Strategic direction as currently stated in ISO 9001:2015
Clause 4.1 The organization shall determine external and internal issues that are relevant to its purpose and its strategic direction and that affects its ability to achieve the intended results of its quality management system.
Clause 5.2: Top management shall establish, implement and maintain a quality policy that is is appropriate to the purpose and context of the organization and supports its strategic direction
Clause 9.3: Top management shall-review.the organization’s quality management system, at planned intervals, to ensure its continuing suitability, adequacy, effectiveness and alignment with the strategic direction of the organization.
What is strategic direction?
Strategic direction is a course of action that leads to the achievement of the goals of an organization’s strategy. The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving). Strategy is an action that managers take to attain one or more of the organization’s goals. Strategy can also be defined as “A general direction set for the company and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process”. A strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment so as to meet the present objectives. While planning a strategy it is essential to consider that decisions are not taken in a vacuum and that any act taken by a firm is likely to be met by a reaction from those affected, competitors, customers, employees or suppliers. Strategy can also be defined as knowledge of the goals, the uncertainty of events and the need to take into consideration the likely or actual behavior of others. Strategy is the blueprint of decisions in an organization that shows its objectives and goals, reduces the key policies, and plans for achieving these goals, and defines the business the company is to carry on, the type of economic and human organization it wants to be, and the contribution it plans to make to its shareholders, customers and society at large.
Features of Strategy
- Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment.
- Strategy deals with long term developments rather than routine operations, i.e. it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future. Strategy is created to take into account the probable behavior of customers and competitors. Strategies dealing with employees will predict the employee behavior.
Strategy is a well defined roadmap of an organization. It defines the overall mission, vision and direction of an organization. The objective of a strategy is to maximize an organization’s strengths and to minimize the strengths of the competitors. Strategy, in short, bridges the gap between “where we are” and “where we want to be”.
Components of Strategy statement
The strategy statement of a firm sets the firm’s long-term strategic direction and broad policy directions. It gives the firm a clear sense of direction and a blueprint for the firm’s activities for the upcoming years. The main constituents of a strategic statement are as follows:
An organization’s strategic intent is the purpose that it exists and why it will continue to exist, providing it maintains a competitive advantage. Strategic intent gives a picture about what an organization must get into immediately in order to achieve the company’s vision. It motivates the people. It clarifies the vision of the vision of the company. Strategic intent helps management to emphasize and concentrate on the priorities. Strategic intent is, nothing but, the influencing of an organization’s resource potential and core competencies to achieve what at first may seem to be unachievable goals in the competitive environment. A well expressed strategic intent should guide/steer the development of strategic intent or the setting of goals and objectives that require that all of organization’s competencies be controlled to maximum value. Strategic intent includes directing organization’s attention on the need of winning; inspiring people by telling them that the targets are valuable; encouraging individual and team participation as well as contribution; and utilizing intent to direct allocation of resources. Strategic intent differs from strategic fit in a way that while strategic fit deals with harmonizing available resources and potentials to the external environment, strategic intent emphasizes on building new resources and potentials so as to create and exploit future opportunities.
Mission statement is the statement of the role by which an organization intends to serve it’s stakeholders. It describes why an organization is operating and thus provides a framework within which strategies are formulated. It describes what the organization does (i.e., present capabilities), who all it serves (i.e., stakeholders) and what makes an organization unique (i.e., reason for existence). A mission statement differentiates an organization from others by explaining its broad scope of activities, its products, and technologies it uses to achieve its goals and objectives. It talks about an organization’s present (i.e., “about where we are”). For instance, Microsoft’s mission is to help people and businesses throughout the world to realize their full potential. Wal-Mart’s mission is “To give ordinary folk the chance to buy the same thing as rich people.” Mission statements always exist at top level of an organization, but may also be made for various organizational levels. Chief executive plays a significant role in formulation of mission statement. Once the mission statement is formulated, it serves the organization in long run, but it may become ambiguous with organizational growth and innovations. In today’s dynamic and competitive environment, mission may need to be redefined. However, care must be taken that the redefined mission statement should have original fundamentals/components. Mission statement has three main components-a statement of mission or vision of the company, a statement of the core values that shape the acts and behaviour of the employees, and a statement of the goals and objectives.
Features of a Mission
- Mission must be feasible and attainable. It should be possible to achieve it.
- Mission should be clear enough so that any action can be taken.
- It should be inspiring for the management, staff and society at large.
- It should be precise enough, i.e., it should be neither too broad nor too narrow.
- It should be unique and distinctive to leave an impact in everyone’s mind.
- It should be analytical,i.e., it should analyze the key components of the strategy.
- It should be credible, i.e., all stakeholders should be able to believe it.
A vision statement identifies where the organization wants or intends to be in future or where it should be to best meet the needs of the stakeholders. It describes dreams and aspirations for future. For instance, Microsoft’s vision is “to empower people through great software, any time, any place, or any device.” Wal-Mart’s vision is to become worldwide leader in retailing.
A vision is the potential to view things ahead of themselves. It answers the question “where we want to be”. It gives us a reminder about what we attempt to develop. A vision statement is for the organization and it’s members, unlike the mission statement which is for the customers/clients. It contributes in effective decision making as well as effective business planning. It incorporates a shared understanding about the nature and aim of the organization and utilizes this understanding to direct and guide the organization towards a better purpose. It describes that on achieving the mission, how the organizational future would appear to be.
An effective vision statement must have following features-
- It must be unambiguous.
- It must be clear.
- It must harmonize with organization’s culture and values.
- The dreams and aspirations must be rational/realistic.
- Vision statements should be shorter so that they are easier to memorize.
In order to realize the vision, it must be deeply instilled in the organization, being owned and shared by everyone involved in the organization.
Goals and Objectives
A goal is a desired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain mission or vision. Goals make mission more prominent and concrete. They co-ordinate and integrate various functional and departmental areas in an organization. Well made goals have following features-
- These are precise and measurable.
- These look after critical and significant issues.
- These are realistic and challenging.
- These must be achieved within a specific time frame.
- These include both financial as well as non-financial components.
Objectives are defined as goals that organization wants to achieve over a period of time. These are the foundation of planning. Policies are developed in an organization so as to achieve these objectives. Formulation of objectives is the task of top level management. Effective objectives have following features-
- These are not single for an organization, but multiple.
- Objectives should be both short-term as well as long-term.
- Objectives must respond and react to changes in environment, i.e., they must be flexible.
- These must be feasible, realistic and operational.
Strategic Quality Planning (SQP)
Strategic quality planning (SQP) is a systematic approach to defining long-term business goals, including goals to improve quality and the means (i.e., the plans) to achieve them. Many organizations have created a vision “to be the best,” toward a goal of outperforming competitors. Many of these organizations fall short in achieving this vision. Most do not align, or have difficulty aligning, their performance excellence initiatives like lean and Six Sigma to the annual business plan. This leads to lack of resources to complete projects, which in turn makes them hard to justify.
Focus by creating goals that provide direction and alignment of the resources needed from the organization to meet those goals and the reasons for selection them. The reasons force management to understand why it is selecting these goals.
- Clarification of goals
- Achievability of goals
- Scheduled reduction of chronic wastes and improved quality of products and services
- Better or new focus on customers
Launching a strategic plan
Developing the plan
- Customer loyalty and satisfaction
- Costs related to poor quality of products or processes
- Organization’s culture
- Business processes
- Competitive benchmarking
- Product performance
- Competitive performance
- Business improvement
- Cost of poor quality
- Performance of business processes
- Customer satisfaction
- Customer loyalty and retention
- Performance measures indicate the degree of accomplishment of objectives
- Performance measures are needed to monitor the improvement process
- Performance measures are required for periodic reviews by management
Change management and employee involvement should be embedded into the five stages of strategic planning for ISO 9000 initiatives. First, a SWOT (strengths, weaknesses, opportunities, threats) analysis helps to create an effective quality system. Strengths and weaknesses within the business can be analyzed by internal audits and corrective and preventive actions. External opportunities and threats are analyzed by tools like contract reviews and corrective action. These analyses should include an examination of visible and invisible products, the latter being knowledge and information. Second, mission and vision are developed using tools like benchmarking. The company’s principles and values will be described in its quality policy. Third, there should be a gap analysis of products, processes, skills, suppliers, and technology. These are related to ISO 9000 elements such as design control, inspection and test results, requirements training, supplier evaluation, and process control. Fourth, operational objectives must be established. They should emphasize skills, suppliers, and technology. Development of these objectives should involve an analysis of the manageable size of business units. Fifth, implementation and monitoring can be successful if employees were involved in the development of the previous four stages. Other keys to implementation and monitoring are measurement ownership, corrective action reporting , and internal audits results
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