You need to overpower yourself and stop being afraid of the phrase “strategic management”. Associations and stereotypes associated with him are actually not very pleasant: annual strategic sessions involving managers from all branches, presentations, guest consultants, group work, hall walls hung with scribbled sheets with options for wild and pipe missions, countless goals, plans, deadlines and implementers. Then these sheets will be rolled up, thrown on a cabinet to dust for a long time - until the next session. In fact, the concept of strategic management is erased by numerous stereotypes.
Where the stereotypes come from and who is to blame
Strategic management is a favorite topic of business trainers, which would be more correct to call business charlatans. Many of them, being quite decent people, easily go to teach other people the basics of high-flying management - strategic management. These people have everything for coaching happiness: a good education, effective public speaking skills, the ability to read and learn the main thing. All but one is management experience. And the education is most often psychological with the addition of a psychotherapist’s diploma. A theoretician can never be a full-fledged consultant, no matter how clever and a great speaker he may be. Hence the crowded sessions with pompous declarations of missions (it is easier to hide incompetence). The result is a complete discredit in the eyes of employees and managers of the most important component of modern company management - strategic management.
How it all started
The term itself is very young, it was introduced into everyday life in the mid-70s. The task then was to separate the concepts of current management at the level of production and management from senior management. Therefore, the first and main difference between the new concept of “strategic management” is its “leadership” status. The author of the term is Igor Ansoff (American of Russian origin). He introduced the model of strategic planning, then many authors invested in the concept, including the famous Peter Drucker.
Over the next fifty years, new approaches and miraculous recipes for the rapid and effective growth of the company grew and multiplied like mushrooms after the rain. As a result, the development of strategic management is head over heels bogged down in stereotypes and numerous managerial candy wrappers.
The theme "Management for superiors", by definition, has become a favorite for all sorts of schools, trends and trends. After all, who only, with what and how only does not manage ... Today, a dozen schools have already accumulated in strategic management, and this is only officially recognized. It became increasingly difficult to understand them and all the more to choose the best option for yourself and your company. The essence of strategic management is overgrown with additional formulations, like a Christmas tree - with toys. Economic reference books give standard definitions. Strategic management is an organization management function that extends to long-term goals and actions of an organization, an interconnected set of long-term measures or approaches in the name of strengthening the viability and power of an organization in relation to its competitors.
Who first began to get confused and doubt
Yes, a lot of people. It’s just that not everyone spoke, much less wrote about it. Some kind of status guru was needed here. And such were found, at once three together - together it is easier. All three have quite world names. This is a group of authors: Henry Mintzberg, Bruce Alstrand, and Joseph Lampel. They wrote this bestselling book Strategic Safari. A tour of the wilds of management strategies. ” It will be useful to everyone to read it - this is a professional and unbiased guide to all existing methods of strategic management with debriefing, criticism and a very competent comparative analysis. The Tower of Babel of "discrete changes" and "fortifications of vitality" finally fell. There she is dear.
The most important thing
It is necessary to determine only three concepts:
- Strategy - they write it.
- Strategic planning - this is also written.
- Strategic management - you can’t write it, you can only perform it, it’s actions, a process.
Strategy: in fact, it all started with military affairs, the art of a commander, a general plan of warfare. Well, such a definition may well suit what the chief is not a commander, and modern business is not a war? Let's try to formulate: a strategy is a general plan for achieving a mission and goals. And that’s all. It's enough.
Now about the mission - this is the reason for the existence of the company, its global goal.
Now strategic planning: this is a detailed plan for achieving strategic goals with deadlines and decision makers.
Finally, strategic management is a system for implementing a strategy with analysis of results. We remind you once again that this is a process.
The essence of strategic management can be understood by asking and answering three difficult questions about the company:
- What is your company now?
- What should your company become in a year, two, three, etc.?
- How can these changes be achieved?
The main focus of attention in strategic management in the organization is focused on its capabilities and the ability to implement strategic decisions. And such solutions are rarely simple, usually this:
- new products, new markets;
- new technologies and software;
- reconstruction or restructuring of departments or the entire company.
A feature of strategic management is its preventive nature. All actions to implement the strategy are proactive, not reactive. Strategic management is not for extinguishing fires. The strategy can be called anti-crisis, but only so that the crisis does not even arise.
Tasks and functions of strategic management
There are only five tasks:
- Definition of the main goal (mission) and long-term prospects.
- Converting high declarations and strategic concepts into detailed operational action plans that are understandable to each employee.
- Fulfillment of these plans.
- An honest assessment of everything that has been done, followed by an unbiased analysis of errors and the external environment.
- Adjustment of the content of the stages of strategic management taking into account the analysis.
All of them are tightly interconnected with each other.
As for the functions of strategic management, they are similar to the above tasks only at first glance. In fact, these are fundamentally different things, functional separation is carried out in order to determine the main executors - the developers of the strategy according to their functions:
- Planning function - who performs this function in this case?
- Organizational function - the implementation of the strategic plan. Who is doing? Who is responsible for the overall process?
- Coordination function - when and in what form is coordination needed? Who is doing it?
- The function of motivating employees to fulfill strategic plan points and achieve positive results: most likely, this function should be taken over by the human resources management department.
- Strategic plan follow-up function: how often? By what criteria and which parts of the strategy to control more often? Form of control and so on.
Thus, the functions of strategic management consist in a detailed division of responsibilities of strategy executors with control criteria and methods of employee motivation.
Mission and dreams of the leader
Is strategic vision a chef's dream? Not only possible, but it really is. In order for this dream to be realized, one needs to dream taking into account new trends in the industry and society as a whole. Everything needs to be remembered: about new technologies, products, customer groups, means of communication, and so on. The world is changing at a cosmic speed, you need to keep track of everything, not to miss anything. These are the realities of today. Therefore, the planning horizon and strategic vision should be limited, for example, to one year.
The mission statement style can be any, detailed or short. The brightest examples:
- Mission from Pepsi-Cola: “Defeat Coca!”
- Mission from Microsoft: "A computer is in every home."
Thus, the mission and strategic vision is the end point of the route, a common vector, direction: in a year we will become so. But how to get to this endpoint, what to go around in a cart, and where to sail in a boat - we understand the next stages of strategic management.
Strategy Development
If the end point of the annual route is determined, it is time to begin to detail the work. The strategy should include answers to specific questions. Examples:
- Who will we look at in the market and how will we achieve a competitive advantage?
- How will we respond to changing preferences in the main groups of our consumers?
- How will we respond to unforeseen changes in the market?
- How can one achieve the benefits of lowering costs, changing the product line or restructuring the company’s branches?
There is no and cannot be a universal way to create an effective strategy. But there are several essential elements that should be included in the strategy:
- The system of goals (organizational and special).
- Resource priorities - how to distribute them in strategic directions.
- Administration of plans, control and evaluation: who is responsible for what in the company.
- Forecasts of changes in key areas of the external environment.
- Overview of the main competitors with an assessment and forecasts.
- Risks - external and internal.
- Financial plan by type of budgeting.
Henry Mintzberg (one of the aforementioned authors of Strategic Safari) offers three methods for developing a strategy:
- A planned strategy is the implementation of deliberate and rational plans. Usually these are the planned restructuring of the company, their mergers or acquisitions, diversification. Reminds an intellectual product "from the chef".
- The strategy of entrepreneurs. In this model, the so-called entrepreneur intuition plays a large role. For this intuition, you need to be in the subject: an excellent understanding of the situation, an instant reaction to changes. It would be more correct to call such a model entrepreneurial art.
- Corrections along the way. We are talking about constant changes based on the information received during the implementation of the strategy itself. This model requires the participation of all teams of performers.
Strategic Management Goals
Where the word “strategic” is present, it is always said about large-scale and fateful events, including the thoughts of the leader, which simply must be large-scale.
The goals, if strategic, also reflect the company's ambitious plans. They vary from company to company, but most often in the process of strategic management the following typical goals are realized:
- Maximum profitability, expressed in any format you want - from profit rates and sales growth rates to the level of dividends to shareholders and product quality.
- The stability of the company in the market is a concept associated with risks and changing external conditions of existence. For real sustainability, that is, the company's security from unforeseen events, we need not only a well-developed risk management system, but also serious expenses for motivation, an advanced personnel policy with a strong social component.
- Moving the company forward - new areas and activities, development of new technologies and products, development of the IT sector, product diversification, new markets, etc.
Implementation of strategic plan items
At this stage, it is time for intensive administrative work. Organizational work within the framework of the strategic management system is best described in the format of clear and clear points - so that none of the participants have any discrepancies and doubts:
- Formation of an effective team of performers with clearly defined responsibilities, hierarchy and ethical standards.
- Priority allocation of financial and other resources, taking into account the importance of the tasks performed by each unit. The main word in this paragraph is “priority”.
- Development of procedures and rules necessary for the implementation of the strategy.
- The most important “communication” point is informing employees about upcoming strategic events. In this case, one cannot spare no effort or resources, it must be carried out with maximum efficiency. The success of the new strategy depends on the success of this function. Employees should have a good understanding of why and how changes are being made to the company.
- The most comfortable conditions for employees to perform tasks: place, time, money, communications, information.
- Effective incentives and smart and motivation of executing employees, including financial and non-financial, if necessary, changing functional duties and job descriptions.
- Formation and introduction of a system of key performance indicators associated with the implementation of the tasks of the strategic plan.
- Correction or formation of a new corporate culture, in which the concept of the mission and implementation of the company's strategy must be present.
- Create and implement advanced policies, such as continuous improvement policies.
Implementation of the strategy is the most complex and troublesome component of strategic management. The fate of the strategic management system in the company depends on its success. In this case, there are two ways: either total discredit in the eyes of employees, or achievement of goals and progress of the company with an impetus to further growth.
Evaluation and adjustment
Far from always, the implementation of the strategy goes as planned. All changes in the internal and external environment must be carefully monitored - this is also included in the strategic management component called “assessment and adjustment”.
How to respond to changes? It depends on the nature of the changes and capabilities of the company itself and may consist, for example, in revising the budget, rearranging employees in the hierarchy of subordination.
The main thing is to conduct continuous and systematic monitoring of progress in implementing the strategy, as well as unplanned changes along the way. Based on the results of such monitoring, it is necessary to create new development paths and adjust actions in the plan.
Any company always has a choice - to change or comfortably continue to work in the usual format. Change is always difficult. The manager and employees need to be prepared for the fact that strategic management is forever. All constituent components are repeated cyclically. Continuous process - strategy, planning, plan implementation, strategic analysis, risk management. This is one of the most interesting areas of management science, where one cannot do without a creative attitude and real enthusiasm of performers. Strategic management is a high-flying action.
Do not forget about the accompanying and supporting regulations that are not included in the strategy. Without them, effective work on its implementation will be impossible. Usually these are corporate rules in the form of various policies and codes. Documents of this kind are usually prescriptive; they help in creating a healthy environment and working mood.
A few words about the features of modern strategic management:
- If earlier strategic management was focused on long terms (from five or more years), today strategies are written even for a year - strategic terms are much shorter.
- Strategic management is impossible without the tight integration of all departments of the company - it is a multi-component, but a single process. A special role in integration is now played by IT technology.
- Strategic management has always been largely dependent on environmental conditions. Now this dependence has intensified. A company cannot exist outside the context of the general development of technology, market and society.
We wish everyone who undertakes the creation and implementation of a new strategy a working mood, smart bosses and positive changes.