Strategy Process: Phases, Cycle, Practice

tl;dr

• The strategy process is the systematic cycle of strategic analysis, strategy formulation, strategy implementation, and strategic control — the strategy process as a validation instrument means treating each phase as a test of the strategic hypothesis, not as plan execution.
• Without a structured strategy process, strategy development and strategy implementation remain separate worlds — the result is plans that are never implemented and actions that follow no strategy.
• A functioning strategy process connects the four phases into a learning cycle: analyze, formulate, implement, control — and with each iteration the strategy becomes sharper.

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What is a strategy process?

A strategy process is the systematic cycle by which a company analyzes, formulates, implements, and controls its strategy. Henry Mintzberg distinguishes in “The Rise and Fall of Strategic Planning” (1994) between the formal planning process and the actual strategy process: “Almost every sensible real-life strategy process combines emergent learning with deliberate control.” The strategy process as a validation instrument treats each phase as a hypothesis test — not as execution of a fixed plan.

The four phases of the strategy process

Phase 1: Strategic analysis

Strategic analysis captures the current situation: Where does the company stand, what is happening in the market, what internal strengths and weaknesses exist? Tools: SWOT analysis, Porter’s Five Forces, PESTEL analysis, competitive analysis. Rumelt emphasizes in “Good Strategy Bad Strategy” (2011): Analysis is the precursor to diagnosis — it delivers data, diagnosis transforms it into an understandable problem.

Phase 2: Strategy formulation

Strategy formulation translates the diagnosis into a strategic direction: guiding policy, objectives, prioritized actions. Strategy development is the creative-analytical core of this phase. Ansoff structures in “Corporate Strategy” (1965) four growth directions: market penetration, market development, product development, and diversification. Formulation ends with a decision — not with a list of options.

Phase 3: Strategy implementation

Strategy implementation translates the formulated strategy into action. Hrebiniak documents in “Making Strategy Work” (2013): “As difficult as strategy making is, making strategy work is even more difficult and challenging.” The implementation phase requires organizational alignment, communication, resource allocation, and progress measurement — supported by tools such as Balanced Scorecard, OKR, or Hoshin Kanri.

Phase 4: Strategic control

Strategic control examines whether the strategy is delivering the desired results — and whether the assumptions on which it is based are still valid. Control in the strategy process does not mean retrospective evaluation but ongoing validation: Are the assumptions still correct? Have conditions changed? Does the strategy need adjustment? Control closes the cycle — its insights feed into the next analysis phase.

Strategy process phases as a cycle

The four phases of the strategy process are not linear but cyclical. Mintzberg shows in “Tracking Strategies” (2007): “If deliberate strategy is about control, then emergent strategy is about learning.” A functioning strategy process connects both — deliberate planning in phases 1-2 with emergent learning processes in phases 3-4.

The Honda example illustrates the cycle: Honda entered the US market with a deliberate strategy for large motorcycles (Phase 2), failed in implementation (Phase 3), recognized the market for small motorcycles emergently (Phase 4 to Phase 1), formulated a new strategy (Phase 2), and implemented it successfully (Phase 3). The strategy process works not despite but because of iteration.

Distinction from related concepts

The strategy process is not the same as strategy development

The strategy process is the complete cycle of analysis, formulation, implementation, and control, while strategy development is the second phase of this cycle — the formulation of the strategic direction. The process is the framework; development is a part of it.

The strategy process is not the same as strategic planning

The strategy process encompasses deliberate planning AND emergent learning, while strategic planning is the formal, analytical part — the programming of an already defined direction. Mintzberg warns: When the planning process dominates the entire strategy process, strategic thinking is crowded out.

The strategy process is not the same as strategic management

The strategy process describes the cycle of strategy work, while strategic management encompasses the entire management discipline that connects strategy with organization, leadership, and culture. The process is the methodological scaffolding; strategic management is the discipline.

The strategy process in practice

Aydoo uses an iterative strategy process in strategy consulting: Strategic analysis identifies the leverage point (Phase 1), strategy development formulates the hypothesis (Phase 2), implementation tests it (Phase 3), and control validates or corrects (Phase 4). Each cycle sharpens the strategy — not through planning perfectionism but through systematic learning.

Conclusion

The strategy process is the systematic cycle of analysis, formulation, implementation, and control. The strategy process as a validation instrument treats each phase as a hypothesis test — the strategy is not formulated once and then executed but iteratively sharpened. Mintzberg: “Almost every sensible real-life strategy process combines emergent learning with deliberate control.”

Corporate strategy determines the content of the process. Strategic thinking provides the cognitive foundation. And the Bottleneck-Focused Strategy (EKS) shows where in the cycle the greatest leverage lies.

Sources

• Ansoff, Igor: Corporate Strategy. McGraw-Hill, 1965.
• Hrebiniak, Lawrence: Making Strategy Work. Pearson, 2013.
• Mintzberg, Henry: The Rise and Fall of Strategic Planning. Free Press, 1994.
• Mintzberg, Henry: Tracking Strategies. Oxford University Press, 2007.
• Rumelt, Richard: Good Strategy Bad Strategy. Crown Business, 2011.

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Frequently Asked Questions

What is a strategy process?

A strategy process is the systematic cycle of strategic analysis, strategy formulation, strategy implementation, and strategic control. It structures how a company moves from diagnosing its current situation through developing options for action to implementing and iteratively adapting its strategy.

What phases does the strategy process have?

The strategy process has four core phases: (1) Strategic analysis (Where do we stand?), (2) Strategy formulation (Where are we going?), (3) Strategy implementation (How do we get there?) and (4) Strategic control (Are we on track?). The phases form a cycle, not a linear plan — insights from control feed into the next analysis.

How does the strategy process differ from strategy development?

The strategy process encompasses the entire cycle from analysis through formulation and implementation to control. Strategy development is the second phase of this cycle — the formulation of the strategic direction. The strategy process is the framework; strategy development is a part of it.

Why is the strategy process a cycle?

The strategy process is a cycle because strategies must be adapted upon contact with reality. Mintzberg shows: Purely deliberate strategies that are implemented without adaptation fail when conditions change. Control provides feedback that informs the next analysis — a continuous learning process.

What tools support the strategy process?

In the analysis phase: SWOT, Porter’s Five Forces, PESTEL. In formulation: Ansoff Matrix, Blue Ocean, scenario planning. In implementation: Balanced Scorecard, OKR, Hoshin Kanri. In control: Strategy Map, KPI dashboards, regular reviews. Each phase has its own tools — the choice depends on the question at hand.

Related Articles

• Strategy — What strategy is and why companies need one
• Strategy Development — Phase 2 of the strategy process
• Strategy Implementation — Phase 3 of the strategy process
• Strategy Consulting — External guidance for the strategy process
• Strategic Thinking — The cognitive foundation of the process

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