Strategic Management Simplified

In reality, this book has been under development for over 40 years. Only recently have I begun to organize my thoughts and experiences in a single manuscript. It represents the culmination of my experiences in industry and academia. The portfolio of experiences includes developing strategy as a young manager, researching strategy as an academic, teaching countless undergraduate, graduate, and executive education audiences, and finally consulting with numerous organizations to develop strategy. During this entire time, I have been seeking to understand the most effective way to develop and manage strategy. My early work experience was essentially with yearly operational planning in a small, private firm that took our top managers a few months time at the end of every year. The result was a lengthy tome that sat on our shelves but was hardly ever consulted until time to prepare the next year’s plan. The basic problem with this approach was that almost as soon as the plan document was done, the world changed. Different opportunities, unexpected problems, and the economy were just some of the sources of change that made the plan obsolete. The result was that we intuitively reacted to the changed environment without being effectively assisted by our “plan” or the process we used to develop it. This plan was basically a detailed “budget”, but it did not provide me with assistance I really was seeking in my daily decision making. Another fundamental problem with this approach was that after doing it for a few years, everyone merely updated the previous year’s plan without taking time to really examine if these activities were the best things we could be doing. In effect, it became just another task that needed to be done, but had little impact on our daily activities. It was never referred to when making resource allocation decisions on new issues or opportunities. The good aspect of the process was that it forced management to spend some time thinking about what we needed to achieve in revenues and cost containment to meet our sales and profit goals for the year. However, this exposure to budgetary planning left me with a desire to find something that would provide meaningful direction to the organization without taking so much management time to develop. In addition to my “in-house” experience, my job allowed me to be exposed to some of the largest firms in the world. As a manager of technical sales, I was able to interact and observe the strategic approaches and results of these firms. My experiences suggested that for most of these firms there did not appear to be a well developed and coordinated overall strategy guiding their technology decisions. In many cases the actions and decisions of the technical people did not seem to be related to the stated “strategy” of these organizations. This fact also piqued my curiosity with respect to how to manage better the strategic direction of firms. After 13 years in this environment, I left my practitioner job and went back to school to get a Ph.D. in Strategic Management. This experience opened my eyes to exactly what strategy is and, most importantly, how personal decision making is so central to the concept. It provided me a totally different perspective on the concept of strategy for organizations. The combination of the practitioner and academic researcher perspectives motivated me to develop an approach to strategy that would address the problems I had observed as a practitioner. First, any process would need to provide meaningful, real-time direction for individual resource allocation decision making throughout the organization. Second, it would need to be developed reasonably quickly to allow small organizations to utilize the concept effectively and large organizations to adapt quicker. Third, it would need to be continuously adaptable to the many environmental and organizational changes that constantly occur. And last, it would need to be understandable and actionable by employees at all levels of the organization. I utilized the research and academic knowledge and practical experiences I had been exposed to and developed an approach to strategic management that I believed would address these criteria. I refined my understanding of the process and my approach as I applied the techniques successfully to multiple organizations, both for profit and not for profit. The result is the material presented in this book. Chapter 1 outlines how I define the strategy concept as a basis for the rest of the book. Chapter 2 discusses several characteristics and managerial policies of organizations that have been shown to be essential context for successful strategic management in both the formulation and implementation stages of strategy. Chapter 3 develops a set of desired outcomes that should result from any successful strategic management system. Chapter 4 presents a strategic decision making framework and its various elements that I have found to be useful in making such decisions. Chapter 5 then introduces a very simple management process for implementing the framework and addressing the criteria set out in chapter 3. Finally, chapter 6 provides examples of the experiences of real organizations I have personally facilitated in utilizing this approach. (I must add here that I am indebted to the three organizations included for allowing me to share their strategies with outsiders.) A simple caveat is that virtually every organization that attempts to manage strategically wonders if they are optimally using their time and resources, regardless of what process or approach they are using. Along with the many books on the topic, virtually every consultant of strategic planning (and there are thousands) recommends a different process or set of tools. Most practitioners have tried various processes and methods (as well as consultants), until they settle on a method that at least seems most effective. The fact is, there are as many different processes and tools for developing and implementing strategic planning as there are organizations. In other words, managers modify basic strategy processes and tools to fit best their specific organization, culture, external environment, personal preferences, managerial philosophies, and styles. 1 My experience over the years suggests the model I propose is no different. In fact, virtually every organization I have worked with has started with my model and taken what worked for them to develop their own unique, individualized approach. The key to these modified approaches was a fundamental belief in the underlying philosophy that is the foundation of this model. What I sincerely hope will result is that the ideas and concepts introduced in this book will at least force you to think about how you are currently doing strategic planning. If the ideas presented herein resonate with you, perhaps you can use some of the model. If you have never done any strategic planning, and the ideas presented make sense to you, I suggest you start with this model and build on it as you go. If you don’t ascribe to the basic management philosophy implied in the book, I strongly suggest you stay with what you currently are doing. On the other hand, if these points don’t fit your idea of good management practices I doubt you will need my advice to reject the approach outright. Lastly just a word about why I use the term strategic management instead of strategic planning. The clear implication is that strategy is ever changing in response to changes in the organization and the external environment. As such, it is very much a dynamic phenomenon. The term “plan” implies a static (or point in time) exercise, while the term “management” suggests interaction and responsiveness to dynamic context. All kinds of plans can be developed to lead action, but they should be based on a strategy for the organization.