going to be taken to implement the changes.

Strategy evaluation can lead to strategy formulation changes, strategy implementation changes, both formulation, and implementation changes, or no changes at all. Management cannot escape having to revise strategies and implementation approaches sooner or later.

Resistance to change is often emotionally based and not easily overcome by rational argument. Resistance may be based on such feelings as loss of status, implied criticism of present competence, fear of failure in the new situation, annoyance at not being consulted, lack of understanding of the need for change, or insecurity in changing from well-known and fixed methods. It is necessary, therefore, to overcome such resistance by creating situations of participation and full explanation when changes are envisaged.

Corrective actions should place an organization in a better position to capitalize upon internal strengths; take advantage of key external opportunities; avoid, reduce, or mitigate external threats; and improve internal weaknesses. 

Corrective actions should have a proper time horizon and an appropriate amount of risk. They should be internally consistent and socially responsible. 

Corrective actions strengthen an organization’s competitive position in its basic industry.

Continuous strategy evaluation keeps management close to the pulse of an organization and provides information needed for an effective strategic management system.

Contingency Plan in Strategy Evaluation and Control (adsbygoogle = window.adsbygoogle || []).push({});

A basic premise of good strategic management is that firms plan ways to deal with unfavorable and favorable events before they occur. 

Too many organizations prepare contingency plans just for unfavorable events. This is a mistake because both minimizing threats and capitalizing on opportunities can improve a firm’s competitive position.

Regardless of how carefully strategies are formulated, implemented, and evaluated, unforeseen events, such as strikes, boycotts, natural disasters, the arrival of foreign competitors, and government actions, can make a strategy obsolete. 

To minimize the impact of potential threats, organizations should develop contingency plans as part of their strategy evaluation process.

Contingency plans can be defined as alternative plans that can be put into effect if certain key events do not occur as expected. 

Only high-priority areas require the insurance of contingency plans. Management cannot and should not try to cover all bases by planning for all possible contingencies. But in any case, contingency plans should be as simple as possible.

Some contingency plans are commonly established by firms.

They are: (1) If a major competitor withdraws from particular markets as intelligence reports indicate, what actions should our firm take? (2) If our sales objectives are not reached, what actions should our firm take to avoid profit losses? (3) If demand for our new product exceeds plans, what actions should our firm take to meet the higher demand? (4) If certain disasters occur such as loss of computer capabilities; a hostile takeover attempt; loss of patent protection; or destruction of manufacturing facilities because of earthquakes, tornadoes or hurricanes, then what actions should our firm take? and (5) If a new technological advancement makes our new product obsolete sooner than expected, what actions should our firm take?

Alternative strategies not selected for implementation can serve as contingency plans in case the strategy or strategies selected do not work.

Too many organizations discard alternative strategies not selected for implementation although the work devoted to analyzing these options would render valuable information. 

When strategy evaluation activities reveal the need for a major change quickly, an appropriate contingency plan can be executed in a timely way. Contingency plans can promote a management’s ability to respond quickly to key changes in the internal and external bases of an organization’s current strategy.

In some cases, external or internal conditions present unexpected opportunities. When such opportunities occur, contingency plans could allow an organization to quickly capitalize on them. 

Contingency planning gave users  3 major benefits .

They are: (1) It permitted quick response to change, (2) it prevented panic in crisis situations, and (3) it made managers more adaptable by encouraging them to appreciate just how variable the future can be. 

The effective contingency planning process involves 7 steps.

They are: (1) Identify both beneficial and unfavorable events that could possibly derail the strategy or strategies; (2) Specify trigger points. Calculate when contingent events are likely to occur; (3) Assess the impact of each contingent event. Estimate the potential benefit or harm of each contingent event; (4) Develop contingency plans. Be sure that contingency plans are compatible with the current strategy and are economically feasible; (5) Assess the counter-impact of each contingency plan. That is, estimate how much each contingency plan will capitalize on or cancel out its associated contingent event. Doing this will quantify the potential value of each contingency plan; (6) Determine early warning signals for key contingent events. Monitor the early warning signals; and (7) For contingent events with reliable early warning signals, develop advance action plans to take advantage of the available lead time.

Further Reading

• Strategic Evaluation And Control Overview (cioinsiderindia.com)
• Strategic Evaluation and Control – Types of Control, Strategic Evaluation Process, Importance (bbamantra.com)
• The Process of Strategic Evaluation and Control (qsstudy.com)
• Strategy Evaluation And Control (introduction-to-management.24xls.com)
• Strategy Evaluation (businessmanagementideas.com)
• Strategic Control: Breaking Down The Process & Techniques (clearpointstrategy.com)
• Strategy Evaluation – Process Guide (cascade.app)
• Strategy Evaluation and Control (hahuzone.com)
• What Is the Meaning of Evaluation and Control? (bizfluent.com)

Even More Reading

• The Complete Guide to Strategy Evaluation (creately.com)
• Techniques of Strategy Evaluation (smallbusiness.chron.com)
• Strategic Control (yourarticlelibrary.com)
• Strategy Evaluation Process and its Significance (managementstudyguide.com)
• Strategy Evaluation: Necessity, Requirements, Strategy Evaluation Framework (iedunote.com)
• Why Evaluation and Control are Important in Strategic Management? (talentedge.com)
• Strategy Evaluation & Control (indiafreenotes.com)

Related Concepts

• Nature of Organizational Controls
• Strategy Performance Measurement
• Hitt, M. A., Ireland, D. R., & Hoskisson, R. E. (2019). Strategic Management: Concepts and Cases: Competitiveness and Globalization (MindTap Course List) (13th ed.). Cengage Learning.
• Hill, C. W. L., & Jones, G. R. (2011). Essentials of Strategic Management (Available Titles CourseMate) (3rd ed.). Cengage Learning.
• Mastering Strategic Management. (2016, January 18). Open Textbooks for Hong Kong.

Strategic Planning

The art of formulating business strategies, implementing them, and evaluating their impact based on organizational objectives

What is Strategic Planning?

Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. The term strategic planning is essentially synonymous with strategic management.

The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.

CFI’s Course on Corporate & Business Strategy is an elective course for the FMVA Program.

Strategic Planning Process

The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Before settling on a plan of action and then determining how to strategically implement it, executives may consider many possible options. In the end, a company’s management will, hopefully, settle on a strategy that is most likely to produce positive results (usually defined as improving the company’s bottom line) and that can be executed in a cost-efficient manner with a high likelihood of success, while avoiding undue financial risk.

The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:

1. Strategy Formulation

In the process of formulating a strategy, a company will first assess its current situation by performing an internal and external audit. The purpose of this is to help identify the organization’s strengths and weaknesses, as well as opportunities and threats ( SWOT Analysis ). As a result of the analysis, managers decide on which plans or markets they should focus on or abandon, how to best allocate the company’s resources, and whether to take actions such as expanding operations through a joint venture or merger.

Business strategies have long-term effects on organizational success. Only upper management executives are usually authorized to assign the resources necessary for their implementation.

2. Strategy Implementation

After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to “buy into” the desire to put the strategy into action.

Effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.

3. Strategy Evaluation

Any savvy business person knows that success today does not guarantee success tomorrow. As such, it is important for managers to evaluate the performance of a chosen strategy after the implementation phase.

Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. For example, after implementing a strategy to improve customer service, a company may discover that it needs to adopt a new customer relationship management (CRM) software program in order to attain the desired improvements in customer relations.

All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and managers at all levels, so as to help the firm to operate as a more functional and effective team.

Benefits of Strategic Planning

The volatility of the business environment causes many firms to adopt reactive strategies rather than proactive ones. However, reactive strategies are typically only viable for the short-term, even though they may require spending a significant amount of resources and time to execute. Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations.

Among the primary benefits derived from strategic planning are the following:

1. Helps formulate better strategies using a logical, systematic approach

This is often the most important benefit. Some studies show that the strategic planning process itself makes a significant contribution to improving a company’s overall performance, regardless of the success of a specific strategy.

2. Enhanced communication between employers and employees

Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees, which shows their commitment to achieving organizational goals.

Strategic planning also helps managers and employees show commitment to the organization’s goals. This is because they know what the company is doing and the reasons behind it. Strategic planning makes organizational goals and objectives real, and employees can more readily understand the relationship between their performance, the company’s success, and compensation. As a result, both employees and managers tend to become more innovative and creative, which fosters further growth of the company.

3. Empowers individuals working in the organization

The increased dialogue and communication across all stages of the process strengthens employees’ sense of effectiveness and importance in the company’s overall success. For this reason, it is important for companies to decentralize the strategic planning process by involving lower-level managers and employees throughout the organization. A good example is that of the Walt Disney Co., which dissolved its separate strategic planning department, in favor of assigning the planning roles to individual Disney business divisions.

An increasing number of companies use strategic planning to formulate and implement effective decisions. While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction.

Additional Resources

Thank you for reading CFI’s guide to Strategic Planning. To keep learning and advancing your career, the additional CFI resources below will be useful:

• Broad Factors Analysis
• Scalability
• Systems Thinking
• See all management & strategy resources
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• Strategic Evaluation: Different Types and Their Importance

Strategic evaluation is an important part of any business plan. Learn about different types of strategic evaluation & their importance.

Companies can use various techniques to evaluate their strategy . Common methods include SWOT analysis, gap analysis, and value chain analysis. SWOT analysis helps a company identify its strengths, weaknesses, opportunities, and threats. Any organization can assess any stage of the strategy development process, from conceptualization to implementation.

The type and complexity of the strategy being evaluated will determine the most suitable assessment approach. Problem solving, decision analysis, and feedback cycles are some of the typical evaluation methods. This will ensure that the most effective strategies are implemented and that future decisions are based on reliable data. Organizations can make informed decisions about their strategic initiatives by determining if a particular strategy is acceptable. Evaluation is essential to provide feedback on the effectiveness of a company's strategies and to identify areas for improvement.

Therefore, when talking about strategic evaluation, you are referring to strategic evaluation and control. In addition, organizations need a system to select future strategies based on these evaluations. Strategies to mitigate potential risks associated with current or proposed techniques can be useful for managers to make informed decisions accordingly. Another important aspect of strategy is the physical availability of resources in relation to their environment or of physical facilities in relation to markets, labor sources or materials, or the efficiency of the facilities. The motivation system's central function is to induce strategically desirable behavior so that managers are encouraged to work towards achieving the organization's objectives. Suitability is essential to ensure that an organization's strategies are practical and support its goals and objectives.

By evaluating their strategies in a coherent way, organizations can take the necessary steps to achieve their long-term objectives and, at the same time, obtain information on the aspects where they might need improvement. For example, a company could adopt new marketing strategies to increase sales next season. There are organizations where leaders refuse to accept defeat and do not carry out an adequate evaluation of current business strategies. Determining root causes is a complex but essential step in achieving the success of any strategic project. After developing a series of strategic alternatives, they must be evaluated based on the criteria for selecting the best strategy. For these and other reasons, qualitative criteria must also be considered when evaluating strategies. Strategic evaluation is an important part of any business plan.

It helps companies identify areas for improvement and develop strategies that will help them reach their goals. By assessing their current strategies and making informed decisions about future initiatives, organizations can ensure that they are taking the right steps towards success.

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Business Strategy: Evaluating and Executing the Strategic Plan

Explore the concepts and tools of strategic business management.

October 8, 2024

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What You'll Learn

Understanding how your role is linked to your company’s strategy will help you determine the key issues and priorities needed to focus and align your work with your company’s strategic goals and objectives.

In this online program, you will learn how to identify your organization’s strengths, weaknesses, resources, capabilities, and core competencies, and use strategic tools to evaluate competitive forces, industry attractiveness, and environmental threats and opportunities.

In addition, you will learn to sharpen your vision, critical thinking, and decision-making skills by analyzing various companies’ strategies, as well as assessing the strategy of the company you work for, including how your department can help the company strengthen its strategic position, and build a sustainable competitive advantage.

The online program offering is highly interactive and consists of business cases, interactive discussions, presentations, and group exercises.

Program Benefits

• Perform external and internal analyses for companies and evaluate the dynamics of competition
• Build strategies using appropriate frameworks and tools
• Understand your own company’s strategy
• Align your role with your company’s strategic goals and objectives
• Develop recommendations to strengthen your company’s strategic position and competitive advantage
• Understand the basics of strategy implementation and control
• Earn a digital Certificate of Participation from the Harvard Division of Continuing Education

Topics Covered

• The process of crafting and executing a strategic plan
• Frameworks and tools to conduct external and internal analyses
• Evaluating the competitive conditions and industry attractiveness
• Assessing a company’s resources, capabilities, competencies and competitive advantage
• Different types of business strategies
• Strategic moves companies make to strengthen their competitive position in the market (i.e., blue ocean and disruptive innovation strategies amongst other strategies).
• Effective strategy implementation and the strategic change process

Who Should Enroll

This online program is designed for:

• Professionals and managers at all levels of the organization who have limited exposure to strategy
• Managers with some strategy experience who are looking to refresh their business strategy knowledge and skills
• Business owners and employers from any industry who are interested in developing the skills needed to analyze and execute strategies.

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On the first day of the program, [the instructor] presented a slide with a list of key attributes that one needs to become a better strategic thinker. The sliding scales allowed us to evaluate ourselves on these attributes. This exercise really stood out. In fact, I have used it with my team.

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• Strategic Management

Strategy Evaluation Process and its Significance

Strategy Evaluation is as significant as strategy formulation because it throws light on the efficiency and effectiveness of the comprehensive plans in achieving the desired results.

The managers can also assess the appropriateness of the current strategy in todays dynamic world with socio-economic, political and technological innovations. Strategic Evaluation is the final phase of strategic management .

The significance of strategy evaluation lies in its capacity to co-ordinate the task performed by managers, groups, departments etc, through control of performance .

Strategic Evaluation is significant because of various factors such as - developing inputs for new strategic planning, the urge for feedback, appraisal and reward, development of the strategic management process, judging the validity of strategic choice etc.

The process of Strategy Evaluation consists of following steps-

In order to determine the benchmark performance to be set, it is essential to discover the special requirements for performing the main task.

The performance indicator that best identify and express the special requirements might then be determined to be used for evaluation.

The organization can use both quantitative and qualitative criteria for comprehensive assessment of performance. Quantitative criteria includes determination of net profit, ROI, earning per share, cost of production, rate of employee turnover etc.

Among the Qualitative factors are subjective evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc.

If appropriate means are available for measuring the performance and if the standards are set in the right manner, strategy evaluation becomes easier. But various factors such as managers contribution are difficult to measure.

Similarly divisional performance is sometimes difficult to measure as compared to individual performance. Thus, variable objectives must be created against which measurement of performance can be done.

The measurement must be done at right time else evaluation will not meet its purpose. For measuring the performance, financial statements like - balance sheet, profit and loss account must be prepared on an annual basis.

The strategists must mention the degree of tolerance limits between which the variance between actual and standard performance may be accepted.

The positive deviation indicates a better performance but it is quite unusual exceeding the target always. The negative deviation is an issue of concern because it indicates a shortfall in performance.

Thus in this case the strategists must discover the causes of deviation and must take corrective action to overcome it.

If the performance is consistently less than the desired performance, the strategists must carry a detailed analysis of the factors responsible for such performance.

If the strategists discover that the organizational potential does not match with the performance requirements, then the standards must be lowered.

Another rare and drastic corrective action is reformulating the strategy which requires going back to the process of strategic management, reframing of plans according to new resource allocation trend and consequent means going to the beginning point of strategic management process.

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Business Plan Evaluation

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What is Business Plan Evaluation?

A business plan evaluation is a critical process that involves the assessment of a business plan to determine its feasibility, viability, and potential for success. This process is crucial for entrepreneurs, investors, and other stakeholders as it helps them make informed decisions about the business. The evaluation process involves analyzing various aspects of the business plan, including the business model, market analysis, financial projections, and management team.

The purpose of a business plan evaluation is to identify strengths and weaknesses in the plan, assess the feasibility of the business idea, evaluate the potential for profitability, and determine the likelihood of achieving the business objectives. The evaluation process also helps identify areas where improvements can be made to enhance the chances of success. This process is particularly important for solopreneurs who are solely responsible for the success or failure of their business.

Importance of Business Plan Evaluation

The evaluation of a business plan is an essential step in the business planning process. It provides an opportunity for the entrepreneur to critically examine their business idea and identify potential challenges and opportunities . The evaluation process also provides valuable insights that can help improve the business plan and increase the chances of success.

For investors, a business plan evaluation is a crucial tool for risk assessment. It allows them to assess the viability of the business idea, the competence of the management team, and the potential for return on investment. This information is vital in making investment decisions.

For Solopreneurs

For solopreneurs, the evaluation of a business plan is particularly important. As they are solely responsible for the success or failure of their business, it is crucial that they thoroughly evaluate their business plan to ensure that it is feasible, viable, and has the potential to be profitable.

The evaluation process can help solopreneurs identify potential challenges and opportunities, assess the feasibility of their business idea, and determine the likelihood of achieving their business objectives. This information can be invaluable in helping them make informed decisions about their business.

For Investors

Investors use the evaluation process to determine whether or not to invest in a business. They look at various aspects of the business plan, including the business model, market analysis, financial projections, and management team, to assess the potential for success. If the evaluation reveals that the business plan is solid and has a high potential for success, the investor may decide to invest in the business.

Components of a Business Plan Evaluation

A business plan evaluation involves the analysis of various components of the business plan. These components include the executive summary, business description, market analysis, organization and management, product line or service, marketing and sales, and financial projections.

Each of these components plays a crucial role in the overall success of the business, and therefore, they must be thoroughly evaluated to ensure that they are realistic, achievable, and aligned with the business objectives.

Executive Summary

The executive summary is the first section of a business plan and provides a brief overview of the business. It includes information about the business concept, the business model, the target market, the competitive advantage, and the financial projections. The executive summary is often the first thing that investors read, and therefore, it must be compelling and persuasive.

In the evaluation process, the executive summary is assessed to determine whether it clearly and concisely presents the business idea and the plan for achieving the business objectives. The evaluator also assesses whether the executive summary is compelling and persuasive enough to attract the attention of investors.

Business Description

The business description provides detailed information about the business. It includes information about the nature of the business, the industry, the business model, the products or services, and the target market. The business description also provides information about the business's competitive advantage and how it plans to achieve its objectives.

In the evaluation process, the business description is assessed to determine whether it provides a clear and comprehensive description of the business. The evaluator also assesses whether the business description clearly outlines the business's competitive advantage and how it plans to achieve its objectives.

Methods of Business Plan Evaluation

There are several methods that can be used to evaluate a business plan. These methods include the SWOT analysis, the feasibility analysis, the competitive analysis, and the financial analysis. Each of these methods provides a different perspective on the business plan and can provide valuable insights into the potential for success.

It's important to note that no single method can provide a complete evaluation of a business plan. Therefore, it's recommended to use a combination of these methods to get a comprehensive understanding of the business plan.

SWOT Analysis

SWOT analysis is a strategic planning tool that is used to identify the strengths, weaknesses, opportunities, and threats related to a business. This method involves examining the internal and external factors that can affect the success of the business.

In the evaluation process, a SWOT analysis can provide valuable insights into the potential for success of the business. It can help identify the strengths and weaknesses of the business plan, as well as the opportunities and threats in the market.

Feasibility Analysis

A feasibility analysis is a process that is used to determine whether a business idea is viable. This method involves assessing the practicality of the business idea and whether it can be successfully implemented.

In the evaluation process, a feasibility analysis can provide valuable insights into the feasibility of the business plan. It can help determine whether the business idea is practical and whether it can be successfully implemented.

In conclusion, a business plan evaluation is a critical process that involves the assessment of a business plan to determine its feasibility, viability, and potential for success. This process is crucial for entrepreneurs, investors, and other stakeholders as it helps them make informed decisions about the business.

The evaluation process involves analyzing various aspects of the business plan, including the business model, market analysis, financial projections, and management team. The purpose of a business plan evaluation is to identify strengths and weaknesses in the plan, assess the feasibility of the business idea, evaluate the potential for profitability, and determine the likelihood of achieving the business objectives.

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How to Evaluate a Business Plan

by Evangeline Marzec

Published on 16 Oct 2019

Whether you're an investor, an entrepreneur or a business skills teacher, you'll be exposed to a wide variety of business plans and should have a solid, somewhat standard approach to conducting a business plan assessment. Analyze each section individually, and then look at the plan as a whole to determine the viability of the business and the likelihood of its success in the manner proposed. Also consider the writing skills and attention to detail that went into formulating the plan.

Read and Understand the Executive Summary

The first step in a business plan assessment is reading the business' executive summary. This should be a concise "elevator pitch", not a summary of the business plan. In one or two pages, it should convey the market opportunity and the uniquely compelling features of the business that will help it meet that opportunity. The executive summary should excite you and make you want to turn to the next page. If it doesn't, the entrepreneur might lack marketing or writing skills, or it may indicate that the idea itself is not going to fly.

Analyze Opportunity in the Market

Evaluate the market opportunity. Ideally, the market should be growing at least 10% per year and have a substantial potential relative to the size of the business and investment. For example, a small company seeking an investment of $50,000 should see a potential market of $5 million.

The larger the potential market and the faster it is growing, the greater the opportunity in the market. Look to the exhibits and appendices to ensure that the business actually has done the necessary market research and can back up any claims.

Evaluate the Company's Business Strategy

Examine the company strategy for capturing its market. The plan must clearly describe the problem the company is solving or need it is meeting for customers, and then propose a solution. This is the crux of a business plan assessment.

Closely examine the alignment between problem and solution. Will the company actually address that need? This evaluation must take into account the product or service being offered, the operational capacity and efficiency with which the business actually can produce its product, and the quality of the proposed marketing efforts.

Examine the Business Environment

The business plan should describe the competitive landscape in which the company operates, preferably by referencing Porter's 5 Forces or another well-established tool. Look for detailed breakdowns and analyses of each of it competitors, and of how the company is different and better than the competition in a particular niche. This section should include the regulatory environment and mention any costs or necessary delays associated with regulations.

Porter's 5 Forces is an evaluation model that looks closely at the five competitive forces at play in the business landscape. These forces are present in every industry and by evaluating how they manifest in an individual industry, one can gauge that industry's strengths and weaknesses. Porter's 5 Forces are:

• Competition in the industry
• Potential of new entrants in the industry
• Power of suppliers
• Power of customers
• Threat of substitutes

Evaluate the Leadership Team

Look for experience, integrity and passion in the executive team. Read bios and brief highlights of each executive's strengths and expertise should accompany standard business information such as headquarters and corporate structure. The company should have experienced advisers, either formally or informally.

It is paramount that the principals involved in the business convey their passion and drive toward success with this project. If the founders haven't invested their own capital into the business, or plan on keeping their “day jobs” while running the business, they might lack faith in the project.

Crunch the Numbers and Understand the Finances

Ensure that the financial projections are both promising and realistic. Most entrepreneurs vastly overstate their company's potential, starting with the market size and market share. Financial figures should be based on historical data if available, or very conservative projections if the company is not yet profitable. Entrepreneurs that project capturing 20% market share in the first two years probably have unrealistic expectations.

Investigate the returns provided by the investment. Good business plans include exit strategies for pulling the initial investment back out of the company, and have a realistic valuation of their shares.

View the Business Plan as a Living Document

Evaluate the business plan as a whole document, and as a reflection of a real-world company. Determine whether the market need is adequate, the company's offerings are compelling, the management team experienced and committed, and the financial statements realistic. Does this company as a whole have a chance of success?

The Importance of Strategic Evaluation

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What Is a Bankable Feasibility Study?

What is the difference between a strategic aim & a strategic objective, does the objective or the goal come first.

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Strategic evaluation is an important tool for assessing how well your business has performed, relative to its goals. It's an important way to reflect on achievements and shortcomings, and is also useful for reexamining the goals themselves, which may have been set at a different time, under different circumstances.

Deciding the Destination

Although the actual evaluation step takes place at the end of the process, after goals have been reached or not, the process of strategic evaluation starts at the beginning of the process, with the step of setting the goals themselves. Goals are important because they give your company direction, and a way to measure success.

Effective goals should be tangible steps that move your company toward achieving its longer term mission and vision, such as improving the environment, alleviating suffering or simply making money. Unlike your company's mission and vision, its goals should be specific and quantifiable, such as increasing sales by a certain percentage during a specific period of time.

Benchmarking your Performance

Your goals provide you with criteria and benchmarks, and the process of measuring your performance involves taking a step back and assessing how effectively your company has achieved its goals. Measuring performance is an important step in the strategic evaluation process because it provides a snapshot of the outcomes you have achieved relative to the milestones you created. When you've set clear and quantifiable goals at the outset, its easy to see and measure how well you have performed relative to these objectives.

Succeeding or Falling Short?

Although goals are milestones, the process of reaching them isn't an all or nothing endeavor. In addition to simply measuring your outcomes relative to your goals, it's important as part of the strategic evaluation process to analyze how close you've come. It's unlikely that you will achieve a preset goal precisely – and if you're one percent short – you've clearly been more successful than if you'd only made it half-way.

Similarly, you may exceed your goal by just a fraction of a percent, or you can succeed so wildly that your goal seems irrelevant. It's important to analyze variance both quantitatively and qualitatively. Calculate the degree of variance, and also look at why you've exceeded your goals or have fallen short.

Steering a Better Course

If your business falls far short of meeting its goals, the strategic evaluation process is an opportunity to reflect on why this has occurred and to then take corrective action. If your company has blown its goals out of the water, the strategic evaluation process is an important opportunity for you to create a new set of goals that will reflect your progress and challenge you in new ways.

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Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.

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Strategy Evaluation

‘Strategy evaluation’ is the process through which the strategists know the extent to which a strategy is able to achieve its objectives. In the words of Professor William F. Glueck and Lawrence R. Jauch,

“Evaluation of strategy is that phase of strategic management process in which the top managers determine whether their strategic choice as implemented is meeting the objectives of the enterprise.”

Learn about:- 1. Meaning of Strategy Evaluation 2. Need of Strategy Evaluation 3. Requirements 4. Process 5. Criteria to Evaluate Strategy 6. Role of Organisational Systems in Evaluation 7. Critical Factors 8. Steps Involved in the Process of Strategy Evaluation 9. Difficulties.

Strategy Evaluation: Meaning, Process, Criteria, Steps, Factors, Need, Requirements, Difficulties and More…

Strategy evaluation – meaning.

Strategy evaluation is that phase of the strategic management process in which manager tries to assure that the strategic choice is properly implemented and is meeting the objectives of the enterprise. When one talks of evaluation one cannot forget control aspect.

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‘Strategy evaluation’ is the process through which the strategists know the extent to which a strategy is able to achieve its objectives. In the words of Professor William F. Glueck and Lawrence R. Jauch, “Evaluation of strategy is that phase of strategic management process in which the top managers determine whether their strategic choice as implemented is meeting the objectives of the enterprise.”

Therefore, when one says that he is talking of strategic evaluation, he is talking of strategic evaluation and control. Then, strategic evaluation and control stands for the process of determining the effectiveness of a given strategy in attaining the organisational objectives and taking corrective action if need there be.

Thus strategy evaluation and control deals with ensuring as to whether a particular strategy contributes to the organisational objectives or not.

In other words strategy evaluation and control is that phase of strategic management process which comprises of those activities that ensures that a given strategic choice is implemented in letter and spirit by the managers who are entrusted with the task of implementing a chosen strategy so as to meet the overall vision, mission, goals and objectives of the organisation.

Strategy Evaluation – Need

The need for evaluation of business strategy arises out of the fact that a strategy may fail during implementation and an early corrective action is to be taken based on the detailed evaluation report. Decision-makers are also interested in such evaluation reports for their rewards in case the strategic plans work well.

One may hardly meet with a manager who has never experienced any strategic failure in his life. Failures are inevitable. The most important thing for a manager is to learn from such failures. Those who analyze the cases of failure can learn more about how to avoid failures. They become more cautions, more systematic in carrying out EAD and more concerned about strategic implementation. In fact, unlucky executives are those who do not have any experience of failure in their corporate lives.

Business organizations may also fail if no evaluation is undertaken. There are organizations where the top man refuses to accept defeat and do not carry out adequate evaluation of the current business strategies. Their decision making process solely depends on current strategy of the firm. They refuse to deviate from the existing strategy because of which strategic evaluation takes a back seat for them. Results are mostly painful. They are forced to quit the organization and their successors take the divestment decision due to accumulated losses.

In case managers are rewarded based on the organizational performance, they will be motivated to carryout systematic evaluation to study the extent of realization of objectives. Unfortunately, only during the period of crisis such things happen. Managers, being the decision-makers, continue to enjoy increments and promotions even when the performance is not satisfactory.

A direct tie is very much needed to motivate the process of evaluation. For doing so, an effective management information system should be installed in the organization so that smooth, complete and correct information can reach the top executives about the results of the corporate strategy. Top executive usually dislike knowing about the negative results. But the information system should be designed in such a way that even the negative results can draw their attention without any unnecessary delay.

According to Rumelt (1980), evaluation of strategy is not the simple appraisal of the business growth rate and the rate of profit. The strategy evaluation should look beyond the short-term state of the organization and examine the fundamental factors that govern the business success.

In fact, one should examine the appropriateness of the business objectives and major policies and plans and should indicate whether the results obtained so far approve or disapprove the critical assumptions, based on which the strategies are made. Of course, giving answers to these questions do require high degree of situation-based knowledge.

Strategy Evaluation – Basic Requirements

Strategy evaluation system must meet several basic requirements to be effective.

Strategy evaluation:

1. Activities must be economical.

2. Should not provide too much information and provide required information at right time.

3. Should be done with average control and avoid too many controls.

4. Activities should specifically relate to a firm’s objectives.

5. Should be designed to provide a true picture of what is happening.

6. Process should not dominate strategic decisions, it should foster mutual understanding, trust and commonsense.

Process of Strategy Evaluation (With Steps)

The task of planning, reviewing and controlling is an integral part of the organization. However, in some organizations evaluation is an informal task. For some others, it is an integral part and is being carried out in periodic review sessions. Argyris and Schon (1978), in their study on organizational learning, introduced the concepts of single-loop and double-loop learning. Organizational learning, as observed by them, is normally based on feedback control system.

In other words, an organization examines the gap between the expected and actual performances and tries to install a problem solving mechanism to bring back the system under control. This is known as single-loop learning. In double-loop learning system, an organization not only detects the error in strategic choice but also redefines the very norms, which currently measure the effective performance of a business firm.

This need for double-loop learning system, suggested in Argyris and Schon (1978), is in conformity with the works of Ashby (1954) who presented an interesting study on the design of brain. Ashby pointed out that for all the feedback system multiple-loop error control is needed for stability so that system goals may undergo changes when the existing control system becomes outdated.

According to Argyris and Schon (1978), one cannot specify, in abstract terms, the ideal method for strategy evaluation. An organization’s approach towards strategy evaluation must vary with its own strategic posture, method of planning and control mechanism. It has also been suggested by them that the evaluation process should neither be a periodic nor be too frequent.

A periodic evaluation system is more formal and is destined to be more automatic. Periodicity may induce efficiency in collection and analysis of data but is bound to fix the question frame and inhibit broad-ranging reflection. In fact a good strategy should not require frequent reformulation. It should provide with an operational framework for problem solving. Strategy is not problem solving by itself. Strategy is the embodiment of past convictions and commitments. It is not a mere analytical exercise that vary frequently. The validity of the organization’s mission otherwise will be questioned.

It is also observed that frequent changes in strategy may send a message of weak image of the firm to its competitors and customers. One may have to impress others that its stand is right and fixed. Frequent internal debate about the policy also weakens the organizational harmony.

The process of strategy evaluation consists of following steps:

1. Fixing Benchmark of Performance:

While fixing the benchmark, strategists encounter questions such as – what benchmarks to set, how to set them and how to express them. In order to determine the benchmark performance to be set, it is essential to discover the special requirements for performing the main task.

The performance indicator that best identify and express the special requirements might then be determined to be used for evaluation. The organization can use both quantitative and qualitative criteria for comprehensive assessment of performance.

A quantitative criterion includes determination of net profit, ROI, earning per share, cost of production, rate of employee turnover etc. Among the Qualitative factors are subjective evaluation of factors such as – skills and competencies, risk taking potential, flexibility etc.

2. Measurement of Performance:

The standard performance is a bench mark with which the actual performance is to be compared. The reporting and communication system help in measuring the performance. If appropriate means are available for measuring the performance and if the standards are set in the right manner, strategy evaluation becomes easier.

But various factors such as managers’ contribution are difficult to measure. Similarly divisional performance is sometimes difficult to measure as compared to individual performance. Thus, variable objectives must be created against which measurement of performance can be done.

The measurement must be done at right time else evaluation will not meet its purpose. For measuring the performance, financial statements like – balance sheet, profit and loss account must be prepared on an annual basis.

3. Analyzing Variance:

While measuring the actual performance and comparing it with standard performance there may be variances which must be analyzed. The strategists must mention the degree of tolerance limits between which the variance between actual and standard performance may be accepted.

The positive deviation indicates a better performance but it is quite unusual exceeding the target always. The negative deviation is an issue of concern because it indicates a shortfall in performance. Thus in this case the strategists must discover the causes of deviation and must take corrective action to overcome it.

4. Taking Corrective Action:

Once the deviation in performance is identified, it is essential to plan for a corrective action. If the performance is consistently less than the desired performance, the strategists must carry a detailed analysis of the factors responsible for such performance. If the strategists discover that the organizational potential does not match with the performance requirements, then the standards must be lowered.

Another rare and drastic corrective action is reformulating the strategy which requires going back to the process of strategic management, reframing of plans according to new resource allocation trend and consequent means going to the beginning point of strategic management process

After developing a number of strategic alternatives, they should be evaluated against the criteria, in order to select the best strategy. The process of evaluation is discussed below.

The steps in the process of strategic evaluation are:

(i) The first step is a strategic analysis in order to gain a clear understanding of the circumstances affecting the organisation’s strategic situation.

(ii) The second step is to produce a range of strategic options.

(iii) The third step is to develop a basis of comparison. This may be available from the strategic analysis or may need to be specially developed.

(iv) It is helpful to establish the underlying rationale for each strategy by explaining why the strategy might succeed. This is often done in qualitative terms and by using techniques like scenario building product portfolio analysis and the assessment of synergy.

(v) At this stage, the large number of strategic alternatives may be narrowed down, before a more detailed analysis is undertaken. Strategic alternatives may be ranked, based on their relative merits and demerits.

(vi) Suitability of each alternative should be tested. There are a number of techniques for testing. The specific choice of technique will depend upon the circumstances.

(vii) The next stage is assessing the feasibility and acceptability of strategies which appear reasonably suitable based on the analysis. The choice of the technique should be based on the circumstances of the company.

(viii) Finally, the company will need some system for selecting future strategies as a result of these evaluations.

Criteria Suggested by Richard Rumelt and Seymour Belt for Strategy Evaluation

Few popular criteria as suggested by Richard Rumelt are:

i. Consistency

ii. Consonance

iii. Advantage

iv. Feasibility.

i. Consistency :

Strategic consistency lacks in different ways. The strategy present must not be inconsistent with the broad plans and policies of corporate strategy. For instance, the strategic, which are not formulated to its excel, may compromise between opposing power groups or, it may be manifested in the form of interdepartmental conflicts with the organisational conflict.

Operating problems are brought on the top to reformulate the policies for its effective implementation. Again the structure of objectives may be inconsistent. The success of one organisational objective is perceived as failure of another unit. The strategic inconsistency noticed between the organisational objectives and the values of managerial groups. Thus the evaluation requires constant checking on the consistency of goals and policies in the strategy.

ii. Consonance :

The key to evaluate consonance is to understand the existence of business, how it is valued currently assumed to be and current pattern differs with earlier patterns. The business must match and be adapted to its environment to the critical changes occurring within it.

The analysis of economic relationship and the scope of business are related with economic and social conditions over time. Thus, the evaluator has to examine the basic pattern of economic relationship that characterises the business and determine the value created is sufficient to sustain the strategy or not.

iii. Advantage :

There are two aspect of business mission in relation to the environment. One aspect is that the business must fit with the environment. Second aspect is that business must compete with other firms that are trying to adapt to the environment. Second aspects of business mission provide a competitive advantage among other firms than their common aspect.

The advantage of competitive strategy may be in creation or in maintenance to prove its superiority of resources, skill and resources, skills or position. Evaluation of strategy requires to analyse specific skills and resources relevant to the competitive areas. Some of the competitive areas are – positional advantages, successful trade names, ownership of sources, geographical location, leadership in service field, reliability, and quality of the product or service.

iv. Feasibility :

Feasibility is the test of strategy, assessing the firm’s ability to sustain the strategy or not. Whether a firm is capable to compete with other firm’s strategy, with the environment, or the organisation possess the high degree of coordinate and integrative skill to carry out the strategy. If the feasibility is found then that these are qualitative criteria, which can be profitably deployed after the implementation is complete.

Criteria suggested by Seymour Tiles :

Seymour Tiles suggests the following criteria to evaluate strategy soon after the implementation is over:

1. Internal Consistency:

The consistency of policy implementation of the strategy fits into the integrated pattern of the organisation should also be related to the other policies of the organisation, which has been established, and to the goals it is pursuing.

2. Consistency with the Environment:

Long-range planning implements the strategy that looks for long-run success. For long-run success, it is necessary for continuous assessment of high degree to which previously established policies are consistent with the environment and how current policies are accounted with future of the environment.

3. Appropriateness of the Strategy in the Light of Available Resources:

The implementation of strategy has to make use of the critical resources most effectively. The management should assess the available resource and identify the critical one, which is the most the company poses and which is the least it has. To evaluate competence in relation to strategy, the company must identify its strength whether it is good in marketing, in production or in R&D.

Another strategic importance is the physical availability of resources in relation to its environment or physical facilities relative to markets, source of labour or materials or the efficiency of facilities. The implementation of strategy should facilitate the economic use of scarce resources.

4. Acceptability of the Degree of Risk Involved in the Strategy:

In the given environment, attitude of the management is to eliminate risks involved in the strategy. This criteria does not imply that the strategy is the one with minimum risk. High returns often go with high degree of risk.

The degree of risk involved in the strategy is dependent on three factors:

(i) Uncertainty of available resources over the anticipated period may be caused by internal of external changes.

(ii) The risk is involved in the time period of available resources with the difficulty of predicting long-run environmental changes.

(iii) The proportion of resources is committed to a single venture.

Greater the magnitude of the above factors, greater is the degree of risk involved. Non-utilization of internal resources to the fullest may well be the riskiest strategy.

5. Appropriates of Time Horizon of the Strategy:

Strategic are not goal oriented but also time bounded. Introduction of new product, market or installation of a plant can be of strategic importance only if mission is accomplished within specified time. Realising the goals within the appropriateness of time horizon evaluates the strategy effectively and efficiently.

6. Workability of the Strategy:

If the evaluation of the strategy is result-oriented then the workability of the strategy is appraised. The workability amount of the strategy obviously explicit the implementation of strategy with skill and appropriateness. If the workability of strategy cannot be evaluated by results alone, Seymour Tiles suggests some other indicated that may be used for the purpose.

Role of Organisational Systems in Strategy Evaluation

The process of strategic evaluation and control does not operate in isolation; it works on the basis of the different organizational systems that are used to implement strategies. There are six organizational systems – information control, appraisal, motivation; development and planning.

There, the thrust of discussion is on understanding the role that these systems play in strategy implementation and how they have to be adapted to suit the requirements of changing strategies.

Here, we shall briefly review the role of organizational systems in evaluation.

1. Information System :

Evaluation is done by comparing actual performance with standards. The measurement of performance is done on the basis of reports generated through the information system. In fact the purpose of information management system is to enable managers to keep track of performance through control reports.

Several of the techniques whether for strategic surveillance or financial analysis are based on the use of an information system to provide relevant and timely data to managers to allow them to evaluate performance and strategy, and ‘Initiate corrective action.

In fact, with the increasing sophistication of the information management systems and the use of it is possible to devise elaborate methods for evaluation. Techniques such as data warehousing and data mining enable organisations to delve deeper into their internal systems and come up with information that can be useful for evaluation and control purposes.

2. Control System :

The control system, of course, is at the heart of any evaluation process, and is used for setting standards, measuring performance, analyzing variances, and taking corrective action.

3. Appraisal System :

The appraisal system actually evaluates performance and so is a part of the wider control system. However, its significant role in evaluation is yet to be acknowledged. When the performance of managers is appraised, it is their contribution to the organizational objectives which is sought to be measured.

In practice, it is difficult to differentiate strictly between the performance of individuals and that of the organizational units they belong to.

Thus, the achievement of a department or a profit centre is the sum total, or even more, synergistically, of the individual performance of managers and employees in that department or profit centre. The, evaluation process, through the appraisal system, measures the actual performance and provides the basis for the control system to work.

4. Motivation System :

The central role of the motivation system is to induce strategically desirable behavior so that managers are encouraged to work towards the achievement of organisational objectives. Now, if we look at the way the evaluation process works, we will observe that its efficacy depends on the extent to which it is able to bring actual performance to the level of the standards.

In other words, the lesser the deviation of actual performance from standards, the higher is the efficacy of the evaluation process. The motivation system plays a significant role in ensuring that deviations do not occur, or if they do, then they are corrected by the means of rewards and penalties. Incentive systems are directly related to the amount of deviation. Performance checks, which are a feedback in the evaluation process, are done through the motivation system.

5. Development System :

The development system prepares the managers for performing strategic and operational tasks. Among the several aims of development, the most important is to match person with the job to be performed.

Critical Factors that could Help in Evaluating a Strategy: Quantitative Factors and Qualitative Factors

The critical factors that could help in evaluating a strategy may broadly be classified into two categories:

1. Quantitative factors and

2. Qualitative factors.

1. Quantitative Factors:

Quantitative criteria commonly employed to evaluate strategies are financial ratios, which strategies use to make three important comparisons – (i) comparing the firm’s performance over different time periods (ii) comparing the firm’s performance to competitors’ and (iii) comparing the firm’s performance to industry averages.

Some key financial ratios that are particularly useful as criteria for strategy evaluation may be stated thus:

i. Return on investment

ii. Return on equity

iii. Z score

iv. Employee satisfaction index

v. Return on capital employed

vi. Profit margin

vii. Market share

viii. Debt to equity

ix. Earnings per share

x. Sales growth

xi. Asset growth

However, there are some potential problems associated with using quantitative criteria for evaluating strategies. First, most quantitative measures are tied to annual objectives rather than many quantitative measures. Second, dividing the quantitative measures for various purpose involves judgment. For these and other reasons, qualitative criteria are also to be taken into account while evaluating strategies.

2. Qualitative Factors :

Many managers feel that qualitative organizational measurement is best arrived at simply by answering a series of important questions aimed at revealing important facets of organizational operations. The following list of questions, suggested by Milton Lauenstein could be useful to the practicing manager.

Seymour Tiles identified six qualitative that are useful in evaluating strategies way back in 1963 thus –

i. Is the strategy internally consistent?

ii. Is the strategy consistent with the environment?

iii. Is the strategy appropriate in view of available resources?

iv. Does the strategy involve an acceptable degree of risk?

v. Does the strategy have an appropriate time framework?

vi. Is the strategy workable?

Some additional key questions that reveal the need for qualitative or intuitive judgment in strategy evaluation may be listed thus –

i. How good is the firm’s balance of investments between high-risk and low-risk projects?

ii. How good is the firm’s balance of investments between long term and short-term projects?

iii. How good is the firm’s balance of investments between slow-growing markets and fast-growing markets?

iv. How good is the firm’s balance of investments among different divisions?

v. To what extent are the firm’s alternative strategies socially responsible?

vi. What are the relationships among the firm’s key internal and external strategic factors?

vii. How are major competitors likely to respond to particular strategies?

Major Difficulties that may Arise During Strategy Evaluation

The major difficulties that may arise during the stage of evaluation are the followings:

1. No Best Way:

There is no clear-cut concept of right or wrong strategy. In fact for each business the choice of strategy is different as it depends on the situational logic. One has to tailor-made the strategy according to the solution need of the business problem. As a result, one cannot talk in terms of the best way of evaluating a strategy.

2. Lack of Focus for Evaluation:

Executives find it easier to talk in terms of goals and objectives. They are much eager to decide about goals and objectives rather than to evaluate objectives against achievements. The main reason behind such indifference towards evaluation can be traced back to their lack of training in problem structuring. Differences also arise out of the fact that objectives are devices for ensuring coherence in action but are mostly treated as values.

3. Selection of Evaluator:

Confusion arises about who should undertake the evaluation work in an objective way. Strategy being a comprehensive plan of actions, one has to evaluate its performance at the top management level. But strategists themselves cannot evaluate the performance of their strategies in an unbiased way, as they will remain emotionally attached with their strategic choice. Many of the strategic failures are due to evaluation of strategies by their planners.

Evaluation of a strategy at the next lower level invites problem, as the evaluators will have divisional and or functional inclinations. Further, organizational hierarchy may not ensure full freedom to them as evaluators. These difficulties might be absent for external evaluators. But they will have limited idea about the past conditions of the firm due to leadership implementation, structural modifications and adoption of different sets of functional policies.

Related Articles:

• Strategy: Meaning, Features and Evaluation | Organisation
• Criteria for Evaluating the Strategy of a Firm | Company Management
• Corporate Strategy Audit: Concept and Outline | Organisation | Auditing
• Strategy Formulation in Management: Top 8 Steps

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Organizations frequently take a forward-thinking stance to remain competitive in today’s technology-driven business climate. However, they frequently find deciding between strategic planning and thinking skills challenging. 

These organizations often fail to remember that, despite their similarity in sound, the terms have various meanings and contribute differently to an organization’s direction. Consequently, you are in the ideal place if you want to encourage efficient decision-making in your company. 

Read this blog to understand the difference between strategic planning and strategic thinking skills. 

What is Strategic Planning?

Strategic planning is the systematic and disciplined process of identifying an organization’s goals, assessing its current situation, and creating a plan to achieve them. It entails deciding which tasks to prioritize, assigning funds, and creating action plans that direct organizational decision-making. 

Fundamentally, strategic planning converts an organization’s vision and objective into concrete actions. It offers an organized framework for coordinating the organization’s actions, competencies, and resources to produce the intended results.

What is Strategic Thinking?

The cognitive process of strategic thinking course includes the aptitude for scenario analysis, future planning, and creative strategy development. It focuses on an organization’s goals rather than only tactical decision-making and daily operations. The strategic thinking examples

entails a comprehensive business environment expansion, considering internal and external elements affecting an organization’s performance. 

Fundamentally, this idea entails critically assessing the existing state of affairs, spotting possibilities and obstacles, and producing insights that influence the organization’s course.

Difference Between Strategic Planning and Strategic Thinking

Any firm needs to distinguish between strategic planning and strategic thinking. A defined path to follow is provided by strategic planning, but being flexible and prepared to take advantage of new opportunities is what strategic thinking does. By striking a balance between the two, you can ensure the company is ready for whatever comes next and can handle any unanticipated detours.

1. Why is strategic planning important for a business?

Strategic planning is essential because it gives a company a well-defined and organized path to pursue. It supports objective setting, effective resource allocation, action prioritization, and progress tracking, guaranteeing that every effort is directed toward accomplishing the company’s long-term goals.

2. What are the critical elements of strategic planning?

Setting specific goals and objectives, creating thorough action plans, assigning the required resources, and implementing monitoring and assessment procedures are all essential components of strategic planning. These components guarantee that the company can monitor its development over time and has a clearly defined course to pursue.

3. How often should a company review its strategic plan?

A business should periodically examine its strategic plan—usually once a year but also anytime there are significant shifts in the organization or the market. Frequent evaluations ensure the strategy stays current and enable modifications in response to fresh data and evolving conditions.

4. How can a company encourage strategic thinking among its employees?

A business can promote strategic thinking by creating a transparent and cooperative work atmosphere, promoting original problem-solving techniques, offering professional growth opportunities, and praising and rewarding unique ideas. To foster a strategic mentality across the entire business, leadership should also engage staff in decision-making processes and set an example for strategic thinking habits.

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The ai maturity model and its impact on marketing.

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Alex Kudos has over 20 years experience in marketing and currently serves as CMO at Social Discovery Group.

Artificial intelligence (AI) is more than just a tech trend—it’s a transformative force that has altered the landscape of modern marketing. The integration of AI into marketing has flipped the industry upside down, and companies need to adapt to maintain their positions.

Incorporating AI into a marketing strategy can best be executed by following the steps of the AI Maturity Model , a framework that is used to assess and evaluate the level of maturity of an area within an organization. This model can help organizations enhance their AI capabilities systematically, understand the steps required to improve their processes and establish a road map for achieving their goals. To evaluate our stage with AI, Social Discovery Group followed this model, which transformed our company and helped us incorporate AI into everyday operations.

Understanding The Five Levels Of AI Maturity

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2. Active Phase: Companies start using AI in specific areas like data science and analytics.

3. Operational Phase: Companies optimize processes and employ AI tools more broadly.

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Transitioning Through The Stages

Phase 1: analyze.

Evaluate current AI capabilities by conducting a comprehensive audit of marketing processes to identify gaps and opportunities. This sets the foundation for AI integration.

Phase 2: Plan

This phase is about developing a strategic approach to AI integration. Companies can start by identifying AI applications within their marketing operations. These might include chatbots for customer service, AI-driven content creation or machine learning algorithms for targeted advertising.

The planning phase involves prioritizing these AI initiatives based on their potential impact and feasibility. This ensures that resources are allocated efficiently and efforts are focused on high-impact projects. A well-defined road map is created, aligning AI initiatives with broader business objectives. This structured approach is essential for ensuring that AI integration is both strategic and scalable.

Phase 3: Experiment

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Phase 4: Evaluate

Measure and optimize AI initiatives' performance by monitoring KPIs and using data to assess effectiveness. Refine strategies based on insights to ensure AI solutions evolve with changing business needs and market conditions.

Phase 5: Innovate

Foster a culture of innovation and experimentation. In this phase, organizations might invest in cutting-edge AI research, explore novel AI applications or partner with AI startups to stay at the forefront of technological advancements. By embracing a forward-thinking mindset, companies can identify untapped business potential and pioneering solutions that set them apart from competitors. Innovation is key to sustaining growth and staying ahead in the rapidly evolving AI landscape.

By following the AI Maturity Model, companies can systematically integrate AI into their marketing strategies and harness its full potential. This structured approach helps ensure that AI initiatives are strategic, impactful and continuously evolving, enabling organizations to stay competitive and achieve sustained success in the age of AI-driven marketing.

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• This article is part of " The Future of Supply-Chain Management ," a series on companies' manufacturing and distribution strategies.

Gregg Roden, PepsiCo's chief operating officer, has spent his entire 34-year professional career working at the snacking giant. He said that in the past three years alone he'd witnessed more change than in the 31 years before that.

Over the past couple of decades, as consumers bought more goods online, grocery sales remained reliably stuck in the store. But the pandemic shifted grocery-shopping patterns, and now people are increasingly likely to buy food and beverages online too.

"When I started 34 years ago, everything was bought from a store, and we had a pretty narrow portfolio of options for the consumer," Roden told Business Insider. "Now, literally anyone can buy anything, anywhere." PepsiCo has also expanded its product line, offering new flavors and sizes of its snacks and drinks.

These changes mean demand for more brands is coming from more directions. PepsiCo says it is investing in digitization and automation — including robotics and predictive artificial intelligence — so it can better plan for demand and more quickly and precisely produce and deliver its products. And it says its supply-chain transformation is two-thirds complete.

Supporting agriculture with AI predictive insights and satellite imagery

PepsiCo generated more than $91 billion in 2023 from the sales of more than 500 brands worldwide, including its namesake soda, Lay's, Doritos, Gatorade, and Mountain Dew. The company's earnings for the first two quarters of 2024 exceeded Wall Street's expectations , but volume in North America for the Frito-Lay and beverages businesses has been declining as consumers have pushed back against years of price hikes.

Athina Kanioura, PepsiCo's chief strategy and transformation officer, described investments in PepsiCo's seed-to-shelf supply chain as the "glue" in the company's future ability to deliver higher profits and revenue growth. And it all begins with the work done in the field.

The farmers PepsiCo works with own more than 4 million acres in North America alone, providing ingredients such as potatoes and corn for its chips and other snacks.

The thinking is that by using less water and fertilizer to produce those ingredients, the company can boost its profits in an industry that operates on thin margins. It says that it works with farmers to ensure they have the technology to harvest those ingredients efficiently and that it subsidizes some of the cost of that technology for smaller farms.

It also says it has partnered with companies including CropTrak, AgroScout, and Microsoft to monitor production, analyze crop health, track where crops go, and better understand where to plant crops so they can thrive.

Distribution workers do fewer manual tasks

PepsiCo is also rethinking how it fulfills orders and distributes its products, which is changing the work of the company's many employees in manufacturing and distribution. With more automation, workers are doing fewer physical tasks, like driving a forklift, and far more oversight of the machines taking over those tasks.

Workers at manufacturing facilities and distribution centers and the unions that represent them often bristle at automation, which can lead to layoffs. Large food manufacturers that have announced closings and layoffs this year include PepsiCo, Tyson Foods, and Campbell Soup. Often those announcing layoffs don't directly attribute them to automation but to soft sales , older facilities that can't keep up with demand , or even product recalls . PepsiCo declined to comment on the reason for its layoffs.

Food producers are also confronting a generational shift. Research from McKinsey suggests that while many Gen Zers express interest in working in manufacturing, not enough of them are taking jobs at factories to fill vacancies, and that they're more likely than older workers to leave those jobs .

PepsiCo argues that it can't continue to have employees perform most tasks manually while cost-effectively churning out enough food and drinks to meet demand. So it trains workers to monitor autonomous machines and ensure they're working safely and efficiently. "You are taking an analog worker, and you are making them a digital worker," Kanioura said.

Its modernization efforts include how it puts together variety packs, such as those containing several small bags of Ruffles, Doritos, Cheetos, and Fritos: While workers used to assemble the packs, machines are increasingly taking over.

Even as it has invested in automation, PepsiCo's total workforce has swelled: It grew by 20%, to 318,000, over the five years that ended in 2023.

Creating more intelligent warehouses

PepsiCo says it considers most of the company's warehouses "intelligent" facilities with tech that allows employees to track and control the movement of goods.

It uses sensors and AI to help with predictive maintenance checks and quality-control measures — for example, using patterns to identify a machine or vehicle that's likely to malfunction and cause problems later on. Rather than suffering a shutdown when a motor breaks on the tortilla-chip line, PepsiCo can preemptively replace the motor the next time the line is scheduled for downtime.

"Being able to turn that data into action is important," Roden said.

• Main content

News release details

Uber and byd partner to accelerate global ev transition.

Multi-market agreement to offer best-in-class EV pricing and financing for Uber drivers

Companies also agree to collaborate on future BYD autonomous-capable vehicles to be deployed on the Uber platform

SAN FRANCISCO & SHENZHEN, China--(BUSINESS WIRE)-- Uber Technologies, Inc. (NYSE: UBER) and BYD Co. Ltd. today announced a multi-year strategic partnership designed to bring 100,000 new BYD electric vehicles onto the Uber platform across key global markets. Beginning first in Europe and Latin America, the partnership is expected to offer drivers access to best-in-class pricing and financing for BYD vehicles on the Uber platform, and will expand to include markets across the Middle East, Canada, Australia, and New Zealand.

Uber and BYD announced a multi-year strategic partnership (Graphic: Business Wire)

Both companies are EV leaders in their respective categories: Uber has the most widely available on-demand EV network in the world, and BYD is a global leader in EV production. By working together, the companies aim to bring down the total cost of EV ownership for Uber drivers, accelerating the uptake of EVs on the Uber platform globally, and introducing millions of riders to greener rides.

While Uber drivers are going electric five times faster than private car owners, driver surveys show the price of EVs and availability of financing remain the key barriers to switching. In addition to their affordability, BYD vehicles have lower costs of maintenance and repair, and are well suited to rideshare due to the wide range of models, superior battery performance, and excellent build quality.

To support drivers going electric, the companies’ joint efforts may also include discounts on charging, vehicle maintenance, or insurance, as well as financing and lease offers, based on what works best for drivers in a given market.

The two companies will also collaborate on future BYD autonomous-capable vehicles to be deployed on the Uber platform. As the largest on-demand mobility and delivery platform in the world, Uber is well-positioned to bring autonomous vehicle technology to a global audience at scale.

“Uber and BYD share a commitment to innovate towards a cleaner, greener world, and I am excited to work together towards that future,” said Chuanfu Wang, Chairman and President of BYD.

“As the largest global agreement of its kind, we’re thrilled about the benefits this partnership will deliver for drivers, riders, and cities,” said Dara Khosrowshahi, CEO of Uber. “When an Uber driver makes the switch to an EV, they can deliver up to four times the emissions benefits compared to a regular motorist, simply because they are on the road more. Many riders also tell us their first experience with an EV is on an Uber trip, and we’re excited to help demonstrate the benefits of EVs to more people around the world.”

Stella Li, Executive Vice President of BYD and CEO of BYD Americas, also commented, “We are elated to join forces with a global leader like Uber to not only accelerate the transition to electric vehicles but also to make green transportation accessible and affordable for everyone. This collaboration marks a new era in the electrification of urban mobility, and we look forward to seeing our cutting-edge EVs become a common sight on the streets of cities worldwide.”

About Uber:

Uber’s mission is to create opportunity through movement. We started in 2010 to solve a simple problem: how do you get access to a ride at the touch of a button? More than 49 billion trips later, we're building products to get people closer to where they want to be. By changing how people, food, and things move through cities, Uber is a platform that opens up the world to new possibilities.

BYD is a multinational high-tech company devoted to leveraging technological innovations for a better life. Founded in 1995 as a rechargeable battery maker, BYD now boasts a diverse business scope covering automobiles, rail transit, new energy, and electronics, with over 30 industrial parks in China, the United States, Canada, Japan, Brazil, Hungary, and India. From energy generation and storage to its applications, BYD is dedicated to providing zero-emission energy solutions that reduce global reliance on fossil fuels. Its new energy vehicle footprint now covers 6 continents, over 80 countries and regions, and more than 400 cities. Listed in both Hong Kong and Shenzhen Stock Exchanges, the company is known to be a Fortune Global 500 enterprise that furnishes innovations in pursuit of a greener world.

For more information, please visit www.bydglobal.com .

BYD: [email protected] Uber: [email protected]

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