Effective Strategic Management

Characteristics of effective strategic management include:

• A clear business strategy and vision for the future.
• A strategic direction endorsed by senior managers, taking account of partners and other stakeholders.
• A mechanism for accountability (to the citizen in meeting their expectations, as well as to the centre in meeting policy targets).
• A framework for governance at several levels (government-wide down to internal reporting arrangements) that ensures you can coordinate everything (multiple goals) even when there are competing priorities and different goals.
• The ability to exploit opportunities and respond to external change (turbulence) by taking ongoing strategic decisions.
• A coherent framework for managing risk – whether it is balancing the risks and rewards of a business direction, coping with the uncertainties of project risk or ensuring business continuity.

Importance Of Strategic Management

Organisation need to be able to respond effectively to challenges – both problems and opportunities – as they arise. For example, the citizen has increasing expectations of service standards and availability. In response, organisations are working towards an outward-focused view of the way services should be provided - a fundamental shift from the traditional focus on internal concerns. At the same time, major opportunities for improvement may arise from developments such as new information and communications technologies, and the availability of additional financial resources such as the Invest to Save Budget. In many cases the response to the problem or opportunity will:

• Require the continuous attention of senior management.
• Affect most or the entire organisation.
• Have long term implications.
• Require substantial resources.
• Be interconnected with other issues and developments.

Strategic Management Process

PART - III

Organizational analysis can also be thought of as fourfold. How is the firm organized? What is the structure of the organization, who reports to whom, how are the tasks defined, divided and integrated? How do the management systems work, the processes that determine how the organization gets things done from day to day – for example, information systems, capital budgeting systems, performance measurement systems, quality systems? What do organizational members believe in, what are they trying to achieve, what motivates them, what do they value? What is the culture of the organization? What are the basic beliefs of organizational members? Do they have a shared set of beliefs about how to proceed, about where they are going, about how they should behave? 

We know, thanks to Peters and Waterman’s In Search of Excellence, that the basic values, assumptions and ideologies (systems of belief) which guide and fashion behavior in organizations have a crucial role to play in business success (or failure). What resources does the organization have at its disposal – for example, capital, technology, and people?

Management’s role is to try to ‘fit’ the analysis of externalities and internalities, to balance the organization’s strengths and weaknesses in the light of environmental opportunities and threats. A concept that bridges internal and external analyses is that of stakeholders, the key groups whose legitimate interests have to be borne in mind when taking strategic decisions. These can be internal groups, such as managers themselves and employees, or the owners of the firm, shareholders. They can also be external groups: the stock market if it is a quoted company, banks, consumers, the government.

Senior management’s task is to try and align the various interest groups in arriving at its chosen strategy in the light of the creation of an appropriate strategic vision for the organization. Increasingly important here is the issue of corporate responsibility, how the organization defines and acts upon its sense of responsibility to its stakeholders. The broad responsibility to society at large is important here in, for example, such areas as ‘green’ (ecological) issues. Sometimes the various interest groups may be at odds with each other and management will have to perform a delicate political balancing act between them.

Having chosen a strategy, there is the issue of implementation. Very few schemes go totally (or even approximately) according to plan. The business environment changes, new issues emerge – green ones, for example. Some demand to be taken on board so that in many, perhaps the majority, of cases emergent strategy asserts itself to the extent that the realized strategy differs markedly from the chosen/planned strategy. In time, the realized strategy becomes a part of the firm’s strategic history . . . and the strategy process continues.

Strategic Management Process

PART - II

If change is the order of the day, then two issues need to be addressed: environmental (external) analysis and organizational (internal) analysis (This is the ideal way of proceeding. In practice, managers may adopt only a partial solution and analyze only external or internal factors.). For a change of strategy to work there must be alignment between internal capability and external opportunity.

This is described as ‘strategic fit’. The ideal situation is where there is a fit between the environments, a business need arising out of that environment that is strongly felt by a firm that has the sense of purpose (mission) and a management system that enables it to respond to this need with a coherent and practicable strategy. The potential to act in this way depends upon managerial judgments, managerial skill to exploit windows of opportunity and management ability to motivate other employees to support and commit themselves to the firm’s new strategic objectives. 

The analysis of the environment can be segmented into four interactive elements. There is the issue of the firm’s general environment, the broad environment comprising a mix of general factors such as social and political issues. Then there is the firm’s operating environment, its more specific industry/business environment. What kind of industry is the firm competing in? What ‘forces’ make up its ‘industry structure’? Having examined its business environment, the issue then arises: how is the firm to compete in its industry? What is to be the unique source of its competitive positioning that will give it an edge over its competitors? Will it go for a broad market position, competing on a variety of fronts, or will it look for niches? Will it compete on the basis of cost or on the basis of added value, differentiating its products and charging a premium? What is the range of options that managers have to choose from? How are they to prioritize between these options? Does the company have strategic vision, a strong sense of mission, a ‘reason for being’ that distinguishes it from others? If change is necessary, what is to be the firm’s direction for development? Having identified the major forces affecting its environment, how is the firm to approach the future?

(Cont...)

Strategic Management Process

PART - I

If a firm chooses a particular strategic direction and it works in the way that very successful firms like IBM or, on a smaller scale, Body Shop have, the fact that it is successful does not mean that the choice of strategy was optimal and that it was the best. There might have been another strategic decision that could have led to even greater success. Conversely, if a firm makes a choice that leads to disaster, this does not necessarily mean that it could have made a better choice (though, with better decision making, it hopefully could have averted the disaster). The environmental conditions in its industry might have been such that this was the best choice, but that no choice, given its size or history, or the power of its competitors, could have changed its fate.

Current strategy has its roots in the strategic history of a firm and its management and employees. Both management and employees has been mentioned here because, though in many cases senior management is the source of strategic decisions, it is the employees at the point of production or delivery of a product or service who are responsible for the actual implementation of a strategy. (Of course, in the final analysis it is management who are ultimately responsible for the performance of employees.) Current strategy is the result of the interaction of intended strategy and emergent strategy. The organization’s actual strategy (its realized strategy) can be the direct result of strategic planning, the deliberate formulation and implementation of a plan. More often it is the outcome of the adaptation of such a plan to emergent issues in the environment. In some cases actual strategy can be very different from the strategy as planned or the firm may not have a very clear plan in the first place. In such cases the strategy can be described as emergent in the sense that strategy emerges from an ongoing series (sometimes described as a pattern or stream) of decisions.

Managers can decide that they are happy with their current strategy. They can take this decision in two ways. In a proactive sense they can scan their environment and the potential for change within their own organization and decide that to carry on doing what they are doing and what they are good at is the best way to face the future. In a less active, and far less satisfactory, way they can proceed on the basis of tradition – ‘This is the way we have always done it. It has worked so far. That’s good enough for us’ – or inertia. Or management may decide that change is necessary. Again this can come about in a variety of ways. They may scan their environment and decide that there are major changes occurring in their business world to which they have to adapt. Or they might decide, through internal analysis, that they have the ability to develop a new way of doing business that will redefine the nature of the business they are in. Another stimulus to change can be the new manager appointed to a senior position who wants to leave his or her mark on the company and changes strategy primarily for this self-centered reason.

(Cont...)

Understanding Strategic Management

Strategic management is a dynamic process of aligning strategies, performance and business results; it is all about people, leadership, technology and processes. Effective combination of these elements helps in providing strategic direction and successful service delivery. It is a continuous activity of setting and maintaining the strategic direction of the organisation and its business, and making decisions on a day-to-day basis to deal with changing circumstances and the challenges of the business environment. In other words strategic management can be defined as the application of strategic thinking to the job of leading an organization. 

As part of strategic thinking about advancing the business, one has to set a course for a particular direction, but subsequent policy drivers (such as new performance targets) or business drivers (such as increased demand for services) could take the organisation in a different direction. There could be implications for accountability when one has to decide whether to take corrective action to get back on course or to go with the new direction. Similarly, there could be implications for governance if relationships between the partners/directors change.

We can say that strategic management means continually asking the question, "Are we doing the right thing?" Strategic management is focused on the future within a context of a changing, but relatively predictable environment. 

Strategic management consists of the following three activities and decisions:

1. Formulation of the future mission of the organization in light of changing external factors such as regulation, competition, technology and customers;

2. Development of a competitive strategy to achieve the mission; and

3. Creation of an organization structure which will deploy resources to successfully carry out its competitive strategy. 

That is, it requires attention to the "big picture" and a willingness to adapt to changing circumstances.

What is 'Strategy'?

The term ‘strategy’ proliferates in discussions of business. Scholars and consultants have provided myriad models and frameworks for analysing strategic choice. The key issue of strategy is a clear sense of an organization’s objectives and a sense of how it will achieve these objectives. It is also important that the organization has a clear sense of its distinctiveness.

For the leading strategy guru, Michael Porter (1996), strategy is about achieving competitive advantage through being different – delivering a unique value added to the customer, having a clear and enactable view of how to position yourself uniquely in your industry, for example, in the ways in which Deccan Airways had positioned itself in the airline industry as a low cost airlines.

To enact a successful strategy requires that there is fit among a company’s activities, that they complement each other, and that they deliver value to the firm and its customers. The Deccan Airways example just mentioned illustrate that industries are fluid. It came to prominence by taking on industry incumbents and developing new value propositions. Also, one must reckon that success is not guaranteed.

While there is much debate on substance, there is agreement that strategy is concerned with the match between a company’s capabilities and its external environment. Analysts disagree on how this may be done. 

John Kay (2000) argues that strategy is no longer about planning or ‘visioning’ – because we are deluded if we think we can predict or, worse, control the future – it is about using careful analysis to understand and influence a company’s position in the market place. 

Another leading strategy guru, Gary Hamel (2000), argues that the best strategy is geared towards radical change and creating a new vision of the future in which you are a leader rather than a follower of trends set by others.

We can say with certainty that: "winning strategy = foresight vision"

Key ITIL Processes For Cloud Computing: Service Provider Perspective (Internal Facing) - Request Fulfillment

ITIL and Cloud Computing Series - Part 17

Request fulfillment is the process responsible for fulfilling service requests. Such requests are simply provisioned. These requests does not go through a formal change approval cycle.

But in cloud environment, the requests for addition, modification or deletion/removal of the existing capacity or resource has to be done in real time. Such requests are raised by the customer and provisioned without any change approval cycle. The request fulfillment team has to ensure that such requests are received in a complete manner and all required approvals, if any, from the customer side is provided along with the request.