A strategy-formulation framework is a set of plans, strategies, and tactical steps that support and guide an organization's strategic planning. This framework defines the relationship between an organization's strategic goals and objectives, its planning processes, and its processes for assessment, prioritizing, planning, implementation, monitoring, and adjustment.
In essence, it
captures the essence of an organization's overall strategic planning process
and provides a map showing how these processes affect each other and ultimately
the strategic goals and objectives.
A comprehensive
framework is necessary to conduct an effective overall strategic planning. With
this in mind, a strategic planning process begins with an analysis of the
strategic goals and objectives of the organization, nature, and complexity
of the activities required to reach those goals and objectives, and the
available tools, techniques, and systems that are relevant to the tasks.
Analysis of the subject matter and detailed description of
the processes involved in strategic planning provide a foundation for
evaluating the plan. Then, based on the analyzed information, the overall
strategy should be formulated. Each part of the process should be justified and
the relationship among them identified.
In addition, the nature of the organization's internal and
external resources, the scope of human resources, the priorities, and potentials
of budgeting, and the preferences and capabilities of key decision-makers,
should be taken into account.
Strategic planning determines the strategic direction and provides
direction for the organization. It is therefore important that a sound strategy
is developed. The process also identifies the roles and responsibilities of
individuals in the organization, the relationships among them, and the means by
which the objectives of the strategy are achieved.
Finally, the process
determines the resources required to implement the strategy and assesses the
costs of implementation. These resources include human capital, existing and
future financial resources, and the range of technological and other
organizational factors.
This framework enables strategic planning to specify and
measure strategic objectives, specify roles and responsibilities of individuals
and groups, and define the resources needed to implement those objectives. This
framework can be applied to any organization regardless of size and complexity.
For instance, when
organizing a hospital, it would not make sense to try and construct a
comprehensive strategic plan unless it is understood that there will be a staff
of nurses and other clinicians responsible for patient care. Hospital
management may wish to develop a smaller more focused operational plan for
treating only critical patients, or a larger comprehensive strategic plan aimed
at meeting long-term goals.
This framework has numerous benefits for planning managers.
It makes the process transparent and allows for better communication between
all involved. It reduces the risk of errors due to a lack of accurate information
and increases the likelihood of a successful execution of the plan. In
addition, it can be used to derive modeling assumptions from the existing
organizational structure, knowledge base, resources, and competition, making
the assumption more reliable and effective.
However, not all companies use a strategy-formulation
framework. Some view it as a time-consuming and cumbersome approach and believe
that there are many other ways in which they can organize their organizations.
This is not true. Using a solid strategy-formulation framework provides a clear
road map for the planning manager and his team, and ensures that the
organization takes consistent and timely actions in accordance with its plans.