THE PROCESS OF STRATEGIC MANAGEMENT - PART ONE

A lot is being written about strategy. The subject is critical, it is complex, but it does not need to be complicated. Based on “The Five Forces of Enterprise”, let us revisit some of the basics.? (1) This is the first of a series of 5 articles, which I post on LinkedIn on Thursdays.

Often people say “strategy” when they actually mean the process of strategic management. Placed at the center of the global management system, it drives the personnel and the resources to work with the external partners and to produce products.

To be effective, the process of strategic management must? be systemic to encompass different types of business. it must be synergistic to connect and to energize the forces of the enterprise. And, last but not least, this process must be stimulating to spawn creativity. To this effect the process of strategic management (hereafter PSM) should adequately cover the following 5 “C”.

CLARITY: To keep thing clear and simple, the advocated PSM - captured under the acronym SP.I.D.E.R. - sequences and connects the following 5 steps:? studies, strategy, and plans; the investments, the process of strategic and organizational deployment; the execution; the reviews of these 5 steps.

COMPREHENSIVENESS: Peter Drucker’s “Doing the right thing right” underscores the need to combine the right strategy with the right execution in the frame of the different types of business that the enterprise manages.

CONNECTIVITY: the planners and the doers must work together to share knowledges and motivation.

CREATIVITY: the previous “Cs” should set off ideation, imagination, and innovation, and heed to Peter Drucker’s “The best way to manage the future is to create it”.

CONTINUITY: the business is a constant albeit changing flow, and the process of strategic management must keep things moving. Top-down budgets must be replaced by performing plans.

THE 5 “C” OF THE SP.I.D.E.R.

Clarity: There are different types of business. Larger companies run simultaneously several or all the different types of business, namely: business to be exploited, to be expanded, to be engineered, to be explored, to exit.

The business-leaders at the different levels and in the different functions manage as appropriate the business to be exploited, to be expanded, to exit. The executives and special teams focus on the businesses to be engineered with transformations and/or with mergers + acquisitions, and on the businesses to be to be explored.

The business-leaders must grasp the peculiarities, the different life-cycles, and the different approaches each of these business types may require. The enterprise’s composition of the aforementioned 5 types of business will significantly affect the balance of the risks and rewards, of the resources and their return on investment, and the overall sustainability of success over time-horizons.

Hoshin planning merely looked on 4-5 business breakthroughs, and some strategy-models concentrate on the businesses to be explored. But the businesses to be explored and/or the businesses to be engineered while exciting should not lead business-leaders to neglect the businesses needed to finance future ventures.

Comprehensiveness: the strategy must include the internal and external environments, the past and the future. Moreover, the advocated process of strategic management (PSM) integrates 5 steps that cover the full cycle from research to reviews.

° Our PSM integrates both the internal as well as the external business environment. Mandela observed: “Changes start inside-out”. Indeed, the present strengths and weaknesses will seriously affect the enterprise’s effectiveness tackling future opportunities and threats.

“Culture eats strategy for breakfast”, a well-known axiom, should remind business-leaders that the internal business environment’s mindsets, methods of management, and means will impact the enterprise’s ability to implement the strategy that has been set.

Yet, some of the well-known strategy books merely focus on what the enterprise does on the chosen markets, and they neglect the internal business environment. Their index does not feature “culture”. Forgetting “the way we do things down here” can cause toxic estrangements between the planers and the doers.

To be complete, the business strategy must duly envisage the likely/possible reactions of the 5 external stakeholders, and the ensuing likely/possible impact on the five forces of enterprise, namely: the people, the power of the resources, the process of strategic management, the partners, the? products. ?(1)

° W. Faulkner posited: “The pasts is never dead. It is not even past”. When developing the strategy, some business-leaders tend to neglect the past. J. J. Dordain submitted: “The shortest way to understand ?the future goes through a deep understanding of the past”. We submit that the future will be built – at least in part – on the tangible and intangible resources and that have been created in the past, and on the trusted capabilities.

° Some of the best-known authors present powerful models on strategy. A mega-chip runs a computer, but people need a computer to work. Likewise, a model of strategy can run strategic management, but people need a comprehensive process of strategic management in order to perform.

Peter Drucker’s? “Doing the right thing right” underscores the importance of performing on all the parts of the process of strategic management. And Morris Chang put it quite clearly: “Without strategy executions is aimless. Without execution strategy is useless”.

Our SP.I.D.E.R. encompasses the full PSM from research to reviews, i.e. from the study of the past and of the future to the reviews of the whole process.

Connectivity: Some strategy models that are presented as a pyramid or as a cascade to underscore a top-down thrust.

Taylorism and the traditional management emphasize the separation between the different levels and the different functions. Traditionally the strategy was reserved to the top-team, and the lower levels were not even encouraged to provide inputs.

Often the strategy and the plans that are cascaded top-down are poorly understood by their executioners who become disengaged and just follow orders. Dr. W. E. Deming said: “People hang up their coat and their brain when they get to work, and they pick them up when they leave.” And so, quite some time ago Kaplan and Norton observed: ?“Nine out of ten organizations fail to execute their strategies.”

The advocated process of strategic management (PSM), the SP.I.D.E.R., is not a pyramid or a cascade, but a ring that sequences and that iteratively connects the 5 steps or sub-processes of strategic management, namely: the studies-strategy-plans, the investments, the strategic and organizational deployment, the execution, and the reviews. Both the planners and the doers are involved as appropriate in the 5 aforementioned steps.

“The Five Forces of Enterprise” sequence as follows the five forces of the enterprise, namely: people, powers, PSM, partners, products. So, placed in the middle, the PSM connects the personnel and power of the resources on the internal environment’s with the partners and the products/outcomes on the? external environment.? (1)

In order to implicate the teams of the personnel at the different levels and in the different functions in the business strategy, the PSM provides a logical sequence of steps that are simple, synergistic, and stimulating.

Creativity: Peter Drucker posited “The best way to manage the future is to create it”. So, creativity is generated by involving people at the different levels and in the different functions in small task-groups that apply to innovative projects the following 5 “i”, namely:? ideation, inspection, imagination, implementation, and improvements. (1)

Agile management’s decentralization, delayering, and delegating powers to the teams arouses people’s participation in running the 5 “a”, i.e. alertness, anticipation, agility, adroitness, and assessment. The team-leaders must engage people in observing and in reporting what they see changing in the markets, and to support their creative initiatives. They may be reminded of Peter Drucker’s “Look out the window see what is visible but not yet seen”.

Continuity: Traditional management features an annual setting of the strategy and of the plans, and an annual deployment of the budgets. This practice simply disregards the fact that business is a dynamic and continuous process. Moreover budgets merely lead to sand-bagging, to sidestepping responsibilities, and to tiptoeing around innovative initiatives.

?Conversely, the PSM develops and deploys plans with targets and means that are deployed on teams that cooperate with other teams on the same value-chain as well as with teams of other value-chains. The inter-team cooperations are discussed, and lead to acceptances and to commitments. People who understand the plans are well placed to understand the reasons to modify them,t and will be ready to contribute.

The last step of the? SP.I.D.E.R. features a review of each of the 5 steps. Some steps take some time to produce results, and interim reviews can be applied. However, the efficiencies of the aforementioned 5 “C” of the process of strategic management can be checked fairly regularly.

I hope you found the 5 “C” interesting, and that you will post your comments.

The second article of this series on the process of strategic management will be posted on LinkedIn on next Thursday. It will provide an overview on the SP.I.D.E.R.’s ?study of the past and study of the future, which serve as a basis for the development of the strategy.

(1)nbsp; W. A. Sussland “The Five Forces of Enterprise” Kindle 2023 $ 27