From Strategic Planning to Strategic Thinking - Coursework Example

2009 TURBULENT TIMES STRATEGIC PLANNING. Introduction Whenever a company is operating under turbulent times, proper planning need to be embraced, organizations need to go beyond mere visioning, planning and forecasting. In today’s rapidly changing business and economic world, all necessary substantive issues of business and corporate strategy have been issues of proper implementation. Today business strategizing is more concerned with matching between companies internal capabilities with its external environment. In these turbulent times there are quite a number of challenges businesses are being faced with, there is the issue of global financial crisis which has even threatened to bring some of the best economies on its knees, more pressure is being felt at the corporate level, with newly increased competition from the newly industrialized economies, dwindling market share, uncertainty in the stock market, crushing of the real estate sector which is the main driver of the global economy, unemployment numbers soaring, increased cost of energy, corruption, escalation of medical care , soaring cost of education, counterfeits. However despite the challenges there are new opportunities emanating especially in the Information and Communications Technology. To begin with, telecommunication companies subscription numbers are at the record highest, this is evident by the number of new operators, there is also the hype of newer services such as the anticipated 4G technology, there is the mushrooming of web 2.0 services, for the first time laptop sales have eclipsed the PC market worldwide, smart phones sales are at the peak and finally the “Netbooks” these are the smaller version laptops, have taken the computer industry by storm however there is still a lot of debate whether all this is being attributed to the global financial crisis or the natural success of the product ”Netbooks”. During these turbulent times organizations need to become competitor oriented, they must always organize themselves to pursue the right competitive advantages & strategy, these means they should avoid their competitor’s strength, and at the same time look for their weak points. Organizations ought to implement some unique value based strategy by combining an organizations internal resources and capabilities that competitors will find extremely hard to replicate across. However, there is a difference of performance between various industries across the world. The stock market in New York however big is not the same as the stock market in China, the real estate sector in Dubai is a different story with what is being witnessed in Malaysia or Singapore, the Tourism industry in Kenya is not the same story as the tourism industry in South Africa. In this report we are going to critically analyze the different sector independently and make a conclusive conclusion at the end of the analysis whether we should change tact in implementing some of our business strategies. From strategic planning to strategic thinking In period of drastic changes, there should always be a shift from strategic planning towards the strategic thinking and strategic management (Henry Mintzberg, 1994). However there has been a lot of debate whether the term “Strategic planning” should be dropped because it is being believed to have profoundly impeded strategic thinking. Strategic planning is more about analysis, the breaking down of a goal into different steps, designing how the steps should be strategically implemented and finally anticipating the eventual consequences of the envisaged steps. Strategic planning is more about usage of synthesis, intuition and personal creativity in coming up with an integrated perspective towards business success. The only problem is that strategic proponents are of the belief that analysis always encompasses synthesis. It is towards this belief that there are assumptions that predictions will always be possible and the process of strategy making can be easily formalized. However, some predictions are simple but others could be absurd, predictions such as technological innovations which are pretty difficult even to the famous industry gurus. But anyway formalizing a business strategy is an implication of a sequence from its initial analysis, to the procedure and finally the action phase. The main essence of strategy making is basically learning as people act. Formal system will never internalize, synthesize or comprehend complex information (Mintzberg p.111) Strategic planning should continually be practiced by elaborating on previous workable strategies that existed. Business managers should comprehend the difference between strategic planning and thinking, they should always capture what they learn from all sources within the organization, afterwards they should synthesize the knowledge acquired from the many different sources into one vision of the direction that the business is en-route (Judy Spady). This does not mean that the planners should be gotten rid off but, those with the responsibilities of planning should focus their contribution towards the process of strategy design rather than being inside it (Judy Spady). Something funny, is that planners are ceremonial, they don’t have the authority in making commitments, but neither do the business managers have access to the information that is very critical in strategy making. Managers are always under pressure due to time, they need to make decision and act. Planners on the other hand have all the time in analyzing the business information, they function as strategy finders and analysts. They should encourage managers towards future thinking by usage of creative mechanisms, by questioning conventional wisdom & assumptions and finally raising difficult questions (Arie De Gus, 1988) Today in the market there are quite a number of tools that may aid business executives in planning and thinking strategically (Judy Spady). Strategy planning history. Strategy planning could be traced back way as early as during the terms of the ancient Greeks, however its use in business dates back to the twentieth century, recently it is mostly used in competitive contexts. Before the nineteenth century there were limitations in applying competitive thinking to business situations. There were intense competition among different lines of business, but individual organizations lacked the potential in having influence on competitive outcomes. Organizations had incentives in being small and employing the minimal fixed capital. In 1946 Alfred Sloan who was the then chief of general Motors, devised a strategy that was based on the perceived strength and weaknesses of its main rival, the ford motor company. It was also in the 1930s when Mr. Chester Bernard one of AT&T chiefs argued over that managers need to pay special attention to "strategic factors" which were more or less dependent on personal and organizational actions. During the Second World War, organizational challenges witnessed acted as a very good stimulus towards strategic thinking, the crisis of allocating very scarce resources across the economy led to various innovations in management science. Since the destruction of Second World War led to excessive demand, it was only then until 1960s when multinational organizations considered world wide competition as a factor in their planning. It is this post war destruction that led American corporations, in profiteering without effective competitors. Coincidentally in the 1960s, there were classroom discussions from business schools that were focusing on matching a company’s strength and weaknesses, the distinction with opportunities and risks organizations were facing at the market place. It is this framework that came to be known as the SWOT analysis. In the early 1970s there was a rise in strategy consulting companies, companies came up with very many different matrices for portfolio analysis and virtually every company used some type of recommendations in generating strategy analysis. This concept regained popularity in 1973 just after the famous oil crisis and many large corporations were forced to rethink some of their long term plans. This analysis gave senior managers, proper grounds to do away with poor performing units and come 1979 almost half of the fortune 500 companies had introduced portfolio analysis as part of their long term business strategy. However the technique had some drawbacks and some executives went ahead and argued that, the dependence on some packaged techniques, resulted in tightening up within the established business units. Come the early 1980s, businesses consultants were interpreting how the dynamic question of how businesses can create and sustain their competitive advantages in the presence of high alert competitors, this led to many consultants recommending that businesses ought to be more smart than their competitors, the businesses should always focus on their customers future need while their competitors were only focusing on their current needs. In 1993, George Stalk and Allan Webber argued that, Japanese companies are nowadays so dedicated in creating some product development cycles such that there is a strategic treadmill created whereby companies were naturally condemned in running faster but staying in the same place competitively. During this new millennium, strategy management is very excessive and it is linked to the observation that it is one of the few subjects that require intellectual inquiry about markets. A lot of money is at stake and it is being competed for in the development of blockbuster ideas, which is also a source of concern. Concerns about the supply side have been exacerbated by the fact that there are informational imperfections towards markets for the ideas as opposed to the conventional products. Basically the buyer of some idea finds it extremely hard to judge how much the information is worth until it is completely disclosed to him but on the other hand what happens when the buyer decides not to pay much due to the disclosed information. It is an empirical matter whether market performance for ideas, make their real effects to be felt in the world of management, unfortunately information imperfections only complicates the systematic empirical analysis of a main product ideas and a specific turnover in management of ideas. This clearly shows strategy is something dynamic, it is never constant it will keep on changing from time to time. In 2009 this is the period of post financial crisis managers need to re-align their strategies, they have to come up with new ways of doing things, untested ways ,they have to risk beyond, they have to go beyond the call of duties. But to begin with they have to first start with the known towards the unknown. Business Strategy. Currently In 2009there is the global financial crisis, crushing of the world’s main stock markets, free-fall of the real estate sector among others. Managers need to think how they will work towards the future, they need to define a process that will ride them through, and this is a process that will affect all the staff within the organization, from the senior executives to the support staffs. in ensuring that the strategies involved are completely implemented throughout the entire organization, an appreciative inquiry method is the most ideal way in completing all the elements required in strategic planning. A strategic plan should be only serving two unique purposes, these are increasing innovation & driving mans creativity and building peoples prepared minds in ensuring decision makers are always alert on their business strategies. Some argue that real strategies are rarely formalized on the boardrooms but rather on hallways, casual environments and air flights (Beinhocker & Kaplan) When (Beinhocker & Kaplan) performed some research they found that, organizations annual strategic plans resulted into three main things: There was replay of updates from yesteryears presentation. Situations arose where business leaders never took risks without announcing their ideas. Leaders were working on avoiding embarrassments rather than on future prosperity of an organization. But all in all business strategy may also fail due to mainly two reasons: 1. poor implementation. These can be: Over estimating the available resources and abilities Under estimation of resources such as time, personnel and the finances. Failure in co-ordination Poor attempts in gaining support from other or resistance. Inability to follow the plan. Senior management loss of focus. 2. Inappropriate strategy formulation. Poor market research Failure to define the objectives properly Incomplete SWOT analysis Lack of creativity in identification of strategies. Failure in synchronizing the external environment with the organizational resources. Methods of Strategic Planning. However in this paper we are going to discuss some of the strategy methods that any manager could implement in these turbulent times especially this year 2009 as this year contains a lot of uncertainty. To begin with, the method that is effective in ensuring a strategic plan becomes a reality is the Open Space Technology(OST) this is inviting the whole system into a common room and sharing of the ideas, people open up anything that comes to the mind and it consists of a structure. Participants are the ones responsible in creating the agendas for the sessions. In the olden days there were thoughts that planning was pegged on a very simple formula PAST+PRESENT=FUTURE but it was discovered that as the world rapidly changed, an extrapolation from the past, present to the future was more likely to bring a business to a certain point of failure. The only disadvantage associated with using OST in strategic planning is that the focus could end up becoming a negative one. Any topic can be discussed, and any positive strength based approach is not encouraged. We can also employ the Hoshin planning methodology, this is very popular among the Japanese companies, it has quite a number of advantages including a matrix that is immediately deployed when the strategy is identified in improving the odds for its implementation within the entire organization (Stavros, Cooperrider, & Kelley, 2003). Also its tools provided assist in employee involvement and buy INS. The only downfall associated with it is that it uses the popular SWOT analysis which has been failing over the last fifty years. Secondly I would use the Appreciative Inquiry (AI) method, it is a methodology that mainly focuses on an organizations positive core with an intention of carrying the organization forward in the best direction. It came to the limelight in the 1980s as a development process that was using a 4D-cycle. Dream, Discover, Design, Destiny. This can also be used in other aspects such as the training, interviews, goal setting and performance reviews. Appreciative inquiry has the potential in developing employees so that they may be properly prepared in leading the organization towards the future because it always starts as an adventure. AI mainly focuses on what gives life and tangible meaning to an organization, which subsequently brings out the positive core throughout the usage of appreciative interviews. With AI, I will be in a position in shifting focus from a particular deficit thinking towards a strength based approach that is visible in the organizations face and moves that will make it better. Here the main idea will be discovering and building upon strengths of human systems as experienced and displayed by members (Fitzgerald, Murrel, & Newman, 2001, p.g 205) One of the main reasons that AI, will succeed in 2009 as a strategically tool is because of its five principles: Constructionist principle: This states that organizations were invented and maintained by social interactions. It will encourage bringing of new ideas without fear and shyness. Simultaneity Principle: This outlines that inquiry and changes are simultaneously, they have to go hand in hand. Once there is an inquiry and a question is brought, the change process is going to start immediately. Poetic Principle: This states that organizations are mere compilations of their Past, Present and Future depending on the interpretations. Positive Principles: This one describes how organizations are easily changed, within environments that will always support and encourage innovation. Anticipatory Principle: Since it is easy to anticipate the organization potential through analysis, it is this anticipation that will be guiding the organization towards the future. AI should appeal to the senior executives and the organizational top management because it is a methodology grounded on solid theories. It is also very generative in nature, its positive nature disperses within the organization, and the ongoing power within the AI cycle, re-multiplies within the organization. Since change will require action, action will require a game plan, a plan will require a strategy, a strategy will require goals with its enabling objectives, goals and objectives will require a mission and a mission will require a vision. A vision will always be set by the individual’s value and here the AI, inquiry approach towards strategic planning must begin by focusing on the businesses' strength together with its stakeholder’s value. If a business executive implements a higher level of Emotional Intelligence in the turbulent ears of 2009, there will be a unique working climate that will encourage employees in giving their best, the business executive should also strive in the implementation of visionary leadership among senior managers, developing others, empathy, teamwork & collaboration, building bonds, open communication, and finally there must be respect within the organization’s employees . This will enable employees perform at their best throughout the turbulent times. However AI is not the ultimate solution towards strategical planning, but rather it is just an opening for organizations into new way of life. Successful AI implementation Case Study Telesystems WNI Design Team. When 16 Telesystems engineers were working as a close team, in building a, new generation interface that would aid in connecting long distance transmission system and emerging wireless technologies PCS, After just a day and a half onto the project working by the AI methodology, an engineer stood up and declared that " the group has been tremendous, I really enjoyed it and I also think it did much for the team, Now I want to know if the team really mean it from its heart, because if it doesn’t I have various ways to spend my time" This stunned the entire group. This prompted the team to move around the room and each individual present was thinking about it, they tried and made some individual commitments and also live within the predispositions defined. The AI, result process could eventually be summed up as: At the time of the appreciative Inquiry, the team had reached 11 months into a 20 months project and they were six weeks behind the schedule. The Wireless network Interface Team completed the work ahead of schedule, they took 19 months The product performed above expectation and it was also below the budget. There were improvements to the concurrent design and process Telesystems has now adapted AI, as its main team development tools for all of its product designs (Brittain, 1998, p. 226). One can just conclude by saying that, using strategic planning in the workforce, is basically an effort used to anticipate a business future and environmental demands and meeting the human resource requirements that are dictated with these conditions. It should be more than an effort, but rather an inspirational creative process that will always strive to move the business towards achieving its fundamental dream. It should be more of a process whereby the organizations manpower collaborate in ensuring new directions will always increase the odds that proper strategic innovations is going to shape their future. CONCLUSION. Likewise 2009 has been a very challenging year for businesses, even though signs are now showing that there might be some upturn beginning the last quarter of 2009, nevertheless there is still some way to go. Companies executives need to implement very tactful strategies in order to gain competitive advantage from its peers, despite the global financial turmoil there are new challenges being witnessed everywhere. There is new competition from each and every sector, companies are being founded while the older ones are being liquidated, but the rate at which they are being liquidated far outweighs the ones being founded. New competition are being witnessed especially from the Asian tigers due to their booming mainland, for instance during the financial year 2009-2010 the Chinese economies is projected to have an average growth rate of approximately 8%, compare this with the contracting western worlds economy, we need to embrace new tactics, new way of doing things, rediscover our strengths and properly see our competitors weaknesses so that we may be able to capitalize on their weaknesses while building on our strengths. Business executives need to re-stock their arsenals and ensure their performances are at their peak. This is a period of uncertainty and we can even see a dozen businesses venturing into new lines of businesses, this can be witnessed by Tata of India that has traditionally been in the motor vehicle business, is now venturing into the telecommunication world, mobile phone companies have ventured into money transfer business which has been the reserve for banks, computer companies are venturing into the Smartphone markets and mobile phone makers likewise are also venturing into the computing industry on the disguise of portability anywhere "netbooks" As business executives, we need to re-align our mission and vision, there is still much to be made and it is only by giving surgical operations within our business units that we are going to become more competitive and regain our consumer, employee and the shareholders trust and confidence. We as business leaders we have to accept that, people in position authorities solve problems with the short vision perspectives, we resort to what we know so that we may do it quickly and return to business as normal, but nevertheless do we understand that an organizations adaptability in meeting a relentless succession is beyond any single persons expertise. Risk will always increase if we make the mistake of wrong conclusion from our envisaged recovery from the current economic crisis, however, but the diminished sense of urgency will restrain us from focusing on the need of adaptation towards the reality. People who are known to be adapting the adaptive leadership technique, do not make this mistake (Robert et al). Business leaders need to foster adaptation of new environments, increased and new competition and so forth. Organizations must also adapt change to the environment, this is not an exception even to the successful corporate (Robert et al). They also should embrace disequilibrium, difficult changes are very unlikely today, but if the executives are distressed they will either freeze, run or fight, but, an effective leader ought to orchestrate the inevitable conflicts and confusions brought about by change so that in the long run the disturbance will be very productive than destructive to the organization and the executive (Robert et al). Leadership should also be generated within a firm, there should be interdependence of suppliers, customers, employees and even rivals, an executive team on its own can never succeed in finding its own way into the future and leadership must be used to develop leaders. Finally a business executive need to take care of himself first than anybody else, he/she should refrain from being controlled by the forces that brought about the crisis, he should depart completely from the habitual authoritative certainty, but he should also be able to manage his/her own thinking and emotions(Robert et al). References. 1. Robert H, Alexander G, Marty L. July 01, 2009. Leadership in a Permanent Crisis: Harvard Business Publishing. 2. harvardbusiness.org/.../leadership-in-a-permanent-crisis/.../R0907F-PDF-ENG 3. Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard business review, 106-115. 4. DeGeus, A.P, (1988) Planning as Learning. Harvard Business Review. 70-74. 5. George Stalk & Allan N. Webber. “Japans Dark side of time” Harvard Business review. (July/ Aug1993): 94 6. Stavros, J., Cooperrider, D., and Kelley, D. L. (2003, November). Strategic inquiry. Appreciative intent: Inspiration to SOAR: A new framework for strategic planning. A Practitioner, 10-29. 7. Beinhocker, E.D. and Kaplan, S. (2002). Tired of strategic planning [Special Edition]? McKinsey Quarterly, 2, 48-57. 8. Brittain, J. (1998). Do we really mean it? In S. Hammond, C. Royal (Eds.), Lessons From the Field: Applying Appreciative Inquiry. Plano, TX: Practical Press, Inc. 9. Judy Spady. Flipside of Strategic Planning. Retrieved on 2nd Oct, 2009. from www.peaktransformations.com/.../Flipside%20of%20Strategic%20Planning_AI.doc Read More