Have you ever wondered what a strategic audit could do for your business? Would it be useful for your company and if so, how would you do it? Most importantly, what gold could you get out of a strategic audit, regarding results that will make a positive, transformational difference to your company?
Answering these questions is the topic of this article. We begin with the traditional definition of what a strategic audit is. Next, we introduce you to a strategic audit method that is unusually effective in creating meaningful, even transformational results for your employees and bottom line.
The basis for the effectiveness of the Top-Notch CEO strategic audit is evaluating eight critical aspects of your business. Furthermore, it takes into account the perspectives of not only executives and board members but also of staff members across the entire company.
Meet the Fresh Eyes Assessment™.
Let’s begin with this question:
What is a Strategic Audit: Let's Start with a Definition
The Oxford College of Marketing defines a strategic audit this way:
“A strategic audit assesses your:
- Current business strategy
- How suitable it is for your business
- Whether your company is in position to execute the strategy”
Of course, we agree. The bottom line is that a strategic audit, when done right, will unearth new opportunities as well as hidden challenges. These opportunities and challenges are tied to business strategy, in the narrower and wider sense of the word.
In our experience, it is insufficient to audit businesses only with respect to strategy. Using a metaphor: Strategy is like a plan to drive to a given destination, say New York City. The plan could not be developed without knowing where you are currently. You must also put your finger on the pulse what is currently happening in your entire organization. That includes team dynamics, operational routines and systems, beliefs and company culture. It includes talking to staff members who may be holding back new opportunities or who are are untapped resources.
Whether you know your company has challenges that are holding back growth or its running well, the Fresh Eyes Assessment™ strategic audit, can reveal new paths to profit and efficiency. It takes courage, a willingness to listen and an innovative spirit to step back from your company and look not only at what is working well but also at it, warts and all.
What is a Strategic Audit: How is our Fresh Eyes Assessment™ Done?
A strategic audit is about asking the right questions, evaluating the current strategy (and status quo), identifying strategic risks, opportunities and challenges, and assessing changing resource needs.
To be useful the strategic audit’s findings must lead to implementation. For implementation to succeed, you need to develop a plan to which you are committed. Establishing meaningful metrics and accountability for implementation are crucial. Otherwise, new action items based on the findings of the strategic audit are unlikely to be implemented.
- The strategic audit must be done by an external person or team, with fresh eyes. No one inside of your business can have “fresh eyes”. Even you are too close to your own business and views of it. Your team members may or may not see which new opportunities could be taken advantage of. They also may be not verbalizing what they see, think or feel. Reasons could include: They don’t think their input is appreciated by their manager, they are apathetic, or perhaps they think that you might be opposed to or offended by their views. Not knowing these views can hurt your business.
- The strategic audit must involve not only the executives and board members, but it is important to include team members from all departments, including those working in the “trenches”. It is impossible to get an accurate, complete picture of your current status quo without this requirement being met. It bears repeating: If you don’t know your status quo, it is like starting a road trip to a given destination without knowing from which location you are starting off.
What is a Strategic Audit: Which Areas Need to be Assessed?
The strategic audit has to systematically assess all areas of your business:
- What is your vision and mission for the business? Can anyone remember them with what level of clarity? Is the understanding of vision and mission consistent throughout the organization? Is there a plan for making the business sustainable for the long run? If the founder is still around, has he/she the intention to create the company as a lasting legacy?
- What are the people dynamics? What is the culture? What are the beliefs driving daily activities? What levels of synergy exist? Where does conflict arise and why? How well does leadership work throughout all levels of the company?
- Is the work environment supportive of the team reaching its goals?
- What do the financial results look like? What can we learn from those data?
- How well do the operations of the company perform? What are the methodologies? What is working well and what could be optimized or rethought?
- What are the practices and results of the sales and marketing team? E.g.: What market niches are being pursued? Do you have a marketing plan and could it use revision? How successful are the sales? Is every potential customer viewed as equally important? What is the process and cost of customer acquisition?
- Which systems is the company using? Which areas could use systems it doesn’t have currently or which systems have become inadequate?
- What kind of training is the company offering now? Are staff members yearning for training they are not getting? Are there signs that lack of training costs the company money, even major losses in money and talent?
What is a Strategic Audit: What is the Appropriate Frequency?
Performing a strategic audit on a regular basis is crucial to the ultimate success of your business.
External factors such as market conditions change. Internal factors change, too, for example:
- The company sets new ambitious growth goals.
- The company reaches hyper growth. It’s time to beef up the foundation to make sure the aggressive growth is sustainable instead of leading to a collapse later on.
- The dependency on key people creates bottle necks and uncertainty about how to replace them in the future.
- The question arises how key people can go on vacation without being in touch constantly.
- The founder/s want/s to exit, either through sale to a third party, family members, the company’s employees or via absentee ownership.
- The need for succession planning is becoming more obvious.
These examples are just some of the common situations that cause company owners/ executives to do a strategic audit – preferably one that leads to an actionable plan that is supported by the executives and the company’s team as a whole.
What is a Strategic Audit: The Ultimate Benefits
What are the benefits of conducting a strategic audit such as the Fresh Eyes Assessment™ discussed here? Ultimately, the benefits are that you it reach and often even exceed your goals. You get there with a plan that you and your team are committed to. As a result, you are managing to achieve this new level of success with considerably less stress than what would normally be the case.
Consider this: If you are not doing a Fresh Eyes Assessment™, aka strategic audit regularly, such as at major transition times, or every two years, it is highly likely that you are leaving money on the table. Your people are most certainly not as productive as they could be and you may be working too hard for the success you do have.
What is a Strategic Audit: What to Do Next?
Dr. Stephie, Geek Guru