Strategy, Innovation, and Practise - Essay Example

STRATEGY AND PRACTISE "Winners don't do different things, They do things differently This in a nutshell could be termed as the essence of being successful. Organizations prepare strategies for long term survival. Strategic management function becomes all the more important in case of large organizations. Other functional management areas like Human Resources, Finance etc. deal with only a part of the organization or its activity. At times two or more such areas may need to take assistance from each other. But strategic management relates to the management of the organization as a whole. Different set of persons may contribute in different proportions towards making strategic moves. Strategic decisions are concerned with the issue of setting a direction for the organization to move or the course the organization will follow Though very crucial, yet preparing 'strategic moves' for future often is not based on hard fact, but on presumptions. It involves past experience, forecasting and 'surround-effect'. Strategic management can be described as what Bernard called 'maintaining the organization in operation'2. For any organization to function effectively; three main aspects are critical; Eliciting the contribution from all concerned Organising the workforce by assigning them the responsibilities, and Developing an information system for monitoring and coordination activities. Contribution from the concerned helps in widening the thoughts, assigning responsibilities helps in implementing and constantly monitoring the results and feedback helps in devising a still better strategy. It is said that organizations are not passive components. They are live, full of activity and environment-responsive like living beings. Organizations do acquire character and develop a typical personality with time and we tend to make an image of the employee depending on the organization he/ she works for. This very personality of the organization considerably influences the functions of the organization in the long run. For example we tend to remember some companies as employee friendly, as well paying, as investor friendly, as market friendly, as customer friendly etc. depending upon their past performances and behavior. To meet and exceed customer satisfaction, the business team needs to follow an overall organizational strategy. Traditionally 'maximizing' profits has been considered to be the objective of any organization. Not any more.This criteria has been discarded. Now organizations are supposed to have multiple objectives, monetary as well as non-monetary. There are short-term objectives as well as long-term ones. Strategists are supposed to prioritize all such objectives, so that there is clarity and ease of decision making in situations where there is an apparent clash of objectives. Situations like these at times present testing times for organization. Failure doesn't come with a one off decision, in fact it is the result of continuous interactions in a system. It has structure and sequence. John Martin, CEO, Taco Bell says, "When you are on the right road and the wind is behind you, you can make all kinds of mistakes."3 And the real test comes in overpowering these mistakes and taking corrective and preventive steps. Strategic intent cannot be planned all in advance. It has to be a continuous evolutionary process depending upon the experiences. Henry Ford say, "Failure is the opportunity to begin again more intelligently"4 Basic Building Blocks of Strategy: 1. Environment Analysis 2. Doing a SWOT Analysis 3. Preparing a Business Policy. Environment Analysis: It involves studying and analyzing the surroundings to identify the competitors, the threats and opportunities. Maslow's hierarchy of needs argued that the driving force for human actions is the urge for satisfaction of one or the other need. These needs go on changing depending upon a number of factors. In fact the needs of consumer/ customer and those of the organization are inter-linked because organization too is an active component so needs of the organization too keep changing. Similarly changing needs of the customer must drive an urge for change in the organization for it to succeed in the long run. Environment analysis involves market analysis as well. In fact environment analysis tends to be unique to the strategists, because what may appear to be an opportunity to one organization may not look the same to other. In fact situation of threat for one may appear to be full of opportunity to another. For example, most of the MNCs doing business in Iraq and Afghanistan have fled the respective countries because of the uncertainties prevailing in the regions for quite a while now, yet some of the US companies are doing a roaring business in both these war zones. Well, politics apart, it is the entrepreneurial skills and confidence in one's abilities from the past experience. SWOT Analysis: SWOT Analysis is a strategic method for identifying your business' Strengths and Weaknesses, and to examine the Opportunities and Threats in the wider environment (market, industry, global situation)5. The strength and weakness analysis has to be done at two levels. One, with reference to the industry, and the other with reference to the competitors. Every industry has some unique identifiers, called key success factors. Success of the organization depends on these very factors. Strength of an organization is something, which at times even the organization doesn't realize. It may be in the form of the good strategists, good managers, good workforce, a well recognized brand, sound financial strength, state protection from competitors, loyal customer base etc. Opportunities are often searched by identifying the distinctive competencies, some sudden developments in and around the organization etc. Business Policy: Business policy involves the study of functions and responsibilities of senior management. It deals with the determination of the future course of action that the organization has to adopt and how the resources will be mobilized to achieve this. All this ultimately helps in determining the course of action for the organization. Business policy seeks to integrate knowledge and experience gained in various functional areas of management. The constraints an complexities of the real life business help in shaping a sound business policy for the organization. Group of strategists has to keep track of these three dimensions and keep learning from failures. Failures for an organization can broadly be categorized as; a) Dip in sales. b) Decrease in profit margins c) Continuously dwindling market share d) Bad publicity e) Tensions in industrial relations f) Exodus of good professionals And if not studied with focussed attention, these factors result in offering the competitors an edge, not a very healthy proposition for an organization. Decrease in sales figures, profit margins and the market share may result from; An adverse impact of some major policy decisions taken by the organization, Some better policies implemented by the competitors. Both these cases require strategist's immediate attention and a brainstorming session to figure out the reasons. The decline in sales figures may bring some more information relevant facts in the notice of planners and strategists. So the next time, these new facts will be included in the plan of action. These days media has become very inquisitive. It is almost impossible to keep something under wraps for long. Sting Operations carried out by media organisations have become a very potent weapon. In fact media houses look for such 'sensational' news. 'A dog biting a man is not considered a news but a man biting a dog is considered a scoop'. Therefore how to 'handle' the media for appearing people friendly in the market space has itself become an area of expertise for some strategists. So, it is very important that organizations' moves are understood in the right perspective by the media and subsequently by the customers. Maintaining worker friendly environment and entrusting responsibilities to the responsible one's is very crucial from the point of view of management. The workforce if kept in good humor will not only help in efficient output but also work as a goodwill messenger for the organization. It is said that average managers play checkers, while great managers play chess. Difference lies in their approach and rules of the game. In Checkers, all the pieces are uniform and move in the same way; they are interchangeable. Their movement needs to be planned and co-ordinated as per the requirements. But they all move at the same pace, on parallel paths. In the game of Chess, on the other hand, each type of piece moves in a different way, and to play we need to know how each type of piece moves. Great managers are therefor supposed to know abilities, positive and not so positive traits of their employees. For employees, monetary aspects ease of work are no doubt triggers for better performance, but recognition of their work is equally important. Top management often spends a lot of time working out strategies, but fail to execute well. One big reason - the workforce remains totally aloof to organization goals. Execution of a plan involves more people than the strategy formulation often calls for. It can very well be argued that all information must not go to all men, but at least the requisite information must percolate down to the last person, so that he gets the feeling of being an inseparable part of the team. Some managers love to have the perception that 'smart people plan and grunts execute'. Unfortunately, this has become an outdated perception. The point is, there has to be a logical flow of strategic information between the upper and lower levels in terms of strategy and tasks, and there has be accountability along the way. If a goal is set for an organization but we fail to identify who, what, when and why up and down the organization - accountability varies along the way. A person's strengths may not always be visible, it might be overshadowed by something that he has done in the past. Sometimes it requires a personal trigger from the manager. When they feel that the bosses have enough confidence in them they come out of their shell and ready to take initiatives. The trigger has to be the right one, because squeezing the wrong one might lead to further detachment. Strategies must be in place to support such initiates and experiments. Exodus of trained manpower hurts the organization much more. Trained professional takes away with him not only the training costs but some trade secrets and unique information of organization as well. Maslow's hierarchy of needs identifies the needs from physiological to self-actualization for professionals ranging from lower to higher levels in the organization. It can therefore be very well argued that the faith the top management shows in its professionals is very crucial to retaining the manpower. Fields requiring Strategy: 1. Consolidation 2. Diversification 3. Expansion 4. Amalgamation 5. Acquisition and Mergers Consolidation: When an organization/ company takes stock of its operations it is supposed to deliberate on all its pluses and minuses vis--vis the competitors. The analysis provides an insight into the strengths and weakness. Then strategies are formulated to overcome the weakness and turn opportunities into strengths. The threat perception keeps the managers on toes and they are to review the progress periodically. So, consolidation implies sewing up the loose ends and preparing the organization to take the competitors head-on. Diversification: When a company feels that; i. The products or services that the company is offering have been established in the market and they have enough resources to go in for another range of products or services, or ii. The company feels that the products or services presently on offer from the company are just not helping in break-even or the profit margin has attained a saturation point, Then it starts thinking in terms of entering into a new range of products or services. In case of having market leadership the company can afford to be little liberal in its approach, but in case of not a very healthy current business, the company is supposed to take all precautions while entering newer areas and gradually phasing out of the existing business. Expansion: This is a strategy of pooling the profits for opening newer branches/ offices/ R&D centres/ manufacturing sites/ service centres etc. When the organization takes up such projects it indicates that the organization is in sound health and the financial statistics are equally healthy. This encourages the top brass to plan out strategies to capture more market space and be visible in more regions/ areas. Expansion can be within the region, within the country or in some other country. Therefore, strategists are supposed to take note of; Profile of prospective customers, Rules and regulations of the state or country, Per capita income and other development indicators of the country, Spending habits of the masses in general Amalgamation: When the organization requires some readjustments in its current operations strategies are planned to amalgamate more than two subsidiaries or two similar operations. This helps in strengthening the operations of the company. Acquisitions and mergers: When the company is in a commanding position as compared to some of its competitors, it starts thinking about acquiring another smaller company. This takeover bid may sometimes be little hostile, by purchasing the shares from market and thus taking over the company or it may be a fruitful union of two companies after mutual discussions and talks. Role of strategists is very crucial in such matters. One wrong move may land the company in all sorts of litigation and trouble. Similarly if the company feels that it is not doing good enough it may float the idea of merging itself with some other company. Again the role of strategists come into picture. Strategists are supposed to get the best deal possible so that it may not end up on the loosing side when being taken over by a big brother. Mergers and acquisitions are resorted to catch hold of the market space already with the companies. Resources: http://www.dh.gov.uk/assetRoot/04/13/17/17/04131717.pdf http://www.1000ventures.com/business_guide/crosscuttings/failure_managing.html http://www.nonprofitrisk.org/tutorials/rm_tutorial/1.htm http://www.quickmba.com/strategy/porter.shtml http://www.strategy4u.com http://www.innovation.cc/discussion-papers/ps-innovation-public-interest.htm http://cbae.nmsu.edu/dboje/sbc/pages/page3.html Read More