Introducing Strategic Management to an Organization
By: Novita, S.Kom, MBA
Not every authority on strategic management believes that there should be a formal process of strategic management. The aim has been to present strategic management at both a conceptual and a practical level. In order to make sense the practical implications have been restricted to the particular aspect of planning which was under discussion. It is now time to leave the discussion of individual components and to look again at the complete process. The next chapters are very much a continuation of the first three, which also examined corporate planning from a holistic viewpoint.
It is true to say that many attempts at introducing strategic management have been doomed to fail from the outset simply because too little forethought was given to what was really involved. A technique such as marketing research, a new forecasting method, or discounted cash flow can be applied to a company at will in as large or small a dose as desired. Strategic management is not a technique but a complete way of running a business. The application of strategic management is not like taking a patent elixir in casual doses, but is a strict regimen that transforms the patient and which can do harm if administered haphazardly.
Strategic management in any company should begin with a decision. The only person who can take this decision is the chief executive, who must reach the conclusion that this is the way in which he or she wishes to manage the company. Ideally at this stage the top management team should share this enthusiasm. The chief executive’s enthusiasm must also infect others with the same feeling. The decision to implement planning should not be taken lightly.
The first problem the chief executive will encounter following the decision is how to implement it. If the company is of any significant size, the probability is that it will need some full-time professional help in the person of a corporate planner. Smaller companies may need this assistance but may not be able to afford the services of a full-time person: for them there is another solution – the use of part-time specialists. At the start-up stage it is possible for a chief executive to use a firm of management consultants, although this solution is usually only economic in the short term, and a more permanent arrangement is needed once the problems of introduction have been overcome.
The best solution of all, if it is workable, is for the chief executive to be the planner. This will only work where he or she is fully conversant with all aspects of the strategic planning process and if it has been possible to delegate enough of the other work to allow adequate time for planning matters. Unfortunately, the nature of top management being as it is, these circumstances rarely apply. In many ways this is a pity because maximum enthusiasm would be generated in a situation where the chief executive was so obviously deeply involved in the process.
Part-time professional planners are a solution which has been rarely applied. For many small companies the specialist need is probably for only three to four days’ attendance a month, and could be achieved by the appointment of a suitable non-executive director to the board (or, more exactly, a part-time executive director). From the point of view of the specialist planner the ability to work for a number of non-competing companies makes this an interesting and economic proposition. The company gains expertise from someone with a continuous involvement in the business: this, too, can be an economic concept. There are one or two firms of consultants who specialize in this type of service. I believe that it is a concept which will become increasingly important in the future.
Much of the impact of strategic management throughout the world still depends on the professional corporate planner. Few effective planning processes have been installed without the skilled services offered by this type of manager. The chief executive who decides a corporate planner is needed is faced with another choice. Should someone be recruited from inside the organization or brought in from outside? Each possibility has advantages. The person from inside may know the business well and already command the respect of senior managers. On the disadvantage side he or she may know nothing about strategic management. This disadvantage may be removed if there is sufficient time to learn about the subject before being turned loose on the company. Too often, planners appointed in this way are expected to do the impossible – to become experts overnight. A person appointed from within should always be a manager ‘who cannot be spared’: anyone who can be easily spared is unlikely to hold the good opinions of colleagues. It is unfortunate, too, that planning positions filled in this way are often pitched too low: the temptation to do this is much stronger where the chief executive can virtually force anyone from the company into the new job.
An outside skilled planner should bring particular benefits through expertise. He or she will be unfamiliar with the specific company (although not necessarily the industry), but this problem can be overstressed. A good corporate planner can learn the key areas of the company very quickly and should have a consultant type skill for adapting to new situations. Above all, the person should be expected to know what to do in the new job.
It is very easy for those inside a company to overstress the time it takes to learn the business. A line manager who has spent an entire business life learning the craft from the shopfloor upwards is likely to believe that no one can understand the dynamics of the business without following a similar career pattern. This is just not true, and confuses two different types of knowledge. A production manager in the iron and steel industry needs to have an encyclopedic knowledge of how to make iron and steel. The corporate planner does not have to be able to make the product: but has to understand what makes the business tick.
The chief executive must, however he or she decides to recruit the planner, set the position at the right level of seniority. The person chosen should be able to walk on equal terms with the senior management of that company, and should be a member of the board or management executive committee – or whatever the senior organ of management is in that company. This immediately answers the question of how much a planner should be paid. Salary (and status) should be within the band applicable to the most senior managers in that company. The planner need not be the highest paid nor need be regarded as the most senior of the group, but must be within that group.
The reasons for this are sensible and straightforward. The planner and the chief executive, to be a successful combination, have to develop a level of rapport that is much greater than that of other managers. In many ways the planner is only an extension of the chief executive: it is only possible to function in this way if there is mutual support and confidence. Without it, the planning function will wither and die, like a plant whose roots have been severed. If the gulf of seniority and standing is too wide, the required relationship will never develop. No good planner is a ‘yes’ man (or woman) and no good chief executive will want anything but a self-confident individual in this particular function. Criticism of an idea or decision of the chief executive is often a delicate task: it may well become impossible if the planner is positioned as a keen, middle-management type rather than a high-level executive.
Similarly, relations with other managers are conditioned by seniority. Few managers like to meet opposition to, and criticism of, their ideas and decisions: yet in a planning situation this need may arise from time to time. Such moves by a management peer are tolerable. If the planner is not seen as an equal, many of the actions he or she must take to do the job properly will do nothing more than erect a barrier of resentment which will effectively close the way to a process of strategic management. The chief executive, too, can be put in an impossible position when forced to arbitrate between two managers of highly disproportionate seniority. Arbitration between equals is carried out in a much less emotionally charged atmosphere and, because of the dynamics of the situation, the need for such intervention to settle disagreements is something that rarely arises.
Managers are human. In any circumstances there may be some hostile feelings to the idea of an additional person who will hold the confidence of the chief executive. If the planner is too junior this can well change to bitter jealousy, coupled with the fear that the planner is a ‘whispering Rasputin’ who is really only out to get their jobs. If already an equal, many of the fears will not occur: the planner has a job as good as theirs already, and has no incentive to work against their interests. From the foregoing it is clear that much of the success of strategic management in an enterprise will depend on the personality and ability of the person selected to be the corporate planner. If this person’s behavior and attributes antagonize managers continuously it will not be possible to succeed at the job whatever the person’s paper qualifications and however distinguished the record. Planners also need to be respected by those in the company for their skills as a planner and as a manager. Corporate planners have been called ‘specialists in general management’. It is very easy to move from broad statements of this nature to long lists of the disciplines and personal traits which should characterize the good corporate planner. Unfortunately such an approach would do nothing more than resemble the lists of the personal attributes of leaders, and the qualities of leadership, which were produced by the early industrial psychologists. One is left with the impression of a saint-like creature, barely human, the identification of whom would defy the efforts of the most skilled and efficient of management ‘headhunters’. There is no single person who exists who fulfils the requirements of the ‘ideal’ planner. But there are many people who are excellent corporate planners.
Before any real consideration can be given to the selection of a planner, it is necessary to give some thought to the real nature of the job. There are at least two levels of planning in any organization: strategic (the duty of the chief executive and the top management team) and operational (the duty of line managers). The corporate planning function has to be able to operate at both levels, which really means that there are two closely integrated but very different planning requirements. At all times it is worth remembering the maxim that the real planners in any company are the managers. The job of the planner is to help make planning happen; to coordinate all planning efforts; to help the company more clearly see the issues that affect its future and the alternative paths it may take to systemize planning procedures in the company, including control methods; to analyze and evaluate various issues; to draw the plans together. It is no part of the planner’s job to replace any manager’s duty to perform the planning elements of management.
In a previous publication there’s an outlined generalized job description for a corporate planner. This is reproduced in Figure 28.1, and although there will be variations between companies, it still includes the main functions of the job and the requirements of the person. The organization of the planning function is another matter that requires careful thought and consideration. There may be a great temptation to establish a large centralized planning department in order to ensure the mix of disciplines which go to make up the ‘ideal’ (and non-existent) planner. This may be reinforced by a common belief that the worth of a manager is measured by the number of direct reports: thus empire building is seen as a way of increasing the status of the manager.
Whatever the temptation, a large planning department is something to be avoided. As a general principle it may be said that the employment of every additional person in the planning department is a relative degree of failure, something to be undertaken only when it is so essential that no other answer is possible. This is a good principle for all chief executives or planning managers to keep at the back of their minds but there are further guidelines which might be suggested.
David, Fred. R. 2013. Strategic Management, 14th edition. Pearson.
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