Strategy is the term given to the overarching goals and objectives of a business. Strategy decisions affect what line of business a company is in, who it serves and how it serves them, as well as how the company operates internally. It an be difficult to predict exactly what will happen when an organization changes its strategy, but companies experience a number of common positive and negative effects when going through a strategic transition.
Organizational strategy guides all managerial decisions from the front line to the board room. Strategic plans act as a roadmap that helps businesses to achieve the grand vision of their owners and top-level executives in practical ways. Changing an organization's strategy can change the way the organization operates, altering everything from organizational structure to the daily routines of employees.
The process of changing a corporate strategy can be broken down into four distinct steps: planning, implementation, monitoring and review. In the planning stage, managers form their strategic vision into concrete, time-bound goals and objectives. Research and testing are vital in the planning stage, as managers attempt to gain as much information as possible about the viability of the change. The implementation phase sees the change put into action according to the plan. Monitoring is a less of a phase and more of a continual activity that helps managers to gain insight into how well their plans are working and pinpoint potential problems. In the review stage, managers analyze information gained from monitoring activities and decide whether the strategy needs to be altered yet again.
Changing strategy can have a number of positive effects. New strategic directions can help a company to adapt to changes in the legal environment or the marketplace. New strategies can help a company to perform more effectively or cost-efficiently, or can help them to enter a new, more profitable industry or market segment. Changes in strategy can also help a stagnant company to reclaim its former growth rates.
Not all of the effects of change are positive. Internal employee resistance can be a major barrier to effective change implementation, as certain people strongly resist any kind of change to the status quo or daily routine. There is also always the possibility of failure in new initiatives, leaving a company in a worse position than it was before the change.
Regular changes in strategic direction are healthy and natural for a successful company. Markets, technology, legal issues and operational trends do not stay stagnant, and neither should a dynamic, adaptable company. Involve a wide range of people in your monitoring and planning activities on a regular basis to fully leverage the creativity of your workforce.
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