The essence of strategic management
Strategies,
in my experience, always
come from one of three sources: strategic planning, strategic
thinking, and opportunistic decision making—with the latter two
being the most important.
I
think of strategic planning as the job of collecting and analyzing
the enormous amounts of data that characterize the modern world and
monitoring changes in markets and the competitive environment. This
process, which requires frameworks and concepts, is where academics
can contribute most in the way of ideas, and strategic-planning
groups can add the most value. Strategic planning, defined in this
way, provides the raw material and factual basis for strategic
thinking and opportunistic decision making.
The
next challenge is to synthesize this raw material into what I once
called (in a 1978 McKinsey staff paper that was subsequently
summarized in the Quarterly)
an “integrated set of actions designed to create a sustainable
advantage over competitors.”
In
my view, this is the province of CEOs and their top-management teams,
and the quality of the synthesis and the effectiveness of the
implementation are determined by the quality of the interaction
between those teams and the strategic planners. This is the essence
of strategic thinking and strategic management: it’s where
creativity is paramount and insights take place, and it’s not
something that should be limited to an annual strategic-planning
process.
Checklists
of strategic leverage points—though I prefer the richer notion of
“dimensions,” or “strategic degrees of freedom,” as Ken Ohmae
called them in his book The
Mind of the Strategist—are
a powerful means of structuring these discussions and stimulating
strategic thinking.
Those
involved must gain agreement on what the dimensions are; what, in
each dimension, is the second level of strategic degrees of freedom;
and what data and analyses are required to shed light on these
questions. There are some obvious dimensions: customers, costs, and
so on. But new ones are always coming in. You’re more likely to
grapple with the right issues if you explicitly take the time to ask
along which dimensions should your organization be doing its
strategic thinking and engaging in creative debates.
The
question then becomes what process continually engages the
top-management team in synthesizing and resynthesizing the analyses
into both meaningful strategic initiatives and some strategic rules
of thumb that can inform opportunistic decision making and
continually evolve. A related step in building a robust and
insightful approach to managing a company strategically is to engage
the board in the process. This must be done in a manner that keeps
directors fully informed about the dimensions of the strategy being
explored and that provides them with ample opportunity to probe and
contribute to the strategic thinking.
Our
recent conference in London began with a lively debate on the
paucity of new frameworks for strategy development. We wound up
spending a considerable amount of time sharing views on the people
and processes that underpin strategy. I thought this was appropriate,
and I am hopeful that as the developers of strategic ideas—in
academia, corporate strategy departments, and McKinsey—continue
pushing the state of the art in response to the changing business
environment, they will focus at least as much on tools supporting
synthesis and bold responses to unexpected opportunities as on
frameworks and planning.
Fred
Gluck
http://www.mckinsey.com/Insights/Strategy/Synthesis_capabilities_and_overlooked_insights?cid=mckq50-eml-alt-mip-mck-oth-1411
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