Is it right to suggest that Strategies are not worth the Paper they are Written On - Essay Example

? Is it Right to suggest that Strategies are not worth the Paper they are Written On? By Candi s FACULTY OF BUSINESS ADMINISTRATION (This page intentionally left blank) Introduction Strategy is about deciding how best to achieve desired ends and within the business context, it is about attempting to gain sustainable competitive advantage to outperform competitors by establishing a difference in the way in which a frim operates in relation to its competitors (Porter, 2000, Pp. 60 – 64). In the business context, most competitors focus on the notions of strategy because of the argument that organisations need a strategy to establish a direction that will cause them to outperform competitors or at least enable them to manoeuvre effectively in a threatening, volatile and rapidly changing business environment (Mintzberg, 1987, Pp. 25 – 26). It is impossible to confine strategy to business, because a strategy is about deciding about how best to achieve a desired end, or result, and this means that strategy is of significance in the conduct of war, in politics for achieving victory, in marketing, in the management of economy and in numerous other fields (Chia, 2009, Chapter 1). Yet, despite the results presented by the great strategies of the past, including the adoption of mass production by Ford, Sear’s sale of reliable merchandise at reasonable prices and the Xerox strategy of selling copies rather than copiers, today a lack of satisfaction exists with the strategic plan (Campbell, 1997, Pp. 42 – 43) and (Christensen, 1997, Pp. 141 – 142). Rapid change in the business environment, the strategy process and execution of strategy add to the confusion about strategy (Cravens, 2009, Pp. 31 – 32), (Fithian, 2007, Pp. 82 – 84) and (Beudan, 2001, Pp. 65 – 67). However, because strategy is about deciding how to achieve the desired end, it is useful and this essay presents a discussion about the worth of strategy today. What is the Need for Strategy? A need exists for strategy because strategists must decide how best to cope with competition, determine how best to overcome the enemy and how best to generally achieve a desired end (Porter, 2008, Pp. 79 – 80) and (Mintzberg, 1987, Pp. 25 – 26). It is important for a firm to decide about what will catalyse the growth of value and the creation of wealth (Hamel, 1998, Pp. 7 – 8). Strategy innovation that challenges the existing models is the only way for new companies to succeed in the face of competition and enormous resource disadvantages. Without investigating how best to create money, it is unlikely that wealth creation will occur and growth may not necessarily the best way to go for all firms. Although managers may feel that delivering quality at the right price will deliver the desired results, it will be important for them to know how best to do this (Hamel, 1998, Pp. 7 – 8). Even if the competitive environment is changing rapidly, it still makes sense to try to understand the trends to decide how best to take advantage of these. Thus, although a need may exist to reinvent the practice of strategy, it will be wrong to suggest that strategy itself is worthless because deciding about how to achieve an end cannot be useless. Mintzberg (1987, Pp. 25 – 30) suggests that organisations need to set their direction and focus if they are to succeed and even though this idea emerged more than twenty years ago, it is still right today. It is likely that if the grand strategy for an organisation is correct, the performance will be superior compared to the case when no strategy is prepared and performance depends on chance. Although a focus on strategy may blind an organisation to the need for properly managing its operations, without a strategy it will be difficult to have properly focused operations. Strategy presents a focus, which results in a coordination of organisational activity in an attempt to achieve the optimal. Strategy encourages an organisation to appropriately acquire, organise and utilise resources. In addition, strategy encourages organisations to transform organisational learning and experience into proper plans for the future. However, although the concept of strategy is rooted in stability, strategy is about planning for change. Thus, even if the pace of change is now very rapid, organisations must still plan for the change imposed on them. Even if rapid change has put into question the utility of traditional strategy tools, including the Strength, Weakness, Opportunity and Threat (SWOT) analysis, it is important to remember that other management and strategy tools, including Business Process Re-Engineering (BPR) and benchmarking can help with performance improvement (Warren, 2002, Chapter 11). A need now exists to think more deeply about strategy and to focus on dynamic issues that confront a firm while not losing sight of the broader vision and how to attain this vision. Strategic managers must still manage the time-path of performance for their organisations by exploiting opportunities, limiting damage and overcoming obstacles to sustain strategy dynamics for achieving the broader vision (Warren, 2002, Chapter 1). Thus, although rapid change may require a more frequent revision of strategy, the way to achieve that which is optimally possible is still of value today. What is wrong with Strategy? According to Campbell (1997, Pp. 42 – 43), strategists often fail to distinguish between the purpose for which an organisation exists and what an organisation must do to survive, or the constraints to present confusion that results in directionless strategies. A need now exists to improve planning processes that will deliver the right insights to present the right strategy in the face of rapid change. In addition, it is useful to consider carefully strategy implementation to achieve the desired results. Availability of information contributes to the speed of change in business environment and this means that strategy formulation must now have the right information inputs to present the right strategy (Stern, 2006, Pp. 99 – 115). A need now exists for a thorough analysis of information inputs, keeping in mind that they are also available to many competitors. It is now possible to effect collaboration between organisations far more quickly because of the availability of electronic communications technologies and this means that competitor tactics may change quickly, requiring the strategist to respond quickly (Stern, 2006, Pp. 120 – 135). According to Stern (2006), price fluctuations in response to market are now much faster than ever before and consumers now fuel new kinds of markets based on their perceptions of value, quality and price. Markets are global and this means that production costs decide about purchase decisions. Portfolio decisions are now more complex with a requirement for taking into account a complex mix of considerations related to the portfolio. The strategist must now identify the right mix of business issues confronting an organisation and strategy formulation maintains an element of the unknown that requires processes of correction. In addition, the strategist must constantly deal with emergent issues by formulating emergent strategies that will drive the organisation towards the intended vision (Mintzberg, 2007, Pp. 1 – 17). Mintzberg (2007, Pp. 340 – 342) suggests that it is possible to consider strategy in terms of plans for the future, patterns from the past, positions on the ground and perspectives in the abstract that focus on theory of business. Mintzberg goes further to state that strategy formation consists of four basic processes, which are as follows: Strategic planning for formulating plans about tangible positions. Strategic visioning decides about the broad perspectives that are of value. To determine emergent patterns that manifest themselves as tangible positions it is necessary to resort to strategic venturing. Strategic learning helps a strategist to decide about emergent patterns that help determine broad perspectives for the future from reasoning and past experience. Now, the strategy content focus for tangible positions has shifted from strategic planning to strategic venturing that seeks to learn from emergent patterns rather than firm future positions. For deciding about broad perspectives that are of value to an organisation, strategic learning has replaced strategic visioning (Mintzberg, 2007, Pp. 340 – 341). Now, it is best to approach strategy formulation as a craft that requires intimacy and harmony with that with which one is dealing with, acquired from long experience, and a great attention to detail (Mintzberg, 2007, Pp. 376 – 379). Thus, strategy formulation must present the right approach with an emphasis on designing action with thought, deciding about how best to manage stability. It is now vital for a strategist to make the effort to detect discontinuities and decide about how best to reconcile change with continuity. Strategy formulation must now deal with patterns and a strategist must know the business intimately to create the right strategy because trying to develop strategy without insights leads to unrealistic plans. In the present day and age, strategists cannot insist on a purpose if one does not exist, but they must emphasise optimality (Campbell, 1997, Pp. 50 – 51). Perspectives related to the management of operations are important for strategy formulation and this means that it is useful to consider how operations management can contribute to achieving the desired result. Thus, strategy formulation is now far more complex than what textbooks present, requiring better tools, techniques, superior strategy execution, superior policy formulation processes with insights, details etc. and constant re-planning based on patterns and trends. Improving on Strategy In addition to considering patterns, and how things change, strategists must now increasingly think about developments in the market when deciding about strategy (Cravens, 2009, Pp. 32 – 35). Fast change must now influence strategic vision and strategy implementation for satisfying customers and market demand. It is now essential for a strategist to identify new business models, new competition and change that emerges in the business environment to make an organisation respond appropriately. Thus, the sensing of the business environment, learning about the environment and presenting broad trends for change should effectively impinge on strategy formulation. According to Porter (2008, Pp. 91 – 93), ignoring industry trends when deciding about strategy will present flawed strategy. Values persisting in the business environment are significant for consideration during strategy formulation. Mantere (2008, Pp. 341 – 350) suggests that participation problems impinge on strategy processes in organisations and this means that concretisation, or the formulation of clear rules and procedures for seeking inputs into the strategy process helps with the delivery of effective strategy. A genuine dialogue, exchange of ideas, participation and critical thinking assists with the formulation of the right strategy. Leadership involvement in strategy formulation is likely to stimulate creation of superior strategy (Montgomery, 2008, Pp. 57 – 59). The CEO is the chief strategist and this job cannot be outsourced. Now, strategy should focus on the creation of value rather than the achievement of a long-term sustainable competitive advantage and strategy has turned into an organic process that is adaptive, holistic and open-ended. Today, strategy is a process that is a continuous everyday process that is unending, refined constantly to foster competitive advantage, with a view to developing the organisation in the face of constant change. A Case Study A case study that illustrates the disaster that can befall an organisation due to flawed strategy is that of Dunlop tyres, which was once a prominent and successful British tyre maker that was a household name for tyres in the Commonwealth (McGovern, 2007, Pp. 886 – 887). Dunlop tyres that depended heavily on automobile production in the United Kingdom lost out to Michelin, a French competitor, because it lagged in switching to steel radial tyre technology and relied on a switch to fabric tyre. However, fabric tyre technology was not popular in Continental Europe and because Dunlop relied heavily on automobile production in the United Kingdom, it could not compete when it failed to sense a substantial slump in the production of automobiles in the United Kingdom. Dunlop, later acquired by BTR, failed because its management could not sense important and significant market trends to formulate strategy and the brand name that was once a household name in the Commonwealth ceased to exist. Conclusion It should be obvious from the discussion presented in the essay that despite the fact that rapid change now presents greater demands on strategy formulation, it will be wrong to suggest that strategies are not worth the paper. However, because information is now readily available, collaboration is far more rapid and the business environment is global with global markets and customers shaping demand, strategy needs leadership, an emphasis on superior processes for formulation, an attention to detail and rigor, participation, inputs from trends and patterns, inputs from organisational learning and experience, optimal implementation and well-considered execution. Without an approach that emphasises the craft in strategy formulation, flawed strategy can present disasters for organisations. Now, strategy is a continuous and never-ending process rather than a one-off plan. (This page intentionally left blank) Bibliography / References Beudan, Eric 2001, ‘The Failure of Strategy: It is all in the Execution’, Ivey Business Journal, January / February 2001, Pp. 64 – 68, retrieved: February 18, 2011, from EBSCO Campbell, Andrew and Alexander, Marcus 1997, ‘What’s wrong with Strategy?’, Harvard Business Review, November / December 1997, Pp. 42 – 51, retrieved: February 18, 2011, from EBSCO Chia, Robert C. H. & Holt, Robin 2009, Strategy without Design: The Silent Efficacy of Indirect Action, Cambridge University Press Christensen, Clayton M 1997, ‘Making Strategy: Learning by Doing’, Harvard Business Review, November / December 1997, Pp. 141 – 156, retrieved: February 18, 2011, from EBSCO Cravens, David W. 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