Welcome to the Introduction to Corporate Strategy lesson. In this video, we're going to look more closely at the role of corporate strategy in an organization. I'll also take you through the main elements of corporate strategy and briefly touch on the concept of Integrated Strategic Planning. Corporate strategy is the traditional method that businesses, charities, and other similar entities use to identify, plan, and achieve their long term goals and objectives. Corporate strategy often includes a lot of different plans and strategies. Sometimes, these strategies are standalone strategies, they might be large long term strategies that are broken down into smaller milestones. Other times, there might be several interdependent elements between different strategies. Let's briefly look at a few of the most common components of a corporate strategy. Risk management, financial strategy, people and culture, and customer acquisition and sales. These are all part of an organization's strategic plan. Now, there's a level of risk with every business decision that is made or equally not made. While there are many different risks that businesses face, three of the key types of risks that we often see are; Opportunity risk, this is choosing one option over another option. For instance, deciding to invest in a potentially valuable but expensive IT project that would improve your customer data versus not doing so. Doing nothing would save money in the short term, but you'd miss out on collecting rich data on your customers. Uncertainty risk. Uncertain, unknown, or unplanned events, or actions. That could be something like a shift in the economy resulting in a major customer unexpectedly going under. And hazard risk, dangerous materials or actions are all included in hazard risks. Even psychological hazards like bullying is a type of hazard risk. A robust risk management framework enables business leaders to clearly articulate the risk appetite of the entity, and in turn, the appropriate level of risk employees can take when making delegated decisions. A risk management strategy will include a framework for identifying and mitigating known risks. It will also provide an overview on how to manage potential and unknown risks that may arise in the future. No matter the size of the business or entity, a well thought out and validated financial strategy is important. At a minimum, a corporate financial strategy will usually include an historic review of the entity's financial position, balance sheet, income statement and cash flow statement, as well as forward projections. Let's have a look at these in a little more detail. A balance sheet provides an overview of your business's assets, liabilities, and net position. Essentially, it provides an indication of its financial health at a given point in time. Next, the income statement shows the organization's revenue and expenses for a particular period. It also provides a net financial position. A cash flow statement provides an overview of how cash is flowing in and out of the business, and how the company is able to make cash commitments such as bills. And this is often done over a month time frame. Finally, financial projections estimate the future performance and position of a company. This could include a budget, but may also include asset forecasts. A financial strategy may also articulate the entity's appetite for internal debt, bad debtors and creditors, investment considerations, and horizon growth. Financial strategies are a very large piece of work. A robust people and culture strategy is critical to business success. It's no use having an amazing product or service if you don't have the right people and culture to deliver it. At a minimum, a people and culture strategy will include a road map to a desired workplace culture, a workforce planning strategy, productivity strategy, and a succession and legacy plan. All of these elements work together to help you build a strong and effective workplace culture in the short, medium, and long term. And remember, you need a great team to generate great ideas, and build great products or services. So let's have a look at these in a little more detail. A workplace culture plan will usually provide an overview of where the entity's culture is relative to where you'd like it to be. For example, does the company need to move from a startup culture to a growth culture? Workforce planning is all about making sure you have the right people for the current and future workforce demand. It will provide guidance on when you need to hire certain people or let other functional categories go. Next, productivity is about improving the performance of an organization's people, systems, and motivators. For example, do you need to provide training? Is remuneration at the right level to maximize productivity? And what work systems can improve workforce productivity and efficiency? Finally, but critically to a company's people and culture strategy is succession and legacy. At a minimum, an entity should have a strategic framework in place for replacing C-suite, board, and other critical positions. Some entities may wish to consider strategies for managing phased retirement of seasoned executives, or strategies for managing founders who may wish to protect their legacy. Now, let's shift our focus to the strategy that an organization may have in place to acquire new customers, a critical component of many businesses. Customer acquisition strategies have a strong alignment to marketing and communications. But ultimately, customer acquisition is about building a sales base. Each sector, and indeed each business, will have vastly different customer acquisition and sales strategies. Some may wish to increase website traffic, others foot traffic, others a strategy of growth through brand recognition and community identity. No matter what your business is, your strategy should clearly set a road map for increasing customer volume and converting digital or foot traffic to sales leads. This strategy ensures a meaningful structured and sustainable growth plan, rather than a haphazard attempt. I'd like to finish off this lesson by touching on integrated strategic planning. Integrated strategic planning is a methodology of strategic planning that suggests each of the above plans should be developed in a collaborative manner, with each document being live and not simply updated on an annual basis. This is also known as being signed off by the executives and stuffed in the top drawer of your desk. Integrated strategic planning also recommends the planning process be outwards focused, and to include stakeholders, partners, and customers in the planning process. It's a great tool kit for ensuring your corporate strategy is something your customers, stakeholders, and employees will work with. It provides ownership through involvement and allows the drafters to validate assumptions early on in that strategic process. I hope this has now given you an overview of corporate strategy. You should now be able to understand the role of corporate strategy in an organization, and identify the main components that make up a corporate strategy. Hopefully, you are also starting to see that many of these elements aren't just standalone strategies or plans. They should be living iterative processes to be really effective within an organization. This is one of the reasons why design thinking can be a really effective tool in a business setting because it, too, is an intuitive and people-driven process.
