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Strategic Management Process - The Translation Stage

by

William M. McGee

August, 2010

The first step in managing a successful strategic process is defining a market strategy that differentiates a company from its competitors in the marketplace. This first step is critically important, and should put a company on the pathway to improved growth and profitability. However, that is only the first step. To be effective, a market strategy must be internalized into a company. The work encompassed in the next stage of the strategic process, the translation stage, is intended to accomplish at least a portion of that requirement.

The purpose of the translation stage is to translate a new market strategy into policies and procedures that will cause a company to do business differently based on its new market strategy. Otherwise, the payoff from the hard work that went into the definition stage, will likely be lost. Oddly, many companies forget or ignore the translation stage almost entirely. It is a serious strategic mistake, and it puts these companies at an operational disadvantage against competitors that have better internalized and communicated their market strategies.

The translation stage has a few key components, which can be viewed as physical documents that should be prepared during the translation stage.

  • Mission Statement. A mission statement should specify the goals that the company has set for its new market strategy. It should clearly state the types of business that will be conducted in the market, and the value propositions that will be offered to customers, suppliers, employees, and investors. In addition to the types of business that will be conducted, the mission statement should state the types of business that will not be conducted. Too many times companies continue to do business that is not consistent with their market strategies. This simply negates the impact of their strategies.
  • Culture Document. Culture defines the type of values that a company wants to encourage, reward, retain, and acquire. A company's culture must support its mission, and it will affect a broad range of internal policies. As an example, if a company wishes to have a culture that values collaboration, its compensation methods should not reward individual performance. Again, as with the mission statement, allowing cultural exceptions will cause the desired culture to lose credibility with stakeholders.
  • Organization Structure. There are always three elements that must be balanced in any organization structure. They are customers (or markets), products (or functions), and geography (or locations). All three elements should be represented in any organization structure, but it is the priority of the three that is most important. The element with top priority normally has solid line responsibility and is responsible for P&L management. The element that is ranked second normally has dotted line responsibility and provides a check and balance on the solid line authority that is given to the element with top priority. The element that is number three normally has a coordinating role, or is a sub-element under one of the other two elements with higher priority. Just to state the obvious, if for example a company's market strategy is attempting to differentiate based on product offerings, the top priority within its organization structure should be products.
  • Communications. All communications, internal and external, should be rewritten to underscore a company's market strategy. Many times it is advisable to have all communications approved by a central coordination group in order to assure consistency with market strategy.

To be effective, a market strategy must be internalized into the "fabric" of a company. The translation stage of a strategic management process is critical to internalization. Many companies ignore the work associated with the translation stage, and thereby never get the full payoff from their strategy.

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