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3 Stories To Explain Strategic Analysis In Business
Are you confusing strategic analysis with one of these other business functions? If so, you could be focusing on the wrong priorities.
What is strategic analysis?
Strategic analysis is the process of gathering data that helps a company’s leaders decide on priorities and goals, shaping (or shifting) a long-term strategy for the business.
To help give that definition some context, below are three stories about recent conversations I had with prospective customers that revolved around strategic analysis and how it should be applied in business. I have these types of conversations a lot because this is what we do—ClearPoint’s software is built to manage an organization’s strategy and everything that comes along with it, like analysis.
Through my discussions with prospective customers and explanations of how our platform works, I've found that strategic analysis is often confused with other types of analysis. By extension, that means people are also sometimes confused about what software tools should be used for the job. Sometimes, the best way to explain something is to explain what it's NOT. Take a look at the three customer interactions below for more background on strategic analysis and what your software should do if it’s truly focused on strategy.
Story #1: Strategic Analysis Vs. Operational Data
A local government prospect asked me if ClearPoint’s software could track individual court cases and budget line items.
I explained that ClearPoint is designed to track information that enables organizations to do strategic analysis. We can track summary information—such as the total number of cases each month or budget status for projects—but not individual court cases or department expenses. Here’s why:
- Analyzing summary information is strategically useful because it provides direction for an organization’s long-term strategy. For example, if one type of court case is appearing frequently, the local government may want to change its five-year plan to increase court staffing levels or reorganize the layout of a court building. The strategic analysis might also be something the municipality communicates to lawmakers in an effort to change the way current laws are executed through the court system.
- Tracking individual court cases or standalone budget items is operational data and not as helpful for strategic analysis. While important, operational data as individual items is too detailed to extrapolate into trends or summaries that might shift an organization’s strategy. For example, ClearPoint doesn’t track the outcome of Case #1234 and how long it took to process. The ideal way to use our system would be to analyze the average length of time to close a specific type of case, but not to track cases one by one. Another example: You can’t make strategic decisions to fund (or defund) certain projects based on a team’s expenses for new computers or division’s investment in technology upgrades.
The goal of strategic analysis is to chart performance in order to see patterns and trends, which can help predict future outcomes. Tracking one-off items won’t accomplish that goal. (Don’t get me wrong; you need to track all of the transactions, but just not in ClearPoint.)
ClearPoint can link strategic data from an operations system. This gives you the complete data story—both high-level and detailed information—within one platform.
Story #2: Strategic Analysis Vs. Data Analytics
I met with a manager at a large media corporation who inquired if ClearPoint could provide insights on its media campaigns, similar to what data visualization software like Tableau offers.
ClearPoint can report on the status, progress, and results of different campaigns or initiatives, but again is not designed to provide individual data points. For example, our platform cannot provide impressions from thousands of individuals or tweak information by demographic groups. That is data analytics, and very different from strategic market analysis. Similar to the previous section, you should look at the results of media impressions to learn how the market is reacting to your products—but those impressions or data analytics will not drive your strategy.
You should have strategic goals and measure progress in achieving those goals. Changes over time to the average reaction of those media impressions will help you make strategic decisions. ClearPoint’s strength is in summarizing and interpreting data analytics to simplify and improve management reporting, so organizations can focus on making better strategic decisions.
Story #3: Strategic Analysis Vs. Customer Relationship Management
A nonprofit organization asked me if ClearPoint could replace its customer relationship management (CRM) software.
CRM software cannot do strategy management. Managing customers and managing strategy requires very different functions and capabilities within a software platform...and it won’t surprise anyone if the strategy planning office and sales team have different opinions on which software has the biggest benefit for an organization.
Tracking all of your customer interactions and the results of those interactions isn’t a job for ClearPoint or any other strategic analysis program. To focus on strategy from a customer standpoint, you need the ability to summarize all prospect and customer information to discern trends. Then your sales leadership team can make decisions like which audiences to target, which products or services to push, etc. Again, this is managing high-level information and not one-off data points.
Both types of software are important, and they are important for solving different types of problems.
What These Stories Have In Common
The common thread in these anecdotes is that strategic analysis should not be confused with tracking individual data points. If you’re talking about singular transactions, operations, or customer interactions, you might not be talking strategy.
The key components of strategic analysis are:
- An unwavering focus on high-level strategy. If you’re prioritizing operations, sales, marketing, or any other function, organization-wide strategic analysis won’t happen. The focus should be on information that directly impacts your long-term strategies and goals.
- The ability to look backward and forward. Strategic analysis means assessing data about what happened in the past, so you can determine the implications of that performance and predict what is likely to happen in the future. The better your reports are at looking backward, the better your organization will be at moving forward.
- Decision making at the highest levels. Junior analysts may assemble the information, but the leadership team needs to be who makes decisions and takes action based on the information.
Given the pace of change in the business world, I strongly believe you need strategy at the center of your management process to ensure you're achieving your goals.
That’s not to say you should ignore operational or customer data—data that aids internal analysis in strategic management meetings is critical to your success, but it won’t determine how your business should be run. Strategy management and analysis should be the big gear that drives all the smaller gears doing operations, data analytics, and more. You likely need different tools to manage all your data, but platforms like ClearPoint can connect all the pieces to tell the entire story and help you drive your organization with strategy, not data points.