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Alean staffand/ or consultants maybe used to support e
processgenerating and implementing strategy, but the essential
workthinking, deciding, acting - must be retained by line
management.Flat, broad, and lean structure. In the turbulent
business environment that willpersist for decades to come,
strategic advantage willbe commanded by those companies that are
most flexible andadaptive to change. Hierarchicalbureaucracies are
doomed.Superior strategic performance requires a flat, broad
stnICturefew levelsin the "chain of command;' broad "span of
control;' andhuman-scale business units (500 employees seems about
the opti-mum size). .The overhead burden of sprawling staff, once a
necessary evil ofgoverning a largeorganization, has been made an
unnecessary evilthanks to telematic technology. One desktop
computer with goodsoftware, and the right kind of communications
system, can provide the line manager with far greater support to
analyze and execute decisions than do dozens of staffand middle
managers.Participatory strategic management. Agrowing number
ofAmerican corporations are encouraging employee participation in
operationalmanagement through such devices as "Quality
Circles:'Fewcompanies yet have grasped the necessity of broadening
participation in strategic decisionmaking.We need a more powerful
process than just the usual "open door"or suggestion box, Le., the
use of "Strategic Circles" which couldprovide companies with an
effective mechanism for broadenedparticipation in strategic
management.5.ManageThinking.It should be evident that the quality
of corporate strategy is limitedby the quality of the thinking that
creates it. Though "strategicthinking" long has been a popular
catch phrase, we are just beginning to learn how much we reallycan
do to manage and cultivatethis most critical resource. This is a
complex task, but again letme offer a few simple suggestions.First,
learn as much as you can about the intellectual capabilitiesof your
company's people. People varynot only in their levelof"IQ;'but in
their knowledge, interests, experience, values, and
thinking"styles:'No one human can be a perfect thinker about
allproblems;itpays to learn what your organization's mental
strengths and "blindspots" are. .Second, develop opportunities to
expand your collective cognitiveskills.There are asurprising number
ofworkshops, seminars, booksand other training resources available
to cultivate creativity,innovation, imagination, intuition, logic,
and other problem-solving skills.Finally,develop your intellectual
support network of individualswith powerful minds and provocative
ideas to leaven the thinking ,ofyour own people. Bringthem in to
reason with - not just talk atyour folks and keep them involved
over a sufficient period of timefor them to get to know your goals
and values.ConclusWnThese things are happening in many comp~ies
today.But, tobe aleader in the strategy revolution.you.aeed to
pursue them all ina consistent, integrated program: keep a clear
focus on what "strategy" really means; move to*ard flexible issues
management and Iaway from planning rituals; take full advantage of
the power ofemerging telematic technologies; make your total
organization aneffective strategic weapon; and make a conscious
effort to expand ( cand use your uniquely human capacity for
creative thinkin!t,;;.... .
There are examples of each of these steps being practiced
inAmerican companies today.But superior strategy requires allthese
stepsto be carried out in a c oherent approach, and I know no
exampleswhere that is yet being done.1.Understand theMeaning
of"Slrategy"Important business strategy needs are often unmet
because executives get distracted by tactical activities which are
misleadinglylabelled "strategic." It is, therefore, important to
know what wemean by "strategy."Strategy literallyrefers to the
decisions made by a military general,or similar top manager. In
essence, strategy is the line decisionmaker's consciousness of the
implications of each competitivedecision. Strategyis ideas -
intentions (what do we want to do andto achieve), perceptions (what
are the relevant facts), and expectations (the "what if'
questions).At best, planning may help you to organize the execution
ofstrategy, but the rigidities of formal planning systems also
havebeen known to stifle the creativity and flexibility that
superiorstrategic performance requires. For example, the
vice-presidentfor planning of a major electronics company, which
recently abandoned a consumer product line that had lost half a
billion dollars,admitted that the company's planning had failed
because of "thetendency to substitute mechanics for thought,"
resulting in a processof" strategy by cookbook."The critical fact
to understand about "strategic planning" (whichI have never seen
stated clearlyin any text on the subject) is this:no strategic plan
has ever been implemented Anyone who ever
continued on page 2.
"Strategyis ideas- intentions (uhat dowewant todo
andtoachieve).perceptions
(uhataretherelevant.{acts).andexpectations(the 'what
if'questions):'
Similarly,the old concept of "strategy" as a static document in
ablack notebook, generated by an often thoughtless planning
ritual,is being replaced by a new vision of strategy as
managementthinking and total organizational performance.Basedon a
number of years of professional experience in strategicmanagement,
I recommend the following five essential steps forcorporations that
want to be leaders in strategic performance.
The Strategy Revolutione y LewisJ PerelmanIn thisarticle, Lewis]
Perelman, President, StrategicPerformanceSeroices in Alexandria,
Virginia, summarizes some of the keyelements in what he contends is
a new strategy revolution emerg-ing among executives who have been
revising their approach tomanagement in an effort tomake
theirorganizations "bestrategic."The strategy revolution is marked
by a shift in focus from "hard"[0"soft" -that is, away from "hard"
data, rational analysis, andsingleminded pursuit of the bottom
line, and toward such "soft"dimensions of management as goals,
philosophy, culture, organization, systems, creativity, innovation,
and motivation.
I ]lIlIlIlI/)' 11),'{1
f A N N I N GSeniorManagement's Blueprint for Corporate
Growth
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"Teamwork is reallyessential togetting tbefuUstrategicbenefit of
issues management. Critical strategic issuesalmostalways cutacross
the boundaries tbat definepro-fessknud.flelds and organizatUmal
units:'
tried to adhere to a prefabricated "strategic plan" in war,
politics,poker, business, or any other competitive game suffered
disaster."Strategic plan" really is a contradiction in terms. Plans
are mostuseful under conditions that are predictable and
controllable.Strategy is essential precisely because the events of
a competitivebattle are always,to some extent, unpredictable and
uncontrollable.The importance of strategy increases as the
feasibility of planningdecreases. Also,while planning is highly
concerned with analysisof data, strategy is mainly concerned with
creation of ideas - thatis, patterns and meanings.If you try to
define the ideal strategy for creating a new businessor entering a
new market, environmental changes will continuallyinvalidate the
assumptions on which your plans are based. Competent competitors,
who know that surprise is the most effectivestrategic weapon, win
go out of their way to do what you leastexpect. Customers
willbehave "irrationally."The plan willbe compromised by internal
politicking;subordinates will be insubordinate.And on, and on.Such
disruptive events, commonly referred to as strategic problems,
cannot be "solved" like algebra problems. Instead, they mustbe
addressed as issues to be managed - the desired result is notan
ideal solution, but some resolution that at least allows you tomake
continued progress toward your strategic
goals.2.ManageIssuesSuperior strategic performance requires getting
away from theannual ritual of concocting an ideal "pian;' and
instead developinga proactive, flexible, day-to-day process for
managing strategicissues. "Issues management" isbeing practiced in
a growing numher of corporations. Although corporations are
devising substantially different waysof establishing an issues
management process,the most effective approaches reflect at least
the following threecharacteristics;Business intelligence. The
American headquarters officeof a majorJapanese electronics company
has been described as an "anthill ofintelllgence activity:'A
Defense Department consultant estimatestharjapancse electronic
firms have some 1,500 software expertsdeployed in the U.S.,spending
up to S30 million a year, primarilyto gather intelligence about
American computer technology. Thesame expert estimates that 35-40%
of the baseline data requiredto develop Japanese VlSI semiconductor
chips came from suchintelligence operations.FewAmerican companies
take the intelligence process as seriouslyas do their foreign
competitors. The corporate planning departmento(ii;l\xtune
500company I know had a staffof20 people receivingover t 2 P
periodicals a month, yet had no process for systematically
over2 \I'll }tOtlW ,') ....
Youshould make it explicit a nd forcefullyclear that strategy is
a lineresponsibility which should be shared broadly (to encourage
thesense of"oMlership"), but must not be delegated to those who
lackdecisionrnaking authority
3.Manage "Telematlcs"Telematics-the marriage of computer and
communications technology - is transforming the structure and
function of our wholeeconomy; including corporate management.Nobody
yet knows exactly how to capture the fullbenefits of thesepowerful
tools, but it is clear that enormous strategic advantagewill accrue
to those companies that lead the way. A leading oilservices company
is using computerized production schedulingand parts-inventory
records to enable plant managers to decidequickly whether to fill
an emergency order for the company'sspecialized oil drilling
equipment.Ifyou wait for the perfect system, you willbe accepting a
permanentand growing competitive disadvantage. Leading
organizations willlearn to coevolve with the technology.The
important requirement here is to make this development a
collaborative effort of computer experts, communications
experts,industrial psychologistS, organization developers, human
resourcespecialists, and managers themselves. You will need to
establisha multidisciplinary team, calling on consultants if
needed. Thewhole program should be directed by a forceful
linemanager whowin report to the CEO.4. Createa
StrategicOrganizattonThough "corporate culture" is currently a hot
management topic,many managers still seem not to realize that
superior strategicperformance, in relation to the external
environment, requires a"strategic" internal organization, including
structure, systems,human resources, values, goals, and so
forth.Creating a strategic organization is a complex task, but let
me suggest three fundamental requirements.Clear line
responsibilit)l "Implementation" has become a keybuzzword in recent
strategy articles, because top managers are comingto realize that
having an elegant strategy on paper is useless if theorganization
cannot carry out the actions it demands for success.The simple fa
ct isthat line people are not effective in carrying outa strategy
that they do not "OMl;' and they feel ownership onlyofwhat they
have created themselves.
C01J1i1WL"fi from /)aRe 1.he Strategy Revolution into the
consciousness of decisionmakers. Teamwork helps reduceinformation
overload. Teamwork also helps sharpen pattern recognition, and
therefore issue definition, by subjecting business intelligence toa
varietyof perspectives and thinking styles.For example,one
corporation has created an issue team to answer the questionofwhat
technological capabilities the firm should possess toremaindominant
in its industry.Teamwork is really essential to getting the full
strategic benefitof issues management. Critical strategic issues
almost always cutacross the boundaries that define professional
fields and organizational units. Superior performance requires a
holistic view of COfporate strategy which can only emerge from an
interdisciplinary orinterdepartmental approach.Line responsibilit)l
Issues must be managed by line managers, notby an academic
department of staff "issues managers:' Staffor consultants can
provide technical expertise, but the process shouldremain in the
hands of line people and centered ultimately on theCEO.
scanning, analyzing, consolidating, and reponing the strategic
information in this resource to responsible decisionmakers. In
thiscompany, millions of dollars and thousands of people-hours
werebeing invested in reading, professional seminars, conferences,
s a l e sreports, market research, and so forth.Yetonly a few
percent of thepotential intelligence value of all this activity was
actually used.' / eamwork Information isuseless ifit is not
digested and integrated
