Reasons for Transitioning from Traditional Management to Strategic Management
Companies lacking long-term goals and objectives often struggle with establishing a clear direction, focusing efforts, and achieving competitive advantages. However, the implementation of strategic management not only ensures their sustainability but also promotes growth and prosperity. The motives for shifting from traditional management to strategic management are varied and can be outlined as follows:
Strategic Management Promotes Innovation
Strategic management facilitates the planning of innovative approaches to navigate crises and ensures that organizations are well-prepared to face future challenges. This proactive stance enhances the organization’s ability to identify growth opportunities, especially during difficult times.
Strategic Management Increases Company Profits
Strategic management secures the future growth of a company by identifying potential financial gains and losses. This strategic foresight creates substantial opportunities for gaining a competitive edge in the market, enabling firms to recover from financial setbacks and make informed decisions based on accurate financial analysis.
Strategic Management Achieves Sustainability
In addition to creating profitable business models and satisfying customers, strategic management involves the formulation of well-thought-out plans for long-term solutions. Strategic managers consider various factors, such as ethical practices in strategy development, environmental concerns, and social issues, to ensure sustainability.
Strategic Management Addresses Digital Disruption
Strategic managers must comprehend how to integrate new technologies into their business strategies to stay ahead in the competitive landscape. Strategic management is concerned with identifying major emerging trends within the ecosystem and reshaping organizational strategies accordingly.
Differences Between Traditional Management and Strategic Management Approaches
Within traditional management, there is a hierarchical structure comprising lower-level, middle-level, and upper-level management. In this framework, managers define expectations for employees, emphasizing a fear-based approach that often focuses more on negatives than positives, neglecting employee motivation and engagement in management decisions.
Conversely, strategic management revolves around identifying and articulating strategies that managers can implement to enhance performance and secure a competitive advantage for their organizations. A company has a competitive edge when its profitability exceeds the industry average.
A strategic management approach necessitates that managers possess comprehensive knowledge and analysis of the broader organizational and competitive environment to make informed decisions. Conducting a SWOT analysis is essential to leverage organizational strengths, minimize weaknesses, capitalize on emerging opportunities, and remain vigilant about potential threats.
Phases of the Strategic Management Process
The application of strategic management can be executed as follows:
- Strategic Objective
The successful implementation of strategic management begins with defining organizational objectives, which serve as benchmarks for measuring performance and progress. The organization’s vision and direction must be clearly articulated and measurable.
- Strategy Formulation
The following phase involves formulating the strategy, which requires validating the company’s plans through a SWOT analysis. This strategic analysis focuses on identifying the organization’s strengths, weaknesses, opportunities, and threats.
- Strategy Execution
While an organizational blueprint marks a good start for strategic management, it must be actively implemented to ensure the company’s sustainability, growth, and expansion. This can be achieved through the following:
- Developing frameworks and systems.
- Overseeing change management.
- Enhancing decision-making processes.
- Improving project management capabilities.
- Strengthening competitive advantages.
- Rewarding performance.
- Strategy Evaluation
Evaluation constitutes the final phase of strategic management, involving the analysis of outcomes by measuring the performance of organizational strategies. Through this analysis, companies can decide whether to continue on their current path or adjust their actions to adapt to changing market conditions.