Analysis Strategy of an Organization from Strategic Intent and Stretch Perspective - Essay Example

? Analysing strategy of an organisation from strategic intent and stretch perspective. Introduction: Strategy is always identified with Porter’s (1996) elucidation, which suggests that strategy involves creation of a unique and valuable position, involving a different set of activities. The present discussion revolves around, the IT giant, Accenture’s strategy and its execution. Porter’s studies and contribution towards gaining an understanding and insight into strategy is regarded as highly valuable in contemporary management, and have paved way to the emergence of many businesses that have reached their pinnacle and have managed to stay there; one of them being Accenture. Porter’s studies have identified five main forces of industry competition, which can be used as the core guide to business management. Porter (2008) ascertains that the industry structure drives competition and profitability irrespective of the age of the business, policies or technology used. This, in other words, accounts for strategy adopted by the industry or business to enter the market, grow and sustain its position. Precisely, strategies help organisations to be focused towards their goals. Accenture is a global organisation that deals with and provides services in consulting, technology and outsourcing, with about 246,000 employees in more than 100 countries. Its strategy is to become the world’s leading company in the field of consulting, technology and outsourcing by delivering high performance. Its consulting services include business process management, growth, finance and performance management, operational excellence, risk management, sustainability etc and continues to expand its territory. Such versatile business is the result of its unique approach that provides competitive advantage to all its clients and customers (Accenture, n.d). Accenture has been able to deliver and sustain its position in such versatile and competitive business markets by aligning all its stakeholders towards one common goal through a common vision; however, it adopts customized strategies in accordance with the business and market. Hamel and Prahalad (1989) assert the importance of strategies and the need to survive competition through effective strategies, which, they claim, is more often achieved by imitating or copying competitors’ practices and also sometimes partnering with competitors in some way or other to share the profits. They also identified that many businesses actually adopted practices that were beyond mere replication of existing strategies and such businesses not only succeeded but also reached far fledged horizons. A good lesson for most of the businesses worldwide, this approach has indeed opened up new ways of looking at business and management. Hamel and Prahalad (1989) refer to this approach or attitude as the ‘strategic intent,’ which also indicates a specific approach to all strategy formulation and implementation that will help in treading ahead in the chosen field of industry. Accenture’s mission to become the world’s leading company by delivering high performance can be considered as its strategic intent. Harfield’s (1998) study challenged Porter’s approach to strategy and strategic management claiming the latter’s concept to be more of a myth. His study on strategic management based on the linear, adaptive and interpretative approaches provides multidimensional view to strategic management. Overall, this extensive study credits Porter for his contribution and on the other hand also claims strategic management to be much more complicated as well as resourceful, which modern management specialists can use for further construction. This anticipated potential gives rise to the concept of strategic intent, which is realized by leaders that really wish to align the actions and beliefs of all employees of an organisation towards one common challenging goal; Smith (1994, p.66) refers to such leadership attitude as the ‘Merlin Factor.’ Strategic intent is a by-product of strategic management whereby the organisation’s vision is determined in a manner that will foster its growth and sustainability. Accenture’s differential business offerings along with their strategic intent have contributed to their competitive position in the market. Accenture display its strategic intent through business and management models based on core values of stewardship, best people, client value creator, respect for the individual, and integrity (Accenture, n.d). While strategy helps the organisation to start and make its way to achieve its intended goal, strategic intent helps the organisation to stay-put on its achieved position by leveraging its resources, improving and maintaining efficiency, complementing the existing skills, managing risk and recovering in shortest timeframe. Strategic intent or strategic purpose is embedded in organisation’s vision and mission (Badescu, 2006). Basically, this means the vision and mission relay the sole purpose of the organisation in the form of common goal and direction that it intends its employees to follow and achieve. Accenture’s strategic intent has guided its various business ventures, such as that of outsourcing and consulting in the Eastern countries that were unexplored by others. In other words, strategic intent also helps in formulating strategies in accordance with changing situations and demands. Strategic intent instils the habit of winning, motivating employees as well as anticipating and preparing for challenges. Accenture’s strategic intent is evident in its slogan: ‘High performance. Delivered,’ which is accomplished thorugh innovation, resourcefulness, competency development and goal clarity. From Hamel and Prahalad’s (1989) perspective, these attributes explain about strategic intent. In short, mission, core competence and competitive advantage can explain the organisation’s strategic intent (Daft, 2009). Hamel and Prahalad (1989) explain that organisations use stretch targets to achieve their strategic intent and to achieve competitive advantage. The concept of stretch targets is very prominent and critical in tough global competitive markets, such as what Accenture operates in. The executive leadership here is focused on creating ability or competency that can match with their ambition and anticipated challenges instead of going after solutions when the situations arise. In this manner, organisations not only prepare themselves to futuristic challenges but also are able to conquer larger markets and businesses as well as retain their competitiveness through profits, resources and performance. Accenture’s strategic intent and stretch can be understood by examining its strategies, vision, mission, leadership practices, etc. Accenture’s vision is to deliver high performance in every function and every business; this indicates the winning attitude it wants to instil in its employees through strategies, practices and business models. Nanterme (2011), the chief executive officer of Accenture, attributed their well-planned growth strategy that is aligned with the needs of their clients in the current environment to its increased revenues and profits in 2011, as published in Accenture’s fiscal report of 2011 (see appendix 1). Nanterme (2011) claims that the uniqueness in delivering best service to their clients lies in technological differentiation; that their profits are due to industry differentiation and ability to capture new geographical markets within short span of time. From an industry perspective, Accenture targeted the high-revenue and promising industries such as the health care industry coupled with their software advancements, which earned competitive advantage to both Accenture and their clients in healthcare sector. From initiatives and innovations perspective, Accenture was able to improve its capabilities, skills and competencies to serve a broad range of businesses through strategic initiatives like analytics, mobility, digital marketing, cloud computing, etc (Nanterme, 2011). From leadership perspective, executive leadership at Accenture assumes stretch responsibilities to drive high performance at all levels and in all functions so that maximum participation is created and responsibility owned by maximum number of employees (Caldwell, 2004). Stretch, as implied by Hamel and Prahalad (1989), points to the extended commitment that changes the organisation’s internal culture and fosters preparation to challenges as well as to seize new market opportunities. The aim of strategic intent is to attain a leadership position in the market in which the organisation operates as well as to mark a way for further progress. Smith (1994) asserts the importance of internal culture in building a strategic intent and stretch goals; in turn, establishes the significance of employee engagement, knowledge sharing, empowerment and a leadership practice different from the conventional or bureaucratic types. Referring to the Merlin Factor, Smith (1994, p.68) quotes, ‘The Merlin Factor is the ability to see the potential of the present from the point of view of the future. It is the ability to enlist people throughout the organisation as ambassadors who listen, speak, and act on behalf of that future, and it is an absolute commitment to performance breakthroughs that explode the existing cultural limits on what’s possible.’ In order to imbibe such strategic intent, Accenture has constantly strived to adopt an appropriate internal culture that is supportive of participation, encouragement, innovation, leadership behaviour and winning. Accenture’s efforts to match organisational capabilities with future requirements are focussed towards training and cross-training, employee engagement and empowerment, innovation, knowledge sharing, and continuous learning practices (Training and development in solutions, n.d). Nanterme (2011) reported that Accenture invested more than $800 million in training and professional development activities for its employees in 2011 in order to ensure highest performance is delivered. Delivery of high performance to all of its clients and to continue to expand its businesses require much more than efforts, strategies, policies and practices, employee involvement and ownership. In Hamel and Prahalad’s (1994) perspective, the additional exertion is that of core competence, which will actually help the organisation to gain competitive advantage. Organisations gain competitive advantage not just by new product/service and/or features but by earning the ability to build products/services at low cost and in greater pace than competitors, and by developing innovative product lines in highly efficient manner that can be priced and marketed in a manner to reach maximum number of customers in its segment. The strategic intent of delivering high performance with maximum profits necessitates building core competence that will provide competitive advantage to the company. However, development of core competence should follow its appropriate usage through different management practices in order to gain competitive advantage. These management practices should be able to create both real and perceived advantages, like, real results that are superior to competitors’ and unique positioning strategy used to let potential customers and customers know about the company’s offerings, respectively (Alvarenga & Malmierca, 2010). Considering this as just one example, core competencies must be developed in almost every aspect of the business in order to execute the function efficiently and truly gain competitive advantage. All big businesses use strategies, policies and practices for functioning; however, it is the efficiency and appropriateness of these strategies that helps the business to gain competitive edge in the market. This is one of the core reasons that gave birth to outsourcing, and Accenture adopts outsourcing as one of its business models to deliver high performance to its clients. Moreover, Accenture’s core competence, whether outsourcing or any other business, is determined by three factors: the activity creates real of perceived competitive advantage; the activity cannot be done by any other unit, inside or outside, any better; and the activity involves minimum risk (Alvarenga & Malierca, 2010). While strategic intent and stretch goals provide direction, without commitment from individuals these are redundant in nature. To instil commitment, leaders must strive to align individuals’ goals to organisation’s vision, or create shared personal vision. Gaining commitment towards common vision can then be used to prepare means or resources to accomplish the vision. This demands change in internal culture, which can be highly challenging. The core factors necessary to execute internal culture change include leadership, employee engagement practices, and key resources such as training and skill enhancement. Another potential challenge that confronts strategic intent is the need for constant upgrading of core competencies and assessment of existing capabilities. Vertical hierarchies, policies and structures, technological gaps, etc also can come in way of realizing company’s strategic intent. Hamel and Prahalad (1994, p.136) point out that the three main challenges of any strategic intent are direction, discovery and destiny. Direction refers to the goals at all levels, individual and organisational, which can be in the form of corporate challenges that act as milestones to be achieved by the individuals. Secondly, discovery refers to identification of the right resource capabilities to be developed that can add to the competitive advantage. Thirdly, destiny refers to the point where the organisation wants to reach, and thus the point where individuals have to reach in terms of their performance and growth; this, according to Hamel and Prahalad (1994) should be the world standard. World standard entails all possible advancements and changes, and strategic intent is to compete in these frames through stretch goals. Conclusion: In conclusion, although adopting a strategic perspective to business management has proven to be immensely effective, competition in the market continues to pose great threats to businesses and their sustainability. Attaining and maintaining a comparable game with competitors is important for the plying businesses in order to thrive and grow, which necessitates instilling an attitude of winning, envisioning and anticipating beyond the visible horizons, and preparing for the anticipated threats and potential opportunities through strategic intent. Accenture is able to translate its strategic intent to outcomes that provide competitive edge through core competencies, stretch goals and a strong internal organisational culture that is built upon strong strategies, policies and practices, and supported by leadership. Initiatives to enhance learning and knowledge sharing stand at the core for Accenture’s expansion besides identifying new markets for conducting business and delivering high performance through efficient technology and diversified services. Finally, stretch goals aligned to the strategic intent are imperative to reach beyond conventional markets and lead, which can be realized through continuous learning and development; further, this leads to building core competencies, which can provide means to competitive advantage. References Accenture. n.d. ‘Company description.’ Acccenture.com. Available from http://www.accenture.com/us-en/company/overview/description/Pages/index.aspx (accessed 5 August 2012). Alvarenga, C.A and Malmierca, P. 2010. ‘Outsourcing core competency 2.0: the case for outsourcing supply chain management.’ Accenture. www.Accenture.com. Available from http://www.accenture.com/SiteCollectionDocuments/PDF/282Accenture_Core_Competency_20_The_Case_For_Outsourcing_Supply_Chain_Management.pdf (Accessed 8 August 2012). Badescu, C. 2006. ‘Organisational strategies in the competitive environments.’ In The vertical boundaries of the firm competitive advantages: a strategic approach. ASLA Publishing House, California. (Ch.1, pp:1-54). Caldwell, C.M. 2004. Leadership skills for managers. 4th edn. AMACOM, USA. Daft, R.L. 2009. Organisation theory and design. 10th edn. Cengage Learning, Ohio. Hamel, G and Prahalad, C.K. 1989. ‘Strategic Intent.’ Harvard Business Review, vol 67, no 3, pp 63-76 Hamel, G and Prahalad, C.K. 1990. ‘The core competence of the corporation.’ Harvard Business Review, vol 68 no 3, pp: 79-91. Hamel, G and Prahalad, C.K. 1994. Competing for the future. 6th edn. Harvard Business Press, Harvard. Harfield, T. 1998. ‘Strategic Management and Michael Porter: a postmodern reading.’ Electronic Journal of Radical Organisation Theory, vol 4, no1. Nanterme, P, 2011, ’Annual Report 2011 - Letter from our chief executive officer.’ Accenture.com. Available from http://www.accenture.com/us-en/company/annual-report/Pages/annual-report-2011-ceo-letter.aspx (Accessed 8 August 2012). Porter, M .E. 1996. ‘What is strategy.’ Harvard business review, vol 74, no 6, pp: 61-78. Porter, M. E. 2008. ‘The five competitive forces that shape strategy.’ Harvard Business Review, vol 86, no 1, 78-93 Smith, C.E. 1994. ‘The Merlin Factor: leadership and strategic intent.’ Business Strategy Review, vol 5 no 1, pp: 67–84. Training and development in solutions, n.d. Accenture. www.accenture.com. Available from http://www.accenture.com/Microsites/india-graduates-site/careers/Pages/training-solutions.aspx (Accessed 8 August 2012). Appendices 1. Accenture’s fiscal report 2011 Source: Nanterme, 2011. Annual Report 2011 - Letter from Our Chief Executive Officer. Completed report accessible from http://www.accenture.com/us-en/company/annual-report/Pages/annual-report-2011-ceo-letter.aspx Appendix 1 contd…. source: Nanterme, 2011. Appendix 1 contd… Source: Nanterme, 2011. Read More