JLBC Strategic Thinking: Key to Corporate Survival
JLBC OBJECTIVES:
Define the term “strategy” as used in this article.
Describe the relationship between strategy and operations.
Identify reasons why long-range planning impedes strategic thinking.
List the advantages of separating strategic thinking from long-range planning.
Define the term “driving force” as it relates to long-term strategy.
Most companies face the future unprepared. Though long-range planning has saturated our corporate environment, it does not guarantee success. In our constantly changing environment, the key to corporate survival lies in the quality of our long-range planning and the clarity of our strategic thinking. To survive and flourish, organizations must face the future knowing what they want to be – strategic planning and how to get there – long-range planning and operational decision making.
Our thesis is that strategy should provide a picture of the organization as it wants to look in the future. Strategy is vision. It is directed at what the organization should be rather than how it will get there. Unfortunately, the word “strategy” has been used rather casually in management literature and the marketplace. It has assumed a variety of meanings, some of which confuse the “what” and “how” dimensions.
For example, strategy is sometimes called “strategic planning” and then is used indiscriminately with “long-range planning.” Executives frequently talk about a “market strategy” or a “pricing strategy” when they mean a plan to penetrate a market or keep prices competitive. Such “strategies” are major operational decision points that presume an overall corporate or divisional strategy.
While not interested in legislating the meaning of the word strategy, we are interested in avoiding the confusion we have observed. JLBC Cadets For us, strategy has an exact definition, which we define as a particular framework that guides those choices that determine the nature and direction of an organization. These “choices” confront an organization every day. They include choices about an organization’s products or services, the geographical markets and customer groups the organization serves, its capabilities of supporting those products and needs, its growth and return, and its allocation of resources.
How these choices are made determines the nature of an organization. If they are made within a strategic framework, the organization’s direction is clearly under the control of the managers who develop
that framework. If these choices are made without a strategic framework, you surrender that control and run the risk of having an uncoordinated direction in the hands of whoever is making these choices.
JLBC THE STRATEGY/OPERATIONS RELATIONSHIP
Since strategy sets direction, it must be formulated before long-range planning and the day-to-day decision-making that flows from such planning. Failure to separate strategy formulation from planning and operations com- promises corporate strategic thinking.
The chart below illustrates the relationship between strategy and operations. A clear plan and effective operations are a winning combination, but you are bound to be a loser with unclear strategy and ineffective operations. Suppose the system is transparent, but operations are inadequate. In that case, the result is uncertain – you may still win, but winning depends almost totally on your ability to predict and then be carried by the kindness of external forces such as the economy and competition, forces not generally known for their benevolence. Similarly, if operations are effective but the strategy is unclear, you may survive by being swept forward efficiently – but for how long?
What
How
Clear Strategy Unclear Strategy
A clear strategy and Effective effective operations
Operations have equaled success in the past and will in
the future.
Unclear strategy but effective operations have equal success in the past, but success is doubtful in the future.
JLBC Ineffective Operations
Clear strategy but ineffective operations have sometimes worked in the past in the short run, but increasing competition makes success doubtful in the future.
Unclear strategy and inefficient operations have equaled failure in history and will in the future.
References:
Perkins, Robert, and Samantha Seals. “Exploring Vision And Growth In New Ventures: A Multi-Case Study.” Journal of Business and Entrepreneurship, vol. 31, no. 1, Association for Small Business and Entrepreneurship, Oct. 2019, p. 1.
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