Quotes for July 2019

Strategic Thinking vs. Strategic Planning

In the view of F. Graetz, strategic thinking and planning are “distinct, but interrelated and complementary thought processes” that must sustain and support one another for effective strategic management. Graetz's model holds that the role of strategic thinking is "to seek innovation and imagine new and very different futures that may lead the company to redefine its core strategies and even its industry". Strategic planning's role is "to realise and to support strategies developed through the strategic thinking process and to integrate these back into the business".

Henry Mintzberg wrote in 1994 that strategic thinking is more about synthesis (i.e., "connecting the dots") than analysis (i.e., "finding the dots"). It is about "capturing what the manager learns from all sources (both the soft insights from his or her personal experiences and the experiences of others throughout the organization and the hard data from market research and the like) and then synthesizing that learning into a vision of the direction that the business should pursue."

Mintzberg argued that strategic thinking cannot be systematized and is the critical part of strategy formation, as opposed to strategic planning exercises. In his view, strategic planning happens around the strategy formation or strategic thinking activity, by providing inputs for the strategist to consider and providing plans for controlling the implementation of the strategy after it is formed.

According to Jeanne Liedtka, strategic thinking differs from strategic planning along the following dimensions of strategic management:

Strategic Thinking Competencies

Liedtka observed five “major attributes of strategic thinking in practice” that resemble competencies:

Systems perspective, refers to being able to understand implications of strategic actions. "A strategic thinker has a mental model of the complete end-to-end system of value creation, his or her role within it, and an understanding of the competencies it contains."

Intent focused which means more determined and less distractible than rivals in the marketplace. Crediting Hamel and Prahalad with popularising the concept, Liedtka describes strategic intent as "the focus that allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal."

Thinking in time means being able to hold past, present and future in mind at the same time to create better decision making and speed implementation. "Strategy is not driven by future intent alone. It is the gap between today’s reality and intent for the future that is critical." Scenario planning is a practical application for incorporating "thinking in time" into strategy making.

Hypothesis driven, ensuring that both creative and critical thinking are incorporated into strategy making. This competency explicitly incorporates the scientific method into strategic thinking.

Intelligent opportunism, which means being responsive to good opportunities. "The dilemma involved in using a well-articulated strategy to channel organisational efforts effectively and efficiently must always be balanced against the risks of losing sight of alternative strategies better suited to a changing environment."

What is Strategic Thinking?

Strategic thinking is defined as a mental or thinking process applied by an individual in the context of achieving a goal or set of goals in a game or other endeavor. As a cognitive activity, it produces thought.

When applied in an organizational strategic management process, strategic thinking involves the generation and application of unique business insights and opportunities intended to create competitive advantage for a firm or organization. It can be done individually, as well as collaboratively among key people who can positively alter an organization's future. Group strategic thinking may create more value by enabling a proactive and creative dialogue, where individuals gain other people's perspectives on critical and complex issues. This is regarded as a benefit in highly competitive and fast-changing business landscapes.

Strategic thinking includes finding and developing a strategic foresight capacity for an organization, by exploring all possible organizational futures, and challenging conventional thinking to foster decision making today. Recent strategic thought points ever more clearly towards the conclusion that the critical strategic question is not the conventional "What?", but "Why?" or "How?". The work of Henry Mintzberg and other authors, further support the conclusion; and also draw a clear distinction between strategic thinking and strategic planning, another important strategic management thought process.

General Andre Beaufre wrote in 1963 that strategic thinking "is a mental process, at once abstract and rational, which must be capable of synthesizing both psychological and material data. The strategist must have a great capacity for both analysis and synthesis; analysis is necessary to assemble the data on which he makes his diagnosis, synthesis in order to produce from these data the diagnosis itself—and the diagnosis in fact amounts to a choice between alternative courses of action."

There is no generally accepted definition for strategic thinking, no common agreement as to its role or importance, and no standardised list of key competencies of strategic thinkers. There is also no consensus on whether strategic thinking is an uncommon ideal or a common and observable property of strategy. Most agree that traditional models of strategy making, which are primarily based on strategic planning, are not working. Strategy in today's competitive business landscape is moving away from the basic ‘strategic planning’ to more of ‘strategic thinking’ in order to remain competitive.

However, both thought processes must work hand-in-hand in order to reap maximum benefit. It has been argued that the real heart of strategy is the 'strategist'; and for a better strategy execution requires a strategic thinker who can discover novel, imaginative strategies which can re-write the rules of the competitive game; and set in motion the chain of events that will shape and "define the future".

There are many tools and techniques to promote and discipline strategic thinking. The flowchart to the right provides a process for classifying a phenomenon as a scenario in the intuitive logics tradition, and how it differs from a number of other planning approaches.

What is Strategic Management? (Part 4 of 4)

3 Who Are the Strategy Managers

It goes without saying that an organization’s CEO (chief executive officer) and COO (chief operating officer) are strategy managers with ultimate authority and responsibility for formulating and implementing the strategic plans of the organization as a whole. But... those who implement the plan must make the plan! The strategic management function directly involves all managers with line authority at the corporate, line-of-business, functional area and major operating department levels.

4 Why Strategic Management Matters

The advantages of first-rate strategic thinking and a deep commitment to the strategic management process include:

1. the guidance it provides to the entire management hierarchy in making clear just “what it is we are trying to do and to achieve”

2. the contribution it makes to recognizing and responding to the winds of change, new opportunities, and threatening developments

3. the rationale it provides for management in evaluating competing requests for investment capital and new staff

4. the coordination it adds to all the strategy-related decision making done by managers across the organization

5. the proactive instead of the reactive posture that it gives to the organization.

What is Strategic Management? (Part 3 of 4)

2.4 Strategy Implementation and Execution

Putting the strategy into place and getting individuals and organizational subunits to go all out in executing their tasks is the next step. The leadership challenge is to so stimulate the enthusiasm, pride and commitment of managers and employees that an organization wide crusade emerges to carry out the chosen strategy and to achieve the targeted results.

2.5 Evaluating Strategic Performance and Making Corrective Adjustments

Neither strategy formulation nor strategy implementation is a once-forall-time task. Corrective adjustments may be necessary under particular circumstances. Testing out new ideas and learning what works and what doesn’t through trial and error is common. Thus, it is always incumbent upon management to monitor both how well the chosen strategy is working and how well implementation is proceeding, making corrective adjustments whenever better ways of doing things cand be supported.

2.6 The Process of Strategic Management

Because each component of strategic management entails judging whether to continue with things as they are or to make changes, the task of managing strategy is a dynamic process - all strategic decisions are subject to future modifications.

2.6.1 Characteristics of the Process

• managers do not necessarily go through the sequence in rigorous lockstep fashion.

• the tasks involved in strategic management are never isolated from everything else that falls within a manager’s purview

• the demands that strategy management puts on the manager’s time are irregular

• formulating and implementing strategy must be regarded as something that is ongoing and that evolves

The strategy implementation is the product of incremental improvements, internal fine-tuning, the pooling effect of many administrative decisions and gradual adjustments in the actions and behavior of both managerial subordinates and employees.

What is Strategic Management? (Part 2 of 4)

2 The Components of Strategic Management

• defining the organization’s business and developing a strategic mission

• establishing strategic objectives and performance targets

• formulating a strategy to achieve the objectives

• implementing an executing the chosen strategic plan

• evaluating strategic performance and making corrective adjustments

2.1 Defining the Business

“What is our business and what will it be?” is the fundamental directionsetting question facing the senior managers of any enterprise. Addressing this question thoughtfully compels executives:

• to think through the scope and mix of organizational activities,

• to reflect on what kind of organization they are presently trying to create,

• to consider what markets they believe the organization should be in, and

• to be specific about which needs of which buyers to serve The management’s view of what the organization seeks to do and to become over the long-term is the organization’s strategic mission.

2.2 Establishing Strategic Objectives

Specific performance targets are needed in all areas affecting the survival and success of an enterprise and at all levels of management from the corporate level on down deep into the organization’s structure.

The act of establishing formal objectives not only converts the direction an organization is headed into specific performance targets to be achieved but also guards against drift, aimless activity, confusion over what to accomplish, and loss of purpose.

What is establishing formal objectives?

• conversion of the target direction into specific performance targets to be achieved

• guard against

– drift,

– aimless activity,

– confusion over what to accomplish, and

– loss of purpose

Both short-run and long-run objectives are necessary. The strategic objectives for the organization should at minimum specify:

• the market position and competitive standing the organization aims to achieve

• annual profitability targets

• key financial and operating results to be achieved through the chosen activities

• any other milestones by which strategic success will be measured

2.3 Formulating Strategy

This component of strategic management reveals how the targeted results will be accomplished (a detailed action plan is necessary to achieve both short-run and long-run results). Objectives are the “ends” and strategy is the “means” of achieving them.

Strategy is a blueprint of all the important entrepreneurial, competitive and functional area actions that are to be taken in pursuing organizational objectives and positioning the organization for sustained success.

General Electric opinion on the issue is: “a statement of how what resources are going to be used to take advantage of which opportunities to minimize which threats to produce a desired result”:

How to respond to changing conditions

• what to do about shifting customer needs and emerging industry trends

• which new opportunities to pursue

• how to defend against competitive pressures and other externally imposed threats

• how to strengthen the mix of the firm’s activities by doing more of some things and less of others

How to allocate resources

• over the organization’s various business units, divisions, and functional departments

• making decisions that steer capital investment and human resources in behind the chosen strategic plan

How to compete

• how to develop customer appeal

• how to position the firm against rivals

• to emphasize some products and de-emphasize others

• meet specific competitive threats

What actions and approaches to take in each of the major functional areas and operating departments to create a unified and more powerful strategic effort throughout the business unit.

The issue of strategy goes up and down the managerial hierarchy (it is not just something that only top management wrestles with). Strategy formation is largely an exercise in entrepreneurship reflecting the long-term direction of the organization.

Analysis (situational analysis) and judgement are always factors. The right choice and strategy for one organization need not be right for another organization. One of the special values and contributions of managers is an ability to develop customized solutions that fit the unique features of an organization’s situation.

What is Strategic Management? (Part 1 of 4)

1 Definition of Strategic Management

Strategic management is the process where managers establish an organization’s long-term direction, set the specific performance objectives, develop strategies to achieve these objectives in the light of all the relevant internal and external circumstances, and undertake to execute the chosen action plans.

Strategic management steps:

• specifying an organization’s objectives,

• developing policies and plans to achieve these objectives,

• allocating resources to implement the policies

Therefore, we can see that strategic management is a combination of strategy formulation and strategy implementation. It is the highest level of managerial activity, usually performed by an organization’s Chief Executive Officer (CEO) and executive team. Strategic management provides overall direction to the enterprise.

Strategy formulation involves:

• doing a situation analysis: both internal and external; both microenvironmental and macro-environmental.

• concurrent with this assessment, objectives are set. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.

• these objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.

This three-step strategy formulation process is sometimes referred to as :

1. determining where you are now,

2. determining where you want to go, and then

3. determining how to get there.

These three questions are the essence of strategic planning.

1 Strategy implementation involves:

• allocation 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.

Leadership and Management Training & Consultancy (LMTC)

Baru-baru ini, dua jabatan di ILSAS telah bergabung menjadi satu jabatan yang diberi nama Leadership and Management Training & Consultancy (LMTC). Nama product LMTC ialah Leadership and Management Solutions (LMS). Rangkakerja LMS ialah seperti dibawah.

Kenapa rangkakerja LMS digambarkan begini? Sebab dalam memantap urus-tadbir satu-satu organisasi itu agar mampu memberi perkhidmatan terbaik kepada pelanggan, inilah cabang-cabang ilmu yang perlu diambilkira. Rangkakerja LMS ini juga bolehlah dipanggil sebagai 'body of knowledge' bila kita bercakap tentang soal leadership dan management.

Walaubagaimanapun, bagi menangani sebarang cabaran mahupun masalah sebarang organisasi itu, LMTC akan 'mengadun' cabang-cabang ilmu ini bagi membentuk 'resepi' untuk menangani cabaran dan masalah organisasi tersebut.

Kami yakin dengan inisiatif penggabungan dan rebranding produk ini dapat memberi servis yang lebih baik kepada sebarang organisasi dalam menangani cabaran dan masalah yang dihadapi.

Has your organisational culture evolved or have you cultivated it?

The problem surrounding culture in a lot of organisations is that senior leaders set the culture and define the organisation’s values, these often end up on a wall for everyone to see and it is assumed the culture and values are implemented.  However, the reality can sometimes be that the shared beliefs, behaviours and assumptions of what the culture and values really mean are different in the eyes of employees.

Over the next few weeks we are going to pose a few questions to unpack why this occurs.  These will include

1.            Do you (senior managers) understand the true culture and the lived values?

2.            Have you or your organisation identified the culture that you really want (Have you asked yourself “where do we really want your organisational culture to be”?)

3.            Have you considered how to build a sustainable organisational culture (processes)

4.            What is the best way to monitor and review your culture to ensure you maintain where you want to be.

So why do organisations get this so wrong?  To start with, let’s look at what organisational culture is.

Organisational culture can be defined as a unique set of shared beliefs, assumptions, values and norms that shape the socialisations, representations, language and practices of a group of people.  This is the mantra that employees use to guide behaviour and actions.  Culture is therefore refined and conveyed by employees, consciously and unconsciously now and into the future.

Elements of culture can be typified using this Iceberg model.  What you can see every day is classified as the artefacts or tangible elements such as physical structures, the language the organisation uses to function and sell its services, the rituals such as the way it positions itself and how its customers recognise it.  These are the vision, mission, purpose, goals and strategic objectives of the organisation.

However, it’s the intangible elements below the waterline that represent the reality of your organisations culture.  Things like shared values and shared assumptions, do they match what is above the line when leaders are not around, or does it change into something less desirable.  Other areas that sit below the waterline include office politics and old ways of doing things that all have an impact on the intended organisations culture.

The challenge for leaders is to work towards a match between the intended culture above the water line and what happens day to day under the waterline.  And this is what we will be looking at in more detail over the next few weeks.

Ask yourself these questions, do you understand the reality of your organisation’s culture and its lived values and is it a true representation of your business?