Strategy is all about planning. Critically evaluate this statement

Strategy is all about planning. Critically evaluate this statement

“The notion that strategy is something that happens way up there, far removed from the details of running an organization on a daily basis, is one of the great fallacies of conventional management”

– Mintzberg, 1987.

“Strategy is the great work of the organization. In situations of life or death, it is the Tao of survival or extinction. Its study cannot be neglected”

—Sun Tzu, The Art of War

In this assignment we will first understand the concept strategy and why companies invest time, money and efforts in creating a strategy for them. This will help us know the importance of strategic planning and then we will also be able to evaluate the statement that strategy is all about planning.

Michael E. Porter says in the corporate world your competitors will imitate your quality and efficiency levels. They will also copy the product that you are selling. But they should not be able to know your strategy. Strategy helps companies differentiate themselves with others. It will give companies that unique edge to stand out from others. Porter said three important things about strategy are “Strategy is the creation of unique and valuable position, involving a different set of activities”, “Strategy requires you to make trade-offs in competing- to choose what not to do”, and “Strategy involves creating fit among a company’s activities”. These three points speaks about how strategy will help a company in choosing the best option for them (Porter, 1996). Porter statement in his article stands very true that your competitors can copy your quality and efficiency levels. They can also copy your products and services. But adopting or copying your strategy wont stand any fruitful to them. The reason Porter says so is that strategies and plans that your company has developed and implemented will be favorable only to your company and not others. As the PEST and SWOT analysis done while strategy making process are done considering your organizations strengths and weakness. Hence strategy is one thing that your competitors will not copy.

In gone years various writers has given their definition of strategy, for this assignment we will be using the definition given in the book Planning and Control Systems (1965) of which Robert N. Anthony was the author but he has not used his own definition but stood by Kenneth R. Andrews definition in an unpublished paper.

The pattern of objectives, purposes or goals and major policies and plans for achieving these goals stated in such a way as to define what business the company is or is to be in and the kind of company it is or is to be

Anthony (1965)

From the above definition we can understand that strategy helps company reach that vision, achieve that goal and change the company’s image in the future. Strategy is all about planning about how to achieve the aims, goals and objectives of the company.

Michael Porter in 1980 gave a competitive strategy a definition,

A broad formula for how a business is going to compete, what its goal should be, and what policies will be needed to carry out those goals

                                                                                     

Porter (1980)

The focus of Porter is very much based on competitive business and how a company is going to compete and accordingly what its goal should be and what policies it needs to formulate. In contrast to Porter, definition in Anthony (1965) book is doesn’t talks anything about competition. Author of this assignment believes that companies does not have only one strategy. In fact they have lots of strategy each destined to meet it goals with the given period of time. There are strategies for competition, positioning, marketing etc. The flourishing signs of strategy has also engulfed public and non for profit organization to indulge into strategy making (Bryson, 1994).

Other definitions given by Alfred Chandler (1962) and Ansoff have actually helped strategy evolve as a management regulation in the late 60’s (Palmer, I. & Hardy, C. 2000).  Authors understand of the definition written in this assignment is that strategy is a direction that is given to the company for which changes will be made internally and externally and appropriate resources that are required will be applied.

Strategy exists at three different levels in an organization, namely Corporate, Business and Operational. At corporate level, strategy is planned for the entire organization as whole. At business level the strategy is planned to compete with other companies. Finally at the operational level, strategy is planned to make sure that different operation within the organization like finance, marketing and production contribute their maximum to corporate level strategy (Gerry Johnson and Kevan Scholes 1988).

Henry Mintzberg (1996) in his book The Rise and Fall of Strategic Planning threw some lights on strategy. He directed that strategy is a plan, a pattern, a position, and a perspective. The usage of the word strategy has originated from the military time wherein strategy actually referred to planning for attack or defense. It was later when the strategy word came to the for-profit organizations and then the public and non profit organizations (Bryson, 2004).

Planning is plan of action for any organization. There are two elements required is ends and the means. Ends is what the company has to achieve or where the company is planning to position itself in the future and Means is how will company realize these goals. What are the tools or techniques or strategies that company will use to achieve those goals or objectives. Hence, it can be seen that Strategy is all about planning. Planning the right plan of action for the company choosing the right means to reach to the goals and achieve it.

Strategy is all about planning for the company’s vision, to achieve those goals. It could be planned for short term or long term, corporate of business level for specific departments and objectives or for all. The goals or objectives might vary in respect to different terms but the planning will remain as core. Bryson and Alston (2004) gave the ABC of strategic planning. The figure showed “A” as the position where company is currently standing and “B” as the position where the company intends to be in the near future. And “C” is in middle of “A” and “B”, it is the process of getting there. The tools and techniques that will be required to get from “A” to “B”. “C” is basically the strategic plan, hence from A to C comes the planning of strategy and from C to B comes the time for realizing the strategies that are planned. The figure clearly states that the long term goals of company or visions or objectives can be met only by a strategic plan. Bryson also claims that for many organizations “strategic plan is the natural way of doing business” (Bryson, 2004).

Henry Mintzberg in his article about strategic planning made a clear distinction between strategic planning and strategic thinking. He said that they are not two identical ideologies. One is about analysis and the other is about synthesis (Mintzberg, 1994).

Bryson (2004) said that strategic planning is set of concepts and procedures that are basically designed to help the planners and managers think and act strategically. Practicing strategic planning has been widely accepted and when done appropriately, it is a smart practice (Bryson, 2004).

Mintzberg argues that planning cannot help any company generate strategies but only make them operational (Mintzberg, 1994). Bryson in his book Strategic planning for Public and Nonprofit Organizations says that the benefits of derived from strategic planning are various. Few of them are:

·        Promotion of strategic thinking, acting and learning.

·        Strategic planning will help company’s in making quick and right decisions. It will improve the quality of decision making.

·        The first two benefits will help companies faces internal and external issues which will in turn lead into overall organizational effectiveness.

(Bryson, 2004)

Mintzberg states the pitfalls of strategic planning is that when the time comes top management blames the planner for failure and the planners claim that the management support was absent throughout the process of planning. But in reality, it’s the style that is problem, planning signifies calculating style of management and what is required is a committed style. The main responsibility of the planners is to lessen the power of management over strategy making. Planners cannot create strategies all they can do is supply information and data to help managers develop a strategy and plan for the vision (Mintzberg, 1994). Steiner has given 50 major pitfalls in starting, doing and using strategic planning in his book Strategic Planning (1979).

Strategic planning is long process. It starts with the mission and vision of the company goes to the objectives and then there are some tools and techniques likes PEST and SWOT analysis used to know the market and environment in which the company operates. Once the management and the planners have a clearer picture of all these they will implement the strategy. Once there is successful implementation, constant monitoring and measuring of results is required. This is done to make sure that there are no deviations in the plans and company is heading in the right direction to achieve its goal.

Bryson claims that strategic planning is here to stay and stay for a long time, its no passing fad. The reason stated is because it takes into account all angles like political, rational and decision making. The reason for failure of many management techniques is that they fail to connect all the elements of business. Strategic planning will help organization program and execute effective strategies. Bryson throughout his book Strategic Planning for Public and Non Profit Organization has remained very positive about strategic planning and claims that strategic planning will represent hundred percent effectiveness in organization.

Conclusion:

Planning strategies has become very natural for all organizations. If strategy and strategic planning are thought and planned carefully they can give tremendous results. Thinking, acting and learning strategically should be the top most priority for all managers, as it will help them develop the right vision for their company. Strategy planning and thinking are not identical concepts. They are two different concepts, many organizations have failed badly because their management did not recognize the difference between the two concepts. Strategic planning has its share of benefits and pitfalls. Author of this assignment has tried to give a equal picture of both. Three important things that strategic planning will give to the company is think, act and learning strategically; improved decision making; and overall organizational effectiveness. Author rightly believes in the statement that “Strategy is all about planning” as a strategy made without proper or appropriate planning is doomed to fail. Strategy making process involves lot of planning and research. Research will be support the strategy planning process. Strategy implementation is also a very important part of strategy process. As just doing planning and research will not reap benefits, in the end it is effective implementation which will reap benefits. But planning will still hold its strong importance in the strategy making process.

Reference:

Ø Porter, Michael E. (1996), What is Strategy, Harvard Business Review, November-December 1996, pp. 61-78.

Ø George Steiner, Strategic Planning, The Free Press, 1979.

Ø Andrews, Kenneth (1980). The Concept of Corporate Strategy, 2nd Edition. Dow-Jones Irwin.

Ø Bryson, John M. (1994). Strategic Planning for Public and Nonprofit Organizations. Jossey-Bass.

Ø Mintzberg, Henry (1994). The Rise and Fall of Strategic Planning, Harvard Business Review, January- February 1994, pp. 107-114.

Ø Anthony, Robert N., Planning and Control Systems a Framework for Analysis, Boston: University, 1965.

Ø Porter, M. (1980) Competitive Strategy, Free Press, New York.

Ø Mintzberg, H. 1987, Crafting Strategy, Harvard Business Review, 65(July- August), 66-75.

Ø Sun Tzu, in The Art of Strategy: New York: Doubleday, 1988.

Ø Gerry Johnson and Kevan scholes, (1988), Exploring Corporate Strategy: Second Edition,  Prentice Hall, London.

Ø Palmer, I. & Hardy, C. 2000, Thinking about Management, London: Sage.

Ø Chandler, A.D. 1962, Strategy and Structure: Chapters in the History of American Industrial Enterprise, Cambridge, Mass., MIT Press.