Strategic management

Compare and contrast the approaches taken by a selected organisation to strategic planning on one hand and organizational development on the other. Consider the extent to which there is an adequate strategic management framework in place to harness the two processes effectively.

So what do we mean by strategic management? Thompson J. (1997 p1128) succinctly describes it as the ‘systematic and formal creation of strategies, to be found in many organisations, and capable of making a very significant contribution in large, multi-activity organisations.’ Going on to comment,

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‘Sitting within the strategic management process in which ‘an organisation establishes its objectives, formulates actions designed to meet these objectives in the desired timescale, implements the actions, and assesses progress and results.’

Further clarification can be seen in a description given by Channon, D. F. (1994). Who sees strategy as a formal approach, Strategic management workbook, commenting that, ‘It is a formal rather than an informal process’. Working Paper, Imperial College. Channon (1998, p635). Detailed in Encyclopaedia of Management, Cooper, Agryris (eds) Blackwell.

Arguably beginning in 1962, if not earlier, with a Harvard Business Report by Gilmore and Brandenburg entitled ‘Anatomy of Corporate Planning’, which detailed the virtues of this school of thought. Mintzberg (2000 p35). Others would argue a relevant starting point could be found by looking at the work of Gilmore and Chamberlain Gilmore (1970 p16) Chamberlain (1968 p151). However, in the broader sense, the concept dates much farther back. There is even a reference to a “Director of Strategic Planning” in Sun Tzu’s The Art of War (1971 p146), originally written about 2400 years ago. But what is it? Mintzberg gives a number of views to help clarify the term. He offers the idea that strategy can be seen as a plan, or for some analysts, it could be viewed as a pattern.

Mintzberg (2000 p23). For some people, notably Porter (1980, 1985) and his followers, strategy is a position, namely the determination of particular products in particular markets. To others, however, strategy is perspective. Mintzberg (2000 p27).

So we can see that a link between strategy and planning dates well before modern business principles, but what is planning? Mintzberg offers the noun, planning, to mean a formalized procedure to produce articulated result, in the form of an integrated system of decisions. In simple terms, he considers the verb, plan, to mean simply taking the future into account whether formally or informally. Mintzberg (2000 p31). This is an important last point from Mintzberg, who is at odds with the early work of Taylor, built on by Ansoff who concentrated on the formal approach to planning.

But to understand the concept fully it may be useful to expand a few definitions of planning. Mintzberg states that planning means different things to different people. To some people, planning is about future thinking. To others, planning is controlling the future with a number of writers proposing, sometimes inadvertently, that planning is decision making, as in Drucker, for example, by discussing the, ‘futurity of present decisions’ (1959 p239). Other views conclude that planning is integrated decision making or that it is a formalized procedure to produce an articulated result, in the form of an integrated system of decisions. Mintzberg (2000 p7).

It is therefore difficult to clearly identify exactly what we mean by strategic planning, especially if we can’t agree the definition of a plan, a point Mintzberg illustrates, ‘Planning may be so elusive because its proponents have been more concerned with promoting vague ideals than achieving viable positions, more concerned with what planning might be than what it actually became.’ Mintzberg (2000 p6)

Thomson argues that ‘all managers plan’ but advises that a clear distinction must be made between the ‘cerebral activity of informal planning and formalized planning systems’ This poses the first problem an organisation must address before it can clearly identify its present position and how it feels it should develop, at what level and in what form should the strategic planning element of an organisation be established. Taylor and Hussey (1982) detailed in Thompson J. (1997 p377) identified seven different approaches to planning, ranging from, and including the informal planning that takes place in ‘someone’s head’ through top-down, bottom-up and the approach of a strategic review that encompasses many different approaches that are formulated into a ‘systematic and comprehensive planning system’. Thomson offers the approach to strategic planning that requires an organisation initially to assess its current position in terms of skills, resources and an evaluation of whether there is a clear understanding of the mission, broad objectives and directions for the future.

The contrast between Thomson and Mintzberg one hand and the views borne out of Taylor, Ansoff and detailed earlier by Channon, in terms of formal and informal, driven either from the top through imposed objectives, or initiated from below taking account of the strengths, skills and culture of any organisation, is one that is highlighted by Mintzberg. He identifies 3 forms of strategic planning, conventional Strategic Planning which sets objectives over strategies, Strategic Planning used as a Numbers Game and an ad-hoc approach, where’ strategy flows up rather than down, bypassing that mysterious process of strategy formation altogether’. In concluding he comments, ‘First came the numbers game, then forecasting techniques, later the introduction of methods to formulate strategy, and so on, resulting finally in a comprehensive planning system encompassing all these elements.’ Arguing ‘planning cannot work effectively without the support of the people who hold senior positions in organizations, nor can it survive in climates hostile to its practice. Mintzberg (2000 p159).

It is therefore clear that Mintzberg’s argues that different planners of strategy should be employed in different organizations, and arguably in different contexts within organizations. Defining these different organizations he describes 5 different forms:

The Machine Organization – Centralized, bureaucratic and highly formalized

The Entrepreneurial Organization – Flexible, non-collaborative run directly from the top seen in small businesses

The Professional Organization – Seen in environments containing a high level of experts, with administrators serving support rather than exercising control.

The Adhocracy Organization – Seen when expert work is being carried out in highly dynamic settings. High evidence of project teams, and product development.

The Diversified Organization – Where an organization is split into semiautonomous divisions to serve a diversity of markets.

Mintzberg (2000 p298)

Additionally, Mintzberg goes on to identify 10 different approaches or schools to planning, which are further broken down in to 3 groupings,

Firstly he describes a Prescriptive group of three schools, more concerned with how strategies should be formulated rather than with how they necessarily do form. A middle group of 6 schools that generally deal with learning, contextual, environmental, power, political outlooks that accommodate both internal and external influences. And one final school, in a group of its own, named by Mintzberg as the Configuration School that combines all the other approaches. Mintzberg (2000)

It is this final school that looks not only at the analytical and qualitative approach of Taylor and Ansoff, but a wider range of issues that is favored by Mintzberg. The outlook understands the complexity of any organization, a point highlighted by Handy, who lists six factors that affect culture: history, size, technology, goals & objectives, environment and people. Handy (1993 p191-9) and further described by Hofstede who suggests three measures to invoke change, ‘structural, process and personnel change’. Hofstede (1994 p201). Thus we have a link between a strategy and the organization in which it is to be developed and employed.

This complexity and failure of earlier strategic thinkers to fully grasp and identify the nature of strategic planning led him to conclude, ‘We have in other words, found nothing yet to link planning directly with strategy formation. Mintzberg (2000 p90), highlighting a difference between conception, design and implementation of a planning strategy.

So it remains difficult to clearly agree let alone identify the functional components of planning in particular and strategic planning in general. Mintzberg concludes that strategy cannot be planned because planning is about analysis and strategy is about synthesis. That is why, he asserts, the process has failed so often and dramatically, arguing, ‘Planning may be so elusive because its proponents have been more concerned with promoting vague ideals than achieving viable positions more concerned with what planning might be than what it actually became’. Mintzberg (2000 p6).