Assessment of strategy formulation: how to ensure quality in process and outcome
International Journal of Operations and Production Management
69 - 91
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Purpose - Today, industrial firms need to cope with competitive challenges related to innovation, dynamic responses, knowledge sharing, etc. by means of effective and dynamic strategy formulation. In light of these challenges, the purpose of the paper is to present and evaluate an assessment tool for strategy formulation processes that ensures high quality in process and outcome. Design/methodology/approach - A literature review was conducted to identify success criteria for strategy formulation processes. Then, a simple questionnaire and assessment tool was developed and used to test the validity of the success criteria through face-to-face interviews with 46 managers, workshops involving 40 managers, and two in-depth case studies. The success criteria have been slightly modified due to the empirical results, to yield the assessment tool. Findings - The resulting assessment tool integrates three generic approaches to strategy assessment, namely the goal-centred, comparative and improvement approaches, as found in the literature. Furthermore, it encompasses three phases of strategy formulation processes: strategic thinking, strategic planning and embedding of strategy. The tool reflects that the different approaches to assessment are relevant in all phases of strategy formulation, but weighted differently. Managerial perceptions expressed in particular that learning from experience should be accommodated in strategic thinking. The strategic planning stage is mainly assessed based on the goal-centred approach, but cases and managerial perceptions indicate that the need for accurate and detailed plans might be overrated in the literature, as implementation relies heavily on continuous improvement and empowerment. Concerning embedding, key aspects relate both to the goal-centred and improvement approaches, while the comparative approach appears to play a more modest role, related to monitoring external changes and enabling the organization to respond adaptively. Research limitations/implications - The proposed assessment tool is general in the sense that it does not take into account relationships between the strategic context and the assessment of strategy formulation processes. The investigated cases indicate that contingencies matter, and call for further investigation of particular applications. The present research maintained a focus on formal and relatively top-down-oriented strategy formulation processes. Practical implications - The integration of three different strategy assessment approaches has been made to obtain a holistic, multi-perspective reflection on strategy formulation. Such reflection is assumed to enable managers to proactively evaluate the potential outcome and performance of their chosen strategy. Originality/value - The originality of the paper lies in the combination and compilation of multiple approaches to strategy assessment, which draws on a wide range of literature, and in the proactive perspective on strategy assessment. Furthermore, the validity of the proposed assessment tool or checklist is based on multiple sources of empirical evidence.