What is organizational strategy?
Organizational strategy is a mechanism used by an organization to interact with its context and execute its mission. She is responsible for guiding the organization’s behavior in a changing, dynamic and competitive world.
Strategy is strongly linked to the stability of an organization. This is because it is through it that a company is able to achieve internal coherence. At this point, it is important to highlight that to maintain such coherence, the strategy needs to be modified whenever new challenges are encountered.
Finally, it is worth adding that strategy can be either planning for the future or looking for models in the past.
What are the advantages of organizational strategy?
In general, the strategy is linked to 4 advantages:
- Promote internal coherence;
- Fix a direction;
- Concentrate efforts;
- Define the organization.
Thus, the definition of a strategy reduces ambiguity, generates order and favors the coordination of different activities towards a predetermined objective. Through it, it is possible to map the path to be followed by the organization to remain adjusted to the environment. In addition, it sets the company apart from others.
Where does organizational strategy come from?
From what has been discussed so far, it can be seen that the strategy basically represents what the organization must do to put its mission into practice in the environment in which it operates.
However, before defining a company’s strategy, it is necessary to be clear about some points that support it:
- Company mission;
- Company vision;
- Company values;
- The company’s strengths, weaknesses, opportunities and threats.
The mission represents the reason for an organization’s existence, indicating the purpose of its creation and which market and/or society demands it seeks to meet. By presenting these characteristics, the mission works as a guide for the organization’s activities, directing the efforts of the members that compose it.
The vision, in turn, presents the image that the organization has of itself in the future, that is, it represents the destination it seeks. Therefore, the vision establishes a common identity regarding the company’s purposes for the future, in a way that its lack disorients the organization and its members about priorities.
Values are the principles and goals that guide the behavior of individuals and, consequently, organizational life. They represent a basic belief about what is and is not valued within a company.
Finally, strengths and weaknesses are identified through an analysis of the organization itself, while threats and opportunities are identified through an analysis of the environment. One way to do this situational analysis is through the SWOT matrix .
In this sense, through SWOT, you can identify ways to leverage the organization’s environmental opportunities and strengths, while dealing with environmental threats and internal weaknesses. The objective here is to favor the achievement of organizational objectives.
An organization’s mission, vision, values and the result of an organization’s SWOT matrix influence the definition and execution of organizational strategy. Therefore, it is important to always keep these questions in mind.
The organizational objectives
Knowing where and how the company wants to be in the coming years is the fundamental question. Without it, there is no way to plan. However, many slip when it comes to defining the objectives and, therefore, the strategy ends up not being well elaborated.
Simply stating that the company wants to grow is not setting a goal. It is also not worth saying that the company wants to be the biggest or the best in certain conditions, as it is too vague.
In general, every organizational objective should be:
- Realistic : Setting a goal that cannot be achieved, either through exaggeration or impossibility, cannot be considered a good goal.
- Measurable : every objective must be able to be measured and monitored. Otherwise, how do you know if it’s being reached (and not just if it’s already been)?
- Motivator : It is not enough to be realistic and measurable, it is necessary to motivate those who will work. Defining that a company must grow 0.1% in revenue from one year to the next may be realistic and measurable, but it is not at all motivating, as there are no challenges, no great achievements, no need for greater effort.
Mintzberg’s organizational strategy
Any activity that involves at least one goal to be achieved, whether by one or several people together, needs to be properly planned in order to be successful. This planning requires that strategies be drawn up, which, once developed, enable a company to achieve the initially desired objectives. But how to design an efficient corporate strategy?
Aiming to better explore the concept of strategy and broaden the corporate view of its actions before the market and society, at the end of the 1980s, Canadian Henry Mintzberg developed what he called the 5 Ps of strategy. As a PhD in Management, as well as a university professor and renowned researcher in the field, Mintzberg’s work is the result of extensive studies on organizational strategy.
Henry Mintzberg has written a large number of articles and books in which he discusses aspects relating to management and business strategy. The work “The Rise and Fall of Strategic Planning” stands out among his works, in which he criticizes certain current practices of strategic planning. He is a very productive scholar and an important specialist in organizational strategy.
The 5 Ps of strategy conceived by Mintzberg make a clear allusion to the paradigm of managing the marketing mix, which culminated in the concept of the 4 Ps of Marketing, proposed by McCarthy in the middle of the last century. According to Mintzberg, strategy should be understood as a complex process that has 5 basic biases, the so-called 5Ps: plan, ploy, pattern, position and perspective.
According to the PhD in Management, the 5 Ps refer to 5 different possibilities of framing the strategy, which add competitive advantage to a company. Next, we will better understand what Mintzberg postulates about these 5 ways of conceiving and applying strategy, which are so in vogue in the contemporary corporate world.
Strategy as a plan, or plan, can be understood from the perspective of an orientation based on a guideline — or a set of them — that aims to ensure the organization’s objectives in a conscious and deliberate way. In general, there is an initial goal, which needs means, activities, actions to be achieved. From this relationship between the deprecated objective and the ways to achieve it, strategies emerge as plans.
Conceiving of strategy as a plan is common both in a more global corporate approach and in those that are more specific. When designing its strategic planning (macro action) or even proposing an incentive program (micro action) to employees with a view to expanding their market share, a company is working with this P.
In Mintzberg’s understanding, strategy can also be considered a pretext, or ploy, that performs the function of a stratagem that will weaken or eliminate competition. It is a deliberate action, or even a set of them, whose objective is to lead its competitors to have certain postures that are favorable to the corporation that employs the strategy.
There are several situations in which the pretext or maneuver strategy is employed in the market context. The most common example is the announcement of a company about the implementation of a new unit, seeking to conquer new markets. In this case, the scam aims to disrupt competition, discouraging it from fighting for that specific market.
When a company establishes a repetition of its behavior towards the market, developing the attribute of reliability — so valued in organizations —, it is using the concept of strategy as a pattern, or pattern. Thus, resources and tools are used in order to maintain certain criteria and procedures that serve as parameters for its operation.
In this way, the strategy as a standard consolidates a business model that tends to provide credibility to the company, which is valid both in its management with customers and suppliers, as well as with its employees. From this perspective, a company that invests and values its human capital will be applying (or replicating) this strategic standard by incorporating incentive trips for its employees, for example.
Understanding and using strategy as a position, or position, means defining a form of business according to its location, interaction with consumers, employees and suppliers , as well as relationship with competitors. This definition allows the corporation to take advantage of the set of forces of the external and internal environments to direct and strengthen its performance in the market.
From this perspective, it is possible to clarify the concept with the example of a multinational that, in a different way from its global stance, invests heavily in the professional and cultural development of its employees in a specific market. With this initiative, it is adopting a position strategy, whether due to the social situation, labor laws or even as a competitive strategy in the search for talent.
On the other hand, strategy as a perspective, or perspective, is one that brings together a series of company characteristics, such as norms, values and behavior disseminated about a brand, aiming, mainly, to add quality and value to its product/service. The nature of this strategy is necessarily collective, since its actions require the involvement of all employees of the corporation to be implemented.
It is a conceptual strategy. To visualize its use, it is possible to think of a scenario that has become increasingly common in the current market context: as when companies in the cosmetic sector assert themselves in favor of nature, focusing on sustainable products, or for the diversity of society, featuring people from different cultures, genders, sexual options and skin colors.
Multi-strategies for success
By deepening the concept of strategy, Mintzberg allowed managers to broaden their understanding of the context in which the company is inserted and how it transforms when interacting with the market. Therefore, the theory about strategy proposed by the scholar was fundamental for the corporate environment, enabling its application in different segments and with different marketing objectives.
Although presented separately, the 5 Ps of strategy are actually tools that can be used individually or in combination. The use of any type of organizational strategy contributes to the improvement of the results obtained by a corporation.