Strategy and enterprise architecture are the most frequently used and misused words in corporate America. The understanding of the real concept and utilization of it for the organization benefit has been increasing significantly in recent years. Let me attempt to generalize the IT strategy framework and explain how it fits with in over all organization.
In general, strategy is a long term plan. When I say it is also widely misused, I mean, I heard in lots of discussion that someone is going to come up with strategy to solve a production problem. Production problem is the one, which needs immediate solution. It does not require long term planning to solve an immediately required solution.
Strategy in other words, when we were kids, we all had ambitions. Those ambitions were strategies if some one work towards to accomplish it. If some one had ambitions but never worked towards to accomplish it, then it was not a strategy it was a dream.
Before we jump into IT strategy, let us discuss types of strategy.
- Corporate Strategy
- Competitive Strategy
- Functional strategy
- Military Strategy
- Political strategy
I’m not an expert in both military & political strategy. May be after few years, I will look into the military strategy (will start from art of war) & political strategy frameworks.
Competitive Strategy:Almost in every market segment, there exist immense competition. The company wants to differentiate themselves from their competitors by doing something different than others. Cost, quality, heritage, brand identity are few differentiating attributes. Competitive strategy is a long term plan to uniquely differentiate & recognize the company among their competitors. For example, Target & Walmart are in the same market segment.
Walmart’s competitor’s strategy is to provide the goods for the lowest cost possible. The customer who look for the lowest cost always prefer the Walmart stores. There are few grocery stores like Trader’s Joe in the same market segment like Walmart but adopt a different competitive strategy. Their differentiating attributes are not cost, but unique products with quality customer services. The customer who are willing to pay extra for preferential treatment and unique products (like organic, healthy, etc) will prefer Trader’s Joe store than Walmart.
Corporate strategy is a long term plan to align the entire organizations to support the competitive strategy. It is to line up the employees, contractors, right sourcing partners, consultants, partners, internal processes, external processes, tools, software, systems, business model to support the corporate strategy in turn to support the competitive strategy. For example, Trader’s Joe will look for the partner who provides the unique products like organic foods, low gluten, heart healthy, fat free, low sodium, etc and hire employees are naturally friendly to everyone. A strategy person could do reverse engineering and figure out the strategy by closely watching their actions.
Functional strategy is a long term plan of the functional organization (like HR, IT, Finance, etc) to support the corporate strategy. The functional strategies should support other functional strategies and the corporate strategy. IT strategy is a functional strategy which supports the corporate strategy.
It can be formed by following any methodology. The concept is more important than the methodology. IT exist for a purpose. The purpose should be clearly understood by the IT organization. It is natural for the IT organization to be technical and lose sight of the business. That is an ignition for the IT failure eventually. For discussion purposes, I will take Kaplan and Norton strategy formation process. There are four perspectives in this framework. Learning & Growth (or people), Internal Process, Customers & finance. The concept is, there is should be dedicated focus in each perspective and if we have a right people & process, the company will have more customers, and if we they have more customer their finance will be have a positive impact. If their finance has a positive impact, then the profit organization will meet the share holders (or owners) expectation. Very simple and straight forward.
To support the corporate strategy, the IT strategy will have these four perspective. Each perspective will have set of strategic objectives. As I stated above, strategy is long term plan and we have to work daily towards this long term plan. To work daily on the the long term, we need to have a focus area (say for the current year). What we want to accomplish in the direction of the strategy. The focus area is other wise called Themes. Theme (or focus area) are the organization goal for that year which aligns to multiple objectives across the perspectives.
Themes will have a set of performance measures (or the strategic objectives). Each performance measures will have a target for that year. For each target, there are set of initiatives and the entire organization will be work on those initiatives.
It is a straight forward easy to understand management concept which is very powerful.
This strategy formation process can be used to create corporate or competitive strategy.