The 3 Principles of Strategic Mgt

Willy A. Sussland

 A one-page outline I published in this got a lot of interest. Hereafter the full article on this subject.

 From the 60s until now every decade brought its lot of new models and methods to the art and to the science of management. Business-strategy – hereafter for short strategy - remains a key to the fate and to the future of the enterprise. However, the external and the internal business environment have considerably changed, and they cause some of the older concepts to fade.

 Business has become global, i.e. more intricate, more interactive, and much more innovative and inventive. People have become more intelligent, more imaginative, and more interactive. These changes affect the relationships of the personnel at the different levels and in the different functions inside the

Organization, of the personnel and the external partners, and of  the personnel and the practices of management.

 Traditionally, a few at the very top of their organization managed the strategy and they cascaded objectives and means top-down once a year. The gap that separated the planners and the doers led the latter to be detached from the planning process, and to stick to executing orders. This negatively affected the bold collective creativity, the execution of the strategies, and the attitude to the reviews.

 “Nine out of ten organizations fail to execute their strategies.” Kaplan & Norton

 The <strategic fundamentals> set the guidelines for the practices of strategic management, which need to be comprehensive, connective, and constructive.

 In this article we focus on some of 3 tenets that animate the aforementioned approaches. Then a week later, in The Strategic Management System, I will discuss each of the 5 the practices of strategic management that integrate my model of the  SP.I.D.E.R.

The comprehensive approach

 Tackling tectonic turbulences, the business-leadership in general and the practices of strategic management in particular need to be comprehensive, connective, and constructive in order to optimize transparency as well as the commitment, the cooperation, and the collectively creativity of the personnel.

 To involve the people and to maximize their contribution their he leadership must design and deploy a logical sequence of the practices of strategic management, and keep them simple, smart, and reasonably swift.

 The 5 practices that integrate the acronym SP.I.D.E.R., present the complete layout of the strategic management, namely:

 study and planning, investments, deployment, execution, and reviews. (2)

 The advocated model of the <company management system> puts the practices of strategic management in the middle of the <five forces of enterprise>, wherefrom they activate the other <forces of enterprise>, which are essentially assets. (1)

 Also Kaplan & Norton present a complete layout of the strategic management from the Balanced Scoreboard to the Execution Premium. However, many authors focus on one of  the aspects of strategic management. A-G. Lafley & R. L. Martin’s “Playing to Win” features the capabilities that are needed for the strategy and the systems for conceiving and checking the strategy. (2) However, their excellent book does not feature the strategic and organizational deployment, and the execution.

 The SP.I.D.E.R. takes 3 steps to lay out the business-strategy, namely:

 1.    the <business-policy>, which articulates the direction and the speed of the organization

2.    the <business plans> that run the critical special undertakings such as mergers & acquisitions, business ecosystems

3.    the <business projects> that  concern the businesses to be exploited, to be expanded, to be experimented on, to be explored, and the businesses to exit the 3 time-horizons.

 Some strategists finely focus on the markets and on the strategies that will enable the enterprise to sustain success. Osterwalder & Pigneur’s canvas of the business-model features 8 building blocks focused on the customers and 1 block on the key resources needed to sustain customer-oriented activities. (3) There is no link between the business-model and the <company management system>. This calls to mind the well-known aphorism attributed to Drucker:

  “Culture eats strategy for breakfast”.

 Let us not forget that both culture and business-strategy are two of the five factors that interact at the core  of the <company management system>. They must evolve closely aligned together.

 Hereafter a few examples of their significant synergies between the business-model and the <company management system>.

 The first of the <five forces of enterprise>, the personnel, includes the purpose of the enterprise, the leadership, and the culture that must work in concert to support the strategy.

 The second of the <five forces of enterprise> presents a map of the 5 <corporate capitals>. Among them, the  <talent capital>, which features the talents and the skills to develop and to deploy original and effective strategies. The <organizational capital> secures the vital alignment of the following factors that interact at the core of the management-system, namely: the <strategic fundamentals>, the <spirit and style of leadership>, the <systems of management>, the <structures of the organization>, and the <system technologies>. (3)

 The fourth of the <five forces of enterprise>, the <partners>, highlights the exchanges of the tangible and the intangible resources with the external partners, not just the customers but all the 5 stakeholders.

 The fifth of the <five forces of enterprise>,  the products, show the results of all the interactions, and the customer appreciated value of the products.

The connective approach

 The connective approach complements the comprehensive approach to enable the enterprise to create superior business-value with its external partners and for its external partners. To this effect the enterprise expands the connectivity of

 -       people inside and outside the organization

-       people and  the practices of strategic management

-       the past and the future.

 But now the enterprise needs to get its people and to some extent its principal external partners involved in the processes of strategic management in order to benefit from their commitment, from their cooperation, and from their collective creativity.

 Traditionally the management looked at their external partners essentially in terms of financial transactions. Today, in order to take full advantage of the knowledge and of the know-how that the principal external partners can contribute, the enterprise develop longer-term mutually beneficial cooperation.

 Moreover, the  personnel want to be better informed and more implicated in the strategic management because their morale and material well-being depends on the success of their enterprise and on the good relations internally and externally.

 Many authors to deploy the strategies top-down in a cascade level-by-level. This tends to perpetuate authoritarian approaches and the traditional gaps that separate the different levels.

 The SP.I.D.E.R. is not a cascade but a ring with 5 points, which has the following advantages.

 Like Hoshin Planning there are discussions between the team of the upper and of the lower practice. These discussions take place both in the case of a deployment of new plans, and in the case of changing the  plans. These discussions ensure mutual understanding and facilitate the commitment, the cooperation, and the collectively creativity.

 The last of the 5 points, i.e. the review, feeds the next ring.

The constructive approach

 To incite constructive approaches from the different levels and from the different functions of the organization as well as from the principal external partners of the enterprise, the <strategic management processes> need to be presented in a logical sequence of steps that are simple and systemic, and that foster smart, synergistic, and creative thinking.

 Next I will post an outline of the 5 the practices of strategic management that form the Strategic Management System, and then the full article.