This paper seeks to discuss about strategic planning based on the statement of Richard Whittington who said that almost 10 years ago, the average book on strategic planning (management) is pretty cheap, so how come if the secrets of strategic management are so cheaply and easily available, many organizations fail to develop successful strategies? Is there something wrong with the literature or maybe even the concept itself (Clegg et. al 2005).
Analysis and Discussion
What is strategic planning?
Gale, (2006) defined strategic management as the process of defining the purpose of the pursuits of the organization and the methods for achieving them. It was Robert Grant who emphasized there is competition in business that provides the rationale for strategy hence strategy must be winning the said contest or game. The inter-dependence of therefore of competitors play an important role on what strategy will be adopted by the players thus it is logical to view that indeed the actions of individual competitors and teams of competitors are determinative of outcome for other players or companies in the industry (Gale, 2006).
Playing therefore a game requires some skills as it could be left to chance. This makes business them different from pure game of chance as there is better chance if one player has a skill. But the correctness of applicability of the skills played and their knowledge of the rules of the game would really be material if winning is an objective of the players. Gale (2006) emphasized the need for the companies to have strategic focus if these companies intend to survive and flourish in the long term.”
Strategic management involves strategy formulation or development and strategy implementation or deployment. As such success in the first does not necessarily result in the success to the second but success in first is requirement for the success in the second. The development part of the model is about the creation and establishment of the company’s overall mission and vision and the means to achieve them creation and establishment of an organization’s overall mission and vision and the means to achieve them. It is under this stage also that the internal and external assessment is made in terms of company strengths and weaknesses and industry opportunities and threats. This also include an assignment of who will do the strategies, tactics and actions plans (Gale, 2006)
After the plans or strategies are formulated, the same would be followed by implementation or deployment where the plans are put into action and result. It is therefore the execution stage in all levels of the organization. This normally includes measurement and feedback as way on monitoring on whether what is being implemented is done and whether modifications are necessary.
Is there something wrong with the literature on strategic planning?
This researcher believes that there is nothing wrong with the literature on strategic planning on matters where strategies formulated are supposed to be implemented but there were many aspects that were overlooked. Gale (2006) provided several reasons why strategic planning failed. If one traces the history of strategic planning in the 60’s and 70’s, one would notice that strategic planning was viewed as the best way to ensure productivity and profits.
The 1980 however saw the disappointment of some executives who began to feel the return on their investment in the development of large strategic planning departments as the increase in computer technology and globalization of industries caused increased complexity in those industries, and the strategic models of the 1960’s and 1970’s were n not responsive to the dynamics of the market place (Gale, 2006).
Planning departments were found decreasing during 1980s and 1990s as strategic planning was replaced in the minds of executives with the thoughts of improving quality and productivity through operational innovation. The most prominent of these approaches included total quality management (TQM) and the Quality philosophies of authors then like Deming. Reengineering and downsizing as a means to attain operational activities came into being as promoted by Hammer and Champy in the Process Reengineering. The latter was accepted by many as strategies to increase productivity (Gale, 2006)..
Strategic planning came back to life in the 1990s but this time it is used more on growth through mergers and acquisitions, joint ventures, innovation through decentralized strategic efforts within the company, emergent strategy and leveraging core competencies to create strategic intent.
To say there is something wrong with the literature on strategic planning is not borne by evidence. Their uses have been there under different names over the years.
Is the concept of strategic planning wrong itself?
Although it was explained that it could not be literature on strategic planning that was wrong but there are factors to account for failure, this section does not necessarily prejudice the analysis as attacking the concept of strategic planning itself has different arguments to assert said proposition.
The argument that would support the idea that strategic planning was not needed is found in some success stories of companies which essentially the side that strategic planning is not needed or its concept has no application to reality indeed.
Corporate Strategy: Management Guide (2000) however cited that were other scholars have long contended that business is too complex to allow rational and deliberative a process – and that real- world companies don’t operate like that anyway. The paper argued that while middle managers decide which initiatives to push, sales people decide which customers to focus on. In noting that some strategic moves work, while others don’t and thus the company modifies its strategy accordingly. This latter act of modification of strategy was called by McGill University professor Henry Mintzberg as emergent strategy (Corporate Strategy: Management Guide, 2000).
If the concept of emergent strategy is to be sustained there seems to be good reason to believe that what really matters in this model strategy making is not analysis and wise decision making at the top (being equated with strategic planning) but creating the right conditions for effective experimentation and learning such as opening up the process to those “new voices” and tapping into entrepreneurial energy that can be found in any organization.
A continual probing and testing would be more important than what was really thought at the start at the top (Corporate Strategy: Management Guide, 2000). This is on the premise that this strategic plan may actually become obsolete overnight because of the dynamic market place. It is therefore argued that what is really happening is testing whatever hypothesis will actually work in reality (Corporate Strategy: Management Guide, 2000).
It is also argued that what is right to one company is a question of what will happen in the future. Corporate Strategy: Management Guide, (2000) cited the fact that strategic theorists make bold statements, as if their prescriptions are appropriate for every era. This is also the seeming explanation why consultants want to garner all the clients they can, yet the more fruitful approach may be to begin with the company’s unique situation, then assess the relative importance of industry position, internal capabilities and fit between them.
There are also classic mysteries when it comes to strategy. Corporate Strategy: Management Guide (2000) explained cited a statement that strategy is clear only in retrospect. As proof two stories that have provoked the most disagreement on the use of strategic planning is being made part this paper.
These are the cases of The Railroad and Honda. In the case of The Railroad, Professor Theodore Levitt of Harvard Business School published a “manifesto” in 1960 about a topic he called “Marketing Myopia,” where he pointed out that companies often commit the strategic error of defining market too narrowly. He cited the case of railroad executives who had led their companies into decline because they thought of themselves in the railroad business, not the transportation business. Railroad is not just about the raid road trains and tracks but about any that move people (Corporate Strategy: Management Guide, 2000).
When a company does this narrow view, it is actually limiting itself to the potentials of its business by thinking only of its own distinctive competencies. A flexible organization which can build on whatever strengths they can make use are the one who will survive. This sound almost similar to what Charles Darwin has said it is not the strongest of our species that survives nor the most intelligent but those most adaptable to (“Some Timely Evolutionary Quotes”, n.d.).
In the case of Honda what happened was Honda had tried to introduce motorcycles as those done by British and American competitors in the US but had failed miserably. By discovering its strategy by accident, Honda subsequently introduces a small, user-friendly motorcycle on to a U.S. market dominated by big bikes and black-leather-jacket image. After the successful introduction, it slowly moves up-market, elbowing aside once-powerful British and American manufacturers. Honda’s emergent strategy was not considered a brilliant conceived and executed strategy (Mintzberg, et al.,1996). Rather it was a strategy by accident and the Boston Consulting Group reported that Honda’s case became the basis for widely used business-school cases (Corporate Strategy: Management Guide, 2000).
As proof of its emergent strategy, Honda had to create a market and a distribution system from scratch, which it actually did so mostly by trial and error (Corporate Strategy: Management Guide, 2000). To say therefore that strategic planning takes a considerable explanation to overcome the story of Honda.
Although it appears that there are cases that are the product of accident it does not mean that business entities would opt not to plan. This researcher therefore honestly believes that there is nothing wrong with the concept of strategic planning itself. The concept has basis in logic and in principle and some companies have in fact benefited from it. The fact that a few arise by accident and some strategic plans failed does not mean that the concept is wrong. To simplify the argument, the original composer and singer of a song may execute the song by singing it well. The fact however that the same song is not beautifully sung by another person does not mean that original song is wrong. There are many reasons to prove the cause the faulty singing of the song is not in the song but in the singer.
Having proven that there in nothing wrong with the concept and literature that could be supported with evidence, the assertion of this paper would be strengthened by knowing some specific reason or explanations of failure of strategic planning in the next section.
Why Did Traditional Strategic Management/Strategic Planning Fail?
Henry Mintzberg attributed the ultimate failure of strategic planning models of the 1960s and 1970s to the failure to distinguish between strategic planning and strategic thinking. He argued that traditional strategic planning models got heavily oriented to quantitative analysis, the result of which directed the executive towards what strategy should be taken. The effect was actually to subvert strategic thinking that involves the synthesis on one’s experience, intuition and creativity, in addition to analysis. There was therefore failure to do strategic thinking first before strategic planning (Gale, 2006). It was not the literature that was wrong. It was the user who misinterpreted the literature.
Mintzberg also found that the traditional planning failed to include in the planning process those who had to implement the strategic plan. Since strategic planning was done at the very top of the organization, or by expert consultants, the result was just to have strategic plan handed down to managers in bound, published documents. This caused therefore managers to become less committal as it failed to take into account the actual business challenges these managers faced on a day-to-day basis (Gale, 2006). Again, there was a misused by the people who had to implement strategic plan.
Mintzberg also blamed some fundamental flaws like the fallacies of prediction, of detachment and of formalization as explained and each is explained below.
Under the fallacy of prediction, traditional strategic planning was based on the assumption that one could measure all the variables that were relevant to the future of a business, analyze the result, and construct strategies based upon the results that, if followed, would ensure future success. This fallacy overlooks unforeseen economic, industry, social, and market shifts, thus this fallacy of prediction inevitably leads to the downfall of traditional strategic planning as what was planned could not longer be delivered because of change condition. (Gale, 2006). It may be observed that the existence of the policy of prediction presupposes the existence of assumptions that proved to be incomplete.
Under the fallacy of detachment, traditional strategic planning assumed that it was better to detached from the workers and from middle managers when analyzing data, in order to prevent bias in the planning process. This simply separated the strategy makers from the strategy implementers, which turned out to be a fatal mistake as there is a need for collaboration between the two (Gale, 2006).
Under the fallacy of formalization, some executives wrongly believes that formal systems are superior to human systems in the terms of information processing and decision making. Mintzberg explains that while formal systems can process larger amounts of data than humans can, only human can integrate, synthesize or create new directions from such analysis (Gale, 2006).
Miller offered another perspective as to why strategies often fail. In his land mark study, Miller name the result of his findings, Icarus Paradox (Miller, 1990), after the tragic failure from Greek mythology where Icarus’ father named Daedalus and who was an inventor, was asked to build a labyrinth for King Minos. This resulted to King Minos not allow Daedalus to leave after the latter’s completion of the task thus causing Daedalus to escape.
Daedalus and his son Icarus built wings for themselves by adhering the wings of birds onto long boards with wax. Having experienced fascination in flying using invention, Icarus was warned only to fly only at a moderate height, thus the escape was indeed a success but along the way Icarus had ignored the advice of his father not to fly too high because of the confidence gained in his ability to fly. Icarus’ have grown more daring, causing him to ultimately flew too high to get too close to the sun, hence the heat from the sun just caused the wax to melt that resulted to foiled escape (Gale, 2006). The lesson of story was that it was to too much or uncontrolled use of skill and technology which led him to freedom and ultimately his death (Gale, 2006) and such could happen to corporations’ management.
Miller discovered the reality of this Icarus paradox his research that the victories and strengths of companies can often be the cause of their failure, which he delineated into four major causes of strategic failure while an organization is experiencing successfully in its strategic initiatives. These are the leadership traps, monolithic cultures and skills, power and politics, and structural memories (Gale, 2006).
As to leadership traps, Miller came to know that steady success tend to strengthen leaders’ world views and ties them rigidly to the strategies and processes that brought about past successes. This in turn produces over confidence, prone to excess and neglect and even being prone to shape strategies based on their preferences rather than what data changing business circumstances. By becoming conceited leader succumbed to the adulation given upon them by the press, subordinates, shareholders and other admirers that eventually caused them to be isolated from the reality of the market place (Gale, 2006).
As to monolithic cultures sand skills, organizations were found by Miller to be tending to rely on “star” departments and the culture that builds up around them thereby causing certain imbalance (Mintzberg, 1994). Thus as one department takes the center state and other business functions are seen as less important, and perhaps even unimportant, to the success of the organization (Gale, 2006) organizational cultures in successful companies tend to become monolithic, intolerant and focused on a single goal or very limited goals over time. By giving more power to star departments, the later use there increased power to play politics and hence gaining more resources and success but would result to an imbalance organization that eventually cause the failure of the organization.
Another plausible explanation for failure is the role of disruptive technologies. In relation to this, Christensen (1997) discussed the case of Innovator’s Dilemma where he found that even when companies do follow sound management practices they still are exposed to events and problems that can cause strategic failure. He argued that good management involves sustaining the success of products and processes, and the companies are generally good at this, yet the possibility of being blind sided is there by the emergence of disruptive technologies. What caused successfully companies to miss seeing the threat of disruptive technologies is their being essentially caught in the routine of maintaining their current success.
It can be concluded that based on the foregoing analysis, there is nothing wrong with the literature of strategic planning. The problem is neither in the concept too. It is the people who misunderstood the concept and related literature that mainly caused of the failure of strategic planning on the part of the companies. The fact the strategic planning has evolved (Crittenden and Crittenden, 2000; Stollar, et. al, 2006) over the years from 1950s when its theme was budgeting planning and control to this present century under its theme of strategic and organizational innovation is a proof that strategic planning is necessary in business.
The fact also that accidents could happen sometimes does not mean the accidents become the general guides for business. This paper therefore concludes that the concept of strategic planning is not wrong but there was only a limitation of the user on now to interpret the same. Although a strategy may be called emergent does not mean that it is not longer strategic. The basis of strategic planning was never fixed conditions. So that when conditions changes strategies must lend some flexibility likewise although not necessarily at the top but the tactical or operation level which are within the purview of strategic decisions. This is the reason why strategic plans are broad plans and if ever the market reacts differently does not mean that plan was wrong. Strategic plans can change in the process (Porter, 1985; Porter, 1998).
Several reasons for failure of strategic plan were cited which means that the concept and literature are valid. To synthesize it could be said that emerging organizations failed to understand either or both their complementary competencies and synergies (Iii and Daly, 2007; Dull, et. al, 1995; Kaounides, 1999) as against the areas that are not complementary and synergistic, it is not the fault of strategic planning but on the people who should benefit from it. Knowing strategic planning is not limited to knowing its definitions, there may critical issues that must be evaluated along the way and strategic plans are just guide to make the best choice. Making therefore the wrong choice is not necessarily the fault of strategic planning.
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