Improve Organizational Performance Using Strategic Decision Making

Posted on: August 29, 2020, by :

History has proven it: strategic planning is less valuable than it could be. The traditional strategic planning practice that involves business units presenting to executives on a periodic basis is outdated. This particular approach too often relies on assumptions or inherited legacy plans rather than data.

History has proven it: strategic planning is less valuable than it could be.

It also limits constructive dialogue about market dynamics and changing consumer and customer preferences. Planning is regularly connected to budget or other internal processes with organizational effectiveness paying the price since strategic decisions must be made throughout the year, independent of calendar constrained planning practices. The current pandemic offers a case in point.

Investing time and resources in outdated practices negatively impacts organizations and stakeholders. Traditional strategic planning practices can prevent executives from making more impactful decisions. Most executives cannot avoid strategic planning, but they can use issues-focused decision making to complement traditional planning practices.

Competitive organizations must adapt as market conditions change. Many organizations are challenged to change at the pace needed to retain or secure greater market share. During the current pandemic some organizations have been able to modify operations or adapt products and services to meet regulatory guidelines and consumer demands, but others have been less successful and unable to adapt. Many strategic plans are now outdated if not obsolete—they are disconnected from market conditions and fail to tap into the support provided by strategic issues-focused decision making throughout the year.

There are certain kinds of decisions that only your executive team can make. That’s true for most organizations. When you establish practices that support year-round strategic issues-focused decision making, you improve performance throughout the organization.

To maximize the return on strategic decision making, consider using these four strategies.

Strategy 1: Re-allocate executive responsibilities.

Assign responsibility to executives to ensure they understand the market conditions and consumer and customer preferences that are critical to realizing both short-term goals and long-term vision.

Operational ability does not guarantee broader strategic thinking capabilities. When you’re deciding which leaders to serve on your executive team, ensure they are capable strategic thinkers. Your leaders need to be change agents and effective marketers with domain level expertise who can synthesize large amounts of information and sell ideas throughout the organization.

Once you select your leaders, explain expectations and empower them to do their best work. Then you can be confident that your team is thorough and that they consider the critical strategic aspects relative to current and future operations.

Strategy 2: Update planning practices.

Many organizations lack practices that encourage strategic thinking. This not only limits individual development but it also negatively impacts teams and business units. It’s tempting to rely on long held practices. Instead, ask yourself: Does this practice position us to survive a pandemic or other massive change in the market?

Michael Porter says, “The essence of strategy is choosing what not to do.”

This should be the approach embraced by organizations who want to outlast trying times. Holding onto past practices can be costly. Develop the planning practices and decision-making capabilities that enable leaders to understand and act on strategic issues.

Strategy 3: Gather meaningful data.

Update or establish processes for collecting and analyzing data. Simply gathering the same data gathered by your competitors is not sufficient. Use a scorecard that includes sales, market share, and return on investment. Tailor your scorecard to your organization and then conduct a qualitative assessment of your organization’s performance.

Create processes to collect and review metrics on consumers, customers, and competitors. Once you understand your organization’s strengths and areas for improvement, you can then use issues-focused decision making to ensure your organization’s assets are aligned to support evolving customer demand and market conditions. This strategy can improve understanding and alignment among your leaders and teams.

Strategy 4: Listen to your customers, not your competitors.

Your team’s performance is impacted by the structures you put in place. In fact, there’s a direct correlation between your decisions and their performance. To improve performance, the organization may need redesigned. This could involve changing roles and responsibilities, updating team memberships, or implementing new practices and incentives, ensuring they all support serving or securing your target customer. You may also need to update processes in response to changing market dynamics and to gather the correct information from your customers throughout the year.  

When you use these four strategies, you’ll improve your team’s ability to make strategic issues-focused decisions in real time. This in turn, can strengthen your strategic planning process because your leaders will thoroughly understand the challenges faced by the organization and how the organization navigates them. 

This article was originally published by Inside Indiana Business on August 26, 2020.

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