Strategy

Dr Brian Monger

Strategy and strategic planning is constantly in danger of becoming the punching-bag of dissatisfied managers because it has either not been properly understood or applied ineffectively.

 

For illustration, if we take a sample of the academic critique we find that:

 

  • Strategies have a tendency to emerge through an often haphazard but discernible ‘pattern’ in a stream of decisions (Mintzberg, 1978) rather than within an all- embracing strategic planning framework.

 

  • This process is usually an ‘incremental’ rather than a ‘holistic’ one (Quinn, 1980).

 

  • Strategic planning, which becomes narrowly owned by a ‘planning department’ becomes sterile.

 

  • The transformation of strategic planning into a more widely shared strategic management vision is extremely rare, difficult to attain (Goold and Quinn, 1990).

 

  • Even when a strategic vision is attained, the barriers to action and change are often either not addressed or change is not mobilised effectively (Stonich, 1982; Johnson, 1988; Piercy, 1989).

The key to useful strategy is not knowledge of strategic planning but knowledge of the process(es). The keys to the process are insight, creativity, adaptability and intuition.

 

What is strategy?

Consider these definitions:

A (master) plan of action designed to achieve a desired overall aim.

 

A method of planning and marshalling resources for their most efficient and effective use

 

Strategic planning is the formal consideration of an organisation’s future course.

 

Competitive Strategy is the search for the best competitive position in any industry. It aims to establish a profitable sustainable position.

 

Strategy can be defined as the way an organisation sets out to differentiate itself (positively) from its competitors, using its relative strengths to satisfy market needs.

 

Strategic planning

A process of management which attempts to identify the operational environment and demands of the future and to take steps to anticipate and meet those demands in order to find the best way to utilise resources. In a business context, it is about identifying and implementing systems and procedures necessary to maintain lines of communication and information flow and looking for the next logical step in a timely and well-controlled plan of expansion

 

Strategy It is about trying to develop a (sustainable) advantage

Finding or obtaining an advantage, while at times difficult, is not the ultimate aim of strategy.

 

The ultimate aim is not to win the skirmish, perhaps not even the battle, but to win the war (and subsequent period after?). Thus the key objective of all military strategy seeks long term or sustainable advantage. This is essentially the difference between tactical and strategic thinking. Strategic planning is considered long term because it seeks long term advantage. A longer term advantage is also more economic.

 

Strategy implementation

Strategy implementation is about the allocation and management of sufficient resources (financial, personnel, time, technology support) Establishing a chain of command or some alternative structure (such as cross functional teams) Assigning responsibility of specific tasks or processes to specific individuals or groups It also involves managing the process.

 

This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances and making adjustments to the process as necessary. When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation and integration with (and/or conversion from) legacy processes. In order for a policy to work, there must be a level of consistency from every person in an organisation, including from the management. This is what needs to occur on the tactical level of management as well as strategic.

 

Tactics

Tactics are decisions that have a narrow scope, involve limited resources and have only short-run consequences, in contrast to strategy. A plan or course of action by which a strategy is to be implemented

 

Tactics is the way we implement a strategy in a more immediate situational sense. They provide the detail as to how the organisations executives will achieve the goals and objectives described in the strategy

 

Planning

Forging ahead without a plan is like driving in a fog.

 

Success can only be found with the aid of a plan. Anything else is luck and luck is not sustainable. Furthermore luck is something that happens to other people.

 

If you don’t care where you’re going, any road will take you there. (Alice in Wonderland).

 

Corporate performance is the result of combining planning and successful execution.

 

Strategy development

Strategy development is the managerial process of defining and obtaining a differential advantage by analysing the organisation’s internal and external environment. Organisational missions, objectives and policies provide guidelines for the process.

 

Better results – competitive advantage and superior performance is based on good strategic thinking.

 

Analysis and plain planning methods are insufficient for an organisation to survive and prosper. The firm must engage in strategic thinking and planning. Any organisation, to be capable of sustained success, must be predicated on building and maintaining a competitive advantage.

 

The Benefits of a Strategic Approach to Management

The advantages of strategic thinking and management process include:

 

  • Providing a communication and co-ordination system – the guidance it provides to people in the organisation, making clear just “what it is we are trying to do and to achieve”; The coordination it gives to all decision making.
  • Gaining a better overall understanding of the key factors in the environment; likely variables; trends.  All of which make it easier to adapt quickly as circumstances change
  • Forcing a wider and longer-range view. The pressures to manage with a short-term focus are strong and frequently lead to decision errors.
  • The contribution it makes to recognising and responding to change, (new opportunities, and threats).
  • The provision of a management and control system – the basis it provides for evaluating competing requests for investment.

Key Factors of Strategic Planning

There are a number of key factors to consider with any planning. The areas are as follows:

Focus refers to concentrating limited resources in the areas that will reap the most rewards.

 

Goals are what we are aiming to achieve from our efforts and investment. All too often that is simply equated with money and does not consider other, more important factors.

 

Competitive Advantage refers to the fact that we are operating in a competitive environment. If we are not aware of the fact that there are other players competing with us for the same client’s money, then we are likely to lose.

 

Superior Performance What is important for the organisation, is to plan a position which takes into account all of the players. Firstly the strategist must achieve superior performance to the competitor. At the same time the strategy must be in line with the strengths and weaknesses of the organisation and must also meet the needs of the market.   A successful strategy is one which gives a stronger matching of organisational strengths with market needs than that provided by the competition.

 

Sustainable Competitive Advantage (SCA), which suggests that there are many possible good ideas, but which one will remain yours (that the competitors cannot take away) and work for the longest time?

 

Creativity and Innovation What gives a strategy its competitive impact is the creative element and the will of the mind that conceived it to make it work.

 

Flexibility – The best strategies are flexible and allow for innovation. They are based on information, which gives us a series of probabilities to work with. Strategy is vulnerable to reality. One cannot totally predict the future. All business decisions are probabilistic. There is always a chance of the plan failing.

 

Basic Conceptual Simplicity – Complicated, long range plans rarely work and require constant adaptation and change – usually into another detailed long range plan. We must remember that any strategic plan is based partly on historic information and partly on future prediction. Once written it also becomes part of history.

 

The Ability to be Implemented. A wonderfully conceived and crafted strategy is meaningless unless it can be implemented to achieve the Mission and Goals of the organisation

 

Strategy is Also about a Competitive Environment

Competition is the very essence of success or failure of organisations.

Strategic Planning usually assumes a competitive environment. Except to better utilise resource an organisation has no need to engage in strategic planning if it does not have (or expect competition). It may undertake resource and development planning but without competitors it can only measure success in abstract terms.

 

What is important for the strategist, is to plan a position which takes into account all of the players. Firstly the strategist must achieve superior performance to the competitor. At the same time the strategy must be in line with the strengths and weaknesses of the organisation and must also meet the needs of the market.

 

A successful strategy is one which gives a stronger matching of organisational strengths with market needs than that provided by the competition.

 

 

Flexibility

Strategy is vulnerable to reality and change. One cannot totally predict the future. All business decisions are probabilistic. There is always a (high) chance of the plan failing, even if you have analysed all the input incessantly.

The best strategies are flexible and allow for innovation. They are based on information, which gives us a series of probabilities to work with.

 

Good strategies must be broad, directional and have room to move.

 

We must remember that any strategic plan is based partly on historic information and partly on future prediction. Once written it also becomes part of history.

The Value is in the Process

The key to strategy is not knowledge of strategic planning but knowledge of the process(es). The keys to the process are insight, creativity, adaptability and intuition.  All of which make it easier to adapt quickly as circumstances change

 

The Need for Strategy

 

In any business strategy, to be capable of sustained success, must be predicated on building and maintaining a competitive advantage. Competitive advantage grows out of positioning afirm in its competitive and industry

 

Competitive advantage is at the heart of environment so that it has an edge in coping with competitive a firm’s performance in competitive forces. Many different positioning advantages exist: offering markets the highest quality product, providing the best customer service, being the biggest in the market, having the lowest prices, dominating a particular geographic region, having the best product to meet the needs of a narrowly targeted group of buyers, guaranteeing the highest degree of performance and reliability, and offering the most value for the money (a combination of good quality, good service, and acceptable price) – to mention some of the most frequently used competitive edge possibilities.

 

Whichever positioning option is pursued, the essential competitive advantage requirement is that a viable number of buyers end up preferring the firm’s product offering because of’ it’s perceived “superior value.”

 

Superior value is nearly always created in either- of two ways: (1) by offering buyers a “standard” product at a lower price or (2) by using some differentiating technique to provide a “better” product that more than offsets the higher price it usually carries.

 

Strategic decisions are never simple to make, and they sometimes go wrong because of human shortcomings. Behavioural economics teaches us that a host of universal human biases, such as over-optimism about the likelihood of success, can affect strategic decisions. Such decisions are also vulnerable to what economists call the “principal-agent problem”: when the incentives of certain employees are misaligned with the interests of their companies, they tend to look out for themselves in deceptive ways.

 

Most corporate strategic plans have little to do with strategy. They are simply three-year or five-year rolling resource budgets and some sort of market share projection. Calling this strategic planning creates false expectations that the exercise will somehow produce a coherent strategy.

 

Dr Brian Monger is Executive Director of MAANZ International and an internationally known consultant with over 45 years of experience assisting both large and small companies with their projects.  He is a specialist in negotiation and behaviour He is also a highly effective and experienced trainer and educator

He is very well known and highly regarded as a Linked In groups manager

Did you find this article useful?  Please let us know

These articles are usually taken from notes from a MAANZ course.  If you are interested in obtaining the full set of notes (and a PowerPoint presentation) please contact us – info@marketing.org.au

Also check out other articles on http://smartamarketing2.wordpress.com

MAANZ International website http://www.marketing.org.au

Smartamarketing Slideshare (http://www.slideshare.net/bmonger)

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