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May 1, 2020 41 min read

ITIL ITIL4 Practice Guides

Strategy management: ITIL 4 Practice Guide

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This document provides practical guidance for the strategy management practice.

Table of Contents

1. About this document 4. Organizations and people 7. Important reminder

2. General information 5. Information and technology 8. Acknowledgements

3. Value Streams and processes 6. Partners and suppliers

1. About this document

It is split into five main sections, covering:

general information about the practice

the practice’s processes and activities and their roles in the service value chain

the organizations and people involved in the practice

the information and technology supporting the practice

considerations for partners and suppliers for the practice.

1.1 ITIL® 4 qualification scheme

Selected content from this document is examinable as a part of the following syllabus:

ITIL Leader Digital and IT Strategy

Please refer to the syllabus documents for details.

2. General information

2.1 Purpose and description

Key message

The purpose of the strategy management practice is to formulate the goals of the organization and adopt the courses of
action and allocation of resources necessary for achieving those goals. Strategy management establishes the organization’s
direction, focuses effort, defines or clarifies the organization’s priorities, and provides consistency or guidance in response to
the environment.

The starting point for the strategy management practice is to understand the context of the organization and define the desired outcomes.
The strategy of the organization establishes criteria and mechanisms to decide how to best prioritize resources, capabilities, and investment to
achieve those outcomes. This practice ensures that the strategy is defined, agreed, maintained, and achieved.

The strategy management practice applies at various levels and across various time zones. Strategy generation is not a one-off activity, and the
strategy cannot be expressed in a single document that is then never amended. Strategy is a purposeful journey with a stated direction and
objectives, not a destination. This means that strategy management activities are ongoing, rather than a one-off or periodic activity. Strategic
decisions, plans, and actions vary in their lifetime, applicability, and priority in the constantly changing circumstances of today’s organizations.
External and internal factors constantly change, as should an organization’s strategies.

An important factor affecting an organizations’ strategic positioning and objectives is the development of digital technology. The wider use of
technology, emerging capabilities such as artificial intelligence (AI) or the internet of things (IoT), technology-based disruption of the markets
and industries all affect an organizations’ direction and its approach to strategy management. For example, strategic decisions can be enabled
by advanced analytics, or methods used for strategy development should be adjusted for the emerging business and social dynamics enabled
by the technology.

Other external factors (political, economic, social, legal, and environmental) also continually affect organizations. Consequently, organizations
must adjust its strategic objectives, plans, and priorities, or sometimes its vision of the desired future state.

The strategy management practice ensures that:

organization’s vision, objectives and direction are defined and continually validated or redefined

actions that are needed to realize the vision are identified, agreed, and communicated

execution of the strategy is continually evaluated, challenged, and improved.

These three aspects of the practice can be described as long-term, medium-term, and short-term strategy management.[1]

The strategy management practice is typically the responsibility of the executive leaders of the organization. However, it is important to engage
a broad group of internal and external stakeholders in the strategy development. The executive strategic team has the critical role of organizing
and making the final decisions. Yet, the more stakeholders that are involved in the strategic planning, the more effective and relevant the
strategy, and the greater the stakeholders’ engagement.

The strategy management practice provides the necessary inputs for many practices, including:

architecture management

workforce and talent management

risk management

service financial management

project management

organizational change management

portfolio management

relationship management.

These practices ensure that the organization-wide approaches, methods, and plans are developed and adopted by the organization. Strategic
alignment is needed to ensure that these approaches are appropriate to the organization. Strategic alignment can be achieved by involving
experts in the strategy management practice and establishing frequent communication and feedback between the practices.

2.2 Terms and concepts

2.2.1 Business strategy/digital strategy/IT strategy[2]

Business strategy is how an organization defines and achieves its purpose. Every organization has a business strategy. Some organizations
maintain a formal set of processes and documents. Other organizations rely on the less formal communication, decision-making criteria, and
patterns of behaviour established the governing body and executives.

Regardless of the rigour of the strategy management practice, a business strategy will encompass:

a way of defining, refining, and communicating the vision of the organization

a way of defining the goals of the organization

the organization’s business model and operating model (see 2.2.4)

a means of aligning the different parts of the organization’s ecosystem to achieve its goals; for example, its people, information and
technology, value streams, processes, and partners/suppliers

guiding principles that determine how decisions are made and what actions are taken

agreements of the actions that the organization will take and how to allocate resources to ensure those actions, often in the form of
strategic plans.

The level of formality of a business strategy is determined by the culture of the organization and the demand for formality by the organization’s
stakeholders and environment, for example regulatory requirements.

In a technology-enabled organization, the role of technology in the organization’s strategy is key. This raises the question of the positioning of
the digital strategy and/or IT strategy towards the business strategy. In order to maximize the effect of digital technology on the business,
organizations must embrace the greatest integration of digital technology into the business strategy.

Definition: digital strategy

A business strategy that is based on all or in part on using digital technology to achieve its goals and purpose.

Digitalization of the business strategy helps to achieve the following objectives:

exploit an opportunity in the market that has been created due to customers using a new digital technology

use digital technology to engage with customers and improve their experience with the products and services

relaunch existing products and services with new features and delivery methods made possible by digital technology

use digital technology to improve the performance or efficiency of the organization’s operations

create new technology-enabled products and services.

The term IT Strategy is used in three ways:

as a synonym for, or component of, digital strategy, in the sense that all digital technology comprises IT. This term has been largely
replaced by the term digital strategy

as a technology strategy and corresponding architecture that supports the digital strategy

as a strategy for the back office and administrative elements of information technology, for example, the data centre, HR and financial
systems, infrastructure, and networking.

Regardless of the terminology adopted by the organization, it is important to ensure that:

technology is included in the organization’s strategy as a key enabling element

technology-based innovations are considered an important business driver and potential disruptor

technology-related risks are addressed

technology competence of the organization is seen as a priority

all uses of IT are included in the strategy, including any IT used in business-facing and support activities.

Figure 2.1 Business, digital, and IT strategy

2.2.2 Purpose, vision and strategic objectives

Many organizations differentiate between its vision and its purpose.

Definitions:

Purpose
The reason that an organization exists, or its core business.
Vision
The defined aspiration of what an organization would like to become in the future.

The purpose of an organization is constant, but its vision is likely to change with the purpose remaining as it was. However, it is possible that at
certain moments the vision will require a repurposing of the organization. In this case, new purpose becomes a part of the organization’s vision.

The organization’s strategy encompasses its purpose and vision, and outlines the specific objectives and initiatives required to achieve these.

The strategic objectives of an organization are usually structured around the purpose and vision statements. It is useful to add a resource
perspective to the structure, by mapping the objectives to the four dimensions of service management. For example, an organization’s vision
of ‘doubling the size of the business while reducing its environmental footprint’ can be encompassed by the strategy structured around growth
and sustainability, addressed by strategic initiatives related to organization and people, information and technology, value streams and
processes, and suppliers and partners.

Start where you are. The exact structure of the organization’s strategy varies, depending on the organization’s purpose, vision, and current
state. It is important to understand the current state, as a strategy rarely develops out of nothing. The organization has resources, architectures,
value chain and value streams, products and services, customers, and other stakeholders. All of these are likely to be addressed by the strategy
and impact the structure of the strategic objective and initiatives. The current status of the organization provides strategic opportunities, but
also imposes constraints. Objectives that are too ambitious and unattainable might make the strategy unrealistic, which will affect its
effectiveness and the attitude towards it across the organization. Rather than planning a huge leap towards the vision, progress iteratively with
feedback. See section 2.4.1 for more on this topic.

2.2.3 Strategy in a VUCA environment

The business environment is often characterized by high levels of volatility, uncertainty, complexity, and ambiguity (VUCA). Organizations aim
to address these in its strategies, embedding capabilities such as agility, resilience, innovativeness, and complexity-thinking.

2.2.3.1 Organizational agility and resilience

For an organization to be successful, it must not only achieve organizational agility to support the internal changes, but also organizational
resilience, which will allow it to withstand and even thrive within changing external circumstances. The organization must also be considered
and managed as a part of a larger ecosystem of organizations, all delivering, coordinating, and consuming products and services.

Key message

Organizational agility is the ability of an organization to move and adapt quickly, flexibly, and decisively to support internal
changes.[3]
Organizational resilience is the ability of an organization to anticipate, prepare for, respond to, and adapt to both
incremental changes and sudden disruptions from an external perspective.

External influences could be political, economic, social, technological, legal, or environmental (PESTLE). Resilience cannot be achieved without
a shared understanding of the organization’s priorities and objectives, which sets the direction and promotes alignment, even as external
circumstances change. In extreme situations, resilience is provided by effective continuity. This is a last resort when normal capability to adapt
to changing circumstances is insufficient. Agility supports resilience by enabling the internal changes required to adapt to external influence.

The organization’s purpose and vision provide direction to the level of agility and resilience that is expected by the stakeholders. The strategy
management practice transforms this direction into strategic objectives, models, and initiatives to achieve the required level of organizational
agility and resilience.

2.2.3.2 Innovation

Digitally-enabled organizations often make innovativeness a key part of its strategy. Innovations might arise in any of the four dimensions of
service management. Whichever dimension an innovation originates from, it is likely to affect all four dimensions. For example, the
introduction of GPS on personal devices led to significant changes in the operation and user experience of taxi and delivery services.

Definition: Innovation

The adoption of a new technology or way of working that has led to the significant improvement of an organization,
product, or service.

The definition above highlights the fact that on its own, new technology or ways of working are not innovations, and are not guaranteed to
improve a situation. New technology or ways of working are required for innovations to happen, however the fact that they are new is not
enough. There are many new technologies and approaches being created and offered outside and within organizations, but these are only
innovative if its adoption leads to improved value. The key capabilities essential for an organization to benefit from innovations are:

research and development to generate and identify innovation opportunities

continual analysis of opportunities

effective implementation of selected methods and devices.

These introduce requirements to multiple practices (business analysis, portfolio management, project management, change enablement,
organizational change management, workforce and talent management, relationship management and other practices). It is likely that the
management of innovations will be supported by a dedicated value stream. All of these are ways to implement a strategic objective of
becoming an innovative organization, but the first step would be to recognize the need for innovativeness and to set it as a strategic objective.

Innovativeness, just like any strategic objective, cannot be managed by a small specialized team working in isolation. If chosen as a strategic
priority, it should be embedded in the organization’s operation at every level. Identification of the innovation opportunities, supported by the
continual monitoring of the relevant sources and by internal research and development work, should be encouraged across the organization.
Initiatives should be processed promptly and transparently, with effective feedback loops and should involve the initiative’s originators in its
realization wherever possible. The effect of the initiatives should be reviewed and reported, with a high tolerance for failure, as not every idea or
initiative will prove to be an innovation. Highly innovative organizations should adopt the Probe-Sense-Respond heuristic for experimentation
in a complex environment (see figure 2.2).

2.2.3.3 Adapting for variable complexity

The complexity of the business environment and of internal organizational systems vary from clear, predictable, and structured contexts to
complicated, complex, and even chaotic.[4] Different levels of complexity can be addressed with different heuristics and imply different
constraints that are imposed by the strategy, as shown in Figure 2.2.

Figure 2.2 The Cynefin framework[5]

The approach to the strategy management practice and the resulting strategy might vary significantly, to adjust to the complexity of the
environment.

In an uncomplicated context, a strategy might offer a set of fixed constraints in a form of rules, policies, and related enforcement. A strategy like
this would be executed by following a set of clear rules and likely to be effective if the context remains predictable and follows the same
patterns that served as assumptions for the strategy. This kind of strategy can be cascaded from the top of the organization down to the
operational level, with a high degree of detail and be enforced through procedures.

In a VUCA environment, this approach to the strategy management practice is ineffective and might lead to the strategy being ignored or
followed only as a formality, sometimes leading to negative consequences for the organization and other stakeholders.

In order to be effective in a complicated or complex environment, the strategy should relax the constraints it establishes and govern or enable,
depending on the situation, the desired behaviour and effective decision-making. Operating in a complicated or complex context is possible
when decisions are guided with a shared set of principles, and managers, teams, and practitioners are empowered to make decisions and find
solutions through analysis and experimentation. In environments like this, the strategy management practice ensures that the guiding
principles are agreed, communicated, and interiorized across the organization.

Key message

Although the ITIL guiding principles provide a good starting point, organizations benefit from developing and following
their own set of principles based on the purpose, values, and vision of the organization. They are more specific and therefore
more useful in the organization’s context than any generic principles adopted from an external source.

In a chaotic environment, no effective constraints are applicable, and even the agreed guiding principles might not apply. In situations like this,
decisions are likely to be made impromptu, and tested practices are unlikely to provide the expected results. A strategy might help to prepare
for chaotic situations by defining who is in charge of decision-making, how success of the actions should be assessed, and how to identify and
exploit opportunities for coming back to a complex and more manageable situation.

2.2.3.4 Sustainability

The concept of a sustainable organization evolved from the focus on environmental matters to a wider understanding of sustainability. It is one
of the key aspects of many organizations’ vision and strategy and is increasingly important in the context of VUCA business environments.

Definition: sustainability

A business approach focused on creating long-term value for society and other stakeholders, by addressing the risks and
opportunities of economic, environmental, and social developments.

Organizations are moving from a focus on profitability to the triple bottom line, an approach that covers financial, social, and environmental
aspects, as shown in Figure 2.3 (Bordoloi et al., 2018). The triple bottom line marks a shift from short-term financial goals to long-term
sustainability goals, which is an integrated business method. Sustainable goals not only improve an organization’s brand and reputation, but
drives stakeholder value for customers, employees, and society in the form of better health, climate, and resource utilization. Read more on the
triple bottom line approach in ITIL 4: Drive Stakeholder Value, Section 3.4.

Figure 2.3 The Triple bottom line model

To enable sustainability as a strategic priority, organizations should embed respective principles, objectives, ways of thinking, and working into
all of the organization’s teams, value streams, products, and services. The strategy management practice ensures that the sustainability
principles and objectives are clearly defined and communicated, to be embedded into the organization’s approaches and practices, including
architecture management, supplier management, business analysis, service financial management, relationship management, service design,
portfolio management, and other practices. Considerations, challenges, and suggestions from these practices are an important input to the
strategy definition; strategy for sustainability, just like for other aspects, should be developed by the organization, not a small group of executive
leaders.

2.2.4 Business models and operating models[6]

A strategy is not limited to a collection of principles and objectives; it should also enable the achievement of the objective by providing a
business model and an operating model to the organization.

A business model describes how all the pieces of an organization should be configured to provide the intended value proposition to customers,
based on the strategic choices and consequences discussed in the strategy. The business model shows how all of the components work
together to provide value, rather than only focusing on how each product or service provides value individually. Business models therefore
reflect the system of choices and consequences of strategy.

Business models are frameworks that consist of three major themes:

How an organization works to create a value proposition through its products and services. This includes resources of the four dimensions,
key activities, and cost structures associated with value creation.

How an organization makes its value proposition. This includes relationships with service consumers, channels, customers segments, and
revenue streams.

How an organization fulfils the promises it has made and the expectations it has set.

The strength of the business model as a planning tool is that it is a concept and therefore a flexible tool. It allows those who define strategy, to
mix and match several competitive business models and different organizational configurations, without getting tied into complex details. As a
planning tool, the business model assists strategists in analysing, testing, and validating ideas against individual business elements, as well as
how those ideas will perform across the entire business model.

The flexibility of business models means that it can be easily copied by competitors. It is common practice for organizations to compare
competitors’ business models to determine how they can best compete against them.

If business models are used to describe how an organization creates value, then operating models are used to describe how the organization is
run. Operating models represent a series of practices and choices and how they interact to allow the organization to fulfil its defined value
proposition and hold its market position. Operating models ensure that each of these choices and practices, such as which competencies to
acquire and develop, what technology needs to be deployed, and which suppliers to engage with, work together in a unified way.

An operating model, like a business model, is an abstract tool to facilitate the design and configuration of how an organization is run, to enable
the value outlined by the business model. There are two key themes in an operating model:

The key work that takes place. At the centre of an operating model is the organization’s value chain, which illustrates the main work an
organization needs to do in the form of value streams.

The context in which the value streams will be performed, including:

how suppliers or partners will be involved in the value streams and the creation of value

where the work done in the value stream will be located and what resources and practices are needed to perform the work, and how
they interact

how targets will be set and performance measured to ensure that value streams are functioning optimally.

The strategy management practice ensures that the organization follows the agreed operating models and that business and operating
models are up-to-date, effective, continually reviewed, and improved.

2.3 Scope

The strategy management practice includes:

defining and communicating the organization’s purpose, vision, and objectives

defining, communicating, and continually improving the business and operating models

reviewing the organization’s performance and adjusting the way it works, where needed.

There are several activities and areas of responsibility that are not included in the strategy management practice, although they are still closely
related to it. These are listed in Table 2.1, along with references to the practices in which they can be found. It is important to remember that
ITIL practices are merely collections of tools to use in the context of value streams; they should be combined as necessary, depending on the
situation.

Table 2.1 Activities related to the strategy management practice described in other practice
guides
 Activity Practice guide

Implementing strategic decisions All practices

Managing strategic risks Risk management

Measuring and reporting strategy performance Measurement and reporting

2.4 Practice success factors

Definition: Practice success factor

A complex functional component of a practice that is required for the practice to fulfil its purpose.

A practice success factor (PSF) is more than a task or activity, as it includes components of all four dimensions of service management. The
nature of the activities and resources of PSFs within a practice may differ, but together they ensure that the practice is effective.

The strategy management practice includes the following PSFs:

ensuring that the organization's strategies are effective and sustainable, and meet the stakeholders' evolving needs

ensuring that the agreed strategies and models are communicated across the organization and embedded into the organizations'
practices and value streams.

2.4.1 Ensuring that the organization's strategies are effective and sustainable, and meet
stakeholders' evolving needs

Effective strategies correctly translate the organization’s purpose and the needs and requirements of the stakeholders into the organization’s
vision, objectives, business and operating models. They ensure the fulfilment of the agreed objectives across the organization, considering
internal and external constraints and influences.

To create and execute an effective strategy, organizations[7] must:

explore the strategy at distinct intervals (long-term, mid-term and short-term, as described in section 2.1)

constantly reinvent and stimulate the strategic dialogue

engage the broad organization

invest in execution and monitoring.

Key message

‘With strategic planning — unlike sports or music — repetitive practice doesn’t make perfect.’

Four Best Practices for Strategic Planning by Nicolas Kachaner, Kermit King and Sam Stewart

The strategy management practice is not a one-off activity performed annually or every three to five years. Instead, it is a continual activity
involving reorientation, repositioning, and redirecting the organization in changing circumstances. The organization’s strategy should promptly
and effectively react to emerging risks and opportunities, correct inefficiencies, and generally correct the course of action. It is a practice of
constant navigation, rather than the preliminary mapping of a trajectory to follow. This does not devaluate planning, it just makes it dynamic
and ongoing. The process of strategy generation and continual development (see section 3.2.1) should be performed on an ongoing basis. This
does not mean the full business strategy has to be redefined every day. Instead, its natural development and execution should be constantly
monitored and corrected or amended where relevant.

To enable this continual strategic navigation, it is critical to engage with the broader organization. Strategic dialogue followed by strategic
planning and execution should involve all key stakeholders from within and outside of the organization: managers, employees, governing body,
customers, regulators, partners and suppliers, and so on.

An effective strategy management practice also depends on a good understanding of the position of the organization and of its progress in
fulfilling its strategic objectives. The measurement and reporting practice suggests two main types of reports: operational[8] and analytical.

Operational reports are created to monitor performance, identify deviations, and initiate corrective actions to support operations. If automated,
operational reports can be produced promptly and frequently, even daily or multiple times per day. This results in operational reports sources of
very recent data.

Analytical reports deal with data analysis, trends and its explanations and investigations. Analytical reports are usually produced by skilled
strategic analysts, sometimes involving external expertise.

When defining targets and metrics for strategic objectives, organizations should be careful of its influence on people’s behaviour and the
unintended consequences for the organization. For example, if a strategic objective of embracing open innovation is supported by a target of
50% of innovations sourced from outside the company, it might lead to the artificial regulation of the naturally emerging innovative initiative
and cause harm to the organization, at the same time demonstrating the expected achievement.

Data is at the core of the personal and organizational decision-making process and evolution. Yet, data is not the only source of knowledge
used in decision-making. In fact, the term data-driven often implies that data equals or includes insight. If data is assembled from facts,
statistics, quantities, symbols, and so on, the exclusive use of a data-driven approach might limit an organization’s potential to evolve and
might prove to be unwise.[9]

Insight is the ability to gain an accurate and deep understanding of a subject. It might be interpreted as knowing and feeling the underlying
nature of things. Insights are a result of human intelligence, including emotions, experience, and feelings. Insights are a supplementary
component of the data and are a result of an individual’s experience and personality. Therefore, the greater the experience and expertise of an
individual, the more useful their insights will be. Insights cannot be produced by artificial intelligence.

Techniques such as ALOE[10] (asking, listening, observing, empathizing) and the development of emotional, social, and system intelligence,
support an organization’s performance and evolution. They work much more effectively when adopted by the strategic decision makers and
help to create and maintain an insight-driven strategy.[11]

2.4.2 Ensuring that the agreed strategies and models are communicated across the
organization and embedded into the organizations' practices and value streams

A strategy is as effective as it is executed. Without the adoption and implementation of the strategy across the organization’s practices, value
streams, products and services, the strategy management practice is just a planning exercise.

The key factors of successful execution of strategies are:

effective communication

continual improvement

effective organizational change management

embedding the vision and the principles in the organizational culture.

The principles of good communication described in ITIL 4 Direct, Plan and Improve publication help to ensure that strategic communications
are effective. Table 2.2 explains how the principles can be adopted for this purpose.

Table 2.2 Communication principles for strategic communications

Communication Strategic communications

principles

Communication Strategic communications should not be limited to one-way awareness communication or objective
is a two-way setting. Strategy should develop based on the input from stakeholders, including feedback.
process

We are all Non-verbal and non-explicit communications matter, especially when it comes to communicating
communicating principles, values, and ways of thinking and working. Leading by example and transparency are key
all the time enablers of strategy adoption and fulfilment.

Timing and Changes in strategy should be communicated when they can be adequately received and processed.
frequency Status of the ongoing initiatives, climate in the organization, external events, and other factors should
matter be considered. Empathetic and thoughtful communication is more effective.

There is no single Different stakeholders prefer different means of communication, from face-to-face meetings to using
method of social networks and online publications. The method, channel, and format should be selected with
communicating careful consideration to the information’s sensitivity and information security risks, but wherever
that works for possible stakeholders’ preferences should be taken into account.
everyone
The message is
in the medium

All practices should be designed for strategic alignment and continual improvement. This means that they are planned and executed to
support relevant strategic objectives, and they are continually reviewed to ensure that this is achieved. It is important to follow this approach
when the practices are developed and applied in an organization. Too often, practice owners focus on the execution of the practices’ processes
and do not pay enough attention to strategic alignment and continual improvement. The same recommendations apply to the organization’s
value streams, products, and services.

The adoption and execution of a new strategy often requires organizational changes. Effective organizational change management practice
ensures that these are run effectively and to the stakeholders’ satisfaction. Refer to the OCM practice guide for recommendations.

Organizational change management and workforce and talent management practices help to develop a healthy organizational culture and to
establish an improvement loop between the culture and the strategy. The two are naturally and mutually enabling; strategy is based on the
culture and supported by it as long as it fits the culture and does not contradict people’s beliefs, values, and ways of thinking. At the same time,
new values, principles, and ways of thinking and working can be introduced by the strategy and embraced by the organization if they are
sufficiently aligned with the current culture and fit the absorptive capacity of the organization. With that said, strategy, particularly in cases of
digital transformation, may challenge some people’s beliefs, values, and ways of thinking as it requires a dramatic shift of the entire
organization. It is the role of leaders to drive the organizational change, enable changes in competencies and behaviours, and enable a shift to
a new culture that supports a new digital vision.

2.5 Key metrics

The effectiveness and performance of the ITIL practices should be assessed within the context of the value streams to which each practice
contributes. As with the performance of any tool, the practice’s performance can only be assessed within the context of its application.
However, tools can differ greatly in design and quality, and these differences define a tool’s potential or capability to be effective when used
according to its purpose. Further guidance on metrics, key performance indicators (KPIs), and other techniques that can help with this can be
found in the measurement and reporting practice guide.

Key metrics for the strategy management practice are mapped to its PSFs. They can be used as KPIs in the context of value streams to assess
the contribution of the practice to the effectiveness and efficiency of those value streams. Some examples of key metrics are given in Table 2.3.

Table 2.3 Example of key metrics for the practice success factors

Practice success factors Key metrics

Ensuring that the organization's strategies are effective and

sustainable, and meet the stakeholders' evolving needs
Stakeholder’s satisfaction

Number and diversity of stakeholders involved in

the strategy planning

Number and percentage of strategic objectives

achieved

Number and percentage of strategic initiatives

successfully fulfilled

Number and impact of cases where strategy

was found to be outdated or irrelevant

Number and impact of stressful internal and

external events that were successfully addressed
by the strategy

Ensuring that the agreed strategies and models are

communicated across the organization and embedded into the
organizations' practices and value streams Awareness of the strategic principles, objectives
and initiatives across the organization

Strategic alignment of the organization’s

practices, value streams, products and services

Number and impact of cases where strategic

objectives were not supported by practices,
value streams, products or services

The correct aggregation of metrics into complex indicators will make it easier to use the data for the ongoing management of value streams,
and for the periodic assessment and continual improvement of the strategy management practice. There is no single best solution. Metrics will
be based on the overall service strategy and priorities of an organization, as well as on the goals of the value streams to which the practice
contributes.

3. Value Streams and processes

3.1 Value stream contribution

Like any other ITIL management practice, the strategy management practice contributes to multiple value streams. It is important to
remember that a value stream is never formed from a single practice. The strategy management practice combines with other practices to
provide high-quality services to consumers. The main value chain activities to which the practice contributes is plan, however, all other value
chain activities are also impacted by the strategy management practice.

The contribution of the strategy management practice to the service value chain is shown in Figure 3.1.

Figure 3.1 Heat map of the contribution of the strategy management practice to value chain activities

3.2 Processes

Each practice may include one or more processes and activities that may be necessary to fulfil the purpose of that practice.

Definition: Process

A set of interrelated or interacting activities that transform inputs into outputs. A process takes one or more defined inputs
and turns them into outputs. Processes define the sequence of actions and their dependencies.

Strategy management activities form two processes:

strategy generation and continual development

ad hoc strategic decision-making.

3.2.1 Strategy generation and continual development

This process is focused on defining, agreeing, and communicating of strategy and its continual improvement. It is the key process of the
practice; it is performed continually to support the practice’s purpose and PSFs.

Table 3.1 Inputs, activities, and outputs of the strategy generation and continual development
process

Key inputs Activity Key outputs

Stakeholder needs and requirements Strategic assessment Strategic assessment

report

Organization’s vision, principles, and Strategy planning

policies Strategic plans and models

Strategy discussion and approval

Organization’s business strategy Strategy implementation
guidelines
Strategy communication and
Organization’s portfolios implementation
Strategy communications

External factors, including risks and Strategy review

opportunities

Strategy review reports

Figure 3.2 shows a workflow diagram of the process.

Figure 3.2 Workflow of the strategy generation and continual development process

Table 3.2 Activities of strategy generation and continual development process

Activity Example

Strategic Executive leaders of the organization together with key stakeholders assess:
assessment
the direction communicated by the governing body

requirements and needs of relevant stakeholders

current position of the organization

strategic review report available from previous iterations of the process.

The resulting assessment report includes analysis of the current position and performance of the
organization, relevance, and execution of the strategy and recommendations for strategy improvement.
Where relevant, strategic analysts (consultants, advisors) are involved in the assessment.

Strategy Executive leaders of the organization together with key stakeholders define or update the organization’s
planning vision, principles, and objectives.
In consultations with key managers of the organization, they develop a portfolio of strategic initiatives to
support the objectives. The results of the planning are documented and communicated to wider
stakeholder group for discussion and approval.
Where relevant, strategic analysts (consultants, advisors) are involved in the planning.

Strategy The stakeholders discuss and approve the proposed strategy. Where agreement cannot be reached,
discussion and decisions are made in line with the organization’s decision-making approach. If decisions cannot be
approval made, comments, and concerns are communicated back as input for strategic reassessment.
Where relevant, strategic analysts (consultants, advisors) are involved in the discussion

Strategy The approved strategy is communicated to relevant stakeholders for consideration and
communication implementation.
and Implementation of the strategy is performed in conjunction with other practices as described in
implementation Sections 2.3 and 2.4

Strategy review Assigned owners of the strategic initiatives and other key stakeholders review the progress of the
strategy execution.
Resulting reports might include corrective actions recommended to the implementing teams and/or
serve as a trigger for strategic reassessment

3.2.2 Ad hoc strategic decision-making

This process is focused on providing strategic direction in extraordinary circumstances when important decisions to be made are insufficiently
supported by the current strategy and supporting guidelines. This process is engaged when the situation has deviated beyond the tolerances
established by the current strategy, due to the insufficient resilience and adaptability of the strategy or because of the internal or external crisis.
This process includes the activities listed in Table 3.3 and transforms the inputs into outputs.

Table 3.3 Inputs, activities, and outputs of the ad hoc strategic decision-making process

Key inputs Activity Key outputs

Organization’s principles, policies, Detection of a strategic exception Assessment records

and vision

Situational orientation and Records of discussions and

Organization’s strategies and assessment decision-making
models

Discussing and agreeing decision Strategic decisions

Internal and external factors

Decisions communication and Review reports

New needs and requirements implementation
from stakeholders

Review
Risks

Figure 3.3 shows a workflow diagram of the process.

Figure 3.3 Workflow of the ad hoc strategic decision-making process

Table 3.4 provides examples of the process activities.

Table 3.4 Activities of the ad hoc strategic decision-making process

Activity Example

Detection of a When an extraordinary event of strategic importance occurs is detected or organization cannot operate
strategic within direction and constraints provided by the strategy, the situation is escalated to the strategic
exception decision makers. These are usually the executive leaders of the organization.

Situational Strategic decision makers assess the reported situation. If a strategic exception is confirmed and the
orientation and situation cannot be managed within the current strategy, they proceed to discussing a course of action.
assessment If the situation is within tolerance and can be effectively addressed by the current strategy, this is
communicated to relevant stakeholders for normal execution, and the leadership team proceeds to
review of the escalation.

Discussing and The decision makers discuss the situation with relevant stakeholders and propose a course of action,
agreeing considering the level of complexity, associated risks, level of urgency, and other available information.
decision Where relevant, strategic analysts (consultants, advisors) are involved in the discussion

Decisions The decisions made are communicated to relevant stakeholders for execution. Control over the
communication execution and, if necessary, correction of the course may be performed directly by the decision makers
or delegated.

Review Executive leaders of the organization together with relevant stakeholders review the situation, including
relevance of the escalation, the decision-making process and effectiveness of the decisions.
Resulting review report serves as an input to the strategy generation and continual development
process.

4. Organizations and people

4.1 Roles, competencies, and responsibilities

The practice guides do not describe the practice management roles such as practice owner, practice lead, or practice coach. They focus instead
on the specialist roles that are specific to each practice. The structure and naming of each role may differ from organization to organization, so
any roles defined in ITIL should not be treated as mandatory or even recommended. Remember, roles are not job titles. One person can take
on multiple roles and one role can be assigned to multiple people.

Roles are described in the context of processes and activities. Each role is characterized with a competency profile based on the following
model shown in Table 4.1.

Table 4.1 Competency codes and profiles

Competency Description
code

L Leader Decision-making, delegating, overseeing other activities, providing incentives and motivation, and
evaluating outcomes

А Administrator Assigning and prioritizing tasks, record-keeping, ongoing reporting, and initiating basic
improvement

C Coordinator/communicator Coordinating multiple parties, maintaining communication between

stakeholders, and running awareness campaigns

М Methods and techniques expert Designing and implementing work techniques, documenting
procedures, consulting on processes, work analysis, and continual improvement

Т Technical expert Providing technical (subject matter) expertise and expertise-based assignments

Examples of other roles which can be involved in the strategy management activities are listed in Table 4.2, together with the associated
competency profiles and specific skills.
Table 4.2 Examples of roles with responsibility for strategy management practice activities

Activity Responsible Competency Specific skills

roles profile

Strategy generation and

continual development

Strategic assessment Executive TCM

leaders
Key Good knowledge of the organization, its
stakeholders environment, position, and current performance
Strategic
analysts
Good understanding of the current strategy and its
performance

Good knowledge of the relevant technology and

ways of working available to the organization

Excellent analytical skills

Good communication skills

Strategy planning Executive MLTC

leaders
Key Good knowledge of the organization, its
stakeholders environment, position, and current performance
Strategic
analysts
Good understanding of the current strategy and its
performance

Good knowledge of the relevant technology and

ways of working available to the organization

Good knowledge of the outputs of strategic

assessment

Good analytical and communication skills

Strategy discussion and Key MCT

approval stakeholders
Good analytical and communication skills

Good knowledge of the organization, its

environment, position, and current performance

Good knowledge of the outputs of strategic

assessment and planning

Strategy communication Executive LCM

and implementation leaders
Good leadership and communication skills

Good knowledge of the agreed strategy and its

impact on the stakeholders

Strategy review Executive TMC

leaders
Key Good knowledge of the organization, its
stakeholders environment, position, and current performance
Strategic
analysts
Good understanding of the current strategy and its
performance

Excellent analytical skills

Good communication skills

Ad hoc strategic decision-

making

Detection of a strategic Any relevant T Good knowledge of the organization, its environment,
exception stakeholder position, and current performance
Good understanding of the current strategy and its
performance
Good knowledge of the relevant practices and guidelines

Situational orientation and Executive TC Good knowledge of the organization, its environment,
assessment leaders position, and current performance
Good understanding of the current strategy and its
performance
Good analytical and communication skills
Situational analysis and crisis management skills

Discussing and agreeing Executive MLTC Good knowledge of the situation and context
decision leaders Good knowledge of the relevant technology and ways of
Key working available to the organization
stakeholders Good analytical and communication skills
Strategic Situational analysis and crisis management skills
Leadership and communication skills
analysts

Decisions communication Executive LCM Good leadership and communication skills

leaders Good knowledge of the agreed decisions and their
impact on the stakeholders

Review Executive TMC Good knowledge of the situation and context

leaders Good understanding of the effect of decisions on the
Key organization and other stakeholders
stakeholders Excellent analytical skills
Strategic Good communication skills
analysts

4.1.1 Strategic decision-makers

The role of the strategic decision-maker is usually performed by the executive leaders and the governing body of the organization. Strategic
decision-making as well as effective strategy communication and leadership require the following key competencies:

emotional, social, and systems intelligence

cognitive flexibility

self-leadership

discerning thinking

complexity thinking

data-driven and insight-driven analysis and decision-making

conversational intelligence, multimodal communication skills.

4.2 Organizational structures and teams

The strategy management practice is performed by the organization’s leaders supported by multiple stakeholders across the organization.
However, in larger organizations, a specialized team of strategic analysts can be established to perform ongoing strategic analysis and advise
decision makers. The team sometimes consists of strategic advisors or consultants. Members might specialize in specific subjects such as
markets, products, brands, sustainability, innovations, and so on. Strategy reports and plans might be drafted by the members of this team, but
the accountability for strategic decisions always remains with governing body and executive leaders of the organization.

5. Information and technology

5.1 Information exchange

The effectiveness of the strategy management practice is based on the quality of the information used. This includes, but is not limited to,
information about:

organization’s vision, values, and principles

guidance from the governing body

stakeholders’ needs and requirements

relevant external factors (PESTLE)

organization’s architectures

culture and climate of the organization

ongoing performance of the organization.

This information may take various forms. The key inputs and outputs of the practice are listed in section 3.

5.2 Automation and tooling

Strategy management is not usually perceived as a highly-automated practice. However, it can significantly benefit from the opportunities
offered by advanced analytics, big data, modelling and forecasting. Collaboration and communication tools are also useful for every activity of
the practice. Table 5.1 lists the specific means of automation that are relevant to each activity of the strategy management practice.

Table 5.1. Automation solutions for strategy management activities

Activity Means of Key functionality Impact on the

automation effectiveness of the
practice

Strategy generation and

continual development

Strategic assessment Analytical tools Multi-factor analysis, forecasting, trend Medium to High
Sense-making tools analysis, sentiments analysis, sense-
Communication and
making
collaboration
systems

Strategy planning Analytical tools Planning, modelling, forecasting Medium

Sense-making tools
Communication and
collaboration
systems

Strategy discussion and Collaboration and Group communications and collaboration Low to Medium
approval communication tools

Strategy Collaboration and Communication of decisions and feedback High

communication and communication tools Monitoring of performance, dashboards
implementation Monitoring and and operational reports
reporting tools

Strategy review Analytical tools Multi-factor analysis, forecasting, trend Medium to High
Sense-making tools analysis, sentiments analysis, sense-
Communication and
making
collaboration
systems

Ad hoc strategic
decision-making

Detection of a strategic Monitoring and Monitoring of performance, dashboards, Medium to High

exception reporting tools and operational reports
Communication and Communication of exceptions
collaboration
systems

Situational orientation Analytical tools Multi-factor analysis, forecasting, trend Medium to High
and assessment Sense-making tools analysis, sentiments analysis, sense-
Communication and
making
collaboration
systems

Discussing and Analytical tools Planning, modelling, and forecasting Medium

agreeing decision Sense-making tools Group communications and collaboration
Communication and
collaboration
systems

Decisions Collaboration and Communication of decisions and feedback Medium to High

communication communication tools Monitoring of performance, dashboards
Monitoring and and operational reports
reporting tools

Review Analytical tools Multi-factor analysis, forecasting, trend Medium to High

Sense-making tools analysis, sentiments analysis, sense-
Communication and
making
collaboration
systems

6. Partners and suppliers

Very few products and services are delivered using only an organization’s own resources. Most, if not all, depend on other products and
services, often provided by third parties outside the organization (see section 2.4 of the ITIL® Foundation: ITIL 4 Edition publication for a model
of a service relationship). Relationships with suppliers and partners are therefore a key aspect of every organization’s strategy. There are aspects
of strategy directly related to suppliers and partners (sourcing strategy), but other strategic principles, objectives and initiatives are likely to
affect an organization’s approach to relationships with suppliers and partners. For example, strategic sustainability objectives are likely to
change an organization’s approach to the selection and management of suppliers, to ensure that external services and resources are sourced
responsibly and meet organization’s sustainability objectives.

Specific strategies, policies, and guidelines to support organization’s strategy in the suppliers and partners dimension of service management
are defined and executed in conjunction with supplier management, relationship management, project management and other relevant
practices.

External strategic analysts, such as consultants and advisors might be involved in the strategy management processes in a capacity similar to
the internal ones, as described in sections 3.2.1, 3.2.2 and 4.2. However, the main benefit of involving external analysts is to provide additional
insight for strategic assessment and planning. Strategic decision-making should remain a responsibility of the organization’s governing body
and executive leaders.

7. Important reminder

Most of the content of the practice guides should be taken as a suggestion of areas that an organization might consider when establishing and
nurturing their own practices. The practice guides are catalogues of things that organizations might think about, not a list of answers. When
using the content of the ITIL practice guides, organizations should always follow the ITIL guiding principles:

focus on value

start where you are

progress iteratively with feedback

collaborate and promote visibility

think and work holistically

keep it simple and practical

optimize and automate.

More information on the guiding principles and their application can be found in section 4.3 of the ITIL® Foundation: ITIL 4 Edition.

8. Acknowledgements

AXELOS Ltd is grateful to everyone who has contributed to the development of this guidance. These practice guides incorporate an
unprecedented level of enthusiasm and feedback from across the ITIL community. In particular, AXELOS would like to thank the following
people.

8.1 Authors

Antonina Klentsova, Roman Jouravlev.

8.2 Contributors

David Cannon, Erin Casteel, Stuart Rance.

8.3 Reviewers

Akshay Anand, David Cannon, Erin Casteel, Erika Flora, Richard de Kock, Irina Matantseva, Anton Lykov, Stuart Rance.

References
[1] Kachaner, N., King, K., and Stewart, S. (2016) Four Best Practices for Strategic Planning. Boston Consulting Group, [online] Available at:
https://www.bcg.com/publications/2016/growth-four-best-practices-strategic-planning.aspx [Accessed 15th April 2020].

[2] For more on the topic, see ITIL 4: Digital and IT Strategy, section 2.8

[3]Many organizations confuse agility with Agile methods. Organizational agility does not imply adoption of Agile, although may benefit from it
in certain areas. For more on this, see England, R. and Vu, C. The agile Manager, (2019)

[4] For more on complexity and sense-making visit: cognitive-edge.com, (2018). Cynefin® framework introduction [online] Available at:
http://cognitive-edge.com/videos/cynefin-framework-introduction/ [Accessed 15th April 2020]. This is also addressed in ITIL Specialist High-
velocity IT and Digital and IT Strategy publications.

[5]http://cognitive-edge.com/videos/cynefin-framework-introduction/ Reproduced with permission of Cognitive Edge

[6] For more on business and operating models, see ITIL 4: Digital and IT Strategy, sections 2.11 and 2.12 and https://www.axelos.com/case-
studies-and-white-papers/business-models-and-operating-models-white-paper

[7] Kachaner, N., King, K., and Stewart, S. (2016) Four Best Practices for Strategic Planning. Boston Consulting Group, [online]
https://www.bcg.com/publications/2016/growth-four-best-practices-strategic-planning.aspx [Accessed 15th April 2020].

[8] Note that ‘operational’ here means ‘demonstrating how a managed object is operating’; it may refer to managed object at operational,
tactical, or strategic level. For more on types of reports, see the Measurement and Reporting Practice Guide.

[9] bts.com, (2015). Creating an Insight Driven Organization. [online] Available at: https://www.bts.com/blog-article/business-insight/creating-an-
insight-driven-organization [Accessed 15th April 2020].

[10]https://www.bts.com/blog-article/business-insight/creating-an-insight-driven-organization [Accessed 21st April 2020]

[11] For more on data-driven and insight-driven decisions, see ITIL Knowledge Management Practice Guide, Sections 2.2.4 and 2.2.5.

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