Strategic Management

Defining Strategic Management

   Strategic Management is a stream of decisions and actions which leads to the 
   development of an effective strategy or strategies to help achieve corporate objectives.

(Gleck & Jaunch, Business Policy and Strategic Management)

   Strategic Management is concerned with the overall long-range direction 
   of organizations...    ...and consequently also provides a framework for
    operational management

(Greenley, Strategic Management)

   Strategic Management is a systematic approach to a major and increasingly 
   important responsibility of general management to position and relate the
   firm to its environment in a way which will assure its continued success and
   make it secure from surprises.

(Igor Ansoff, Implanting Strategic Management)

   Strategic Management can be defined as the art and science of formulating, 
   implementing, and evaluating cross-functional decisions that enable an 
   organization to achieve its objectives.

(Fred David, Strategic Management)

   Strategic Management is the decision process that aligns the organisation's internal 
   capability with the opportunities and threats if faces in its environment.

(Rowe et al., Strategic Management)

   Strategic Management is concerned with deciding on strategy and planning 
   how that strategy may be put into effect via:
        # Strategic Analysis
        # Strategic Choice
        # Strategic Implementation

(Johnson&Scholes, Exploring Corporate Strategy)

As can be seen from the above range of definitions there are several aspects to strategic management, but at its core it involves strategy formulation - including evaluation, strategic choice and decision-making, and strategy execution or implementation.

Johnson and Scholes, in their widely used textbook on corporate strategy present a "summary model" of the elements of strategic management at the centre of which is the 'triumvirate' of 'Strategic Analysis', 'Strategic Choice' and 'Strategy Implementation'. In Enterprise Architecture terms this is a 'content model' for the practice of Strategic Management. The Johnson and Scholes model is refined and reproduced in "Strategic Management and Information Systems". A further refined and adapted version for STREAMS is presented below.

A Skeptical Note

  Most revealing of all, many companies found that the reams of statistics and 
  targets, once assembled sat gathering dust. Occupied with running their operations,
  few managers at any level of the firm ever bothered to refer again to its handsomely
  bound corporate strategy.

(The Economist, March 1993 - quoted in "Strategy Bites Back")

As the well-known economist and strategic management thinker (and originator of "Distinctive Capabilities Theory"), John Kay, observes in "Strategy Bites Back" the words "strategy" and "strategic" have become essential buzzwords one of whose meanings is "expensive".

   There is more vacuity about strategy than about any other topic in business today.

(John Kay in the Financial Times, March 1998 - quoted in "Strategy Bites Back")

  ...Strategy absence need not be associated with organizational failure...
  Deliberate building-in of strategy absence may promote flexibility in an organization...
  Organizations with tight controls, high reliance on formalized procedures, and a passion
  for consistency may lose the ability to experiment and innovate.
  
  Management may use the absence of strategy to send unequivocal signals to both internal
  and external stakeholders.

  An absence of a rigid pattern of strategic decision-making may ensure that "noise" is
  retained in organizational systems, without which strategy may become a specialized 
  recipe that decreases flexibility and blocks learning and adaptation...

(Inkpen and Choudury, from "The Seeking of Strategy Where It Is Not: Toward A Theory of strategy Absence - quoted in "Strategy Bites Back")

   Strategies are to organizations what blinkers are to horses; they keep them going in 
   a straight line, but impede the use of peripheral vision. ... Setting oneself on a 
   predetermined course in unknown waters is the perfect way to sail straight into an
   iceberg.

(Henry Mintzberg in the California Management Review, March 1987 - quoted in "Strategy Bites Back")

   Organizations don't stand still; they are dynamic entities constantly evolving. 
   Unlike building, strategies do not get finished.  ...
   Strategies from the consulting office or the case classroom, even the executive
   suite, often prove sterile because real strategies are about living customers and
   dynamic markets and evolving technologies, not about abstract strengths, weaknesses, 
   threats, and opportunities.

(Bruce Ahlstrand & Henry Mintzberg - "Are Strategies Real Things?" in "Strategy Bites Back")

STREAMS takes two important messages from this skepticism towards "strategy". First that Strategy Execution is far more important than Strategy Formulation - and therefore should take proportionately much more time and effort. Second that the strategy should be formulated in "broad-brush" outlines and should not contain any detail (which is unnecessary, unfruitful and expensive) - as the detail will be "worked through" in execution. A third, subsidiary message is that a wide range of people in the enterprise should be involved in formulating that strategy - see Strategic dialogue below. The fourth, subsidiary message is that the strategic thinkers and planners - the strategy formulators - should be the same people as, or closely involved with, the doers and implementers - the strategy executors. There should not be "functional specialisation" in strategic management and since an enterprise can do perfectly well without a well-formulated strategy, if it has to, the enterprise can do without the strategy formulators (at least for the short-term).

Ultimately, however, STREAMS agrees with John Kay that despite the prevalent vacuity in "strategy", there is a real issue and that organizations that effectively execute on a good strategy will outperform those with no strategy, or an inability to execute or a bad strategy.

   But there is a real issue and a real subject of strategy for the corporation. And because
   strategy is based on distinctive capabilities, there are no generic strategies. There really
   are many interpretations of strategy. Strategy is what is right for you.

(John Kay in the Financial Times, March 1998 - quoted in "Strategy Bites Back")

McKinsey's "Manageing the Strategy Journey" points out that a great many companies are generating (and presumably pursuing) "substandard" strategies.

Strategy Formulation

Back to Elements of Strategic Management.

Strategy Execution

Back to Elements of Strategic Management.

Elements of Strategic Management

Strategic Analysis

Resources and Capabilities

Back to Elements of Strategic Management.

Strategic Choice

Strategy Options Selection

Back to Elements of Strategic Management.

Capability Analyses, Objectives Prioritization & Resources Rationing

Back to Elements of Strategic Management.

Alignment to Strategy

Back to Elements of Strategic Management.

The Strategic Dialogue Or Strategic Conversation

From the 1950s through to the 1990s the dominant mode of thinking, or paradigm, in strategic management was that of a small "strategic planning group" or coterie of "strategic thinkers" who produced a strategy for the majority of the organisation or enterprise to execute; but were not accountable for execution. This might be labelled as "Strategic Monologue" thinking. With the decline of strategic planning - as charted by Mintzberg - and the realisation that many such strategies were rendered either ineffective or irrelevant by unforeseen changes in the strategic context (see Deliberate and Emergent Strategies), and the accelerating rapidity of technological and market change and ever-growing uncertainty in industries and markets, the Strategic Monologue paradigm was heavily criticised - to the point of being untenable except in the most autocratic of organisations. The main critique was that a small group working in a self-reinforcing bubble of worldviews based on limited conversations was not as aware as it could be of the wider context, or indeed the capabilities of their own organisations, and was wasteful of the knowledge resources available within the enterprise - and produced ineffective and inappropriate strategies. Perhaps more damning of the paradigm were the many empirical observations of strategic failures from strategies produces by the approach.

Hence the concept of a Strategic Dialogue or Strategic Conversation was born - the essence of which is to expand the dialogue about strategic issues, and the development of the enterprise, corporate or organization strategy, to a much wider group, with greater diversity of worldviews and more representative of the wide range of stakeholders involved. Hence a shift from a "directive" style of strategic management to a "participative" style which makes the most of the knowledge and expertise available within the enterprise - rather than relying on the ability of a small number of high-status individuals. This new mode of strategic management has give rise to the phenomenon of Strategic Conversation events - where a number of people are brought together to debate strategic issues perhaps in the context of an enduring strategy review process.

   The quality of both strategic thinking and action rely, in important ways,
   on the quality of the strategic conversations underway at all levels in the
   organization. The design of these conversations is the defining contribution
   of the strategy-making process. When these strategic conversations about the
   design of the future operate successfully at both local and organizational
   levels, they create a "meta-capability" for strategy-making capable of both
   furthering intended strategy and at recognizing opportunities for emergent
   strategy.

Liedtka&Rosenblum ((1996)

Mintzberg's Ten 'Schools' of Strategy (Formulation)

In "Strategy Safari", Mintzberg et al. identify ten 'schools' of strategy:

1 The Design School

Strategy Formation as a Process of Conception

2 The Planning School

Strategy Formation as a Formal Process

3 The Positioning School

Strategy Formation as an Analytical Process

4 The Entrepreneurial School

Strategy Formation as a Visiionary process

5 The Cognitive School

Strategy Formation as a Mental process

6 The Learning School

Strategy Formation as an Emergent Process

7 The Power School

Strategy Formation as a Process of Negotiation

8 The Cultural School

Strategy Formation as a Collective Process

9 The Environmental School

Strategy Formation as a reactive process

10 The Configuration School

Strategy Formation as a Process of Transformation

Strategic Management, Systems Thinking and Management Science (and Operational Research)

Strategic Options Development and Analysis (SODA)

Strategic Options Development and Analysis is a methodology, methods and techniques for developing a model of the social and organisational issues in an enterprise that are perceived as a probelm situation about which decisions need to be made. It recognises that individuals and groups within and organization may have differing - possibly conflicting - views and perceptions of the issues. The model facilitates exposition and explication of the issues in a systematic fashion to allow their exploration prior to making decisions about courses of action. In terms of STREAMS ontology and epistemology the methodology operates between World 2 - the subjective world - and World 3 - the objective knowledge and social structures and forces world - and forms a part of the Critical Discourse or Strategic Conversation in the enterprise. Applied at the scale of the whole enterprise - or indeed a whole organisation within an enterprise - the methodology can be used to explore the strategic issues for the enterprise or organization before making decisions about what the strategy should be or what actions to take to implement the strategy.

More about Strategic Options Development and Analysis

Strategic Assumptions Surfacing and Testing (SAST)

The Strategic Assumptions Surfacing and Testing (SAST) methodology is a discipline and practice for tackling differences of views, perceptions, opinions and prescriptions in a group involved in strategy development.

   SAST was designed as an approach suitable for ill-structured problem contexts where differences of opinion 
   over which strategy to pursue prevent decisive actions from being taken.

Robert Flood and Michael Jackson in "Creative Problem Solving"

Stages of the SAST Methodology

1. Group Formation
2. Assumption Surfacing
3. Dialectical Debate
4. Synthesis

More about Strategic Assumptions Surfacing and Testing.