Strategic management = -=20 Wikipedia, the free encyclopedia

Strategic=20 management

From Wikipedia, the free encyclopedia

Jump to: naviga= tion, searc= h

"business strategy" redirects here. For other = uses, see business = process.

This article has multiple = issues.=20 Please help improve=20 it or discuss these issues on the talk=20 page.

It needs = additional citations=20 for verificatio= n.=20 Tagged since August 2011.
It may need = to be=20 rewritten entirely to comply with Wikipedia's quality=20 standards. Tagged since March 2009.
It may require copy=20 editing for grammar, style, cohesion, tone, or spelling. = Tagged since August = 2011.

This article appears to contain a large = number of=20 buzzwords. = Specific=20 concerns can be found on the talk=20 page. Please help improve=20 this article if you can. (July = 2011)

Strategic management is a field that deals with the major = intended and=20 emergent initiatives taken by general=20 managers on behalf of owners, involving utilization of resources= , to=20 enhance the performance of =EF=AC=81rms=20 in their external environments.^[1]=20 It entails specifying the organization's=20 mission,=20 vision and objectives, developing policies and plans, often in terms of = projects=20 and programs, which are designed to achieve these objectives, and then=20 allocating resources to implement the policies and plans, projects and = programs.=20 A balanced=20 scorecard is often used to evaluate the overall performance of the = business and its = progress=20 towards objectives. Recent studies and leading management theorists have = advocated that strategy needs to start with stakeholders expectations = and use a=20 modified balanced scorecard which includes all stakeholders.

Strategic management is a level of managerial activity under setting = goals=20 and over Tactics.=20 Strategic management provides overall direction to the enterprise and is = closely=20 related to the field of Organization=20 Studies. In the field of business administration it is useful to = talk about=20 "strategic alignment" between the organization and its environment or = "strategic=20 consistency." According to Arieu (2007), "there is strategic consistency = when=20 the actions of an organization are consistent with the expectations of=20 management, and these in turn are with the market and the context." = Strategic=20 management includes not only the management team but can also include = the Board=20 of Directors and other stakeholders of the organization. It depends on = the=20 organizational structure.

=E2=80=9CStrategic management is an ongoing process that evaluates = and controls the=20 business and the industries in which the company is involved; assesses = its=20 competitors and sets goals and strategies to meet all existing and = potential=20 competitors; and then reassesses each strategy annually or quarterly = [i.e.=20 regularly] to determine how it has been implemented and whether it has = succeeded or needs replacement by a new strategy to meet changed=20 circumstances, new technology, new competitors, a new economic = environment.,=20 or a new social, financial, or political environment.=E2=80=9D (Lamb, = 1984:ix) [2]=20 Strategic Management can also be defined as "the identification of the = purpose=20 of the organisation and the plans and actions to achieve the purpose. = It is=20 that set of managerial decisions and actions that determine the long = term=20 performance of a business enterprise. It involves formulating and = implementing=20 strategies that will help in aligning the organisation and its = environment to=20 achieve organisational goals."

[edit]=20 Concepts/approaches of strategic = management

Strategic management can depend upon the size of an organization, and = the=20 proclivity to change of its business environment. These points are = highlighted=20 below:

A global/transnational organization may employ a more structured = strategic=20 management model, due to its size, scope of operations, and need to = encompass=20 stakeholder views and requirements.

An SME (Small and Medium Enterprise) may employ an entrepreneurial = approach. This is due to its comparatively smaller size and scope of=20 operations, as well as possessing fewer resources. An SME's CEO (or = general=20 top management) may simply outline a mission, and pursue all = activities under=20 that mission.

Whittington (2001) highlighted four approaches to strategic = management,=20 utilising different factors that organisations may face. These are the = Classical, Processual, Evolutionary and Systemic approaches. Each = paradigm is=20 suited to specific environmental factors, of which global firms have = faced=20 over the past 4/5 decades.

Mintzberg has stated there are prescriptive (what should be) and=20 descriptive (what is) schools, in the sense that the prescriptive = schools are=20 "one size fits all" approaches designed to work as best practice = methods, and=20 the descriptive schools merely describe how corporate strategy is = devised in=20 given contexts.

It can be said that there is no overriding strategic managerial = method, and=20 that a number of differing variables must be taken into account, = relative to how=20 a corporate strategic plan is outlined. It can also be said to be a = subjective=20 and highly contextual process.

[edit]=20 Strategy formation (Classical school)

The Classical School of strategic management is the most taught and = deployed=20 approach, of which most textbooks on the subject convey. The essential = points of=20 the approach are "where are we now?", "where do we want to be?" and "how = do we=20 get there?". It thus comprises an environmental analysis, a choice of = available=20 options, and determining a path for action and implementation.

The initial task in strategic management is typically the compilation = and=20 dissemination of a mission statement. This document outlines, in = essence, the=20 raison d'etre of an organization. Additionally, it specifies the scope = of=20 activities an organization wishes to undertake, coupled with the markets = a firm=20 wishes to serve.

Following the devising of a mission statement, a firm would then = undertake an=20 environmental scanning within the purview of the statement.

Strategic formation is a combination of three main processes which = are as=20 follows:

Performing a situation analysis, self-evaluation and competitor = analysis:=20 both internal and external; both micro-environmental and=20 macro-environmental.
Concurrent with this assessment, objectives are set. These = objectives=20 should be parallel to a time-line; some are in the short-term and = others on=20 the long-term. This involves crafting vision statements (long term = view of a=20 possible future), mission statements (the role that the organization = gives=20 itself in society), overall corporate objectives (both financial and=20 strategic), strategic business unit objectives (both financial and = strategic),=20 and tactical objectives.

[edit]=20 Strategy=20 evaluation and choice

An environmental scan will highlight all pertinent aspects that = affect an=20 organization, whether external or sector/industry-based. Such an = occurrence will=20 also uncover areas to capitalise on, in addition to areas in which = expansion may=20 be unwise.

These options, once identified, have to be vetted and screened by an=20 organization. In addition to ascertaining the suitability, feasibility = and=20 acceptability of an option, the actual modes of progress have to be = determined.=20 These pertain to:

[edit]=20 The basis of = competition

The basis of competition is the competitive advantage used or = established by=20 the strategy. This advantage may derive from how an organization = produces its=20 products, how it acts within a market relative to its competitors, or = other=20 aspects of the business. Specific approaches may include:

Differentiation, in which a multitude of market segments are = served on a=20 mass scale. An example will include the array of products produced by=20 Unilever, or Procter and Gamble, as both forge many of the world's = noted=20 consumer brands serving a variety of market segments.

Cost-based, which often concerns economy pricing. An example would = be=20 dollar stores in the United States.

Market segmentation (or niche), in which products are tailored for = the=20 unique needs of a niche market, as opposed to a mass market. An = example is=20 Aston Martin cars.

[edit]=20 Mode of = action

Measuring the effectiveness of the organizational strategy, it's = extremely=20 important to conduct a SWOT=20 analysis to figure out the internal strengths and weaknesses, and = external=20 opportunities and threats of the entity in business. This may require = taking=20 certain precautionary measures or even changing the entire = strategy.

In corporate strategy, Johnson, Scholes and Whittington present a = model in=20 which strategic options are evaluated against three key success = criteria:[3]

Suitability; would it work?
Feasibility; can it be made to work?
Acceptability; will they work it?

[edit]=20 Suitability

Suitability deals with the overall rationale of the strategy. The key = point=20 to consider is whether the strategy would address the key strategic = issues=20 underlined by the organisation's strategic position.

Does it make economic sense?
Would the organization obtain economies=20 of scale or economies=20 of scope?
Would it be suitable in terms of environment and = capabilities?

Tools that can be used to evaluate suitability include:

Ranking strategic options
Decision = trees

[edit]=20 Feasibility

Feasibility is concerned with whether the resources required to = implement the=20 strategy are available, can be developed or obtained. Resources include=20 funding, people, time, and information. or = cash flow=20 in the market

Tools that can be used to evaluate feasibility include:

cash=20 flow analysis and forecasting
break-even = analysis
resource deployment analysis

[edit]=20 Acceptability

Acceptability is concerned with the expectations of the identified=20 stakeholders (mainly shareholders, employees and customers) with the = expected=20 performance outcomes, which can be return, risk and = stakeholder/stakeholders=20 reactions.

Return deals with the benefits expected by the stakeholders = (financial and non-financial). For example, shareholders would expect = the=20 increase of their wealth, employees would expect improvement in their = careers=20 and customers would expect better value for money.
Risk deals with the probability and consequences of failure = of a=20 strategy (financial and non-financial).
Stakeholder reactions deals with anticipating the likely = reaction=20 of stakeholders. Shareholders could oppose the issuing of new shares,=20 employees and unions could oppose outsourcing for fear of losing their = jobs,=20 customers could have concerns over a merger with regards to quality = and=20 support.

Tools that can be used to evaluate acceptability include:

what-if=20 analysis
stakeholder= =20 mapping

[edit]=20 The direction = of=20 action

Strategic options may span a number of options, including:

Growth-based (inspired by Igor Ansoff's matrix =E2=80=93 market = development,=20 product development, market penetration, diversification)
Consolidation
Divestment
Harvesting

The exact option depends on the given resources of the firm, in = addition to=20 the nature of products' performance in given industries. A generally=20 well-performing organisation may seek to harvest (,i.e. let a product = die a=20 natural death in the market) a product, if via portfolio analysis it was = performing poorly comparative to others in the market.

Additionally, the exact means of implementing a strategy needs to be=20 considered. These points range from:

Strategic alliances
Capital Expenditures (CAPEX)
Internal development (,i.e. utilising one's own strategic = capability in a=20 given course of action)
M&A (Mergers and Acquisitions)

The chosen option in this context is dependent on the strategic = capabilities=20 of a firm. A company may opt for an acquisition (actually buying and = absorbing a=20 smaller firm), if it meant speedy entry into a market or lack of time in = internal development. A strategic alliance (such as a network, = consortium or=20 joint venture) can leverage on mutual skills between companies. Some = countries,=20 such as India and China, specifically state that FDI in their countries = should=20 be executed via a strategic alliance arrangement.

[edit]=20 Strategic=20 implementation and control

Once a strategy has been identified, it must then be put into = practice. The=20 implementation of strategy is of great importance. Conducting a = corporate=20 strategy is worthless as long as it is not implemented correctly by each = department of the organization This may involve organising, resourcing = and=20 utilising change management procedures:

[edit]=20 Organizing

Organizing relates to how an organizational design of a company can = fit or=20 align with a chosen strategy. This concerns the nature of reporting=20 relationships, spans of control, and any strategic business units (SBUs) = that=20 require to be formed. Typically, an SBU will be created (which often has = some=20 degree of autonomous decision-making) if it exists in a market with = unique=20 conditions, or has/requires unique strategic capabilities (,i.e. the = skills=20 needed for the running and competition of the SBU are different).

[edit]=20 Resourcing

Resourcing is literally the resources required to put the strategy = into=20 practice, ranging from human resources, to capital equipment, and to = ICT-based=20 implements.

[edit]=20 Change = management

In the process of implementing strategic plans, an organization must = be wary=20 of forces that may legitimately seek to obstruct such changes. It is = important=20 then that effectual change management practices are instituted. These=20 encompass:

The appointment of a change agent, as an individual who would = champion the=20 changes and seek to reassure and allay any fears arising.
Ascertaining the causes of the resistance to organizational change = (whether from employees, perceived loss of job security, etc.)
Via change agency, slowly limiting the negative effects that a = change may=20 uncover.

[edit]=20 Testing=20 the Strategic Alignment of the organization

The optimal performance of organizations is highly dependent on the = level of=20 Strategic Alignment. Until 2010 Change management was used to implement = a=20 strategy. In 2010 the Rott= erdam=20 School of Management together with the Erasmus School of=20 Economics conducted research on the measurement possibilities of = Strategic=20 Alignment. This cooperation led to the introduction of the S-ray = Alignment Scan.=20 The S-ray Alignment Scan is a visual of the Corporate Strategy measured = against=20 the level of understanding and implementation of the organozational = departments.=20 In 2011 Erasmu= s=20 University of Rotterdam introduced S-ray Diagnostics, which is a = spin-off of=20 this cooperation, solely focused on measuring strategic alignment of=20 organizations.

[edit]=20 Whittington's=20 perspectives

Apart from the Classical approach, Whittington outlined three other = schools=20 with reference to strategic management thinking.

[edit]=20 Processual

The Classical school was the prominent paradigm in the 1960s. = However, with=20 the advent of stagflation in the 1970s, rising trade union actions in = some=20 countries, wide-scale regional conflicts, rising oil prices, etc. it = became=20 apparent that firms needed to balance numerous stakeholder standpoints. = A=20 rational planning model could not be exercised, if internal (and = sometimes=20 external) powers needed to be heeded, consulted and even accommodated = to.

Processual strategic management thus emphasises politics, in terms of = resolving/managing internal conflicts and reaching compromises in = strategic=20 decision-making. Internal politics may be required for the following = purposes.=20 Some SBUs/functional areas may require more resources, or be competing = for the=20 same items from top management. An SBU/functional area could be headed = by a=20 powerful manager, who by virtue of his or her influence can impede = general=20 strategic actions.

In these cases, satisfying differing viewpoints is key, in an effort = to=20 resolve conflict and provide a common path for the organisation.

[edit]=20 Evolutionary

In the 1980s, business environments became more dynamic. It thus = became key=20 to "sink or swim", and adapt to the needs,challenges and rigours of = one's=20 business landscape. In this sense, evolutionary strategic management is=20 essentially Darwinist, and follows a classical Darwinian path. = Organisations=20 must develop or nurture traits that will help them survive and prosper = within=20 their given markets. If they do not, they will perish. A major facet of=20 evolutionary strategic management is a population ecology model, in = which firms=20 in an industry are seen akin to a population of animals.

Evolutionary strategy stems from an inability to track properly = complex=20 environments. If an industry has continuously changing factors, rational = planning (as per the Classical school) is futile. An organisation holds = no=20 choice but to "adapt or die".

[edit]=20 Systemic

In recent years, there has been greater emphasis on consumer rights = and the=20 general social responsibility of companies. Consumers are now expecting = firms to=20 act responsibly in their business operations, and to take heed of = numerous needs=20 in this process. It can be said, consequent from this eventuality, that = firms=20 operate in a connected fashion with their communities and societies, and = necessarily impact and "give and take" from such bodies.

Systemic strategy views the organisation as an open system, in that = it takes=20 inputs from society and imparts outputs into it. It thus is an integral = and=20 interconnected facet of the wider society, and not an entity distinct = from it. A=20 rational planning model is not seen as optimal, as it detracts from = attuning to=20 the needs of the community and the wider society a firm engages in.

[edit]=20 Drivers

The end goal of Classical planning is a deliberate need for profit=20 maximisation. Deliberate in this instance means that it is consciously = designed=20 by top management as such. Conversely, evolutionary strategy is = emergent, and=20 not consciously planned or executed.

Processual strategy is typically seen as deliberate and pluralistic, = as a=20 firm in the model cannot always seek to maximise profits. Systemic = strategy is=20 emergent and pluralistic, due to the continuous determining of social = needs.

[edit]=20 General = approaches

In general terms, there are two main approaches, which are opposite = but=20 complement each other in some ways, to strategic management:

The Industrial Organizational Approach
- based on economic=20 theory =E2=80=94 deals with issues like competitive rivalry, resource=20 allocation, economies=20 of scale
- assumptions =E2=80=94 rationality, self discipline behaviour, = profit=20 maximization
The Sociological Approach
- deals primarily with human interactions
- assumptions =E2=80=94 bounded rationality, satisficing = behaviour, profit=20 sub-optimality. An example of a company that currently operates this = way is=20 Google. The=20 stakeholder focused approach is an example of this modern approach = to=20 strategy.

Strategic management techniques can be viewed as bottom-up, top-down, = or=20 collaborative processes. In the bottom-up approach, employees submit = proposals=20 to their managers who, in turn, funnel the best ideas further up the=20 organization. This is often accomplished by a capital budgeting process. = Proposals are assessed using financial criteria such as return on=20 investment or cost-benefit = analysis. Cost=20 underestimation and benefit overestimation are major sources of = error. The=20 proposals that are approved form the substance of a new strategy, all of = which=20 is done without a grand strategic design or a strategic architect. The = top-down=20 approach is the most common by far. In it, the CEO, possibly with the = assistance=20 of a strategic planning team, decides on the overall direction the = company=20 should take. Some organizations are starting to experiment with = collaborative=20 strategic planning techniques that recognize the emergent nature of = strategic=20 decisions.

Strategic decisions should focus on Outcome, Time remaining, and = current=20 Value/priority. The outcome comprises both the desired ending goal and = the plan=20 designed to reach that goal. Managing strategically requires paying = attention to=20 the time remaining to reach a particular level or goal and adjusting the = pace=20 and options accordingly. Value/priority relates to the shifting, = relative=20 concept of value-add. Strategic decisions should be based on the = understanding=20 that the value-add of whatever you are managing is a constantly changing = reference point. An objective that begins with a high level of value-add = may=20 change due to influence of internal and external factors. Strategic = management=20 by definition, is managing with a heads-up approach to outcome, time and = relative value, and actively making course corrections as needed.

Simulation strategies are also used by managers in an industry. The = purpose=20 of simulation gaming is to prepare managers make well rounded decisions. = There=20 are two main focuses of the different simulation games, generalized = games and=20 functional games. Generalized games are those that are designed to = provide=20 participants with new forms of how to adapt to an unfamiliar environment = and=20 make business decisions when in doubt. On the other hand, functional = games are=20 designed to make participants more aware of being able to deal with = situations=20 that bring about one or more problems that are encountered in a = corporate=20 function within an industry.^[4]

[edit]=20 The strategy=20 hierarchy

In most (large) corporations there are several levels of management.=20 Corporate strategy is the highest of these levels in the sense that it = is the=20 broadest =E2=80=93 applying to all parts of the firm =E2=80=93 while = also incorporating the=20 longest time horizon. It gives direction to corporate values, corporate = culture,=20 corporate goals, and corporate missions. Under this broad corporate = strategy=20 there are typically business-level competitive strategies and functional = unit=20 strategies.

Corporate strategy refers to the overarching strategy of the=20 diversified firm. Such a corporate strategy answers the questions of = "which=20 businesses should we be in?" and "how does being in these businesses = create=20 synergy and/or add to the competitive advantage of the corporation as a = whole?"=20 Business strategy refers to the aggregated strategies of single = business=20 firm or a strategic business unit (SBU) in a diversified corporation. = According=20 to Michael Porter, = a firm=20 must formulate a business strategy that incorporates either cost = leadership, differe= ntiation,=20 or focus=20 to achieve a sustainable competitive advantage and long-term success. = These=20 three rules are also known as Porter's three generic Strategies; this = concept=20 can be applied to any size or form of business. Porter considered this = concept=20 as tradeoff strategy and argued that a person or company must only = choose ONE=20 strategy or risk having no strategy at all. Alternatively, according to = W. Chan=20 Kim and Ren=C3=A9e Mauborgne, an organization can achieve high growth = and profits by=20 creating a Blue=20 Ocean Strategy that breaks the previous value-cost trade off by=20 simultaneously pursuing both differentiation and low cost.

Functional strategies include marketing=20 strategies, new product development strategies, human resource = strategies,=20 financial strategies, legal strategies, supply-chain strategies, and = information=20 technology management strategies. The emphasis is on short and medium = term plans=20 and is limited to the domain of each department=E2=80=99s functional = responsibility.=20 Each functional department attempts to do its part in meeting overall = corporate=20 objectives, and hence to some extent their strategies are derived from = broader=20 corporate strategies.

Many companies feel that a functional organizational structure is not = an=20 efficient way to organize activities so they have reen= gineered=20 according to processes or SBUs. A strategic business unit is a=20 semi-autonomous unit that is usually responsible for its own budgeting, = new=20 product decisions, hiring decisions, and price setting. An SBU is = treated as an=20 internal profit centre by corporate headquarters. A technology = strategy,=20 for example, although it is focused on technology as a means of = achieving an=20 organization's overall objective(s), may include dimensions that are = beyond the=20 scope of a single business unit, engineering organization or IT = department.

An additional level of strategy called operational strategy = was=20 encouraged by Peter=20 Drucker in his theory of management= =20 by objectives (MBO). It is very narrow in focus and deals with = day-to-day=20 operational activities such as scheduling criteria. It must operate = within a=20 budget but is not at liberty to adjust or create that budget. = Operational level=20 strategies are informed by business level strategies which, in turn, are = informed by corporate level strategies.

Since the turn of the millennium, some firms have reverted to a = simpler=20 strategic structure driven by advances in information technology. It is = felt=20 that knowledge=20 management systems should be used to share information and create = common=20 goals. Strategic divisions are thought to hamper this process. This = notion of=20 strategy has been captured under the rubric of dynamic strategy,=20 popularized by Carpenter and Sanders's textbook [1]. = This work=20 builds on that of Brown and Eisenhart as well as Christensen and = portrays firm=20 strategy, both business and corporate, as necessarily embracing ongoing=20 strategic change, and the seamless integration of strategy formulation = and=20 implementation. Such change and implementation are usually built into = the=20 strategy through the staging and pacing facets.

[edit]=20 Historical development of strategic = management

[edit]=20 Birth = of strategic=20 management

The Strategic management discipline is originated in the 1950s and = 60s.=20 Although there were numerous early contributors to the literature, the = most=20 influential pioneers were Alfred D. Chandler, Philip Selznick, Igor = Ansoff, and=20 Peter Drucker. The discipline draws from earlier thinking and texts on = 'strategy'=20 dating back thousands of years.

Alfred=20 Chandler recognized the importance of coordinating the various = aspects of=20 management under one all-encompassing strategy. Prior to this time the = various=20 functions of management were separate with little overall coordination = or=20 strategy. Interactions between functions or between departments were = typically=20 handled by a boundary position, that is, there were one or two managers = that=20 relayed information back and forth between two departments. Chandler = also=20 stressed the importance of taking a long term perspective when looking = to the=20 future. In his 1962 ground breaking work Strategy and Structure, = Chandler=20 showed that a long-term coordinated strategy was necessary to give a = company=20 structure, direction, and focus. He says it concisely, =E2=80=9Cstructur= e follows=20 strategy.=E2=80=9D^[5]

In 1957, Philip=20 Selznick introduced the idea of matching the organization's internal = factors=20 with external environmental circumstances.^[6]=20 This core idea was developed into what we now call SWOT analysis by = Learned,=20 Andrews, and others at the Harvard Business School General Management = Group.=20 Strengths and weaknesses of the firm are assessed in light of the = opportunities=20 and threats from the business environment.

Igor=20 Ansoff built on Chandler's work by adding a range of strategic = concepts and=20 inventing a whole new vocabulary. He developed a strategy grid that = compared=20 market penetration strategies, product development strategies, market=20 development strategies and horizontal=20 and vertical=20 integration and diversification strategies. He felt that management = could=20 use these strategies to systematically prepare for future opportunities = and=20 challenges. In his 1965 classic Corporate Strategy, he developed = the gap=20 analysis still used today in which we must understand the gap = between where=20 we are currently and where we would like to be, then develop what he = called =E2=80=9Cgap=20 reducing actions=E2=80=9D.^[7]

Peter Drucker = was a=20 prolific strategy theorist, author of dozens of management books, with a = career=20 spanning five decades. His contributions to strategic management were = many but=20 two are most important. Firstly, he stressed the importance of = objectives. An=20 organization without clear objectives is like a ship without a rudder. = As early=20 as 1954 he was developing a theory of management based on = objectives.^[8]=20 This evolved into his theory of management by objectives (MBO). = According=20 to Drucker, the procedure of setting objectives and monitoring your = progress=20 towards them should permeate the entire organization, top to bottom. His = other=20 seminal contribution was in predicting the importance of what today we = would=20 call intellectual capital. He predicted the rise of what he called the=20 =E2=80=9Cknowledge worker=E2=80=9D and explained the consequences of = this for management. He=20 said that knowledge work is non-hierarchical. Work would be carried out = in teams=20 with the person most knowledgeable in the task at hand being the = temporary=20 leader.

In 1985, Ellen-Earle=20 Chaffee summarized what she thought were the main elements of = strategic=20 management theory by the 1970s:^[9]

Strategic management involves adapting the organization to its = business=20 environment.
Strategic management is fluid and complex. Change creates novel=20 combinations of circumstances requiring unstructured non-repetitive=20 responses.
Strategic management affects the entire organization by providing=20 direction.
Strategic management involves both strategy formation (she called = it=20 content) and also strategy implementation (she called it = process).
Strategic management is partially planned and partially = unplanned.
Strategic management is done at several levels: overall corporate=20 strategy, and individual business strategies.
Strategic management involves both conceptual and analytical = thought=20 processes.

[edit]=20 Growth = and portfolio=20 theory

In the 1970s much of strategic management dealt with size, growth, = and=20 portfolio theory. The PIMS=20 study was a long term study, started in the 1960s and lasted for 19 = years,=20 that attempted to understand the Profit Impact of Marketing Strategies = (PIMS),=20 particularly the effect of market share. Started at General = Electric, moved=20 to Harvard in the early 1970s, and then moved to the Strategic Planning=20 Institute in the late 1970s, it now contains decades of information on = the=20 relationship between profitability and strategy. Their initial = conclusion was=20 unambiguous: The greater a company's market share, the greater will be = their=20 rate of profit. The high market share provides volume and economies of = scale.=20 It also provides experience and learning=20 curve advantages. The combined effect is increased profits.^[10]=20 The studies conclusions continue to be drawn on by academics and = companies=20 today: "PIMS provides compelling quantitative evidence as to which = business=20 strategies work and don't work" =E2=80=93 Tom Peters.

The benefits of high market share naturally lead to an interest in = growth=20 strategies. The relative advantages of horizontal=20 integration, vertical=20 integration, diversification, franchises,=20 mergers=20 and acquisitions, joint ventures, and organic growth were discussed. = The=20 most appropriate market = dominance=20 strategies were assessed given the competitive and regulatory=20 environment.

There was also research that indicated that a low market share = strategy could=20 also be very profitable. Schumacher (1973),^<=
SPAN>[11]=20 Woo and Cooper (1982),^<=
SPAN>[12]=20 Levenson (1984),^<=
SPAN>[13]=20 and later Traverso (2002)^<=
SPAN>[14]=20 showed how smaller niche players obtained very high returns.

By the early 1980s the paradoxical conclusion was that high market = share and=20 low market share companies were often very profitable but most of the = companies=20 in between were not. This was sometimes called the =E2=80=9Chole in the = middle=E2=80=9D problem.=20 This anomaly would be explained by Michael Porter in the 1980s.

The management of diversified organizations required new techniques = and new=20 ways of thinking. The first CEO to address the problem of a = multi-divisional=20 company was Alfred=20 Sloan at General Motors. GM was decentralized into semi-autonomous=20 =E2=80=9Cstrategic business units=E2=80=9D (SBU's), but with centralized = support functions.

One of the most valuable concepts in the strategic management of=20 multi-divisional companies was portfolio theory. In the previous = decade=20 Harry = Markowitz and=20 other financial theorists developed the theory of portfolio=20 analysis. It was concluded that a broad portfolio of financial = assets could=20 reduce specific=20 risk. In the 1970s marketers extended the theory to product = portfolio=20 decisions and managerial strategists extended it to operating division=20 portfolios. Each of a company=E2=80=99s operating divisions were seen as = an element in=20 the corporate portfolio. Each operating division (also called strategic = business=20 units) was treated as a semi-independent profit center with its own = revenues,=20 costs, objectives, and strategies. Several techniques were developed to = analyze=20 the relationships between elements in a portfolio. B.C.G. = Analysis, for=20 example, was developed by the Boston=20 Consulting Group in the early 1970s. This was the theory that gave = us the=20 wonderful image of a CEO sitting on a stool milking a cash cow. = Shortly=20 after that the G.E.=20 multi factoral model was developed by General Electric. Companies = continued=20 to diversify until the 1980s when it was realized that in many cases a = portfolio=20 of operating divisions was worth more as separate completely independent = companies.

[edit]=20 The = marketing=20 revolution

The 1970s also saw the rise of the marketing oriented firm. From the=20 beginnings of capitalism it was assumed that the key requirement of = business=20 success was a product=20 of high technical quality. If you produced a product that worked well = and was=20 durable, it was assumed you would have no difficulty selling them at a = profit.=20 This was called the production=20 orientation and it was generally true that good products could be = sold=20 without effort, encapsulated in the saying "Build=20 a better mousetrap and the world will beat a path to your door." = This was=20 largely due to the growing numbers of affluent and middle class people = that=20 capitalism had created. But after the untapped demand caused by the = second world=20 war was saturated in the 1950s it became obvious that products were not = selling=20 as easily as they had been. The answer was to concentrate on selling. The 1950s and = 1960s is=20 known as the sales era and the guiding philosophy=20 of business of the time is today called the sales orientation. In = the early=20 1970s Theodore=20 Levitt and others at Harvard argued that the sales orientation had = things=20 backward. They claimed that instead of producing products then trying to = sell=20 them to the customer, businesses should start with the customer, find = out what=20 they wanted, and then produce it for them. The customer became the = driving force=20 behind all strategic business decisions. This marketing=20 orientation, in the decades since its introduction, has been = reformulated and=20 repackaged under numerous names including customer orientation, = marketing=20 philosophy, customer=20 intimacy, customer focus, customer driven, and market focused.

[edit]=20 The Japanese=20 challenge

In 2009, industry consultants Mark Blaxill and Ralph Eckardt = suggested that=20 much of the Japanese business dominance that began in the mid 1970s was = the=20 direct result of competition enforcement efforts by the Federal = Trade=20 Commission (FTC) and U.S. = Department=20 of Justice (DOJ). In 1975 the FTC reached a settlement with Xerox=20 Corporation in its anti-trust lawsuit. (At the time, the FTC was under = the=20 direction of Frederic=20 M. Scherer). The 1975 Xerox consent=20 decree forced the licensing of the company=E2=80=99s entire patent = portfolio, mainly to Japanese competitors. (See "compulsory = license.")=20 This action marked the start of an activist approach to managing = competition by=20 the FTC and DOJ, which resulted in the compulsory licensing of tens of = thousands=20 of patent from some of America's leading companies, including IBM, AT&T,=20 DuPont, Bausch & = Lomb, and=20 Eastman = Kodak.^{[original=20
research?]}

Within four years of the consent decree, Xerox's share of the U.S. copier = market=20 dropped from nearly 100% to less than 14%. Between 1950 and 1980 = Japanese=20 companies consummated more than 35,000 foreign licensing agreements, = mostly with=20 U.S. companies, for free or low-cost licenses made possible by the FTC = and DOJ.=20 The post-1975 era of anti-trust initiatives by Washington D.C. = economists at the=20 FTC corresponded directly with the rapid, unprecedented rise in Japanese = competitiveness and a simultaneous stalling of the U.S. manufacturing=20 economy.^<=
SPAN>[15]

[edit]=20 Competitive=20 advantage

The Japanese challenge shook the confidence of the western business = elite,=20 but detailed comparisons of the two management styles and examinations = of=20 successful businesses convinced westerners that they could overcome the=20 challenge. The 1980s and early 1990s saw a plethora of theories = explaining=20 exactly how this could be done. They cannot all be detailed here, but = some of=20 the more important strategic advances of the decade are explained = below.

Gary=20 Hamel and C.=20 K. Prahalad declared that strategy needs to be more active and = interactive;=20 less =E2=80=9Carm-chair planning=E2=80=9D was needed. They introduced = terms like strategic=20 intent and strategic architecture.^<=
SPAN>[16]<= SPAN>[17]=20 Their most well known advance was the idea of core=20 competency. They showed how important it was to know the one or two = key=20 things that your company does better than the competition.^<=
SPAN>[18]

Active strategic management required active information gathering and = active=20 problem solving. In the early days of Hewlett-Packard (HP), Dave=20 Packard and Bill=20 Hewlett devised an active management style that they called = management by=20 walking around (MBWA). Senior HP managers were seldom at their = desks. They=20 spent most of their days visiting employees, customers, and suppliers. = This=20 direct contact with key people provided them with a solid grounding from = which=20 viable strategies could be crafted. The MBWA concept was popularized in = 1985 by=20 a book by Tom Peters and Nancy Austin.^<=
SPAN>[19]=20 Japanese managers employ a similar system, which originated at Honda, = and is=20 sometimes called the 3 G's (Genba,=20 Genbutsu, and Genjitsu, which translate into =E2=80=9Cactual = place=E2=80=9D, =E2=80=9Cactual thing=E2=80=9D, and=20 =E2=80=9Cactual situation=E2=80=9D).

Probably the most influential strategist of the decade was Michael Porter. = He=20 introduced many new concepts including; 5 forces analysis, generic = strategies,=20 the value chain, strategic groups, and clusters. = In 5=20 forces analysis he identifies the forces that shape a firm's = strategic=20 environment. It is like a SWOT=20 analysis with structure and purpose. It shows how a firm can use = these=20 forces to obtain a s= ustainable=20 competitive advantage. Porter modifies Chandler's dictum about = structure=20 following strategy by introducing a second level of structure: = Organizational=20 structure follows strategy, which in turn follows industry structure. = Porter's=20 generic=20 strategies detail the interaction between cost minimization=20 strategies, product differentiation strategies, and market = focus=20 strategies. Although he did not introduce these terms, he showed the = importance of choosing one of them rather than trying to position your = company=20 between them. He also challenged managers to see their industry in terms = of a value=20 chain. A firm will be successful only to the extent that it = contributes to=20 the industry's value chain. This forced management to look at its = operations=20 from the customer's point of view. Every operation should be examined in = terms=20 of what value it adds in the eyes of the final customer.

In 1993, John=20 Kay took the idea of the value chain to a financial level claiming = =E2=80=9C Adding=20 value is the central purpose of business activity=E2=80=9D, where adding = value is=20 defined as the difference between the market value of outputs and the = cost of=20 inputs including capital, all divided by the firm's net output. = Borrowing from=20 Gary Hamel and Michael Porter, Kay claims that the role of strategic = management=20 is to identify your core competencies, and then assemble a collection of = assets=20 that will increase value added and provide a competitive advantage. He = claims=20 that there are 3 types of capabilities that can do this; innovation, = reputation,=20 and organizational structure.

The 1980s also saw the widespread acceptance of positioning= =20 theory. Although the theory originated with Jack=20 Trout in 1969, it didn=E2=80=99t gain wide acceptance until Al=20 Ries and Jack=20 Trout wrote their classic book =E2=80=9CPositioning: The Battle For = Your Mind=E2=80=9D=20 (1979). The basic premise is that a strategy should not be judged by = internal=20 company factors but by the way customers see it relative to the = competition.=20 Crafting and implementing a strategy involves creating a position in the = mind of=20 the collective consumer. Several techniques were applied to positioning = theory,=20 some newly invented but most borrowed from other disciplines. Perceptual = mapping=20 for example, creates visual displays of the relationships between = positions. Multidimensional=20 scaling, discriminant=20 analysis, factor=20 analysis, and co= njoint=20 analysis are mathematical techniques used to determine the most = relevant=20 characteristics (called dimensions or factors) upon which positions = should be=20 based. Preference=20 regression can be used to determine vectors of ideal positions and = clu= ster=20 analysis can identify clusters of positions.

Others felt that internal company resources were the key. In 1992, Jay=20 Barney, for example, saw strategy as assembling the optimum mix of=20 resources, including human, technology, and suppliers, and then = configure them=20 in unique and sustainable ways.^<=
SPAN>[20]

Michael=20 Hammer and James=20 Champy felt that these resources needed to be restructured.^<=
SPAN>[21]=20 This process, that they labeled reen= gineering,=20 involved organizing a firm's assets around whole processes rather than = tasks. In=20 this way a team of people saw a project through, from inception to = completion.=20 This avoided functional silos where isolated departments seldom talked = to each=20 other. It also eliminated waste due to functional overlap and = interdepartmental=20 communications.

In 1989 Richard=20 Lester and the researchers at the MIT Industrial Performance Center=20 identified seven best practices and concluded that firms must = accelerate=20 the shift away from the mass production of low cost standardized = products. The=20 seven areas of best practice were:^<=
SPAN>[22]

Simultaneous continuous improvement in cost, quality, service, and = product=20 innovation
Breaking down organizational barriers between departments
Eliminating layers of management creating flatter organizational=20 hierarchies.
Closer relationships with customers and suppliers
Intelligent use of new technology
Global focus
Improving human resource skills

The search for =E2=80=9Cbest practices=E2=80=9D is also called benchmarking.^<=
SPAN>[23]=20 This involves determining where you need to improve, finding an = organization=20 that is exceptional in this area, then studying the company and applying = its=20 best practices in your firm.

A large group of theorists felt the area where western business was = most=20 lacking was product quality. People like W.=20 Edwards Deming,^<=
SPAN>[24]=20 Joseph M. = Juran,^<=
SPAN>[25]=20 A.=20 Kearney,^<=
SPAN>[26]=20 Philip = Crosby,^<=
SPAN>[27]=20 and Armand=20 Feignbaum^<=
SPAN>[28]=20 suggested quality improvement techniques like total = quality=20 management (TQM), continuous=20 improvement (kaizen), lean=20 manufacturing, Six=20 Sigma, and return=20 on quality (ROQ).

An equally large group of theorists felt that poor customer service = was the=20 problem. People like James Heskett (1988),^<=
SPAN>[29]=20 Earl Sasser (1995), William Davidow,^<=
SPAN>[30]=20 Len Schlesinger,^<=
SPAN>[31]=20 A. Paraurgman (1988), Len Berry,^<=
SPAN>[32]=20 Jane Kingman-Brundage,^<=
SPAN>[33]=20 Christopher Hart, and Christopher Lovelock (1994), gave us fishbone = diagramming,=20 service charting, Total Customer Service (TCS), the service profit = chain,=20 service gaps analysis, the service encounter, strategic service vision, = service=20 mapping, and service teams. Their underlying assumption was that there = is no=20 better source of competitive advantage than a continuous stream of = delighted=20 customers.

Process=20 management uses some of the techniques from product quality = management and=20 some of the techniques from customer service management. It looks at an = activity=20 as a sequential process. The objective is to find inefficiencies and = make the=20 process more effective. Although the procedures have a long history, = dating back=20 to Taylorism,=20 the scope of their applicability has been greatly widened, leaving no = aspect of=20 the firm free from potential process improvements. Because of the broad=20 applicability of process management techniques, they can be used as a = basis for=20 competitive advantage.

Some realized that businesses were spending much more on acquiring = new=20 customers than on retaining current ones. Carl Sewell,^<=
SPAN>[34]=20 Frederick=20 F. Reichheld,^<=
SPAN>[35]=20 C. Gronroos,^<=
SPAN>[36]=20 and Earl Sasser^<=
SPAN>[37]=20 showed us how a competitive advantage could be found in ensuring that = customers=20 returned again and again. This has come to be known as the loyalty = effect=20 after Reicheld's book of the same name in which he broadens the concept = to=20 include employee loyalty, supplier loyalty, distributor loyalty, and = shareholder=20 loyalty. They also developed techniques for estimating the lifetime = value of a=20 loyal customer, called customer=20 lifetime value (CLV). A significant movement started that attempted = to=20 recast selling and marketing techniques into a long term endeavor that = created a=20 sustained relationship with customers (called relationship selling, relationship= =20 marketing, and cu= stomer=20 relationship management). Customer relationship management (CRM) = software=20 (and its many variants) became an integral tool that sustained this = trend.

James Gilmore and Joseph Pine found competitive advantage in mass=20 customization.^<=
SPAN>[38]=20 Flexible manufacturing techniques allowed businesses to individualize = products=20 for each customer without losing economies=20 of scale. This effectively turned the product into a service. They = also=20 realized that if a service is mass customized by creating a = =E2=80=9Cperformance=E2=80=9D for=20 each individual client, that service would be transformed into an = =E2=80=9Cexperience=E2=80=9D.=20 Their book, The Experience Economy,^<=
SPAN>[39]=20 along with the work of Bernd=20 Schmitt convinced many to see service provision as a form of = theatre. This=20 school of thought is sometimes referred to as cust= omer=20 experience management (CEM).

Like Peters and Waterman a decade earlier, James=20 Collins and Jerry=20 Porras spent years conducting empirical research on what makes great = companies. Six years of research uncovered a key underlying principle = behind the=20 19 successful companies that they studied: They all encourage and = preserve a=20 core ideology that nurtures the company. Even though strategy and = tactics=20 change daily, the companies, nevertheless, were able to maintain a core = set of=20 values. These core values encourage employees to build an organization = that=20 lasts. In Built To Last (1994) they claim that short term profit = goals,=20 cost cutting, and restructuring will not stimulate dedicated employees = to build=20 a great company that will endure.^<=
SPAN>[40]=20 In 2000 Collins coined the term =E2=80=9Cbuilt to flip=E2=80=9D to = describe the prevailing=20 business attitudes in Silicon Valley. It describes a business culture = where=20 technological change inhibits a long term focus. He also popularized the = concept=20 of the BHAG (Big Hairy Audacious Goal).

Arie=20 de Geus (1997) undertook a similar study and obtained similar = results. He=20 identified four key traits of companies that had prospered for 50 years = or more.=20 They are:

Sensitivity to the business environment =E2=80=94 the ability to = learn and=20 adjust
Cohesion and identity =E2=80=94 the ability to build a community = with personality,=20 vision, and purpose
Tolerance and decentralization =E2=80=94 the ability to build = relationships
Conservative financing

A company with these key characteristics he called a living = company=20 because it is able to perpetuate itself. If a company emphasizes = knowledge=20 rather than finance, and sees itself as an ongoing community of human = beings, it=20 has the potential to become great and endure for decades. Such an = organization=20 is an organic entity capable of learning (he called it a = =E2=80=9Clearning=20 organization=E2=80=9D) and capable of creating its own processes, goals, = and=20 persona.

There are numerous ways by which a firm can try to create a = competitive=20 advantage =E2=80=93 some will work but many will not. To help firms = avoid a hit and miss=20 approach to the creation of competitive advantage, Will Mulcaster^<=
SPAN>[41]=20 suggests that firms engage in a dialogue that centres around the = question "Will=20 the proposed competitive advantage create Perceived Differential Value?" = The=20 dialogue should raise a series of other pertinent questions, = including:

"Will the proposed competitive advantage create something that is=20 different from the competition?"
"Will the difference add value in the eyes of potential = customers?" =E2=80=93 This=20 question will entail a discussion of the combined effects of price, = product=20 features and consumer perceptions.
"Will the product add value for the firm?" =E2=80=93 Answering = this question will=20 require an examination of cost effectiveness and the pricing = strategy.

[edit]=20 The military=20 theorists

In the 1980s some business strategists realized that there was a vast = knowledge base = stretching=20 back thousands of years that they had barely examined. They turned to military = strategy for=20 guidance. Military strategy books such as The Art of War by Sun Tzu, On War = by von=20 Clausewitz, and The Red Book by Mao=20 Zedong became instant business classics. From Sun Tzu, they learned = the=20 tactical side of military strategy and specific tactical prescriptions. = From Von=20 Clausewitz, they learned the dynamic and unpredictable nature of = military=20 strategy. From Mao Zedong, they learned the principles of guerrilla = warfare. The=20 main market= ing=20 warfare books were:

Business War Games by Barrie=20 James, 1984
Marketing Warfare by Al=20 Ries and Jack=20 Trout, 1986
Leadership Secrets of Attila the Hun by Wess=20 Roberts, 1987

Philip Kotler = was a=20 well-known proponent of marketing warfare strategy.

There were generally thought to be four types of business warfare = theories.=20 They are:

Offensive=20 marketing warfare strategies
Defensive=20 marketing warfare strategies
Flanking=20 marketing warfare strategies
Guerrilla=20 marketing warfare strategies

The marketing warfare literature also examined leadership and = motivation,=20 intelligence gathering, types of marketing weapons, logistics, and=20 communications.

By the turn of the century marketing warfare strategies had gone out = of=20 favour. It was felt that they were limiting. There were many situations = in which=20 non-confrontational approaches were more appropriate. In 1989, Dudley = Lynch and=20 Paul L. Kordis published Strategy of the Dolphin: Scoring a Win in a = Chaotic=20 World. "The=20 Strategy of the Dolphin=E2=80=9D was developed to give guidance as = to when to use=20 aggressive strategies and when to use passive strategies. A variety of = aggressiveness=20 strategies were developed.

In 1993, J.=20 Moore used a similar metaphor.^<=
SPAN>[42]=20 Instead of using military terms, he created an ecological = theory of=20 predators and prey (see eco= logical=20 model of competition), a sort of Darwinian management = strategy=20 in which market interactions mimic long term ecological=20 stability.

[edit]=20 Strategic = change

In 1968, Peter=20 Drucker (1969) coined the phrase Age of Discontinuity to = describe the=20 way change forces disruptions into the continuity of our lives.^<=
SPAN>[43]=20 In an age of continuity attempts to predict the future by extrapolating = from the=20 past can be somewhat accurate. But according to Drucker, we are now in = an age of=20 discontinuity and extrapolating from the past is hopelessly ineffective. = We=20 cannot assume that trends that exist today will continue into the = future. He=20 identifies four sources of discontinuity: new technologies, globalization, = cultural = pluralism,=20 and knowledge=20 capital.

In 1970, Alvin=20 Toffler in Future Shock described a trend towards = accelerating rates=20 of change.^<=
SPAN>[44]=20 He illustrated how social and technological norms had shorter lifespans = with=20 each generation, and he questioned society's ability to cope with the = resulting=20 turmoil and anxiety. In past generations periods of change were always=20 punctuated with times of stability. This allowed society to assimilate = the=20 change and deal with it before the next change arrived. But these = periods of=20 stability are getting shorter and by the late 20th century had all but=20 disappeared. In 1980 in The Third Wave, Toffler characterized = this shift=20 to relentless change as the defining feature of the third phase of = civilization=20 (the first two phases being the agricultural and industrial waves).^<=
SPAN>[45]=20 He claimed that the dawn of this new phase will cause great anxiety for = those=20 that grew up in the previous phases, and will cause much conflict and=20 opportunity in the business world. Hundreds of authors, particularly = since the=20 early 1990s, have attempted to explain what this means for business=20 strategy.

In 2000, Gary Hamel = discussed=20 strategic decay, the notion that the value of all strategies, no = matter=20 how brilliant, decays over time.^[46]

In 1978, Dereck=20 Abell (Abell, D. 1978) described strategic windows and = stressed the=20 importance of the timing (both entrance and exit) of any given strategy. = This=20 has led some strategic planners to build pla= nned=20 obsolescence into their strategies.^<=
SPAN>[47]

In 1989, Charles=20 Handy identified two types of change.^<=
SPAN>[48]=20 Strategic drift is a gradual change that occurs so subtly that it = is not=20 noticed until it is too late. By contrast, transformational = change is=20 sudden and radical. It is typically caused by discontinuities (or exogenous=20 shocks) in the business environment. The point where a new trend is = initiated is=20 called a strategic inflection point by Andy Grove. = Inflection points=20 can be subtle or radical.

In 2000, Malcolm=20 Gladwell discussed the importance of the tipping=20 point, that point where a trend or fad acquires critical mass = and takes=20 off.^<=
SPAN>[49]

In 1983, Noel Tichy wrote = that because=20 we are all beings of habit we tend to repeat what we are comfortable = with.<= SPAN>[50]=20 He wrote that this is a trap that constrains our creativity,=20 prevents us from exploring new ideas, and hampers our dealing with the = full complexity=20 of new issues. He developed a systematic method of dealing with change = that=20 involved looking at any new issue from three angles: technical and = production,=20 political and resource allocation, and corporate = culture.

In 1990, Richard=20 Pascale (Pascale, R. 1990) wrote that relentless change requires = that=20 businesses continuously reinvent themselves.^<=
SPAN>[51]=20 His famous maxim is =E2=80=9CNothing fails like success=E2=80=9D by = which he means that what was=20 a strength yesterday becomes the root of weakness today, We tend to = depend on=20 what worked yesterday and refuse to let go of what worked so well for us = in the=20 past. Prevailing strategies become self-confirming. To avoid this trap,=20 businesses must stimulate a spirit of inquiry and healthy debate. They = must=20 encourage a creative process of self renewal based on constructive = conflict.

Peters and Austin (1985) stressed the importance of nurturing = champions and=20 heroes. They said we have a tendency to dismiss new ideas, so to = overcome this,=20 we should support those few people in the organization that have the = courage to=20 put their career and reputation on the line for an unproven idea.

In 1996, Adrian=20 Slywotzky showed how changes in the business environment are = reflected in value = migrations between=20 industries, between companies, and within companies.^<=
SPAN>[52]=20 He claimed that recognizing the patterns behind these value migrations = is=20 necessary if we wish to understand the world of chaotic change. In = =E2=80=9CProfit=20 Patterns=E2=80=9D (1999) he described businesses as being in a state of = strategic=20 anticipation as they try to spot emerging patterns. Slywotsky and = his team=20 identified 30 patterns that have transformed industry after = industry.^<=
SPAN>[53]

In 1997, Clayton=20 Christensen (1997) took the position that great companies can fail = precisely=20 because they do everything right since the capabilities of the = organization also=20 defines its disabilities.^<=
SPAN>[54]=20 Christensen's thesis is that outstanding companies lose their market = leadership=20 when confronted with disruptive=20 technology. He called the approach to discovering the emerging = markets=20 for disruptive technologies agnostic marketing, i.e., marketing = under the=20 implicit assumption that no one =E2=80=93 not the company, not the = customers =E2=80=93 can know=20 how or in what quantities a disruptive product can or will be used = before they=20 have experience using it.

A number of strategists use scenario=20 planning techniques to deal with change. The way Peter = Schwartz=20 put it in 1991 is that strategic outcomes cannot be known in advance so = the=20 sources of competitive advantage cannot be predetermined.^<=
SPAN>[55]=20 The fast changing business environment is too uncertain for us to find=20 sustainable value in formulas of excellence or competitive advantage. = Instead,=20 scenario planning is a technique in which multiple outcomes can be = developed,=20 their implications assessed, and their likeliness of occurrence = evaluated.=20 According to Pierre=20 Wack, scenario planning is about insight, complexity, and subtlety, = not=20 about formal analysis and numbers.^<=
SPAN>[56]

In 1988, Henry=20 Mintzberg looked at the changing world around him and decided it was = time to=20 reexamine how strategic management was done.^<=
SPAN>[57]<= SPAN>[58]=20 He examined the strategic process and concluded it was much more fluid = and=20 unpredictable than people had thought. Because of this, he could not = point to=20 one process that could be called strategic=20 planning. Instead Mintzberg concludes that there are five types of=20 strategies:

Strategy as plan =E2=80=93 a direction, guide, course of action = =E2=80=93 intention rather=20 than actual
Strategy as ploy =E2=80=93 a maneuver intended to outwit a = competitor
Strategy as pattern =E2=80=93 a consistent pattern of past = behaviour =E2=80=93 realized=20 rather than intended
Strategy as position =E2=80=93 locating of brands, products, or = companies within=20 the conceptual framework of consumers or other stakeholders =E2=80=93 = strategy=20 determined primarily by factors outside the firm
Strategy as perspective =E2=80=93 strategy determined primarily by = a master=20 strategist

In 1998, Mintzberg developed these five types of management strategy = into 10=20 =E2=80=9Cschools of thought=E2=80=9D. These 10 schools are grouped into = three categories. The=20 first group is prescriptive or normative. It consists of the informal = design and=20 conception school, the formal planning school, and the analytical = positioning=20 school. The second group, consisting of six schools, is more concerned = with how=20 strategic management is actually done, rather than prescribing optimal = plans or=20 positions. The six schools are the entrepreneurial, visionary, or great = leader=20 school, the cognitive or mental process school, the learning, adaptive, = or=20 emergent process school, the power or negotiation school, the corporate = culture=20 or collective process school, and the business environment or reactive = school.=20 The third and final group consists of one school, the configuration or=20 transformation school, an hybrid of the other schools organized into = stages,=20 organizational life cycles, or =E2=80=9Cepisodes=E2=80=9D.^<=
SPAN>[59]

In 1999, Constantinos Markides also wanted to reexamine the nature of = strategic planning itself.^<=
SPAN>[60]=20 He describes strategy formation and implementation as an on-going, = never-ending,=20 integrated process requiring continuous reassessment and reformation. = Strategic=20 management is planned and emergent, dynamic, and interactive. J. = Moncrieff=20 (1999) also stresses strategy=20 dynamics.^<=
SPAN>[61]=20 He recognized that strategy is partially deliberate and partially = unplanned. The=20 unplanned element comes from two sources: emergent strategies = (result=20 from the emergence of opportunities and threats in the environment) and=20 Strategies in action (ad hoc actions by many people from all = parts of the=20 organization).

Some business planners are starting to use a complexity=20 theory approach to strategy. Complexity can be thought of as chaos = with a=20 dash of order. Chaos=20 theory deals with turbulent systems that rapidly become disordered.=20 Complexity is not quite so unpredictable. It involves multiple agents=20 interacting in such a way that a glimpse of structure may appear.

[edit]=20 Information- and technology-driven = strategy

Peter Drucker = had=20 theorized the rise of the =E2=80=9Cknowledge worker=E2=80=9D back in the = 1950s. He described how=20 fewer workers would be doing physical labor, and more would be applying = their=20 minds. In 1984, John=20 Naisbitt theorized that the future would be driven largely by = information:=20 companies that managed information well could obtain an advantage, = however the=20 profitability of what he calls the =E2=80=9Cinformation float=E2=80=9D = (information that the=20 company had and others desired) would all but disappear as inexpensive = computers=20 made information more accessible.

Daniel=20 Bell (1985) examined the sociological consequences of information=20 technology, while Gloria Schuck and Shoshana Zuboff looked at = psychological=20 factors.^<=
SPAN>[62]=20 Zuboff, in her five year study of eight pioneering corporations made the = important distinction between =E2=80=9Cautomating technologies=E2=80=9D = and =E2=80=9Cinfomating=20 technologies=E2=80=9D. She studied the effect that both had on = individual workers,=20 managers, and organizational structures. She largely confirmed Peter = Drucker's=20 predictions three decades earlier, about the importance of flexible=20 decentralized structure, work teams, knowledge sharing, and the central = role of=20 the knowledge worker. Zuboff also detected a new basis for managerial = authority,=20 based not on position or hierarchy, but on knowledge (also predicted by = Drucker)=20 which she called =E2=80=9Cparticipative management=E2=80=9D.^<=
SPAN>[63]

In 1990, Peter=20 Senge, who had collaborated with Arie de Geus at Dutch Shell, = borrowed de=20 Geus' notion of the learning organization, expanded it, and = popularized=20 it. The underlying theory is that a company's ability to gather, = analyze, and=20 use information is a necessary requirement for business success in the=20 information age. (See organizatio= nal=20 learning.) To do this, Senge claimed that an organization would need = to be=20 structured such that:^<=
SPAN>[64]

People can continuously expand their capacity to learn and be=20 productive,
New patterns of thinking are nurtured,
Collective aspirations are encouraged, and
People are encouraged to see the =E2=80=9Cwhole picture=E2=80=9D = together.

Senge identified five disciplines of a learning organization. They = are:

Personal responsibility, self reliance, and mastery =E2=80=94 We = accept that we=20 are the masters of our own destiny. We make decisions and live with = the=20 consequences of them. When a problem needs to be fixed, or an = opportunity=20 exploited, we take the initiative to learn the required skills to get = it=20 done.
Mental models =E2=80=94 We need to explore our personal mental = models to=20 understand the subtle effect they have on our behaviour.
Shared vision =E2=80=94 The vision of where we want to be in the = future is=20 discussed and communicated to all. It provides guidance and energy for = the=20 journey ahead.
Team learning =E2=80=94 We learn together in teams. This involves = a shift from =E2=80=9Ca=20 spirit of advocacy to a spirit of enquiry=E2=80=9D.
Systems=20 thinking =E2=80=94 We look at the whole rather than the parts. = This is what Senge=20 calls the =E2=80=9CFifth discipline=E2=80=9D. It is the glue that = integrates the other four=20 into a coherent strategy. For an alternative approach to the = =E2=80=9Clearning=20 organization=E2=80=9D, see Garratt, B. (1987).

Since 1990 many theorists have written on the strategic importance of = information, including J.B. Quinn,^<=
SPAN>[65]=20 J. Carlos Jarillo,^<=
SPAN>[66]=20 D.L. Barton,^<=
SPAN>[67]=20 Manuel Castells,^<=
SPAN>[68]=20 J.P. Lieleskin,^<=
SPAN>[69]=20 Thomas Stewart,^<=
SPAN>[70]=20 K.E. Sveiby,^<=
SPAN>[71]=20 Gilbert J. Probst,^<=
SPAN>[72]=20 and Shapiro and Varian^<=
SPAN>[73]=20 to name just a few.

Thomas=20 A. Stewart, for example, uses the term intellectual capital = to=20 describe the investment an organization makes in knowledge. It is = composed of=20 human capital (the knowledge inside the heads of employees), customer = capital=20 (the knowledge inside the heads of customers that decide to buy from = you), and=20 structural capital (the knowledge that resides in the company = itself).

Manuel=20 Castells, describes a network society characterized by:=20 globalization, organizations structured as a network, instability of = employment,=20 and a social divide between those with access to information technology = and=20 those without.

Geoffrey Moore = (1991) and=20 R. Frank and P. Cook^<=
SPAN>[74]=20 also detected a shift in the nature of competition. In industries with = high=20 technology content, technical standards become established and this = gives the=20 dominant firm a near monopoly. The same is true of networked industries = in which=20 interoperability=20 requires compatibility between users. An example is word processor = documents.=20 Once a product has gained market dominance, other products, even far = superior=20 products, cannot compete. Moore showed how firms could attain this = enviable=20 position by using E.M. Rogers five stage adoption=20 process and focusing on one group of customers at a time, using each = group=20 as a base for marketing to the next group. The most difficult step is = making the=20 transition between visionaries and pragmatists (See Crossing the = Chasm).=20 If successful a firm can create a bandwagon effect in which the momentum = builds=20 and its product becomes a de facto standard.

Evans and Wurster describe how industries with a high information = component=20 are being transformed.^<=
SPAN>[75]=20 They cite Encarta's demolition of the Encycl= op=C3=A6dia=20 Britannica (whose sales have plummeted 80% since their peak of $650 = million=20 in 1990). Encarta=E2=80=99s reign was speculated to be short-lived, = eclipsed by=20 collaborative encyclopedias like Wikipedia=20 that can operate at very low marginal costs. Encarta's service was = subsequently=20 turned into an on-line service and dropped at the end of 2009. Evans = also=20 mentions the music industry which is desperately looking for a new business model. = The=20 upstart information savvy firms, unburdened by cumbersome physical = assets, are=20 changing the competitive landscape, redefining market segments, and disintermediating= some=20 channels. One manifestation of this is personalized= =20 marketing. Information technology allows marketers to treat each = individual=20 as its own market, a market of one. Traditional ideas of market=20 segments will no longer be relevant if personalized marketing is=20 successful.

The technology sector has provided some strategies directly. For = example,=20 from the software development industry agile = software=20 development provides a model for shared development processes.

Access to information systems have allowed senior managers to take a = much=20 more comprehensive view of strategic management than ever before. The = most=20 notable of the comprehensive systems is the balanced=20 scorecard approach developed in the early 1990s by Drs. Robert S. = Kaplan (Harvard=20 Business School) and David=20 Norton (Kaplan, R. and Norton, D. 1992). It measures several factors = financial,=20 marketing, production, organiza= tional=20 development, and new=20 product development to achieve a 'balanced' perspective.

[edit]=20 Knowledge = Adaptive=20 Strategy

Most current approaches to business "strategy" focus on the mechanics = of=20 management=E2=80=94e.g., Drucker's operational "strategies" =E2=80=93 = and as such are not true=20 business strategy. In a post-industrial= =20 world these operationally focused business strategies hinge on = conventional=20 sources of advantage have essentially been eliminated:

Scale used to be very important. But now, with access to capital = and a=20 global marketplace, scale is achievable by multiple organizations=20 simultaneously. In many cases, it can literally be rented.
Process improvement or =E2=80=9Cbest = practices=E2=80=9D were=20 once a favored source of advantage, but they were at best temporary, = as they=20 could be copied and adapted by competitors.
Owning the customer had always been thought of as an important = form of=20 competitive advantage. Now, however, customer = loyalty is=20 far less important and difficult to maintain as new brands and = products emerge=20 all the time.

In such a world, differe= ntiation,=20 as elucidated by Michael Porter, Botten and McManus is the only way to = maintain=20 economic or market superiority (i.e., comparative=20 advantage) over competitors. A company must OWN the thing that=20 differentiates it from competitors. Without IP ownership and protection, = any=20 product, process or scale advantage can be compromised or entirely lost. = Competitors can copy them without fear of economic or legal = consequences,=20 thereby eliminating the advantage.

This principle is based on the idea of evolution: differentiation, = selection,=20 amplification and repetition. It is a form of strategy to deal with = complex=20 adaptive systems which individuals, businesses, the economy are all = based on.=20 The principle is based on the survival of the "fittest". The fittest = strategy=20 employed after trail and error and combination is then employed to run = the=20 company in its current market. Failed strategic plans are either = discarded or=20 used for another aspect of a business. The trade off between risk and = return is=20 taken into account when deciding which strategy to take. Cynefin model = and the=20 adaptive cycles of businesses are both good ways to develop KAS, = reference Panarchy and=20 Cynefin.=20 Analyze the fitness=20 landscapes for a product, idea, or service to better develop a more = adaptive=20 strategy.

(For an explanation and elucidation of the "post-industrial" = worldview, see=20 George Ritzer = and Daniel=20 Bell.)

[edit]=20 Strategic=20 decision making processes

Will Mulcaster^<=
SPAN>[76]=20 argues that while much research and creative thought has been devoted to = generating alternative strategies, too little work has been done on what = influences the quality of strategic decision making and the = effectiveness with=20 which strategies are implemented. For instance, in retrospect it can be = seen=20 that the financial crisis of 2008=E2=80=939 could have been avoided if = the banks had=20 paid more attention to the risks associated with their investments, but = how=20 should banks change the way they make decisions to improve the quality = of their=20 decisions in the future? Mulcaster's Managing Forces framework addresses = this=20 issue by identifying 11 forces that should be incorporated into the = processes of=20 decision making and strategic implementation. The 11 forces are: Time; = Opposing=20 forces; Politics; Perception; Holistic effects; Adding value; = Incentives;=20 Learning capabilities; Opportunity cost; Risk; Style=E2=80=94which can = be remembered by=20 using the mnemonic 'TOPPHAILORS'.

[edit]=20 The=20 psychology of strategic management

Several psychologists have conducted studies to determine the = psychological=20 patterns involved in strategic management. Typically senior managers = have been=20 asked how they go about making strategic decisions. A 1938 treatise by = Chester = Barnard, that=20 was based on his own experience as a business executive, sees the = process as=20 informal, intuitive, non-routinized, and involving primarily oral, 2-way = communications. Bernard says =E2=80=9CThe process is the sensing of the = organization as=20 a whole and the total situation relevant to it. It transcends the = capacity of=20 merely intellectual methods, and the techniques of discriminating the = factors of=20 the situation. The terms pertinent to it are =E2=80=9Cfeeling=E2=80=9D, = =E2=80=9Cjudgement=E2=80=9D, =E2=80=9Csense=E2=80=9D,=20 =E2=80=9Cproportion=E2=80=9D, =E2=80=9Cbalance=E2=80=9D, = =E2=80=9Cappropriateness=E2=80=9D. It is a matter of art rather than=20 science.=E2=80=9D^<=
SPAN>[77]

In 1973, Henry=20 Mintzberg found that senior managers typically deal with = unpredictable=20 situations so they strategize in ad hoc, flexible, dynamic, and = implicit=20 ways. . He says, =E2=80=9CThe job breeds adaptive = information-manipulators who prefer=20 the live concrete situation. The manager works in an environment of=20 stimulous-response, and he develops in his work a clear preference for = live=20 action.=E2=80=9D^<=
SPAN>[78]

In 1982, John=20 Kotter studied the daily activities of 15 executives and concluded = that they=20 spent most of their time developing and working a network of = relationships that=20 provided general insights and specific details for strategic decisions. = They=20 tended to use =E2=80=9Cmental road maps=E2=80=9D rather than systematic = planning techniques.<= SPAN>[79]

Daniel=20 Isenberg's 1984 study of senior managers found that their decisions = were=20 highly intuitive. Executives often sensed what they were going to do = before they=20 could explain why.^<=
SPAN>[80]=20 He claimed in 1986 that one of the reasons for this is the complexity of = strategic decisions and the resultant information uncertainty.^<=
SPAN>[81]

Shoshana=20 Zuboff (1988) claims that information technology is widening the = divide=20 between senior managers (who typically make strategic decisions) and = operational=20 level managers (who typically make routine decisions). She claims that = prior to=20 the widespread use of computer systems, managers, even at the most = senior level,=20 engaged in both strategic decisions and routine administration, but as = computers=20 facilitated (She called it =E2=80=9Cdeskilled=E2=80=9D) routine = processes, these activities were=20 moved further down the hierarchy, leaving senior management free for = strategic=20 decision making.

In 1977, Abraham=20 Zaleznik identified a difference between leaders and managers. He = describes=20 leadershipleaders=20 as visionaries who inspire. They care about substance. Whereas managers = are=20 claimed to care about process, plans, and form.^<=
SPAN>[82]=20 He also claimed in 1989 that the rise of the manager was the main factor = that=20 caused the decline of American business in the 1970s and 80s.The main = difference=20 between leader and manager is that, leader has followers and manager has = subordinates. In capitalistic society leaders make decisions = and=20 manager usually follow or execute.^<=
SPAN>[83]=20 Lack of leadership is most damaging at the level of strategic management = where=20 it can paralyze an entire organization.^<=
SPAN>[84]

In 1997, Elliott=20 Jacques book Requisite=20 organization was published based on his 'Stratified Systems Theory'. = From=20 over 20 years of research Jacques concluded that the strategic leader = works in=20 an increasingly complex, ambiguous, volatile and uncertain environment. = Dr=20 Maretha Prinsloo developed the Cognitive= =20 Process Profile (CPP) psychometric from the work of Elliott = Jacques. The CPP=20 is a computer based psychometric which profiles a person's capacity for=20 strategic thinking. It is used worldwide in selecting and developing = people into=20 strategic roles.

According to Corner, Kinichi, and Keats,^<=
SPAN>[85]=20 strategic decision making in organizations occurs at two levels: = individual and=20 aggregate. They have developed a model of parallel strategic decision = making.=20 The model identifies two parallel processes that both involve getting = attention,=20 encoding information, storage and retrieval of information, strategic = choice,=20 strategic outcome, and feedback. The individual and organizational = processes are=20 not independent however. They interact at each stage of the process. For = instance, competition-oriented objectives are based on the knowledge of = the=20 financial status of competing firms, such as their market share.^<=
SPAN>[86]

[edit]=20 Limitations=20 of strategic management

Although a sense of direction is important, it can also stifle = creativity,=20 especially if it is rigidly enforced. In an uncertain and ambiguous = world,=20 fluidity can be more important than a finely tuned strategic compass. = When a=20 strategy becomes internalized into a corporate culture, it can lead to = group=20 think. It can also cause an organization to define itself too = narrowly. An=20 example of this is marketing=20 myopia.

Many theories of strategic management tend to undergo only brief = periods of=20 popularity. A summary of these theories thus inevitably exhibits = survivorship bias=20 (itself an area of research in strategic management). Many theories tend = either=20 to be too narrow in focus to build a complete corporate strategy on, or = too=20 general and abstract to be applicable to specific situations. Populism = or faddishness = can have an=20 impact on a particular theory's life cycle and may see application in=20 inappropriate circumstances. See business=20 philosophies and popular management theories for a more critical = view of=20 management theories.

In 2000, Gary Hamel coined the term strategic convergence to = explain=20 the limited scope of the strategies being used by rivals in greatly = differing=20 circumstances. He lamented that strategies converge more than they = should,=20 because the more successful ones are imitated by firms that do not = understand=20 that the strategic process involves designing a custom strategy for the=20 specifics of each situation.^[46]

Ram Charan, aligning with a popular marketing tagline, believes that=20 strategic planning must not dominate action. "Just do it!" while not = quite what=20 he meant, is a phrase that nevertheless comes to mind when combatting = analysis=20 paralysis.

[edit]=20 The linearity = trap

It is tempting to think that the elements of strategic management = =E2=80=93 (i)=20 reaching consensus on corporate objectives; (ii) developing a plan for = achieving=20 the objectives; and (iii) marshalling and allocating the resources = required to=20 implement the plan =E2=80=93 can be approached sequentially. It would be = convenient, in=20 other words, if one could deal first with the noble question of ends, = and then=20 address the mundane question of means.

But in the world where strategies must be implemented, the three = elements are=20 interdependent. Means are as likely to determine ends as ends are to = determine=20 means.^<=
SPAN>[87]=20 The objectives that an organization might wish to pursue are limited by = the=20 range of feasible approaches to implementation. (There will usually be = only a=20 small number of approaches that will not only be technically and=20 administratively possible, but also satisfactory to the full range of=20 organizational stakeholders.) In turn, the range of feasible = implementation=20 approaches is determined by the availability of resources.

And so, although participants in a typical =E2=80=9Cstrategy = session=E2=80=9D may be asked to=20 do =E2=80=9Cblue sky=E2=80=9D thinking where they pretend that the usual = constraints =E2=80=93=20 resources, acceptability to stakeholders, administrative feasibility = =E2=80=93 have been=20 lifted, the fact is that it rarely makes sense to divorce oneself from = the=20 environment in which a strategy will have to be implemented. = It=E2=80=99s probably=20 impossible to think in any meaningful way about strategy in an = unconstrained=20 environment. Our brains can=E2=80=99t process =E2=80=9Cboundless = possibilities=E2=80=9D, and the very=20 idea of strategy only has meaning in the context of challenges or = obstacles to=20 be overcome. It=E2=80=99s at least as plausible to argue that acute = awareness of=20 constraints is the very thing that stimulates creativity by forcing us = to=20 constantly reassess both means and ends in light of circumstances.

The key question, then, is, "How can individuals, organizations and = societies=20 cope as well as possible with ... issues too complex to be fully = understood,=20 given the fact that actions initiated on the basis of inadequate = understanding=20 may lead to significant regret?"^<=
SPAN>[88]

The answer is that the process of developing organizational strategy = must be=20 iterative. Such an approach has been called the Strategic = Incrementalisation=20 Perspective.^<=
SPAN>[89]=20 It involves toggling back and forth between questions about objectives,=20 implementation planning and resources. An initial idea about corporate=20 objectives may have to be altered if there is no feasible implementation = plan=20 that will meet with a sufficient level of acceptance among the full = range of=20 stakeholders, or because the necessary resources are not available, or = both.

Even the most talented manager would no doubt agree that = "comprehensive=20 analysis is impossible" for complex problems.^<=
SPAN>[90]=20 Formulation and implementation of strategy must thus occur side-by-side = rather=20 than sequentially, because strategies are built on assumptions that, in = the=20 absence of perfect knowledge, are never perfectly correct. Strategic = management=20 is necessarily a "...repetitive learning cycle [rather than] a linear=20 progression towards a clearly defined final destination."^<=
SPAN>[91]=20 While assumptions can and should be tested in advance, the ultimate test = is=20 implementation. You will inevitably need to adjust corporate objectives = and/or=20 your approach to pursuing outcomes and/or assumptions about required = resources.=20 Thus a strategy will get remade during implementation because "humans = rarely can=20 proceed satisfactorily except by learning from experience; and modest = probes,=20 serially modified on the basis of feedback, usually are the best method = for such=20 learning."^<=
SPAN>[92]

It serves little purpose (other than to provide a false aura of = certainty=20 sometimes demanded by corporate strategists and planners) to pretend to=20 anticipate every possible consequence of a corporate decision, every = possible=20 constraining or enabling factor, and every possible point of view. At = the end of=20 the day, what matters for the purposes of strategic management is having = a clear=20 view =E2=80=93 based on the best available evidence and on defensible = assumptions =E2=80=93 of=20 what it seems possible to accomplish within the constraints of a given = set of=20 circumstances.^{[citation=20
needed]} As the situation changes, some = opportunities for=20 pursuing objectives will disappear and others arise. Some implementation = approaches will become impossible, while others, previously impossible = or=20 unimagined, will become viable.^{[citation=20
needed]}

The essence of being =E2=80=9Cstrategic=E2=80=9D thus lies in a = capacity for "intelligent=20 trial-and error"^<=
SPAN>[93]=20 rather than linear adherence to finally honed and detailed strategic = plans.=20 Strategic management will add little value=E2=80=94indeed, it may well = do harm=E2=80=94if=20 organizational strategies are designed to be used as a detailed = blueprints for=20 managers. Strategy should be seen, rather, as laying out the general = path=E2=80=94but=20 not the precise steps=E2=80=94an organization will follow to create = value.^<=
SPAN>[94]=20 Strategic management is a question of interpreting, and continuously=20 reinterpreting, the possibilities presented by shifting circumstances = for=20 advancing an organization's objectives. Doing so requires strategists to = think=20 simultaneously about desired objectives, the best approach for = achieving=20 them, and the resources implied by the chosen approach. It requires a = frame of=20 mind that admits of no boundary between means and ends.

It may not be so limiting as suggested in "The linearity trap" above. = Strategic thinking/ identification takes place within the gambit of=20 organizational capacity and Industry dynamics. The two common approaches = to=20 strategic analysis are value analysis and SWOT analysis. Yes Strategic = analysis=20 takes place within the constraints of existing/potential organizational=20 resources but its would not be appropriate to call it a trap. For e.g., = SWOT=20 tool involves analysis of the organization's internal environment = (Strengths=20 & weaknesses) and its external environment (opportunities & = threats).=20 The organization's strategy is built using its strengths to exploit=20 opportunities, while managing the risks arising from internal weakness = and=20 external threats. It further involves contrasting its strengths & = weaknesses=20 to determine if the organization has enough strengths to offset its = weaknesses.=20 Applying the same logic, at the external level, contrast is made between = the=20 externally existing opportunities and threats to determine if the = organization=20 is capitalizing enough on opportunities to offset emerging threats.^{[citation=20
needed]}

[edit]=20 Putting creativity and innovation into = strategy

Given that companies of all sizes are competing on the global stage, = and the=20 pace of change and level of complexity have skyrocketed in the last = decade,=20 creative strategy development is needed more than ever. In 2010, IBM = released a=20 study summarizing three conclusions of 1500 CEOs around the world: 1) = complexity=20 is escalating, 2) enterprises are not equipped to cope with this = complexity, and=20 3) creativity is now the single most important leadership competency. = IBM said=20 that it is needed in all aspects of leadership, including strategic = thinking and=20 planning.^<=
SPAN>[95]

James=20 Bandrowski declared in 1990 that strategy development should no = longer be=20 just an analytical exercise, but should be highly creative with an aim = to=20 conceiving and executing an innovative strategy that creates competitive = distinction and elates customers.^<=
SPAN>[96]=20 He introduced a sine wave approach that amplifies the strategic thinking = of all=20 participants in the development and execution of strategy. It can be = used at the=20 corporate level, for every function in the organization, as well as in = mergers,=20 acquisitions, divestitures, and turnarounds. He states, the bigger the = amplitude=20 (measure of the height and depth of a sine wave) of one=E2=80=99s = thinking and feeling,=20 the greater the chance of value-added breakthrough thinking and = achieving=20 stretch goals. In 2009, he declared that a small amplitude both = positively and=20 negatively in one=E2=80=99s thinking is the metaphorical = =E2=80=9Cbox=E2=80=9D in thinking = outside=20 the box.

Marketing
Marketing=20 plan
Marketing=20 strategies
Management
Management=20 consulting
Military=20 strategy

Morphological=20 analysis
Ove= rall=20 equipment effectiveness
Proximity=20 mapping
Revenue=20 shortfall
Strategic=20 planning
Strategy=20 visualization

Value=20 migration
Six=20 Forces Model
= International=20 strategic management

[edit]=20 References

^=20 Nag, R.; Hambrick, D. C.; Chen, = M.-J,What is=20 strategic management, really? Inductive derivation of a consensus = definition=20 of the field. Strategic Management Journal. Volume 28, Issue 9, = pages=20 935=E2=80=93955, September 2007.

^=20 Lamb, Robert, Boyden Competitive = strategic=20 management, Englewood Cliffs, NJ: Prentice-Hall, 1984

^=20 Chandler, Alfred Strategy and = Structure:=20 Chapters in the history of industrial enterprise, Doubleday, New = York,=20 1962.

^=20 Selznick, Philip Leadership in = Administration:=20 A Sociological Interpretation, Row, Peterson, Evanston Il.=20 1957.

^=20 Ansoff, Igor Corporate Strategy = McGraw=20 Hill, New York, 1965.

^=20 Drucker, Peter The Practice of = Management,=20 Harper and Row, New York, 1954.

^=20 Chaffee, E. =E2=80=9CThree models of = strategy=E2=80=9D,=20 Academy of Management Review, vol 10, no. 1, 1985.

^=20 Buzzell, R. and Gale, B. The PIMS = Principles:=20 Linking Strategy to Performance, Free Press, New York, = 1987.

^<= /A>=20 Blaxill, Mark & Eckardt, Ralph, = "The=20 Invisible Edge: Taking your Strategy to the Next Level Using = Intellectual=20 property(Portfolio, March 2009)

^<= /A>=20 Hamel, G. & Prahalad, C.K. = =E2=80=9CStrategic=20 Intent=E2=80=9D, Harvard Business Review, May=E2=80=93June = 1989.

^<= /A>=20 Hamel, G. & Prahalad, C.K. = Competing for=20 the Future, Harvard Business School Press, Boston, = 1994.

^<= /A>=20 Hamel, G. & Prahalad, C.K. = =E2=80=9CThe Core=20 Competence of the Corporation=E2=80=9D, Harvard Business = Review, May=E2=80=93June=20 1990.

^<= /A>=20 Hammer, M. and Champy, J. = Reengineering the=20 Corporation, Harper Business, New York, 1993.

^<= /A>=20 Lester, R. Made in America, MIT = Commission=20 on Industrial Productivity, Boston, 1989.

^<= /A>=20 Camp, R. Benchmarking: The search = for industry=20 best practices that lead to superior performance, American Society = for=20 Quality Control, Quality Press, Milwaukee, Wis., 1989.

^<= /A>=20 Deming, W.E. Quality, Productivity, = and=20 Competitive Position, MIT Center for Advanced Engineering, = Cambridge=20 Mass., 1982.

^<= /A>=20 Juran, J.M. Juran on Quality, = Free Press,=20 New York, 1992.

^<= /A>=20 Kearney, A.T. Total Quality = Management: A=20 business process perspective, Kearney Pree Inc, 1992.

^<= /A>=20 Crosby, P. Quality is Free, = McGraw Hill,=20 New York, 1979.

^<= /A>=20 Feignbaum, A. Total Quality = Control, 3rd=20 edition, McGraw Hill, Maidenhead, 1990.

^<= /A>=20 Heskett, J. Managing in the Service=20 Economy, Harvard Business School Press, Boston, 1986.

^<= /A>=20 Berry, L. On Great Service, Free = Press,=20 New York, 1995.

^<= /A>=20 Kingman-Brundage, J. =E2=80=9CService = Mapping=E2=80=9D pp 148=E2=80=93163=20 In Scheuing, E. and Christopher, W. (eds.), The Service Quality=20 Handbook, Amacon, New York, 1993.

^<= /A>=20 Sewell, C. and Brown, P. Customers = for=20 Life, Doubleday Currency, New York, 1990.

^<= /A>=20 Reichheld, F. The Loyalty = Effect, Harvard=20 Business School Press, Boston, 1996.

^<= /A>=20 Gronroos, C. =E2=80=9CFrom marketing = mix to relationship=20 marketing: towards a paradigm shift in marketing=E2=80=9D, = Management Decision,=20 Vol. 32, No. 2, pp 4=E2=80=9332, 1994.

^<= /A>=20 Reichheld, F. and Sasser, E. = =E2=80=9CZero defects:=20 Quality comes to services=E2=80=9D, Harvard Business Review, = September/October=20 1990.

^<= /A>=20 Pine, J. and Gilmore, J. =E2=80=9CThe = Four Faces of Mass=20 Customization=E2=80=9D, Harvard Business Review, Vol 75, No 1, = Jan=E2=80=93Feb=20 1997.

^<= /A>=20 Pine, J. and Gilmore, J. (1999) The = Experience=20 Economy, Harvard Business School Press, Boston, 1999.

^<= /A>=20 Collins, James and Porras, Jerry = Built to=20 Last, Harper Books, New York, 1994.

^<= /A>=20 Mulcaster, W.R. "Three Strategic = Frameworks,"=20 Business Strategy Series, Vol 10, No 1, pp 68 =E2=80=93 75, = 2009.

^<= /A>=20 Moore, J. =E2=80=9CPredators and = Prey=E2=80=9D, Harvard=20 Business Review, Vol. 71, May=E2=80=93June, pp 75=E2=80=9386, = 1993.

^<= /A>=20 Drucker, Peter The Age of = Discontinuity,=20 Heinemann, London, 1969 (also Harper and Row, New York, = 1968).

^<= /A>=20 Toffler, Alvin Future Shock, = Bantom Books,=20 New York, 1970.

^<= /A>=20 Toffler, Alvin The Third Wave, = Bantom=20 Books, New York, 1980.

^<= /A>=20 Handy, Charles The Age of = Unreason,=20 Hutchinson, London, 1989.

^<= /A>=20 Gladwell, Malcolm (2000) The Tipping = Point, Little Brown, New York, 2000.

^<= /A>=20 Tichy, Noel Managing Strategic = Change:=20 Technical, political, and cultural dynamics, John Wiley, New York, = 1983.

^<= /A>=20 Pascale, Richard Managing on the = Edge,=20 Simon and Schuster, New York, 1990.

^<= /A>=20 Slywotzky, Adrian Value = Migration, Harvard=20 Business School Press, Boston, 1996.

^<= /A>=20 Slywotzky, A., Morrison, D., Moser, T., = Mundt,=20 K., and Quella, J. Profit Patterns, Time Business (Random = House), New=20 York, 1999, ISBN 08129311181.

^<= /A>=20 Christensen, Clayton "The Innovator's = Dilemma,"=20 Harvard Business School Press, Boston, 1997.

^<= /A>=20 Schartz, Peter The Art of the Long = View,=20 Doubleday, New York, 1991.

^<= /A>=20 Wack, Pierre =E2=80=9CScenarios: = Uncharted Waters Ahead=E2=80=9D,=20 Harvard Business review, September October, 1985.

^<= /A>=20 Mintzberg, Henry =E2=80=9CCrafting = Strategy=E2=80=9D, Harvard=20 Business Review, July/August 1987.

^<= /A>=20 Mintzberg, Henry and Quinn, J.B. The = Strategy=20 Process, Prentice-Hall, Harlow, 1988.

^<= /A>=20 Mintzberg, H. Ahlstrand, B. and Lampel, = J.=20 Strategy Safari : A Guided Tour Through the Wilds of Strategic = Management, The Free Press, New York, 1998.

^<= /A>=20 Markides, Constantinos =E2=80=9CA = dynamic view of=20 strategy=E2=80=9D Sloan Management Review, vol 40, spring 1999, = pp55=E2=80=9363.

^<= /A>=20 Moncrieff, J. =E2=80=9CIs strategy = making a difference?=E2=80=9D=20 Long Range Planning Review, vol 32, no2, = pp273=E2=80=93276.

^<= /A>=20 Schuck, Gloria =E2=80=9CIntelligent = Workers: A new=20 pedagogy for the high tech workplace=E2=80=9D, Organizational = Dynamics, Autumn=20 1985.

^<= /A>=20 Zuboff, Shoshana In the Age of the = Smart=20 Machine, Basic Books, New York, 1988.

^<= /A>=20 Senge, PeterThe Fifth = Discipline,=20 Doubleday, New York, 1990; (also Century, London, 1990).

^<= /A>=20 Quinn, J.B. Intelligent = Enterprise, The=20 Free Press, New York, 1992.

^<= /A>=20 Jarillo, J. Carlos Strategic = Networks:=20 Creating borderless organizations, Butterworth-Heinemann, Oxford,=20 1993.

^<= /A>=20 Barton, D.L. Wellsprings of = Knowledge,=20 Harvard Business school Press, Boston, 1995.

^<= /A>=20 Castells, Manuel The Rise of the = Networked=20 Society :The information age, Blackwell Publishers, Cambridge = Mass,=20 1996.

^<= /A>=20 Liebeskind, J. P. =E2=80=9CKnowledge, = Strategy, and the=20 Theory of the Firm=E2=80=9D, Strategic Management Journal, vol = 17, winter=20 1996.

^<= /A>=20 Stewart, Thomas Intellectual = Capital,=20 Nicholas Brealey, London, 1997, (also DoubleDay, New York, = 1997).

^<= /A>=20 Sveiby, K.E. The New Organizational=20 Wealth : Managing and measuring knowledge-based assets,=20 Berrett-Koehler Publishers, San Francisco, 1997.

^<= /A>=20 Probst, Gilbert, Raub, S. and Romhardt = K.=20 Managing Knowledge, Wiley, London, 1999 (Exists also in other=20 languages)

^<= /A>=20 Shapiro, C. and Varian, H. (1999) = Information=20 Rules, Harard Business School Press, Boston, 1999.

^<= /A>=20 Frank, R. and Cook, P. The Winner = Take All=20 Society, Free Press, New York, 1995.

^<= /A>=20 Evens, P. and Wurster, T. = =E2=80=9CStrategy and the New=20 Economics of Information=E2=80=9D, Harvard Business Review, = Sept/Oct=20 1997.

^<= /A>=20 Mulcaster, W.R. "Three Strategic = Frameworks,"=20 Business Strategy Series, Vol 10, No1, pp68 =E2=80=93 75, = 2009.

^<= /A>=20 Barnard, Chester The function of the = executive, Harvard University Press, Cambridge Mass, 1938, page=20 235.

^<= /A>=20 Mintzberg, Henry The Nature of = Managerial=20 Work, Harper and Roe, New York, 1973, page 38.

^<= /A>=20 Kotter, John The general = manager, Free=20 Press, New York, 1982.

^<= /A>=20 Isenberg, Daniel =E2=80=9CHow managers = think=E2=80=9D, Harvard=20 Business Review, November=E2=80=93December 1984.

^<= /A>=20 Isenberg, Daniel Strategic = Opportunism:=20 Managing under uncertainty, Harvard Graduate School of Business, = Working=20 paper 9-786-020, Boston, January 1986.

^<= /A>=20 Zaleznik, Abraham =E2=80=9CManagers and = Leaders: Are they=20 different?=E2=80=9D, Harvard Business Review, May=E2=80=93June, = 1977.

^<= /A>=20 leadership vs. management

^<= /A>=20 Zaleznik, Abraham The Managerial = Mistique,=20 Harper and Row, New York, 1989.

^<= /A>=20 Corner, P. Kinicki, A. and Keats, B. = =E2=80=9CIntegrating=20 organizational and individual information processing perspectives on = choice=E2=80=9D,=20 Organizational Science, vol. 3, 1994.

^<= /A>=20 Woodhouse, Edward J. and David = Collingridge,=20 "Incrementalism, Intelligent Trial-and-Error, and the Future of = Political=20 Decision Theory," in Redner, Harry, ed., An Heretical Heir of the=20 Enlightenment: Politics, Policy and Science in the Work of Charles E.=20 Limdblom, Boulder, C): Westview Press, 1993, p. 139

^<= /A>=20 de Wit and Meyer, Strategy Process, = Content and=20 Context, Thomson Learning 2008

^<= /A>=20 Ibid, p. 140

^<= /A>=20 Elcock, Howard, "Strategic Management," = in=20 Farnham, D. and S. Horton (eds.), Managing the New Public = Services, 2nd=20 Edition, New York: Macmillan, 1996, p. 56.

^<= /A>=20 Woodhouse and Collingridge, 1993. p.=20 140

^<= /A>=20 Ibid., passim.

^<= /A>=20 Moore, Mark H., Creating Public = Value:=20 Strategic Management in Government, Cambridge: Harvard University = Press,=20 1995.

^<= /A>=20 IBM, Capitalizing on Complexity: = Insights from=20 the Global Chief Executive Office Study, July 2010

^<= /A>=20 Bandrowski, James, Corporate = Imagination Plus,=20 Free Press, New York, 1990

[edit]=20 External = links

The Journal of Business Strategies
Strategic Planning Society
The=20 Association of Internal Management Consultants-The nationwide = network of=20 Strategic Management and Planning professionals

v t e Management

Outl= ine=20 of business management Index = of management articles Manager

Management branches	Finance Human=20 resources I= nformation=20 technology Marketing<= /LI> Operations/production Strategy

Other Management areas	Accounting Agile Association<= /A> Capability Change Communica= tion Conflict Constructio= n Cost Crisis Critica= l Cu= stomer=20 relationship Design Emergency<= /LI> Distributed<= /A> Earned=20 value Educational Engineering<= /A> Environmen= tal Facility Hospital<= /LI> Hospitality Hotel Information<= /A> Innovation Interim = Inventory Knowledge<= /LI> Land Logistics<= /LI> Lifecy= cle Marine=20 fuel Materials<= /LI> Office Perception Practice Program = Project = Process = Performance<= /A> Product = Public administratio= n Quality = Records = Resource Restaurant Risk Skills Spend Strategic Stress Supply=20 chain Systems = Talent Time Technology

Management-related topics	Association=20 of Technology, Management, and Applied = Engineering Applied= =20 engineering Business=20 school Char= tered=20 Management Institute Decision=20 making styles Organizati= on=20 development Organization= al=20 studies Social=20 entrepreneurship Forecasting Leadership

Articles	Adhocracy Administr= ation Certifie= d=20 Business Manager Collaboration Collaborative = method Corporate=20 governance Decision=20 Making Engineering = management Evidence-= based=20 management Executive=20 Pay Forecasting Futures=20 studies Growth Knowledge=20 visualization Leadership Management=20 consulting Management=20 control Management=20 cybernetics Management=20 development Management=20 fad Managerial=20 Psychology Management=20 science Management=20 styles Management=20 system Managerialism Micromanagement= Macromanagement= Middle=20 management Music=20 management = Organizational=20 behavior management Organization= al=20 studies Predictive=20 analytics Team=20 building Scientific=20 management Senior=20 management Social=20 entrepreneurship Virtual=20 management Williamson's=20 Model=20 of Managerial Discretion Peter=20 Drucker's management= =20 by objectives Eliyahu=20 M. Goldratt's Theory=20 of constraints Pointy=20 Haired = Boss

Retrieved from "http://en.wikipedia.org/w/index.php?title=3DStrate= gic_management&oldid=3D497338447"

Categories: =

Strat= egic=20 management
Anti= cipatory=20 thinking
Business=20 terms
Management<= /LI>

Hidden categories:=20