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Strategic Control: Breaking Down The Process & Techniques
Do you have a process to bridge gaps and course-correct during strategy implementation? Learn about the importance of strategic control in this article.
Even the best-laid plans can go awry—strategic planning teams know this as much as anyone. Carefully crafted strategies may not necessarily lead you astray, but they will almost always change and evolve during their standard three- to five-year implementation. It’s simply a fact that your internal and external environments will change and affect your strategy as it’s being implemented. For this reason, it’s incredibly important to create systems of evaluation and control to monitor your organization’s performance. Establishing a control process as part of strategic management allows you to immediately course-correct if planned strategies cause unintended or unexpected results.
In this article, we’ll walk you through the various components of a strategic control process and how an organization might apply them.
What is strategic control?
Strategic control is a way to manage the execution of your strategic plan. As a management process, it’s unique in that it’s built to handle unknowns and ambiguity as it tracks a strategy’s implementation and subsequent results. It is primarily concerned with finding and helping you adapt to internal or external factors that affect your strategy, whether they were initially included in your strategic planning or not.
The various components of the strategic control process generate answers to these two questions:
- Has the strategy been implemented as planned?
- Based on the observed results, does the strategy need to be changed or adjusted?
In many senses, strategic control is an evaluation exercise focused on ensuring the achievement of your goals. The process bridges gaps and allows you to adapt your strategy as needed during implementation.
The difference between operational and strategic control processes.
In contrast to the large amount of data and extended time frame required for strategic controls to take effect, operational controls monitor and evaluate day-to-day functions to correct any problems as soon as possible. Operational controls may be either manual or automated, and can involve people, processes, and technology. When successful, they flag potential risks, identify misalignments between plans and actions, and effectively implement changes to stay on course with your strategy.
For example, if there are technical malfunctions or performance is below expectations, operational control processes can initiate a course correction quickly. This could include updating an IT system or retraining particular employees, respectively. Or, imagine a factory that produces widgets. If the number of widgets drops below expectations or the error rate rises above expectations, a process control alert should be triggered to make the proper operational change.
Strategic control, on the other hand, might then evaluate whether your hiring criteria and employee onboarding processes need adjustment in order to achieve your strategy.
Strategic Control Techniques
There are four primary types of strategic control:
Every organization creates a strategy based on certain assumptions, or premises. As such, premise control is designed to continually and systematically verify whether those assumptions, which are foundational to your strategy, are still true. These are typically environmental (e.g. economic or political shifts) or industry-specific (e.g. new competitors) variables.
The sooner you discover a false premise, the sooner you can adjust the aspects of your strategy that it affects. In reality, you can’t review every single strategic premise, so focus on those most likely to change or have a major impact on your strategy.
This type of control is a step-by-step assessment of implementation activities. It focuses on the incremental actions and phases of strategic implementation, and monitors events and results as they unfold. Is each action or project happening as planned? Are the proper resources and funds being allocated for each step? This process continually questions the basic direction of your strategy to ensure it’s the right one.
There are two subcategories of implementation control:
- Monitoring Strategic Thrusts Or Projects
This is the assessment of specific projects or thrusts that have been created to drive the larger strategy. This early feedback will help you decide whether to continue onward with the strategy as is or pause to make adjustments.
You can pre-determine which thrusts are critical to the achievement of your goals and continually assess them. Or, you can decide which measurements are most meaningful for your thrusts or projects (such as timeframes, costs, etc.) and use that data as an indicator of whether a thrust is on track or not, and how that may subsequently affect the strategy.
- Reviewing Milestones
During strategic planning, you likely identified important points in the implementation process. When these milestones are reached, your organization will reassess the strategy and its relevance. Milestones could be based on timeframes, such as the end of a quarter, or on significant actions, such as large budget or resource allocations.
Implementation control can also take place via operational control systems, like budgets, schedules, and key performance indicators.
Special Alert Control
When something unexpected happens, a special alert control is mobilized. This is a reactive process, designed to execute a fast and thorough strategy assessment in the wake of an extreme event that impacts an organization. The event could be anything from a natural disaster or product recall to a competitor acquisition. In some cases, a special alert control calls for the formation of a crisis team—usually comprising members of the strategic planning and leadership teams—and in others, it merely means activating a predetermined contingency plan.
Strategic Surveillance Control
Strategic surveillance is a broader information scan. Its purpose is to identify overlooked factors both inside and outside the company that might impact your strategy. This process ideally covers any “ground” that might be missed by the more focused tactics of premise and implementation control. Your surveillance could encompass industry publications, online or social mentions, industry trends, conference activities, etc.
This graph clearly depicts the application of the four techniques for strategic control and how they function alongside each other:
Six Steps Of The Strategic Control Process
Whether your organization is using one or all four of the previous techniques of strategic evaluation and control, each involves six steps:
- Determine what to control.
What are the organization’s goals? What elements directly relate to your mission and vision? It’s difficult, but you must prioritize what to control because you cannot monitor and assess every minute factor that might impact your strategy.
- Set standards.
What will you compare performance against? How can managers evaluate past, present, and future actions? Setting control standards—which can be quantitative or qualitative—helps determine how you will measure your goals and evaluate progress.
- Measure performance.
Once standards are set, the next step is to measure your performance. Measurement can then be addressed in monthly or quarterly review meetings. What is actually happening? Are the standards being met?
- Compare performance.
When compared to the standards or targets, how do the actuals measure up? Competitive benchmarking can help you determine if any gaps between targets and actuals are normal for the industry, or are signs of an internal problem.
- Analyze deviations.
Why was performance below standards? In this step, you’ll focus on uncovering what caused the deviations. Did you set the right standards? Was there an internal issue, such as a resource shortage, that could be controlled in the future? Or an external, uncontrollable factor, like an economic collapse?
- Decide if corrective action is needed.
Once you’ve determined why performance deviated from standards, you’ll decide what to do about it. What actions will correct performance? Do goals need to be adjusted? Or are there internal shifts you can make to bring performance up to par? Depending on the cause of each deviation, you’ll either decide to take action to correct performance, revise the standard, or take no action.
Using A Balanced Scorecard For Strategic Control
The entire strategic planning, implementation, and control process takes significant effort and thought. It requires a lot of buy-in from your leadership team. It also requires employees to understand why their actions are important and continuously work toward achievement of goals—even if those goals shift over time.
A Balanced Scorecard helps tie your overall strategy to those day-to-day activities, giving more clarity about the what and why of strategic implementation to the entire company. You’ll be able to do both operational and strategic control within one framework, linking the two processes and getting everyone on the same page. The Balanced Scorecard approach can provide a clear prescription as to what companies should measure during implementation to enact strategic control.
Putting strategic control in place is critical to a successful strategy implementation. Without proper controls, your strategy won’t have the gut checks required to ensure it remains relevant, on track, and performing at or above standards.
Managing these controls can be made easier by using software to track KPIs, measures, and the external factors around your strategy. At ClearPoint, we see many organizations using our software to take strategic control.