What is strategic management? A definitive overview

Determining how to best use your company's resources and people is a vital part of management, whether you’re in product management, finance, or human resources.

Strategic management is a philosophy that involves implementing precise plans with the intent of helping a company formulate its goals and business objectives. Every decision should be aligned with that overarching plan.

This practice happens at an organizational level and on a smaller scale, such as within a team or department.

Strategic management concerns how to properly use a company's resources to achieve its goals.

This approach involves several components, including:

• Identifying business challenges

• Determining high-level goals

• Tweaking the established strategy to enhance your team's performance

While there are different approaches to strategic management, it involves some distinguishing elements. Strategic management is meant to be fluid. Every company and team leader should adapt their processes and procedures accordingly, based on what best suits the needs of the business.

Strategic management vs strategy

Strategy is typically associated with a business's long-term goals and requires some level of executive involvement.

Strategic management can be done at all levels of an organization, from individual small teams to executive rooms.

Strategic management vs strategic planning

A business uses strategic planning to steer its direction. It can be part of a company's vision or mission statement.

Strategic management can be part of every plan a department executes.

Strategic management vs operational management

Operational management is about setting specific procedures, including targeted outcomes for short-term goals and projects.

Strategic management is a philosophy that is part of current and future destinations.

Strategic management vs tactical planning

Much like operational management, tactical planning can be used for day-to-day challenges every business faces, including managing people and outlining expenses.

Strategic management involves overall planning, including defining and implementing procedures that include general guiding principles.

There are five types of strategic management, each with their own approach:

• Linear strategic management

• Adaptive strategic management

• Interpretive strategic management

• Expressive strategic management

• Transcendent strategic management

Each type features its own unique "flavor." Linear strategic management is the most common and conventional, and transcendent is the highest level of strategic management.

If you're working to develop your strategic management style, don't feel compelled to stick with one style or formula. Many successful leaders blend elements of all five styles to create something unique that works for them and defines their personal management style.

At its most basic level, strategic management helps a company achieve its goals. However, those willing to invest time and resources into this philosophy will reap a host of benefits.

Notably, by employing strategic management, a company might be more likely to reach its goals. Through outlining clear, dynamic processes, project leaders, company stakeholders, and individual team members can easily see the organization's goals and how they can be achieved. This gives everyone a North Star to refer to and work toward.

Including strategic management in your processes can lead to more sustainable growth because it enables more efficient organizational performance. This helps any company, large or small, grow at an enhanced pace.

Strategic management can also improve communication company-wide. By using strategic management, everyone in your company will understand they are working toward a common goal. This improves camaraderie and can lead to better communication and a more cohesive organization.

The business landscape is constantly changing. With the advent of new technological tools and advances and the increase of remote and hybrid work, finding ways to keep your company competitive is more important than ever. By outlining clear plans and processes, a company can not only work toward its goals in a more streamlined way but also identify areas for operational improvement and enhancement.

Before you start outlining these goals, take time to figure out how people in your organization work best. Do some research in your team about various work styles and what motivates members to work toward goals.

Incorporate your findings into your strategic management strategy. This could include anything from regular check-ins with executives and company stakeholders to including special incentives in meetings.

A few issues could occur if you don't invest in strategic management. At the highest level, your company could suffer from a lack of direction and purpose. If your employees don't have goals or specific objectives to work toward, they could flounder, ultimately turning in inconsistent performances and struggling with a lack of motivation.

Additionally, your company could fall behind competitors if you don't involve strategic management in your daily processes. Strategic management helps you differentiate yourself from competitors and stay aware of changes in the market.

Finally, if you don't have strategic management in your business processes, you could suffer from poor resource management. A large part of strategic management is allocating resources properly and planning for how to make the biggest impact with what you already have in-house. 

Without the ability to see what is being used and how, you could miss opportunities and waste finances.

Although every company should identify for themselves how to best apply strategic management to their processes, there are five general stages of strategic management.

Here are five phases you can use to properly plan and execute key initiatives.

1. Goal-setting

Establishing clear, realistic goals can help you and your team members better understand what the company hopes to achieve and why those goals are so important.

Goals should be set at the start of every project, with project leaders and company stakeholders working side by side to identify short- and long-term goals.

2. Analysis

Performing analysis, including market research and other types of data gathering, is essential to understanding how to remain competitive in a tough landscape.

Employ any analytical tools that make sense for your organization during this phase and understand that it can take time to perform in-depth analysis.

3. Strategy formulation

After you review the numbers that result from your analysis, you can form an overall company strategy.

During the strategy formulation phase, you and your team members can identify how resources will be used, who will perform certain tasks, and whether specific teams are needed to accomplish various goals.

4. Strategy implementation

Strategy implementation, also known as the execution phase, is when your strategy is taken from plan to implementation.

Execution isn't always a linear process. While you and your team should be tracking toward established goals, depending on the nature of your vision and the steps required to accomplish each step, full implementation and execution can take a long time, even years.

5. Evaluation and control

After your goals have been set and achieved, it's time to review what went well and what didn't. During the evaluation and control phase, your company can decide if certain strategies should be phased out or whether what you have in place is ideal for your organization.

Almost every career can include some aspect of strategic management, but those who study business are most likely to use this approach in their day-to-day work life.

Middle and top managers can benefit from learning about strategic management and can generally apply what they've learned to most facets of their careers, as can anyone who goes into the finance sector.

Start-ups and small businesses are often still learning how to define themselves in business and with employees. They can benefit from employing people with experience in strategic management.

If you want to study strategic management, most major colleges offer a degree in this field.

Knowing the basics of strategic management and understanding how to apply this line of thinking to your work can help you become a motivating, encouraging leader as well as an employee capable of getting great results.

Strategic management can help almost any company reach its internal and external goals. However, it can take trial and error to figure out what works best for you and what motivates your employees to consistently work towards those goals.

Don't get discouraged; stay curious. The path to growth is through continuous discovery and a willingness to try new approaches.