The basics of strategic planning and vision
Strategic planning involves strategy formulation and strategy implementation.
Strategy formulation and strategy implementation are both dynamic, real-time processes necessitating consistent commitment as to perceive the competitive realities existing in the market. However, strategy formulation implies change and as such it involves a transition period required to absorb this change, whereas strategy implementation applies the change and as such it involves a transition period required to evaluate it. Moreover, it requires a strong strategic consensus not anymore as result of successful strategy formulation, but as a prerequisite for successful strategy implementation.
There is a distinct difference between strategy formulation and strategy implementation and this explains why only ten percent of the crafted strategies are actually successful. In the corporate environment we may encounter strong strategic decisions followed by weak implementations or strong implementation plans based on weak strategic planning. In particular:
1. Strategy formulation stage
Hypothesis 1: Top management are the “thinkers”
A general view regarding the involvement of top management in the decision-making process within an organization is that they think and decide on the strategy to be pursued. However, (a) the manager’s value system – how strongly the manager feels that organizational efficiency is subject to the personal growth of subordinates and (b) the manager’s confidence in his subordinates – how important the manager considers the knowledge and experience of subordinates in order to involve them in the decision making process, are two forces affecting the strategic decision making which should be considered.
Hypothesis 2: Roles determine the perspectives.
Similar sets of facts are perceived differently depending on individual operating roles in the strategy formulation process. Top management allows and desires the involvement of middle and lower management in the strategic decision making. Yet, the way top management and middle or lower management perceive similar market realities depends on own interests and own operating roles.
Hypothesis 3: Supportive climate increases job satisfaction
Organizational climate is viewed as influencing performance through cognitive organizational behaviours which affect employees’ motivation and level of job satisfaction. Top management focuses on identifying the strategies that should be used to achieve an effective organizational structure. Other dimensions of the organizational climate are associated with employee performance, high levels of trust and confidence between top management and subordinates, and effective teamwork.
2. Strategy implementation stage
Hypothesis 1: Middle and lower level managers are the “doers”
Middle managers monitor, interpret and communicate the changing conditions to top management effectively and at a later stage they are expected to implement the strategies set. A significant prerequisite for successful strategy implementation is clear goal setting from top management in order for the middle or lower management to take action and support a strategy. In the opposite case, unsuccessful or successful strategy implementation depends on whether middle managers are well informed or not.
Hypothesis 2: Strategic consensus leads to effective implementation
Strategic consensus is the agreement between top management and middle / lower management on the fundamental priorities of the firm. In large organizations the roles of top-, middle- and operating-level managers differ in their time horizon, information requirements, and core values. Therefore, strategic consensus and consequently strategic implementation is at stake when managers of any level have different perceptions about the need for change deriving from strategy formulation.
Hypothesis 3: Hierarchy improves the efficient allocation of resources.
Usually hierarchy creates conflicts and misalignments in any managerial level and in particular in top management where the members of the Board of Directors have different individual goals per se. Yet, in hierarchical organizational structures, general, divisional and operational managers are responsible for the operation of each division, management by objective (MBO) occurs and the “autonomous” divisions are joined under organizational umbrella. The efficient allocation of resources is explained by a multi-directional goal setting where people with diverse values, skills, and competencies are involved.
By summarizing the six hypotheses, a strategic gap is identified between strategy formulation and strategy implementation. So, how can organizations bridge this strategic gap and achieve effective strategic planning?
The alignment of top and middle management is crucial for the soft transition from strategy formulation to strategy implementation as a result of strategic consensus. To achieve that, organizations need self reliant, confident, trustworthy and dependable managers, but most importantly clear and consistent guidelines, increased quality of strategic conversations and feedback opportunities.
Although the alignment of rewards and structures is a mechanism to anticipate middle management resistance, it is essential to stress that rewards do not produce a long-term commitment to the crafted strategy. The idea is that when people engage in a task driven by an expected reward they become less creative and innovative because they don’t want to risk losing the reward.
Being a two-way process, teamwork involves elements of clear purpose, strategic commitment, and strategic integration reflected on top management commitment, strong team culture and team integration. In modern organizations, without teamwork there is no quality. In order to achieve this quality, organizations should remove the barriers between various departments as to avoid conflicting objectives and unnecessary competition.
In conclusion, no organizational structure per se guarantees success. Both strategy formulation and strategy implementation are subject to emotionality and as such they involve feelings, more or less intense, durable and consistent depending on organizational culture but also on individual mental maps. In this context, successful strategy implementation requires alignment in the organizational culture, structure and management processes. Managers should employ a stronger understanding of group and individual psychology and eliminate fear, and uncertainty from the workplace. Then, strategic consensus will follow.
I work as a financial and investment advisor but my passion is writing, music and photography. Writing mostly about finance, business and music, being an amateur photographer and a professional dj, I am inspired from life. Being a strong advocate of simplicity in life, I love my family, my partner and all the people that have stood by me with or without knowing. And I hope that someday, human nature will cease to be greedy and demanding realizing that the more we have the more we want and the more we satisfy our needs the more needs we create. And this is so needless after all. Article Source:http://www.articlesbase.com/management-articles/the-basics-of-strategic-planning-and-vision-1113994.html
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