The Strategic Imperative: Turning Strategic Risk Into Opportunities
A strategic imperative is a business goal or objective that has the highest priority. For some companies, it could be building their brand; for others it could be expanding internationally. Or it could be a concerted move to digitise the business and leverage on online platforms within a certain timeframe. All these are means of growing or sustaining the business, or making it more competitive. Brand-building will heighten a firm’s profile, leading to an increase in its value. Domestic markets may be limited, hence the need to go abroad. To do all this, the firm will need to streamline or upgrade its technology and expand its digital capabilities.
Strategic imperatives may be known as other terms as well, such as business imperatives or priorities, or strategic priorities. But while there may be conversations about the priorities of the business, strategic priorities are seldom talked about. Organisations which want to use strategic imperatives for sustainability, competitiveness or growth, need to firstly consider developing a strategic imperatives framework. Using this framework, the idea of strategic imperatives may be communicated to staff. In the process of this communication, the firm may start to determine if it has what it takes to achieve the imperatives it has identified.
Communication is crucial to strategic imperatives because it bridges the gap between planning and doing. Staff need to know what the organisation’s strategy is, before putting it into operation. The board and senior management need to be as clear and concise about it at the initial stage so that communicating subsequent strategies will be easier. But experts recommend focusing on what should be achieved, and leaving the actual achieving of these objectives, to the staff concerned – rather than imposing strict guidelines. A deeper sense of buy-in and engagement will result if staff find solutions themselves, instead of having rules and regulations imposed on them.
However, all actions should be measurable so that the extent of their effectiveness and alignment with the strategy or objective, can be determined. Strategic planning for business helps the firm manage current and future operations better; a strategic imperative is a business goal but because it is “imperative” it needs to be accomplished first, ahead of other objectives. Strategic imperatives are not projects but they may be scheduled with beginning and completion dates. For instance, if the organisation determines that identification of second-line leaders is a strategic imperative, it may set a certain period for this to happen.
Someone also needs to be accountable for achieving a strategic imperative. This is usually laid on the doorstep of senior management but the firm may decide on shared responsibility, and allocate it to more than one department or subsidiary to work on. When a strategic imperative is identified, its attainment goes to the top of everyone’s list. In the course of working towards this, certain risks that may be keeping staff from realising their objectives, may come to light. While risk is usually viewed negatively, there are some which may actually give rise to new opportunities for the firm. For instance, in expanding its digital capabilities, it may be able to reach more niche market segments for its products.
It would not have realised this if one of its strategic imperatives had not been the scaled-up use of technology. A firm that puts the attainment of its strategic imperatives first is also indicating where its priorities lie. While it focuses on what it sees as its highest priority an organisational strategy understood by all and a company-wide risk culture are developing in tandem. Staff will follow clearly-defined, systematic processes and procedures that have been established, to reach their objectives. Additionally, a risk culture that everyone in the firm supports and understands, will further improve staff performance.
Strategic imperatives and strategic risk management are complementary. Setting up strategic imperatives is one of the first steps an organisation can take when establishing its strategic direction. Strategic risk management will develop naturally from there. A term has been coined for companies which have successfully managed risk while protecting opportunities as they explore and exploit new ones: ambidextrous organisations. These are firms which have in all probability also been able to cultivate a viable, supportive risk culture which enables agility, flexibility and adaptability to a dynamic environment.
As businesses move from a pandemic to an endemic stage in the New Normal, this ability to accept and embrace change quickly looks set to become a strategic global imperative; being change-ready has already proved to be good for organisational resilience. Over the last few decades, the global economy has experienced disruption every few years. Ambidextrous organisations have been able not only to see the disruption approaching, but to turn it to their advantage as well. This foresight and the effective risk management approaches applied have resulted in the recognition and seizing of opportunities which would have otherwise slipped under the radar.
Considering the speed at which situations can change and affect businesses today, developing the capability to recognise such opportunities has become a prerequisite for organisations wanting to maintain their competitiveness and sustainability. But for it to happen requires a parallel change in mindset. Establishing the firm’s strategic imperatives right from the outset will be the first step towards aligning the firm’s strategy with its action plan. It will also be an indication of how the firm intends to reward its shareholders, gain the confidence of its stakeholders, and increase the value of the organisation.