What is a strategic audit?
A strategic audit is an objective review and evaluation of a strategic plan (or set of plans) that have been put into motion by senior leaders and key stakeholders designed to meet an organization’s future objective. The audit ensures that strategic plans are pinpointed, remain relevant, and continue to create value for the organization.
How do you audit a strategic plan?
When your team is ready to audit your organization’s strategic plan, here are 10 areas of the organization you should consider:
1) Core Competencies
Review the unique mix of qualities that sets your organization apart from the competition, looking at the categories of cost, service, quality, and flexibility.
Examine anything that supports the organization’s objectives, including cash, capital, buildings, employee skills, brand, goodwill, and more.
3) Value Chain
Study all the activities that help or hurt the organization’s ability to achieve its objectives, including logistics, marketing, operations, human resources, procurement, infrastructure improvements, and more.
Investigate how well the organization is taking advantage of its core competencies, resources, and value chain to meet its objectives, measured against past performance, goals, or competitors.
Study the risks and returns of all business units and investments controlled by the organization to determine those that are strong and those that are underperforming. A portfolio audit helps to ensure that each product or service is meeting customer needs and expectations. All products and services have a lifecycle; every enterprise must detect which products are reaching maturity and need to be refreshed or retired. Additionally, organizations need to be assertive in their development process and make preparations to introduce new, game-changing products. This will keep competitors at bay while delighting customers with needed solutions that add value. The portfolio review is all about growing and winning in the marketplace.
6) Execution Capability
Many strategic audits have discovered that to effectively support strategic plans, leaders need to monitor the level of ownership for new assumptions and beliefs as well as track investments, achieve milestones, and create corresponding KPIs to measure progress and maintain accountability. All too often, good strategies fail to deliver promised results, not because they lack good analytics and bold and creative ideas but because they lack conviction and the will to effectively implement their plans. Strategic audits need to assess the level of support and passion for the strategic intentions of the enterprise.
Evaluate the organization’s strengths, weaknesses, opportunities, and threats. A SWOT audit in strategic management gives leaders insights into how to counteract threats and seize opportunities.
8) Strategic Narrative
Assess how well leaders are communicating the new direction, priorities, and desired goals and outcomes the organization is pursuing. In order to get traction with a strategy, everyone needs to understand what the strategic plan is and how they fit and why they matter in relation to it. A good audit will evaluate the quality and quantity of town-hall meetings, the content shared on the firm’s intranet, and the videos and chat messages on the organization’s messaging platforms. Finally, team leaders need to give team members an opportunity to absorb and engage with changes associated with a new or refreshed strategy. Focus groups and surveys can help leaders determine the level of understanding and commitment to the new strategy.
9) Quality of the Strategy
Strategy auditors must determine if the strategy is based on credible and privileged insights using the sources of data above. If you want to achieve an edge over existing rivals, new entrants, or substitutes in the marketplace, you will need to audit the quality of data, research, and your level of inquiry into current and potential future customer segments, competitors and suppliers. Our experience suggests that businesses that go out of their way to look at the big picture, detect new patterns and trends, and experience the world from the customer’s point of view will excel in the market.
10) Quality of the Action Plan
Without clear roles, responsibilities, timelines, and measures of success, the strategy is only an idea. Auditors have a special responsibility to determine the clarity, specificity, creativity, and flexibility of the strategic action plan. This responsibility is based on feedback received through a results forum where progress on the execution of the action plan is reviewed.