Strategic Management System (SMS): The Real Foundation for Strategy Success

Strategic Management System (SMS)

When organizations embark on building or redefining their strategies, numerous challenges and complexities arise. If not addressed properly, these challenges often lead to strategy failure—or in severe cases—organizational decline.

This highlights the importance of focusing not only on strategy formulation, but on establishing a comprehensive system to manage strategy effectively throughout its lifecycle.

Before Initiating the Strategy

Strategy should not be viewed as a temporary function or a time-bound project. It is a continuous process that remains critical as long as an organization seeks sustainability and long-term growth. This perspective has driven extensive research in strategy and organizational continuity.

Like all organizational activities, strategy requires certain prerequisites and capabilities that must be assessed prior to formulation. These prerequisites represent essential tools without which a strategy cannot be successfully designed or implemented, underscoring the importance of evaluating the organization’s current state.

Major strategic initiatives demand thorough analysis and accurate diagnosis. A correct diagnosis represents half the solution, while rushed assessments of the current state often result in flawed decisions with potentially severe long-term consequences.

Strategy Execution and the Operating Model

One of the most critical success factors of any strategy is the organization’s readiness to absorb its implications and achieve its targets. This readiness spans organizational structures, regulatory frameworks, and execution capabilities, all of which must be carefully assessed in advance.

Strategy impacts every component of the organization and may extend into the finest operational details. Therefore, involving all organizational systems within a unified framework becomes essential—this is what professionals refer to as the Strategic Management System.

Building such a system is a significant challenge, often equal to or greater than the challenge of formulating the strategy itself. Many experts argue that possessing a mature Strategic Management System is, in itself, a sustainable competitive advantage—even before launching a new strategy.

Phases of the Strategic Management System

The Strategic Management System consists of five core phases, which together form the backbone of successful strategy execution:

1. Strategy Formulation

This phase includes analyzing internal and external environments, developing a shared vision, formulating and evaluating strategic alternatives, selecting the most appropriate option, and preparing the strategic plan. Selecting a new strategy often creates a temporary misalignment with the current operating model.

2. Strategy Governance

Strategy governance is a critical requirement for long-term success. It ensures clear accountability, decision-making mechanisms, and continuous oversight across all stages of the strategy lifecycle.

3. Organizational Transformation

This phase focuses on aligning the organization’s operating model with the new strategy. It requires a structured transformation roadmap that defines the sequence of initiatives and ensures their proper execution at the right time.

4. Strategy Execution

Execution is responsible for delivering value to stakeholders as defined by the strategy. This requires optimal alignment of operational functions such as human resources, finance, marketing, operations, and information technology with the strategic direction.

5. Stakeholder Engagement

Stakeholder engagement ensures commitment to the strategy by communicating its importance, addressing feedback, building employee buy-in, removing barriers to change, providing training, setting appropriate goals, and establishing motivating incentives.

Conclusion

Establishing a robust Strategic Management System is one of the most critical enablers of strategy success before, during, and after execution. It is not merely a supporting mechanism, but a true competitive advantage that organizations should deliberately design, invest in, and continuously enhance to ensure long-term sustainability.