Strategic Control

Two fundamental perspectives -strategic and operational control-provide the basis for designing strategy control systems. Strategic control systems are intended to steer the company toward its long term strategic direction.

Four types of strategic controls

Premise Controls
Implementation controls
Strategic surveillance
Special alerts

Each is designed to meet the top management's needs to track the strategy as its being implemented,detect underlying problems and make necessary adjustments. These strategic controls are linked to the environmental assumptions and key operating requirements necessary for successful strategy implementation.

Operational control systems identify the performance standards associated with allocation and use of company's financial,physical and human resources in pursuit of the strategy. Budgets,schedules and key success factors are the primary means of operational control.

Operational control systems require systematic evaluation of performance against predetermined standards or targets. A critical concern here is identification and evaluation of performance deviations, with careful attention paid to determining the underlying reasons and strategic implication for observed deviations before management reacts. Some company use trigger points and contingency plans in this process.

The reward system is a key ingredient in motivating managers to emphasize execution and control in steering the business toward strategic success. Companies should emphasize incentive systems that ensure adequate attention to strategic thrusts. This usually requires a concerted effort to emphasizing short -term measures of performance. Short and long term performance considerations must be integrated to ensure performance consistent with the company's strategy and to provide a basis for monitoring future short-run performance against objectives incrementally linked to long term strategic outcomes.

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