But what exactly is organizational strategy, and why does your business need it? We’ll answer those questions in this article, give you four key features of a good organizational strategy, and show you the best way to get started.
What Is Organizational Strategy?
At its most basic, an organizational strategy is a plan that specifies how your business will allocate resources (e.g., money, labor, and inventory) to support infrastructure, production, marketing, inventory, and other business activities.
When you sit down to create your organizational strategy, you should first divide it into three distinct categories:
- Corporate level strategy
- Business level strategy
- Functional level strategy
Think of each category as a building block in the larger organizational strategy that guides your business. Here’s a brief description of each.
Corporate Level Strategy
Corporate level strategy is the main purpose of your business — it’s the destination toward which your business is moving.
Common corporate level strategies include:
- No Change
Most corporate level strategies will be broad in scope, complex, and geared toward the overarching goals of your business.
Business Level Strategy
Business level strategy is the bridge between corporate level strategy and much of the “boots-on-the-ground” activity that occurs in functional level strategy. Because of that, business level strategy is more focused than the corporate level strategy that drives it.
So, for example, if your corporate level strategy is diversification, your business level strategies might look something like this:
- Increase marketing budget
- Investigate new markets
- Broaden exposure
Those more specific goals will then guide you in setting your functional level strategies.
Functional Level Strategy
Functional level strategies are the specific actions and benchmarks you assign to departments and individuals that move your business toward the goals created by your corporate level strategy. They are a direct offshoot of your business level strategies.
Functional level strategies, by nature, will be very detailed. So if one of your business level strategies is to rebrand your product, a functional level strategy might be for the marketing department to investigate which color your product should be so that it appeals to your target audience.
Those three strategies together — functional, business, and corporate — make up the very broad, very general organizational strategy that every company needs to be successful.
Why Does Your Business Need An Organizational Strategy?
1) Sets Direction And Priorities
We’ve said it already, but it’s worth saying again: an organizational strategy gives your business direction. Without that direction, your business may be flailing in the wind, so to speak.
One week you’re working toward diversification, and the next week you’re working toward no change (opposite organizational strategies). That’s a recipe for disaster. At the very least, an organizational strategy gives you consistency.
An organizational strategy also gives your business priorities. It defines success and shows you what activities you should put first (and second, and third) in order to move your business toward that goal.
2) Aligns Teams And Departments In A Common Goal
Getting all your departments and teams pulling in the same direction is hard enough. Without an organizational strategy, it’s nearly impossible.
When you set your overarching strategy — even if it’s something fairly vague, like increase profits — you give all your employees a common goal to get behind. That creates alignment within departments (horizontally) and throughout your organization (vertically).
3) Clarifies And Simplifies Decision Making
Decisions about your business can be some of the most difficult you’ll ever have to make. But with an organizational strategy in place, you can reduce the number of decisions you have to face and clarify which ones make the most sense based on your goals.
So, for example, if your organizational goal is to increase profits but your product has already saturated the market, you only have one or two choices (e.g., diversify).
4) Allows Your Business To Adapt
If you are driving to work in the morning and you encounter a detour, do you turn around and go home? No. You follow the detour (or, if you know the area, you find a better way around the construction) until you arrive at your destination.
Your organizational strategy is like that destination (getting to work). If problems arise along the way, you don’t give up completely; you adapt in order to continue moving toward the ultimate goal.
Key Features Of An Organizational Strategy
Your organizational strategy should, first and foremost, be realistic. If your annual profit is consistently $100,000, then setting the goal to make $1,000,000 in profit next year might be a bit unrealistic.
It’s great to have high standards, but maybe creating smaller goals to get you there incrementally (like $250,000 next year, $500,000 the year after that, and so on) is a better, more realistic decision.
All organizational strategies should be measurable. Saying that you want to get better (a qualitative goal) is fine, but you need to come up with some way to measure how you’re getting better.
When setting your organizational strategy, make it as specific as possible. Instead of saying, “We want to be the best in the industry,” say, “We want to hold 51-percent market share amongst all our direct competitors.” That’s a specific, measurable goal you can work toward.
Your organizational strategy shouldn’t be open-ended. It needs a deadline. Most businesses give themselves three to five years (again, be specific) to reach their organizational goals. This deadline dictates what you do and how quickly you do it.
The Best Way To Create An Organizational Strategy
One of the best ways to start creating an organizational strategy is to examine your current procedures. Scheduling, for example, is notoriously complicated. Preparing your business for the changes to come means streamlining the process so your team can better adapt once you set your organizational strategies.
Few things can help you in that regard the way scheduling software can. Apps like Sling provide everything you need — an easy-to-use interface, powerful communications features, time clock, labor analytics, and more — to reduce the time it takes to schedule your employees. That means you’ll have more time to set goals and guide your business toward success.
For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.