Strategic evaluation

Strategic options can be evaluated by a variety of formal or informal procedures.

The criteria used are of three types:

1. Suitability - how well does the strategy address the circumstances identified by strategic analysis? SWOT analysis can be used as a basis of assessing suitability.
2. Acceptability - how well do the expected outcomes of the strategy meet stakeholders' expectations? Acceptability can be assessed against the expectations of key stakeholders and their likely reactions. These include expectations of financial performance, risk, security, environmental, and ethical issues. Acceptability can be easier to assess for entities with a strong sense of mission.
3. Feasibility - how likely is the entity to be able to implement the strategy successfully in practice? Feasibility can be assessed against the entity's resources and capabilities, the time it would take to implement, the power of opposing stakeholders and likely competitor responses.

Such criteria can be applied in a variety of ways. For example, qualitative tests of suitability and acceptability might be used to screen out inappropriate options. Quantitative feasibility assessments, including detailed financial appraisal and resource planning, might then be used to select the best option.

Reference source: Johnson G. and Scholes K. (1997) "Exploring Corporate Strategy", Prentice Hall

Strategic Processes

Strategy is often closely associated with formal planning processes, which were widely used by organisations in the 1960s and 1970s. Currently, there is greater recognition that strategy does not necessarily result from such deliberate plans or intentions, and that in many organisations effective strategy emerges from more informal processes. This view sees strategy as a coherent pattern of actions with a consistent strategic purpose.

Mintzberg and Waters have drawn a distinction between deliberate strategies and emergent strategies. In practice, strategies are partly deliberate and partly emergent, in a mix determined by:

• how precise, concrete and explicit the intentions of the organisation's leadership and other groups are, and how widely they are shared
• how pervasive and firm central control over organisational actions is
• how benign, controllable and predictable the organisation's external environment is.

These factors affect both strategy formation and implementation. Minzberg and Waters describe eight types of strategies with different origins, lying on a continuum from most deliberate to most emergent. They are:

1. planned - precise intentions backed by formal implementation controls
2. entrepreneurial - originating in the personal vision of a single leader
3. ideological - originating in shared beliefs and collective vision
4. umbrella - leadership defines strategic boundaries or targets within which others respond
5. process - leadership controls process aspects of strategy leaving content to others
6. unconnected - strategies originate in enclaves
7. consensus - mutual adjustment produces converging patterns that become pervasive
8. imposed - strategies originate in the environment, producing limited organisational choice, possibly becoming internalised

This view of strategic processes, rather than content, helps redress the balance between strategy formation through analysis and the practical constraints and behaviour that exist in all organisations. It also helps us to understand some of the ways in which the formation and implementation of strategy are linked, and the contribution that organisational learning makes to strategy.
Reference source: Mintzberg, H. and Waters, J. A. (1985) "Of Strategies, Deliberate and Emergent", Strategic Management Journal, Vol. 6, p. 257-72

Evolution provides a good example of emergent strategy. There is no active design process or designer, yet evolution has bee an extraordinarily effective strategy for those species that have survived.

Strategic Styles

Strategies are developed in different ways in different organisations. Bailey and Johnson identified six strategy drivers that are used in combination when strategies are developed, producing distinctive strategic styles or profiles for different organisations.

• Incremental - step by step development of strategy.
• Visionary - influenced by the personal vision of a strong leader.
• Planning - developing strategies from structured planning approaches.
• Political - strategy developing from bargaining and negotiation between stakeholders.
• Cultural - strategies arising from shared views and experience.
• External - strategies imposed by changes in the external environment.

In the profile, the degree to which each of these factors is present is assessed relative to the others. Some drivers may be completely absent while others dominate, though at least three or four are usually present to some extent.

Analysis of the strategic style of an organisation helps us to understand the processes by which strategy is formed and hence increases our ability to influence it. Strategy styles tend to evolve in response to external and internal pressures, including institutional structures, stakeholder pressures and individual personalities. A major change in any of these can leave an organisation with an inappropriate strategic style that can become an important weakness.

Reference source: Bailey A. and Johnson G. (1995) "The processes of strategy development", in J. L.Thompson (ed.) "The CIMA Handbook of Strategic Management", Oxford, Butterworth Heinemann