The optimisation process should consider the levels at which the strategies are being set. The level of detail and type of optimisation will vary for the three levels of strategy—corporate, business and functional.
Corporate-level strategy will be optimised on the basis of:
* allocating resources to particular parts of the organisation
* changing broad organisational structures
* changing or introducing new aspects to the organisational culture
* developing a code of ethics and values statements
* detailing short-term goals
Business-level strategy will be optimised on the basis of:
* coordinated with the optimisation of the corporate-level strategy, particularly in relation to
the fine-tuning of an organisation's structure and introducing cultural changes.
* developing specific resources and competencies
* coordinating strategic development plans with corporate strategic goals and timeframes, staff selection and cultural development.
Functional-level strategy optimisation will be primarily focused on achieving the best resource allocation and staff development programs for the business-level strategy. The optimisation of the functional-level strategy focuses on allocating budgets to the areas where their impact on the business-level objectives is greatest, rather than maintaining its existing operations.
To determine how a strategy should be optimised, consider the following factors:
* the acceptance of the product or service
* the characteristics of the market
* the industry boundaries
* the business process (way in which the business operates, creates value, deals with customers).
Resources are a key element in strategy implementation. When optimising a strategy, think about:
* the options for changing resources to align with the desired strategic positions and the competitive advantages sought
* the most efficient approaches for doing this.
The two areas of financing to be considered in relation to strategy optimisation are:
* value (to stakeholders)
Similar to the financing perspective, the process perspective involves determining:
* what can be achieved in relation to the broad strategic objectives
* the best approach to achieve these objectives
* the optimal cost/benefits target.
Strategy optimisation includes consideration of particular aspects of an organisation's:
* external environment (i.e. the specific market served by the organisation)
* internal environment (i.e. workplace culture)
The ability of an organisation to control its current activities, operations and relationships in the context of a new strategy and the new operations and relationships must also be considered. This will allow an organisation to decide if any alteration of the objectives is required. It is important that an organisation is able to control the operations it establishes as part of a strategic plan. Areas of control which are normally considered in relation to strategy optimisation include: financial, taxation, employment contract, contract, quality and liability and subsidiary performance.
Information is a critical component of the control aspect of the strategy optimisation process. Without appropriate data and data analysis, the strategy optimisation will be without direction. Choices are ineffective when based on guesswork. The way in which an organisation collects, analyses, distributes and uses information influences how strategic management is applied.
Considering the proposed strategy objectives from the perspective of the various relationships an organisation has established with external organisations (and their maintenance) is an optional, but desirable aspect of strategy optimisation. Determining how a strategy can affect existing relationships is not usually part of the strategy selection process (unless the relationship is particularly important). Therefore, assessment and negotiation need to follow the original strategy selection to optimise it from the perspective of these relationships.
Forms of partnership that are relevant to the optimisation of selected strategies include suppliers, market and customer representation organisations, distributors and research and development organisations. Features of these partnerships which should be assessed to optimise the strategy include contractual agreements, mutual/shared objectives, scope of current agreement and current performance of existing partnership arrangements. Outsourcing is an example of a less sophisticated external relationship compared to a partnership.
The relationship between structure and strategy is very strong. Without the correct structure, a strategy cannot be implemented successfully, so the impact of structure extends beyond the optimisation of a strategy
Particular aspects of structure that affect strategy optimisation include:
* lines of responsibility
* scope of authority
* location and ownership of resources critical to the strategy
* location of skills and competencies critical to the strategy
* geographical location of divisions fundamental to the strategy implementation.
The costs and consequences that should be considered in relation to strategic structural change include:
* relocation of key staff costs
* technology and resource transfer costs
* the impact of structural change on existing customers and contractual agreements
* building and infrastructure costs.
Similar to structure, the business cycles that an organisation is operating under should be reviewed as part of optimising the selected strategy. Certain times will be more suitable for implementing strategic change than others. The timelines and windows of opportunity of selected strategies and objectives may not automatically be well-matched to the company's business cycles.
Successful businesses include innovation in their optimised strategy. The most successful organisations have always generated a large proportion of their profits from innovative strategies. One of their most important findings was that technology was not the basis of blue oceans (new markets). Instead, blue oceans are founded on the ability to deliver something that customers find significant, using existing resources, including technology. Another interesting finding was that the majority of blue oceans were actually created within existing markets (red oceans) by companies already operating in those markets.
(cf., Kim and Mauborgne (2004) of the French Business School)