20076355-strategic-management-and-business-management-f (2)

1

Strategic Management

Strategic management is the art and science of formulating,implementing and evaluating cross-functional decisions thatwill enable an organization to achieve its objectives. It is theprocess of specifying the organization's objectives, developingpolicies and plans to achieve these objectives, and allocatingresources to implement the policies and plans to achieve theorganization's objectives.

Strategic management, therefore, combines the activitiesof the various functional areas of a business to achieveorganizational objectives. It is the highest level of managerialactivity, usually formulated by the Board of directors andperformed by the organization's Chief Executive Officer (CEO)and executive team. Strategic management provides overalldirection to the enterprise and is closely related to the field ofOrganization Studies. In the field of business administrationit is possible mention to the "strategic consistency." Accordingto Arieu (2007), "there is strategic consistency when the actionsof an organization are consistent with the expectations ofmanagement, and these in turn are with the market and thecontext."

"Strategic management is an ongoing process that assessesthe business and the industries in which the company isinvolved; assesses its competitors and sets goals and strategiesto meet all existing and potential competitors; and then

Strategic Management and Business Management Strategic Management2 3

reassesses each strategy annually or quarterly [i.e. regularly]to determine how it has been implemented and whether it hassucceeded or needs replacement by a new strategy to meetchanged circumstances, new technology, new competitors, anew economic environment., or a new social, financial, orpolitical environment." (Lamb, 1984:ix)

PROCESSES

Strategic management is a combination of three mainprocesses which are as follows (as documented by LemonConsulting)

Strategy Formulation

•Performing a situation analysis, self-evaluation and competitoranalysis: both internal and external; both micro-environmentaland macro-environmental.

• Concurrent with this assessment, objectives are set.These objectives should be parallel to a timeline; someare in the short-term and others on the long-term. Thisinvolves crafting vision statements (long term view ofa possible future), mission statements (the role that theorganization gives itself in society), overall corporateobjectives (both financial and strategic), strategicbusiness unit objectives (both financial and strategic),and tactical objectives.

• These objectives should, in the light of the situationanalysis, suggest a strategic plan. The plan provides thedetails of how to achieve these objectives.

This three-step strategy formulation process is sometimesreferred to as determining where you are now, determiningwhere you want to go, and then determining how to get there.These three questions are the essence of strategic planning.SWOT Analysis: I/O Economics for the external factors andRBV for the internal factors.

Strategy Implementation

• Allocation and management of sufficient resources(financial, personnel, time, technology support)

• Establishing a chain of command or some alternativestructure (such as cross functional teams)

• Assigning responsibility of specific tasks or processesto specific individuals or groups

• It also involves managing the process. This includesmonitoring results, comparing to benchmarks and bestpractices, evaluating the efficacy and efficiency of theprocess, controlling for variances, and makingadjustments to the process as necessary.

• When implementing specific programs, this involvesacquiring the requisite resources, developing theprocess, training, process testing, documentation, andintegration with (and/or conversion from) legacyprocesses.

Strategy Evaluation

• Measuring the effectiveness of the organizationalstrategy. It's extremely important to conduct a SWOTanalysis to figure out the strengths, weaknesses,opportunities and threats (both internal and external)of the entity in question. This may require to take certainprecautionary measures or even to change the entirestrategy.

In corporate strategy, Johnson and Scholes present a modelin which strategic options are evaluated against three keysuccess criteria:

• Suitability (would it work?)

• Feasibility (can it be made to work?)

• Acceptability (will they work it?)


SUITABILITY

Suitability deals with the overall rationale of the strategy.The key point to consider is whether the strategy would addressthe key strategic issues underlined by the organisation'sstrategic position.

• Does it make economic sense?

• Would the organisation obtain economies of scale,economies of scope or experience economy?

• Would it be suitable in terms of environment andcapabilities?

Tools that can be used to evaluate suitability include:

• SWOT Analysis

• Ranking strategic options

• Decision trees

• What-if analysis

FEASIBILITY

Feasibility is concerned with the resources required toimplement the strategy are available, can be developed orobtained. Resources include funding, people, time andinformation. Tools that can be used to evaluate feasibilityinclude:

• cash flow analysis and forecasting

• break-even analysis

• resource deployment analysis

ACCEPTABILITY

Acceptability is concerned with the expectations of theidentified stakeholders (mainly shareholders, employees andcustomers) with the expected performance outcomes, whichcan be return, risk and stakeholder reactions.

• Return deals with the benefits expected by thestakeholders (financial and non-financial). For example,

shareholders would expect the increase of their wealth,employees would expect improvement in their careersand customers would expect better value for money.

• Risk deals with the probability and consequences offailure of a strategy (financial and non-financial).

• Stakeholder reactions deals with anticipating the likelyreaction of stakeholders. Shareholders could opposethe issuing of new shares, employees and unions couldoppose outsourcing for fear of loosing their jobs,customers could have concerns over a merger withregards to quality and support.

Tools that can be used to evaluate acceptability include:

• what-if analysis

• stakeholder mapping

GENERAL APPROACHES

In general terms, there are two main approaches, whichare opposite but complement each other in some ways, tostrategic management:

• The Industrial Organizational Approach

o based on economic theory - deals with issues likecompetitive rivalry, resource allocation, economiesof scale

o assumptions - rationality, self discipline behaviour,profit maximization

• The Sociological Approach

o deals primarily with human interactions

o assumptions - bounded rationality, satisfyingbehaviour, profit sub-optimality. An example of acompany that currently operates this way is Google

Strategic management techniques can be viewed as bottom-up, top-down, or collaborative processes. In the bottom-upapproach, employees submit proposals to their managers who,


in turn, funnel the best ideas further up the organization. Thisis often accomplished by a capital budgeting process. Proposalsare assessed using financial criteria such as return on investmentor cost-benefit analysis. Cost underestimation and benefitoverestimation are major sources of error.

The proposals that are approved form the substance of anew strategy, all of which is done without a grand strategicdesign or a strategic architect. The top-down approach is themost common by far. In it, the CEO, possibly with the assistanceof a strategic planning team, decides on the overall directionthe company should take. Some organizations are starting toexperiment with collaborative strategic planning techniquesthat recognize the emergent nature of strategic decisions.

THE STRATEGY HIERARCHY

In most (large) corporations there are several levels ofstrategy. Strategic management is the highest in the sense thatit is the broadest, applying to all parts of the firm. It givesdirection to corporate values, corporate culture, corporate goals,and corporate missions. Under this broad corporate strategythere are often functional or business unit strategies.

Functional strategies include marketing strategies, newproduct development strategies, human resource strategies,financial strategies, legal strategies, supply-chain strategies,and information technology management strategies. Theemphasis is on short and medium term plans and is limitedto the domain of each department's functional responsibility.Each functional department attempts to do its part in meetingoverall corporate objectives, and hence to some extent theirstrategies are derived from broader corporate strategies.

Many companies feel that a functional organizationalstructure is not an efficient way to organize activities so theyhave reengineered according to processes or strategic businessunits (called SBUs). A strategic business unit is a semi-

autonomous unit within an organization. It is usuallyresponsible for its own budgeting, new product decisions,hiring decisions, and price setting. An SBU is treated as aninternal profit centre by corporate headquarters. Each SBU isresponsible for developing its business strategies, strategiesthat must be in tune with broader corporate strategies.

The "lowest" level of strategy is operational strategy. It isvery narrow in focus and deals with day-to-day operationalactivities such as scheduling criteria. It must operate within abudget but is not at liberty to adjust or create that budget.Operational level strategy was encouraged by Peter Druckerin his theory of management by objectives (MBO). Operationallevel strategies are informed by business level strategies which,in turn, are informed by corporate level strategies. Businessstrategy, which refers to the aggregated operational strategiesof single business firm or that of an SBU in a diversifiedcorporation refers to the way in which a firm competes in itschosen arenas.

Corporate strategy, then, refers to the overarching strategyof the diversified firm. Such corporate strategy answers thequestions of "in which businesses should we compete?" and"how does being in one business add to the competitiveadvantage of another portfolio firm, as well as the competitiveadvantage of the corporation as a whole?"

Since the turn of the millennium, there has been a tendencyin some firms to revert to a simpler strategic structure. Thisis being driven by information technology. It is felt thatknowledge management systems should be used to shareinformation and create common goals.

Strategic divisions are thought to hamper this process.Most recently, this notion of strategy has been captured underthe rubric of dynamic strategy, popularized by the strategicmanagement textbook authored by Carpenter and Sanders.This work builds on that of Brown and Eisenhart as well as


Christensen and portrays firm strategy, both business andcorporate, as necessarily embracing ongoing strategic change,and the seamless integration of strategy formulation andimplementation. Such change and implementation are usuallybuilt into the strategy through the staging and pacing facets.

HISTORICAL DEVELOPMENT OF STRATEGICMANAGEMENT

BIRTH OF STRATEGIC MANAGEMENT

Strategic management as a discipline originated in the1950s and 60s. Although there were numerous earlycontributors to the literature, the most influential pioneerswere Alfred D. Chandler, Jr., Philip Selznick, Igor Ansoff, andPeter Drucker.

Alfred Chandler recognized the importance of coordinatingthe various aspects of management under one all-encompassingstrategy. Prior to this time the various functions of managementwere separate with little overall coordination or strategy.Interactions between functions or between departments weretypically handled by a boundary position, that is, there wereone or two managers that relayed information back and forthbetween two departments.

Chandler also stressed the importance of taking a longterm perspective when looking to the future. In his 1962groundbreaking work Strategy and Structure, Chandler showedthat a long-term coordinated strategy was necessary to givea company structure, direction, and focus. He says it concisely,"structure follows strategy."

In 1957, Philip Selznick introduced the idea of matchingthe organization's internal factors with external environmentalcircumstances. This core idea was developed into what wenow call SWOT analysis by Learned, Andrews, and others atthe Harvard Business School General Management Group.Strengths and weaknesses of the firm are assessed in light of

the opportunities and threats from the business environment.

Igor Ansoff built on Chandler's work by adding a rangeof strategic concepts and inventing a whole new vocabulary.He developed a strategy grid that compared market penetrationstrategies, product development strategies, marketdevelopment strategies and horizontal and vertical integrationand diversification strategies. He felt that management coulduse these strategies to systematically prepare for futureopportunities and challenges. In his 1965 classic CorporateStrategy, he developed the gap analysis still used today inwhich we must understand the gap between where we arecurrently and where we would like to be, then develop whathe called "gap reducing actions".

Peter F Drucker was a prolific strategy theorist, author ofdozens of management books, with a career spanning fivedecades. His contributions to strategic management were manybut two are most important. Firstly, he stressed the importanceof objectives. An organization without clear objectives is likea ship without a rudder. As early as 1954 he was developinga theory of management based on objectives. This evolved intohis theory of management by objectives (MBO). According toDrucker, the procedure of setting objectives and monitoringyour progress towards them should permeate the entireorganization, top to bottom. His other seminal contributionwas in predicting the importance of what today we would callintellectual capital. He predicted the rise of what he called the"knowledge worker" and explained the consequences of thisfor management. He said that knowledge work is non-hierarchical. Work would be carried out in teams with theperson most knowledgeable in the task at hand being thetemporary leader.

In 1985, Ellen-Earle Chaffee summarized what she thoughtwere the main elements of strategic management theory by the1970s:


• Strategic management involves adapting theorganization to its business environment.

• Strategic management is fluid and complex. Changecreates novel combinations of circumstances requiringunstructured non-repetitive responses.

• Strategic management affects the entire organizationby providing direction.

• Strategic management involves both strategy formation(she called it content) and also strategy implementation(she called it process).

• Strategic management is partially planned and partiallyunplanned.

• Strategic management is done at several levels: overallcorporate strategy, and individual business strategies.

• Strategic management involves both conceptual andanalytical thought processes.

GROWTH AND PORTFOLIO THEORY

In the 1970s much of strategic management dealt with size,growth, and portfolio theory. The PIMS study was a long termstudy, started in the 1960s and lasted for 19 years, that attemptedto understand the Profit Impact of Marketing Strategies (PIMS),particularly the effect of market share.

Started at General Electric, moved to Harvard in the early1970s, and then moved to the Strategic Planning Institute inthe late 1970s, it now contains decades of information on therelationship between profitability and strategy. Their initialconclusion was unambiguous: The greater a company's marketshare, the greater will be their rate of profit.

The high market share provides volume and economies ofscale. It also provides experience and learning curve advantages.The combined effect is increased profits. The studies conclusionscontinue to be drawn on by academics and companies today:

"PIMS provides compelling quantitative evidence as to whichbusiness strategies work and don't work" - Tom Peters.

The benefits of high market share naturally lead to aninterest in growth strategies. The relative advantages ofhorizontal integration, vertical integration, diversification,franchises, mergers and acquisitions, joint ventures, and organicgrowth were discussed. The most appropriate marketdominance strategies were assessed given the competitive andregulatory environment.

There was also research that indicated that a low marketshare strategy could also be very profitable. Schumacher (1973),Woo and Cooper (1982), Levenson (1984), and later Traverso(2002) showed how smaller niche players obtained very highreturns.

By the early 1980s the paradoxical conclusion was thathigh market share and low market share companies were oftenvery profitable but most of the companies in between werenot. This was sometimes called the "hole in the middle" problem.This anomaly would be explained by Michael Porter in the1980s.

The management of diversified organizations required newtechniques and new ways of thinking. The first CEO to addressthe problem of a multi-divisional company was Alfred Sloanat General Motors. GM was decentralized into semi-autonomous "strategic business units" (SBU's), but withcentralized support functions.

One of the most valuable concepts in the strategicmanagement of multi-divisional companies was portfoliotheory. In the previous decade Harry Markowitz and otherfinancial theorists developed the theory of portfolio analysis.It was concluded that a broad portfolio of financial assetscould reduce specific risk. In the 1970s marketers extended thetheory to product portfolio decisions and managerial strategistsextended it to operating division portfolios. Each of a company's


operating divisions were seen as an element in the corporateportfolio. Each operating division (also called strategic businessunits) was treated as a semi-independent profit center with itsown revenues, costs, objectives, and strategies.

Several techniques were developed to analyze therelationships between elements in a portfolio. B.C.G. Analysis,for example, was developed by the Boston Consulting Groupin the early 1970s. This was the theory that gave us thewonderful image of a CEO sitting on a stool milking a cashcow. Shortly after that the G.E. multi factoral model wasdeveloped by General Electric. Companies continued todiversify until the 1980s when it was realized that in manycases a portfolio of operating divisions was worth more asseparate completely independent companies.

THE MARKETING REVOLUTION

The 1970s also saw the rise of the marketing oriented firm.From the beginnings of capitalism it was assumed that the keyrequirement of business success was a product of high technicalquality. If you produced a product that worked well and wasdurable, it was assumed you would have no difficulty sellingthem at a profit. This was called the production orientationand it was generally true that good products could be soldwithout effort, encapsulated in the saying "Build a bettermousetrap and the world will beat a path to your door." Thiswas largely due to the growing numbers of affluent and middleclass people that capitalism had created.

But after the untapped demand caused by the second worldwar was saturated in the 1950s it became obvious that productswere not selling as easily as they had been. The answer wasto concentrate on selling. The 1950s and 1960s is known as thesales era and the guiding philosophy of business of the timeis today called the sales orientation. In the early 1970s TheodoreLevitt and others at Harvard argued that the sales orientationhad things backward. They claimed that instead of producing

products then trying to sell them to the customer, businessesshould start with the customer, find out what they wanted,and then produce it for them. The customer became the drivingforce behind all strategic business decisions. This marketingorientation, in the decades since its introduction, has beenreformulated and repackaged under numerous names includingcustomer orientation, marketing philosophy, customerintimacy, customer focus, customer driven, and market focused.

THE JAPANESE CHALLENGE

By the late 70s people had started to notice how successfulJapanese industry had become. In industry after industry,including steel, watches, ship building, cameras, autos, andelectronics, the Japanese were surpassing American andEuropean companies. Westerners wanted to know why.Numerous theories purported to explain the Japanese successincluding:

• Higher employee morale, dedication, and loyalty;

• Lower cost structure, including wages;

• Effective government industrial policy;

• Modernization after WWII leading to high capitalintensity and productivity;

• Economies of scale associated with increased exporting;

• Relatively low value of the Yen leading to low interestrates and capital costs, low dividend expectations, andinexpensive exports;

• Superior quality control techniques such as Total QualityManagement and other systems introduced by W.Edwards Deming in the 1950s and 60s.

Although there was some truth to all these potentialexplanations, there was clearly something missing. In fact by1980 the Japanese cost structure was higher than the American.And post WWII reconstruction was nearly 40 years in the past.The first management theorist to suggest an explanation was


Richard Pascale. In 1981 Richard Pascale and Anthony Athosin The Art of Japanese Management claimed that the mainreason for Japanese success was their superior managementtechniques.

They divided management into 7 aspects (which are alsoknown as McKinsey 7S Framework): Strategy, Structure,Systems, Skills, Staff, Style, and Supraordinate goals (whichwe would now call shared values). The first three of the 7 S'swere called hard factors and this is where American companiesexcelled. The remaining four factors (skills, staff, style, andshared values) were called soft factors and were not wellunderstood by American businesses of the time (for details onthe role of soft and hard factors see Wickens P.D. 1995.)Americans did not yet place great value on corporate culture,shared values and beliefs, and social cohesion in the workplace.In Japan the task of management was seen as managing thewhole complex of human needs, economic, social,psychological, and spiritual.

In America work was seen as something that was separatefrom the rest of one's life. It was quite common for Americansto exhibit a very different personality at work compared to therest of their lives. Pascale also highlighted the differencebetween decision making styles; hierarchical in America, andconsensus in Japan. He also claimed that American businesslacked long term vision, preferring instead to applymanagement fads and theories in a piecemeal fashion.

One year later The Mind of the Strategist was released inAmerica by Kenichi Ohmae, the head of McKinsey & Co.'sTokyo office. (It was originally published in Japan in 1975.) Heclaimed that strategy in America was too analytical. Strategyshould be a creative art: It is a frame of mind that requiresintuition and intellectual flexibility. He claimed that Americansconstrained their strategic options by thinking in terms ofanalytical techniques, rote formula, and step-by-step processes.

He compared the culture of Japan in which vagueness,ambiguity, and tentative decisions were acceptable, to Americanculture that valued fast decisions.

Also in 1982 Tom Peters and Robert Waterman releaseda study that would respond to the Japanese challenge head on.Peters and Waterman, who had several years earliercollaborated with Pascale and Athos at McKinsey & Co. asked"What makes an excellent company?". They looked at 62companies that they thought were fairly successful. Each wassubject to six performance criteria. To be classified as anexcellent company, it had to be above the 50th percentile in4 of the 6 performance metrics for 20 consecutive years. Forty-three companies passed the test. They then studied thesesuccessful companies and interviewed key executives. Theyconcluded in In Search of Excellence that there were 8 keys toexcellence that were shared by all 43 firms. They are:

• A bias for action - Do it. Try it. Don't waste time studyingit with multiple reports and committees.

• Customer focus - Get close to the customer. Know yourcustomer.

• Entrepreneurship - Even big companies act and thinksmall by giving people the authority to take initiatives.

• Productivity through people - Treat your people withrespect and they will reward you with productivity.

• Value-oriented CEOs - The CEO should activelypropagate corporate values throughout theorganization.

• Stick to the knitting - Do what you know well.

• Keep things simple and lean - Complexity encourageswaste and confusion.

• Simultaneously centralized and decentralized - Havetight centralized control while also allowing maximumindividual autonomy.


The basic blueprint on how to compete against the Japanesehad been drawn. But as J.E. Rehfeld (1994) explains it is nota straight forward task due to differences in culture. A certaintype of alchemy was required to transform knowledge fromvarious cultures into a management style that allows a specificcompany to compete in a globally diverse world. He says, forexample, that Japanese style kaizen (continuous improvement)techniques, although suitable for people socialized in Japaneseculture, have not been successful when implemented in theU.S. unless they are modified significantly.

GAINING COMPETITIVE ADVANTAGE

The Japanese challenge shook the confidence of the westernbusiness elite, but detailed comparisons of the two managementstyles and examinations of successful businesses convincedwesterners that they could overcome the challenge. The 1980sand early 1990s saw a plethora of theories explaining exactlyhow this could be done. They cannot all be detailed here, butsome of the more important strategic advances of the decadeare explained below.

Gary Hamel and C. K. Prahalad declared that strategyneeds to be more active and interactive; less "arm-chairplanning" was needed. They introduced terms like strategicintent and strategic architecture. Their most well knownadvance was the idea of core competency. They showed howimportant it was to know the one or two key things that yourcompany does better than the competition.

Active strategic management required active informationgathering and active problem solving. In the early days ofHewlett-Packard (H-P), Dave Packard and Bill Hewlett devisedan active management style that they called Management ByWalking Around (MBWA). Senior H-P managers were seldomat their desks. They spent most of their days visiting employees,customers, and suppliers. This direct contact with key peopleprovided them with a solid grounding from which viable

strategies could be crafted. The MBWA concept waspopularized in 1985 by a book by Tom Peters and NancyAustin. Japanese managers employ a similar system, whichoriginated at Honda, and is sometimes called the 3 G's (Genba,Genbutsu, and Genjitsu, which translate into "actual place","actual thing", and "actual situation").

Probably the most influential strategist of the decade wasMichael Porter. He introduced many new concepts including;5 forces analysis, generic strategies, the value chain, strategicgroups, and clusters. In 5 forces analysis he identifies theforces that shape a firm's strategic environment. It is like aSWOT analysis with structure and purpose. It shows how afirm can use these forces to obtain a sustainable competitiveadvantage. Porter modifies Chandler's dictum about structurefollowing strategy by introducing a second level of structure:Organizational structure follows strategy, which in turn followsindustry structure. Porter's generic strategies detail theinteraction between cost minimization strategies, productdifferentiation strategies, and market focus strategies. Althoughhe did not introduce these terms, he showed the importanceof choosing one of them rather than trying to position yourcompany between them. He also challenged managers to seetheir industry in terms of a value chain. A firm will be successfulonly to the extent that it contributes to the industry's valuechain. This forced management to look at its operations fromthe customer's point of view. Every operation should beexamined in terms of what value it adds in the eyes of the finalcustomer.

In 1993, John Kay took the idea of the value chain to afinancial level claiming " Adding value is the central purposeof business activity", where adding value is defined as thedifference between the market value of outputs and the costof inputs including capital, all divided by the firm's net output.Borrowing from Gary Hamel and Michael Porter, Kay claimsthat the role of strategic management is to identify your core


competencies, and then assemble a collection of assets that willincrease value added and provide a competitive advantage.He claims that there are 3 types of capabilities that can do this;innovation, reputation, and organizational structure.

The 1980s also saw the widespread acceptance ofpositioning theory. Although the theory originated with JackTrout in 1969, it didn't gain wide acceptance until Al Ries andJack Trout wrote their classic book "Positioning: The Battle ForYour Mind" (1979). The basic premise is that a strategy shouldnot be judged by internal company factors but by the waycustomers see it relative to the competition. Crafting andimplementing a strategy involves creating a position in themind of the collective consumer. Several techniques wereapplied to positioning theory, some newly invented but mostborrowed from other disciplines. Perceptual mapping forexample, creates visual displays of the relationships betweenpositions. Multidimensional scaling, discriminant analysis,factor analysis, and conjoint analysis are mathematicaltechniques used to determine the most relevant characteristics(called dimensions or factors) upon which positions should bebased. Preference regression can be used to determine vectorsof ideal positions and cluster analysis can identify clusters ofpositions.

Others felt that internal company resources were the key.In 1992, Jay Barney, for example, saw strategy as assemblingthe optimum mix of resources, including human, technology,and suppliers, and then configure them in unique andsustainable ways.

Michael Hammer and James Champy felt that theseresources needed to be restructured. This process, that theylabeled reengineering, involved organizing a firm's assetsaround whole processes rather than tasks. In this way a teamof people saw a project through, from inception to completion.This avoided functional silos where isolated departments

seldom talked to each other. It also eliminated waste due tofunctional overlap and interdepartmental communications.

In 1989 Richard Lester and the researchers at the MITIndustrial Performance Center identified seven best practicesand concluded that firms must accelerate the shift away fromthe mass production of low cost standardized products. Theseven areas of best practice were:

• Simultaneous continuous improvement in cost, quality,service, and product innovation

• Breaking down organizational barriers betweendepartments

• Eliminating layers of management creating flatterorganizational hierarchies.

• Closer relationships with customers and suppliers

• Intelligent use of new technology

• Global focus

• Improving human resource skills

The search for "best practices" is also called benchmarking.This involves determining where you need to improve, findingan organization that is exceptional in this area, then studyingthe company and applying its best practices in your firm.

A large group of theorists felt the area where westernbusiness was most lacking was product quality. People like W.Edwards Deming, Joseph M. Juran, A. Kearney, Philip Crosby,and Armand Feignbaum suggested quality improvementtechniques like Total Quality Management (TQM), continuousimprovement, lean manufacturing, Six Sigma, and Return onQuality (ROQ).

An equally large group of theorists felt that poor customerservice was the problem. People like James Heskett (1988), EarlSasser (1995), William Davidow, Len Schlesinger, A.Paraurgman (1988), Len Berry, Jane Kingman-Brundage,


Christopher Hart, and Christopher Lovelock (1994), gave usfishbone diagramming, service charting, Total Customer Service(TCS), the service profit chain, service gaps analysis, the serviceencounter, strategic service vision, service mapping, and serviceteams. Their underlying assumption was that there is no bettersource of competitive advantage than a continuous stream ofdelighted customers.

Process management uses some of the techniques fromproduct quality management and some of the techniques fromcustomer service management. It looks at an activity as asequential process. The objective is to find inefficiencies andmake the process more effective. Although the procedureshave a long history, dating back to Taylorism, the scope oftheir applicability has been greatly widened, leaving no aspectof the firm free from potential process improvements. Becauseof the broad applicability of process management techniques,they can be used as a basis for competitive advantage.

Some realized that businesses were spending much moreon acquiring new customers than on retaining current ones.Carl Sewell, Frederick F. Reichheld, C. Gronroos, and EarlSasser showed us how a competitive advantage could be foundin ensuring that customers returned again and again. This hascome to be known as the loyalty effect after Reicheld's bookof the same name in which he broadens the concept to includeemployee loyalty, supplier loyalty, distributor loyalty, andshareholder loyalty.

They also developed techniques for estimating the lifetimevalue of a loyal customer, called customer lifetime value (CLV).A significant movement started that attempted to recast sellingand marketing techniques into a long term endeavor thatcreated a sustained relationship with customers (calledrelationship selling, relationship marketing, and customerrelationship management). Customer relationship management(CRM) software (and its many variants) became an integral

tool that sustained this trend. James Gilmore and Joseph Pinefound competitive advantage in mass customization. Flexiblemanufacturing techniques allowed businesses to individualizeproducts for each customer without losing economies of scale.This effectively turned the product into a service. They alsorealized that if a service is mass customized by creating a"performance" for each individual client, that service would betransformed into an "experience". Their book, The ExperienceEconomy, along with the work of Bernd Schmitt convincedmany to see service provision as a form of theatre. This schoolof thought is sometimes referred to as customer experiencemanagement (CEM).

Like Peters and Waterman a decade earlier, James Collinsand Jerry Porras spent years conducting empirical research onwhat makes great companies. Six years of research uncovereda key underlying principle behind the 19 successful companiesthat they studied: They all encourage and preserve a coreideology that nurtures the company. Even though strategyand tactics change daily, the companies, nevertheless, wereable to maintain a core set of values.

These core values encourage employees to build anorganization that lasts. In Built To Last (1994) they claim thatshort term profit goals, cost cutting, and restructuring will notstimulate dedicated employees to build a great company thatwill endure. In 2000 Collins coined the term "built to flip" todescribe the prevailing business attitudes in Silicon Valley. Itdescribes a business culture where technological change inhibitsa long term focus. He also popularized the concept of theBHAG (Big Hairy Audacious Goal).

Arie de Geus (1997) undertook a similar study and obtainedsimilar results. He identified four key traits of companies thathad prospered for 50 years or more. They are:

• Sensitivity to the business environment - the ability tolearn and adjust


• Cohesion and identity - the ability to build a communitywith personality, vision, and purpose

• Tolerance and decentralization - the ability to buildrelationships

• Conservative financing

A company with these key characteristics he called a livingcompany because it is able to perpetuate itself. If a companyemphasizes knowledge rather than finance, and sees itself asan ongoing community of human beings, it has the potentialto become great and endure for decades. Such an organizationis an organic entity capable of learning (he called it a "learningorganization") and capable of creating its own processes, goals,and persona.

THE MILITARY THEORISTS

In the 1980s some business strategists realized that therewas a vast knowledge base stretching back thousands of yearsthat they had barely examined. They turned to military strategyfor guidance. Military strategy books such as The Art of Warby Sun Tzu, On War by von Clausewitz, and The Red Bookby Mao Zedong became instant business classics.

From Sun Tzu they learned the tactical side of militarystrategy and specific tactical prescriptions. From VonClausewitz they learned the dynamic and unpredictable natureof military strategy. From Mao Zedong they learned theprinciples of guerrilla warfare. The main marketing warfarebooks were:

• Business War Games by Barrie James, 1984

• Marketing Warfare by Al Ries and Jack Trout, 1986

• Leadership Secrets of Attila the Hun by Wess Roberts,1987

Philip Kotler was a well-known proponent of marketingwarfare strategy.

There were generally thought to be four types of businesswarfare theories. They are:

• Offensive marketing warfare strategies

• Defensive marketing warfare strategies

• Flanking marketing warfare strategies

• Guerrilla marketing warfare strategies

The marketing warfare literature also examined leadershipand motivation, intelligence gathering, types of marketingweapons, logistics, and communications.

By the turn of the century marketing warfare strategieshad gone out of favour. It was felt that they were limiting.There were many situations in which non-confrontationalapproaches were more appropriate. The "Strategy of theDolphin" was developed in the mid 1990s to give guidance asto when to use aggressive strategies and when to use passivestrategies. A variety of aggressiveness strategies weredeveloped.

In 1993, J. Moore used a similar metaphor. Instead of usingmilitary terms, he created an ecological theory of predatorsand prey (see ecological model of competition), a sort ofDarwinian management strategy in which market interactionsmimic long term ecological stability.

STRATEGIC CHANGE

In 1970, Alvin Toffler in Future Shock described a trendtowards accelerating rates of change. He illustrated how socialand technological norms had shorter lifespans with eachgeneration, and he questioned society's ability to cope with theresulting turmoil and anxiety. In past generations periods ofchange were always punctuated with times of stability. Thisallowed society to assimilate the change and deal with it beforethe next change arrived. But these periods of stability aregetting shorter and by the late 20th century had all butdisappeared. In 1980 in The Third Wave, Toffler characterized


this shift to relentless change as the defining feature of thethird phase of civilization (the first two phases being theagricultural and industrial waves).

He claimed that the dawn of this new phase will causegreat anxiety for those that grew up in the previousphases, and will cause much conflict and opportunity in thebusiness world. Hundreds of authors, particularly since theearly 1990s, have attempted to explain what this means forbusiness strategy.

In 1997, Watts Waker and Jim Taylor called this upheavala "500 year delta." They claimed these major upheavals occurevery 5 centuries. They said we are currently making thetransition from the "Age of Reason" to a new chaotic Age ofAccess. Jeremy Rifkin (2000) popularized and expanded thisterm, "age of access" three years later in his book of the samename.

In 1968, Peter Drucker (1969) coined the phrase Age ofDiscontinuity to describe the way change forces disruptionsinto the continuity of our lives. In an age of continuity attemptsto predict the future by extrapolating from the past can besomewhat accurate. But according to Drucker, we are now inan age of discontinuity and extrapolating from the past ishopelessly ineffective. We cannot assume that trends that existtoday will continue into the future. He identifies four sourcesof discontinuity: new technologies, globalization, culturalpluralism, and knowledge capital.

In 2000, Gary Hamel discussed strategic decay, the notionthat the value of all strategies, no matter how brilliant, decaysover time.

In 1978, Dereck Abell (Abell, D. 1978) described strategicwindows and stressed the importance of the timing (bothentrance and exit) of any given strategy. This has led somestrategic planners to build planned obsolescence into theirstrategies.

In 1989, Charles Handy identified two types of change.Strategic drift is a gradual change that occurs so subtly thatit is not noticed until it is too late. By contrast, transformationalchange is sudden and radical. It is typically caused bydiscontinuities (or exogenous shocks) in the businessenvironment. The point where a new trend is initiated is calleda strategic inflection point by Andy Grove. Inflection pointscan be subtle or radical.

In 2000, Malcolm Gladwell discussed the importance of thetipping point, that point where a trend or fad acquires criticalmass and takes off.

In 1983, Noel Tichy recognized that because we are allbeings of habit we tend to repeat what we are comfortablewith. He wrote that this is a trap that constrains our creativity,prevents us from exploring new ideas, and hampers our dealingwith the full complexity of new issues. He developed asystematic method of dealing with change that involved lookingat any new issue from three angles: technical and production,political and resource allocation, and corporate culture.

In 1990, Richard Pascale (Pascale, R. 1990) wrote thatrelentless change requires that businesses continuously reinventthemselves. His famous maxim is "Nothing fails like success"by which he means that what was a strength yesterday becomesthe root of weakness today, We tend to depend on what workedyesterday and refuse to let go of what worked so well for usin the past. Prevailing strategies become self-confirming. Inorder to avoid this trap, businesses must stimulate a spirit ofinquiry and healthy debate. They must encourage a creativeprocess of self renewal based on constructive conflict.

In 1996, Art Kleiner (1996) claimed that to foster a corporateculture that embraces change, you have to hire the right people;heretics, heroes, outlaws, and visionaries. The conservativebureaucrat that made such a good middle manager inyesterday's hierarchical organizations is of little use today. A


decade earlier Peters and Austin (1985) had stressed theimportance of nurturing champions and heroes. They said wehave a tendency to dismiss new ideas, so to overcome this, weshould support those few people in the organization that havethe courage to put their career and reputation on the line foran unproven idea.

In 1996, Adrian Slywotsky showed how changes in thebusiness environment are reflected in value migrations betweenindustries, between companies, and within companies. Heclaimed that recognizing the patterns behind these valuemigrations is necessary if we wish to understand the world ofchaotic change. In "Profit Patterns" (1999) he describedbusinesses as being in a state of strategic anticipation as theytry to spot emerging patterns. Slywotsky and his team identified30 patterns that have transformed industry after industry.

In 1997, Clayton Christensen (1997) took the position thatgreat companies can fail precisely because they do everythingright since the capabilities of the organization also defines itsdisabilities. Christensen's thesis is that outstanding companieslose their market leadership when confronted with disruptivetechnology. He called the approach to discovering the emergingmarkets for disruptive technologies agnostic marketing, i.e.,marketing under the implicit assumption that no one - not thecompany, not the customers - can know how or in whatquantities a disruptive product can or will be used before theyhave experience using it.

A number of strategists use scenario planning techniquesto deal with change. Kees van der Heijden (1996), for example,says that change and uncertainty make "optimum strategy"determination impossible. We have neither the time nor theinformation required for such a calculation. The best we canhope for is what he calls "the most skillful process". The wayPeter Schwartz put it in 1991 is that strategic outcomes cannotbe known in advance so the sources of competitive advantage

cannot be predetermined. The fast changing businessenvironment is too uncertain for us to find sustainable valuein formulas of excellence or competitive advantage. Instead,scenario planning is a technique in which multiple outcomescan be developed, their implications assessed, and theirlikeliness of occurrence evaluated. According to Pierre Wack,scenario planning is about insight, complexity, and subtlety,not about formal analysis and numbers.

In 1988, Henry Mintzberg looked at the changing worldaround him and decided it was time to reexamine how strategicmanagement was done. He examined the strategic process andconcluded it was much more fluid and unpredictable thanpeople had thought. Because of this, he could not point to oneprocess that could be called strategic planning. Instead heconcludes that there are five types of strategies. They are:

• Strategy as plan - a direction, guide, course of action- intention rather than actual

• Strategy as ploy - a maneuver intended to outwit acompetitor

• Strategy as pattern - a consistent pattern of pastbehaviour - realized rather than intended

• Strategy as position - locating of brands, products, orcompanies within the conceptual framework ofconsumers or other stakeholders - strategy determinedprimarily by factors outside the firm

• Strategy as perspective - strategy determined primarilyby a master strategist

In 1998, Mintzberg developed these five types ofmanagement strategy into 10 "schools of thought". These 10schools are grouped into three categories. The first group isprescriptive or normative. It consists of the informal designand conception school, the formal planning school, and theanalytical positioning school. The second group, consisting ofsix schools, is more concerned with how strategic management


is actually done, rather than prescribing optimal plans orpositions. The six schools are the entrepreneurial, visionary,or great leader school, the cognitive or mental process school,the learning, adaptive, or emergent process school, the poweror negotiation school, the corporate culture or collective processschool, and the business environment or reactive school. Thethird and final group consists of one school, the configurationor transformation school, an hybrid of the other schoolsorganized into stages, organizational life cycles, or "episodes".

In 1999, Constantinos Markides also wanted to reexaminethe nature of strategic planning itself. He describes strategyformation and implementation as an on-going, never-ending,integrated process requiring continuous reassessment andreformation. Strategic management is planned and emergent,dynamic, and interactive. J. Moncrieff (1999) also stressesstrategy dynamics. He recognized that strategy is partiallydeliberate and partially unplanned. The unplanned elementcomes from two sources: emergent strategies (result from theemergence of opportunities and threats in the environment)and Strategies in action (ad hoc actions by many people fromall parts of the organization).

Some business planners are starting to use a complexitytheory approach to strategy. Complexity can be thought of aschaos with a dash of order. Chaos theory deals with turbulentsystems that rapidly become disordered. Complexity is notquite so unpredictable. It involves multiple agents interactingin such a way that a glimpse of structure may appear. Axelrod,R., Holland, J., and Kelly, S. and Allison, M.A., call thesesystems of multiple actions and reactions complex adaptivesystems.

Axelrod asserts that rather than fear complexity, businessshould harness it. He says this can best be done when "thereare many participants, numerous interactions, much trial anderror learning, and abundant attempts to imitate each others'

successes". In 2000, E. Dudik wrote that an organization mustdevelop a mechanism for understanding the source and levelof complexity it will face in the future and then transform itselfinto a complex adaptive system in order to deal with it.

INFORMATION AND TECHNOLOGY DRIVEN STRATEGY

Peter Drucker had theorized the rise of the "knowledgeworker" back in the 1950s. He described how fewer workerswould be doing physical labour, and more would be applyingtheir minds. In 1984, John Nesbitt theorized that the futurewould be driven largely by information: companies thatmanaged information well could obtain an advantage, howeverthe profitability of what he calls the "information float"(information that the company had and others desired) wouldall but disappear as inexpensive computers made informationmore accessible.

Daniel Bell (1985) examined the sociological consequencesof information technology, while Gloria Schuck and ShoshanaZuboff looked at psychological factors. Zuboff, in her five yearstudy of eight pioneering corporations made the importantdistinction between "automating technologies" and "infomatingtechnologies". She studied the effect that both had on individualworkers, managers, and organizational structures. She largelyconfirmed Peter Drucker's predictions three decades earlier,about the importance of flexible decentralized structure, workteams, knowledge sharing, and the central role of the knowledgeworker. Zuboff also detected a new basis for managerialauthority, based not on position or hierarchy, but on knowledge(also predicted by Drucker) which she called "participativemanagement".

In 1990, Peter Senge, who had collaborated with Arie deGeus at Dutch Shell, borrowed de Geus' notion of the learningorganization, expanded it, and popularized it. The underlyingtheory is that a company's ability to gather, analyze, and useinformation is a necessary requirement for business success in


the information age. (See organizational learning.) In order todo this, Senge claimed that an organization would need to bestructured such that:

• People can continuously expand their capacity to learnand be productive,

• New patterns of thinking are nurtured,

• Collective aspirations are encouraged, and

• People are encouraged to see the "whole picture"together.

Senge identified five components of a learning organization.They are:

• Personal responsibility, self reliance, and mastery - Weaccept that we are the masters of our own destiny. Wemake decisions and live with the consequences of them.When a problem needs to be fixed, or an opportunityexploited, we take the initiative to learn the requiredskills to get it done.

• Mental models - We need to explore our personal mentalmodels to understand the subtle effect they have on ourbehaviour.

• Shared vision - The vision of where we want to be inthe future is discussed and communicated to all. Itprovides guidance and energy for the journey ahead.

• Team learning - We learn together in teams. Thisinvolves a shift from "a spirit of advocacy to a spirit ofenquiry".

• Systems thinking - We look at the whole rather thanthe parts. This is what Senge calls the "Fifth discipline".It is the glue that integrates the other four into a coherentstrategy. For an alternative approach to the "learningorganization", see Garratt, B. (1987).

Since 1990 many theorists have written on the strategicimportance of information, including J.B. Quinn, J. Carlos Jarillo,

D.L. Barton, Manuel Castells, J.P. Lieleskin, Thomas Stewart,K.E. Sveiby, Gilbert J. Probst, and Shapiro and Varian to namejust a few.

Thomas A. Stewart, for example, uses the term intellectualcapital to describe the investment an organization makes inknowledge. It is comprised of human capital (the knowledgeinside the heads of employees), customer capital (the knowledgeinside the heads of customers that decide to buy from you),and structural capital (the knowledge that resides in thecompany itself).

Manuel Castells, describes a network society characterizedby: globalization, organizations structured as a network,instability of employment, and a social divide between thosewith access to information technology and those without.

Stan Davis and Christopher Meyer (1998) have combinedthree variables to define what they call the BLUR equation.The speed of change, Internet connectivity, and intangibleknowledge value, when multiplied together yields a society'srate of BLUR. The three variables interact and reinforce eachother making this relationship highly non-linear.

Regis McKenna posits that life in the high tech informationage is what he called a "real time experience". Events occur inreal time. To ever more demanding customers "now" is whatmatters. Pricing will more and more become variable pricingchanging with each transaction, often exhibiting first degreeprice discrimination. Customers expect immediate service,customized to their needs, and will be prepared to pay apremium price for it. He claimed that the new basis forcompetition will be time based competition.

Geoffrey Moore (1991) and R. Frank and P. Cook alsodetected a shift in the nature of competition. In industries withhigh technology content, technical standards becomeestablished and this gives the dominant firm a near monopoly.The same is true of networked industries in which


interoperability requires compatibility between users. Anexample is word processor documents. Once a product hasgained market dominance, other products, even far superiorproducts, cannot compete. Moore showed how firms couldattain this enviable position by using E.M. Rogers five stageadoption process and focusing on one group of customers ata time, using each group as a base for marketing to the nextgroup. The most difficult step is making the transition betweenvisionaries and pragmatists (See Crossing the Chasm). Ifsuccessful a firm can create a bandwagon effect in which themomentum builds and your product becomes a de factostandard.

Evans and Wurster describe how industries with a highinformation component are being transformed. They citeEncarta's demolition of the Encyclopedia Britannica (whosesales have plummeted 80% since their peak of $650 million in1990). Many speculate that Encarta's reign will be short-lived,eclipsed by collaborative encyclopedias like Wikipedia thatcan operate at very low marginal costs. Evans also mentionsthe music industry which is desperately looking for a newbusiness model. The upstart information savvy firms,unburdened by cumbersome physical assets, are changing thecompetitive landscape, redefining market segments, anddisintermediating some channels. One manifestation of this ispersonalized marketing. Information technology allowsmarketers to treat each individual as its own market, a marketof one. Traditional ideas of market segments will no longer berelevant if personalized marketing is successful.

The technology sector has provided some strategies directly.For example, from the software development industry agilesoftware development provides a model for shareddevelopment processes.

Access to information systems have allowed seniormanagers to take a much more comprehensive view of strategic

management than ever before. The most notable of thecomprehensive systems is the balanced scorecard approachdeveloped in the early 1990's by Drs. Robert S. Kaplan (HarvardBusiness School) and David Norton (Kaplan, R. and Norton,D. 1992). It measures several factors financial, marketing,production, organizational development, and new productdevelopment in order to achieve a 'balanced' perspective.

THE PSYCHOLOGY OF STRATEGIC MANAGEMENT

Several psychologists have conducted studies to determinethe psychological patterns involved in strategic management.Typically senior managers have been asked how they go aboutmaking strategic decisions. A 1938 treatise by Chester Barnard,that was based on his own experience as a business executive,sees the process as informal, intuitive, non-routinized, andinvolving primarily oral, 2-way communications. Bernard says"The process is the sensing of the organization as a whole andthe total situation relevant to it. It transcends the capacity ofmerely intellectual methods, and the techniques ofdiscriminating the factors of the situation. The terms pertinentto it are "feeling", "judgement", "sense", "proportion", "balance","appropriateness". It is a matter of art rather than science."

In 1973, Henry Mintzberg found that senior managerstypically deal with unpredictable situations so they strategizein ad hoc, flexible, dynamic, and implicit ways. He says, "Thejob breeds adaptive information-manipulators who prefer thelive concrete situation. The manager works in an environmentof stimulous-response, and he develops in his work a clearpreference for live action."

In 1982, John Kotter studied the daily activities of 15executives and concluded that they spent most of their timedeveloping and working a network of relationships from whichthey gained general insights and specific details to be used inmaking strategic decisions. They tended to use "mental roadmaps" rather than systematic planning techniques.


Daniel Isenberg's 1984 study of senior managers foundthat their decisions were highly intuitive. Executives oftensensed what they were going to do before they could explainwhy. He claimed in 1986 that one of the reasons for this is thecomplexity of strategic decisions and the resultant informationuncertainty.

Shoshana Zuboff (1988) claims that information technologyis widening the divide between senior managers (who typicallymake strategic decisions) and operational level managers (whotypically make routine decisions). She claims that prior to thewidespread use of computer systems, managers, even at themost senior level, engaged in both strategic decisions androutine administration, but as computers facilitated (She calledit "deskilled") routine processes, these activities were movedfurther down the hierarchy, leaving senior management freefor strategic decions making.

In 1977, Abraham Zaleznik identified a difference betweenleaders and managers. He describes leadershipleaders asvisionaries who inspire. They care about substance. Whereasmanagers are claimed to care about process, plans, and form.He also claimed in 1989 that the rise of the manager was themain factor that caused the decline of American business inthe 1970s and 80s. Lack of leadership is most damaging at thelevel of strategic management where it can paralyze an entireorganization.

According to Corner, Kinichi, and Keats, strategic decisionmaking in organizations occurs at two levels: individual andaggregate. They have developed a model of parallel strategicdecision making. The model identifies two parallel processesboth of which involve getting attention, encoding information,storage and retrieval of information, strategic choice, strategicoutcome, and feedback. The individual and organizationalprocesses are not independent however. They interact at eachstage of the process.

REASONS WHY STRATEGIC PLANS FAIL

There are many reasons why strategic plans fail, especially:

• Failure to understand the customer

o Why do they buy

o Is there a real need for the product

o inadequate or incorrect marketing research

• Inability to predict environmental reaction

o What will competitors do

• Fighting brands

• Price wars

o Will government intervene

• Over-estimation of resource competence

o Can the staff, equipment, and processes handle thenew strategy

o Failure to develop new employee and managementskills

• Failure to coordinate

o Reporting and control relationships not adequate

o Organizational structure not flexible enough

• Failure to obtain senior management commitment

o Failure to get management involved right from thestart

o Failure to obtain sufficient company resources toaccomplish task

• Failure to obtain employee commitment

o New strategy not well explained to employees

o No incentives given to workers to embrace the newstrategy

• Under-estimation of time requirements

o No critical path analysis done


• Failure to follow the plan

o No follow through after initial planning

o No tracking of progress against plan

o No consequences for above

• Failure to manage change

o Inadequate understanding of the internal resistanceto change

o Lack of vision on the relationships betweenprocesses, technology and organization

• Poor communications

o Insufficient information sharing among stakeholders

o Exclusion of stakeholders and delegates

CRITICISMS OF STRATEGIC MANAGEMENT

Although a sense of direction is important, it can also stiflecreativity, especially if it is rigidly enforced. In an uncertainand ambiguous world, fluidity can be more important than afinely tuned strategic compass. When a strategy becomesinternalized into a corporate culture, it can lead to group think.It can also cause an organization to define itself too narrowly.An example of this is marketing myopia.

Many theories of strategic management tend to undergoonly brief periods of popularity. A summary of these theoriesthus inevitably exhibits survivorship bias (itself an area ofresearch in strategic management). Many theories tend eitherto be too narrow in focus to build a complete corporate strategyon, or too general and abstract to be applicable to specificsituations.

Populism or faddishness can have an impact on a particulartheory's life cycle and may see application in inappropriatecircumstances. See business philosophies and popularmanagement theories for a more critical view of managementtheories.

In 2000, Gary Hamel coined the term strategic convergenceto explain the limited scope of the strategies being used byrivals in greatly differing circumstances. He lamented thatstrategies converge more than they should, because the moresuccessful ones get imitated by firms that do not understandthat the strategic process involves designing a custom strategyfor the specifics of each situation.

Ram Charan, aligning with a popular marketing tagline,believes that strategic planning must not dominate action."Just do it!", while not quite what he meant, is a phrase thatnevertheless comes to mind when combatting analysis paralysis.

STRATEGIC PLANNING

Strategic planning is an organization's process of definingits strategy, or direction, and making decisions on allocatingits resources to pursue this strategy, including its capital andpeople. Various business analysis techniques can be used instrategic planning, including SWOT analysis (Strengths,Weaknesses, Opportunities, and Threats ) and PEST analysis(Political, Economic, Social, and Technological analysis).

Strategies are different from tactics in that:

1. They are proactive and not re-active as tactics are.

2. They are internal in source and the business venturehas absolute control over its application.

3. Strategy can only be applied once, after that it is processof application with no unique element remaining.

4. The outcome is normally a strategic plan which is usedas guidance to define functional and divisional plans,including Technology, Marketing, etc.

Strategic planning is the formal consideration of anorganization's future course. All strategic planning deals withat least one of three key questions:

1. "What do we do?"


2. "For whom do we do it?"

3. "How do we excel?"

In business strategic planning, the third question is betterphrased "How can we beat or avoid competition?". (Bradfordand Duncan, page 1).

In many organizations, this is viewed as a process fordetermining where an organization is going over the next yearor more -typically 3 to 5 years, although some extend theirvision to 20 years. In order to determine where it is going, theorganization needs to know exactly where it stands, thendetermine where it wants to go and how it will get there. Theresulting document is called the "strategic plan".

It is also true that strategic planning may be a tool foreffectively plotting the direction of a company; however,strategic planning itself cannot foretell exactly how the marketwill evolve and what issues will surface in the coming daysin order to plan your organizational strategy. Therefore,strategic innovation and tinkering with the 'strategic plan'have to be a cornerstone strategy for an organization to survivethe turbulent business climate.

VISION, MISSION AND VALUES

Vision: Defines where the organization wants to be in thefuture. It reflects the optimistic view of the organization'sfuture.

Mission: Defines where the organization is going now,describing why this organization exists.

Values: Beliefs that are shared among the stakeholders ofan organization. Values drive an organization's culture andpriorities.

METHODOLOGIES

There are many approaches to strategic planning buttypically a three-step process may be used:

• Situation - evaluate the current situation and how itcame about.

• Target - define goals and/or objectives (sometimes calledideal state)

• Path - map a possible route to the goals/objectives

One alternative approach is called Draw-See-Think

• Draw - what is the ideal image or the desired end state?

• See - what is today's situation? What is the gap fromideal and why?

• Think - what specific actions must be taken to close thegap between today's situation and the ideal state?

• Plan - what resources are required to execute theactivities?

An alternative to the Draw-See-Think approach is calledSee-Think-Draw

• See - what is today's situation?

• Think - define goals/objectives

• Draw - map a route to achieving the goals/objectives

In other terms strategic planning can be as follows:

• Vision - Define the vision and set a mission statementwith hierarchy of goals

• SWOT - Analysis conducted according to the desiredgoals

• Formulate - Formulate actions and processes to be takento attain these goals

• Implement - Implementation of the agreed uponprocesses

• Control - Monitor and get feedback from implementedprocesses to fully control the operation

SITUATIONAL ANALYSIS

When developing strategies, analysis of the organizationand its environment as it is at the moment and how it may


develop in the future, is important. The analysis has to beexecuted at an internal level as well as an external level toidentify all opportunities and threats of the new strategy.

There are several factors to assess in the external situationanalysis:

1. Markets (customers)

2. Competition

3. Technology

4. Supplier markets

5. Labor markets

6. The economy

7. The regulatory environment

It is rare to find all seven of these factors having criticalimportance. It is also uncommon to find that the first two -markets and competition - are not of critical importance.(Bradford "External Situation - What to Consider")

Analysis of the external environment normally focuses onthe customer. Management should be visionary in formulatingcustomer strategy, and should do so by thinking about marketenvironment shifts, how these could impact customer sets, andwhether those customer sets are the ones the company wishesto serve.

Analysis of the competitive environment is also performed,many times based on the framework suggested by MichaelPorter.

GOALS, OBJECTIVES AND TARGETS

Strategic planning is a very important business activity. Itis also important in the public sector areas such as education.It is practiced widely informally and formally. Strategicplanning and decision processes should end with objectivesand a roadmap of ways to achieve those objectives.

The following terms have been used in strategic planning:desired end states, plans, policies, goals, objectives, strategies,tactics and actions. Definitions vary, overlap and fail to achieveclarity. The most common of these concepts are specific, timebound statements of intended future results and general andcontinuing statements of intended future results, which mostmodels refer to as either goals or objectives (sometimesinterchangeably).

One model of organizing objectives uses hierarchies. Theitems listed above may be organized in a hierarchy of meansand ends and numbered as follows: Top Rank Objective (TRO),Second Rank Objective, Third Rank Objective, etc. From anyrank, the objective in a lower rank answers to the question"How?" and the objective in a higher rank answers to thequestion "Why?" The exception is the Top Rank Objective(TRO): there is no answer to the "Why?" question. That is howthe TRO is defined.

People typically have several goals at the same time. "Goalcongruency" refers to how well the goals combine with eachother. Does goal A appear compatible with goal B? Do theyfit together to form a unified strategy? "Goal hierarchy" consistsof the nesting of one or more goals within other goal(s).

One approach recommends having short-term goals,medium-term goals, and long-term goals. In this model, onecan expect to attain short-term goals fairly easily: they standjust slightly above one's reach. At the other extreme, long-termgoals appear very difficult, almost impossible to attain. Strategicmanagement jargon sometimes refers to "Big Hairy AudaciousGoals" (BHAGs) in this context.) Using one goal as a stepping-stone to the next involves goal sequencing. A person or groupstarts by attaining the easy short-term goals, then steps up tothe medium-term, then to the long-term goals. Goal sequencingcan create a "goal stairway". In an organizational setting, theorganization may co-ordinate goals so that they do not conflict


with each other. The goals of one part of the organizationshould mesh compatibly with those of other parts of theorganization.

MISSION STATEMENTS AND VISION STATEMENTS

Organizations sometimes summarize goals and objectivesinto a mission statement and/or a vision statement:

While the existence of a shared mission is extremely useful,many strategy specialists question the requirement for a writtenmission statement. However, there are many models of strategicplanning that start with mission statements, so it is useful toexamine them here.

• A Mission statement: tells you what the company isnow. It concentrates on present; it defines thecustomer(s), critical processes and it informs you aboutthe desired level of performance.

• A Vision statement: outlines what a company wants tobe. It concentrates on future; it is a source of inspiration;it provides clear decision-making criteria.

Many people mistake vision statement for missionstatement. The Vision describes a future identity and theMission describes why it will be achieved.

A Mission statement defines the purpose or broader goalfor being in existence or in the business. It serves as an ongoingguide without time frame. The mission can remain the samefor decades if crafted well. Vision is more specific in terms ofobjective and future state. Vision is related to some form ofachievement if successful.

A mission statement can resemble a vision statement in afew companies, but that can be a grave mistake. It can confusepeople. The vision statement can galvanize the people to achievedefined objectives, even if they are stretch objectives, providedthe vision is SMART (Specific, Measurable, Achievable, Relevant

and Timebound). A mission statement provides a path to realizethe vision in line with its values.

These statements have a direct bearing on the bottom lineand success of the organization. Which comes first? The missionstatement or the vision statement?

That depends. If you have a new start up business, newprogram or plan to re engineer your current services, then thevision will guide the mission statement and the rest of thestrategic plan.

If you have an established business where the mission isestablished, then many times, the mission guides the visionstatement and the rest of the strategic plan. Either way, youneed to know where you are, your current resources, yourcurrent obstacles, and where you want to go - the vision forthe future. It's important that you keep the end or desiredresult in sight from the start.

Features of an effective vision statement may include:

• Clarity and lack of ambiguity

• Paint a vivid and clear picture, not ambiguous

• Describing a bright future (hope)

• Memorable and engaging expression

• Realistic aspirations, achievable

• Alignment with organizational values and culture,Rational

• Time bound if it talks of achieving any goal or objective

To become really effective, an organizational visionstatement must (the theory states) become assimilated into theorganization's culture.

Leaders have the responsibility of communicating the visionregularly, creating narratives that illustrate the vision, actingas role-models by embodying the vision, creating short-termobjectives compatible with the vision, and encouraging others


to craft their own personal vision compatible with theorganization's overall vision.

BALANCED SCORE CARD

The balanced scorecard is a strategic planning andmanagement system that is used extensively in business andindustry, government, and nonprofit organizations worldwideto align business activities to the vision and strategy of theorganization, improve internal and external communications,and monitor organization performance against strategic goals.

It was originated by Drs. Robert Kaplan (Harvard BusinessSchool) and David Norton as a performance measurementframework that added strategic non-financial performancemeasures to traditional financial metrics to give managers andexecutives a more 'balanced' view of organizationalperformance.

While the phrase balanced scorecard was coined in theearly 1990s, the roots of the this type of approach are deep,and include the pioneering work of General Electric onperformance measurement reporting in the 1950's and thework of French process engineers (who created the Tableau deBord - literally, a "dashboard" of performance measures) in theearly part of the 20th century.

The balanced scorecard has evolved from its early use asa simple performance measurement framework to a fullstrategic planning and management system. The "new"balanced scorecard transforms an organization's strategic planfrom an attractive but passive document into the "marchingorders" for the organization on a daily basis. It provides aframework that not only provides performance measurements,but helps planners identify what should be done and measured.It enables executives to truly execute their strategies.

This new approach to strategic management was firstdetailed in a series of articles and books by Drs. Kaplan and

Norton. Recognizing some of the weaknesses and vaguenessof previous management approaches, the balanced scorecardapproach provides a clear prescription as to what companiesshould measure in order to 'balance' the financial perspective.

The balanced scorecard is a management system (not onlya measurement system) that enables organizations to clarifytheir vision and strategy and translate them into action.

It provides feedback around both the internal businessprocesses and external outcomes in order to continuouslyimprove strategic performance and results. When fullydeployed, the balanced scorecard transforms strategic planningfrom an academic exercise into the nerve center of an enterprise.

Kaplan and Norton describe the innovation of the balancedscorecard as follows:

"The balanced scorecard retains traditional financialmeasures. But financial measures tell the story of past events,an adequate story for industrial age companies for whichinvestments in long-term capabilities and customerrelationships were not critical for success.

These financial measures are inadequate, however, forguiding and evaluating the journey that information agecompanies must make to create future value throughinvestment in customers, suppliers, employees, processes,technology, and innovation."

The balanced scorecard suggests that we view theorganization from four perspectives, and to develop metrics,collect data and analyze it relative to each of these perspectives:

THE LEARNING & GROWTH PERSPECTIVE

This perspective includes employee training and corporatecultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource.


In the current climate of rapid technological change, it isbecoming necessary for knowledge workers to be in acontinuous learning mode.

Government agencies often find themselves unable to hirenew technical workers, and at the same time there is a declinein training of existing employees. This is a leading indicatorof 'brain drain' that must be reversed. Metrics can be put intoplace to guide managers in focusing training funds where theycan help the most. In any case, learning and growth constitutethe essential foundation for success of any knowledge-workerorganization.

Kaplan and Norton emphasize that 'learning' is more than'training'; it also includes things like mentors and tutors withinthe organization, as well as that ease of communication amongworkers that allows them to readily get help on a problemwhen it is needed. It also includes technological tools; what theBaldrige criteria call "high performance work systems."

THE BUSINESS PROCESS PERSPECTIVE

This perspective refers to internal business processes.Metrics based on this perspective allow the managers to knowhow well their business is running, and whether its productsand services conform to customer requirements (the mission).

These metrics have to be carefully designed by those whoknow these processes most intimately; with our unique missionsthese are not something that can be developed by outsideconsultants.

In addition to the strategic management process, two kindsof business processes may be identified: a) mission-orientedprocesses, and b) support processes. Mission-oriented processesare the special functions of government offices, and manyunique problems are encountered in these processes. Thesupport processes are more repetitive in nature, and henceeasier to measure and benchmark using generic metrics.

THE CUSTOMER PERSPECTIVE

Recent management philosophy has shown an increasingrealization of the importance of customer focus and customersatisfaction in any business. These are leading indicators: ifcustomers are not satisfied, they will eventually find othersuppliers that will meet their needs. Poor performance fromthis perspective is thus a leading indicator of future decline,even though the current financial picture may look good.

In developing metrics for satisfaction, customers should beanalyzed in terms of kinds of customers and the kinds ofprocesses for which we are providing a product or service tothose customer groups.

Strategic Management and Business Management The Financial Perspective48 49

focused on inspection and testing at the end of the productionline. The problem with this approach -- as pointed out byDeming -- is that the true causes of defects could never beidentified, and there would always be inefficiencies due to therejection of defects. What Deming saw was that variation iscreated at every step in a production process, and the causesof variation need to be identified and fixed. If this can be done,then there is a way to reduce the defects and improve productquality indefinitely. To establish such a process, Demingemphasized that all business processes should be part of asystem with feedback loops. The feedback data should beexamined by managers to determine the causes of variation,what are the processes with significant problems, and thenthey can focus attention on fixing that subset of processes.

The balanced scorecard incorporates feedback aroundinternal business process outputs, as in TQM, but also addsa feedback loop around the outcomes of business strategies.This creates a "double-loop feedback" process in the balancedscorecard.

OUTCOME METRICS

You can't improve what you can't measure. So metricsmust be developed based on the priorities of the strategic plan,which provides the key business drivers and criteria for metricsthat managers most desire to watch. Processes are then designedto collect information relevant to these metrics and reduce itto numerical form for storage, display, and analysis. Decisionmakers examine the outcomes of various measured processesand strategies and track the results to guide the company andprovide feedback.

So the value of metrics is in their ability to provide a factualbasis for defining:

Strategic feedback to show the present status of theorganization from many perspectives for decision makers

2

The Financial Perspective

Kaplan and Norton do not disregard the traditional needfor financial data. Timely and accurate funding data will alwaysbe a priority, and managers will do whatever necessary toprovide it. In fact, often there is more than enough handlingand processing of financial data. With the implementation ofa corporate database, it is hoped that more of the processingcan be centralized and automated. But the point is that thecurrent emphasis on financials leads to the "unbalanced"situation with regard to other perspectives.

There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, inthis category.

THE BALANCED SCORECARD AND MEASUREMENT-BASED MANAGEMENT

The balanced scorecard methodology builds on some keyconcepts of previous management ideas such as Total QualityManagement (TQM), including customer-defined quality,continuous improvement, employee empowerment, and --primarily -- measurement-based management and feedback.

DOUBLE-LOOP FEEDBACK

In traditional industrial activity, "quality control" and "zerodefects" were the watchwords. In order to shield the customerfrom receiving poor quality products, aggressive efforts were


factors that lead to improved customer, operational, andfinancial performance. A comprehensive set of measures orindicators tied to customer and/or company performancerequirements represents a clear basis for aligning all activitieswith the company's goals. Through the analysis of data fromthe tracking processes, the measures or indicators themselvesmay be evaluated and changed to better support such goals."

MARKETING STRATEGY

A marketing strategy is a process that can allow anorganization to concentrate its limited resources on the greatestopportunities to increase sales and achieve a sustainablecompetitive advantage. A marketing strategy should be centredaround the key concept that customer satisfaction is the maingoal.

KEY PART OF THE GENERAL CORPORATE STRATEGY

A marketing strategy is most effective when it is an integralcomponent of corporate strategy, defining how the organizationwill successfully engage customers, prospects, and competitorsin the market arena. It is partially derived from broadercorporate strategies, corporate missions, and corporate goals.As the customer constitutes the source of a company's revenue,marketing strategy is closely linked with sales. A key componentof marketing strategy is often to keep marketing in line witha company's overarching mission statement.

Basic theory: 1) Target Audience 2) Proposition/KeyElement 3) Implementation

Sectorial tactics and actionsmarketing strategy can serveas the foundation of a marketing plan. A marketing plancontains a set of specific actions required to successfullyimplement a marketing strategy. For example: "Use a low costproduct to attract consumers. Once our organization, via ourlow cost product, has established a relationship with consumers,our organization will sell additional, higher-margin products

Diagnostic feedback into various processes to guideimprovements on a continuous basis

Trends in performance over time as the metrics are tracked

Feedback around the measurement methods themselves,and which metrics should be tracked

Quantitative inputs to forecasting methods and models fordecision support systems

MANAGEMENT BY FACT

The goal of making measurements is to permit managersto see their company more clearly -- from many perspectives-- and hence to make wiser long-term decisions. The BaldrigeCriteria (1997) booklet reiterates this concept of fact-basedmanagement:

"Modern businesses depend upon measurement andanalysis of performance. Measurements must derive from thecompany's strategy and provide critical data and informationabout key processes, outputs and results. Data and informationneeded for performance measurement and improvement areof many types, including: customer, product and serviceperformance, operations, market, competitive comparisons,supplier, employee-related, and cost and financial. Analysisentails using data to determine trends, projections, and causeand effect -- that might not be evident without analysis. Dataand analysis support a variety of company purposes, such asplanning, reviewing company performance, improvingoperations, and comparing company performance withcompetitors' or with 'best practices' benchmarks.

A major consideration in performance improvementinvolves the creation and use of performance measures orindicators. Performance measures or indicators are measurablecharacteristics of products, services, processes, and operationsthe company uses to track and improve performance. Themeasures or indicators should be selected to best represent the


o Follower

• Porter generic strategies - strategy on the dimensionsof strategic scope and strategic strength. Strategic scoperefers to the market penetration while strategic strengthrefers to the firm's sustainable competitive advantage.

o Product differentiation

o Market segmentation

• Innovation strategies - This deals with the firm's rateof the new product development and business modelinnovation. It asks whether the company is on thecutting edge of technology and business innovation.There are three types:

* Pioneers

* Close followers

* Late followers

• Growth strategies - In this scheme we ask the question,"How should the firm grow?". There are a number ofdifferent ways of answering that question, but the mostcommon gives four answers:

o Horizontal integration

o Vertical integration

o Diversification

o Intensification

A more detailed scheme uses the categories:

• Prospector

• Analyzer

• Defender

• Reactor

• Marketing warfare strategies - This scheme drawsparallels between marketing strategies and militarystrategies.

and services that enhance the consumer's interaction with thelow-cost product or service."

A strategy consists of a well thought out series of tacticsto make a marketing plan more effective. Marketing strategiesserve as the fundamental underpinning of marketing plansdesigned to fill market needs and reach marketing objectives.Plans and objectives are generally tested for measurable results.

A marketing strategy often integrates an organization'smarketing goals, policies, and action sequences (tactics) intoa cohesive whole. Similarly, the various strands of the strategy, which might include advertising, channel marketing, internetmarketing, promotion and public relations can be orchestrated.Many companies cascade a strategy throughout anorganization, by creating strategy tactics that then becomestrategy goals for the next level or group. Each one group isexpected to take that strategy goal and develop a set of tacticsto achieve that goal. This is why it is important to make eachstrategy goal measurable.

Marketing strategies are dynamic and interactive. Theyare partially planned and partially unplanned. See strategydynamics.

TYPES OF STRATEGIES

Marketing strategies may differ depending on the uniquesituation of the individual business. However there are anumber of ways of categorizing some generic strategies. Abrief description of the most common categorizing schemes ispresented below:

• Strategies based on market dominance - In this scheme,firms are classified based on their market share ordominance of an industry. Typically there are threetypes of market dominance strategies:

o Leader

o Challenger


of the creative minds employed; which management will thenscreen, often by 'gut-reaction', to ensure that it is reasonable.

For most of their time, marketing managers use intuitionand experience to analyze and handle the complex, and unique,situations being faced; without easy reference to theory. Thiswill often be 'flying by the seat of the pants', or 'gut-reaction';where the overall strategy, coupled with the knowledge of thecustomer which has been absorbed almost by a process ofosmosis, will determine the quality of the marketing employed.This, almost instinctive management, is what is sometimescalled 'coarse marketing'; to distinguish it from the refined,aesthetically pleasing, form favored by the theorists.

STRATEGY

A Strategy is a long term plan of action designed to achievea particular goal, most often "winning." Strategy is differentiatedfrom tactics or immediate actions with resources at hand byits nature of being extensively premeditated, and oftenpractically rehearsed. Strategies are used to make the problemeasier to understand and solve.

The word derives from the Greek word strat?gos, whichderives from two words: stratos (army) and ago (ancient Greekfor leading). Strat?gos referred to a 'military commander' duringthe age of Athenian Democracy.

INTERPRETATION

Strategy is about choice, which affects outcomes.Organizations can often survive -- indeed do well -- for periodsof time in conditions of relative stability, low environmentalturbulence and little competition for resources. Virtually noneof these conditions prevail in the modern world for greatlengths of time for any organization or sector, public or private.Hence, the rationale for strategic management. The nature ofthe strategy adopted and implemented emerges from acombination of the structure of the organization (loosely

STRATEGIC MODELS

Marketing participants often employ strategic models andtools to analyze marketing decisions. When beginning astrategic analysis, the 3Cs can be employed to get a broadunderstanding of the strategic environment. An Ansoff Matrixis also often used to convey an organization's strategicpositioning of their marketing mix. The 4Ps can then be utilizedto form a marketing plan to pursue a defined strategy.

MARKETING IN PRACTICE

THE CONSUMER-CENTRIC BUSINESS

There are a many companies especially those in theConsumer Package Goods (CPG) market that adopt the theoryof running their business centred around Consumer, Shopper& Retailer needs. Their Marketing departments spend qualitytime looking for "Growth Opportunities" in their categories byidentifying relevant insights (both mindsets and behaviours)on their target Consumers, Shoppers and retail partners. TheseGrowth Opportunites emerge from changes in market trends,segment dynamics changing and also internal brand oroperational business challenges.The Marketing team can thenprioritise these Growth Opportunites and begin to developstrategies to exploit the opportunities that could include newor adapted products, services as well as changes to the 4Ps.

Real-life marketing primarily revolves around theapplication of a great deal of common-sense; dealing with alimited number of factors, in an environment of imperfectinformation and limited resources complicated by uncertaintyand tight timescales. Use of classical marketing techniques, inthese circumstances, is inevitably partial and uneven.

Thus, for example, many new products will emerge fromirrational processes and the rational development process maybe used (if at all) to screen out the worst non-runners. Thedesign of the advertising, and the packaging, will be the output


for example, the popularity of the The Art of War as a businessbook). Each domain generally has its own foundational texts,as well as more recent contributions to new applications ofstrategy. Some of these are:

• Political strategy

* The Prince, published in 1532 by Niccolò Machiavelli

* Arthashastra, written in the 4th century BC byChanakya

* The Book of the Courtier by Baldassare Castiglione

• Military strategy:

* The Art of War, written in the 6th century BC bySun Tzu

* Strategikon, written in the 6th century AD by theByzantine emperor Maurice

* Taktikon, by the Byzantine emperor Leo VI theWise

* On War, by Carl von Clausewitz (19th century)

* Strategy, by Basil Liddell Hart

* On Guerrilla Warfare, by Mao Zedong

* The Influence of Sea Power upon History, by AlfredThayer Mahan

* The Air Campaign, by Colonel John A. Warden, III

* Makers of Modern Strategy, edited by Peter Paret

* Strategy, by Edward N. Luttwak

• Economic strategy

* General Theory of Employment, Interest andMoney, published in 1936 by John Maynard Keynes

• Business strategy

* Competitive Strategy, by Michael Porter

* Strategy Concept I: Five Ps for Strategy and StrategyConcept II: Another Look at Why OrganizationsNeed Strategies, by Henry Mintzberg

coupled or tightly coupled), the type of resources availableand the nature of the coupling it has with environment andthe strategic objective being pursued. Strategy is adaptable bynature rather than rigid set of instructions. In some situationsit takes the nature of emergent strategy. The simplestexplanation of this is the analogy of a sports scenario. If afootball team were to organize a plan in which the ball ispassed in a particular sequence between specifically positionedplayers, their success is dependent on each of those playersboth being present at the exact location, and rememberingexactly when, from whom and to whom the ball is to bepassed; moreover that no interruption to the sequence occurs.By comparison, if the team were to simplify this plan to astrategy where the ball is passed in the pattern alone, betweenany of the team, and at any area on the field, then theirvulnerability to variables is greatly reduced, and theopportunity to operate in that manner occurs far more often.This manner is a strategy.

In the field of business administration it is possible mentionto the "strategic consistency." According to Arieu (2007), "thereis strategic consistency when the actions of an organization areconsistent with the expectations of management, and these inturn are with the market and the context."

NOTED TEXTS ON STRATEGY

Classic texts such as Sun Tzu's The Art of War, written inChina 2,500 years ago, the political strategy of NiccoloMachiavelli's The Prince, written in 1513, or Carl vonClausewitz's On War, published in 1832, are still well knownand highly influential. In the twentieth century, the subject ofstrategic management has been particularly applied toorganisations, most typically to business firms and corporations.

The nature of historic texts differs greatly from area toarea, and given the nature of strategy itself, there are somepotential parallels between various forms of strategy (noting,


STATIC MODELS OF STRATEGY AND PERFORMANCE

The static assessment of strategy and performance, and itstools and frameworks dominate research, textbooks andpractice in the field. They stem from a presumption datingback to before the 1980s that market and industry conditionsdetermine how firms in a sector perform on average, and thescope for any firm to do better or worse than that average. E.g.the airline industry is notoriously unprofitable, but some firmsare spectacularly profitable exceptions.

The 'industry forces' paradigm was established most firmlyby Michael Porter, (1980) in his seminal book 'CompetitiveStrategy', the ideas of which still form the basis of strategyanalysis in many consulting firms and investment companies.Richard Rumelt (1991) was amongst the first to challenge thispresumption of the power of 'industry forces', and it has sincebecome well-understood that business factors are moreimportant drivers of performance than are industry factors -in essence, this means you can do well in difficult industries,and struggle in industries where others do well. Although therelative importance of industry factors and firm-specific factorscontinues to be researched, the debate is now essentially over- management of strategy matters.

The increasing interest in how some businesses in anindustry perform better than others led to the emergence ofthe 'resource based view' {RBV) of strategy (Wernerfelt, 1984;Barney, 1991, Grant 1991), which seeks to discover the firm-specific sources of superior performance - a research interestthat has increasingly come to dominate research in strategy.

THE NEED FOR A DYNAMIC MODEL OF STRATEGY AND PERFORMANCE

The debate about the relative influence of industry andbusiness factors on performance, and the RBV-basedexplanations for superior performance both, however, passover a more serious problem. This concerns exactly what the

* Winning In FastTime by John A. Warden, III andLeland A. Russell, 2002.

• General strategy

* Strategy Safari, by Henry Mintzberg, BruceAhlstrand and Joseph Lampel.

* Political Strategy and Tactics by Laure Paquette

• Strategic Theory

* Science, Strategy and War: The Strategic Theory ofJohn Boyd by Frans Osinga

* Strategy generative by Jean-Paul Charnay

* Strategy and Ethnic Conflict by Laure Paquette

• Others

* Marcel Détienne and Jean-Pierre Vernant, Les Rusesde l'intelligence, Paris: Flammarion, 1993 (on therole of the Greek Metis)

STRATEGY DYNAMICS

The word 'dynamics' appears frequently in discussionsand writing about strategy, and is used in two distinct, thoughequally important senses.

The dynamics of strategy and performance concerns the'content' of strategy - initiatives, choices, policies and decisionsadopted in an attempt to improve performance, and the resultsthat arise from these managerial behaviors.

The dynamic model of the strategy process is a way ofunderstanding how strategic actions occur. It recognizes thatstrategic planning is dynamic, that is, strategy-making involvesa complex pattern of actions and reactions. It is partially plannedand partially unplanned.

A literature search shows the first of these senses to be boththe earliest and most widely used meaning of 'strategydynamics', though that is not to diminish the importance ofthe dynamic view of the strategy process.


how to improve its future trajectory - i.e. a dynamic model ofstrategy and performance.

A POSSIBLE DYNAMIC MODEL OF STRATEGY AND PERFORMANCE

To develop a dynamic model of strategy and performancerequires components that explain how factors change overtime. Most of the relationships on which business analysis arebased describe relationships that are static and stable overtime. For example, "profits = revenue minus costs", or "marketshare = our sales divided by total market size" are relationshipsthat always were true and always will be. Static strategy toolsseek to solve the strategy problem by extending this set ofstable relationships, e.g. "profitability = some complex functionof product development capability". Since a company's salesclearly change over time, there must be something furtherback up the causal chain that makes this happen. One suchitem is 'customers' - if the firm has more customers now thanlast month, then (everything else being equal), it will havemore sales and profits.

The number of 'Customers' at any time, however, cannotbe calculated from anything else. It is one example of a factorwith a unique characteristic, known as an 'asset-stock'. Thiscritical feature is that it accumulates over time, so "customerstoday = customers yesterday +/- customers won and lost".This is not a theory or statistical observation, but is axiomaticof the way the world works. Other examples include cash(changed by cash-in and cash-out-flows), staff (changed byhiring and attrition), capacity, product range and dealers. Manyintangible factors behave in the same way, e.g. reputation andstaff skills. Dierickx and Cool (1989) point out that this causesserious problems for explaining performance over time:

• Time compression diseconomies i.e. it takes time toaccumulate resources.

• Asset Mass Efficiencies 'the more you have, the fasteryou can get more'.

'performance' is that management seeks to improve. Wouldyou prefer, for example, (A) to make $15m per year indefinitely,or (B) $12m this year, increasing by 20% a year, starting withthe same resources?

Nearly half a century ago, Edith Penrose (1959) pointedout that superior profitability (e.g. return on sales or return onassets) was neither interesting to investors - who value theprospect of increasing future cash flows - nor sustainable overtime. Profitability is not entirely unimportant - it does after allprovide the investment in new resources to enable growth tooccur. More recently, Rugman and Verbeke (2002) havereviewed the implications of this observation for research instrategy. Richard Rumelt (2007) has again raised the importanceof making progress with the issue of strategy dynamics,describing it as still 'the next frontier … underresearched,underwritten about, and underunderstood'.

The essential problem is that tools explaining why firm Aperforms better than firm B at a point in time are unlikely toexplain why firm B is growing its performance more rapidlythan firm A.

This is not just of theoretical concern, but matters toexecutives too - efforts by the management of firm B to matchA's profitability could well destroy its ability to grow profits,for example. A further practical problem is that many of thestatic frameworks do not provide sufficiently fine-grainedguidance on strategy to help raise performance. For example,an investigation that identifies an attractive opportunity toserve a specific market segment with specific products orservices, delivered in a particular way is unlikely to yieldfundamentally different answers from one year to the next. Yetstrategic management has much to do from month to monthto ensure the business system develops strongly so as to takethat opportunity quickly and safely. What is needed, is a setof tools that explain how performance changes over time, and


a causal path from reputation or product developmentcapability to performance outcomes without going via thetangible resources of customers and cash.

Warren (2002),(2007) brought together the specification ofresources [tangible and intangible] and capabilities with themath of system dynamics to assemble a framework for strategydynamics and performance with the following elements:

• Performance, P, at time t is a function of the quantityof resources R1 to Rn, discretionary managementchoices, M, and exogenous factors, E, at that time(Equation 1).

(1) P(t) = f{R1(t), .. Rn(t), M(t), E(t)}

• The current quantity of each resource Ri at time t is itslevel at time t-1 plus or minus any resource-flows thathave occurred between t-1 and t (Equation 2).

(2) Ri(t) = Ri (t-1) +/- Ri(t-1 .. t)

• The change in quantity of Ri between time t-1 and timet is a function of the quantity of resources R1 to Rn attime t-1, including that of resource Ri itself, onmanagement choices, M, and on exogenous factors Eat that time (Equation 3).

(3) Ri(t-1 .. t) = f{R1(t-1), .. Rn(t-1), M(t-1), E(t-1)}

This set of relationships gives rise to an 'architecture' thatdepicts, both graphically and mathematically, the core of howa business or other organization develops and performs overtime. To this can be added other important extensions, including:

• the consequence of resources varying in one or morequalities or 'attributes' [e.g. customer size, staffexperience]

• the development of resources through stages [disloyaland loyal customers, junior and senior staff]

• Interconnectedness of Asset Stocks .. building oneresource depends on other resources already in place.

• Asset erosion .. tangible and intangible assets alikedeteriorate unless effort and expenditure are committedto maintaining them

• Causal ambiguity .. it can be hard to work out, evenfor the firm who owns a resource, why exactly itaccumulates and depletes at the rate it does.

The consequences of these features is that relationships ina business system are highly non-linear. Statistical analysiswill not, then, be able meaningfully to confirm any causalexplanation for the number of customers at any moment intime. If that is true then statistical analysis also cannot sayanything useful about any performance that depends oncustomers or on other accumulating asset-stocks - which isalways the case.

Fortunately, a method known as system dynamics capturesboth the math of asset-stock accumulation (i.e. resource- andcapability-building), and the interdependence between thesecomponents (Forrester, 1961; Sterman, 2000). The asset-stocksrelevant to strategy performance are resources [things we have]and capabilities [things we are good at doing]. This makes itpossible to connect back to the resource-based view, thoughwith one modification.

RBV asserts that any resource which is clearly identifiable,and can easily be acquired or built, cannot be a source ofcompetitive advantage, so only resources or capabilities thatare valuable, rare, hard to imitate or buy, and embedded inthe organization [the 'VRIO' criteria] can be relevant toexplaining performance, for example reputation or productdevelopment capability.

Yet day-to-day performance must reflect the simple,tangible resources such as customers, capacity and cash. VRIOresources may be important also, but it is not possible to trace


* Establishing a chain of command or some alternativestructure (such as cross-functional teams)

* Assigning responsibility of specific tasks orprocesses to specific individuals or groups

* It also involves managing the process. This includesmonitoring results, comparing to benchmarks andbest practices, evaluating the efficacy and efficiencyof the process, controlling for variances, and makingadjustments to the process as necessary.

* When implementing specific programs, this involvesacquiring the requisite resources, developing theprocess, training, process testing, documentation,and integration with (and/or conversion from)legacy processes

THE DYNAMIC MODEL OF THE STRATEGY PROCESS

Several theorists have recognized a problem with this staticmodel of the strategy process: it is not how strategy is developedin real life. Strategy is actually a dynamic and interactiveprocess. Some of the earliest challenges to the planned strategyapproach came from Linblom in the 1960s and Quinn in the1980s.

Charles Lindblom (1959) claimed that strategy is afragmented process of serial and incremental decisions. Heviewed strategy as an informal process of mutual adjustmentwith little apparent coordination.

James Brian Quinn (1978) developed an approach that hecalled "logical incrementalism". He claimed that strategicmanagement involves guiding actions and events towards aconscious strategy in a step-by-step process. Managers nurtureand promote strategies that are themselves changing. In regardto the nature of strategic management he says: "Constantlyintegrating the simultaneous incremental process of strategyformulation and implementation is the central art of effective

• rivalry for any resource that may be contested[customers clearly, but also possibly staff and otherfactors]

• intangibe factors [e.g. reputation, staff skills]

• capabilities [e.g. product development, selling]

THE STATIC MODEL OF THE STRATEGY PROCESS

According to many introductory strategy textbooks,strategic thinking can be divided into two segments : strategyformulation and strategy implementation. Strategy formulationis done first, followed by implementation.

Strategy formulation involves:

1.

* Doing a situation analysis: both internal andexternal; both micro-environmental and macro-environmental.

* Concurrent with this assessment, objectives are set.This involves crafting vision statements (long term),mission statements (medium term), overallcorporate objectives (both financial and strategic),strategic business unit objectives (both financial andstrategic), and tactical objectives.

* These objectives should, in the light of the situationanalysis, suggest a strategic plan. The plan providesthe details of how to obtain these goals.

This three-step strategy formation process is sometimesreferred to as determining where you are now, determiningwhere you want to go, and then determining how to get there.

The next phase, according to this linear model is theimplementation of the strategy. This involves:

1.

* Allocation of sufficient resources (financial,personnel, time, computer system support)


are emergent from the environment. However, it is again notclear whether, or under what circumstances, strategies wouldbe better if more planned.

In this model, strategy is both planned and emergent,dynamic, and interactive. Five general processes interact. Theyare strategic intention, the organization's response to emergentenvironmental issues, the dynamics of the actions of individualswithin the organization, the alignment of action with strategicintent, and strategic learning.

MONCRIEFF MODEL OF STRATEGY DYNAMICS

The alignment of action with strategic intent (the top linein the diagram), is the blending of strategic intent, emergentstrategies, and strategies in action, to produce strategicoutcomes. The continuous monitoring of these strategicoutcomes produces strategic learning (the bottom line in thediagram). This learning comprises feedback into internalprocesses, the environment, and strategic intentions. Thus thecomplete system amounts to a triad of continuously selfregulating feedback loops. Actually, quasi self regulating is amore appropriate term since the feedback loops can be ignoredby the organization. The system is self-adjusting only to theextent that the organization is prepared to learn from thestrategic outcomes it creates. This requires effective leadershipand an agile, questioning, corporate culture. In this model, thedistinction between strategy formation and strategyimplementation disappears. Do not copy from here .. there isno evidence for its validity! No author's name ! No expertopinion. This website is just for reference.

CRITICISMS OF DYNAMIC STRATEGY PROCESS MODELS

Some detractors claim that these models are too complexto teach. No one will understand the model until they see itin action. Accordingly, the two part linear categorization schemeis probably more valuable in textbooks and lectures.

strategic management." Whereas Lindblom saw strategy as adisjointed process without conscious direction, Quinn saw theprocess as fluid but controllable.

Joseph Bower (1970) and Robert Burgelman (1980) tookthis one step further. Not only are strategic decisions madeincrementally rather than as part of a grand unified vision, butaccording to them, this multitude of small decisions are madeby numerous people in all sections and levels of theorganization.

Henry Mintzberg (1987) made a distinction betweendeliberate strategy and emergent strategy. Emergent strategyoriginates not in the mind of the strategist, but in the interactionof the organization with its environment. He claims thatemergent strategies tend to exhibit a type of convergence inwhich ideas and actions from multiple sources integrate intoa pattern. This is a form of organizational learning, in fact, onthis view, organizational learning is one of the core functionsof any business enterprise (See Peter Senge's The Fifth Discipline(1990).)

Constantinos Markides (1999) describes strategy formationand implementation as an on-going, never-ending, integratedprocess requiring continuous reassessment and reformation.

A particularly insightful model of strategy processdynamics comes from J. Moncrieff (1999). He recognized thatstrategy is partially deliberate and partially unplanned, thoughwhether the resulting performance is better for being plannedor not is unclear. The unplanned element comes from twosources : "emergent strategies" result from the emergence ofopportunities and threats in the environment and "Strategiesin action" are ad hoc actions by many people from all partsof the organization. These multitudes of small actions aretypically not intentional, not teleological, not formal, and noteven recognized as strategic. They are emergent from withinthe organization, in much the same way as "emergent strategies"


STRATEGY PATTERN AND OPEN CLOSED PRINCIPLE

According to Strategy pattern, the behaviors of a classshould not be inherited, instead they should be encapsulatedusing interfaces. As an example, consider a car class. Twopossible behaviors of car are brake and accelerate.

Since accelerate and brake behaviors change frequentlybetween models, a common approach is to implement thesebehaviors in subclasses.

This approach has significant drawbacks: accelerate andbrake behaviors must be declared in each new Car model. Thismay not be a concern when there are only a small number ofmodels, but the work of managing these behaviors increasesgreatly as the number of models increases, and requires codeto be duplicated across models.

Additionally, it is not easy to determine the exact natureof the behavior for each model without investigating the codein each.

The strategy pattern uses composition instead ofinheritance.

In the strategy pattern behaviors are defined as separateinterfaces and specific classes that implement these interfaces.Specific classes encapsulate these interfaces. This allows betterdecoupling between the behavior and the class that uses thebehavior.

The behavior can be changed without breaking the classesthat use it, and the classes can switch between behaviors bychanging the specific implementation used without requiringany significant code changes.

Behaviors can also be changed at run-time as well as atdesign-time. For instance, a car object's brake behavior can bechanged from BrakeWithABS() to Brake() by changing thebrakeBehavior member to:

Also, there are some implementation decisions that do notfit a dynamic model. They include specific projectimplementations. In these cases implementation is exclusivelytactical and often routinized. Strategic intent and dynamicinteractions influence the decision only indirectly.

STRATEGY PATTERN

In computer programming, the strategy pattern (alsoknown as the policy pattern) is a particular software designpattern, whereby algorithms can be selected at runtime.

In some programming languages, such as those withoutpolymorphism, the issues addressed by this pattern are handledthrough forms of reflection, such as the native function pointeror function delegate syntax.

This pattern is invisible in languages with first-classfunctions. See the Python code for an example.

The strategy pattern is useful for situations where it isnecessary to dynamically swap the algorithms used in anapplication.

The strategy pattern is intended to provide a means todefine a family of algorithms, encapsulate each one as anobject, and make them interchangeable. The strategy patternlets the algorithms vary independently from clients that usethem.

STRATEGY VERSUS BRIDGE

The UML class diagram for the Strategy pattern is thesame as the diagram for the Bridge pattern. However, thesetwo design patterns aren't the same in their intent. While theStrategy pattern is meant for behavior, the Bridge pattern ismeant for structure.

The coupling between the context and the strategies istighter than the coupling between the abstraction and theimplementation in the Bridge pattern.


Indeed, this implies proper planning, as it calls for a choiceamong major objectives, the achievement of which requiressets of specific means. But, more than planning, managementstresses dynamic and critical processes, those of leadership,which can bypass present strategies and design new ones. Inother words, strategic management prepares people to projectthemselves into the future, i.e., to face new situations in thenear future, at the cost of risk and uncertainty, when dealingwith changes in structures, models of action, roles, relationsand positions.

Norms are principles for collective action, shaping personalbehaviour and group relations. Normative management is apleonasm, as any significant change necessarily impliesdeveloping new collective norms, new visions and newpractices. The dynamics of cultural processes (values turninginto norms, models and word patterns) sustain any managerialmove.

In management literature, strategy and identity are oftenperceived as the two sides of the same coin. However, in fastchanging environments, strategic issues can imply and inducechanged identities. Leadership then requires critical minds,fresh vision, courage, and the capacity to convince. Such acritical approach can be enhanced when institutions participatein networks, which allow for comparisons between differentsets of inspiration and practice, thus pointing to revised needs,new constraints and new models of change, if the organisation'spotential is to be realised.

In organisations considered as learning systems, strategicmanagement becomes the educating process of change agents,the institutional actors. The actor can be anyone in theorganisation, or its related environment, whose behaviour cansignificantly influence change in the organisation and its milieu.For instance, for a university, the main actors are the students,faculty and staff, network members, public and private

brakeBehavior = new Brake();

This gives greater flexibility in design and is in harmonywith the Open/closed principle (OCP) that states classes shouldbe open for extension but closed for modification.

Strategic Management and Planning as a set of possiblechoices for action is, by itself, an organised process of collectivechange embracing aims, norms, resources, criteria of choice,structures, organisational, institutional and personal relations- all elements which are at the core of any managerial process.Long-term planning is supposed to determine objectives forthe future, while allocating responsibilities and resources toreach them.

It is becoming more difficult, however, to achieve distantgoals in innovative and complex environments, although thepotential for planning exists when strands of stability withinthat context can be presumed. On that basis, with some vision,long-term planning can use scenarios, i.e., prospective statesof the future, that can be deducted from current trends.

However, strategic management is more specific. It aimsat leading, driving and helping people, those inside theorganisation and those outside (also involved in itsdevelopment), to focus on the organisation's identity and image,to question its worth in a new environment, to fix its longerterm growth, while using its present capacity and fostering its"potential" for development.


POLICIES AND STRATEGIES

1. Policies deal with identity, with missions (what MaxWeber calls axiologic rationality), with organisationalclimate. At this level of generality, they are usuallyexpressed in broad terms, even symbolic ones. But suchwording must have meaning for the people involved,as these policies define norms of behaviour and serveas fundamental references in case of serious conflictsbetween projects - or between people - within theinstitution. They play the role of a constitution in aState. Inside and outside the organisation, these normsrepresent institutional commitments and anyinterpretation which might lead to strongly divergentpositions should be seriously debated, explained inwriting and commented by the people in charge. Toooften, obscure or outmoded policies are just ignored,to avoid either the effort of updating or redefinition, orinternal strife or potential conflicts with externalregulators. It usually means that some of the morepowerful and determined sub-groups in theorganisation are de facto imposing their own normsand objectives as if they were those of the wholeinstitution. Alternatively, it leaves the way open forpolicies imposed from the outside by public authorities,the unions, resource providers or even by public opinion.Doesn't this ring a bell in universities? Yet, the worstsituation for an institution is a policy (statement ofidentity, expression of norms, etc.) which has nocredibility; either because it has been expressed toovaguely, or because it is simply ignored or interpretedas fluctuating with circumstances. In such a case, mostpeople, especially the managers, try to understandwhich is the real policy of the organisation and whatthis agenda really means for them. It is often said thatit is not possible, nor opportune, to explain all policies:

regulators, as well as the media. In a learning organisation,their education requires information, communication,motivation through focused exchange and open debates.Educating the person as an agent of change requires well-structured strategic information systems. The data collectedshould provide relevant material available at the right time tosupport The complete strategist's advice: if you want to makea sculpture of an elephant out of a block of granite, startcutting little parts away and then remove, fast, anything thatdoes not look like an elephant.

the right change. Such data (i.e. welldesigned information)should structure signals, even weak signals, which impress theorganisation with a sense of change in process. How to magnifyand transform such signals into data is a managerial informationtask.

Data can monitor change in the environment, or in thestrategies applied in other institutions used as benchmarks.But, more importantly, data should reflect the practice of theactors themselves, inside the organisation or in its directenvironment. It is clear today that a lot of significant informationcan be drawn from staff experience inside the organisation. Itis difficult, however, for management to convince employeesnot only to expose their experience, but also to analyse it sothat it can contribute to a database of useful information forthe organisation. Information must be structured so that it iseasily communicated, while providing useful data to theenquirer. Inside the organisation, it must be available to anyonewho is concerned with specific elements of information:thismeans setting up open systems which are difficult to organise,but essential. Such a task represents a managerial challenge,especially when strong competition for positions exists insidethe institution or, on the contrary, when the administration,interested in routines, prefers to retain information rather thanto find time to disseminate it properly, thus risking the culturalfragmentation of the organisation.


At the level of the whole organisation, it is calledinstitutional evaluation and deals with the basicorientation and norms of the institution. Functionalevaluation of the departments, of specific activities orof the use of specific methods is a necessary complementto institutional evaluation but, too often, as it is easierto achieve and exploit, functional evaluation displacesor replaces institutional evaluation. Strategicmanagement must make institutional evaluationpossible and even desirable for the majority of actors,thus offering a frame of reference to functionalevaluations that develop a critical approach to policies.

Managing evaluation, as a collective process of change, inorder to educate and motivate people for change, is thus at thecore of strategic managerial capacity. This includes the abilityto engage people in the evaluation process, as a criticalunderstanding of what they do and why they do it. As a sidebenefit, this may help other members of the organisation tounderstand the managers' tasks and difficulties.

An internally-organised evaluation is essential to helpinstitutional actors to question their goals and practices. Anoutsider's viewpoint is also useful - or even vital - to reconsidermore objectively the organisation's aims and operations, itsperformance criteria or its public image. The outsiders couldbe external members of the administrative board, regular andinfluential in the governing process, as well as consultants ormembers of networks cooperating with the institution. Theorganisation's information system should be able to registerthis data even if it proves difficult to gather because of itsinformality, usually reflecting various actors' needs andmotivation. Moreover, the management of evaluation impliesa proper follow-up of the recommendations made, i.e., gettingpeople's support for change when they are shown the advantageof action adjustment. Wisdom consists here in showing thata non-change attitude, after the evaluation has pointed to

some should be kept confidential, secret, in order tominimize potential opposition, while beingimplemented by a few people "in the know". But secrecyis difficult when implementation requires a widedistribution of information and an open exchange ofexperience. Moreover, secrecy does not permitdecentralised initiatives - it provides privilege to thehappy few, leaving the other actors with a strong feelingof arbitrary behaviour, if not of mistrust. In fact, theformulation and implementation of strategies in theorganisation are the test of the validity of institutionalpolicies. When no strategic drive proves effective, thereis an obvious need for change in policies.

2. Strategies describe types of changes and ways oftransformation; they tell us what to do in order toimplement policies (instrumental rationality, orefficiency). That is why they need to be expressed inoperational terms: recalling objectives, they enunciatethose activities selected to reach those objectives, thetype of changes induced by such activities, the meanswhich can be used - or kept untouched - to developthem, the allocation of individual sub-missions,resources and authority, the evaluation criteria forspecific projects, the procedures to implementevaluation and those to take account of conclusionsand recommendations. In other words, understandingthe interaction between actors and strategies is at thecore of any managerial process, and of the exercise ofleadership.

3. Evaluation is thus the key to any policy and strategy,because it questions constantly the aims of theorganisation, the institutional allocation of resources,the leadership and operational capacities, i.e., the norms,communication development, the criteria for quality,their implementation and their critical re-evaluation.


the organisational climate of the institution, i.e., its culturalnorms. It is an illustration of badly managed change. Culturalorganisations (universities in particular) - which are made upof traditions, individual motivations, weak leadership,fragmented and difficult communication procedures, as wellas individual initiatives - are particularly at risk.

Rationalisation, innovation and preservation make up aninterdependent system with its own feedback loops. Designingand operating an appropriate balance within this system is atthe core of strategic management, and therefore of leadership.It cannot be an a priori policy, but should flow from theimplementation of change, while leaders remain aware of thedanger of ignoring preservation.

CONTRADICTIONS AND PARADOXES IN STRATEGIC MANAGEMENT

In a fast changing environment, an organisation is oftentorn apart between different objectives, which are notnecessarily coherent, especially in terms of their succession intime; an organisation working on projects, each with its ownspecificities, efficiency and quality criteria, types of personneland resources, requires management to allow for initiativefrom the people involved to foster fast adjustment to unforeseenchange.

Such an approach can reveal, sometimes in a dramaticway, the organisation's contradictions between the objectivesof its staff members, their attitudes, their potential for change,their constraints or their management operations. Thesecontradictions can induce unexpected consequences, good orbad, and institutional leaders should be ready to manage themas components of true strategic change, with high professionaland cultural impact. This is an increasingly importantdimension of management for change. In more classical terms,this represents the dialectical dimension of governance.

Many contradictions occur at the same level, i.e., withinthe same general framework of relations and criteria for action.

areas of weakness, could lead to external adaptation pressures,and that immobility can only undermine present positions,making it all the more difficult to adjust later.

THE BALANCE BETWEEN RATIONALISATION,INNOVATION AND PRESERVATION

Often, managers are tempted to give priority torationalisation, on the basis of efficiency criteria - usually areduction of costs that leaves structures and roles as littleaffected as possible. Indeed, when change is the key, innovationcannot be developed without some rationalisation in order toprovide transfer mobility in resource allocation as well as newmodels of action. Thus, rationalisation usually leads toreorganising organisational structures and to developing newfunctions while, however, keeping to the basics of the existingsystem.

A classical way of developing innovation is to designexperimental structures away from mainstream activities inthe organisation; areas of transformation are set up at themargin with their specific norms and evaluation criteria. Thisallows for focusing, in mainstream activities, on rationalisationand efficiency, thus allowing for some questioning of currentpractice. But, at some stage, innovation will need to betransferred from the periphery to the core resources forincreased structural change. This should lead to a difficult actof balancing between rationalisation and innovation. Too often,the drive for rationalisation and innovation, whichprofessionally and even culturally proves rewarding formanagers, underestimates the damage it can impose onsituations that should be preserved in the longer term interestof the organisation.

Ignoring the need for preservation can often endanger theinstitution or reduce its assets by wasting the professional andtechnical experience of staff, thus jeopardising quality, normsof cooperation, processes and communication or, more broadly,


management thus develops strategic modalities for newleadership processes in which preservation becomes a tool forthe administration of institutional paradoxes.

SHOCK MANAGEMENT

As an approach to managing change, shock can be opposedto incremental change management. Shock has its place in astrategy of change only if used at an appropriate time whensupporting the rhythm of change.

Even so, members of the organisation should realise thatshock can always be employed, for mere necessity's sake. Suchawareness would require some education, as compared to thenon-conflictual marginal move policies, which usually reinforceconservative behaviour, as people are quick to react toincremental change by using it for their own interests.

GLOBAL AND LOCAL COMMITMENTS

Policy and strategy have traditionally been considered asglobal dimensions of management, aimed at driving the wholeorganisation towards its long-term future. Implementation hasbeen regarded as affecting local levels of action. This can betrue in a bureaucratic or thoroughly hierarchical system - asso often described in the literature.

Everybody knows that in times of fast change, growingcomplexity and uncertainty, decentralisation and localinitiatives are keys to the development of the whole institution.At such moments, a local initiative, in response to a signal ofthe market, or to the inventive spirit of local people, can, inthe long run, turn into a real strategic path for the organisationin toto, as the electronic bet taken by some departments or theuse of Internet by others have shown recently.

Such an extension of innovation can occur if centralmanagers are not only informed in time of potential change,but also if they have the culture and organisational capacity

The traditional managerial solution has been to seekcompromise (by dividing stakes, risks and means), thusinducing short-term favourable consequences. In the longerterm, however, compromise could lead to inertia as it is builton acquired status and pre-existing strategies. For most leaders,this is seen as a stable solution, a step which will introduceleverage to structure future development. For others, however,compromise is but a temporary and tactical move, a stageconceived as part of a longer term perspective. Such managerscan envisage a changed future requiring renewed negotiationsto decide on shared goals, action criteria and redistribution ofresources. On-going tensions will probably become the rulewhen contradictions develop at different levels of institutionalstrategy. Indeed, in such a case, the organisation deals withsituations of paradox rather than of contradiction.

Paradoxes are confronting situations, positions, languagesor models, referring to different rationales. A compromise istherefore difficult to design and implement in such a situation,as the frame of reference is not the same.

Paradoxical management leaders should allow divergingsituations to develop side by side, as an incentive towards thefinding of management processes that differ according to thelevel recognised to specific goals and means inside theinstitution. While accepting contrasting situations leading topossible conflicts, the organisation should re-design and adoptnew models for action. In such a case, conflict brings aboutstrategic innovation and requires transformed leadershippractices as well as new cooperative networks. In such aparadoxical context, managers should play on those tensionsand encourage those institutional actors feeling estranged bycontinuous conflict to invent new strategic models, theemergence and implementation of which could be sustainedwithin the organisation. With the speed of change and theimportance of external constraints, history has provided manyexamples of such managerial experience. Paradoxical


that centers also on the individual. Thus, the Internet revolutionshould lead to major transformations in activities and inrelations, especially with the new generation of easy accessday-to-day tools, such as wireless telephones or satellite-televisions, which integrate sound, image and numeric data.Indeed, by fostering communication and personal interaction(through information exchange, debate or networking), theInternet challenge strikes at the heart of social dynamics. Theelectronic revolution calls for major changes in the way peopleestablish and conduct interpersonal relations, rely upon,confirm and contest their collective norms of behaviour.However, its real impact on social norms will depend on itscultural specificity, i.e., on the values it implies and on theirstructuring role within the institution, not to speak of theprevailing rules protecting the individual actors in the system.It directly influences individuals' new aspirations, motivations,reference models and, therefore, their political, economic andcultural organisation.

1. In political terms, this affects society's organisingfunctions such as authority, leadership, regulation andcontrol, or collective consensus. It is clear that publicadministration processes, sooner than expected, will beunder strong pressure to change, because of new modesof interaction between political power andadministration, on the one side, and more demandingcitizens, on the other. Power has, historically, combined"communication" with "distance". With the developmentof new interactive networks, people are now able togather information independently of the politicalpowers' official wisdom. The desire for direct andefficient interaction with public administration andleadership should be much enhanced, because the roleof traditional mediators (political agents, representativesof authority, establishment groups, including the media)will be challenged by the new ease and capacity with

to "exploit" quickly such novelty, while spreading theinformation through the strategic information system.

Looking from the top down, global views can be interpretedonly at the local level; meaning, motivation, awareness ofpractice are local; thus, they inform adaptation or invention.Systems theory is indeed now teaching that each item of asystem incorporates all the basic messages of the system andthat "itemised" change can induce global change. Chaos theoryalso insists on the local source of global disturbance. In termsof management philosophy, this means that any general policy,relative to a particular field of activity, must be explained andunderstood at all levels of execution at which that activity isbeing implemented. Only language would differ according tothe audience and the type of change agents.

Leadership consists in organising such globallocalinteractions, for the benefit of the institution as a whole. Thisis not always easy as, in human affairs - the essence ofmanagement -, rational attitudes can only help to communicateand control global views; their implementation, however,always evokes feelings among the members of the organisation:they desire to be informed, heard, respected, whatever thelevel of operations, even more so at the lower levels. Americanmanagers consider the affective illiteracy of managers as anobstacle to innovation! Look at Princess Diana's tragic deathand the incredible wave of emotions aroused by a road accidentturned into a stage of royal fate. Sentiments, feelings andemotions are gradually recovering their place in theunderstanding of human behaviour in organisations: thisrepresents a big change in the theory and practice of managerialprocesses.

Technical innovation and culture: Internet as a strategicrevolution Stressing personal growth in institutionaldevelopment is but one aspect of governance. It could becomforted by the extended use of electronic communication


institutions! The cultural systems (in communication,education, leisure and sports, literature, performingarts and fine arts) will use new information technologyheavily and widely. The language they use is alreadyand frequently "permeated" by technical terms, whichmirror rapid and widespread technical change. Thelevel, nature and need for cultural development ismodified, discussions and exchanges of views will growin importance while reflecting socialisation and groupaction through fleeting interests and personal emotions.

3. In economic and managerial terms, this affects theproduction of goods and services, the markets for theirexchange, the organisation and use of informationsystems as well as the modalities of human resourcedevelopment, in other words it influences society's"investment in people" and in their learning activities,both being strategic processes in a knowledge society.

The aim for the organisation is for structures and personalbehaviour to spread innovation by adapting quickly to newconstraints and opportunities, if possible at an acceptable cost.Achieving such a goal should be at the core of governancestrategies. Setting up a new strategic information system in theorganisation could question the cultural norms of the institution,its structures and resourcing policies and, of course, itsleadership. This is already the case in the development of"electronic commerce" and of network strategies for customisedtrade. Powerful agents of change, such as the new technicaland managerial systems of information, will probably influencesocial change in fast expanding areas and at fast growing rates.

Because the electronic revolution coincides and combinesitself, in time and space, with important cultural changes insociety, the personal and social needs of citizens, their senseof human dignity, equality or their exercise of liberty, are nowat stake. The new norms stress personal autonomy, i.e., the

which many people will participate in the activities ofreal or virtual communities based on exchange ofindividual views and on coordinated collective action.More generally, as the German philosopher JürgenHabermas has suggested, the dynamics ofcommunication will change the concept and practice ofState and Law, i.e., the citizens' experience of democracy.

2. In cultural terms, this affects society's language, valuesand significations, norms, models of action, i.e., itscommunication, learning and teaching systems, itsesthetics and leisure criteria. The concept itself of culture,which in Europe has been traditionally linked with"enlightened" values and leadership or class criteria,could become more attuned with the "expressedopinions" of a broader part of the population, a trendalready observed in the arts and media performances.This is characteristic of today's mass societies. Innovationis difficult for cultural institutions, which are supposedto preserve their fundamental role, the collectivedevelopment of methods of critical thinking, by keepingcontact with the ideas of prominent thinkers and withthe heritage of culture. The rapid decrease, nowpalpable, in the "reading" habits of society, even amongstudents, challenges the self-discipline and reflectioninduced by writing and reading as the basis for ourcivilisation. Mass culture, as evidenced in TV broadcasts,tends to value all opinions in the same way, thus helpingviewers to acquaint better with their neighbours'existence and needs. For Dominique Wolton, socialdemocracy tends now to shape cultural development.European universities should not stay aloof from thisevolution of culture but, on the contrary, they shouldreaffirm the basic missions of higher education, also interms of culture, as required by the Magna Charta ofBologna. Yet another paradoxical challenge for our


members of a separate academic community, the medievaluniversitas. This is a major challenge. The generalisation ofevaluation methods should, in this sense, work towardsdeveloping some form of cultural lingua franca, making valuesand attitudes explicit among faculty and students - at least asfar as the universities' objectives, means and activities areconcerned.

Evaluation comes out as one of the main tools of universitygovernance and strategic management. Universities cannotignore such overwhelming trends in communication and socialnorms, nor can they delay their inclusion into strategicmanagement and thinking. This represents a vast domain ofcomparative and coordinated scientific research, that shouldinduce concerted action on a European scale.

Much attention in the current developments and debate onstrategic planning and quality assurance has focused ontechnical issues and the design of various rational instrumentsof institutional transformation. However, the interaction ofactors in the policy formation and implementation processesis at the core of any successful reform, but bound up withtensions which derive from differences in intellectual opinionon the best way forward, as well as from vested interests andfear of the unknown. Strategic management (including thequality process) is thus permeated with contradictions andparadoxes. Institutional leaders therefore have come toappreciate that such contradictions have to be lived with, thatstrategic development, far from being a linear process, is highlyinteractive, and that tensions have to be positively and creativelymanaged.

Central to this issue is the question of the effective assembly,management and circulation of knowledge about theperformance and direction of the university. Any qualityassurance system within a strategic context should incorporatemeans by which the university learns about itself, then

need to "express" one's own opinions and needs; one's desireto communicate, to be heard, to be listened to; one's wish forinformation and the discussion of one's own specific problems;in other words, the "right" to be informed and "respected".Thus, citizens expect from society more equality in terms ofpersonal recognition and individual concerns, morepersonalised attention to their problems and efforts: "We areall equals and formality is an obstacle to free exchanges ofviews and to innovative practices".

Learning, leisure, entertainment, game playing, formalreasoning and mere expression of opinions are becomingincreasingly combined, or just mixed, in work, speech and,also it would appear, in education. The information societywill certainly enhance this evolution in social development.

According to Pierre Bonnelli, the chairman of SEMA, apowerful Anglo-French group of information services, theseare still latent needs, although they are calling for fulfilment.The present convergence between new needs and newtechniques is revolutionary and should change the strategicevolution of our societies. New marketing methods, thanks tothe power of information systems, permit targeting personalprofiles.

Organisations will need to focus more and more on theclient's customised needs, unless unforeseen cultural factorsblock this trend. Universities will soon meet, and in fact havestarted to face, those new latent needs, as expressed by thechanging mentalities, norms and attitudes of their students, anew behaviour that will be hastened and reinforced by theformidable growth of communication techniques. In fact,university students, with an increasing proportion of adults,now consider themselves as "users" of academic services toanswer their cultural, professional, if not their personal needs.In other words, being deeply immersed in all the currents ofsocial change, students no longer consider themselves as


end, which clearly gives leaders and academics in the lowerparts of the university much more operating autonomy andfreedom.

This yields four categories of institutional culture:bureaucratic (loose on policy; tight on regulation); collegial(loose on policy; loose on regulation); corporate (tight on bothpolicy and regulation); and entrepreneurial (tight on policy;loose on regulation).

The first paradox or contradiction we may identify is that,whilst a particular university may display an emphasis on oneof the above, inevitably all four dimensions will be present toa certain degree, in a specific part of the university (so that abusiness school may be very entrepreneurial, whilst otherfaculties are not), or for a specific function (financialmanagement clearly has to be bureaucratic in many respectsgiven the demands of external public accountability).

The institutional leader has thus to be able to managestrategically in different cultural settings, particularly withinthe institution, where the collegial mode often dominates aspart of the academic heartland of the university. Leadersattempting to introduce strategic or quality initiatives usuallyencounter difficulties linked especially to cultures with a heavycollegial emphasis, eg.:

1. A tendency to avoid problems. This may be explainedby the individualistic cultures which generally respectindividual academic sovereignty for teaching andresearch; moreover, the development of highly specialistareas of knowledge may also limit challenge or learningfrom other perspectives, and induce reward structuresbased on the individual rather than the group. Thereluctance to confront difficult issues may be linked tosheer cowardice! In a strategic management setting, thepractical consequences of avoidance are defensiveness,isolationism, nonaccountability and fragmented

undertakes activities deemed necessary for constructive change,the so-called virtuous circle.

Universities should conceive of themselves as "learningorganisations", not in a conventional pedagogic sense, but inthe sense of self-evaluation and ongoing monitoring, leadingto continuing enhancement of an institution's capacity torespond to, and lead, a turbulent environment. This clearlycalls for some university-wide strategic awareness orintelligence which does not destroy or inhibit the creativity ofthe academic heartland, but enhances its vitality.

In the light of the above, this paper attempts to analysecharacteristics of cultures in universities, and the extent towhich particular types of culture support strategic and qualityinitiatives. It then goes on to explore issues in the transformationof cultures and the various approaches open to institutionalleaders in this process, exploring in operational detail some ofthe tensions and paradoxes discussed by P. Tabatoni. This isinevitably bound up with a discussion of leadership authority,style and instruments of change (especially at rector's level),and supporting structures.

The existing organisational culture in many universitiesmay not be at all conducive to the sustainability of organisationallearning, both in terms of enhancing knowledge acquisitionacross the institution, and in terms of using it constructivelyfor organisational change. The literature on organisationalcultures in universities emphasises how complex a phenomenonthis is. McNay (1995), building on previous studies, classifiesuniversity cultures along two interrelated dimensions. Thefirst is that of the structure and character of policy formationwhich may be tightly determined by senior leadership atuniversity level, or, alternatively, rather loose. The second isthat of the nature of operational activity, which may be tightlyregulated at one end of the spectrum by a host of rules andconventions (state or institutional) or rather loose at the other


all the more so as the two groups draw on differentknowledge bases. Each version of so-called "reality" isonly partial. Filtering out of data occurs on both sides- and differentially - so that the debate on quality andevaluation issues may take place from quite differentstandpoints. However, the tendency points to somemanagerial discipline being imposed on a hitherto highlycollegial culture, as a result of the changing role ofrectors, vice-rectors and deans. In fact, these seniorofficers are often caught in a personal paradox: are theyadministrators or academics? Especially in the case ofdeans, are they part of senior management, (with whatis implied in terms of collective responsibility forstrategic decisions) or part, not to say leaders, of adevolved collegial structure? They may find extremedifficulty in coping with the demands and roleexpectations of the rectorate, on the one hand, and oftheir faculty colleagues on the other.

6. Different disciplines also display different operatingassumptions, beliefs and modes of behaviour, whichclearly influence the way of understanding issues,approaches to decisionmaking, and means ofintervening in complex issues.

7. Furthermore, many rectors and university leaders havehad at their disposal an ambiguous set of instrumentsof organisational change, and this clearly affects thepossibility of implementing desired quality strategies.We shall return to this later.

One might thus conclude that, by and large, existinginstitutional cultures are not conducive to the sustainability ofsystematic strategic and quality activities, in particular whenthey appear natural and inevitable, and can be defended aspart of academic freedom against arbitrary executive action,as an incentive to individual creativity within the academiccommunity. However, operating cultures in universities are

information, which makes quality-oriented processesproblematical to install.

2. When quality assurance is initiated as a formal process,it is normally a top-down activity, fuelled by externalaccountability or financial reduction, requiring crisismanagement. Traditions of low corporate identity willcreate tension and defensiveness that are reflected innon-compliance with quality processes. This translatesinto a reluctance to admit errors and to be self-critical,information then being passed upwards in asubstantially unfiltered manner.

3. The fact that many universities are public and tied tostate higher education bureaucracies could also lead toprevalence of the rulebook and maintenance-orientedprocedures. This may be encouraged by fragmentedinformation flows designed for external accountabilitypurposes, as well as by limited planning horizons, ora separation between planning and evaluative processes- all of which do not help sustain quality processes inthe sense outlined by Tabatoni.

4. It is also common to find barriers to the sustainabilityof a quality culture in the feedback/evaluative processitself. This process is often ambiguous (apart from somesimple performance indicators) in terms of objectivemeasures. Arrival at commonly accepted interpretationof terms and reality may be problematic owing to thedifferent agendas, interests and behaviours of thevarious actors. There may also be lengthy delays in thefeedback, particularly for impact measures, whichrender short-term adjustments hazardous when contextsalter; such delays are problematical for consensusbuilding.

5. A barrier exists between academic and administrativestaff, which is not simply hierarchical, but may reflectfundamental differences in values and operating styles,


not automatically arise out of strategic thinking or vice-versa.

4. Flexibility is therefore essential, i.e., the willingness ofleaders at various levels to test the legitimacy, relevanceand robustness of rules and regulations: this could meanallowing space for a dean or an entrepreneurialprofessor to contest the administration, or for a rectorto question a national agency, with a good chance ofbeing heard.

5. Hence, the creation of consciously designed feedbackloops is important to turn experiments and initiativesinto learning, spreading information on good practicethroughout the institution, and providing short turn-around time for the use of evaluation results. Cross-university/cross discipline linkages are not, however,so common in many universities, where rigiddemarcations between faculties still represent a majorconstraint to multi-disciplinary approaches - not tospeak of simply learning about other faculties! Therefore,building what James calls a "collective IQ" is not alwaysevident.

6. Since organisational change in universities, to bethorough, must occur way down in the organisation,the basic academic unit - the department or its equivalent- is the key to cultural transformation. Recognisingtraditional autonomy is one thing, but it will neverstimulate a quality or strategic culture in the institutionunless team performance is rewarded as much asindividual results. In other words, a collective approachto quality exercises remains a prerequisite forinstitutional change.

7. Structural experimentation, therefore, characterises anemerging culture of transformation in which formaland former structures are no longer considered adequateto new purposes when the institution needs to cope

shifting from a heavy emphasis towards the bureaucratic andcollegial aspects to an entrepreneurial and corporate orientation.This should result in a greater concentration on strategic,universitywide thinking (usually prompted by externalconstraints): serious discussion may develop on the extent ofdevolved authority needed to realise strategic purposes inways best suited to the devolved unit (faculty) and its externalconstituencies; that evolution often leads to use of resourceincentives and devolved budgeting.

1. A "learning organisation" being naturally adaptive, self-reflexive, and self-critical at strategic and operationallevels, a "learning university" should display a strongability to identify, confront and resolve problems; itmeans recognising its weaknesses, collectively andsingly, and acting accordingly; it implies also to useinternal competitiveness and comparisons transparentlyand constructively, as well as a readiness to account forperformance. Such features are not obvious in EUAquality reviews: therefore, institutions reviewed havenot often developed staff appraisal and developmentprocesses.

2. Transformation should then be grounded in theexperimentation and tolerance of error as acounterbalance to stability and predictability. Such anon-punitive ethos implies transparency, openness andfrankness, not only in leadership style, but also in theincentives and support systems of institutional change.It encourages conscious risk taking, i.e., the capacity toprepare for the unexpected.

3. An "adaptive" university is thus able to make choicesopenly and systematically by determining clearmeasurable objectives generated through consensus andcommitment. Not an easy task for leaders facing adilemma difficult to resolve: how to balance democraticprocedures against executive power, as consensus does


university personnel and external stakeholders. The1998 CRE study analysing the dialogue of universitieswith their regional stakeholders pointed to five stagesin the development of effective and mature workingrelationships that cannot be short-circuited. The processis both intuitive and interactive. The same considerationsapply in creating mature relationships internally.The contention here is that tensions and contradictionsoften reflect misunderstanding or lack of informationas well as genuinely held beliefs. A sense of the evolutionof dialogue towards trust and respect of the other is anintrinsic part of the dialectic to which Tabatoni refers.

2. The evolution towards maturity in strategic and qualitydomains is partly related to the degree of importancegiven to activities in both fields. A low level of activitydoes not lead to much visibility or sense of priority,thus downgrading the sense of urgency needed to learnon these issues.

3. Of equal importance in the maturation of strategic andquality cultures is the degree of systematisation adoptedby the university in its approaches to new challenges,i.e., the institution's sophistication. Does it mainlyrespond to change needs in an ad hoc disjointed manner,with little attempt to develop robust policy andprocedural frameworks, or does it carefully attempt todesign stable instruments to guide collective behaviour,thus building on experience of good practice? In thelatter case, the tensions outlined by Tabatoni have beenbuilt on and used creatively: in the former, the tensionswill tend to paralyse lateral learning and restrictconstructive innovation.

The dimensions of maturity outlined above may beportrayed diagrammatically: its four different quadrants reflectdifferent approaches to the question.

with different external stakeholders, each with adifferent agenda, in terms of service requirements andtime frames (for continuing education, technologytransfer, franchising, co-operative education,independent study, and e-learning, to mention a fewfields for concerted change).

The differentiation of demand requires a diversification oforganisational patterns, both in interfaces with the environmentand in internal operations. Tensions, contradictions andparadoxes can then be accommodated within an institutionthrough purpose-built structures and personnel arrangementsfor different organisational objectives and priorities.Universities, however, run the risk that a wide spectrum ofobjectives will affect their sense of identity, all the more sowhen they depend on simple linear organisation structures,based on historic roles and functions.

In order to support an overall institutional specificity, onewould not only expect differentiated structures, but alsoconscious experimentation monitored from the centre, thusdeveloping a structured process of organisational learningbased on shared evaluation criteria, on accepted assessmentmodalities, and on a clear understanding of the identity andmotives of the reviewers. In short, the university must be ableto learn from its experiments. Pierre Tabatoni pleads for agreater sophistication in strategic thinking and management,using inter alia openness and transparency, credibility,collective education and innovation.

Developing such elements for strategic management andquality assurance requires a relatively slow process ofmaturation if universities are to cope with the many tensionsfor change inside and outside. Maturity is not an instantaneousprocess, and its evolution may be discerned as follows:

1. First, interpersonal and intergroup understandingshould evolve both within universities and between


These four questions are clearly at the hub of culturaltransformation. In general, we may reasonably say thatQuadrant A is probably the weakest in terms of strategic andquality culture, whereas Quadrant D is the strongest. However,for many institutions, in southern and central/eastern Europein particular, Quadrant A often represents the current location,and, as long as the external imperatives can be reasonablyaccommodated, a movement from A to B, and then maybe toD, is probably optimal. Quadrant C should be avoided, ifpossible, since the combination of frenetic activity withuncoordinated growth simply leads to so-called "organisedanarchy".

Moreover, it is rather difficult to move from C to D,assuming that the latter is a desired position, since the ad hocnature of effort in C may well have become endemic andbeyond control in the institution. In other words, Quadrant Ccould prove to be a dead end.

To enrich a quality culture within universities, the questionposed is "how to move a university to a more desired positionin the matrix", where quality has a higher priority, and wherestrategy is better systematised.

EXTERNAL FACTORS

Various environmental factors, i.e., framework conditionsin which institutions operate, have played an important rolein changing attitude to strategy and quality in most systemsand universities. They refer to the needs of governmentdepartments (education, finance, industry and trade), statehigher education agencies (planning, funding or quality),rectors' conferences or peer groups of institutions or subjectspecialisms, industrial or commercial stakeholders (interestedin the nature, quality and price of services), individual consumergroups (students), research funding bodies (public councils,academies and foundations), and international agencies. Eachuniversity is subject to various combinations of such external

o Quadrant A: Low on importance/volume, and low onsystematisation.

o Quadrant B: Low on importance/volume, and high onsystematisation.

o Quadrant C: High on importance/volume, and low onsystematisation.

o Quadrant D: High on importance/volume, and high onsystematisation.

These categories are broad generalisations, and, whilst atinstitutional level, one type may largely predominate, elementsof all four may be recognised somewhere in the university,given the nature of the institution as an organisation, and thecultural idiosyncrasies of different subject disciplines. Fourstrategic questions arise for the institutional leader whenconsidering this typology:

(a) Which category best describes the current position ofthe institution?

(b) Are the leader and the various interest groups in theinstitution satisfied with this position, or should therebe movement to another, more desirable, quadrant?

• Ability of participants to understand terminologyand expectations Ability of participants to identifyand describe all relevant elements in interactionAbility of participants to analyse all elements interms of effectiveness

• Ability of participants to confront problems, criticiseopenly and constructively the elements andrespective roles

• Ascending levels of maturity

• Excessive bureaucratisation?

(c) If the latter, to which quadrant should the institutionmove?

(d) How should the movement be stimulated, managedand achieved?


which external evaluation may very well pose. Such a trendbecomes particularly obvious when quality officers, internalreviews, quality committees, or directors of quality abound. Tomeet the requirements set by some external industrialstakeholders, for instance, the university could adopt generallyrecognised commercial or public sector Total Quality regimes,such as ISO 9000, at the risk of disagreeing with the university'smission and vision, thus evoking new sources of tension insidethe institution.

There is clearly a wide psychological spectrum of responsesby universities to the above … from a highly defensive closed,even rigid, stance ready to repel perceived invaders (in whichthe admission of failure is not high on institutional agendas)to a welcoming stance in which the university, trusting in itsown capacities, will be frank, tolerant and open, and will useexternal initiative as a means of stimulating internal change.

However, whatever type of external framework appertains,many universities would not have adopted, or moved towardsa strategy and quality culture, without an external stimulus ofsome kind. The forces of traditional academe, whilst clearlyquality-oriented, especially at lower levels in terms of scientificrelevance, have often not permitted a strategically orientedquality culture with its own mechanisms, at institutional level.

INTERNAL FACTORS

If quality transformation often relies on external stimulation,quite a few universities have achieved change by enhancinginternal quality awareness; for their rectors and senior leaders,external imperatives have become extra means for changingbehaviour, when it became obvious that refusing change wouldjeopardise the institution's future. Strategic and qualityprocesses are ideally about:

(a) holding up a mirror so that the institution and its partsare able to see themselves for what they really are,rather than cling to obsolete identity myths;

requirements, depending on its academic profile, mix ofactivities and particular context, and the relative weight ofthese external demands is clearly an important factor for theinstitution's possible response.

For universities subject to all the above, the reconciliationand accommodation of differences requires internalmanagement skill of a high order, and considerable sensitivityto external agendas. Social demand may nourish thedevelopment of diverse quality-oriented cultures, for instance,by

(a) requiring universities directly to operate or conform toexternally designed quality processes for assessingteaching and research, a culture of compliance;

(b) requiring universities to develop internal processeswhich are intended to satisfy broad external criteriaand benchmarks, a culture of introspection;

(c) requiring universities to set standards for accreditationpurposes, a culture of normalisation;

(d) requiring universities to have an institutional strategyand transparent quality processes, a culture of qualitymanagement;

(e) requiring linkages between quality reviews and resourceallocation, directly or indirectly, a culture of retroactivestrategies;

(f) benchmarking university performance in such domainsas teaching, research, cost effectiveness, value for money,resource base, student satisfaction, income generation,a culture of transparency.

Viewed as a spectrum, these various "cultures" range frompoint (a), enslaving obedience, to point (f), informed service.All too often, universities replicate internally their approachesto external demands. Then, the internal culture is driven byoutside needs, an understandable development given the threats


may well respond to rational approaches, others to normativeeducative approaches,

and others to the exercise of more powerrelated politicalapproaches. Considerable flexibility and judgement of thestrategies' appropriateness is thus required from university.

LEADERSHIP STRATEGIES

Rational approaches to the development of quality cultures,and the movement towards Quadrant D, are based on theassumption that the people who inhabit universities aregenerally rational, and will react positively to arguments whichare clearly and logically presented, demonstrate a case, and aresupported by sound and relevant data. In this event, the qualitystrategy must be clear and explicit, its rationale (external andinternal) transparent, its purpose welldefined, its decision clear,and its link to institutional mission obvious. A rational qualityculture calls for performance indicators which are perceivedto be relevant and appropriate to what is to be assessed, neitherexcessive in number and complexity, nor overpowering interms of the paperwork which is generated.

Legitimate ground rules would be expected for theoperation of the system, with accompanying documentationand handbooks for the various parties - evaluators, evaluated,and system maintainers. In addition, legitimate experts - internalor external - whose specific reports are likely to have credibilitywith the evaluated, should fulfil the role of change agents.Finally, the whole effort must be supported by a respectedorganisational framework to guide the quality endeavours, forinstance an office or offices to sustain the process and provideassistance, as well as a forum to discuss policy and defineoutcomes. Whilst rational approaches may certainly be justifiedin terms of intellectual rigour, this, per se, does not generateacceptance by the academic community, given that the contextof their use may be fraught with financial reduction, localcrises and internal micropolitics. It is normally wise to develop

(b) providing to people at all levels within the institutioninsights about existing issues, as well as possibilitiesand perspectives of change;

(c) providing a vehicle for the provision of structured advicein relation to defined issues and opportunities;

(d) providing education in the ways and means ofinstitutional improvement.

It might therefore be said that effective quality processesare, in fact, exercises in the supportive destabilisation of thestatus quo, with a view to constructive transformation. Theprocess builds on uncertainty regarding the validity of statusquo arrangements, thus stimulating an assessment ofinstitutional strengths and weaknesses as far as mission,strategy, processes, role, structure and resources are concerned;this internal and creative capability to be critical often refersto similar phenomena in other institutions: such comparisonsallow for improvement.

Changes in behaviour and attitude are the desired end-products of the exercise. When universities move across thematrix, various activities may prove unhelpful, and, asexperience indicates, should be avoided. There is no need forprocesses which are erratic and inconsistent, which offerexcessively narrow and rigid perspectives, which reflectpartiality and bias, or which contain heavy, costly, and time-consuming data collection. Such processes, indeed, are likelyto deter innovation, while leading to substantial demotivation.

To develop sound quality cultures which move theirinstitutions broadly in the direction of Quadrant D (HighPriority/Systematic), senior managers may adopt severaldistinctive leadership strategies. Though conceptually distinct,in terms of underlying leadership style, they are nonethelesslinked in practice, since university leaders will usually combinethem for effective implementation, thus remaining sensitive tothe micropolitical map of the university. Some university groups


approaches: external and internal workshops for both academicsand non-academics on assessment procedures could lead tocounselling, mentoring and related activities, in order to providetailormade assistance to staff members involved in a specificarea of transformation. The rector benefits from a significantadvantage due to his/her position, i.e., a global understandingof all the facets of a quality issue and of a quality strategy; thisgives the leaders immense scope for institutional integrationand cross-referencing. Moreover, the rector often has advancenotice of likely external issues and strategic developments,because of membership of the national rectors' conference andcloseness to the national higher education agencies; thus,university leadership should be able to prepare the politicalclimate of the institution for the likely big issues looming onthe horizon, or use inside information to create shock.

The educative approach is in essence a continuousprocedure, highly flexible to the needs of particular groupswhen assistance is required. Therefore, considerable calls arelikely to be made on expert support from university qualityoffices, from quality specialists at faculty level, all people ableto identify and diagnose likely problem areas at an early stage,and to provide support, remediation and follow-up. Theconstructive partnership between rector's office, strategicplanning office, quality office, staff development departmentand deans is thus a key factor in the evolution of a qualityculture.

There will inevitably be occasions when the rational andeducative approaches above may need to be supplemented bya third, the political or power-coercive approach. Theassumption here is that, in times of organisational stress andhigh conflict, the density of institutional micro-politics is likelyto increase substantially. Even in relatively quiet times, therewill always be people who do not respond positively to rationalor educative approaches. Thus, acquiescence or compliancewith university strategy may need to be achieved through

such "rational" instruments in a period of relative institutionalcalm, and well before they are likely to be used for ratherdifficult organisational purposes.

In this case, questions of validity and integrity are ratherless likely to arise, giving academics less opportunities todisparage the validity of the proposed instruments andprocesses.

Rational approaches clearly imply highly transparent andopen procedures and a free flow of information. This is moredifficult to sustain in a very turbulent environment.

Given the limitations of rational behaviour patterns in theacademic community, formative or educative approaches tostrategic quality culture development can better concur tochange. The underlying assumption here is that people arelikely to feel threatened by the development of qualityinstruments, which could reveal personal inadequacies in termsof past performance, or because their use brings insecurity anduncertainty in terms of induced change. Educative approachesare thus designed to enable academics and other staff to feelcomfortable and proficient in changed circumstances, in orderto reduce resistance, alienation and the feeling of inadequacy.Rectorate and deans can set an example by subjectingthemselves to review and personal development initiatives.Widespread briefings on the reasons why quality processesare needed, the likely ramifications and consequences of theiruse at various levels, and a demonstration, in specific terms,of expected and likely positive outcomes are also vital. Ifdifficulties are likely to crop up, staff should be briefed on thesupport they can expect when coping with change.

Colleagues could be further involved in the design ofprocesses, relevant structures, performance indicators anddatabases as this should generate commitment and ownershipof the change process. Systematic training and staffdevelopment are also important to strenghten mature


(d) To make obvious the need for change, rectors may wishto engage external reviewers coming from thestakeholders' community, especially if the academicunit concerned relies on such outside partner forbusiness or credibility (e.g., a health authority, company,or government department).

(e) In terms of the formulation, legitimisation andacceptance of a quality strategy in the first place, rectorsmay well exert their power in bartering loss andadvantages among various university groups, thusdeveloping coalitions of university interest groups whocan deliver a majority verdict for a policy; this needsclear steering techniques (appointment of committeechairs and members; influence on agenda setting;provision of documentation etc.).

(f) The selection or nomination of allies to key positionsin the strategy quality process is an instrument certainlyopen to rectors who, in some systems, can influence thechoice of a vice-rector for strategy or quality, of thedirector for the quality office, or even of the deans. Thiscan help influence and condition subsequent behaviourby academic colleagues in the area concerned.

(g) An especially important area of concern should be thecomposition and operation of the rectorate or seniormanagement group itself. Here, the important elementswould be for members to share values on the qualityagendas relevant to the university, to develop frequentcontact and dialogue throughout the university (forinstance, when deans are part of the institutionalmanagement teams).

One would expect that one member of the rectorate hasprime responsibility for quality matters as a whole, but allsenior managers should feel responsible for quality withintheir portfolios - be it teaching and learning, research,

other means. This is often quite difficult in various institutionalor national settings where the formal instruments of authorityavailable to the rector are not adequate when facing substantialopposition from colleagues. To enlarge on rational andeducative approaches, however, political approaches mayencompass a number of different possibilities if power is to beexerted.

(a) Rectors and senior leaders may well wish to sustainchange by referring to sources of executive legitimacy,the university law or charter; or to the authoritydelegated by the Ministry, Senate, University Council;or to their personal job descriptions. Credibility oftenarises from a rectoral election, especially if it can relyon strong management structures. However, this needsto be supplemented by personal competence, credibilityand reputation, as expressed by trust and prestige(personal and scientific).

(b) The targeted use of reviews and performance indicatorson those parts of the university deemed to be in needof improvement, investment or remediation, and thewidespread publication of results arising are animportant tactic to destabilise the status quo, and maycertainly be an exercise of power. This little group ofinstruments can put considerable pressure on particulargroups within the institution, developing qualityawareness in the area concerned, and helping others torealise that they are not immune from such pressure.

(c) Resulting from such a targeted use of reviews, a linkwith funding can also be established either within oralongside the normal budgetary process. Funds may beawarded or withdrawn, evoking formidable incentivesto quality awareness and, progressively, to a strategicculture. That represents "shock tactic" in a differentguise. Aggressive follow-up of change induced by areview exercise is likely to have the same effect.


micropolitics of the academe, there is a need for political aswell as intellectual leadership of a high order. That is whyinstitutional leaders should develop a balanced portfolio ofapproaches - rational, formative and political - in order tomove the institution to a position which is both one of highpriority and an appropriate systematisation.

The stimulation of university cultures supportive ofstrategic quality endeavours is far from easy, but is probablya precondition of effective quality operations. Such stimulationusually needs a kick-start from externally inspired initiatives,at least if a university-wide approach is to be achieved.However, given the nature of the academic community, itsbeliefs and values concerning innovative and creative research,teaching and community service, the institution requires aquality-related culture that avoids rigidity, and harnesses theenthusiasm and sense of ownership of the academe. In thisrespect, the selection by university leaders of appropriateapproaches to cultural transformation is clearly critical.

The management of a body is a way of conducting collectiveaction on the part of those responsible for it. While "government"and "leadership" are also employed, these terms tend to expressthe structures of command and control, whereas "management"describes the processes by which collective action is stimulatedwith a view to change.

The aim of any management activity is to steer thedevelopment of a body in certain directions, to co-ordinate itsdifferent initiatives to the same end, and to ensure that itsadministrative activities deliver the appropriate support,logistic, evaluation and control services. It is essential thatmanagement and administration, which are highlyinterdependent, are coherently devised and implemented. Aspart of the function of management, the ultimate aim of policiesand strategies is to guide the activities and operation of auniversity with respect to the transformations in its environment

postgraduate or continuing education. It might be argued thatthese devices are not necessarily power-coercive approachesper se. Nonetheless, they are tools often used to force ratherthan encourage movement in a specific part of the university.As such, their inclusion in political instruments is justified. Wehave already alluded to the importance of the dynamics ofpolicy formation in understanding the nature of paradoxes,utilising the existence of tensions to foster change. Therefore,the skill of the leader in recognising and exploiting ambiguityis crucial. Analysis shows that a policy portfolio needs toencompass strategic directions (size, shape and scope of theuniversity) as well as supporting "bread and butter" policies(for curriculum, research, personnel, finance, businessgeneration etc.) if it is to reinforce trust in the process oftransformation, particularly in a turbulent environment whereeffective policy-making (in relation to the original crisis) tendsto move through four stages:

o an ambiguous stage (typified by a clarification of thedimensions of the problem and the parameters of likelysolutions, and by an identification of policy actors ina climate of high tension and uncertainty);

o a political stage (typified by a sorting out of viablepolicy options, by the selection of incentives andbargains, by informality, and by a solid informationbase);

o a legitimisation phase (typified by the testing of solutionsagainst criteria, by political acceptability leading tocommitment, and by formal collegial approvalprocesses);

o a bureaucratisation stage completing the maturationprocess and corresponding to implementation.

One is not insinuating in the above that rectors shouldbecome unbridled disciples of Machiavelli in the developmentof a particular type of culture. Rather, in view of the


evaluation. By this is meant the appraisal of the capacity of theuniversity to formulate and further general policies for change,which affect the long-term development of the entire institution.

With the development of numerous and varied networkingactivities both internally and with external partners, and aspart of the future information society, universities mightgradually assume a more virtual form, in which it wouldbecome hard to circumscribe precisely their activities, andstructural and organisational rules, indeed their very being.Ultimately, the identity of an institution would be expressedmainly by rules of conduct enabling the operation of networks,norms, the shared perception of a collective interest - and,where possible, common policies and communication withinand between networks - rather than through strong action anddecision-making structures, regulations and controlmechanisms. It is to be expected that elements of this "virtual"nature will become an increasingly marked feature of theorganisation of universities and the university system.

When a university simply turns to experts to evaluatewhat it does, it implicitly adopts the policies and strategies ofthe bodies or professional milieux that these experts havechosen as their model. Indeed, its institutional policy may beto adopt a model which the experts recommend as good.However, this decision has to be clear and explicit. And thevarious experts consulted who, in most cases, evaluate specificactivities (such as organisation, finance, particular trainingprogrammes, different kinds of research and staff policies),still have to adopt coherent points of view among themselves.

The absence of formulated institutional policies certainlydoes not mean that there are none whatever. Often they areimplicit, corresponding to the policies of certain bodies orinfluential persons who make use of the potential of theinstitution for the benefit of their own particular strategies. Asfar as the development of the institution is concerned, the

which are observed, foreseeable or liable to result from its owninnovations.

These bearings or objectives apply to its activities,structures, methods and operational regulations, as well as itsresources, relations and public image. They concern the entireuniversity when they are defined and acted on by its centralbodies, or each of its decentralised units (faculties, departments,institutes or research centres, and services) whenever theypossess some developmental autonomy.

Policy is formulated in terms of general principles regardingwhat to do (or not do) and how: it comprises rules and commonstandards which condition the long-term development of aninstitution. Strategies reflect policy from an operationalstandpoint, defining a set of aims and associated means. Theyfix priorities and balances to be respected across differentobjectives. They determine precise goals, whose achievementcan be measured and performances evaluated. And, finally,they specify their time frame, allocate responsibilities andresources, organise structures and ways of working and set upevaluation exercises. A policy may thus give rise to severaldifferent strategies, all of which are compatible with its generalthrust.

Policy and strategy thus engender quality criteria forevaluation of activities. This evaluation makes it possible to seehow objectives and goals are implemented and to analyseobstacles and positive factors, and may sometimes lead to theirreappraisal. The identity of a university seeks to communicatethe essential aspects of its different tasks, the specific natureof its objectives and methods, and its public image. Althoughsymbolic, identity is sufficiently precise to influence subsequentstrategic decisions and give rise to arbitration regarding newinstitutional policies. The latter express, in terms of actionprinciples, the concrete embodiment of this identity. They alsodefine the quality criteria that are the basis of institutional


at all decision-making levels. It relies on organisational methods(behavioural norms, structures, communications, rules,procedures, etc.), on a solid and clear commitment on the partof administrators in new courses of action, which is an integralpart of appropriate methods of leadership (stimulation ofcollective action). It encourages decentralised initiative,innovation, personal involvement, but also co-operation, theexchange of information, and network activity, with a constantconcern for quality and the widest possible propagation ofevaluation methods and quality standards.

A university and the university system are complexorganisations. But they also include, to a greater or lesserextent, more standard situations with clearly perceptibledevelopmental trends, which have to be planned, programmedand organised in the classical manner. Strategic managementmust be able to control these two types of situation incombination. There is no standard strategic management model.Each university possesses its own form of government,structures, traditions, experience, problems to be resolved,individual persons, means, capacity to manage and, inparticular, its practice of leadership. It is characterised by itsown management style.

Strong centralised leadership, whose authority and know-how are fully accepted, with real staff concern for quality andgood communication, can exercise innovative management ina way that has its limits. There are also bureaucraticmanagement methods with little leadership, in whichmanagement essentially entails administration, cost supervisionand sound programming of the implementation of decisions,and the conduct of operations according to the rules, etc. Suchmethods may suit certain situations. But forces for change maythen come from outside an institution (external reforms andregulations, limitation of means, competition, "centrifugal"movements of staff or resources, or the arrival of influentialnew staff, etc.). The level of participation and initiative of

result may be good or bad, depending on the quality of thosestrategies, as well as their capacity to influence for the goodthose bodies and agencies that are least influential. But oftenthis mode of management has the effect of strengthening centresof excellence at the expense of sectors the least able to adaptand improve the quality of their activities.

In the last resort, this leads to internal tension. Naturally,these institutional policies must be adapted to the developmentof the environment or, in other words, to changes which haveoccurred or are foreseeable in restrictions, in the perception ofnew opportunities, or in appreciating the capacity for changewithin an institution, so that it may better fulfil itsresponsibilities.

In our societies, in which environmental changes arenumerous, rapid and interdependent, future developmentsare not easily predictable. As a result, institutional policies areaimed above all at preparing an institution for change, atensuring their own flexible adaptability and ability to graspinnovative opportunities. They primarily concern theinstitution's organisation, its standards and attitudes, and itsleadership relies on strategic management methods.

This is a particular form of management. It is participatory,critical, forward-looking, leading towards institutional policieswhich seek essentially to enhance the potential for change ina university. This potential depends on skills, the principlesgoverning the conduct of all parties concerned, the organisationand management methods and the network of relations andtheir quality. It is directed towards complex situations involvingnumerous and highly autonomous actors. In such situations,there is considerable uncertainty as regards both informationand trends, which can only be forecast to a limited extent,while the evaluation of results encounters serious difficulties.Thus, strategic management strives to introduce and sustaina capacity for adaptation, and collective learning about change


The expression "collective learning with regard to change"may also be coined. Clearly, a university is by definition alearning organisation. All its members, teaching staff andstudents or partners are part of a broad community of specialistsin their disciplines or professional expertise who are ceaselesslyreshaping their knowledge and exchanging experience via theirpublications and meetings. However, the move from knowledgepossessed by individuals to that of a collective entity is notstraightforward. The information comprising it is still specialist,in the domain of experts, and is linked to the play of powerand influence or, in other words, to the highlycompartmentalised strategies of the different parties possessingit. Neither is it made up solely of firmly recorded and clearlystructured data that are easily transferable. In fact, it is onlyfully accessible in the complex context of experience, expertise,"know-how" and, above all, the practice of collective action.

There are other forms of knowledge than scientific oracademic expertise. They include experience of teachinginnovations, working methods in co-operation and exchangenetworks, the development of relations, methods oforganisation and management, etc.

Furthermore, communication is not neutral, but aparticipatory exchange in which subjective, cultural and evensocial factors associated with those involved contribute to thevery nature of the information and to the meanings andrepresentations with which it is invested. The Germanphilosopher, Jürgen Habermas refers to "action conducive tocommunication". The circulation of knowledge is thus a complexprocess the effectiveness of which depends on a realorganisational culture.

In a period when progress in information processing bothimplies and makes it technically possible to work in networksand when information must be widely available for allconcerned, experience demonstrates the difficulties involved

members in the formulation and achievement of policies is alsospecific. Traditions and leadership play a central part in them.

Despite the highly specific nature of strategic management,it may be considered to possess general principles which arethe subject of this document. To lead, in the strict sense of theterm, is to bring to bear a particular line of action throughorganisational, resourceful and supervisory means aimed atachieving objectives laid down by the management bodies. Butin a body as varied and fragmented as a university, the differentmanagement units (boards, managers, etc.) strive to engagein coaching, by means of a participatory management systemin which discussion makes for agreement, in line withexperience, on the nature of the developmental problems tobe resolved, as well as on appropriate strategic methods, andgroups of objectives, goals and means which arise from them.

The real vectors of strategic practice are, then, thebehavioural norms, the richness and effectiveness of internaland external communication and the quality of discussions,rather than plans, structures and regulations which are partof the administration of activities and persons.

Coaching therefore entails methods of collective orientationwhich are devised and carried out with a constant eye topossible divergences from the aims, the very validity of thelatter and the suitability of the means. There is simultaneousconcern also for promoting the quality of activities throughpropagation of a quality culture, the nurturing of responsibilityamong the greatest possible number of "actors", encouragementof initiative and innovation and the spread of good practice.

To adopt now the most current expression, coachingpractices at the heart of strategic management seek to strengthenthe nature of a university as a "learning organisation". Thisterm refers to an organisation capable of establishing a collectivememory vis-à-vis its innovations, and of learning to change onthe basis of its own experience or that of partners or competitors.


o By learning to identify and exploit signals ofdiscontinuity or weak signals which help one tounderstand that major changes are likely to develop inthe future and that very close attention should be paidto the way they do so. Such changes are far from self-evident, and identification and interpretation are onlypossible where there is a strategic and forwardlookingculture. In general, real strategies for change are basedon these signals, and are reflected in new directionswhich are necessarily characterised by risk and which,in the context of the present, may well seem misplacedand impossible to implement. Such signals are associatedwith uncertainty.

o By maintaining competitive pressures to reduce inertiaand "defensive routines" and to induce the emergenceof new roles and new innovative "actors" and assistthem in their enterprise. This spirit of competition andthe individualism which accompanies it, should nothowever lead to reinforcement of the "boundaries"between bodies or individuals, inhibiting co-operationand thus creating a barrier to the development of alearning organisation culture. For management, this isa serious challenge and a paradox to be resolved in animaginative and vigorous manner.

o By establishing structures and modes of organisationand, therefore, communication which are as flexible aspossible in that they are fairly rapidly adaptable to newsituations, and can facilitate experimental activities. Inthis way, the adaptation of structures and organisationitself becomes a process of change and a collective wayof learning how to change.

Here, however, another paradox has to be overcome, sincestructures have to be well established in order to be useful asoperational and communications networks. They are oftenstrengthened by an associated culture and by working norms

in establishing it on an integral and integrated basis. It is easierfor information related to standardised clearly identified activityin technical, scientific, commercial and financial fields or inpersonnel administration. Broadly accessible databases can bebuilt up, at least if there is a suitable communication policy.

On the other hand, in less standardised sectors, thespecialisation and fragmentation of information on the veryconduct of occupations are often much stronger.

The exchange and propagation of information are harderto achieve. Universities are in this category of "non-industrial"small-scale culture in which, other than in publications andformal teaching, non-formal knowledge is transmitted amongthe small number of persons, teachers, researchers or studentswho are involved in the execution of a project or teachingsession.

Strategic management methods must strive to reduce thesedifficulties.

o By ensuring good communications between those partyto it and, in particular, carefully noting their innovatorypractices, circulating and initiating critical discussionof them, with a view to transposing them and possiblyamending prevailing institutional policies.

o By encouraging behavioural norms and institutionalorganisation which prompt those involved to try outnew solutions and systematically analyse otherexperimentation or experience which seem relevant.

o By gathering and interpreting outward signs ofsatisfaction on the part of those who resort to its services(students and users, staff, partners and co-contractors,supervisory authorities and suppliers of resources,public opinion), and taking account of them in qualityevaluation procedures and the reformulation of actionprogrammes.


a measure of arbitration between rationalisation and innovation,and these strategies are rarely dissociated. Conserving orpreserving is also frequently an essential requirement in change.Intense and rapid rationalisation through cost reduction maycertainly prompt compensatory innovations.

Indeed, this is one of the expected reactions in policies forreduced financial support which often accompany basicreforms.

But when the quality of services does not suffer, it may bebecause the contractual or conditional modes of funding havebeen increased, with specific costs in terms of academicindependence.

In short, rationalisation, innovation and conservation arelinked in paradoxical interdependent relations. Only a clear,coherent and consequential institutional policy in strategicmanagement practice can lead to a dynamic equilibriumbetween the three dimensions of change.

The exercise is all the more difficult in that the consequencesof processes of rationalisation and innovation on thepreservation of certain characteristics may be difficult toenvisage or foresee, and hard to control too in their cumulativedevelopment.

Moreover, in phases of important and rapid change, thereis a frequent tendency to underestimate their longlasting effectson the attitudes, norms and modes of operation necessary topreserve the values, know-how, relations and a public image,which are part of the potential for development. From thisstandpoint, strategic management must be constantly on thealert and ready to redirect its goals and means.

By definition, participatory, strategic management reliesconsiderably on jointly conducted processes, with a view toresolving the inevitable conflicts associated with change. Theterm "consensus strategy" can be used when the diversity of

and relations compatible with them. But, in a structuralframework, different cultures are conceivable, with modes ofoperation and relations between those concerned which makefor greater adaptation, including changes in the structuresthemselves.

Furthermore, there always exist informal structures whichmay be more flexible or, on the contrary, more rigid, and workwithin networks often results in the setting up of a matrix-styleorganisation, in which individual "actors" may be related todifferent structures, depending on the activities for which theyare responsible.

The methods of strategic management seek to oblige thedifferent individuals and agencies involved in universitystrategies to appropriately combine the three components ofany strategy for change, namely strategies for rationalisation,strategies for innovation and strategies for conservation.

Rationalising means implementing defined objectives withoptimal efficiency.

Reduction of unitary costs is the most classical form theytake, at least when it is possible to define new and moreproductive methods, or to expand the scale of operations withexisting means (for example, a greater number of students, ora reduction in the teacher/student ratio). A policy ofrationalisation is always necessary when changes seeminevitable, since it releases resources which may be earmarkedfor innovation. However, efficiency cannot be measured solelyin terms of cost since quality is at stake.

Innovation in the nature of the service supplied, or in theprocesses which enable it to be so, is frequently the means torationalise an activity, making it more efficient and enhancingits quality, but at a higher development cost.

However, it often entails new responsibilities related toconception, and then development. Therefore, there is always


strategies, entirely consistent with the hypotheses of "boundedrationality" proposed by H. Simons. Proactive model. But toensure the credibility of strategic management essential to itspractice, leaders may have rapidly to introduce new strongpolicies which set the tone for the fresh inspiration regardingthe action they intend to promote.

Such is the case, for instance, with far-reaching reforms inorganisation, programmes, recruitment, funding, or where thereis a change of leadership at the top, or where new strategiclimitations point to a rapid and radical reaction.

One example of this might be a sudden major reductionin financial support. Firm and fast action is therefore necessaryso that at least the idea of new strategic scenarios is rapidlycommunicated, while the expectations and differentperspectives of all concerned are modified. At the same time,there is reorganisation and a redistribution of responsibilitiesand resources.

Paradoxical strategies. Mention has already been made ofparadoxical situations in 74 and 75. At the outset, there is nosearch for compromises. Here are contradictions which provokeconfrontation, initiating a new paradoxical scenario. This modusoperandi presupposes vigorous and efficient leadership.Although leaders may open their new vision to wide debate,they do not attempt to settle contradictions through joint effortat the outset, for fear of weakening in initial compromises thenew action principles they wish to implement.

On the contrary, they reveal them clearly in the initialprocedures, relying on subsequent debate and on proceduresthat will have to resolve these inconsistencies to launch theimpetus for collective change.

It is clear that this kind of strategy can only be achievedin circumstances in which the need for change cannot becontested or overlooked long, and where the leaders of the

interests and points of view does not threaten the identity ofinstitutions.

The aim of the joint effort and negotiation is thus to reducedifferences and find a solution in the general interest. At theoutset, the essential phase is for leaders to make apparent,understand, and if possible admit, the need for change, toidentify clearly its forms and to make credible, for the mostinfluential at least, the idea that this change is possible and willbe profitable.

This is the way to establish a climate of confidence, withoutwhich the cultural and organisational cost of the change maybe prohibitive.

A flexible model. The complexity and uncertainty whichreigns over problems and solutions in strategic practices, theneed to learn jointly through experience, the action of amultiplicity of interdependent processes, the divergent values,motivations, interests and influences of everyone involved, thefact that university statutes often provide for electedrepresentatives, are the factors that put a premium on adaptivelogic.

Partial, acceptable and promising changes, lead on to otherswithin the framework of general inspiration regarding change,which becomes clearer in successive stages.

The task of leadership, therefore, is both to transmit thisgeneral inspiration as regards action, and to prepare throughnegotiation the acceptance of what are often compromisesolutions enabling its concrete conversion into particularstrategies; then, to encourage the transfer of new ideas andpractices from one sector to the other.

With a view to ensuring maximum credibility for changeand fresh inspiration, leaders thus take the time to chooseinnovations that have the best chance of being accepted,achievable and transferable. These are so-called adaptive

Strategic Management and Business Management118 Developing a Knowledge Management Strategy 119

3

Developing a KnowledgeManagement Strategy

Organisations are facing ever-increasing challenges,brought on by marketplace pressures or the nature of theworkplace.

Many organisations are now looking to knowledgemanagement (KM) to address these challenges. Such initiativesare often started with the development of a knowledgemanagement strategy.

To be successful, a KM strategy must do more than justoutline high-level goals such as 'become a knowledge-enabledorganisation'.

Instead, the strategy must identify the key needs and issueswithin the organisation, and provide a framework foraddressing these. This discussion provides an approach fordeveloping a KM strategy that focuses strongly on an initialneeds analysis.

Taking this approach ensures that any activities andinitiatives are firmly grounded in the real needs and challengesconfronting the organisation.

THE NEED FOR KNOWLEDGE MANAGEMENT

There are a number of common situations that are widelyrecognised as benefiting from knowledge management

institution concerned have the necessary authority, ability andinfluence to make the new ideas credible, if not immediatelyacceptable.

Here, one may refer to a paradoxical strategy as a way ofprompting the emergence of a new vision and meaning and,therefore, a fresh inspiration. It is through strategic managementthat these paradoxes can be handled, while developing a newstrategic practice through collective action. The need for strongsimple strategies capable of mobilising and committing themost active interested parties around new principles ofcollective action: this is the true test of leadership. The choiceof a method of strategic management is always specific to eachcase. But in all cases, policies and strategies have to be definedand conducted. Whatever the complexity of the situation, astrategy, which is the expression of a new vision, is a collectionof new principles and highly significant action criteria. Allmust be as simple and clearly expressed as possible, in orderto be easily communicated and, also, to release initiatives andgive rise to new norms. In this sense, any strategy is culturaland normative, drawing admittedly on certain existent normswhich permit its inception, but carrying new norms within it.

Strategic Management and Business Management Developing a Knowledge Management Strategy120 121

The challenge in the front-line environment is to ensureconsistency, accuracy and repeatability.

Business Managers

The volume of information available to businessmanagement has increased greatly. Known as 'informationoverload' or 'info-glut', the challenge is now to filter out thekey information needed to support business decisions.

The pace of organisational change is also increasing, as arethe demands on the 'people skills' of management staff.

In this environment, there is a need for sound decisionmaking. These decisions are enabled by accurate, completeand relevant information.

Knowledge management can play a key role in supportingthe information needs of management staff. It can also assistwith the mentoring and coaching skills needed by modernmanagers.

The loss of key staff can have a major impact

Aging Workforce

The public sector is particularly confronted by the impactsof an aging workforce. Increasingly, private sector organisationsare also recognising that this issue needs to be addressed if thecontinuity of business operations are to be maintained.

Long-serving staff have a depth of knowledge that is reliedupon by other staff, particularly in environments where littleeffort has been put into capturing or managing knowledge atan organisational level.

In this situation, the loss of these key staff can have a majorimpact upon the level of knowledge within the organisation.

Knowledge management can assist by putting in place astructured mechanism for capturing or transferring thisknowledge when staff retire.

approaches. While they are not the only issues that can betackled with KM techniques, it is useful to explore a numberof these situations in order to provide a context for thedevelopment of a KM strategy.

Beyond these typical situations, each organisation will haveunique issues and problems to be overcome.

A KM strategy must address the real needs and issues

Call Centres

Call centres have increasingly become the main 'publicface' for many organisations. This role is made more challengingby the expectations of customers that they can get the answersthey need within minutes of ringing up.

Other challenges confront call centres, including

• high-pressure, closely-monitored environment

• high staff turnover

• costly and lengthy training for new staff

In this environment, the need for knowledge managementis clear and immediate. Failure to address these issues impactsupon sales, public reputation or legal exposure.

Front-line Staff

Beyond the call centre, many organisations have a widerange of front-line staff who interact with customers or membersof the public.

They may operate in the field, such as sales staff ormaintenance crews; or be located at branches or behind front-desks.

In large organisations, these front-line staff are often verydispersed geographically, with limited communication channelsto head office. Typically, there are also few mechanisms forsharing information between staff working in the same businessarea but different locations.


content management systems, and much more. While theseapproaches may have widespread success in otherorganisations, they will only succeed in the current environmentif they meet actual staff needs.

In practice, organisations are littered with well-meaningbut poorly targeted knowledge management activities. In manycases, these failed because they simply didn't address a clear,concrete and imperative problem within the organisation.

This is now recognised as one of the 'critical success factors'for knowledge management: identify the needs within theorganisation, and then design the activities accordingly.

Avoid jumping directly into 'solutions mode'

DEVELOPING A KM STRATEGY

There are many approaches for developing a knowledgemanagement strategy, each supported by a holistic model ofKM processes.

These can be classified into two main approaches:

Top-down

The overall strategic direction of the organisation is usedto identify the focus of the knowledge management initiative.This is reflected in a series of activities designed to meet thisbroad goal.

Bottom-up

Research is conducted into the activities of staff involvedin key business processes. The findings of this researchhighlights key staff needs and issues, which are then tackledthrough a range of knowledge management initiatives. Eachof these approaches has its strengths, and in practice, a successKM programme must encompass both. This article presents amodel that focuses strongly on the needs analysis activitieswith staff, to drive a primarily bottom-up strategy, as follows:

Supporting Innovation

Many organisations have now recognised the importanceof innovation in ensuring long-term growth (and even survival).

This is particularly true in fast-moving industry sectorssuch as IT, consulting, telecommunications andpharmaceuticals.

Most organisations, however, are constructed to ensureconsistency, repeatability and efficiency of current processesand products. Innovation is does not tend to sit comfortablywith this type of focus, and organisations often need to lookto unfamiliar techniques to encourage and drive innovation.

There has been considerable work in the knowledgemanagement field regarding the process of innovation, andhow to nurture it in a business environment.

ORGANISATIONAL ENVIRONMENT

Every organisation has a unique environment, defined byfactors such as:

• purpose and activities of the organisation

• overall strategic direction

• organisational culture

• size of the organisation

• geographic spread

• staff skills and experience

• organisational history

• available resources

• marketplace factors

For this reason, each organisation has a unique set of needsand issues to be addressed by knowledge management.

It is easy to jump into 'solutions mode', recommendingapproaches such as communities of practice, storytelling,


others will be specific to individual business units or job roles.The use of a range of needs analysis techniques will identify:

• cultural issues

• key business needs

• duplication of effort

• inconsistencies in practices

• inefficiencies in business processes

• opportunities for improved policies or procedures

• major business risks

• and much more…

Solution-independent

The approach used to develop the knowledge managementstrategy makes no assumptions about the solutions that mightbe implemented.

As such, the approach is independent of any technologiesimplemented, or knowledge management techniques applied.

Instead, the approach is to identify the need, and thendetermine the solution.

TALKING WITH STAFF IS ALWAYS ENLIGHTENING

Simple

The use of well-tested needs analysis techniques givesconfidence that the true issues in the organisation will beidentified. In practice, these simply 'fall out' of the researchactivities, with the key strategic and tactical recommendationsbecoming obvious in most cases. This simplicity makes theprocess easy to implement, and ensures that the findings andrecommendations are well-understood throughout theorganisation.

Efficient

A modest amount of initial research will be sufficient toidentify the most crucial problems within the organisation.

1. Identify the key staff groups within the organisation.These groups deliver the greatest business value, or areinvolved in the most important business activities.

2. Conduct comprehensive and holistic needs analysisactivities with selected staff groups, to identify keyneeds and issues.

3. Supplement this research with input from seniormanagement and organisational strategy documents,to determine an overall strategic focus.

4. Based on these findings, develop recommendations foraddressing the issues and needs identified.

5. Implement a series of strategic and tactical initiatives,based on the recommendations. These will select suitableknowledge management techniques and approaches.

BENEFITS OF THIS APPROACH

Historically, many knowledge management strategies havefocused solely on the top-down approach, identifying high-level objectives such as 'become a knowledge-enabledorganisation'.

With little understanding, of the key issues and needs ofstaff throughout the organisation, these initiatives found itdifficult to engage staff in the required cultural and processchanges.

As a result, many of these initiatives had little long-termimpact on the organisation, despite initial efforts.

Recognising these issues, this approach focuses much morestrongly on the initial needs analysis activities.

The approach to developing a KM strategy outlined in thisarticle provides a number of major benefits:

Holistic

The focus on needs analysis will identify a wide range ofissues and requirements. Some will be organisation-wide, while


• administrative and support staff

• managers (senior, line)

• IT staff

Each of these groups will have specific needs and issues,as well as those in common with the organisation as a whole.

By targeting the key staff groups, the extent to which theneeds vary across the organisation can be identified, and theKM strategy developed accordingly.

Needs analysis techniques are drawn from many fields

NEEDS ANALYSIS TECHNIQUES

There are a wide range of need analysis techniques, drawnfrom fields such as knowledge management, user-centreddesign, ethnography and anthropology.

Techniques include:

• facilitated discussions

• focus groups

• surveys

• staff interviews

• workplace observation

• contextual inquiry

• task analysis

In practice, more than one technique should be used witha selected group of staff, to ensure that a complete picture isbuilt up.

Each of the techniques are briefly described in the sectionsbelow.

Facilitated Discussions

There are a wide range of facilitated discussion techniquesthat can be used to explore issues with targeted staff groups.These are most commonly used with management, consultants,

These can then be tackled with suitable activities and initiatives.Once this first round of projects have delivered tangible businessbenefits, additional targeted research can be used to identifyfurther issues to be addressed.

This 'iterative' approach can then be repeated, ensuringthat business improvements are seen even as the next roundof research is initiated.

Targets Resources

There are many 'good ideas' that can be drawn from thefield of knowledge management. The challenge is to identifythose approaches that will have the greatest impact upon theorganisation.

By starting with the needs analysis, approaches can betargeted to address the most critical issues, or to deliver thegreatest business benefits.

TARGET THE CRITICAL ISSUES WITH THE KM STRATEGY

Identifying Key Staff Groups

The first step in the process is to identify the key staffgroups in the organisation. The key staff are typically thosedirectly involved in the most important business activities.

In general, the key staff groups are more likely to be thoseat the front-line, rather than managers or administrative staff.This will, of course, depend on the nature and structure of theorganisation.

Common staff groups involve:

• front-line staff

• call centre staff

• field workers

• researchers

• clinical staff

• production workers


Staff Interviews

One-on-one interviews are one of the most effective andoften used techniques for identifying staff needs and issues.

For more on applying these as part of a knowledgemanagement project, see the following two articles:

• Stakeholder interviews as simple knowledge mapping

• Selecting staff for stakeholder interviews

Workplace Observation

This involves going 'out into the field' to observe theactivities of staff, and the environment in which they work.

Workplace observation is particularly effective inenvironments such as call centres, manufacturing areas, fieldworking, or on-the-road staff.

It is a very holistic technique that will identify patterns ofwork and environment issues that are impossible to gatherusing techniques such as surveys or focus groups.

Contextual Inquiry

This is a combination of staff interviews and workplaceobservation that involves exploring issues with a staff person,while situated within their normal working environment.

By conducting the interview 'in context', it becomes possibleto see the resources used by staff when conducting workactivities.

The interviewer can also ask the staff person to show themhow they complete specific activities, for example, showinghow they find a piece of information on the intranet.

This technique is very effective at identifying issues withcurrently-available information sources and tools.

Task Analysis

Not all activities within an organisation are of equal value.Key business tasks should be identified, and investigated to

and other staff comfortable with these types of meetings.Techniques such as 'affinity diagrams' can be used toprovide structure to the discussions, and to capture the issuesidentified.

In many cases, facilitated discussions are used as theprimary mechanism for gaining the strategic input requiredfor the development of the KM strategy.

Focus Groups

These are a specific, and widely-used, form of facilitateddiscussions that focus on exploring a topic within a groupsetting.

Often used as a way of gathering input from larger numbersof stakeholders, focus groups must be run carefully if they areto generate meaningful results.

Focus group are best used to explore current issues andproblems, rather than to discuss future 'wish-lists' of knowledgemanagement approaches.

Focus groups should always be used in conjunction withtechniques such as staff interviews and contextual inquiry, toensure that the results are meaningful.

Surveys

The use of surveys is widespread, and they are a veryefficient way of gaining input from a large number of staffthroughout an organisation.

In practice, surveys are best used to gather staff opinions,rather than specific information on which to base decisions.

Care must also be taken when developing the surveyquestions, and analysing the results.

Survey results must always be supported with the use ofother techniques, to provide confidence in the findings.

Interviews are very effective at identifying staff needs


USE CORPORATE DOCUMENTS AS A KEY STRATEGIC INPUT

Common Findings

The needs analysis and strategic input will highlight abroad range of issues and needs throughout the organisation.

In past projects, we have identified issues such as:

• difficulty in finding key corporate information

• inconsistent and unstructured approach to informationmanagement

• ineffective dissemination of corporate and regional news

• reliance on 'rumour' and 'gossip' as the key sources oforganisational news

• lack of knowledge sharing between related businessunits

• difficulties in determining and disseminating 'bestpractices'

• inconsistency in advice given by call centre and front-line staff

• over reliance on long-service members of staff as sourcesof knowledge

• cultural barriers between head office and regional staff

• duplication of effort between regions

• roadblocks between policy development andprogramme implementation

These are just a small sampling of possible findings, toprovide an idea of the types of issues that will often drive theimplementation of a knowledge management strategy.

Acting on the Findings

With an in-depth understanding of the problems, issuesand needs within the organisation, it is then possible tomeaningfully determine appropriate strategies for addressingthem.

gain an understanding of the steps involved, and the knowledgerequired at each step.

The existing sources of the knowledge can then be identified,along with the key issues and roadblocks impacting upon theeffectiveness and efficiency of the task.

This type of research will identify mechanisms for bothimproving the task itself, as well as indicating how to improvethe provision of knowledge to those involved in completingthe task.

SUPPLEMENT THE NEEDS ANALYSIS WITH A STRATEGIC FOCUS

Strategic Input

While the needs analysis activities focused on the 'bottom-up' aspects of the KM project, the overall strategic focus mustalso be identified. This strategic focus then guides theknowledge management strategy, providing a framework forthe selection and prioritisation of individual projects andactivities.

In this way, both the bottom-up and top-down aspects ofthe knowledge management strategy are addressed.

There are a number of sources of input that can be drawnupon when determining the strategic focus, including:

• Senior management involvement, via interviews,facilitated discussions, or other interactions.

• Organisational strategy documents, such as thecorporate plan or annual report.

• Results of other strategic research projects, such as 'staffsatisfaction surveys'.

• External market research.

• Industry 'best practices', and other reports drawn fromrelevant industry or sector bodies.

These inputs can then be synthesised into a strategic focusfor the knowledge management initiatives.


By focusing on identifying staff needs and issues, activitiesand initiatives can be recommended with the confidence thatthese will have a clear and measurable impact upon theorganisation.

Supplementing this 'bottom-up' research with a strategicfocus then ensures that the KM initiative is aligned with broaderorganisational directions.

Taking this approach to the development of a KM strategyallows limited resources to be targeted to the key needs withinthe organisation, delivering the greatest business benefits whilepositioning the organisation for long-term growth and stability.

This will undoubtedly include a range of both strategic(long-term) and tactical (short-term) initiatives.

Depending on the issues identified, these might include:

• improving the corporate intranet

• formalising communities of practice

• implementing coaching and mentoring programmes

• improving document and records management

• facilitating skills transfer from retiring staff

• capturing staff knowledge in a documented form

• improving policies and procedures

• implementing new learning approaches, including e-learning

• enhancing the corporate staff directory

• implementing team collaboration tools and processes

• establishing after-action review processes

• formalising the role of 'knowledge brokers' within theorganisation

These are just a small cross-section of the many possibleapproaches that can be taken to knowledge management.

As highlighted throughout this article, only the needsanalysis activities allow a meaningful selection to be madebetween these different approaches.

In practice, each organisation will apply a unique mix ofshort-term 'quick wins' and longer-term projects to meetknowledge management needs.

CONCLUSION

Developing a knowledge management strategy providesa unique opportunity to gain a greater understanding of theway the organisation operates, and the challenges that confrontit.

Strategic Management and Business Management Strategic Management Process134 135

The implementation of strategy is typically handled by middleand lower level managers, except when drastic company-widechanges are needed.

But implementation is reviewed by the top managementfrom time to time.

The evaluation phase marks the beginning and the end ofthe strategic management process. It includes a thorough reviewof the results of the strategy in terms of its contributions infinancial and operational terms, and in terms of social goals.

The careful use of strategic management can assure betterreturns for shareholders and help develop the potential of theorganization. Nevertheless, there are some practical limitations.The strategic management model is criticized as being tooholistic, excessively analytical, non-political.

The process of strategy formulation begins with the firm'svision. Vision describes the broad thinking that goes intodetermining the future of the organization.

The company mission is a set of intentions the companyhopes to realize in the future. Vision is vague, personal andunwritten, whereas, the mission is clearly expressed. Whileformulating a mission, managers need to take into considerationvarious factors such as the basic product, primary market,principal technology, company goals, company philosophy,public image, and the company’s self- concept.

The company’s mission, though more specific than thevision, gives few concrete directions for action. The missionstatement also reflects social responsibility. It should addressthe different concerns of various stakeholders such asshareholders, customers, employees, society, and the localcommunity. Ethical norms held important in the society andin business institutions also influence the company mission toa large extent. A company's mission plays a crucial role in itslong-term and short- term success.

4

Strategic Management Process

The process of strategic management consists essentiallyof environmental scanning, strategy formulation, strategyimplementation, and evaluation and control.

Environmental scanning is a study of the externalenvironment, focusing on both the remote and the operatingenvironments. Comprehending the external environment is aprerequisite for strategic management because it influencesthe organization and also gets influenced by the company’sactivities.

Strategy formulation involves setting up long-term andshort-term objectives. This process also involves choosing amix of strategies and designing policies that guide the executionof strategy. As policies determine the extent of success of anystrategy, they should be designed carefully. The topmanagement also wields influence over the formulation andimplementation of strategies through framing policies.

Strategic decisions can be undertaken in the entrepreneurialmode, the planning mode or the adaptive mode. The processby which strategies and policies are put into action is calledstrategy implementation. Programs, budgets, and proceduresare developed for this purpose.

This process may call for changes in the company’s culture,the organizational structure, and/or the management system.

Strategic Management and Business Management Strategic Management Process136 137

aim of the firm is expressed by the multinationalized missionstatement and a unity of direction is provided that transcendsboth divergent managerial perspectives and geographicallydispersed strategic decision makers. The basis for strategicdecision making processes is provided by the multinationalizedmission statement, particularly in situations where the strategicalternatives may appear to conflict.

The shared corporate values and commitments that extendbeyond a single culture are promoted by this statement andcan be identified and assimilated by internal and externalorganizational claimants. Eventually, the legitimacy of theorganization is asserted with respect to support coalitions ineach of its operating environments, which is essential for thecompany to ensure and protect its survival.

When evaluating a corporation’s functional and managerialresources, answers to numerous key questions reveal how theorganization looks as a whole. The internal analysis andresulting profile is valuable for identifying the areas in whichthe organization has performed well in the past and the areasin which it is doing well at present.

Then various departments and functions such as finance,marketing, production, etc. were also analyzed. It wasconcluded that all the functional areas must work in perfectcoordination to implement a strategy successfully. Within astrategic framework, the internal analysis begins and endswith the organization’s management.

As a result, topics such as analyzing management, assessingtop management and stockholders and directors are discussed.Then the human resource function was examined as itpermeates all the segments and units within an organization.Lastly, a quantitative approach for evaluating internal factorswas discussed. Thus, a complete internal assessment isnecessary for strategy formulation.

Moreover, the mission statement ensures uniformity ofpurpose. Therefore, due attention should be paid to the processof laying out the company’s mission. Company goals expressits mission in specific terms. The company philosophy is animportant part of the company mission. The mission shouldalso take into consideration the public image of the company.

There are different types of industry-based competitionsthat exist and these differences are linked to an understandingof the strategic options available to a multinational corporation.Managers should be keen enough in recognizing these types.The industry must be identified by the managers along theglobal versus multidomestic continuum and then consider theimplications for their firm. So, in developing a multinationalstrategy this is the initial step.

Distinctive strategic emphasis is necessitated by the globaland multidomestic industries as a result of the location andcoordination of the corporation’s functional activities.Consequently, after understanding the industry, a strategymust be pursued by the managers which is consistent with theindustrial environment and supported through the functionalactivities. Increased coordination and concentration offunctional activities must be emphasized by the managersspecifically.

This is because of the competition in the industry beingglobal and it requires enormous effort to face it. The corporatemission statement must be reviewed and revised by themanagement if it is going for international expansion. A missionstatement developed from a domestic perspective is oftenthought to continue encompassing and directing multinationalactivities. However, the corporate direction and strategiccapabilities are altered fundamentally by multinationaloperations.

The guiding purpose of the firm must be reclarified throughmultinationalization of the mission statement. The ultimate

Strategic Management and Business Management Emerging Patterns138 139

will find the ensuing discussion interesting since this will helpthem in getting a feel of the ‘black box’ of academic research-a terrain which a majority don’t have the time to explore.

METHODOLOGY, SAMPLE SIZE AND SAMPLECHARACTERISTICS

This study is based on four academic journals related tostrategic management. The survey covers a nine-year period(from 1995 to 2003) and seeks to find out the dominant trendsin terms of the topics covered, methods employed and thescope investigated. The articles selected were published inAcademy of Management Journal (AMJ), AdministrativeScience Quarterly (ASQ), Journal of Management Studies (JMS)and Strategic Management Journal (SMJ). Three hundredstrategic management articles were sampled. Statistical analysesof various kinds were carried out on data extracted from theseselected papers.

An issue of interest would be to find out the total numberof strategic management related articles carried by each of thejournals that we studied. ASQ carried 53 papers whereas JMShad 68 articles. The rationale for choosing these four journalswas that these journals are renowned for publishing a significantnumber of articles that can be construed as strategicmanagement related ones.

In addition, the papers found in these journals are largelygeneral management and strategic management oriented ratherthan having a function-specific approach. Though strategyrelated articles were found in other journals, these journalswere not included in our survey.

This was due to the smaller proportion of strategy articlescontained in these journals. Inclusion of these journals wouldhave constrained the general nature of our study. The last nineyears have been chosen as they represent the most recent trendemerging in strategy research.

5

Emerging Patterns

INTRODUCTION

The area of Strategic Management has grown in importanceover the past two decades with increasing relevance topractitioners. This increased importance has also led to the risein the quantum of research, the outputs of which arepublications, both academic and practitioner-oriented, in thisarea. It is interesting to look for trends and patterns in thisresearch/ publication process as this endeavor will be able toshed light on the strengths of the area of strategy and highlightneglected aspects for the use of future researchers andmanagers. A more holistic idea of the field will thus emergeover time.

An example is in order. Getting insights into themethodological rigors adopted till date, such as researchsettings, sample sizes selected, etc., keeping in mind theproblems investigated, will help us realize how themethodological barriers identified can be surmounted in futureresearch. This kind of an approach to consolidating on previousresearch efforts will also help managers repose higherconfidence in academic findings in future.

Let us now study the practical details of the tools of theacademic researcher’s trade, i.e., the methodological techniquesemployed, the sampling frames and characteristics employed,just to name a few points of interest for this paper. Managers


where each of the multiple authors belongs to the US. Any“joint” work (joint work being that which is written by authorsbased in different countries) with non-US authors was classifiedseparately. The only other country whose researchers aresignificantly publishing is UK, from where 24 authors couldbe traced subject to the above clarification. Canada is the onlyother country with double-digit number of articles from itsauthors, with the number being twelve out of this threehundred. The significance of contributions from US basedauthors will be better appreciated with the knowledge thateven among the 50 odd “joint” works identified among thissample, over 70 per cent has one of the authors based in theUS.

Another interesting aspect to check for would becorrelations between the researcher’s base country and theresearch method adopted. To explore whether the base countrymight influence the author to prefer a certain research methodwe analyzed the data for two countries, which were dominantin terms of research contribution viz. the USA and UK. Thisanalysis was carried out for the top two research techniquesemployed in the sample, i.e., regression analysis and casestudy research method. The results were contrasting. WhileUS- based researchers employed regression techniques in morethan half the researches (57 per cent), UK-based authors usedcase study methods in fifty per cent of the papers. On the otherhand, case-study research did not appear as a favored onewith US-based scholars, with only 10 per cent adopting thistechnique. Similarly, the UK based authors used regressiontechniques sparingly, with 21 per cent of the studies reportingtheir usage.

THE SCOPE OF STRATEGY RESEARCH

Strategic management has to do with the survival andsuccess of firms. Not surprisingly, issues pertaining to thesetwo topics were the areas of focus of most researchers. The

EMERGING PATTERNS IN STRATEGY RESEARCH - THEFINDINGS

GEOGRAPHICAL BIAS IN THE LITERATURE

Management research focuses on the context/challengesfaced, actions initiated by the firms or the outcomes of theactions of the firms. However, many of these issues are soembedded in the context surrounding the study thatgeneralization beyond the scope of the research becomesquestionable. In recent times, especially in the context ofresearch pertaining to the culture and geography-specificstudies, the ability to generalize based on these is beingincreasingly questioned. The geographical research settings ofthe studies were tabulated and analyzed. The findings arenoteworthy. USA dominates the research setting with anastonishing 61 per cent of the studies. In other words, US basedfirms, their actions, regulations, outcomes of these actions, etc.have been investigated in 183 of the studies referred for thisproject. 14 of the studies pertained to comparisons betweensets of two countries, and 30 of them had multi-national researchsettings. When it comes to Asia, China and Japan were thefocus of researchers, with eight studies carried out with eachof these countries as research settings. The importance ofemerging markets like Brazil, Mexico and India is not reflectedin academic research published in these four journals. Noneof these countries was the research ground for any study.

RESEARCHERS’ PLACE OF WORK

We also found that most of the researchers were based inUS/Canada or UK/Europe. This can be seen from figure 4,which shows us that 63 per cent of the authors of the articlessurveyed were from the US alone. A clarification to this is that63 per cent of the authors were based in the US at the timeof publication of the articles. They might have moved over tosome other country subsequently. Additionally it should benoted that this figure includes studies with multiple authors


rankings have been arranged in descending order. This exercisewas carried out first by noting down the topic-wise frequenciesin each journal and then arranging them in descending order.Of these, articles pertaining to the “miscellaneous” head wereremoved. We were thus left with 14 areas to be ranked perjournal.

The most frequently occurring area was ranked 14, withthe least frequent one receiving a score of one. Then thesescores for each area were summated across all the four journalsto get a final score. These final scores were then arranged inthe descending order to determine the emphasis placed by thejournals on the areas. This rigorous procedure, it is hoped, willreduce the bias in the rankings presented in each of the journalsindividually. Figure 8 illustrates the importance accorded tothe areas on an aggregate level, obtained by using this novelprocedure.

TYPE OF METHODOLOGY DEPLOYED BY THE RESEARCHERS

There is a general apprehension among journal reviewersthat management research is moving towards being “cut anddry” and cross-sectional, rather than reflecting comprehensive,context-sensitive rich details. The richer the details more willbe the comprehensibility leading to higher applicability. Themethodology of the research was thus an important area thatwe looked at in our survey. We found that in over half of thearticles, the technique/method used was predominantlyregression analysis in varied forms.

Many of them used a few other quantitative techniquestoo. 15 per cent of the papers surveyed used case study researchmethods. Other techniques attempted, though to a lesser extent,included factor analysis (6 per cent), structural equationmodeling (4 per cent) and event study methods (3 per cent).The multiple-method approach did not appear to be a favoredone, with only three per cent studies reporting this as the toolof choice.

topic- wise break up of the articles surveyed gives an overviewof the research agenda of the scholars in this field. Toppingthe list in terms of the number of articles on the subject is thatof cooperative strategies. This records the maximum with 38of the 300 or nearly 13 per cent of the papers concentratingon some of its aspects.

Next on the list are the areas of corporate strategy, corporaterestructuring and competitive strategy with over 10 per centof the papers devoted to each. Leadership/Top ManagementTeam (TMT) is the focus of nearly seven per cent of the articles.Organizational change and learning account for six per centof the papers studied by us. Corporate governance, executivecompensation and strategic decisions are the other areas ofinterest at about five per cent each. These are followed byinternational strategic management research at four per cent.These results have to be interpreted with caution as the datapertain to a specific nine-year period taken in its entirety. Wehave not analyzed intra-period trends, which might exist. Shiftsin such trends might be interesting to capture and probe in-depth for possible reflection of the business/internal markets.

When the topic-wise coverage in the different journals wasstudied, the differences in the areas of focus were brought outclearly. For instance, AMJ has covered corporate strategy,cooperative strategy and TMT topics. Similarly, for ASQ thetop four areas of interest appeared to be corporate strategy,organizational change, competitive strategy and learning. JMSappears to have concentrated on the topics of corporate strategy,strategic decision-making, cooperative strategy and corporaterestructuring. In the case of SMJ the top three topics werefound to be competitive strategy, restructuring and cooperativestrategy.

Dominant topics for strategy research, as reflected in thefour journals, were also identified through ranking of therelative frequency of their appearance in these journals. The


median were over sixty each. This gives a fair idea of theresearch effort that goes into taking cognizance of the earlierworks and building on the same.

Another interesting analysis that was attempted on thereferences quoted was to calculate the percentage of the citedreferences that were from the four surveyed journals. This wasto gain an understanding of the extent to which cross-referencing exists. The mean and median figures for cross-referencing were at much lower levels of over 20 per cent each.What this means is that cross-referencing amongst these fourstrategy journals is only moderate with almost 80 per cent ofthe referencing being resorted to among other journals.

A similar exercise was attempted to find out the extent towhich the articles referred to were of recent origin. Alsodetermined was the level to which classics were referred to inthe articles published in these four journals. Articles appearingbefore 1985 were assumed classics. This assumption was madesince we regard any article that is being quoted/referred toeven after a decade of its publication as a classic. Figure 13shows that on average three fourths of the articles referred to,were those that were published in or after 1985. Only one-fourths could be considered as classic articles.

APPARENT METHODOLOGICAL PREFERENCES OF THE JOURNALS

Every research journal represents a group of like-mindedindividuals engaged in serious conversation. The journalfacilitates an ongoing and continuous discussion among a groupof researchers who engage in scholastic conversation usingfamiliar and suitable techniques/tools. It is important thatthere be an element of continuity about the whole process.Therefore, looking into the topics/techniques journal-wiseshould provide interesting insights on the tools of the trade.AMJ, ASQ and SMJ predominantly use econometric methodssuch as regression analysis. JMS appears to emphasize the casestudy method of research. The other journal, which gives

THE SAMPLE SIZE USED FOR DIFFERENT METHODS

The purpose of research is knowledge-generation. This isachieved by studying a sample of the population of interest.This sample is determined by the method applied, heterogeneityof the studied population, resource constraints, accessibility ofsample elements, etc. Figure 10 provides the median samplesize - method-wise - to bring out the differences existing onsample size determination and use amongst various methodsof research.

One can see that modeling tops the list with a mediansample size of 506. This is followed by structural equationmodeling and regression analysis with over two hundred each.Factor analysis and event study methods, each have samplesizes of about hundred and sixty. In contrast, the case studyresearch method has a median sample of four, which isunderstandable given the rigor of this technique. In recentstudies, there has been a growing trend for large sample sizeinclusion. This is due to the availability of tremendouscomputing power that modern information technology accords.High quality secondary data sources also provide readilyaccessible data that can be analyzed in batches of severalthousands, if desired.

REFERENCING IN JOURNAL ARTICLES

Knowledge generation is an iterative process. The inchingforward by scores of researchers, working over a period, canmove the field forward. The requirement for this is to learnand acknowledge the works of others and add on to them sothat subsequent researchers can take them further ahead. Thiswhole process of iterative knowledge development is reflectedin the number of articles cited/referenced in each academicpaper. Keeping this aspect in mind we looked into the numberof articles referred in the surveyed journal papers. As can beseen, the range is quite large with the minimum and maximumat 23 and 162 references per paper. However, both mean and


representative of this important field. Topmost among ourfindings are that most of the research that is being attemptedand published has a quantitative technique bias, covers largesamples, and has little focus on managerial implications. Mostof the research projects were targeted at audiences who wereacademic scholars in the field. Though the target audiencemay not have explicitly included managers, the practitioners’problems and challenges were also the top research themesduring the cited period.

For instance, the topics that dominated strategy researchwere mainly in cooperative, corporate and competitive strategyareas. Corporate restructuring, which of late is being pursuedby practitioners, was seen as the next important research area.The qualitative approach to research has not been exploitedadequately. These aspects, along with the other less focusedissues, when attempted and taken care of during research bythe strategy scholars, shall not only enrich the research outcomesbut also make it more significant to the practitioners who canderive benefit from the entire pursuit.

CASE ANALYSIS- STRATEGIC MANAGEMENT

The purpose of Case study is to apply the concepts ofstrategic management to the facts related about a company’ssituation and performance and to make recommendations aboutits future course of action to enable it to compete with sustainedadvantage in its business environment. It is necessary thereforeto develop an appropriate framework to do this. Dependingupon the number of times a case is read and the care takenover it, the quality of analysis is likely to be detailed andfocused.

However it is possible to develop a reasonably good broadunderstanding that will permit an acceptable level of analysisand basic recommendations even after one reading providedthe student knows what to look for and determine as relevantto the case study.

significant importance to case research, is ASQ with 15 percent of the papers here using this method.

CATEGORIES OF THEORETICAL INSIGHTS GENERATED

Research in any area aims at extending the frontiers ofknowledge. The theoretical focus of the works has beenclassified into provision of additional insights, confirmingexisting precepts and providing new insights, i.e., theory-building studies. ‘New’ were those articles, which started fromscratch due to the absence of prior theory. The articles wereclubbed under ‘additional theoretical insights’ when there wasan already existing theory, which they researched, in order toseek an extension of that theory. Confirmatory research soughtto validate existing theory. Sixty percent of the articles wereof the ‘providing additional insights’ genre. Only eight percentwere of offering ‘new insights’. The other 32 per cent were of‘confirmatory’ nature.

EMPHASIS PLACED ON DISCUSSING MANAGERIAL IMPLICATIONS

As the field of strategic management is concerned withpractice, one expects the research in this field to have managerialimplications. In this light, the surveyed articles were classifiedinto those having high, moderate and low managerialimplications. A surprising proportion of 65 per cent of thearticles was having low/very low managerial implications; 28per cent had moderate managerial implications, with onlyabout seven per cent of the total having significantly highimplications for practice. This information needs to bemoderated with the knowledge that the surveyed journalswere predominantly academic in nature and their targetaudiences were predominantly researchers and scholars fromthe field, and not practitioners.

Our study brings to light the general trends that are visiblein strategic management research of the last decade. Thoughthe surveyed journals were not exhaustive, they were quite


Vision and Business Definition: Some companies especiallylarge established companies have vision and missionstatements. Several have no formal vision statements includingrenowned companies like Microsoft. Often firms make upvision statements which could fit any company e.g. “To be theleader in our business and to provide total satisfaction to ourconsumers”. The vision statement can be derived from whatbusiness the company is and more importantly should be inand in what unique ways it is an outstanding competitor inits business environment.

This constitutes good Business definition: Thus we havedeveloped a vision statement for Microsoft which says“Leadership in the PC related software industry throughinspired followership”. If a company through its decisions andits business activities demonstrates a lack of vision, it is veryunlikely to succeed long term and probably will not evensurvive. On the other hand a company that understands thebusiness it is in and that happens to be the business it shouldbe in, and has and uses unique competences, it is more thanlikely to be a competitor with sustained advantage. Beyondgood business definition, a truly successful companyincorporates into its vision a concern for its stakeholders andplans to meet their respective requirements. Thus a companywould build in long term wealth creation for its shareholders,a high level of belonging and motivation for its employees, aconcern to be a good corporate citizen complying with thelaws of the land in letter as well as spirit, and to spreadprosperity and goodwill throughout the larger community inwhich it resides, and is a part of.

Environmental Analysis: This is the most important partof the strategic analysis exercise. We have been exposed to theSWOT model and the Porter’s 5 forces model. Both of theseare important tools for the manager. The 5 forces model analysesthe industry environment from its individual perspectives ofthreat of new entrants, threat of substitutes, power of buyers,

Generally detailed analysis of a case should include thefollowing:

• The history development and growth of the companyover time

• The vision of the company either explicitly stated orimplied from the facts of the case.

• The company’s business definition i.e. what businessthe company is in and its unique position in thecompetitive space

• Environmental analysis both internal and external

• Business strategies

• Growth and Diversification strategies

• Functional strategies, structure and control systems

• Financial analysis including Balance sheet and profitand loss statement analysis. Analysis should includecapital structure debt/eqity, profitability and liquidityindicators

RECOMMENDATIONS

History and Development: Investigate the company’s paststrategy and structure through critical incidents in its history.Note the incidents must be quoted to support analysis and notmerely be repeated from the case without comment. Eventsconnected with the circumstances of its founding, thebackground and aspirations of its founders, its decisions aboutwhich markets to enter, the initial products, the technologiesadopted, the organization structure employed, the state of theindustry at the inception of the company are areas to be covered.The financial structure of the company including owner’s stakeis another relevant factor.

The growth and development of the company from itsfounding to its present state are to be noted and commentedupon.


has to either adopt a cost leadership position in its industry,or to differentiate( charge premium prices on its products andservices based on unique product or marketing advantages).The Japanese auto manufacturers including Toyota, Hondaand Nissan for long adopted cost leadership vis. a. vis theirAmerican and European competitors. The Swiss watch industryhas always adopted a differentiation strategy for almost all ofits products( the exception is Swatch which was deliberatelypriced low to attack the Japanese who had taken a huge marketshare by cost leadership) While a new entrant to an industryusually takes a cost leadership position to facilitate its entry,it will after a while consider and adopt a differentiation positionfor some of its products. This has been demonstrated with theintroduction of luxury auto models like the Toyota Lexus afterthat company successfully established itself in the U.S. automarket.

On the other hand a company which has been successfulwith a differentiated business strategy might consider a costleadership position to increase its market share. Whileseemingly attractive, it is a more risky proposition. Witness theexperience of Titan who were very successful with adifferentiated strategy. With the introduction of their low pricedoffering Sonata, they sought to grab the lower end of themarket. While Sonata quickly racked up impressive salesnumbers, It was largely at the expense of Titans own higherpriced products leading to a serious erosion in that company’sprofitability. In addition to the overall strategy options describedabove, Business Strategy analysis should also cover Tacticswhich are short and medium term competitive moves takenby companies to out maneuver, neutralize, or surprise theirrivals existing and potential. These include offensive tactics byway of aggressive pricing, encirclement tactics which wouldmean surrounding the competitors through comprehensiveproduct offering or saturating the distribution channels withits own products. Other tactics could include defensive tactics

power of sellers and internal rivalry. The net conclusions todraw from this model is the relative attractiveness of theindustry from the incumbents’ point of view and the forceswhich principally affect it, be they the power of sellers, buyers,threat of substitutes, threat from potential entrants or internalrivalry. The conclusions are common to all the incumbents.Therefore specific strategic analysis and recommendation w.r.t.internal industry competitors is not within the scope of thismodel. SWOT on the other hand is more wide ranging becauseit can cover any aspect of a company’s internal environment.Unfortunately charges have been leveled against SWOT thatthe analysis tends to be subjective and vague. Both these chargescan be taken care of if firstly, the comprehensive share holderrequirement is considered as mentioned in the earlier part ofthis note.

Further a strength, weakness has to be assessed in relationto competitors within the industry and potential competitorsfrom outside the industry. For example, if a company believesits Sales and Distribution is a strength, as in the case of TitanWatches it must have objective evidence that it has betterdistributors, dealers, and retail coverage both quantitativelyand qualitatively than its competitors. Similarly opportunitiesand threats have to be evaluated quantitatively and qualitativelyand in relation to the situation of competitors. For instance inthe passenger car market, the major growth opportunity forthe next several years will still be in the small car sector(800-1000 c.c.) where Maruti has the best prospects. G.M. or Fordcannot claim this as their opportunity because they do nothave products to offer in this critical market segment. SWOTanalysis should also cover the existing business and functionalstrategies of the firm. If all this is done the SWOT can providea complete and exhaustive framework for environmentalanalysis.

Business Strategies: This term is not to be confused withthe overall strategic plan. It refers to the option the company


approach or better still a set of guidelines can be developedto enable effective case analysis and recommendations thatwould follow for adequate addressal of the firm’s needs orthe functional area concerned.

Approach: A framework has to be developed which wouldbe valid for each category of case. Where the organizationalsituation is concerned the framework should be strategic,tactical or operational depending on whether the situation isshort term(upto 1 yr time horizon for consideration), mediumterm(1yr to 5 yrs), and long term( beyond 5 years). The strategicframework consists of the stakeholder group requirements(stakeholders include shareholders, customers, vendors,employees, creditors, regulatory agencies and the larger societalenvironment in which the firm operates and interfaces with).In addition the various areas and elements that are relevantto strategy have to be addressed such as company vision/Business definition, factors of competitive advantage,environmental analysis, growth and diversification and changeanticipation/response.(these have been covered in the firstpart of this note. Where issues of an ethical nature are concernedthe stake holder framework would have to be used, as wellas the ethical approach of Rights and Duties for analysis aswell as for the recommendations that would follow.

Functional Situations: Quite often case studies are focusedon situations relating to a specific functional area say Marketing,Sales & Distribution, Finance or Operations. How then shouldwe approach the problem? Firstly the analysis should be madekeeping the existing company strategy in mind. If for instance,a firm is in the Energy business and wishes to be a leader inProject completion time, and sizing of its units, its dependenceon in house project management skills would be greater thana firm in the same business that say is focusing on trading ofenergy resources. Similarly a firm which is in the high pricedsegment of the automobile market would have a differentapproach to Customer Care/Service than another automobile

where a company could circulate threatening messages aboutnew products or increasing capacity to discourage new entrantsto the industry.

Growth and Diversification Strategy: In the currentcontext of intensifying competition in our country and theopening up of our economy to global competition, this aspectof strategy has assumed paramount importance. Every firmhas to evaluate its position with respect to size and scope ona continuous basis. It is the natural inclination of a firm togrow where prospects for growth exist, and to think of movinginto or moving out of industry where prospects are bleak. Thevarious options of vertical growth have to be explored firstwhich could take the form of forward or backward integration.These decisions depend firstly on the firm’s accumulatedexpertise on the technologies and processes connected withtheir end products and services. It would also depend onwhether the firm can manufacture the upstream or downstreamproducts at an economically advantageous rate.

CASE ANALYSIS GENERAL

What is a Case: A case is a representation of a situation,a problem, an achievement or a challenge that an individualfirm or groups of firms experience which can be used foranalysis, and for gaining insights and learning for managersin industry as well as for students in business schools andother institutions of organizational learning. Cases may dealwith situations that companies organizational entities facesuch as entering new national and international markets, growthand diversification decisions or restructuring options for firmsin troubled times. They may also portray situations that arelargely relevant for specific functions of the company or arefocused on situations that deal with specific resource areassuch as finance, human resources, or technologies. Given thiswide range of areas, functions and specific situations that arecovered by Case studies the question arises as to whether an


Beyond this every element of an analysis should as far aspossible be supported by some quantification.

It is no use saying “ the market for Kitchen ware is verygood”. If however a market study reveals that “the market forMechanical Kitchen ware appliances in India includingMicrowaves, Blenders and Dry Grinders is currently estimatedat between Rs 2000 and Rs, 3000 Crores and is growing at arate of 7 to 10% per annum”, such an estimate would be usefulnot only to the Marketing function but would be relevant toother functions of the company and to its top management.It is true that in certain situations it is more difficult to getaccurate and reliable quantitative data to support hypothesisand conclusions but if efforts are made, reasonable quantitativeestimates can always be developed. It is advisable to developand present ranges of estimates than firm figures. The examplegive above would be more credible and therefore acceptablethan an assertion like “the market for the foregoing kitchenware products is Rs 2750 Crores”.

One Final Point: we must remember the limitations ofdata and perspectives and opinions reflected in most, if not allCase Studies. Most cases are written with data solely providedby the companies studied and their executives. Therefore thecase data as well as the opinions expressed reflect theperformance and the views of company insiders which wouldtend to demonstrate and justify the company’s thinking andits assessment of the situation being studied. Weaknesses ofthe company and faulty handling of situations are eithersuppressed or glossed over. In a rare case where the casewriter would wish to point to inadequate handling of situationsor areas for improvement, it is unlikely that this would bepermitted by the management of the company.

Therefore while analyzing cases, students are advised togo beyond the opinions and views submitted in the case andattempt a more objective analysis. For instance the prospects

player who is focusing on the lower price/performance segmentof the market.

Functional Frameworks: One way of looking at functionalframework is to identify the processes and sub processes froma progressive value addition perspective. In Marketing thiswould start with study of Customers & Markets, identifyingsuperior products and services, developing these competitivelyin time ,quality and time dimensions, getting them to thecustomer in the most effective way through appropriatechannels and associates, and provision of adequate After SalesService. We must evaluate the company’s situation andperformance in comparison to the best in the industry or bestin the class.

For instance for a company in the consumer electronicsindustry, the best example of Customer Care may be found inanother industry say the entertainment industry(While lookingfor best practices in the precision hydraulics industry, firmsfound them in Disney World an entertainment industry leader.Another useful perspective to adopt while analyzing afunctional situation/problem would be to use the external/internal customer framework. If a function like Marketinglooks at its responsibilities to providing the greatest satisfactionto its customers of the firm as well as in meeting its functionalobligations to internal customers in sister functions likeOperations, finance, quality assurance, it would be in the bestposition to solve the existing problem as well as to meet thechallenges that the future would throw up.

The Quantitative Perspective: It is always preferable touse quantitative data and analysis to understand a firm’ssituation or a functional situation. It is particularly appropriateto use financial data and numbers both in the analytical andrecommendatory parts of a Case study. The financial frameworkfor analysis should include cost/profit/profitability, long termand short term assets and liabilities and Cash and Fund flows.


project using the Balanced Scorecard and SFO principles toimplement a strategy management system in the company;and an HR sponsored project using a traditional approach toimprove the company's individual performance managementsystem. These two organizations are large complex enterprisesemploying more than 20,000 people.

The first enterprise devoted six months to clarifying andimplementing its strategy across the top levels of the enterprise.The project team of managers and consultants mapped thecompany's strategy and developed a Balanced Scorecard forthe enterprise. The project team used a series of workshops tocascade the strategy to more than 20 large SBUs andDepartments. This yielded a clear specification of objectives,measures, targets and projects for translating the strategy intoaction at the top two levels of the organization. The HRdepartment of this enterprise had initiated a project to improvetheir performance management system by focusing on jobdescriptions, responsibilities and accountabilities. The twoproject teams operated in parallel paths without coordinatingwith each other.

The first enterprise's strategy management project usingthe Balanced Scorecard methodology succeeded. Theperformance management project using the traditionalapproach was not as successful. Now the key decision makershave recognized the problem and are revising the HR approachto align with the BSC objectives. The executive team hasrecommended the BSC strategy management system to theirassociated companies and to their holding company.

The second enterprise's project team followed global bestpractice by involving the company's executive team indeveloping and refining the enterprise strategy map and BSC,then cascading it to SBUs and Departments. The project teamestablished Alignment of the BSC with performancemanagement as one of the key objectives in the enterprise and

of the Indian Software Industry would not be as bright asprojected by the incumbent software companies and theindustry associations if one realized that they are all largelyconcentrating on the low value part of the industry and theirposition would be threatened by aggressive new entrants likeChina in the not so far future. It helps if, before analyzing aspecific company situation portrayed in a case, that we collectfacts and opinions of the general industry situation andprospects from perusal of available industry and general macroeconomic data available in the public domain. I believe andsubmit that it should be the endeavour of each student, teacherand educational institution to collect, organize and share asmuch relevant business data as would make the most if notall case studies objective, realistic and capable of supportinggood business decisions.

STRATEGY MANAGEMENT CHALLENGE - ALIGNMENTWITH PERFORMANCE MANAGEMENT

Translating strategy into action includes the managementof both organizational and individual performance. Globally,there was been a continuing misalignment between strategymanagement and individual performance management. Thisis particularly true in China. If the organizational strategy ispushing organizational focus in one direction, the performancemanagement systems needs to line up with that. Otherwise,there is a strategy disconnect between the two systems.

Best practices have been established, and are continuouslyupdated, for how to link organizational strategy to individualperformance management. Of the five principles for establishinga Strategy Focused Organization [SFO], the fourth principle isfocused on creating alignment with the workforce. SFO BestPractice Principle 4.2 is specifically focused on creatingalignment of the strategy with personal goals.

During the last year I have observed two large enterprisesundertake two simultaneous projects: an executive sponsored

Strategic Management and Business Management158 Strategic Management for Achieving Business Excellence 159

6

Strategic Management forAchieving Business Excellence

This chapter explains the importance of StrategicManagement and Policy Management in the framework of theJapanese Model for Business Excellence, the Deming Prize. Italso highlights how the two auto component companies, SonaKoyo Steerings Limited and Sundaram Clayton have becomeglobally competitive by wining the Deming Prize in India. Thispaper also discusses Tata Business Excellence model based onMalcolm Baldrige (American) model for Business Excellenceapplied by a major steel company, Tata Steel in India, whichhas made this company as one of the best steel companies inthe world.

INTRODUCTION

Many Indian Auto companies in India have been doingexceptionally well since early 1990's by learning from eachother and following the philosophy of Total QualityManagement (TQM) as a way for their corporate strategy toachieve Business Excellence. Many Indian companies especiallyin the automobile-component sector have been applying theprinciples of TQM or Business Excellence for competing in thisvery competitive market. With help from Prof. Osada ofJapanese Union of Scientist and Engineers (JUSE) and theConfederation of Indian Industry (CII), these companies have

the HR strategy maps. Quantitative measures for this objectivewere defined. Revisions in the company's approach to writingjob descriptions were proposed. The HR department welcomedthese improvements. Revisions were proposed to the processfor defining the position accountabilities for executives andmanagers. These revisions were also accepted by the HRdepartment. The twice yearly performance managementdiscussions were also re-designed.

The second enterprise's executive team followed the bestpractice principle of creating alignment between the strategyand the performance management system. As the secondorganization's strategy management project nears completionthe project appears to be successful. The process continues forcreating alignment between the strategy and individualperformance management.

Strategic Management and Business Management Strategic Management for Achieving Business Excellence160 161

10. Future Plans for the organization for improvingproblems, changes in social and customer environmentand future plans, relationship between managementphilosophy, vision and long term plans.

STRATEGIC MANAGEMENT BY BUSINESS POLICY(SMBP) FOR TQM IMPLEMENTATION

Prof. Osada, the Japanese Guru for JUSE emphasizes theconcept of Strategic Management by Business Policy (SMBP)for TQM Implementation.

Excellent companies in 21st century will have to focus on

(a) Sustainable growth

* Looking at all stakeholders' satisfaction, which impliesvalue for customer, employee, society, business partnerand shareholders and be

(b) Able to face the mega competition and win thecompetitive advantage by

* Differentiation strategies

* Tapping of creativity and innovation from all itsemployees for coming out with creative and innovativeproducts.

* And having optimum resource allocation.

View points needed for strategic planning, as per Osadashould certain the following:

(a) Innovation: strategic & future orientation

(b) Improvement in processes: problem solving

(c) Forecasting business environment clearly &comprehensively

(d) Product business lifecycle

(e) Positioning, benchmarking

(f) And focus on optimum resource allocation

(g) Concentrate on key success factors / failure factors

been applying the Deming Model for TQM Implementation intheir companies for achieving competitive advantage.

Many of the companies like Sundaram Clayton, Sundram-Brakelining, Sundaram Fasteners, TVS Lucas of the TVS groupand Sona Koyo Steering Limited have been applying theprinciples of TQM and Business Excellence by applying theGuidelines for the Deming Prize instituted by the JapaneseUnion of Scientists and Engineers (JUSE).

THE DEMING PRIZE (JAPANESE MODEL FOR EXCELLENCE)

This best known prize with the longest history was firstawarded by the Japanese Union of Scientist and Engineers(JVSE) in 1951 to a Japanese company which excelled in TotalQuality Management.

This prize is given for an overall performance of a company.Till 1991 this prize was given to only Japanese Companies butfrom 1992, any company outside Japan could apply forJapanese--Deming Prize.

The 10-Point Content of the Deming Prize ComprehensivelyCovers Issues for Any Organization as Given below:

1. Policy

2. Organization

3. Information

4. Standardization

5. Human Resource Development and Utilization

6. Quality Assurance Activities

7. Maintenance and Control Activities

8. Improvement Activities

9. Effects including Tangible and Intangible effects,Methods for measuring and grasping effects, customersatisfaction and employee satisfaction, Influence onassociated companies and local and internationalcommunities.


Manager level. The process has been improved over the yearsbased on the learning during implementation using the Plan,Do, Check, Act (PDCA) Cycle as propagated by Guru's likeShewart and Deming.

Implementation of Objectives & Action Plans At Sona KoyoSteering Systems Ltd. the implementation of objectives andaction plans is briefly highlighted as:

* Weekly review of action plan in Managing Committeemeetings

* Monthly review of Divisional Objectives

* Quarterly review of Chief Level Objectives

* Half yearly review of Company Objectives

* Daily, weekly and monthly gap analysis of CheckingPoints, and

* Monthly review of Managing Points

This has given better results in terms of reducing themanufacturing expenses as % of net sales from 2000 yearonwards. Fuel consumption per unit of power has gone downsince year 2000.

Inventory Turnover ratio has improved; In-house rejectionhave declined customer returns Per Part Million (PPM) hasdecreased since year 2000. After implementing the concept ofpolicy management in the company. Some highlights of thecompany from the primary source are given which gives usan idea how this company has achieved competitive advantagein the field of auto component business.

New competitions will be coming through supplier powerand price level sensitivity in the market. New opportunity forthe company will be in Western Europe and North Americaas well as new challenges in Indian market.

Some of the aspect of the competitive advantage in thiscompany is:

(h) Practical strategy looking at product, market & strategicelements

(i) Participatory type of strategic planning

(j) And finally strategic planning implementation.

By applying this framework and the concerns for theDeming prize, companies in the TVS Group like, SundramClayton, Sundram Brakelining, TVS Motors, have achievedexcellence. Other auto- component manufacturers like JayBharat Maruti, a subsidiary of Maruti Udyog Limited, SonaKoyo Steering, and Minda Huf Ltd. in India have establisheda level of excellence by which they are able to supply theirproducts to the top automobile manufactures of the worldbased in India. They are also able to export to foreign countriesfacing the challenges of global competition successfully. Twoexamples of Indian auto component companies would behighlighted in the next part of the paper:

CASE STUDIES FOR DEMING PRIZE WINNERS IN AUTO-COMPONENT COMPANIES

SONA KOYO STEERING SYSTEMS LTD., INDIA

In Jan. 1985, Sona Group had technical collaborationagreement with Koyo Seiko Co. Ltd., Japan for manufactureof manual steering, gear assemblies and steering columnassemblies. From October 1987 this company started itsproduction. In 1992 equity participation of 8% by Koyo andit was increased to equity participation to 20.5%. In 1998, SonaSteering systems changed to Sona Koyo Steering Systems Ltd.Since 1994 Koyo certified Sona as an approved vendor forexport of steering parts to Japan.

Policy management is the process of formulating, deployingand implementing the company policy of the year related tohigh priority to lower levels in the organization. PolicyDeployment starts from the Top Management and goes downto Plant Manager, Departmental Manager and to the Section


become globally competitive by applying the principles ofTotal Quality and Excellence.

(B) Sundaram--Clayton Limited Brakes Division (Chennai),India This company was established in 1962 as a joint venturewith Clayton Devandre, UK (Now WABCO Automotive UK).WABCO Automotive is part of American Standard Inc.--afortune 500 company. Sundaram Clayton--Brakes Division islocated at Chennai and is part of the TVS group, which wasestablished in India in 1911.

SCL Products:

* Air brake systems for medium and heavy commercialvehicles

* Vacuum brake products for light commercial vehicles.

* Anti-lock braking systems (ABS) and Anti-spinRegulation Systems.

In 1983-87 there was a recession in the Automobile Industryand Emergence of Competition in Sundaram Clayton Business.There was a drop in market share and profitability.

Thus in 1987-88 there was a wakeup call for the companyto gear up and faced competition. Sundaram Clayton embracedthe TQM philosophy and the Deming model for improvingperformance and manufacturing excellence.

1987-90 PHASE THE INTRODUCTION PHASE

The first issues was to be tackled in this phase was bringingabout a cultural change in the organization by having commonuniform for all employees, open offices, total employeeinvolvement, where quality circles and suggestion schemeswere encouraged among the employees.

Restructuring Manufacturing process was done to haveproduct layout, self-contained units, and operator's ownershipof Quality.

* Shared costs between several products

* Quality & knowledge of work force

* Experience and knowledge of business & organizationallearning culture

* Production technology upgradation

* Strategic outsourcing

* Standardization of product and pricing policy

* Good relationship with suppliers computerizedmanagement of information flows and material flows

* Quick response to unscheduled production demand

* Just-in-Time (JIT) concept of manufacturing

* Customer service contract

* After sales service and availability of spare parts

* Regular assessment of customer satisfaction

* Product purchased from the company vs. competition,services required from time-to-time by the customers

* Trends or future possible change in customerrequirement for product and services monitoring

* Good financial management systems

* Good policy management systems in the company

New strategic goals of the company are:

* Development of new knowledge and technologies

* Increase of the sales turnover

* To be present in the global market

* Research and development reinforcement &development of unique capabilities within the companyfor innovation

The company won the prestigious Deming ApplicationPrize for Business Excellence awarded by Japanese Union ofScientists and Engineers (JUSE) in 2003. This company has


CONTINUOS IMPROVEMENT PHASE (1998--PRESENT)

Responding to the External changes and the Internalchanges, the Deming examiner's feedback with TVS corporatevalues in mind, efforts began to own new products, sustainproduct quality and productivity with social responsibility forimproved customer satisfaction and business results.

Concepts like Total Productivity Maintenance (TPM), LeanManufacturing, Application of IT as enabling processesProductivity Improvement, Establishing EnvironmentalManagement Standards (EMS) as per ISO 14001 standard weretaken up. Development work for electronic control system forair brakes was taken up during this period. Development ofnew customers has also being given importance. For sustainingprofit, product mix optimization and cost management havebeen made very effective throughout the company.

With the above two case study, from the auto componentindustry in India, we have seen how policy management aspart of the Deming way of implementing Total QualityManagement (TQM) for achieving business excellence has beenimplemented in the two case studies.

TATA BUSINESS EXCELLENCE MODEL (TBEM) AT TATASTEEL

Now we look at the genesis of the Tata Business ExcellenceModel (TBEM) applied by one of the largest diversified andadmired private group in India the Tata Group. Based on theAmerican Model, The Malcolm Baldrige Award for businessExcellence, The TBEM is applied in one of the oldest companiesof the group, Tata Steel, the first Steel Company in Asia, whichstarted in 1907 in India. By applying this integrated model forexcellence, has become one of the best steel companies of theworld now.

Tata Business Excellence Model at Tata Steel: One of thelargest business groups in India consists of 85 companies and

1990-1994: THE PROMOTION PHASE

The Policy Management philosophy was employed to havegoal congruence among all the levels of management. Measuresand targets were fixed and monitored / reviewed and achieved.The audit reviews were carried out throughout the organization.

The concept of cellular manufacturing--emphasizingProductivity Improvements, Lead--Time Reduction, settingsup of operation standards for all key processes were done.

Massive efforts towards Education and Training whereproblem solving skills were imparted to company wideemployers at all levels.

1994-1998: DEPLOYMENT PHASE

Standardization was adopted for all processes and operatingprocedures were written for every activity specially allmanufacturing activity & related activities. Poka-Yoke (MistakeProofing) was implemented for various machines in themanufacturing process.

New Product Development was taken up very seriouslyapplying a multidisciplinary task force full time and NewProduct Development (NPD) process was well defined and allthe tools and techniques were applied for New ProductDevelopment.

Supplier Development was emphasized for the wholemanufacturing function. Manufacturing cells were created atthe suppliers' sites and training of suppliers or vendors of thecompany was done by the specialists.

In 1998 Sundaram Clayton--Brakes Division was awarded"Deming Application Price" for distinctive performanceimprovement through the application of Company-wideQuality Control. This company became the forth companyoutside Japan and the very first in India to receive thisprestigious award.


adopted in 1998. It has all the same criteria as the MalcolmBaldrige Award criteria plus it also incorporates the Tata Brandequity promotion and Tata Code of conduct.

JRDQV AWARD QUEST AT TATA STEEL

Tata Steel, the oldest Integrated Steel Company India, whichwas, founded in 1907 at Jamshedpur in the Bihar State (Nowcalled Jharkhand State) produces about 3 Million Tons/yearof saleable steel. Tata Steel is Asia's first and country's largestprivate sector integrated steel plant. The company has playeda pioneering role in integrating professional business practiceswith exemplary corporate citizenship programs in India.

In mid of year 2000, the company has started operating a1 Million-Ton Cold Rolling Plant with the collaboration withNippon Steel, Japan. In 1999-2000, the company had a salesturnover of Rs. 6,943.33 Crores i.e. about $1.47 Billion andProfit after Taxes as Rs. 422.59 Crores i.e. about $8.93 Million.In the year 2000-2001, the sales turnover was Rs.7814.58 Croresi.e. about $1.65 Billion with a net profit of Rs.553.44 Crores i.e.$11.71 Million. Year 2001-2002 was a very difficult year for thesteel industry.

All the companies in the world made losses but Tata Steelmade a profit of Rs 205 crores and in 2002-2003, The companyhas done exceedingly well by making a net profit of Rs. 1012crores i.e. about $18.72 Million. Tata Steel in its new visionstatement in 1998 had taken up the challenge to become thelowest cost producer of steel in the world. Till the year 2000,it was second to the leading Korean Steel Company, PoscoSteel.

In year 2001-2002 as per the World Steel Dynamics, TataSteel of India has become the lowest cost producer of steel inthe whole world.

This is the only company among the Tata Group, whichhas crossed 600 points out of 1000 points to qualify for the

7 business sectors worth about Rs. 50, 000 crores i.e. about US$11. 213 billion in revenues.

Tata Group of companies have taken upon themselves oneof the largest strategic change initiatives in their companiesthrough the Tata Business Excellence Model (TBEM) launchedin 1998 to grapple with the challenges and transformation, thecompetitive environment was throwing upon the differentcompanies in the Group. Post 1991--when the liberalization erahad just begun in India, there was a change in the competitivescenario in India and companies had to adopt their strategiesand philosophies which would make them more competitivein the market place.

Between December 1998 and early 2000, about 30 companiesin the Tata Group signed up to implement the Tata BusinessExcellence Model (TBEM) and from July 2000, these companiesare being annually evaluated on the 7 criteria that constitutethe TBEM:

1. Leadership

2. Strategic Planning

3. Customer and Market Focus

4. Information and Analysis

5. Human Resource Management

6. Process Management and

7. Business Results

ORIGIN OF TBEM

The genesis of the Tata Business Excellence Model (TBEM)lies in the JRD Quality Value (JRDQV) Award launched afterthe death of the group chairman Mr. J.R.D. Tata in 1994 in hismemory for the Tata group companies. This model is basedon Malcolm Baldrige National Quality Award that jump-startedthe Quality movement in USA in 1988. The TBEM, which wasadopted in Tata Group, companies including Tata Steel, was


THE TBEM MODEL

Beyond the broad guidelines, the model has noprescriptions, and is extensively adaptable. The choices of thetools of implementation lie entirely with the company, as doesthe method of deployment. Here is how the TBEM drivesexcellence across functions:

* The leadership criteria checks how senior leaders createa leadership system based on Group Values

* The customer and Market Focus checks how thecompany determines customer groups, key customerneeds, and complaint-management issues

* The Strategic Planning criteria examines how thecompany develops strategic-objectives, action plans andresource allocation

* The information and Analysis criteria check whetherthe organization has key metrics in place to measureand analyze performance

* The human resources management checks the appraisal-system, the work environment, and the training anddevelopment of employees

* The process management examines the product-design,production and delivery process and supply-chainmanagement

* The business results criteria measures the organization'sperformance in business areas like customer satisfaction,human resource results and company's financial results.

The foundation on which the Tata Business ExcellenceModel (TBEM) is built upon is the 1) JRDQV Award guidelines(based on Malcolm Baldrige Quality Award), which emphasizeson quality practices, customer focus and process improvementand 2) the Tata Brand Equity Business Promotion (BEBP) whichlays down the criteria for using the Tata Brand and 3) the codeof conduct for the Tata group and ethical practices for the Tata

JRDQV award in July 2000. Tata Steel is way ahead of the othercompanies because it's quest for Total Quality and Excellence,which started in the late 1989, when it started its Total QualityManagement (TQM) movement. In early 1992, it adopted theMalcolm Baldrige Award Criteria for implementing TQM invarious divisions of the company and called it the JN TataQuality Award, where various divisions within the companywere competing with each other on Total QualityImplementation. In 1994, Tata Steel adopted the JRDQVguidelines again based on Malcolm Baldrige guidelines formoving towards Total Quality or Business Excellence, andstarted competing with other Tata group companies. From1998 onwards it has been leading in the JRDQV award totalscores in the Tara group. The need for TBEM and what it doesare given in the next sections.

THE NEED FOR THE TBEM

The following issues were considered before the Tata Groupfelt the need for adopting the Tata Business Excellence Model(TBEM). They are:

* Processes and practices were not customer-centric inthe companies

* Tata Group Companies pursued size instead of agility

* Performance standards varied between organizations

* Knowledge and best practices were not being shared

* There was no unified management strategy for the TataGroup

WHAT THE TBEM DOES?

* Provides a framework for the group to becomecompetitive

* Uses quality as the route to acquiring competitiveness

* Works as a competition to ensure participation

* Becomes a transformational tool for every company


corporate strategy and started Reengineering its core Businessprocesses.

JOURNEY FOR BUSINESS EXCELLENCE AT TATA STEEL

Prior to globalization of Indian economy in 1991, thecompetition in steel industry was limited. By adopting measuresleading to marginal improvements, Tara Steel was ahead of itsIndian competitors.

However, the company was primarily inward looking andwas not affected much with the happenings beyond Indianeconomy with globalization, the environment changeddramatically and the company had to think 'out of the box'.

It became necessary to redefine the business elements(technology, products, market-segment, human resource, inputmaterials, plant location, etc.), business priorities, vision,strategies, management tool and techniques etc. In effect, thecompany redefined and reoriented itself in a turbulentenvironment.

First adopting the Total Quality Management (TQM)philosophy as a part of Competitive Strategy was formallylaunched in the company in late 1989.

It started with massive effort on education and training onTQM. It started with ISO 9001 and ISO 9002 certification ofvarious manufacturing and later service units. ProcessImprovements through Quality Improvement Projects (QIP's),Value Engineering Projects and Statistical Process Controlprojects and Operations Research Projects by managerial teamswas making great contributions in various departments anddivisions of the company.

Quality Circles and 5S as strategic tool for employeeinvolvement and improvement were adopted in all departmentsof the company.

It adopted the J N Tata Quality Award Model based onMalcolm Baldrige Model for its various divisions in the

Group. Beyond the broad guidelines, the model has noprescriptions and is extremely adaptable.

The choices of tools of implementation lie entirely with thecompany, as does the method of deployment. TBEM drivesexcellence across functions. Every group company withdifferent business is applying this model for business excellencein their own way.

Massive education and training effort is in place in thecompany to take care of the minimum training needs for eachemployee and the developmental need for every employee.This is achieved through in-house Management DevelopmentCenter and Technical Training Institute for the company.

Every Department in the company has Training andEducational Executive and coordinates the Education andTraining function with the central company facilities.

The Human Resource Division has now an organizationallearning wing, which caters to the employee's learning needs.When Tata Steel won the JRDQV awards in July 2000, itshighest scores were in the category of "Customer and Market-Knowledge" and Public Responsibility and Citizenship" Now,Knowledge Management structures has been created for thebenefit of integration of knowledge within the company.

The measures based on Customer, In-process, Financialand Innovation and Learning are monitored at the topmanagement level.

It also percolates to each department and division andindividual employee.

Tata Steel started positioning itself as a more competitiveand customer-oriented steel manufacturer. For this, a processwas needed which could be used by the managers throughoutthe organization to improve their performance and hence thecompetitiveness of the organization. In order to achieve sucha goal, the company incorporated Benchmarking into its


the JRDQV Award in July 2000. This is the only companyamong the Tata Group of companies to have got this awardfor excellence based on the Malcolm Baldrige Award criteriafor Organizational Excellence.

The judges for the award found that Tata Steel exhibitedthe following strengths:

* System based approaches in addressing many areas ofthe TBEM

* Demonstrable strength in processes addressing keycustomer and stakeholder needs

* Fact-based evaluation and improvement processes

Tata Steel also won the CII-EXIM Award for BusinessExcellence in November 2000.

This award is based on the European Model for BusinessExcellence (EFQM). Tata Steel become the third company inIndia to win this award after Hewlett Packard India and MarutiUdyog Ltd., (the biggest car manufacturer in India) who havea Japanese collaboration with Suzuki Motors.

In 2003 Tata Steel has won the TBEM sustainable awardby getting 675 marks out of 1000 points based on MalcolmBaldrige criteria for Excellence assessed by experienced BaldrigeAssessors along with the Tata Group Assessors. Despite difficulttimes in Steel industry worldwide as well as in India, Tata Steelhas been always making net profit every year since its inception.World Steel Dynamics has identified 12 companies as WorldClass Steel Makers. Tata Steel of India has been rated on thetop above Posco of South Korea, Nucor of USA and Nipponof Japan and other such companies.

CONCLUSION

By applying the Japanese Business Excellence Model, theDeming Prize as shown by two small auto componentcompanies in India namely Sona Steering Limited and

company in 1992. Later it adopted the JRDQV Model forBusiness Excellence in 1994 for competing with other groupcompanies.

Benchmarking and Business Process Reengineering (BPR)emerged as powerful Management Tools in this directioncomplimenting the TQM efforts at Tata Steel in terms ofcontinuous improvement in process and practices.

Concept of Balanced Score Card was integrated with theTQM strategy of the company in 1998. It was integrated withthe Annual quality Improvement Plans (AQUIP's) of variousdepartments.

NEW THRUST AREAS AT TATA STEEL

In the quest for further increasing their benchmark andimproving their processes, Tata Steel has signed an AutomotiveSteel Technology Cooperation with Nippon Steel of Japan andArcelor of Europe.

This will help Tata Steel get the technology of making highquality sheets for the Indian automotive market. The topmanagement of Tata Steel has created the new vision 2007after Tata Steel became the world's lowest cost producer ofhot-rolled coils at $160 per tonne in the year 2001.

THE NEW VISION 2007

"To seize the opportunities of tomorrow and create a futurethat will make us an EVA +ve company. To continue to improvethe quality of life of our employees and communities we serve"

This vision will uphold the spirit and values of the Tata'stowards nation building.

It will realize the core business for a sustainable future andventure into new business that will own a share of thecompany's future. Applying and adopting the strategic issuesas discussed in this paper, Tata Steel, has been able to achieve

Strategic Management and Business Management176 Strategic Planning (in Nonprofit or For-profit Organizations) 177

7

Strategic Planning (inNonprofit or For-profit

Organizations)

Simply put, strategic planning determines where anorganization is going over the next year or more, how it'sgoing to get there and how it'll know if it got there or not. Thefocus of a strategic plan is usually on the entire organization,while the focus of a business plan is usually on a particularproduct, service or program.

There are a variety of perspectives, models and approachesused in strategic planning. The way that a strategic plan isdeveloped depends on the nature of the organization'sleadership, culture of the organization, complexity of theorganization's environment, size of the organization, expertiseof planners, etc. For example, there are a variety of strategicplanning models, including goals-based, issues-based, organic,scenario (some would assert that scenario planning is more atechnique than model), etc. Goals-based planning is probablythe most common and starts with focus on the organization'smission (and vision and/or values), goals to work toward themission, strategies to achieve the goals, and action planning(who will do what and by when). Issues-based strategicplanning often starts by examining issues facing theorganization, strategies to address those issues, and action

Sundaram Clayton which have won the Deming Prize in Indiahave become globally competitive companies. It has been seenthat by applying the principles of the American Model forBusiness Excellence and fine-tuning to the needs of an old andculturally strong Steel Company, Tata Steel, has inculcated thephilosophy of Total Quality Management and BusinessExcellence as part of the company's Corporate BusinessStrategy.

Any company can gain competitive advantage and movetowards Business Excellence as described in this paper. TataSteel, Sona Koyo Steerings Limited and Sundaram ClaytonLimited in India have done this because of its foresight andthe vision it had among the Top Management Leadership andsupport from all its employees in the company. Thesecompanies have as prepared themselves to compete and besuccessful in a competitive globalized world.

Strategic Management and Business Management Strategic Planning (in Nonprofit or For-profit Organizations)178 179

for-profits and nonprofits. Nonprofits tend to focus more onmatters of board development, fundraising and volunteermanagement. For-profits tend to focus more on activities tomaximize profit.)

Also, in addition to the size of the organization, differencesin how organizations carry out the planning activities are morea matter of the nature of the participants in the organization-- than its for-profit/nonprofit status. For example, detail-oriented people may prefer a linear, top-down, general-to-specific approach to planning. On the other hand, rather artisticand highly reflective people may favor of a highly divergentand "organic" approach to planning.

Therefore, the reader is encouraged to review a variety ofthe materials linked from this page, whether he or she is froma nonprofit or for-profit organization. Items below are markedas "nonprofit" in case the reader still prefers to focus oninformation presented in the context of nonprofit planning.

BENEFITS OF STRATEGIC PLANNING

Strategic planning serves a variety of purposes inorganization, including to:

1. Clearly define the purpose of the organization and toestablish realistic goals and objectives consistent withthat mission in a defined time frame within theorganization’s capacity for implementation.

2. Communicate those goals and objectives to theorganization’s constituents.

3. Develop a sense of ownership of the plan.

4. Ensure the most effective use is made of theorganization’s resources by focusing the resources onthe key priorities.

5. Provide a base from which progress can be measuredand establish a mechanism for informed change whenneeded.

plans. Organic strategic planning might start by articulatingthe organization's vision and values and then action plans toachieve the vision while adhering to those values. Someplanners prefer a particular approach to planning, eg,appreciative inquiry. Some plans are scoped to one year, manyto three years, and some to five to ten years into the future.Some plans include only top-level information and no actionplans. Some plans are five to eight pages long, while otherscan be considerably longer.

Quite often, an organization's strategic planners alreadyknow much of what will go into a strategic plan (this is truefor business planning, too). However, development of thestrategic plan greatly helps to clarify the organization's plansand ensure that key leaders are all "on the same script". Farmore important than the strategic plan document, is thestrategic planning process itself.

NOTE: Much of the following information is in regard togoals-based strategic planning, probably the most commonform of strategic planning.

GAINING UNDERSTANDING OF STRATEGICPLANNING

LEARNING STRATEGIC PLANNING

First, a Point About For-Profit and Nonprofit Strategic Planning

Major differences in how organizations carry out the varioussteps and associated activities in the strategic planning processare more a matter of the size of the organization -- than its for-profit/nonprofit status. Small nonprofits and small for-profitstend to conduct somewhat similar planning activities that aredifferent from those conducted in large organizations.On the other hand, large nonprofits and large for-profits tendto conduct somewhat similar planning activities thatare different from those conducted in small organizations.(The focus of the planning activities is often different between


planning process, for example, action planning (objectives,responsibilities, time lines, budgets, etc) are updated each year.Consider the following guidelines:

1. Strategic planning should be done when an organizationis just getting started. (The strategic plan is usually partof an overall business plan, along with a marketingplan, financial plan and operational/management plan.)

2. Strategic planning should also be done in preparationfor a new major venture, for example, developing anew department, division, major new product or lineof products, etc.

3. Strategic planning should also be conducted at leastonce a year in order to be ready for the coming fiscalyear (the financial management of an organization isusually based on a year-to-year, or fiscal year, basis).In this case, strategic planning should be conducted intime to identify the organizational goals to be achievedat least over the coming fiscal year, resourcesneeded to achieve those goals, and fundedneeded to obtain the resources. These funds are includedin budget planning for the coming fiscal year. However,not all phases of strategic planning need be fullycompleted each year. The full strategic planning processshould be conducted at least once every three years. Asnoted above, these activities should be conducted everyyear if the organization is experiencing tremendouschange.

4. Each year, action plans should be updated.

5. Note that, during implementation of the plan,the progress of the implementation should bereviewed at least on a quarterly basis by theboard. Again, the frequency of review depends on theextent of the rate of change in and around theorganization.

6. Bring together of everyone’s best and most reasonedefforts have important value in building a consensusabout where an organization is going.

Other reasons include that strategic planning:

7. Provides clearer focus of organization, producing moreefficiency and effectiveness

8. Bridges staff and board of directors (in the case ofcorporations)

9. Builds strong teams in the board and the staff (in thecase of corporations)

10. Provides the glue that keeps the board together (in thecase of corporations)

11. Produces great satisfaction among planners around acommon vision

12. Increases productivity from increased efficiency andeffectiveness

13. Solves major problems

WHEN SHOULD STRATEGIC PLANNING BE DONE?

The scheduling for the strategic planning process dependson the nature and needs of the organization and the itsimmediate external environment.

For example, planning should be carried out frequently inan organization whose products and services are in an industrythat is changing rapidly .

In this situation, planning might be carried out once oreven twice a year and done in a very comprehensive anddetailed fashion (that is, with attention to mission, vision,values, environmental scan, issues, goals, strategies, objectives,responsibilities, time lines, budgets, etc).

On the other hand, if the organization has been around formany years and is in a fairly stable marketplace, then planningmight be carried out once a year and only certain parts of the


1. Your organization has not conducted strategic planningbefore.

2. For a variety of reasons, previous strategic planningwas not deemed to be successful.

3. There appears to be a wide range of ideas and/orconcerns among organization members about strategicplanning and current organizational issues to beaddressed in the plan.

4. There is no one in the organization whom members feelhas sufficient facilitation skills.

5. No one in the organization feels committed to facilitatingstrategic planning for the organization.

6. Leaders believe that an inside facilitator will eitherinhibit participation from others or will not have theopportunity to fully participate in planning themselves.

7. Leaders want an objective voice, i.e., someone who isnot likely to have strong predispositions about theorganization's strategic issues and ideas.

WHO SHOULD BE INVOLVED IN PLANNING?

Strategic planning should be conducted by a planningteam. Consider the following guidelines when developing theteam.

1. The chief executive and board chair should be includedin the planning group, and should drive developmentand implementation of the plan.

2. Establish clear guidelines for membership, for example,those directly involved in planning, those who willprovide key information to the process, those who willreview the plan document, those who will authorizethe document, etc.

3. A primary responsibility of a board of directors isstrategic planning to effectively lead the organization.Therefore, insist that the board be strongly involved in

PREPARATION FOR STRATEGIC PLANNING

GUIDELINES TO KEEP PERSPECTIVE DURING PLANNING

Many managers spend most of their time "fighting fires"in the workplace. -- their time is spent realizing and reactingto problems. For these managers -- and probably for many ofus -- it can be very difficult to stand back and take a hard lookat what we want to accomplish and how we want to accomplishit. We're too buy doing what we think is making progress.However, one of the major differences between new andexperienced managers is the skill to see the broad perspective,to take the long view on what we want to do and how we'regoing to do it. One of the best ways to develop this skill isthrough ongoing experience in strategic planning. The followingguidelines may help you to get the most out of your strategicplanning experience.

1. The real benefit of the strategic planning process is theprocess, not the plan document.

2. There is no "perfect" plan. There's doing your best atstrategic thinking and implementation, and learningfrom what you're doing to enhance what you're doingthe next time around.

3. The strategic planning process is usually not an "aha!"experience. It's like the management process itself -- it'sa series of small moves that together keep theorganization doing things right as it heads in the rightdirection.

4. In planning, things usually aren't as bad as you fear noras good as you'd like.

5. Start simple, but start!

NEED CONSULTANT OR FACILITATOR TO HELP YOU WITH

PLANNING?

You may want to consider using a facilitator from outsideof your organization if:


to determine the strategies needed to address the issuesand meet the goals.

11. In general, where there's any doubt about whether acertain someone should be involved in planning, it'sbest to involve them. It's worse to exclude someoneuseful then it is to have one or two extra people inplanning -- this is true in particular with organizationswhere board members often do not have extensiveexpertise about the organization and its products orservices.

12. Therefore, an organization may be better off to involveboard and staff planners as much as possible in allphases of planning. Mixing the board and staff duringplanning helps board members understand the day-to-day issues of the organization, and helps the staff tounderstand the top-level issues of the organization.

HOW MANY PLANNING MEETINGS WILL WE NEED?

Number and Duration of Planning Meetings1. New planners usually want to know how many

meetings will be needed and what is needed for eachmeeting, i.e., they want a procedure for strategicplanning. The number of meetings depends on whetherthe organization has done planning before, how manystrategic issues and goals the organization faces, whetherthe culture of the organization prefers short or longmeetings, and how much time the organization is willingto commit to strategic planning.

2. Attempt to complete strategic planning in at most twoto three months, or momentum will be lost and theplanning effort may fall apart.

SCHEDULING OF MEETINGS

1. Have each meeting at most two to three weeks apartwhen planning. It's too easy to lose momentumotherwise.

planning, often including assigning a planningcommittee (often, the same as the executive committee).

4. Ask if the board membership is representative of theorganization’s clientele and community, and if they arenot, the organization may want to involve morerepresentation in planning. If the board chair or chiefexecutive balks at including more of the board membersin planning, then the chief executive and/or board chairneeds to seriously consider how serious the organizationis about strategic planning!

5. Always include in the group, at least one person whoultimately has authority to make strategic decisions,for example, to select which goals will be achieved andhow.

6. Ensure that as many stakeholders as possible areinvolved in the planning process.

7. Involve at least those who are responsible for composingand implementing the plan.

8. Involve someone to administrate the process, includingarranging meetings, helping to record key information,helping with flipcharts, monitoring status of prework,etc.

9. Consider having the above administrator record themajor steps in the planning process to help theorganization conduct its own planning when the planis next updated.

Note the following considerations:

10. Different types of members may be needed more atdifferent times in the planning process, for example,strong board involvement in determining theorganization’s strategic direction (mission, vision, andvalues), and then more staff involvement in determiningthe organization’s strategic analysis to determine itscurrent issues and goals, and then primarily the staff


Feedback is incorporated in the document and it isdistributed before the next meeting.

4. The next meeting does not require entire attention tothe plan, e.g., the document is authorized by the boardduring a regular board meeting.

5. Note that in the above example, various subcommitteesmight be charged to gather additional information anddistribute it before the next planning meeting.

6. Note, too, that the staff may take this document andestablish a yearly operating plan which details whatstrategies will be implemented over the next year, whowill do them, and by when.

7. No matter how serious organizations are about strategicplanning, they usually have strong concerns about beingable to find time to attend frequent meetings. Thisconcern can be addressed by ensuring meetings arewell managed, having short meetings as needed ratherthan having fewer but longer meetings, and havingrealistic expectations from the planning project.

HOW DO WE ENSURE IMPLEMENTATION OF OUR NEW PLAN?

A frequent complaint about the strategic planning processis that it produces a document that ends up collecting dust ona shelf -- the organization ignores the precious informationdepicted in the document.

The following guidelines will help ensure that the plan isimplemented.

1. When conducting the planning process, involve thepeople who will be responsible for implementing theplan. Use a cross-functional team (representatives fromeach of the major organization’s products or service) toensure the plan is realistic and collaborative.

2. Ensure the plan is realistic. Continue asking planningparticipants “Is this realistic? Can you really do this?”

2. The most important factor in accomplishing completeattendance to planning meetings is evidence of strongsupport from executives. Therefore, ensure thatexecutives a) issue clear direction that they stronglysupport and value the strategic planning process, andb) are visibly involved in the planning process.

AN EXAMPLE PLANNING PROCESS AND DESIGN OF MEETINGS

One example of a brief planning process is the followingwhich includes four planning meetings and develops a top-level strategic plan which is later translated into a yearlyoperating plan by the staff:

1. Planning starts with a half-day or all-day board retreatand includes introductions by the board chair and/orchief executive, their explanations of the organization'sbenefits from strategic planning and the organization'scommitment to the planning process, the facilitator'soverview of the planning process, and the board chairsand/or chief executive’s explanation of who will beinvolved in the planning process. In the retreat, theorganization may then begin the next step in planning,whether this be visiting their mission, vision, values,etc. or identifying current issues and goals to whichstrategies will need to be developed. (Goals are oftenreworded issues.) Planners are asked to think aboutstrategies before the next meeting.

2. The next meeting focuses on finalizing strategies todeal with each issue. Before the next meeting, asubcommittee is charged to draft the planningdocument, which includes updated mission, vision, andvalues, and also finalized strategic issues, goals,strategies. This document is distributed before the nextmeeting.

3. In the next meeting, planners exchange feedback aboutthe content and format of the planning document.


Consider all or some of the following to ensure the planis implemented.

12. Have designated rotating “checkers” to verify, e.g.,every quarter, if each implementer completed theirassigned tasks.

13. Have pairs of people be responsible for tasks. Haveeach partner commit to helping the other to finish theother’s tasks on time.

CONDUCTING STRATEGIC PLANNING

STRATEGIC ANALYSIS (ENVIRONMENTAL SCAN AND SWOT)

A frequent complaint about strategic plans is that they aremerely "to-do" lists of what to accomplish over the next fewyears. Or, others complain that strategic planning never seemsto come in handy when the organization is faced with havingto make a difficult, major decision. Or, other complain thatstrategic planning really doesn't help the organization face thefuture. These complaints arise because organizations fail toconduct a thorough strategic analysis as part of their strategicplanning process. Instead, planners decide to plan only fromwhat they know now. This makes the planning process muchless strategic and a lot more guesswork. Strategic analysis isthe heart of the strategic planning process and should not beignored.

(Note that some planners prefer to identify/update themission, vision and values statements before conducting thestrategic analysis. Others prefer to identify/update these itemsafter the strategic analysis. In this library, these items areaddressed as part of the next major section "Setting StrategicDirection".)

TRICK OR TREAT (OR WHY PLAN?)

I really wanted to put together an eye-catching costumefor Halloween this year, but I didn't make the deadline. On

3. Organize the overall strategic plan into smaller actionplans, often including an action plan (or work plan) foreach committee on the board.

4. In the overall planning document, specify who is doingwhat and by when (action plans are often referencedin the implementation section of the overall strategicplan). Some organizations may elect to include the actionplans in a separate document from the strategic plan,which would include only the mission, vision, values,key issues and goals, and strategies. This approachcarries some risk that the board will lose focus on theaction plans.

5. In an implementation section in the plan, specify andclarify the plan’s implementation roles andresponsibilities. Be sure to detail particularly the first90 days of the implementation of the plan. Build inregular reviews of status of the implementation of theplan.

6. Translate the strategic plan’s actions into job descriptionsand personnel performance reviews.

7. Communicate the role of follow-ups to the plan. Ifpeople know the action plans will be regularly reviewed,implementers tend to do their jobs before they’rechecked on.

8. Be sure to document and distribute the plan, includinginviting review input from all.

9. Be sure that one internal person has ultimateresponsibility that the plan is enacted in a timely fashion.

10. The chief executive’s support of the plan is a majordriver to the plan’s implementation. Integrate the plan’sgoals and objectives into the chief executive’sperformance reviews.

11. Place huge emphasis on feedback to the board’sexecutive committee from the planning participants.


PLANNING IS A PROCESS NOT A PRODUCT

Don't run away. Planning is only a tool.

The word "plan" evolved from Latin and originally meanta plane, or level ground, a plain. Let's start where planningbegins. Beyond the Latin, beyond MBA school, what does"planning" mean, anyway?

Planning is the equivalent of consciousness amongorganisms. It does not preclude or subvert instinct, but addsa layer of awareness that spells the difference between survivaland extinction in a changing environment. Planning may ormay not involve a stack of paper. It does involve:

An honest understanding of an organization's history.

A systematic examination of an organization's environment.

The rigorous assessment of an organization's mission.

Clear vision of organizational goals.

A mapping process presenting ways of reaching thosegoals.

An inclusive, collaborative process for gatheringinformation, ideas, opinions and intuitions on which goals anddecisions are based.

A realization that planning never stops.

THE VELOCITY OF CHANGE

Does it seem that the world around you moves more quicklythan it did even five years ago? That's because it does. Theincreasingly unrestricted international movement of capitaland its increasingly vertical integration in business and industryare the major reasons, with the effects of this unleashedeconomic torque radiating into politics, culture, and civic andsocial life.

Rapid advances in information management andcommunication technology give extra spin to both the

October 31st I ended up limply draped in a half-hearted, last-minute amalgam of odds and ends cobbled together fromwhatever happened to be randomly lying around the house.It could have been so much better.

Instead, my celebration of All Hallow's Eve was spentkicking myself for my lack of . . . something. Not foresight,because I started thinking about it a month early. Notcommitment, because for the first time in several years I actuallywanted to dress up. I mean, it's just a lousy costume, howcomplicated can it be? Come up with an idea, get the materials,make it. My schedule got a little complicated as calendar pagespassed, but why couldn't I pull it all together?

"It could have been so much better." I've heard artsorganization staffs say the same thing; but, instead of referringto a Halloween costume, they were talking about a half-successful season, or promotional campaign, or arts educationcollaboration with another organization. For them, however,the consequences of these fizzled projects ranged frominconvenience to bankruptcy, however.

What linked us all was a lack of planning. Theseorganizations had not conducted any meaningful planning.

Why didn't we plan? In my case, because I am a naturalslacker. And the organizations? Because--pick one:

Planning is anal. Plans are for businesses. Plans arestraitjackets. Plans are just stacks of paper that sit on a shelfand are never used. Plans are out of date as soon as you dottheir last 'i'. Plans give the board a weapon to use against staff.Plans give staff a weapon to use against the board. Plans arejust busywork for consultants. Plans for arts organizations arelike discussing neurophysiology while you're looking at arainbow. Plans are just transcripts of the executive director/board chairs/artistic director talking to him/herself. Plans arejust written for funders.

So much misunderstanding, so little time.


BAMBI MEETS GODZILLA

In arts organizations, members of the artistic staff oftenshy away from planning, feeling that it leaves no room forserendipity or magic or the simple changing of minds. Oftenthis perception results, like many of the misconceptions relatedto planning, from experiences with bad processes masqueradingas planning. In truth, an arts organization's planning processshould mimic the creative process and be just as open andflexible. The process of strategic thinking becomes by far themost important part of planning, and the absorption of suchthinking into everyday organizational life the most importantoutcome.

A plan can begin with an honest, income-based budgetand a budget narrative. How much beyond this basic foundationan organization needs to build a plan depends completely onthe organization. However, artistic staff are critical to theprocess without them, there is no plan. The heart of an artsorganization is its art, not its fundraising or its marketing oranything else. The unique artistic vision of each organizationis what it contributes to the world, and from this springseverything else.

When pursued correctly, the planning process fosterscreativity, rather than creating fossils.

RIGHT YOU ARE

The business world voraciously sucks up useful ideas,regardless of their origins. The arts must be equally voraciousin looking for any edge that can be found. Planning may havecome to the arts from the corporate world, but so what?

An arts organization is still an organization. It producesart and services. It must find the human and other resourcesneeded to make its products, it must use those resources asefficiently and effectively as possible, and it must get its productsto as large an audience as possible or appropriate. Viewing

perception and the reality of change. As populations and citiesand cultures and industries and philanthropy and governmentalter and morph in increasingly mercurial ways, organizationalmanagement demands a different attitude than that demandedeven in the early '90s.

No need to recite the further list of social, governmental,economic, electronic, cultural, and other forces currently shiftingthe foundations on which the arts have built their organizations.Suffice it to say that it is courting disaster to run an artsorganization without some kind of planning process in place.

Moving forward in cycles.

Always coming back to the source,

completing the circle.

Bringing visions into reality.

We all hold part of the truth, the vision.

Spirit of creativity is in the center.

Declaring your vision like

a sacred oath on the pipe.

Keep your word-straight as the stem.

-- Design Planning Process, National Museum of theAmerican Indian, Douglas Cardinal Architects PC

MASTER OF SITUATIONS

Being "master of situations" is how Duke Ellington describedhis philosophy as band leader. Planning means not necessarilypredicting the future, but anticipating a range of likely futuresand being prepared for them as they rush toward you at thespeed of change.

Planning represents a kind of surfing, seeing event wavescoming and catching them, riding rather than being poundedinto sand. Gnarly, dude!


construct processes for creating their futures that are not fueledby the energy of crisis and turmoil. It can be done.

Another tendency of planning driven by the wrong energyis to segment or compartmentalize, to plan for a componentof an organization's operation. A healthy organization,however, represents a balanced and intertwined web of systemsand operations. Especially in small organizations, everythingdepends on everything else. It's not possible to consider aparticular program in isolation from others; the wholeorganization must be included in any attempt at organizationalthinking.

ONE SIZE DOES NOT FIT ALL

Every organization is unique in its history and culture,and, it is to be hoped, in its mission. Every plan should reflectthat uniqueness; there is no standard model appropriate forevery organization. As a corollary: any outsider (e.g., aconsultant) should be involved in a process only as a facilitator(or, if a document is involved, as an editor). The real work ofplanning can only be done by an organization's artistic andadministrative leadership, in collaboration with staff, focusgroups, community groups, peers, or whoever else leadershipdeems necessary to the process. A planning process in whichan outsider played a key decision-making role is sure to beabout something, but not about the organization.

THE BOTTOM LINE

Plans are first and foremost for organizations, but it is truethat funders, especially corporate funders, may predicate theirpotential support for an organization on the organization'sability to demonstrate a clear strategic vision of its future.Smart organizations know that planning not only offers concreteand immediate results in shaping an organization's future, butit is also an increasingly necessary prelude to developingrelations with funders.

operations from a pragmatic vantage is not being corporate;it's being smart. The days of taking pride in lack of businessacumen and administrative ability should be over, for such(misplaced) pride represents a luxury no arts organization canafford.

Planning is what allows the vaunted entrepreneurial modelto succeed; you make your own luck, and place yourself inposition to be able to take advantage of opportunities whenthey pop up. It also helps you weather adversity. That's whybusinesses plan because planning produces results.

THE BOTTOM LINE

If key people in an organization balk at planning becauseof a fear of possible failure in pursuit of goals, or in fear ofbeing held to standards, then problems run deeper than FOP(fear of planning) and must be dealt with before real planningcan begin. Appropriate planning involves the crafting ofexpectations in collaboration with those responsible forimplementation.

Honest planning can uncover long-buried problems andstir up considerable stress, as assumptions and understandingare tested. Usually this is a positive thing, forcing anorganization to deal with rather than avoid issues. Sometimes,the process reveals unbridgeable rifts and the organizationsuffers. Here, however, planning serves only to accelerateinevitable outcomes.

Planning means developing self-knowledge. Just as thiscan be scary in individuals, this discovery process producesanxiety for organizations. Healthy organizations work throughthe anxiety. The result is wisdom.

EMERGENCY MEDICINE

Organizational planning, when it does occur, too often isspurred by crisis, focused on the short term, and not wellthought out. To create healthy futures, organizations must


something to upset the most careful of human calculations."Robert Burns, the bard of 18th century Scotland, put it asfollows: "The best laid schemes o' mice and men/Gang aft a-gley." I cannot name the late-20th century wit who coined theresonant phrase "Shit happens," but whatever elegance it lacksin comparison with its predecessors it more than makes up ineconomy of expression.

If the wisdom of the ages won't suffice to make this point,consider only the top layer of recent human events, thehappenings big enough to make banner headlines.Notwithstanding global intelligence operations, includingunlimited access to computer simulations, who was able topredict the fall of the Berlin Wall? The Velvet Revolution inCzechoslovakia? The end of apartheid in South Africa? As Iwrite, headlines trumpet the top-speed collapse of the Asianeconomic miracle, long-touted as a triumph of economicplanning. Who would have guessed?

Planning cannot guarantee the outcome you want. Instead,it can help you to achieve something integral to any futuresuccess: readiness to face the challenges that chance presents.Rule number one for coping with challenges is to know whatyou're up against. Allow me to offer some of the pitfalls ofplanning in the hopes that forewarned, you will be forearmedagainst them.

PLANNING IS ONLY AS GOOD AS THE INFORMATIONON WHICH IT IS BASED. Too often, groups rely on untestedassumptions or hunches, erecting their plans on unsteadyground. Everyone "just knows" there'll be no problem gettinga distributor for a video, or that it would be impossible to findfunding for a new facility; or it's "obvious" that a half-timeperson would suffice to accomplish a brand-new and sorelyneeded task. It's the obvious things that everyone just knowsthat are most likely to trip you up. We were once called in tohelp a client who'd gotten into a lot of trouble by assuming

PIXIE DUST ON MY CLEATS

Anyone ever involved with the creation of any art knowsthat it is hard, unromantic work, built on, in most cases, yearsof dedication and practice, and lots of humbling failure. Inspite of stereotypes fostered by pop culture and Hollywoodconcerning the creative process, being in "the zone" goingmano a mano with The Muse is a small part of the birth processfor a stage work, poem, painting, or any other artistic endeavor.The larger part involves a series of decidedly practical andtechnical processes. It's dirty, dangerous work, and I can'torder anyone to do it. Any volunteers? (Oh, sorry, just wanderedoff there into that WWII movie I saw last night.)

Regardless of the effortless magic of the final product,behind the scenes is a lot of sweat and duct tape. Therefore,does it make sense to believe planning is somehow antitheticalto the diaphonous spirit of creation? (After all, artists mostoften begin the process of making a particular work by craftinga plan: sketches, studies, storyboards, outlines, maquettes, etc.)It is my experience that the gossamer spirit is a tough, hungryold buzzard that's pretty hard to kill (it has to be) and interestedonly in its own stomach, which it will fill by any meansnecessary. And planning is way more useful than duct tape.

PLANNING . . .

like fire, is a tool of enormous latent value. This value,however, depends completely on what you do with it. You canlight a cigarette with it, or you can use it to heat the air in aballoon and circumnavigate the globe. Or you can -- well, it'sup to you, isn't it?

THE PITFALLS OF PLANNING

The main pitfall of planning - the one from which all othersderive - is falling into the delusion that planning can determineoutcome. The error of this proposition is a commonplace. In17th century Japan, Ihara Saikaku wrote "There is always


future the way one builds a house. If things don't go accordingto plan, they blame other people's failure to "get with theprogram."

But an organization isn't an artifact to be set in place withplanks and nails. In contrast to a construction project,organization-building is never complete; like all life-forms, anorganization's choices are to continuously adapt or die. Ratherthan planning as if the future were pre-determined, plan forflexibility. Plans that can't be changed shouldn't be written.

PUT PLANNING IN ITS PLACE AND TIME. Some groupsdon't recognize that it takes time and effort to plan well. Theywant the results, but aren't able or willing to make theinvestment.

They end up in the worst of both worlds: their ongoingwork is set back because they took time to plan without thinkingthrough the implications; and their too-rushed plans end uphalf-baked ideas. Be realistic about what you can invest. Finda way to plan that suits your available resources - time, energy,money.

TOO MUCH OF A GOOD THING: PLANNING CANBECOME A SUBSTITUTE FOR ACTION. Times have beenhard for many nonprofit organizations. One of the ironies offunding cutbacks in recent years is that it has sometimes beeneasier to obtain support for planning than for programming.Some funders evidently believe that merely talking about self-sufficiency - to pick just one example - is a perfectly good wayto achieve it.

This can lead to an obsessive internal focus: fleeing theindifferent outside world - the "big world" - people retreat tothe "little worlds" of their organizations, where they can atleast have company in their misery. "They're always havingretreats to figure out who they are," someone recently said ofa well-funded but aimless organization. "That's a bad sign."

it would be a snap to solve a problem that had stymied itswhole field for years.

The client's optimistic pronouncements were greeted bythe field as arrogant examples of unjustified self-confidencethat could only have been based on disrespect for other'sefforts to solve the same problem.

The client had to do a lot of apologizing and fence-mendingthat could have been avoided if only they'd taken the time tofind out how others had attempted to address the problem inthe past. Not only that, the basic assumption was wrong: mostof the "new" solutions the client had put forward had alreadybeen tested by others and found wanting. If you're going toplan, it's worth the extra time to test assumptions and hunchesagainst reality.

PLANNING ISN'T MAGIC: YOU CAN'T ALWAYS GETWHAT YOU WANT. Frequently, organizations contemplatingnew initiatives - a program, a facility, staff expansion - beginby writing the last page of their plans, the one where everyonelives happily ever after. But the process of planning is one ofresearch and investigation.

Results can no more be predetermined than can the outcomeof a scientific experiment. Considering a major expansion ofactivity means taking stock of organizational readiness in manyways. Is there a need for the new activity? An audience orconstituency? Do you have access to the expertise? The materialresources?

The time required to do it right? Planning is a tool that canhelp you decide whether to go forward, not just how. If theanswers to key questions are "no," then the outcome of planningshould be to postpone the contemplated expansion, workingtoward readiness to tackle it farther down the road.

ADAPTABLE BEATS OBDURATE, ANYTIME. Someplanners see themselves as creating a blueprint, building a


you on what it should be. Organizations, multiplying thecomplexity and diversity of their individual members, deserveto find their own paths rather than being pulsed through anorganizational assembly-line. In planning, insist on your rightto march to a different drummer.

WRITING IT UP IN PLANSPEAK RATHER THAN PLAINLANGUAGE UNDOES THE GOOD OF PLANNING.Sometimes organizations have great face-to-face planningexperiences: good discussions, moments of profound insight,the excitement of contemplating future possibility, the elationof a meeting of the minds.

But feelings don't last long: they need to be carried forwardinto action, guided by a written plan. Some planning documentsare so vague, abstract, and general, they're useless to the peoplewho invested so much in considering their futures. Typically,an aim is listed - "become self-sufficient in five years" - andbeneath it, phrases suggesting a range of ways to advance thataim: "expand earned income," "secure individual donations,""develop endowment."

As time goes by and the memory of the face-to-faceexperience fades, the planning document's generalities aredrained of any meaning that might once have clung to them.If you are going to take the time to plan, do it right: talkthrough alternative scenarios for realizing your aims; map outways to test them; be concrete about guiding values, deadlines,ways to evaluate your experiments.

Put enough flesh on the bare bones of your plans to keepthe document alive and kicking, or it will be buried in a drawerbefore the ink has dried.

To speed you on your way, I offer a small selection of sageefforts to describe the future by people who were no doubtsmarter, braver, or more intoxicated than either you or I. Theywere also wrong - or the truths they hit on were so partial as

WHAT GOES AROUND, COMES AROUND: GROUPSCAN BE BLINDSIDED BY THE ISSUES THAT PLANNINGREVEALS. There's a mollifying rhythm to the daily grind, asdiligence, deadlines, and distractions keep tensions and conflictsat bay. When an organization pauses to plan, what's beensubmerged may come up for air.

Suppose everyone is asked to dream of future roles orprojects, and two staff members' dreams come into majorconflict? Suppose there's a discussion of workplace culture,fingers are pointed, defenses mustered, rifts revealed?

When an organization undertakes to plan, everyone shouldbe made aware that issues may arise that need talking through,that there may be moments of heat, struggle, even head-oncollision. Your planning process should include the time, focus,and talent for the mediation needed to resolve such conflicts,so you can turn to face the future as a team.

BOILERPLATES AND COOKIE-CUTTERS ARE THEWRONG TOOLS FOR THIS JOB. Some planners opt for a"model" approach: all dance companies are supposed to developthis way, media centers that way; here are the seven stages ofmuseum development; follow the ten "best practices" ofcommunity arts councils.

It's not that other organizations' experiences aren't relevantto your own. Sometimes they're perfectly germane. But notoften. Perfect congruence is more likely to be a fortuitousaccident than an application of science: even a broken clockis right twice a day. Think about how complex and variousindividual human beings are.

Even if I were equipped with a database of the ways thathundreds of individuals roughly your age and backgroundhad behaved in a variety of situations, in competition withyour partner or best friend, I could never hope to win a gamewhose object was to guess your next move - let alone advise


canceled by each other, resulting in a stationary system. Today,a static, stationary condition for any arts entity is deadly. Amore suitable metaphor for dynamic balance is a tightropeartist.

On the tightrope, the artist is intensely aware of her/hiselements of balance--center of gravity, focus, weight andcounter-weight, and controlled movement--and uses theseelements to move and perform. As long as the artist is movingand balanced, stability and confidence is maintained.

Tightrope walkers perform and maintain stability throughdynamic balance; so must arts organizations. Likewise, anumber of elements--leadership, vision, the equation, andprocess--frame and define dynamic balance for each arts entity.

Leadership. For each arts organization, professionalleadership must clearly and unquestionably be in place andleading. The first responsibility of professional leadership is todefine and describe reality.

The leadership is uniquely positioned to see and understandthe entire reality of the organization. Others on staff and boardmay have pieces of the picture, but they don't have a completeview. Describing reality through a fragment of the whole canbe misleading, often distorting. Today, arts organizations mustview their environment and their conditions in cold, hard,truthful terms--there is no place for self-deception orromanticized notions of the organization's reality.

Inevitably, an arts organization will direct its resourcestoward the reality described or implied. In the past, whenresources were more plentiful, perhaps reality could be deniedor deferred. Today, resources are too scarce, and reality mustbe dealt with head-on. No organization can afford to expendgood human, financial, and spiritual resources on an activitythat does not contribute 100% to the health and progress ofthe work and the organization.

to be entirely inadequate - which brings us back to the pointabout planning: not to be right, but to be ready.

A DYNAMIC BALANCE

Planning deliberately and strategically creates change whichmoves the work and the organization towards their nextevolution. Sometimes this change is subtle and sequential,other times dramatic, even chaotic. In either case, the key ismoving forward in a stable and confident way by maintainingdynamic balance.

Stability through dynamic balance allows an organizationto create opportunities it needs and wants, take advantage ofopportunities presented, and effectively address the artisticand operating challenges that endlessly crop up.

In today's environment, what does it mean to be a stableorganization? Unfortunately, stability has come to be anabsolute concept in an increasingly relative and highly volatileenvironment.

Over the years, programs of stabilization and capacity-building have promoted a unified theory of stability throughforce of proclamation and programming; when that failed,through guilt and blame. We now have a generation or twoof arts organizations that have been advanced, challenged,stabilized, and capacity-built into abstraction--or even out ofbusiness.

In the real world, each arts entity must define what stabilitymeans to it alone. No outside person, program or agency canpossibly know enough about any single arts organization todefine stability for it.

We don't attempt to quantify stability. We believe thatstability is qualitatively connected to dynamic balance. In thisregard, balance is not the same as equilibrium. By definition,equilibrium is a condition in which all acting influences are


current realities and divert attention from day-to-day problems).But, in the short term, the planning process can and must beemployed to reestablish dynamic balance.

Reconceptualizing the Equation. No planning process canreconcile an organization to an incorrect equation. When theequation is wrong it must be changed. For many, theorganizational equation cannot be balanced by traditionalmeans (selling more tickets or raising more money).

In such instances the leadership must create a neworganizational equation with variables that respond to reality.We are not talking about downsizing, or attempting to do thesame amount of activity with fewer resources.

Reconceptualizing means fundamental change, a totalredesign and restructuring from the inside out. For example,a dance company attempting to operate on a $1 million budgetfinds that it may end the year with a $200,000 deficit. Ratherthan asking "how do we do $1 million of activity with $800,000?,"reconceptualizing asks "what kind of dance and dance companycan we create for $800,000?"

The planning process must provide an understanding ofthe kind of equation possible; what the new equation willmean to the overall vision and mission of the organization;who are the key people involved and who else needs to beinvolved; how will opportunities and resources be secured orleveraged to maintain a healthy, productive organizationalequation.

Reconceptualizing does not mean that growth will not bepossible later. But an important part of the planning processis to redefine growth. Are there qualitative aspects of growththat need to receive greater attention and focus, such asdeepening the relationship with existing audiences? In somecases, by reconceptualizing, the planning process may revealsome areas of quantitative growth not possible before.

Vision. The second and most important job of leadershipis to provide a vision for how this reality is going to be changed,altered or addressed. Is there a clearly articulated,communicated, understood and agreed-upon mission, vision,and direction of the work and the organization? Is the workand the organization's direction being shaped by clearlyarticulated values and beliefs? Positive change for an artsorganization follows vision and values; if not, the change canbe reactionary or purely reactive, detached and even delusional.

The Equation. For each arts entity there is an equation thatdefines the balance between (1) what the organization needs,hopes or wants to do artistically and programmatically, and(2) the available human and financial resources. In years past,when the balance was found, an organization could expect tosustain the equation for a while, sometimes several years.Today the equation has to be defined and balanced over andover again--certainly for each operational year, possibly everysix months or even less.

Correcting Balance. The effectiveness of a short-termplanning process is the best test for long-term application.Likethe federal government, an arts organization cannot do anythingcreative or significant if it is seriously overextended, in debt,or in crisis. It's axiomatic--if left alone, out-of-balanceorganizations tend to grow increasingly dysfunctional. Anout-of-balance situation must be acted upon and correctedimmediately to stop the hemorrhaging. It's imperative notonly to prevent long-term damage, but to help the organizationregain a sense of health and energy.

To reclaim balance, the professional leadership must takean honest look at reality. Clearly outlined, immediateintervention or short-term actions may be needed to "stanchthe bleeding" and bring the organization into balance.

Long-range planning can't solve short-term needs andproblems (too often, long-range planning is a way to avoid


THE DOUBLE-CROSS OF DOWNSIZING

Downsizing is a failed approach for arts organizationsbecause arts organizations start out downsized. Artsorganizations never have all the people or money they need.Maybe IBM and GM can lay off 50,000 people and call ittrimming the fat--arts organizations can't. When arts entitiesdownsize, they often make cuts in human resources, marketingand production--usually the areas which produce the resourcesneeded to close the gap. The result is almost always anincreasing gap and a worsening imbalance. Thus, downsizingoccurs as a reaction and accommodation, not as a strategicresponse or as part of a process to create a healthier situation.In the majority of cases, downsizing to achieve organizationalbalance is implemented during the final quarter of the fiscalyear when it becomes clear that the budget won't balance. Theoptions to leadership for cutting expenses are limited and mostoften, the cuts drive deeper and are far more damaging in thenext year, as the organization tries to regroup. As a result theorganization is weaker, often demoralized, and prone to repeatthe same behavior again and again.

Process. The organization must have a process--a meansto achieve and maintain stability and dynamic balance on anongoing basis. Is there a way to take calculated steps andactions to alter conditions, solve problems, or achieve neededand desired results? If so, no matter what internal or externalchallenge confronts the organization, the process can guideleadership toward making the best responses. However theworld or conditions change, the organization can use the processto chart another course.

The planning process, like the creative process, must be aneffective confluence of conceptual, collaborative, problem-solving, decision-making, and performance elements. If theframe of reference for planning is the creative process, how isa vision for a work or program conceptualized and articulated?

How are conditions, opportunities, and problems framed andidentified? Who are the collaborators who shape the vision,work or program? How do decisions get made, who makesthem, and how are they implemented? The planning processmust be constantly informed by the creative process for focus,guidance, perspective, and method. Whenever we encountera problem in a planning process or in an organization's life,we ask the professional leadership how they would deal withthe problem if it were in rehearsal. Or, if it is a really bigproblem, we ask how they would make a work about it.

By mirroring the artistic process, planning becomes asorganic, logical, and effective as the most effective thing theydo (making art), and therefore repeatable and replenishable.Today, those who plan and reconceptualize their organizationseffectively must realize that they will have to repeat the processas conditions and challenges change.

Strategic Management and Business Management The Pillars of Planning: Mission, Values, Vision208 209

end, you'll pay for it later. In our consulting practice, we'reoften called in to work with organizations when their staffs orboards are locked into what are described as "personalityconflicts." A little exploration reveals not irreconcilablepersonalities, but real differences on issues about governance,finances, purpose and program. The contenders' personal stylesand entire beings have come to stand in for unresolved tensionsconcerning mission, values, and vision. John is a compulsiveorganizer; he's worried about taking risks, especially financialrisks. Lisa is spontaneous and improvisatory; she's worriedthat the organization will lose its soul by pinning everythingdown. Each has collected a little camp of supporters, and everyissue that comes up is ammunition in their competition. Noone is talking about the deeper questions this competitionobscures: what they want to accomplish as an organization,and what measure of risk-taking and improvisation areappropriate to that mission and their values. At this stage, ittakes extraordinary time and effort -- and no small measureof mutual forgiveness -- to get the organization back on trackagain.

The time to articulate mission, values, and vision is nowat the outset of an organization's life, if possible, and at thefirst opportunity if the organization is already underway. Eachelement has its distinct characteristics and role in organizationallife:

MISSION is the raison d'etre for your organization, whyit exists. The original founders' intentions - what they wantedto achieve by starting the organization - must be reexaminedand refreshed periodically if an organization is to remaindynamic.

VALUES manifest in everything you do as a group, notonly your public programs, but also how you operate. Forinstance, one organization may identify access as a primaryvalue; when they plan programs, they think foremost about

8

The Pillars of Planning:Mission, Values, Vision

His inability to grasp "the vision thing" was an importantpart of George Bush's undoing in the '92 election; but he's notthe only one to have a hard time articulating wishes anddreams for the future. In over twenty years of consulting withorganizations of every stripe, I've seen again and again howgroups are brought to crisis by conflicts over basic issues ofmission, values, and vision. Without these basic agreements inplace, no organization is truly viable.

Mission, values, and vision are the glue that holds anorganization together. They describe what you're trying to do,how you want to go about it, and where you're headed.Knowing these things helps to keep your organization ontrack. It gives you a yardstick you can always use to measureyour present performance and plans against your aspirations.

They also sound abstract, new age, and downright jet-puffed to a lot of people, especially those who are burning tomove forward with a real-world project, and don't want tohang back jawboning about people's wishes and dreams. Manypeople who style themselves as "pragmatic" get away withskipping over this important stage of building a strongfoundation of consensus for their organizing. If you don't takethe time to articulate mission, values, and vision on the front


argument. Many other approaches are also possible, such as:A series of interviews, posing questions on mission, values,and vision to all the key people, then writing up their responsesand circulating them as a foundation for group discussion;

Asking each individual to complete a survey or write upa personal statement, then circulating the results to help definethe range of people's thinking;

Asking individuals with strong ideas to write up a seriesof short discussion pieces exploring themes and proposingsolutions; or

Using media -- video or audio interviews, or othercommunity arts techniques -- to "draw a picture" of the activitiesand end-results people imagine, then exhibiting the results ata meeting.

On the grandest scale, a group with the large ambition ofserving the entire community can enlarge the process by invitinga wider public to contribute to their vision through communitymeetings or arts events. Using methods such as those listedabove can bring more people into the envisioning process,demonstrating the organization's commitment to listening.

Not everyone approaches articulating mission, values, andvision in the same way. It's important to recognize and respectdiverse approaches to questions of ultimate purpose in a group.Some are fired with a passionate vision of something specificthat needs doing. Others have a more general view of howthey'd like the future to look, and more tentative notions abouthow to get there. Still others do best at identifying and analyzingproblems and working through to solutions. Others may bemotivated by the desire to work with people they respect oradmire, or to get to know new people with whom they shareinterests. Different ways of defining a group's mission andvalues may seem foolish or even alarming to some organizers;but organizations are strongest when many aptitudes, interests,and points-of-view can pull together.

how to remove the barriers and encourage the widest possibleparticipation. Another group might value quality of artisticperformance above all else; when they assign budget priorities,they opt for artistic expenditures above all others. Articulatingvalues provides everyone with guiding lights, ways of choosingamong competing priorities and guidelines about how peoplewill work together.

VISION is what keeps us moving forward, even againstdiscouraging odds. For example, a media-literacy group mayenvision a nation where every child knows how to talk backto television. Vision is the most powerful motivator in anorganization. If it's vivid and meaningful enough, people cando astounding things to bring it to realization. But if it's lacking,no amount of resources will be able to get people off theirbutts.

Most people can relate to a personal vision, their personalvalues, their mission in life. But when two or more peopleagree to work together, the difficulties of arriving at sucharticulations multiply. When you want to bring new peoplein, you must give them ways to participate in the vision of theorganization. Everyone's preferences and abilities must be takeninto account for a group to work together optimally. What thismeans practically is that group members need focusedopportunities to exchange ideas and make decisions aboutgroup mission, values and vision.

Exploring and agreeing on fundamentals of purpose andprocess most often takes place in face-to-face group meetings,through facilitated discussion. One way to focus such a meetingis to lead a "guided fantasy" of the group's activities five orten years down the line, then discuss the ideas it brought upand have a working group prepare a draft after the meeting,summarizing the results. Doing an exercise like this canencourage people to develop their visions, looseningimaginative powers rather than falling into a polarized


"SURROGATE" ISSUES: Symbolic or theoretical disputemay be hiding concrete conflicts over organizational turf,budget priorities. Who will be president? Who will choose theprograms? When you see issues and dynamics such as thesearising in discussions of mission and vision, point this out andagree to take up these practical questions later in the planningprocess, refocusing fellow group members on the task at hand.

MAINTAINING FORWARD MOMENTUM: People caneasily get diverted into minutiae. A casual reference to apersonal pet idea may trigger a heated argument among yourerstwhile happy planners and threaten group consensus.Sometimes this is just because certain people find it easier todiscuss concrete details than large issues. Help people regainperspective and move on, noting issues to bring up later inyour planning process.

RECOGNIZING IRRECONCILABLE CONFLICTS: Notevery group or project is meant to be. Not every organizer'senthusiasm and vision withstands the cold light of reality.Timing is all -- or nearly all: material support is pretty vitaltoo, and so is person-power. Early discussions of values andvision are the best possible time to be evaluating whether itreally seems advisable to go forward. Recognize the risks you'retaking, and accept the possibility of failure. If a little voice tellsyou this is not the time, don't ignore it without seriousconsideration. The stage of talking about mission should beearly enough to give you the opportunity to back out. Perhapsthe group of people isn't right, the organization doesn't seemviable. If so, it's time to rethink.

In my experience, mission, values, and vision don't comeneatly packaged in separate mental compartments. Instead,they are braided together in people's hearts and minds. Forplanning purposes, I have always striven to keep the processas open as possible. Instead of focusing a group on filling ineach separate blank of mission, values, and vision in turn, I

Since questions of mission may evoke differing bedrockassumptions, discussing them can be complicated. Participantsin such discussions must be aware of many considerations:

THE GENERAL AND THE SPECIFIC: There's room forboth general-purpose and specialized projects in the pantheonof community organizations.

General aims - such as making our community a betterplace through the arts -- may bring more people of diverseinterests together, leaving room for many things under theorganizational umbrella. But highly specific goals - conductinga high-quality dance school and sponsoring two performancesa year - can help keep a valuable activity going for years.It's important to sort out such basic issues of organizationalfocus early, before a lot of time has been invested by peoplewith significantly different aims who might feel burned lateron.

DEALING WITH SYMBOLIC CONFLICT: Red-herringquestions have polarized and short-circuited culturaldevelopment discussion for decades. How many hours ofagonized twisting in one's seat have been wasted on the falsedichotomy of "quality versus community," to cite just oneexample? If you find people standing off like stags on eitherside of some conceptual clearing, pause and ask what elsemight be going on beneath the surface.

"Quality versus community" most often masks a conflictover resources. Group members who find themselves facingsuch symbolic conflicts should ask, "What are we reallyconcerned about here? What might our group do to pursuequality that could harm community participation? What mightour group do to pursue participation that might harm quality?Do we have a vision of an organization that can work on bothof these at once?" Don't let polarized theorizing break downgroup consensus. Instead, try to enlarge the group's vision sothat consensus may be maintained.

Strategic Management and Business Management214 Understanding Current Realities 215

9

Understanding CurrentRealities

Your Development Director has just resigned, effectiveimmediately... your Board members don't seem to have a clueabout their roles and responsibilities... the past fiscal yearended with a surplus-first time in three years!!... the buildingwhere your theater is housed was just put on the market-you've been given six months notice to vacate... your exhibitionshave been getting rave critical reviews, but attendance andmembership are at an all-time low...

The above comprises just a small sampling of what maybe an organization's "Current Realities" - those existingsituations, obstacles, issues, conflicts, challenges, circumstances,and positive and negative attributes that constitute and definean organization. Understanding these realities is a crucial initialstep in the strategic planning process.

First and foremost is the development of your vision (Phase1): the clear and compelling view of your organization in thefuture, encompassing your hopes, desires and aspirations forthat future. After the vision has been articulated, it is criticalto have a comprehensive and objective-or at least reasonablyobjective-perspective of your organization's "Current Realities"(Phase 2): its strengths, weaknesses, assets, obstacles andchallenges.

invite everyone to share the entire picture of what they'd liketo see the group doing and how. For some people, it will bemost comfortable to focus on the purpose of the organizationitself: its mission. Others will naturally begin imagining howthe world will change as the result of the group's work, thearray of things they'd like it to do: their vision. And others willfind themselves thinking first about how the kinds of groupsthe organization should involve and how they should workwith each other and the public: elements of the organization'svalues. After welcoming all these contributions, planners caneasily review the results of the brainstorming session andharvest what is needed to formulate mission, values and visionstatements. The alternative approach -- trying to engage awhole group of dreamers in drawing fine distinctions betweenwhat's a vision and what's a value -- can easily dampenenthusiasm and cooperation.

Strategic Management and Business Management Understanding Current Realities216 217

the process can help prioritize them, possibly leading torelatively straightforward solutions or helping you determinewhere longer-term assistance will be required.

For example, you might discover that your audience lists,donor records and accounting system are in separate formatsand incompatible software. Concurrently, you learn that yourMarketing Director has a knack for computers and has beensilently fuming about the organization's inability to accessmuch needed information. Solution: have her redesign andstreamline the database. Perhaps it's not part of her jobdescription, but if the expertise is available-and the softwarelimitations have prevented her from accomplishing primaryresponsibilities-then having her work on it will only benefitthe organization in the long run.

Learning about an employee's or Board member's specificskills or interests is only one way conducting an assessmentprocess provides new insights into your organization.Assessment will also reveal where consensus lies among Board,staff and community members, and where there might beconfusion, or even conflict, about the organization, its mission,programs and policies.

And significantly, assessment engages people in the process,and therefore in the decision making for the organization'sfuture. Assessment is the essential starting point to realizing-or strengthening-a shared vision, and provides the opportunityto energize, motivate and even inspire people. Without question,the more involved and comprehensive the assessment processand the more invested the participants, the more apt they areto "buy in" to the plan from the onset, to see it through and,most critically, to ensure that the plan is implemented.

DISCUSS THE UNDISCUSSABLE

Objectivity is the key to a successful assessment process.The assessment methods employed should be designed in a

These first two steps are fundamental components tosuccessful planning. Quite simply, if you don't know whereyou're starting from-or what your starting with-it's difficult oreven impossible to determine the most effective, practical steps(Phase 3) to successfully realize the future envisioned for yourorganization.

CURRENT REALITIES

Ideally, an examination of "Current Realities," otherwiseknown as an assessment process, should look at an organization(w)holistically, encompassing its:

Mission and history

Programs and services

Governance

Infrastructure

Human resources

Fund development

Marketing

Financial management

Public relations

Planning and evaluation methods

The design and implementation of an organizationalassessment provides the essential foundation for planning. Ifthe process begins "grounded" in reality, the action steps andstrategies devised will have a significantly greater likelihoodof being successfully achieved.

YOU'VE GOT TO IDENTIFY THE PROBLEMS BEFORE YOU CAN SOLVE

THEM!

An assessment process is not designed to resolve issues,but to identify and define organizational strengths andweaknesses. As challenges, needs or shortcomings are revealed,


Determine how best the information can be obtained, takinginto consideration:

Time constraints

- the amount of time necessary to implement a method

- amount of time available to implement

Human resource requirements

- will additional staff be needed?

- will specialized skills be needed?

- will the participation of an outside consultant be required?

Costs

- can the process(es) be implemented with existingresources?

- will minimal additional resources be necessary?

- will substantial additional resources be necessary?

- are additional resources available? not available?

- conduct a cost/benefit analysis

Determine the most appropriate methods for accessinginformation

Design vehicles for collecting the data

COLLECT - INFORMATION AND DATA

Analyze - The Information and Data Compiled

Organize the information collected

Distill the information

Analyze the data

Synthesize

Determine what the collected data means (draw inferences,insights, and conclusions)

way to make all types of issues and problems safe to discuss.Whoever facilitates the process needs to remain open andaccepting of what is learned. Very likely the organization isnot always going to like what it hears.

"Undiscussables"-those issues, struggles or frustrations thatfester just below the surface of an organization's daily life --are often revealed during this process. All organizations haveundiscussables, but few have the courage to engage themopenly and objectively. They are rarely made public. Generallythese difficult issues are only confided at the office copymachine, whispered at a board meeting, or angrily vented overcoffee. Bringing these issues to the fore, provides a rareopportunity to resolve them and institute change...for the better.

THINK THE PROCESS THROUGH...DON'T DECEIVE YOURSELF

Before getting started, it is vital to fully recognize that anorganizational assessment and planning process takes W - O- R - K: over and above your already overloaded programmingpriorities, pressing grant deadlines and daily crises. However,the long-term value to your organization's future health andwell-being cannot be underestimated. A carefully thought outblueprint for an organization's future, grounded in its currentrealities, leads to positive and constructive change.

Assessment should never be looked at as an end untoitself, but as a process that will lead to action and change.Before embarking on an organizational assessment, considerthe full scope of what needs to be accomplished. Following isa checklist detailing each of the steps:

Prepare

Determine what information should be collected: what isabsolutely necessary; what would be desirable to have; andwhat is not necessary:

opinions, preferences, perspectives

facts, statistics, financials


Inevitably Board members won't be aware that each yearthe series' audience is substantially "papered," with more than50% of the tickets donated or given away.

Perception versus reality. Should the series be continued?The answer will lie in analyzing other information, such as thegoodwill that might be generated in the community by offeringso many free tickets...who the tickets are donated to...etc.

QUALITATIVE INFORMATION - GLEANINGPERCEPTIONS, PERSPECTIVES AND OPINIONS

WHAT DO THOSE CLOSEST TO YOU, THINK OF YOU?

To obtain the most salient and comprehensive information,it is critical that opinions and perceptions are elicited fromthose people most invested in your organization.

Such people are typically known as "Stakeholders." It isextremely beneficial for each organization to identify thesestakeholders and how they honestly perceive your organization.

A Stakeholder can be defined as any individual,organization or group who has either a personal or professionalinterest or investment in your organization's operations,resources or programs. There are two types of Stakeholders,"Internal" and "External," and both should be queried duringthe assessment process.

INTERNAL STAKEHOLDERS

"Internal" Stakeholders can vary from organization toorganization, depending upon the type(s) of programs andservices provided and the administrative structure. Staffmembers and Board members, those individuals responsiblefor day-to-day operations and policies respectively, are alwaysconsidered Internal Stakeholders. Others may include:

• program committee members

• advisory committee members

Evaluate

Convert the information and data into usable knowledge

Judge the value of the knowledge

Develop Action Steps

Determine how to best use the knowledge

Decide what action(s) to take and strategies to devise basedon the knowledge accumulated

COVER ALL YOUR BASES...PERCEPTION VS. REALITY

To ensure a broad spectrum of pertinent details and factsis collected, two distinct types of information should begathered: qualitative (pertaining to or involving quality orkind, e.g. individual attitudes) and quantitative (expressible interms of quantity or amounts, e.g. attendance figures).Gathering individual or collective perceptions and opinions ofyour organization and comparing that information withquantitative data (facts, figures and percentages) provides athorough and comprehensive understanding of anorganization-- that 360° perspective noted in Warhol's quoteat the beginning of this section.

For example, Board members might perceive that yourorganization's annual chamber music series is a sell-out-throughout the years, every time they have attended, all theseats have been filled-and therefore it must be a highly soughtafter ticket and a fiscally successful program much wanted inthe community.

However a financial analysis coupled with a review of boxoffice figures for the past three years, reveals that this particularprogram ends up "in the red," -- it annually causes ahuge deficit for the organization and a necessity to scramblefor increased revenue from other programs to balance thebooks.

What's going on here?


every member of this committee would be considered aninternal stakeholder and treated accordingly.

Regardless of their "internal" or "external" status, everyonewho participates in the assessment process should understand:

• personal opinions count

• there is no single right answer

"I don't know" is a perfectly respectable answer and peopleshouldn't be afraid to say it. It is also a particularly revealinganswer. If people don't know or don't understand an aspectof an organization, it inevitablymeans something has fallenthrough the cracks somewhere.

A MYRIAD OF METHODS AWAIT YOU

A variety of means exist to elicit an individual's or group'spersonal perspective on your organization and the types ofprograms and services provided to your community. There isno one right approach. Specific methods, techniques or toolsshould be used based on: (1) the type and range of informationyou have determined should be compiled; (2) the human andfinancial resources available; and (3) possible time constraints.

For example, if you have only limited resources and timeavailable to conduct the assessment, select individuals whosecomments will be representative of a group of individuals youwould like to hear from, such as - the chair of your Programcommittee (in lieu of each member), or your VolunteerCoordinator (instead of all your volunteers).

Some of the more commonly used methods to elicit opinionsand perspectives include:

Interviews: This method is one of the most personal,allowing for spontaneity and valuable open-ended responsesthat are not quantifiable. It is also probably the most laborintensive and time consuming, and generally the least objective.However, interviews can stimulate in-depth responses and an

• deeply committed volunteers

• interns

EXTERNAL STAKEHOLDERS

External Stakeholders can be considered those who maynot play a central role in your organization's operations orpolicies, but are invested in the programs or services it provides.These can include:

• membership

• subscribers

• audience

• community members or constituents

• professional colleagues

• local officials

• funders

• artists

Together these individuals possess the greatest range anddepth of knowledge about your organization from both the"inside" and the "outside."

Generally, internal and external stakeholders are involvedin the assessment process in different ways (e.g. Board membersmight participate in an interview process, while subscribersare asked to complete a two-page survey). Therefore, it isbeneficial to identify who's who, and what types of informationyou need from each.

Whether you categorize someone as "internal" or "external"is dependent upon the specific role(s) different groups orindividuals play within your organization. For example, ifyour organization is an exhibition space that determines itsprograms solely by a curator, artists would most likely beexternal stakeholders, no doubt along with your membershipand audience members. However, if your exhibition spacemakes program decisions by a committee of artists, each and


officials (see end of article for Sample Board Questionnaire andSample Staff Questionnaire).

Surveys: This approach is most often employed to gleaninformation from specific populations, such as yourorganization's membership, subscribers or audience. Thisformat provides the easiest way to track trend data and drawbroad-based conclusions from surveyed populations based onbreakdowns such as: program interests, artistic discipline,geography, age, ethnicity, financial resources, etc. Surveys aremost often sent through the mail or distributed at the conclusionof a performance, event or program. Surveys typically include:a list of questions or response opportunities (usually limitedto two pages) that can be quantified (e.g. respondents can beasked to put items in priority order or to rate them on a 1 -5 or 1 - 7 scale); along with questions requiring an opinion orvalue judgment. An excellent guide to creating surveys isLaura N. Wagner's Writing Effective Survey Questions, a "How-to Guide" available from: Stanford Center for Research inDisease Prevention, 1000 Welch Road, Palo Alto, CA 94034-1885 (415.723.0003).

Who might you survey?: membership, audience members,subscribers, gallery visitors, education program participants

Retreats: Typically conducted as a day-long meeting, thismethod is often employed as an opportunity to launch anorganization's planning process. An assessment can beconducted during the retreat. The use of this format forassessment is most successful and effective if an organization'skey Stakeholders are participants. In this setting, participantscan raise and explore issues in great detail and develop a senseof their colleagues' opinions and perspectives. A retreat canalso be used to culminate an assessment process. Used in thismanner, retreat participants can be informed about the resultsof the process with detailed information on where consensuslies, what primary issues and needs were raised, and what

extensive range of information, ideally covering all key aspectsof an organization's programs, services and infrastructure.Interviews can be conducted either in person or via thetelephone. Prior to embarking on this method, it is importantto decide what information is needed and from whom. A seriesof specific questions should be designed with the understandingthat less is generally more-a half-hour to one-hour interviewshould suffice, using no more than 10 to 12 questions. Thismethod can be conducted by an organization's ExecutiveDirector, Board Chair or consultant.

Who might you interview?: staff members, Board members,program committee members, key volunteers, funders, localofficials.

Questionnaires and Checklists: Questionnaires used incombination with checklists are intended to elicit similarinformation as interviews. However, they offer a slightly moreobjective, substantially more streamlined, and a generally lesstime-consuming approach. Questionnaires and checklists canbe distributed to participants to fill out on their own, or theycan be completed as part of a group meeting (e.g. during aBoard or staff meeting). They can be as comprehensive orstreamlined as necessary, but generally no more than 12 broadorganizational questions should be included for open-endedresponses. An accompanying checklist can be more extensive,with headings covering all aspects of an organization'soperations-mission, programs and services, governance, humanresources, fundraising, marketing, financial management,public relations, planning and evaluation-with a detailed listof criteria under each area. Respondents are asked to rate eacharea as either strong, adequate, needs improvement, uncertainor not relevant.

Who might you assess through a questionnaire and checklistprocess?: staff, Board members, program committee members,advisory committee members, key volunteers, funders, local


complete after a performance? And where are all those surveysyou had participants in that educational workshop complete?All of this is important existing data that should not beoverlooked.

You might already have quite a bit of key information onfile; it won't cost you anything to access it; and it can help yougain a broad based perspective on different aspects of yourorganization.

QUANTITATIVE DATA-COMPILING STATISTICAL ANDFACTUAL INFORMATION

Perceptions and perspectives about your organization arejust one piece of the pie. To establish the "big picture," thisqualitative information needs to be examined in relationshipto hard data. A Data Review, as this component of theassessment process is often known, offers additional insightsinto an organization's operations; a tool for understandingtrends and patterns; and factual confirmation of what youheretofore have only assumed.

The types of information you may want to compile andassess can include some or all of the following:

• Financial records

• Operational expenses and revenue, includingcontributed and earned income and in-kindcontributions

• Operating results by programs (one year summary)

• Cash flow analysis by month (one year summary)

• Historical summary of financial data

• Donor records

• Individuals

• Board members

• Membership

program and administrative priorities came to the fore. Inwhatever way a retreat is designed, it is an ideal setting tobring together disparate members of the organization whodon't often have the opportunity to strengthen their camaraderieand share ideas, interact, debate and question.

Who might attend a retreat?:Board members, staff, keyvolunteers, artists, program committee members. (See end ofarticle for a sample outline for a Trustee Planning Retreat.)

Focus Groups: Similar to ad hoc advisory groups, thismethod is designed to bring together people with commoninterests to express their opinions about specific programs,services, activities, issues, needs, etc. Approximately 8 to 12participants, representative of the population whose opinionsyou want to sample, are brought together for a one to threehour meeting. Questions to guide the discussion and encourageparticipation from all attendees should be prepared in advance.A number of focus groups can be organized to respond to thesame issues. After all groups involved have gone through themeetings, a synthesis of their views is formed. The process hasthe advantage of involving people in defining issues and needsand enlisting their help developing solutions.

Who might attend a focus group?: audience members,community members, artists, membership, subscribers. (Seeend of article for Sample Focus Group Questions.)

Existing Data: And let's not forget that some of yourassessment work may have already been done. An assessmentshould build on reasonably current-two to four years old-information you may already have in-house. Existinginformation is an invaluable resource that is far too oftenforgotten as the assessment process gets underway. No doubtover the course of the past few years, your organization hascompiled peer panel comments from various governmentfunding agencies or notes taken from foundation inquiries. Orwhat about evaluations you have asked audience members to


However, don't avoid implementing an organizationalassessment just because you can't afford the assistance of aprofessional or can't enlist their pro bono support. The needto gather this information is too important to the planningprocess, and the health and well-being of your organization'sfuture. Analyze your needs; prioritize the information needed;assess your available resources; and conduct the assessmentin the manner most appropriate and realistic for yourorganization at this time.

SO, NOW THAT I'VE GOT ALL THISINFORMATION...WHAT DO I DO WITH IT?

No doubt, in the midst of your organizational assessment,programming deadlines will take priority, fundraisingresponsibilities will become pressing, and umpteen minoremergencies will scream for your attention. However, youmust remain steadfast in your determination that this processis for the long-term benefit and health of your organization.

There is absolutely no reason to go through all the troubleand hard work of creating and implementing an organizationalassessment unless it is fully integrated as a critical componentof the planning process, and not an end unto itself. It will bea frustrating and heartwrenching, aggravating, depressing,mind-numbing waste of time, if the knowledge and insightsrevealed are not used to develop action steps and strategies.These are what will ultimately lead to the successful realizationof your organization's future vision.

Go forth, good luck and remember:

The thing always happens that you really believe in; andthe belief in a thing makes it happen. - Frank Lloyd Wright

BOARD OF DIRECTORS ASSESSMENT INTERVIEWQUESTIONNAIRE

Describe your primary reason(s) for serving on the Board.What is / are your specific area(s) of interest?

• Revenue by categories and levels of giving

• Costs / benefits analysis by categories and levels ofgiving

• Attendance

• Ticket sales

• Event analysis

• Audience/Subscribers/Membership Demographics

Unless otherwise specified, it is recommended that threeyears of historical data be compiled for each area, in order tofully evaluate any existing trends or operational patterns.

DO I NEED A CONSULTANT TO CONDUCT ANASSESSMENT PROCESS?

In the best of all possible worlds, it would be ideal to havean objective, impartial individual design and conduct all orpart of your organization's assessment process; and distill theinformation, thoughts and feedback received. An impartial"outsider" will not-or should not-have any preconceived notionsabout a direction an organization should take and what isconsidered "appropriate." It might be difficult for an ExecutiveDirector or Board member to facilitate an interview processand not interject personal opinions or perspectives. They alsomay become defensive or guarded if some negative commentsare made about a program or an administrative process.However, these "outside," objective individuals inevitably costmoney, and resources to pay for them are not always readilyavailable.

If you have the resources and interest to work with aconsultant, make sure that you are central to the process(es)selected. Participate in designing the different assessmentinstruments to be used and remain actively involved to ensurethat the methods employed are most appropriate for yourorganization. Your input will be essential.


STAFF ASSESSMENT INTERVIEW QUESTIONNAIRE

What initially attracted you to Name of Organization?What is / are your primary reason(s) for working here?

Do you feel there is a consensus of agreement and everyone(staff/board of directors/volunteers/constituency/funders/public) understands the purpose, artistic vision, and philosophyof Name of Organization? If not, why not?

What is the importance of Name of Organization'sprograms? Who do they serve?

What is your perception of how Name of Organization isviewed by the local artistic community? Regional and nationalpeers and colleagues?

What do you see as the three to five most urgent concernsor challenges facing the organization in the coming years?

Do you have recommendations about Name ofOrganization's future directions and priorities?

What do you see as your three - five most noteworthyaccomplishments since you've come to Name of Organization?

What are your greatest frustrations?

Within your work arena, do you have any recommendationsthat would make the conditions more functional, effective, and/ or enjoyable? Within the organization overall?

What resources and skills do you feel that you have broughtto Name of Organization? Have they been utilized? If not, whynot?

What are your long-term goals with Name of Organization?What do you hope to accomplish?

Is there any special training and / or expert assistance thatwould help you do your job more effectively?

Any other comments? suggestions?

How would you articulate Name of Organization'smission?

Do you feel there is a consensus of agreement and everyone(staff/board of directors/volunteers/constituency/funders/public) understands the purpose, artistic vision, and philosophyof Name of Organization? If not, why not?

What is the importance of Name of Organization'sprograms? Who do they serve?

What is your perception of how Name of Organization'sis viewed by the local artistic community? Regional and nationalpeers and colleagues?

What do you believe are the responsibilities of being onthe Board of a cultural organization?

Is Name of Organization achieving these standards? If not,how can the Board of Directors better accomplish their primaryresponsibilities?

What are your three areas of greatest satisfaction withName of Organization?

What do you see as the three to five most urgent concernsor challenges facing the organization in the coming years?

What resources and expertise do you feel you have broughtto Name of Organization? Have they been utilized? If not, whynot?

Do you have recommendations about Name ofOrganization's future directions and priorities?

Can you recommend three to five people who (1) wouldmake excellent Board

members; (2) help the organization financially; and / or (3)provide other needed assistance or support?

Any other comments? suggestions?


Preparation: Collect surveys and organize information foruse at the retreat.

Retreat

- Identify important issues and opportunities for theorganization.

- Define the relative importance of the issues to theorganization.

- Identify who will work on each issue and what theywill do.

Explain Group Process Techniques

Describe techniques used:

- Idea Generation

- Inputting

- Clarification

- Weighing

- Discussion

Describe benefits of group process:

- Balances involvement by all participants.

- Uses different creative processes for each phase of theexercise.

- Incorporates mathematical voting techniques in theassessment of group judgement.

Present Interview and Survey Results

- Present Responses Organized in Six Groups: Artistic,Administrative, Governance, Development (fund raisingand public relations), Planning and Financial. Haveparticipants rank the six groups in priority order.

Run Group Process

First Round:

- Idea generation: Present responses from survey andask group to generate additional ideas, writing on 3X5

FOCUS GROUP QUESTIONS

What comes to mind when you think of Name ofOrganization?

What kind of reputation do you feel Name of Organizationhas within the community? And why?

What are the most important programs and services thatName of Organization offers the community? And why?

Which of the programs offered most appeal to you andyour interests?

In what way(s) would you like to become involved, ormore involved, with Name of Organization?

What role can you and people with similar interests toyours play in the Name of Organization's ability to reach anexpanded and more involved audience?

How can the Name of Organization better serve yourneeds and interests?

What could be improved?

How can Name of Organization makes its programs andservices more accessible to you?

Is there anything else you feel that we should know forour assessment.

TRUSTEE PLANNING RETREAT

Pre-Retreat Activities

Interview: Interview the administrative and artistic directorsto ascertain their view of the organization's current situationand need for change.

Survey: Design and mail questionnaire to trustees.Questionnaire asks their opinion on the organization's recentaccomplishments, most pressing needs and opportunities forfurther development.


spend a hundred hours contemplating organizational culture,structure or function?

Well here's the bad news: It could be a waste of time. Infact it will be a waste of time to do your organizationalassessment --- unless assessment leads to change andimprovement.

Assessment as an end in itself can easily become little morethan an exercise. But assessment that is immediately linked toaction can have surprising, positive and exciting results for theorganization as well as for the people working with it andaffected by it. Here are four briefly described scenarios for lifeafter assessment.

AS A TOOL FOR ORGANIZING ACTION

Often an organization's leaders will be uncomfortable andnot know why. They'll feel that their group is not as effectiveor successful as it ought to be. And, they may not know wheretheir efforts are best placed. In some cases, excellent, skilledpeople are lost to an organization because they're just not clearabout how they fit and how they can make a difference.

The completion of a thorough-going assessment almostalways yields a range of ideas about changes or improvementsthat are possible and needed. The simplest and quickest wayto energize a post-assessment organization is to immediatelyturn the issues identified in the assessment into action. Oneeffective strategy is to use the vehicle of Board/staff task forcesset up for limited times to address specific issues or areas. Eachof these task forces should have a workplan and time line andthen just get on with the business of making things happen.

AS A FUNDRAISING TOOL

It takes time to make change. It also often takes money.There are funders who understand the relationship betweena strong organization and its ability to pursue its mission. Forthese funders, an assessment report can serve as the basis of

cards. Ask each group member to put his/her ideas inpriority order.

- Round-robin recording of ideas: Have each groupmember report his/her most important idea.

- Serial discussion for clarification.

- Preliminary vote on item importance: Have eachparticipant list items in order of importance from mostimportant to least. Report results to group. Collect listsand tabulate results.

- Discussion of vote results.

- Revote, if group wants.

Second Round: Define how issue is to be addressed.

- Select most important issue from first group.

- Ask, over the next year, what can we do to address thisissue?

- Repeat the process described in step one.

- Identify people who will be responsible for decisionsmade by the group.

Third Round: Repeat second step using second mostimportant issue.

Repeat Process until participants have addressed the mostimportant issues from the first group. Then begin the processfor the second group, etc.

(IS THERE) LIFE AFTER ASSESSMENT...?

Very few of us who work in the arts would be caughtsaying out loud that we don't believe in assessing, reflectingand evaluating. But we all know that this noble trio representswork, work and more work. And -- at least some of the time-we may not be absolutely, positively convinced that it's allworth it. If what we really want to be doing is getting a showopen (or hanging an exhibition or publishing a book orproducing a documentary) what difference will it make if we


the Managing Director's chronic insomnia; 3) The enemy.Budgets are the enemy everyone loves to hate. As managers,we constantly try to outflank, outmaneuver, and ultimatelyoverwhelm our budgets, reducing them (and us) to a quiveringheap abandoned on the battlefield of Desire vs. Reality. Evenif we manage to avoid outright war, our struggles often resultin a budget that is not a useful tool, but rather:

A Wish List: Everything we would do if we had all theresources we want and/or need. Planning and budgeting areabout assessing what realistic level of resources can be expectedand making the hard choices about what to do with thoseresources: given that we can't do everything, what is mostimportant to us? What activities, realistically, will we be ableto support?

A Symptom of Organizational Delusion or Denial: Budgetsthat project 400% growth in one year, with no indication ofwhere those increases will come from. This is an extreme (butnot unrealistic) example of budgets that reflect an organization'sinability or -- more frequently, unwillingness -- to deal withreality as it is currently constituted. If you are consistentlycreating annual budgets that bear little or no resemblance tothe organization's actual activity for the year, chances are yourorganization suffers from the "budget-as- a-symptom-of-denial-syndrome."

A Tutorial in Spreadsheet Software: Spending hourscreating budgets on spreadsheet software and then neverlooking at them again. There are cheaper and more efficientways to learn how to use computer software. While developingbudgets can certainly improve our computer skills, ultimatelywe need to have some other goal (e.g., creating a useful tool)to make it worth the investment of time and energy.

A LASTING PEACE?

We have met the enemy ... and it doesn't have to be ourbudget. Can we overcome our "us vs. it" approach to budgeting

a proposal for funds to address specific issues that emergedin the assessment. For example, a funder may be eager tosupport staff development and training in the area of financialmanagement or they might have a particular interest in marketresearch and marketing planning. The fact that a thoroughassessment precedes a specific request adds credibility to theproposal and shows clearly how it is linked to the organization'swork to improve itself and its capacity.

AS A WAY TO GARNER THE SUPPORT OF STAKEHOLDERS

We all like to join a winning team. A group that knowsitself well - its strengths and its weaknesses - is better able toidentify the skills and capabilities it needs in volunteers, Boardmembers, donors and other supporters. An objective assessmentthat identifies a need for increased skills in financialmanagement points the way for recruitment of an accountant.Or, the assessment might point the way to the need for anAdvisory Board or fundraising auxiliary. With assessment asa guide, new people can be identified and recruited to help theorganization move to the next level.

AS A PRELUDE TO STRATEGIC PLANNING

Last and perhaps most common, an assessment is anexcellent prelude to a full-blown strategic planning process. Itis more than helpful to know what your strengths andchallenges are when developing a vision and goals for thefuture. Plans that are developed following assessments havethe advantage of being grounded in the real capabilities of anorganization.

CONVERTING THE ENEMY: BUDGETING DURINGPLANNING

WAR AND PEACE: AN OVERVIEW OF BUDGETS

Common definitions of "budget" often include: 1) analbatross around the Artistic Director's neck; 2) the cause of


gap between income and expense does not make for a veryuseful tool. Good budgets are based on estimates that havesome (the more the better) basis in reality.

How do we create a budget that is reality-based? We doresearch. This is initially more time consuming than adding 5%to every expense, but it pays off. At some point you are goingto have to figure out all this information anyway: doing thework now will save you time later in the year.

GATHERING INFORMATION

(1) What activities do you have planned for the next year?Obviously, this means you will have to have some ideaof what your actual activities will be. That is, you willhave to have made a plan.

(2) Now the more tricky part (maybe): How much willeach activity cost? This step will be a combination ofresearch and best guesses. For example, we are bringingtwo artists from Russia to participate in our work nextyear. So, we call the airline to find out how much planetickets will be. Accommodations: hotel or private home?Expenses while they are here? Expenses related tosecuring their visas? And do we have any ideas abouthow we might pay for all this? A corporate sponsor?An interested individual?

BUILDING BUDGET ASSUMPTIONS

As you start to gather information and turn it into budgetnumbers, this information will be the basis of your budget"assumptions": the underlying explanation of the numbers thatappear in your budget. For this reason it is CRITICAL that youkeep track of the information, preferably in a way that is easilytied to your budget numbers. You should have assumptionsfor both income and expenses.

In constructing budgets, the tendency is to build up theexpense assumptions first. What can happen with this approach,

and regard budgets as useful tools that serve a greater purpose?Can we come to think of budgets as a means to the end ofmaking art happen? Can we consider budgets as:

Your plans for the future expressed in the language ofnumbers.

Every activity you undertake has a dollar value associatedwith it, be that value in materials, artists' time and expertise,or paying the heating bill for your office. A budget takes yourplanned activities and translates them into dollars.

A plan that identifies your priorities.

Where you spend your resources is where your prioritiesare, regardless of any rhetoric your organization may have tothe contrary. A budget can help you identify where your idealsand your actual activities may be out of alignment.

A guide to measure progress over time.

The budget is a measuring stick to gauge how well youprojected the future against what actually happened. Bycomparing the budget to your actual financial activity you willknow if you are on track or losing sight of what you intendedto accomplish during the year.

Deviating from your projections is not a bad thing in andof itself. In fact, a variance can have a positive effect if it helpsyou take advantage of previously unknown or /unavailableopportunities. However, it is's helpful to know you are deviatingfrom your plans so that changes can happen in a deliberateand thoughtful way.

So how do we create this "budget as tool"? How do wedevelop a budget that reflects your true priorities and goals,a budgets that is useful and used?

GETTING DOWN TO BUSINESS: CONSTRUCTING THE BUDGET

Merely adding 5% to all the costs you incurred the previousyear and increasing "Income from Foundations" to plug the


• If you send out an additional direct mail appeal to raiseadditional funds, there will also be extra costs associatedwith that appeal (printing, mailing service, postage).

Examine the Results. You make adjustments, you get thebudget to balance, hooray! But wait, does it still reflect thepriorities of the organization, your stated goals for the year?If yes, great. If no, then you need to revisit your goals in lightof this financial information: are the goals really possible, givenyour REALISTIC resources? Does the organization need torethink HOW it achieves those goals? Over what time spanwill the organization achieve the goals? Throughout all thisself-examination, the aim is to emerge with a plan that isdoable, that reflects the priorities and goals of the organization,and that translates into a balanced budget.

PRACTICAL CONSIDERATIONS

(1) Who is going to do all this work?

Depending on the size and structure of the organization,it could be one person (the Executive Director, the BusinessManager, the Finance Manager) or it could include severalpeople. If your organization functions in departments or areasof activity, it may make the best sense to have the peopleresponsible for each area of activity gather the initial budgetinformation. This information is then integrated into acomprehensive budget by one person (preferably one personwho is very comfortable with manipulating numbers).

Tip: If more than two people are providing information forthe budget, make sure they are gathering it in the same formatso it can be easily integrated. The easiest way to do this is togive them a worksheet to use (download sample #2: PC |MAC) that ties into your budget format.

(2) Formatting

The budget format should correspond to your incomestatement format for ease of comparison. Following your chart

however, is that you may develop undue affection for thoseexpenses and try to construct income projections that will "fit"your expenses. Thus, the income assumptions are built togenerate enough income to cover projected expenses, ratherthan to reflect what is realistically possible. You can avoid thistrap by starting with the income assumptions. This will helpestablish a realistic "scope" for your thinking about whatactivities are realistically feasible in the coming years.

Tip: With spreadsheet software you can link your budgetsheet to your budget assumptions sheets, so that every timeyou change your assumptions, the corresponding budgetnumber will automatically be recalculated. This is particularlyuseful when you are making budget revisions.

INTERCONNECTEDNESS OF ALL THINGS BUDGETARY

You build your assumptions, you outline your priorities,you write it all down, you add it all up -- and the budgetdoesn't balance. Now what? This is where the "give and take"of budgeting begins. "Give and take" does not mean add moreunidentified foundation income to make the budget balance."Give and take" does mean:

Review your plans. Are there activities that can bepostponed until a time when there is adequate funding? Arethere activities that can be scaled down? New staff positionsthat can be added more gradually? Savings to be gained onslightly less glossy marketing materials?

Make Adjustments. The tricky thing about this is to keepin mind that each adjustment may (and probably will) haveramifications elsewhere in your budget. For example:

• If you do one less production, your ticket income willalso be less;

• If you delay hiring the new development director, youmay need to scale back those ambitious goals forcontributed income;


UPDATING/REVISING THE CURRENT YEAR BUDGET

As a rule, don't do this. Some people revise budgets everymonth. This is not very useful. Staying with your originalbudget through the year gives you a stable point for measuringprogress (as opposed to the moving target in budgets that arerevised monthly).

It also gives you a way to measure your budgeting skills(i.e., your ability to accurately/realistically project into thefuture). Variances will occur, of course, but it is better to notethose variances in the budget-to-actual report with explanatorynotes.

It may be appropriate to revise the budget if thecircumstances of the organization change so drastically thatthe original budget is completely irrelevant. In this situation,you will want to repeat the budgeting process and create abudget that reflects the new circumstances. You would alsowant to be sure that this new budget is reviewed and approvedby the Board as a replacement for the original budget.

UPDATING/REVISING MULTIPLE YEAR BUDGETS

Ideally, you will revisit your plan and accompanyingbudgets every year and update them for the coming year. Ifyou're really ambitious, each year you will also add a year toyour planwith a corresponding budget. Having the format andwell-documented assumptions in place already will make thistask much easier.

AN END TO THE CONFLICT

While you may never think of a budget as your best friend,it is possible to forge a new relationship with your formerenemy. You may even come to regard your budget as:

(1) Helpful tool;

(2) Measuring stick;

(3) Respected colleague.

of accounts for budget categories is usually the best way tomake this happen (if the chart of accounts does not have the"right" categories, then you may need to revamp your chartof accounts).

For the plan, include at least two years of actuals. Thisenables readers of your plan to compare the reasonableness ofyour projections to your historic activity. (download sample#4: PC | MAC).

(3) Multiple Drafts

Don't kid yourself: you'll have multiple drafts of the budgetbefore you're through. For this reason, and for general sanity,put a date on every single piece of paper that has numbers onit. This will help you identify which of the morass of papersaround your desk is truly the most recent version of the budget.

Tip: Your spreadsheet software can create a footer that willalways print the current date on the bottom of the page. Ifyou're doing a marathon session of multiple drafts andgenerating more than one draft per day, you may want toinclude the time on the footer as well.

(4) Confidentiality

Certain information in your budget may be confidential(salary levels, for example), so you may want to create a formatthat can consolidate or hide confidential information.

GETTING ON WITH BUSINESS: USING THE BUDGET

Flexibility

The more flexible the format of your budget, the more itwill be used, and the less often you will have to recreate thedocument in different formats. Think about how (and who)you may want to use it:

• Staff members within the organization

• Board Members

• Funders


Successful planning begins at mission level and then is re-tested periodically against mission. Mission is what draws thepeople of the entire enterprise together. It's the touchstone forall efforts. Mission can hold stakeholders together to keep theplan alive after it is written.

The planning process is inclusive. A team, or teams, oftrustees, administrators, and artists/programmers workcollaboratively to develop best thinking. All sectors in theorganization are made to feel valued and have a chance torespond meaningfully.

Those driving the process bring an attitude of curiosityand openness that becomes infectious.

In fact, an environment is created in which creativityflourishes and spontaneous insights become possible.

Debate is not only permitted, but actually encouraged, andeven provoked.

There are multiple points throughout the planning processwhen ideas become more crystallized, and participants havea chance to affirm a direction.

The thinking is rigorously specific to the organization'sneeds and dreams, as well as the environment in which itoperates. The plan cannot have been written by any otherorganization.

The plan document is written in the voice of theorganization and reflects its personality and culture.

If most of these indicators are in place, then the plan will,in fact, have a future life.

Symptoms of that future life are many.

The plan will be provided to all new employees and trustees.Some organizations make it a part of the employee manual,as well as the trustee orientation packet.

And the reward for working on this relationship? Thereward for taking the time to construct a budget based inreality, to use the budget, to keep it current? For starters, youmay have fewer crises to manage. You may have fewer sleeplessnights. You may even have fewer ulcers. Most important,however, you may find that without the constant strain offighting against your budget you have more time and moreenergy for what is, after all, the most significant thing you do:making art happen.

KEEPING THE PLAN AND PLANNING ALIVE

We've all heard over and over again the lament thatplanning processes don't lead to anything of lasting value. Infact, well known management author Tom Peters is said tohave offered $100 to the first person who could prove that asuccessful strategy had come from a planning process; he hasapparently never had to pay! But a good plan should be aliving, breathing document. Many plans are stillborn -- perhapsa rushed effort to respond to a grant requirement, or a mandatedeffort undertaken with little enthusiasm. In these cases, andothers like them, the plan will have no life, will likely havelittle impact, and will make people be skeptical of the powerof planning.

Though this chapter is placed near the end of the Table ofContents, in fact the fate of a plan is determined at the verybeginning of any planning process. There are many exceptionsto any generalization, but I will offer a few key indicators thatcorrelate with an effective plan that comes to have profoundimpact over an arc of time.

I'll begin with an indicator that has no exceptions; it is anabsolute requirement for the successful plan of all culturalorganizations: The impulse to plan, and the context in whichthe planning occurs, comes from the art or program of theorganization. How can we do what we do more effectively andfor better impact upon people?


organized framework. As the planning process challenges theparticipants to think strategically, and as the power of thatthinking stimulates a hunger to do that more often, it is thisway of thinking that lasts.

It's also true that a good plan shows the result of manypeople focused on a common purpose - the best overall interestsof the organization. This gives all participants an overviewthat is very healthy as initiatives are considered, affirmed, andthen acted upon. When this happens, that elusive "collectivewill" is established throughout the organization. This is thewill that says: "We will succeed. We believe in this plan. Wewill carry out its major initiatives."

OFF THE SHELF: HOW TO ENSURE THAT YOUR STRATEGIC PLAN

BECOMES A VALUED TOOL

Any claim of success implies that some goal has beenestablished and subsequently reached. Strategic planning isthe process an organization uses to determine its goals andultimately to measure its successes.

The process includes a review and possible revision of themission statement as well as research and analysis of theorganization's services or grantmaking opportunities,environmental threats and internal capacity to achieveestablished goals. Following this analysis, planning participantsdevelop outcome, output and input objectives. These statementsdescribe what effects the organization wants to have onidentified opportunities and threats, and how it will go aboutaccomplishing them.

For participants, strategic planning can be an excitingprocess. Those involved gain a new working knowledge of oneanother because they conduct most of their planning activityoutside regular business meetings. Frequently they gain newinsights into the organization as well. Thinking about theorganization without the pressures of more immediate issues

Its executive summary will likely be submitted to donors,the media, and community leaders. Often, press coverage isgarnered in response to some powerful plan initiatives that areshared with the community. This also helps in later efforts toraise funds.

There will be marks on everyone's copies as adjustmentsare made based on changing circumstances; this documentshould definitely not be merely gathering dust on a shelf.

Perhaps detailed operating plans were drafted whoseprogress is being checked upon monthly. Many organizationsput these operating plans on the walls and check off theirprogress.

Key meetings of the Board of Directors will have discussionof plan progress to-date during which possible majoradjustments are considered. A number of boards have devotedone special meeting a year to a discussion of that progress.Generally this begins with an assessment of the then currentenvironment and the changes that this compels in strategies,if any.

Staff meetings will have planning benchmarks as a regularpart of the conversation. Have we achieved what weanticipated? Why and why not? Are we heading in the rightdirection given the rapidly changing circumstances, or are westuck obstinately on the wrong course?

n sum, the plan will be referenced often as a set of signpostson the journey into the future. And the fact of the matter isthat this constant consideration of the plan through all aspectsof the organization's life instills a way of strategic thinking thatis valuable all the time.

One of the major benefits of a strong planning process isthe fact that the very art and act of planning is inculcated intothe organization's culture. We are always planning, whetherwe know it or not. The planning process merely provides an


involved. Work assignments should accommodate the availabletime and interest levels of the participants. Meeting their needswill assure participants that they have had every reasonableopportunity to contribute to the planning process. This, inturn, will lead to the greatest possible sense of ownershipwhen the plan is complete.

Make Sure Your Plan Is Realistic, Flexible and Complete.Of course, "realistic, flexible and complete" are in the eyes ofthe planner. The desire to excel may cloud reasonable objectives.After developing objectives, one final review of the strengths,weakness and competitive analysis parts of the planning processwill help define what is achievable given specific time andresource parameters. A review of past successes and athoughtful competitive analysis often provide valuable contextfor strategic decisions.

Planning flexibility is also important. Unless crystal ballsor futurists with 20/20 vision are a part of the planning process,the unforeseen may limit the organization's ability to achieveestablished objectives. Therefore, objectives have a largerpotential for success if they reflect external, unforeseen changes.It is important to define a range of possible occurrences andplan contingency responses across the full range. Thesepossibilities may be revised or rejected, but they provide avaluable starting point for responding to the unexpected.

A process for considering changes or adjustments shouldbe agreed upon before the plan's implementation. This processshould identify those individuals who can propose a change.The process should also describe the steps required forachieving change.

Many so-called strategic plans are little more thanstatements of goals and objectives. Knowing where you wantto go is only half the challenge; you must also decide how toget there. A detailed implementation plan makes a strategicplan complete. It identifies the significant tasks that must be

often leads to renewal and increased dedication. However, theplanning process may not be inspiring enough to ensure thatthe strategic plan is used by the organization's members. Dailydemands can easily distract good intentions and keep thenewly completed strategic plan on the shelf.

The objective of planning is to develop a practical tool thatcan guide an organization into some defined future and provideimportant measures of success. The following "do's and don'ts"for keeping your strategic plan off the shelf can help yourorganization to obtain the tangible benefits it deserves fromits planning efforts.

KEEPING YOUR PLAN OFF THE SHELF: WHAT TO DO

Here are four essential steps you can take to ensure thatyour strategic plan fulfills its function as the organization'scompass for the future.

Make You Planning Process Inclusive. Ownership is acritical ingredient when implementing a strategic plan. Withoutownership, individuals who are most affected by the plan mayactively or passively resist their part in implementing it. Themost effective means of developing ownership is to make surethere is broad participation in the planning process.

Participation can take place on many levels, includinginformation gathering, brainstorming, committee discussions,individual interviews and plan review. If you are wonderingwho should be included, a good test is to ask, "Who will beaffected by this decision?"....

A commitment to inclusiveness will require special attentionto the needs of planning participants. Manage the location,frequency and scheduling of meetings to enable the fullestparticipation and to reflect the diverse needs, desires andlimitations of participants. Written materials used during theprocess should provide summaries and detail to match thedifferent information processing styles of the various people


it will never really leave the shelf. To gain the commitment ofyour board, consider the following approaches:

Involve board members in approving, if not designing, theplanning process.

Involve board members as planning participants on thesteering committee, as researchers or in unofficial and officialdiscussions throughout the process.

Engage board members as a body in discussion about thepros and cons of the proposed plan.

Ensure that members are involved, whether throughcommittee or another method, in regularly scheduled reviewsof the implemented plan.

Your strategic plan does not have to end up as filler for[your] archives. If you follow the guidelines in this article, itcan be an invaluable map to your organization's future. Asnoted above, four simple rules can help ensure that yourstrategic plan succeeds: make your planning process inclusive,make sure your plan is realistic, make a commitment toevaluation, and gain the support of your board of trustees.

accomplished and says who is responsible for them and whenthey must be completed for each strategic objective. Withoutan implementation plan, there will be little accountability forusing and achieving the strategic plan.

Make a Commitment to Evaluation. Evaluation is theprocess of measuring success. If your strategic plan is well-conceived, it will be invaluable for measuring success. This isreason enough to keep it off the shelf. Four simple rules apply.First, decide what you really want to know from an evaluation.Your goals may include finding out not only whether youachieved an objective but how it was achieved, how efficientthe process was and what impact the achievement has made.Evaluation points are good times to make adjustments to theplan in light of findings.

Next, identify who will be responsible for evaluation. Thisinvolves oversight - often by a board committee, perhaps withdata collection and structuring by staff and analysis by anoutside consultant. If evaluation tasks are not specificallyassigned, they may not be carried out. Most important isdeciding who will be accountable for initiating and coordinatingthe effort.

Third, agree on an evaluation method or methods. Forevaluation to be a productive tool, those both evaluating andevaluated must be comfortable with the process. Evaluationmethods will produce different results for different objectives.

Finally, develop an evaluation schedule that assigns specificresponsibilities to specific indivi-duals. Charts with benchmarksare an effective graphic tool for keeping everyone apprised ofthe status of planned activities. Assigning specific dates andmeetings for review is a mechanism for creating deadlines thateveryone will remember.

Gain the Support of Your Board. The board's considerationof the completed strategic plan is the last step in the planningprocess. Unless the board fully endorses your strategic plan,

Bibliography

Angel, Bradley: Toxic Threat to Indian Lands: A Greenpeace Report,San Francisco, Greenpeace, 1991.

Baker, S. H.: Character Building Clubs for Boys. The ScientificManagement of Clubs for Boys, London, YMCA BoysDepartment, 1919.

Campbell, R. R., and Wade, J. L.: Society and Environment: TheComing Collision, Boston, Allyn and Bacon, 1972.

Gitman, Lawrence J.: Principles of Managerial Finance, MA:Addison Wesley Longman, 2000.

Johnson, Hazel: Financial Institutions and Markets: A GlobalPerspective, NY, McGraw Hill, 1993.

Kruvant, W.J.: People, Energy, and Pollution, Cambridge, BallingerPublishing, 1975.

Martin, Justin: The Man Behind Money, Perseus Book Group,2000.

Milson, F.: Growing With the Job, London, National Assocationof Youth Clubs, 1968.

Petty, Keown, Scott, and Martin: Basic Financial Management, Prentice Hall, 1993.

Schall and Haley: Introduction to Financial Management, McGraw-hill, 1988.

Vallette, J.: The International Trade in Wastes: A GreenpeaceInventory, Washington, Greenpeace, 1989.

Zupan, J.M.: The Distribution of Air Quality in the New YorkRegion, Baltimore, Johns Hopkins University Press, 1973.

Index

AAdvantage, 7, 16, 17, 18, 20,21, 27, 29, 51, 53, 62, 75,101, 147, 149, 153, 160, 161,163, 176, 194, 202, 226, 236,238.

Approaches, 5, 23, 39, 45, 86,89, 91, 93, 96, 99, 100, 101,102, 104, 105, 120, 123, 124,126, 128, 132, 175, 177, 211,251.

BBusiness, 1, 2, 6, 7, 8, 9, 10,11, 12, 13, 14, 16, 18, 19,21, 22, 23, 24, 25, 26, 27,28, 29, 30, 32, 33, 34, 37,38, 41, 43, 44, 45, 46, 47,49, 52, 53, 54, 56, 57, 59,60, 61, 62, 63, 64, 66, 87,103, 104, 120, 121, 122, 123,124, 125, 126, 130, 131, 133,135, 142, 147, 148, 149, 150,151, 152, 153, 156, 159, 160,161, 163, 164, 165, 167, 168,169, 170, 171, 172, 173, 174,175, 176, 177, 178, 181, 191,193, 194, 202, 235, 238, 241,242, 247.

CCommittee, 103, 163, 184, 188,189, 221, 222, 223, 224, 226,248, 250, 251.

Communication, 46, 72, 74, 76,77, 80, 81, 82, 83, 84, 85,107, 109, 110, 111, 112, 113,120, 192.

Conditions, 55, 59, 95, 203,206, 207, 231.

Conference, 101.Considerations, 93, 184, 212,241.

Constitution, 73.Cooperation, 76, 174, 214.Corporate, 2, 3, 6, 7, 8, 9,10, 12, 14, 15, 25, 26, 28,36, 37, 46, 48, 51, 64, 67,87, 88, 90, 130, 131, 132,136, 137, 142, 147, 149, 159,167, 169, 173, 176, 193, 194,195, 239.

Criticisms, 36, 67.Culture, 6, 14, 15, 16, 21, 25,26, 28, 36, 39, 44, 67, 79,80, 82, 86, 87, 88, 89, 91,95, 96, 97, 99, 100, 101,102, 104, 105, 110, 111, 112,113, 122, 134, 137, 140, 164,

Strategic Management and Business Management Index254 255

177, 185, 191, 195, 196, 200,235, 245, 246.

Customer, 13, 15, 17, 20, 21,31, 35, 40, 41, 42, 45, 47,48, 50, 51, 55, 63, 153, 154,160, 161, 163, 164, 167, 168,170, 171, 172, 175.

DDepartment, 6, 91, 101, 103,157, 158, 172, 181.

Development, 6, 8, 9, 33, 53,54, 61, 62, 63, 64, 70, 74,78, 79, 80, 81, 82, 83, 84,85, 87, 90, 93, 96, 99, 100,101, 104, 105, 106, 107, 108,111, 113, 114, 115, 119, 120,128, 131, 133, 144, 148, 160,164, 166, 167, 171, 172, 178,179, 183, 200, 212, 215, 216,232, 233, 236, 240.

EEconomy, 4, 21, 40, 152, 173,197.

Employment, 31, 57.Empowerment, 48.Environment, 2, 4, 9, 10, 11,17, 22, 25, 26, 27, 28, 34,40, 41, 54, 56, 66, 67, 70,71, 72, 77, 86, 92, 100, 104,105, 108, 120, 121, 122, 123,129, 134, 136, 147, 149, 150,153, 161, 168, 171, 173, 177,180, 191, 202, 203, 245, 246.

FFinancial Perspective, 45, 48.

GGovernment, 13, 35, 44, 46, 47,95, 103, 105, 109, 192, 204,226.

Guidelines, 153, 160, 170, 171,172, 181, 182, 183, 187, 210,251.

IImplications, 27, 60, 136, 146,147, 199.

Information, 4, 6, 7, 8, 10, 16,27, 29, 30, 31, 32, 33, 34,35, 36, 46, 49, 50, 54, 72,74, 75, 80, 81, 83, 84, 88,91, 93, 100, 101, 104, 107,108, 109, 111, 112, 120, 121,128, 130, 131, 144, 146, 160,164, 168, 171, 178, 179, 183,184, 187, 191, 192, 197, 217,218, 219, 220, 221, 222, 223,224, 225, 226, 227, 228, 229,233, 239, 241, 242, 248.

Innovation, 18, 19, 38, 45, 46,53, 76, 77, 78, 79, 80, 82,83, 92, 93, 98, 109, 110,114, 115, 122, 161, 164, 172.

Instruments, 85, 95, 98, 102,108, 110, 112, 240.

Interpretation, 55, 73, 88, 113.Investigation, 60, 198.

JJudgement, 33, 99, 233.

LLaws, 149.Leaders, 34, 44, 77, 78, 85, 86,

87, 89, 90, 91, 97, 98, 101,102, 105, 116, 117, 171, 178,183, 235, 246.

Leadership, 23, 26, 35, 67, 71,74, 77, 78, 79, 80, 81, 82,83, 86, 90, 98, 101, 105,108, 109, 110, 116, 117, 118,142, 149, 151, 168, 171, 176,177, 195, 203, 204, 205, 206,207.

MManagement, 1, 2, 3, 5, 6, 7,8, 9, 10, 11, 13, 14, 16,17, 18, 19, 20, 21, 23, 27,28, 30, 33, 34, 35, 36, 37,40, 42, 44, 45, 47, 48, 50,55, 56, 59, 60, 63, 65, 66,70, 71, 72, 75, 77, 78, 79,80, 85, 87, 88, 89, 92, 96,102, 103, 105, 108, 109, 110,111, 112, 113, 114, 115, 117,118, 119, 120, 121, 122, 123,124, 125, 126, 127, 128, 129,130, 131, 132, 133, 134, 135,136, 137, 138, 139, 140, 141,142, 143, 146, 147, 153, 155,156, 157, 158, 159, 160, 161,162, 163, 164, 166, 167, 168,170, 171, 172, 173, 174, 176,179, 181, 182, 192, 216, 224,236, 244.

Marketing Revolution, 12.Marketing Strategy, 51, 52.Markets, 26, 40, 83, 140, 142,148, 152, 154.

Measurement, 44, 45, 48, 50.Methodology, 48, 139, 143, 157.Mission, 2, 39, 40, 42, 43, 47,

51, 64, 97, 98, 99, 135, 136,137, 149, 177, 179, 180, 184,186, 188, 189, 191, 195, 204,205, 208, 209, 210, 211, 212,213, 214, 216, 217, 224, 230,235, 245, 247.

OOpinions, 82, 84, 128, 155,156, 191, 218, 220, 221, 223,225, 226, 228.

Opportunity, 24, 30, 56, 60,133, 150, 163, 183, 209, 213,217, 218, 225, 226, 249.

Organization, 1, 2, 6, 7, 9, 10,15, 19, 21, 22, 26, 28, 29,30, 31, 33, 35, 36, 38, 39,40, 42, 43, 44, 45, 46, 49,51, 52, 55, 56, 62, 63, 66,67, 134, 135, 137, 148, 156,165, 167, 168, 169, 172, 178,180, 184, 185, 186, 187, 188,189, 190, 191, 192, 193, 194,196, 197, 199, 200, 201, 202,205, 206, 209, 210, 211, 212,213, 215, 216, 217, 220, 222,223, 224, 225, 227, 228, 229,230, 234, 237, 238, 239, 240,241, 242, 244, 245, 246, 247,250, 251.

PParadoxes, 77, 78, 79, 85, 86,92, 104, 118.

Performance, 4, 15, 19, 21, 42,44, 45, 46, 47, 50, 51, 58,59, 60, 61, 62, 63, 66, 75,85, 88, 90, 91, 96, 99, 100,102, 147, 154, 155, 156, 157,

Strategic Management and Business Management256 Strategic Management and Business Management 257

Contents

Preface

1. Strategic Management 1

2. The Financial Perspective 48

3. Developing a Knowledge Management Strategy 119

4. Strategic Management Process 134

5. Emerging Patterns 138

6. Strategic Management forAchieving Business Excellence 159

7. Strategic Planning (in Nonprofit orFor-profit Organizations) 177

8. The Pillars of Planning: Mission, Values, Vision 208

9. Understanding Current Realities 215

Bibliography 252

Index 253

158, 160, 165, 166, 170, 171,172, 188, 207, 208, 210, 225,227.

Policy, 13, 68, 73, 74, 77, 79,80, 85, 86, 87, 93, 99, 103,104, 106, 107, 112, 114, 115,131, 159, 160, 161, 162, 163,164, 166, 167.

Politics, 101, 191.Portfolio Theory, 10, 11.Power, 28, 57, 59, 81, 84, 90,101, 102, 103, 104, 111, 144,149, 150, 163, 213, 244, 247.

Preparation, 181, 182, 233.Preservation, 76, 77, 79, 115.Prevention, 225.Promotion, 52, 166, 169, 171.Psychology, 33.

RRationalisation, 76, 77, 114,115.

Relationship, 10, 21, 31, 51,161, 164, 206, 227, 235, 243,244.

Research, 11, 21, 35, 37, 59,60, 85, 87, 95, 96, 103, 104,105, 106, 107, 123, 124, 125,126, 130, 131, 133, 138, 139,140, 141, 142, 143, 144, 145,146, 147, 164, 173, 198, 225,236, 239, 247.

Revolution, 12, 80, 81, 83, 197.

SShock Management, 79.

Society, 2, 24, 31, 82, 83, 84,107, 135, 161.

Strategic Management, 1, 8, 33,36, 70, 77, 134, 138, 139,147, 159, 161.

Strategic management, 1, 2, 5,6, 8, 9, 10, 11, 16, 18, 27,28, 33, 35, 37, 42, 45, 47,55, 56, 60, 65, 66, 70, 71,75, 77, 85, 87, 92, 108, 109,110, 112, 114, 115, 117, 118,134, 135, 139, 141, 142, 146,147.

Strategic Planning, 2, 6, 10, 27,28, 37, 38, 39, 41, 42, 44,45, 58, 85, 101, 161, 162,168, 171, 177, 178, 179, 180,181, 182, 183, 184, 185, 186,187, 189, 215, 236, 247.

Strategy Hierarchy, 6.Strategy Process, 58, 64, 65, 66,67.

Strategy Research, 139, 140, 141,142, 147.

Suitability, 3, 4, 110.

TTechnology, 2, 3, 6, 7, 18, 19,26, 29, 31, 32, 33, 34, 36,38, 40, 46, 53, 83, 92, 135,144, 164, 173, 174, 192.

WWisdom, 75, 81, 194, 197.Workers, 29, 36, 46, 54, 55,136.

20076355-strategic-management-and-business-management-f (2)

Documents

processes strategic

strategic consistency

key strategic issues

new strategy

organizations objectives

essence of strategic

expectations of management

corporate objectives