Strategic Control Process: Steps, Types, Importance & More

Being strategic in control is your secret weapon to success in a world of economic rollercoasters and constant disruption. A PWC survey revealed a telling statistic: They are gearing up to ride out a substantial organisational change within 3 years: 78% of global business leaders.

This is your tool to turn these winds of change into tailwinds. It allows your business to adapt, make confident decisions, and effectively manage resources. In this article, we’ll explain the importance of strategic control, what it is, and how to implement it in your business. Most importantly, we’ll give you some simple tools you can utilise as you face wave after wave of change.

What is Strategic Control?

Strategic control is the terminal part of the strategic management process. The process of strategic management involves its control function. Nevertheless, this strategy evaluation and control process should be introduced at the early stages of its implementation to rectify mistakes at the right time and ensure the realisation of a corporation’s desired goals and objectives. The control process is important since the internal and external factors of the business environment may follow different trends than what was expected before the planning of the strategy.

The strategic control process is the course of action for achieving what needs to be done and the way to take corrective measures in the event of failure or deviation from the path of progress so that performance remains on the proper path. Therefore, the evaluation is strategic, in constant and perpetual rather than periodical control rather than the other way around. P. Drucker characterises strategic control as an equilibrium between ends and means, output and efforts.

The strategic control process consists of three phases: Performance evaluation and Feedback. The first phase (the evaluation criteria) could be performed qualitatively and quantitatively. Quantitative criteria of evaluation focus on the post facto analysis of data, which forms the basis of the performance evaluation and the comparison of actuals with expecteds. Corrective measures are taken if there are large variations from the set objectives. They are not. Strategy qualitative evaluation and control is a real-time process comprising a series of qualitative performance monitoring and taking mid-way corrective action.

Steps to the Control Process

1.     Define Strategic Objectives

To control any process effectively, you need a clear understanding of your goals. Analyse relevant performance data to pinpoint areas for improvement or growth and set specific, measurable objectives that align with your organisation’s overall strategy. These objectives should serve as a roadmap to your vision, with clearly defined time frames and expected outcomes.

2.     Assign KPIs

Key Performance Indicators (KPIs) are essential for tracking progress toward your strategic objectives. Choose KPIs that accurately reflect your goals and provide a benchmark for performance. Our guide on crafting unique KPIs can help you tailor them to your strategic needs.

3.     Measure Progress

KPIs should be regularly monitored to ensure you’re on track. Use strategy dashboards to gain visibility into your team’s activities and consistently measure progress against your KPIs.

4.     Analyse Performance

Evaluate your organisation’s performance by looking for patterns and trends. Identify strengths, weaknesses, and opportunities for improvement. Use strategy reports to communicate these insights to top management and ensure alignment across the team.

5.     Analyse Deviations

Expect some deviations from your anticipated outcomes. Use these as opportunities to understand why they occurred. Identify whether these deviations are due to strategic flaws or external factors. Also, note any positive deviations to recognise what is working well and reinforce those strategies.

6.     Adapt Your Strategy

Adjust your objectives, KPIs, or overall strategy based on your analysis. Reallocate resources as needed and modify execution plans to address issues or capitalise on successes. This may also require revisiting your organisation’s strategic direction to ensure continued alignment with your goals.

Also Read: Importance of Strategic Management in 2024

Importance of Strategic Control

Control is strategic for the success of any organisation. Here’s why:

●      Measuring Progress

Strategic control helps measure organisational progress. Organisations can evaluate results after implementing a strategy and determine if they are on track towards their goals. The ongoing measurement allows timely actions to be rectified, and the organisation stays on target with its strategic direction.

●      Feedback For Future Actions

Continuous feedback is important in strategic management. Strategic control allows the recycling of essential actions to achieve organisational objectives. This feedback loop would provide great input to optimise and enhance future planning processes.

●      Rewards And Recognition Based On Performance

A performance-based reward system is important in strategic control. Recognising and rewarding employees during this implementation period will keep them engaged and guarantee that they want to participate in meeting the desired outcomes.

According to this, the main purpose of strategic control is to facilitate managers’ understanding of changes in circumstances and make appropriate strategic changes so that the organisation remains flexible and responds well to internal and external changes.

Types of Strategic Control Methods

There are four primary types of strategic control:

1.     Premise Control

Premise control ensures that your strategy’s foundational assumptions remain valid. These assumptions can be environmental (e.g., economic or political shifts) or industry-specific (e.g., new competitors). Verbalising these premises can quickly identify false assumptions and adjust your strategy accordingly. Focus on the assumptions most likely to change or significantly impact your strategy.

2.     Implementation Control

Implementation control monitors the step-by-step execution of your strategy, ensuring that each phase and activity is on track. This type of control checks if actions are occurring as planned and if resources are allocated properly. It continually reassesses the direction of your strategy to ensure its validity.

Implementation control has two subcategories:

• Monitoring Strategic Thrusts or Projects: Assess specific projects to drive the overall strategy. Early feedback helps determine if the strategy should continue as planned or if adjustments are needed. Focus on critical thrusts and meaningful measurements, such as timeframes and costs, to gauge progress and impact.
• Reviewing Milestones: Reassess the strategy at key points identified during planning. Milestones could be based on timeframes (e.g., end of a quarter) or significant actions (e.g., large budget allocations). Operational control systems like budgets and KPIs can also facilitate this process.

3.     Special Alert Control

Special alert control responds to unexpected events with a fast and thorough strategy assessment. These events can range from natural disasters to competitor acquisitions. Depending on the severity, a crisis team may be formed from the strategic planning and leadership teams, or a predetermined contingency plan may be activated.

4.     Strategic Surveillance Control

Strategic surveillance involves a broad information scan to identify any overlooked factors that could impact your strategy. This control type covers areas that premise and implementation controls might miss. Surveillance can include industry publications, social media mentions, industry trends, and conference activities.

Also Read: Top 12 Benefits of Strategic Management

Tools Used for This Purpose

●      Administrative Controls of Budgets

Budgets are necessary for short-term planning, control, and effective resource allocation. The classification of assets is based on time (yearly, quarterly, monthly), function (HR, marketing, R&D) and their flexibility at volumes (flexible) and volume (performance perfect). Budgetary control involves comparing actual performance with budgeted figures and correcting deviations.

●      Ratio Analysis

Using ratios, we can evaluate a firm’s efficiency, liquidity solvency, and profitability in a minimum of time. Therefore, by looking at the trends of the various key ratios, we can tell the extent of an organisation’s strategy and take appropriate measures.

●      Audits

Audits keep financial statements truthful and transparent. Employees conduct internal audits, and external agencies conduct external audits. Accountability and trust demand the existence of both types of audits.

●      Time-related Control Methods

Project timeline and resource management use the Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). These methods identify priorities and ensure that projects are well allocated to resources and on track.

Conclusion

A well-designed strategy is only effective if its objectives are met. Therefore, strategy formulation and implementation must be followed by continuous strategic evaluation and control. This ensures the strategy aligns with its original goals and timelines. Strategic control is an ongoing process influenced by internal and external factors and requires a solid adjustment system. Managers must also address potential barriers to effective evaluation and control.

Strategic control includes premise control, implementation control, strategic surveillance, and special alert control. Tools like budgets, ratio analysis, audits, and time-related techniques help organisations stay on track and adapt as needed. For further guidance, you can enrol on the Certificate Program in Strategic Management and Business Essentials powered by Hero Vired with INSEAD.