Title: Modern Strategic Management: Balancing Strategic Thinking and Strategic Planning for Internal and External Stakeholders
Authors: O"Shannassy, Tim
Subject: Strategic Management
Publish: 2003
Status: full text
Source: Singapore Management Review; 2003 1st Half, Vol. 25 Issue 1, p53
Preparation: Scientific Database Management Journal Articles www.SYSTEM.parsiblog.com
Abstract: The later years of the 20th century were spent searching for new strategy paradigms as managers and researchers sought to resolve the intricacies of customising strategy process and content to context. In particular. this paper builds on a popular view in the strategy literature that all individuals in the organisation can think strategically, not just the CEO. In the modern organisation, all staff are encouraged to demonstrate autonomy and responsibility combining thought, and analysis, and action. In this context the paper goes on to explain the interaction of internal and external stakeholders in the organisation from the board of directors down to line management in an evolved or sophisticated strategy process. Contemporary definitions of strategic thinking, strategic planning. and strategic management are developed. Download Article

Introduction: The popularity of strategic planning peaked in the 1960s with the contributions of Kenneth Andrews (1965) and Igor Ansoff (1965) and their rational, analytical strategic planning models. However, experience as early as the 1970s and into the 1980s taught an important lesson in that these preive approaches (Mintzberg, 1990; Mintzberg, Ahlstrand and Lampel, 1998; Mintzberg and Lampel, 1999) to strategic planning are of little practical use in an uncertain environmental context. Mintzberg (1978) made an important insight when he distinguished between the intended and the emergent strategy of the organisation. Later contributions from Ohmae (1982), Peters and Waterman (1982), Mintzberg (1994,2000), Prahalad and Hamel (1994), Liedtka (1998a, 1998b), Heracleous, (1998) and Markides (2000) have discussed and advanced our awareness of and insight into the activities of strategic thinking, strategic planning and strategic management.
From this past we now have a greater awareness of what the strategy paradigm can and cannot do for an organisation and the importance of the interaction of internal and external stakeholders in participating in the strategy process. In particular, this paper agrees with Liedtka (1998) that all individuals in the organisation can think strategically, not just the CEO. In the modern organisation all staff are encouraged to demonstrate autonomy and responsibility combining thought, analysis and action. In this context the paper goes on to explain the interaction of internal and external stakeholders in the organisation from the board of directors down to line managers in an evolved or sophisticated strategy process. Contemporary definitions of strategic thinking, strategic planning, and strategic management are developed.

Strategic Thinking
Terminology in the field of strategic management is a contentious issue (Markides, 2000) with different writers using similar terminology in different ways in an effort to present their ideas as new and fresh. The introduction of the term strategic thinking to the strategy literature has served to create further confusion with a strong debate at present on what actually constitutes strategic thinking. There has been little attention given in the literature to identifying what strategic thinking looks like in a practical setting (Liedtka, 1998) and this is a significant void given the strength of the debate in journals and conferences on this important organisational activity. Review of empirical journals also indicates little or no attention to relating a theoretical understanding of strategic thinking to the substantial body of strategic management empirical research. Review of the strategy literature indicates that it is possible to take a "broad" or a "narrow" definition of strategic thinking. A narrow definition of strategic thinking emphasises eastern, generative, creative, synthetic, divergent thought processes and is usually associated with writers such as Mintzberg (1994) and Ohmae (1982). The focus of the strategists is the high level issues of mission and vision for the organisation. A broad definition of strategic thinking seeks to combine eastern, generative, creative, synthetic, divergent thought processes with a western, rational, analytical, convergent approach to problem solving. This view of strategic thinking is associated with writers including Liedtka (1998), Wilson (1994,1998), and Raimond (1996).
Wilson (1998:511) points out: "... if one thing is clear from the experience of the past 20 years, it is that innovative strategies do not emerge from sterile analysis and number-crunching; they come from new insights and intuitive hunches. Equally clear, however, is the fact that intuition if it is to be strategically helpful, must be grounded in facts ... in dealing with current complexities today"s strategist must supplement extinct with more explicit analysis".
Strategic thinking taking this broader perspective is much more than addressing high level mission and vision issues for the organisation. Following this background, a definition of strategic thinking is then proposed for future empirical research; strategic thinking is a particular way of solving strategic problems at the individual and institutional level combining rational and generative thought processes. In strategic thinking, thought and action can be intertwined or linear or something in between (Eccles, 1993) depending on the strategy context confronting the organisation. There is no single formula to strategic thinking for the individual or organisation and it is evident from the lessons of the evolution of strategy (O"Shannassy, 2001) that practising managers need some flexibility in problem solving style. As such a "broad" definition of strategic thinking is preferred. Having established a "broad" definition of strategic thinking the next step is to identify the specific elements of strategic thinking. Examination of the literature assists in identifying several key elements that should be included in the development of any such model.
Firstly, drawing on the writing of Liedtka (1998a, 1998b) it is evident that a strategic thinker requires a clear mental picture of the complete system of value creation within the organisation and the individual"s role within the larger system. In order for an organisation or open system to be able to respond flexibly and responsively to customers and markets, the organisation will require access to flexible inputs. The inputs required will vary from firm to firm and industry to industry, however, there will generally be four categories. These categories are flexible technology and machines, flexible people, flexible structures and flexible systems and processes (Ahmed, Hardaker and Carpenter, 1996:562). The "soft" people and systems aspect of Ahmed et al"s (1996) message can be developed further drawing on Peters and Waterman"s (1982) classic McKinsey "7-S Model" to include leadership style, staff skills, and culture or shared values. Secondly, a core focus of strategic thinking is problem solving. A systems perspective facilitates strategic thinkers at all levels of the firm identifying problems, hypotheses or propositions for investigation with an understanding of the wider business context. This problem solving or "scientific" orientation allows the use of either or both of intuition or analysis depending on needs (Liedtka, 1998a, 1998b; Wilson, 1994, 1998).
Thirdly, it is evident that the modern perception of strategic thinking encourages the participation of internal and external stakeholders (Mintzberg, 1994; Liedtka, 1998a, 1998b, 2000). This contrasts with traditional approaches to strategy which have focused on the chief executive officer as being the chief strategist in the organisation. Employees are given greater autonomy in their roles as the organisation devolves responsibility from the centre in response to uncertainty (Wilson, 1994). External consultants in particular and at times other external stakeholders (for example, creditors, suppliers in respect of the total quality management literature, lenders, equity investors) may also have an input to firm strategy from time to time. Fourthly, where responsibility for organisation strategy is devolved from the centre there is a need for a clear, direct, intuitive understanding among employees of the future direction of the company. A clear statement of the organisation"s strategic intent (Hamel and Prahalad, 1989) provides the necessary focus to allow employees to direct their efforts and resist distraction when confronted by environmental uncertainty. Fifth, strategic thinking requires consideration of the past, present and future of the organisation. Liedtka (1998a) terms this "thinking in time" emphasising the value of the predictive value of the past and a clear perception of the present in determining the future of the organisation. The history and ethos of the business often linked to the founder can remain of value many years after they move on. There is often a cultural legacy of a decision-making and problem solving style which continues to be relevant as the successful organisation matures and employees accept processes and strategic priorities (Christensen and Overdorf, 2000).
The output or outcome of strategic thinking will be a solution to strategic problems and a conceptualisation of the future of the firm, disruption of the alignment of the McKinsey "7-S Model" as new futures are considered, and greater commitment of internal and external stakeholders to the strategy resulting from their greater inclusion in the strategy process. Similar to branches of the theory of reasoning (Donaldson and Lorsch, 1984; Isenberg, 1984) and decision-making (Langley, 1995) strategy formulation and implementation are seen as taking place either concurrently, sequentially or something in between (Eccles, 1993), allowing flexibility in the use of intuition and analysis to the manager at the "coal face". Organisations will have greater responsiveness to customers and markets (Wilson, 1994), the ability to rapidly change (Tushman and O"Reilly III, 1997), and enhanced ability to manage change.

Strategic Planning and Strategic Programming
Henry Mintzberg in his insightful 1994 Harvard Business Review article "The Fall and Rise of Strategic Planning" argues that the practice of strategic planning "has really been strategic programming, the articulation and elaboration of strategies or visions that already exist" (Mintzberg, 1994: 107). Mintzberg"s (1994) view of the activity of strategic planning and the relationship of planning with thinking provides a useful background to an elaboration of what a sophisticated, contemporary strategy process designed to cope with an uncertain contextual environment may look like. Mintzberg (1994:112) observes that strategic programming involves the "codification, elaboration and conversion of strategies" that have already been developed from the strategic thinking activities of individuals and the institution as they attempt to disrupt and realign the organisation in the context of the McKinsey 7-S Model in an effort to encourage change and adaptability (Liedtka, 1998b) to customers and markets. Strategic programming requires the operationalisation (Heracleous, 1998) of the vision for the future of the organisation, the preparation of substrategies and action plans for staff to execute (Mintzberg, 1994), and careful consideration of and alignment of issues at network, corporate, business and functional levels of the organisation. Liedtka (1998b) also discusses the relationship between strategic thinking and strategic planning in the context of the McKinsey 7-S Model. Peters and Waterman (1982:9-11) argue that organisations seek to align firm "hardware"--strategy and structure-and "software"--leadership style, systems, staff, skills and shared values. Liedtka (1998b: 33) observes in this context: "A broadened view of the strategy-making process ... would incorporate both strategic thinking and strategic programming as related activities, each valuable in its own fight, in an ongoing process of creating and disrupting the alignment between an organisation"s present and its future".
The literature clearly indicates that in a modern, sophisticated strategy process designed to deal with an uncertain contextual environment there is a place for both the activities of strategic thinking and strategic planning. Following then from this discussion of the elements of strategic thinking and strategic planning the following model of a modern, sophisticated strategy process is proposed. Download Article