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Michael J. Kami
President, Corporate Planning, INC.
A useful, practical tool. Strategic Planning deals with "how-to," not theory; it has an immediate application, it helps, not just educates.
Sets forth functional information that every person in a management position ought to use as an aid to efficient growth and the accomplishment of responsible goals.
Strategic Management and Strategic Planning
Strategic planning is inextricably interwoven into the entire fabric of management; it is not something separate and distinct from the process of management. This point is underscored in this chapter. Also discussed is the shifting focus of management from operations to strategy. Finally, attention is given to the different fundamental approaches to strategic planning that can support management decisionmaking.
The Managerial Task and Planning
Years ago when my colleagues and I were "selling" what at that time was called long-range planning and what I now call strategic planning, we spoke of it as a valuable new tool for management, a major new technique to help managers. I no longer speak of it this way. Strategic planning is inextricably interwoven into the entire fabric of management.
Several years ago, The Conference Board interviewed intensively fifty chief executives about their roles in planning. The first overarching frame of reference most executives articulated was that "planning cannot be usefully distinguished from the rest of the management process....
The researchers summarized the view of the executives in this way: planning cannot be disentangled from such management functions as organizing, directing, motivating, and controlling.
Although it is acknowledged that each of these functions or elements can be formally defined and contrasted with one another, in terms of the chief executive's daily, weekly, even annual routine it is not realistic from his point of view to break up his job into parts and examine each as a discrete phenomenon. For his role as planner is meshed with his role as organizer, director, and so on, in a seamless web of management; for instance, the thought he devotes to what might be termed planning questions, and decisions he makes about them, have implications for his exercise of control; and vice versa. It is the whole of his job that must be looked at, the interaction of the elements of the management process rather than the individual elements.
The Conference Board survey was concerned with chief executive officers, but the conclusion is applicable to all managers. I believe that no manager is fully discharging his or her responsibility when strategic planning is neglected. Strategic planning is a function and responsibility of all managers at all levels in an organization. It is obvious, however, that the planning responsibilities of managers will vary significantly among types of organizations and different organizational levels.
Strategic Management, Operational Management, and Strategic Planning
To oversimplify, there are two types of management. That which is done at the top of an organizational structure is strategic management. Everything else is operational management.
Strategic planning is a backbone support to strategic management. It is not, of course, the entirety of strategic management but it is a major process in the conduct of strategic management. Everyone recognizes that strategic and operational management are tightly linked. Strategic management provides guidance, direction, and boundaries for operational management. Just as strategic management is vitally concerned with operational management so is strategic planning concerned with operations. But the focus and emphasis of strategic planning as with strategic management is on strategy more than operations.
Years ago the managerial emphasis in the typical corporation was on operations. A major question for management was how to use efficiently those scarce resources at its disposal in producing goods and services at prices consumers were willing to pay. If this task were done efficiently, it was believed, profits would be maximized. Today, efficient use of scarce resources is still a commanding concern of managements of all organizations, but today, because of a turbulent and rapidly changing environment, the ability of an organization to adapt properly to environment, internal and external, is becoming more critical in survival.
General Robert E. Wood, when chief executive of Sears, Roebuck and Company, succinctly captured this thought when he said: "Business is like a war in one respect, if its grand strategy is correct, any number of tactical errors can be made and yet the enterprise proves successful." A company may overcome inefficient internal resource use if its basic strategy is brilliant, but it is not likely to overcome the wrong strategies even with excellent production and distribution performance. The ideal situation, of course, is for an organization to design brilliant strategies and to implement them efficiently and effectively.
In a growing number of companies, particularly the larger organizations, the framework for formulating and implementing strategies is the formal strategic planning system. Strategy can be formulated without a formal system, however, as will be discussed later. But either way, the processes of strategic planning are intertwined with management.
Tasks of Top Management
This is a book about strategic planning and not about the tasks of top management. It is useful, however, to comment a bit more on a point already made, namely, that strategic planning is a central concern of strategic management but not the entirety of the top management job.
In a recapitulation of his monumental book on management Peter Drucker summarized the tasks of top management as follows: First is the formulation and implementation of strategy. Drucker explained this prime task as
the task of thinking through the mission of the business, that is, of asking the question "what is our business and what should it be?" This leads to the setting of objectives, the development of strategies and plans, and the making of today's decisions for tomorrow's results. This clearly can be done only by an organ of the business that can see the entire business; that can make decisions that affect the entire business; that can balance objectives and the needs of today against the needs of tomorrow; and that can allocate resources of men and money to key results.
That, of course, is the strategic planning process.
The other tasks of top management according to this eminent observer of management and managers are as follows: standard setting, for example, for the conscience functions; building and maintaining the human organization; fulfilling responsibilities concerning relationships that only the people at the top of an organization can establish and maintain, such as with major customers, very important suppliers, or bankers; performing ceremonial duties, such as at civic events; and being the "standby" organ for major crises.
There is, of course, no idealized or single way for top managers to discharge their responsibilities. For some managers the strategic planning process is a much larger part of the total job than for others. But for all it is of central importance in performing properly the top management function.
Planning Responsibilities of All Managers
It was said previously that strategic planning is a function of all managers at all levels of an organization. This point has been amplified by Marvin Bower, who for several decades was managing director of McKinsey and Company, a well-known, worldwide management consulting firm. In a superb book that summarized the lessons of experience of effective managers over a long period of time Bower concluded that there are
fourteen basic and well-known management processes [that] make up the components from which a management system for any business can be fashioned....Fashioning these fourteen components into a tailor-made management system is the building job of every chief executive and every general executive. To support, follow, and enforce the system is a vital part of every top manager's operating job -- and of managers and supervisors at every level.
What are these fourteen processes? They are, Bower says, the following:
1. Setting objectives: Deciding on the business or businesses in which the company or division should engage and on other fundamentals that shall guide and characterize the business, such as continuous growth. An objective is typically enduring and timeless.