How To Evaluate Strategies in 5 Steps
Updated March 10, 2023
Periodically monitoring the effectiveness of a corporate strategy can ensure the strategy functions as it's intended, allow you to improve the strategy and may improve the quality of future strategies. You can check how well a strategy functions by performing a strategic evaluation. Understanding how to evaluate strategies and the main criteria of an evaluation may help you when reviewing strategies or policies at your workplace. In this article, we discuss the main criteria and steps of a strategic evaluation.
What is strategic evaluation?
A strategic evaluation is an act of reviewing a particular corporate strategy to ensure that it's functioning correctly. During a strategic evaluation, an assigned evaluator reviews data about the specific strategy and compares it to the company's predicted amount of improvement. Evaluations allow you to check the effectiveness of any strategies your company implements and may help you address any potential challenges that you find.
How to evaluate strategies
These are the steps you can use to evaluate strategies for your organization:
1. Establish standards
Before you evaluate a strategy or policy, try to create a set of standards that you can use to measure the progress and goals of the strategy. These standards are goals or milestones that you want to reach that you can use to track a strategy's success. For example, if you want your new strategy to improve the number of people who sign up for your mailing list, you can set a 25% increase of new mailing list requests as an evaluation standard.
2. Measure performance
Once you're ready to evaluate a policy, you can gather information about its performance. This information can contain both quantitative and qualitative data that you can obtain through a variety of ways, such as surveys, interviews and analytics software. Consider gathering data about multiple variables of performance, such as cost, the popularity of the strategy, amount of time the policy saves or any increase in sales.
3. Analyze results
After you obtain the data about how well a strategy functioned during a set period of time, you can compare it to the standards you've already set. You can also look at other sets of data to see if it fulfills other criteria, such as how risky the strategy is or how many resources it needs. If you discover that there are any categories where the strategy doesn't match or exceed your goals, you can address these challenges by making slight adjustments.
Related: SWOT Analysis Guide (With Examples)
4. Make adjustments
You can make modifications to your strategy that may increase the possibility of it achieving the goals you set. Consider brainstorming potential adjustments to the policy that can help increase its effectiveness and create a plan for how to implement these changes. You can use the data from previous steps to give you insights about solutions for any potential challenges.
5. Set goals
After you finish your evaluation and make any necessary adjustments, you can set goals for the next evaluation. Use your gathered data to make a prediction about how well the strategy may perform. Then schedule another evaluation so that you can continually track the strategy's progress.
Why is it important to evaluate strategies?
Evaluating strategies is important because it allows you to gain information about your new strategies. This allows you to know if a policy works as intended, see opportunities to improve that strategy and learn about any modification it may need. Evaluation can also help you notice points of the strategy that may produce challenges ahead of time and adjust or replace the policy before any large unexpected circumstances occur.
Criteria for evaluating strategies
These are some common criteria that you can use when evaluating strategies:
Internal consistency is the strategy's ability to work with other strategies and policies at the company. You can determine if a strategy meets this standard by comparing it to other existing policies. A strategy is internally consistent if it doesn't contradict any existing policies and performs a unique function that helps further the organization's goals.
Consistency with the environment
Environmental consistency relates to how well a policy interacts with the environment around it. An organization's environment is any outside influence that a company interacts with and can include customer opinion, other organizations and new technologies. For example, if you're evaluating a marketing strategy for selling hats, you can look at the latest fashion trends and what your target audience usually wears to determine consistency with the environment.
Appropriateness within your available resources
Resources are the things that an organization has that help it achieve its goals. Common resources include money, people with appropriate expertise, physical facilities and connections. When evaluating a strategy, you can check to make sure that your company has the proper resources to fully implement it. For example, if your organization decides to hire more security guards, you may review your finances to ensure that you have enough money for that policy.
Degree of risk
Strategies often contain at least a small amount of risk. When evaluating a strategy, you can determine how risky it is compared to how much your organization may benefit from it. If a policy has a high chance for a large reward, you may consider a higher degree of risk than a strategy with a lower rate of gain.
Appropriate time horizon
A time horizon is the period of time between the implementation of a strategy and your evaluation. You want to set a time horizon that allows you to see how well a strategy functions with enough time to fix any challenges that occur during implementation. If a time horizon is too short or too long, consider changing the rate at which you evaluate that strategy.
Workability is a strategy's ability to complete the function that it's meant to perform. For example, if you implement a recycling strategy meant to reduce waste at your organization by 30%, you can check to see how well it helps your company reduce waste. You can evaluate workability by looking at performance data, interviewing people who work with the strategy and handing out surveys.
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