We have previously gone through the importance of developing sound organizational structures in order to achieve business excellence. Having a sound organizational structure is important because it can leverage the technical abilities in the organization to create value, but unless that value is directed towards a strategic outcome, the work will not be relevant. In order to succeed in business, it is necessary to create a strategic organization that not only provides the structure for efficiently executing work, but also directs the work toward a clear strategic goal.
In theory strategic organizational design is quite simple. In order to make this work, the organization first needs to get clear on their long term goals and systematically break these goals down into strategic initiatives and smaller goals per departments. The most important thing to remember in the goal hierarchy is that lower-level goals must be formulated in ways such that the realization of these goals will in turn realize the higher-level goals.
Developing Strategic Initiatives that Creates a Strategic Organization
After having developed a clear set of sound, sustainable long term goals for the organization, the next step in creating a strategic organizational structure is developing strategic initiatives that when realized will accomplish the organizational goals.
When developing strategic initiatives, ask what is necessary to accomplish in order to reach the long term goals, and what these accomplishments require in terms of resources and time. At this stage, the leadership in charge of developing strategic initiatives are free to reallocate resources between departments, and should make sure the different departments have clear purposes.
After having taken the correct strategic initiatives to enable the realization of long term goals, the next step for the leadership group is creating a functional plan of specific operational goals that each department needs to hit in order for the company to reach its organizational goals.
Developing a Functional Plan
What makes a plan functional is that it is inherently realistic. The key to integrating a functional plan in strategic management is allowing the departments themselves to create the plans according to goals set by the leadership group in the organization. Far too often, the leadership group in any organization tries needlessly to push their ideas without consulting the experts at the frontlines, and plans fail.
What makes this system work is that while strategic initiatives are preserved through goal specifications, the execution and accomplishment of said goals are anchored in the part of the organization that is supposed to carry out the plans. Not only does this give the departments ownership of the accomplishment of department goals, but it establishes accountability.
When creating specific goals at any level, remember to make them SMART (Specific, Measurable, Achievable, Relevant, Time bound).
Creating the Functional Strategy that Works for Your Organization
Now that we have explained the basics, it is time for you to create a functional strategy for your organization.
- Start by establishing sound long term goals for your organization. Truly lean and excellent organizations define their goals based on the value they can provide the society at large, ensuring that the organization has a clear purpose to fulfil customer needs.
- Break down the strategic goals the company needs to achieve within the next four year period, and what the organization that will achieve these goals look like in terms of structure. Allocate resources between departments according to said goals and develop annual SMART goals for each department.
- Let individual departments break down necessary quarterly goals in order to achieve annual goals, and let departments provide the plans for reaching every quarterly goal for the next year.
- Conduct a planning review with each department to ensure that quarterly goals are well thought out and have a sound plan of approach.
With this quick article, we hope you have made a couple of insights regarding the importance of developing strategic organizations from long term goals, and the importance of defining operational goals in ways that fulfils higher level goals in the organization. This article was mainly to illustrate these quick points, so if you want to learn more about separating great goals from mediocre ones, or how to achieve excellence in planning by cascading activities backwards from your end goal, feel free to check out our full archive of free resources. At Kaizen Leaders, our main activities revolve around coaching organizations to develop functional strategies for business excellence. Be sure to learn more about how our leadership consulting services can benefit your organization!