Saturday, April 9, 2011

Introduction to Strategy Management

The last few articles have detailed questions to be addressed in order to develop a sound strategic plan. Perhaps we should pause and look at the context in which we use them.

Throughout history, military leaders have devised strategies to achieve victory over their opponents. Each general’s approach is unique. The great Chinese general, Sun-tzu, said there were 13 principles of war that each general had to know. Napoleon declared that his officers should know 115 rules of generalship. In his treatise, On War, Karl von Clauswitz of Prussia originated the concept of total war. In the United States, a confederate general said there was only one adage of war: Get there first with the most men.

We call these approaches to war strategies. Indeed, the English word “strategy” comes from the ancient Greek word meaning generalship. Strategy is the art and science of conducting a major campaign to achieve an objective, be it military or otherwise. Indeed, some modern sports coaches study ancient military leaders to improve their understanding of how to lead their teams.

As we see, the generals often disagree with each other on what or how many principles should be part of their strategic plan. Most principles of strategy, however, include some common elements, including clarifying the objective, proper deployment of forces on key targets, discipline, security and simplicity of operations.

Dr. W. Edwards Deming also taught that, in business, an organization’s leadership must determine its aim and establish a system for getting all employees involved in the aim. It is management’s job to ensure that there is an organizational strategy as well. Today this means more than clarifying the objective and laying the plans for reaching that objective. It also means executing the strategy.

This is done differently all over the globe. Most North American managers excel at developing strategies, whether in business, government, or other types of organizations. In carrying out the strategy, however, they frequently lag behind our foreign competitors, sometimes leaving our carefully written strategies unexecuted.

Why? The answer probably lies in not having a system of management to deploy our strategies through the organization. The Strategy Management system does that. It communicates the strategies and organizational aim to every employee, and gives them all a part in the execution. It is a modern method for focusing our troops on the important targets.

The Strategy Management System has four main elements-Prepare, Research, Plan, and Manage. The preparation element consists of top management making the decision to use this system and parceling out the responsibility for research on the twenty-one items to be reviewed. It should be noted that this system is not size dependent; it has been used with as many as 435 participants in the planning event to as small as a single person.

With the assignments handed out to the planning team, they begin to survey, meet, talk and research data to find out answers to the questions presented in their assignments.

They bring their findings to the planning event in a five to ten minute presentation. Other individuals whose input is respected are invited to the planning event, such as key employees, customers, suppliers, Board members, community leaders, etc. They are given a pad of sticky notes and a marking pen to write down any issues that come to mind during the presentations. At the conclusion of the presentations, the sticky notes are randomly placed on a wall and participants are asked to group them by like subjects. After the number of distinct groups is reduced to a number between three and twelve, the groups are named in the form of a verb and noun and these become the strategic actions with all the notes under them as back up for what must be addressed.

The actions are then prioritized according to primarily causes as opposed to effects of the others. They are tested to see if they are both necessary and sufficient to achieve the aim of the organization and a leader identified to be responsible to achieve each strategic action.

The aim, values, mission, and strategic actions are then summarized on a one-page document, sometimes called a strategy map and distributed to all employees. The Japanese have a saying that it takes more than one of the senses to communicate so this plan must not only be provided to each employee but must also be explained orally by management.

The last element of Strategy Management is to manage the system to make sure results are obtained. The leader of each strategic action typically reports monthly to the rest of the management team on the progress they have made, roadblocks encountered, and plans going forward.

This system has been proven to work with any size or type of organization to focus all employees on achieving the aim of the organization and obtaining the desired results.

Using SWOT Analysis for Strategic Planning

Many strategic planning processes use as a basis an exploration of strengths, weaknesses, opportunities, and threats. As important as these subjects are, they are still only four of the twenty-one areas that must be researched to develop a solid plan that will be achieved. This article will share some questions to be addressed in these four important areas.

Strengths are defined as the organization’s competencies, capabilities, and any other resources it can leverage to fulfill the needs of customers. It is a list of advantages the organization has over its competitors; resources it has to fulfill the needs of customers or to contribute to society; unique characteristics that appeal to customers; and perceived benefits of this organization to customers. Questions to investigate and understand why are:

1. What do you do best?

2. What are perhaps some untapped resources?

3. What do customers think you are best at?

4. What part of your operation would your competitors most like to emulate?

5. What part of your organization do you most fear to lose?

6. Where can you be most successful? (area, industry, application, etc.)

7. Do the customers really care about each of your strengths?

Weaknesses are defined as vulnerable characteristics that the competition might exploit and reasons, real or perceived, for customers not to avail themselves of your organization’s products or services. Two questions to research, analyze, and understand why are:

1. What are your organization’s most critical vulnerabilities in the eyes of your customers?

2. What are your organization’s most critical vulnerabilities in the eyes of your competitors?

Opportunities are defined as significant areas for your organization to exploit its strengths and opportunities through new markets and product or service offerings. Research on the major opportunities for the organization in the next three to five years should be conducted and presented with the rationale that the opportunities are real, you can be successful, and the results will justify the effort. Questions to be considered in this area are:

1. Where are the unmet needs?

2. Where are the growth areas in the market?

3. What are the significant market needs?

4. What positive impact could the economy have?

5. Where are you technically superior?

Threats are defined as areas of vulnerability in the marketplace, encompassing the economy and environment trends, legislation, competitive actions, possible market obsolescence or change. The theme of this research and presentation is on the major threats that face your organization in the next three to five years. Questions to investigate and understand why are:

1. In what areas of markets and products are you in the declining phase?

2. What negative impact could the economy have?

3. What negative impact could the government have?

4. What environment factors could have a negative impact?

5. What customer factors/changes could have a negative impact?

6. Where are you technically inferior?

7. What are your limitations? Why?

Research and discussion of strengths, weaknesses, opportunities, and threats will reveal areas to be shored up or strengthened and other areas to be exploited in your planning activity. By knowing yourselves and of what you are capable, you are in a better position to move forward.