{"id":7261,"date":"2024-06-27T16:02:58","date_gmt":"2024-06-27T21:02:58","guid":{"rendered":"https:\/\/flevy.com\/blog\/?p=7261"},"modified":"2024-06-27T17:31:07","modified_gmt":"2024-06-27T22:31:07","slug":"strategic-management-done-right-set-up-a-strategic-management-office-smo","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/strategic-management-done-right-set-up-a-strategic-management-office-smo\/","title":{"rendered":"Strategic Management Done Right: Set up a Strategic Management Office (SMO)"},"content":{"rendered":"<p>Most organizations struggle with <a href=\"https:\/\/flevy.com\/business-toolkit\/strategy-execution\">Strategy execution<\/a>. In fact, numerous studies from top consulting firms (including McKinsey, Bain, BCG) and Harvard Business Review have shown approximately 70% of strategies fail due to poor execution. Furthermore, organizations only realize about 60% of their strategies&#8217; value.<\/p>\n<p>Having a <a href=\"https:\/\/flevy.com\/browse\/flevypro\/smo-series-strategic-management-office-smo-primer-3393\">Strategic Management Office<\/a>&#8211;i.e. SMO&#8211;may improve your chances of success. The SMO is the team responsible for managing the Corporate Strategy of the organization.<\/p>\n<p>The ultimate role to execute Strategy lies with the line managers and employees. However, without a core command and coordination office (i.e. the SMO), Strategy is either skipped from key processes or the processes are ineffectual across business units, causing poor Strategy execution.<\/p>\n<p>The high failure rate for Strategy execution can often be attributed to scattered and uncoordinated Strategy Management processes. Effective Strategy implementation necessitates synchronized efforts by different executive groups.<\/p>\n<p><img decoding=\"async\" class=\"alignright size-medium wp-image-7263\" src=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/pexels-photo-3862370-300x200.jpeg\" alt=\"\" width=\"300\" height=\"200\" srcset=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/pexels-photo-3862370-300x200.jpeg 300w, https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/pexels-photo-3862370.jpeg 500w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>The following describes how Strategic Management is performed at many organizations:<\/p>\n<ul>\n<li><a href=\"https:\/\/flevy.com\/browse\/stream\/strategy-development\">Strategy Development<\/a> is typically performed by coordinating a meeting at an off-site location for the top team, doing a <a href=\"https:\/\/flevy.com\/business-toolkit\/swot-analysis\">SWOT analysis<\/a> in view of the changing circumstances and the information gathered since the last yearly Strategy gathering. These planning sessions are useful yet lack a clear and pragmatic framework to share the updated Strategy across the board.<\/li>\n<li>Individual departments issue their own annual Strategic Plans, and their strategies are hardly shared by the Corporate Strategy with other units. There is hardly any alignment between the various units and corporate strategies. The departmental plans do not aid corporate or business unit strategic initiatives.<\/li>\n<li>The Finance team\u2019s annual budgeting process at year end is typically unaffected by the Strategic Plan; as most firms do not link their financial budgets to strategic priorities.<\/li>\n<li>Likewise, the <a href=\"https:\/\/flevy.com\/business-toolkit\/human-resources-hr\">Human Resources<\/a> unit conducts annual performance reviews for all employees at the year end, but most of the managers and front-line people do not have rewards tied to successful Strategy implementation.<\/li>\n<li>Senior executives meet at least once a month during a year to review progress and initiate actions, but always get engaged in tactical issues and fire-fighting. Many leadership teams report spending less than an hour per month discussing their units&#8217; Strategies.<\/li>\n<\/ul>\n<p><em>Does this sound familiar?<\/em><\/p>\n<p>The SMO provides the coordination and connection among these fragmented processes, as outlined above. More specifically, the SMO should manage 9 cross-functional processes, depicted below.<\/p>\n<p><a href=\"https:\/\/flevy.com\/browse\/flevypro\/smo-series-strategic-management-office-smo-primer-3393\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-7262\" src=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/SMO_processes.png\" alt=\"\" width=\"1000\" height=\"752\" srcset=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/SMO_processes.png 1000w, https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/SMO_processes-300x226.png 300w, https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/SMO_processes-768x578.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/a><\/p>\n<p>These 9 processes are categorized into 3 groups.<\/p>\n<h2>1. Core Processes<\/h2>\n<p>All the Core Processes must be run by the SMO.<\/p>\n<ol>\n<li><strong>Scorecard Management<\/strong> \u2013 Design and report on the <a href=\"https:\/\/flevy.com\/business-toolkit\/balanced-scorecard-bsc\">Balanced Scorecard (BSC)<\/a> measures. <a href=\"https:\/\/flevy.com\/business-toolkit\/balanced-scorecard-bsc\">For more resources on BSC, refer to these best practice documents from Flevy (here)<\/a>.<\/li>\n<li><strong>Organization Alignment<\/strong> \u2013 Ensure all business and support units are aligned with the strategy.<\/li>\n<li><strong>Strategy Reviews<\/strong> \u2013 Shape the agenda for management strategy review and learning meetings.<\/li>\n<\/ol>\n<h2>2. Desirable SMO Processes<\/h2>\n<p>These processes are performed by existing organizational units. These processes should eventually be incorporated into a central organization with strategic focus.<\/p>\n<ol start=\"4\">\n<li><a href=\"https:\/\/flevy.com\/strategic-planning\"><strong>Strategic Planning<\/strong><\/a> \u2013 Help the CEO and executive team formulate and adapt the strategy. <a href=\"https:\/\/flevy.com\/strategic-planning\">For an in-depth discussion on Strategic Planning, check out our article (here)<\/a>.<\/li>\n<li><strong>Strategy Communication<\/strong> \u2013 Communicate and educate employees about the strategy.<\/li>\n<li><strong>Initiative Management<\/strong> \u2013 Identify and oversee management of strategic initiatives.<\/li>\n<\/ol>\n<h2>3. Integrative Processes<\/h2>\n<p>The integrative processes fall under the natural domain of other functions where the SMO plays a coordinating role, ensuring that the processes are closely incorporated with the enterprise Strategy.<\/p>\n<ol start=\"7\">\n<li><strong>Planning\/Budgeting<\/strong> \u2013 Link financial, human resources, information technology, and marketing to strategy.<\/li>\n<li><strong>Workforce Alignment<\/strong> \u2013 Ensure all employee\u2019s goals, incentives and development plans link to strategy.<\/li>\n<li><strong>Best Practice Sharing<\/strong> \u2013 Facilitate a process to identify and share best practices.<\/li>\n<\/ol>\n<p>Interested in setting up a <a href=\"https:\/\/flevy.com\/pro\/library\/tag=634\">Strategic Management Office (SMO)<\/a>? We have a series of frameworks on SMO:<\/p>\n<ul>\n<li><a href=\"https:\/\/flevy.com\/topic\/value-creation\">Strategic Management Office (SMO) Primer<\/a><\/li>\n<li><a href=\"https:\/\/flevy.com\/browse\/flevypro\/smo-series-strategic-management-office-smo-implementation-3395\">Strategic Management Office (SMO) Implementation<\/a><\/li>\n<li><a href=\"https:\/\/flevy.com\/browse\/flevypro\/smo-series-strategy-management-processes-3394\">Strategic Management Office (SMO): Strategy Management Processes<\/a><\/li>\n<\/ul>\n<p>In establishing an SMO, organizations should recognize the transformative potential this structure brings. Beyond merely coordinating strategic efforts, the SMO acts as a catalyst for embedding a strategic mindset across all levels of the organization.<\/p>\n<p>This alignment ensures that every department&#8217;s initiatives are not only synchronized with the overall Corporate Strategy, but also dynamically responsive to market changes and internal performance insights. As the business environment grows increasingly complex and competitive, the ability of the SMO to provide a cohesive, agile strategic framework becomes a critical differentiator for sustained success.<\/p>\n<p>Moreover, the strategic oversight provided by the SMO fosters a <a href=\"https:\/\/flevy.com\/browse\/flevypro\/continuous-process-improvement-and-innovation-cpi2-3937\">culture of continuous improvement and innovation<\/a>. By systematically reviewing performance metrics and facilitating cross-functional collaboration, the SMO encourages teams to consistently seek out and implement new ideas. This proactive stance ensures the organization remains competitive and forward-thinking in a rapidly evolving market landscape.<\/p>\n<p>Further, by centralizing strategy management, the SMO enables a systematic approach to identifying and scaling best practices across the organization, thereby enhancing operational efficiencies and <a href=\"https:\/\/flevy.com\/topic\/value-creation\">driving value creation<\/a>. This centralization also supports better resource allocation, ensuring that strategic priorities receive the necessary attention and investment.<\/p>\n<p>In turn, this comprehensive approach to strategy execution not only mitigates risks associated with fragmented processes, but also enhances the organization&#8217;s capacity to achieve its long-term objectives and adapt to emerging challenges.<\/p>\n<h2>Do You Find Value in This Framework?<\/h2>\n<p>You can download in-depth presentations on this and hundreds of similar business frameworks from the\u00a0<a href=\"https:\/\/flevy.com\/pro\/library\">FlevyPro Library<\/a>.\u00a0<a href=\"https:\/\/flevy.com\/pro\">FlevyPro<\/a>\u00a0is trusted and utilized by 1000s of management consultants and corporate executives.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most organizations struggle with Strategy execution. In fact, numerous studies from top consulting firms (including McKinsey, Bain, BCG) and Harvard Business Review have shown approximately 70% of strategies fail due to poor execution. Furthermore, organizations only realize about 60% of their strategies&#8217; value. Having a Strategic Management Office&#8211;i.e. SMO&#8211;may improve your chances of success. The&hellip;&nbsp;<a href=\"https:\/\/flevy.com\/blog\/strategic-management-done-right-set-up-a-strategic-management-office-smo\/\" rel=\"bookmark\"><span class=\"screen-reader-text\">Strategic Management Done Right: Set up a Strategic Management Office (SMO)<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":11936,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[408,81],"tags":[76,1281,28,1280,77,391],"class_list":["post-7261","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-management-leadership","category-strategy","tag-corporate-strategy","tag-smo","tag-strategic-management","tag-strategic-management-office","tag-strategy-development","tag-strategy-execution"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/7261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=7261"}],"version-history":[{"count":5,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/7261\/revisions"}],"predecessor-version":[{"id":14049,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/7261\/revisions\/14049"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/11936"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=7261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=7261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=7261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}