STRATEGIC MANAGEMENT Short Questions and AnswersWhat is strategic management?Strategic management can be used to determine mission, vision, values, goals, objectives,roles and responsibilities, timelines, etc.What is strategic planning?Strategic planning is a management tool, period. As with any management tool, it is used forone purpose only: to help an organization do a better job - to focus its energy, to ensure thatmembers of the organization are working toward the same goals, to assess and adjust theorganizations direction in response to a changing environment. In short, strategic planning isa disciplined effort to produce fundamental decisions and actions that shape and guide whatan organization is, what it does, and why it does it, with a focus on the future. (Adapted fromBrysons Strategic Planning in Public and Nonprofit Organizations).A word by word dissection of this definition provides the key elements that underlie themeaning and success of a strategic planning process: The process is strategic because itinvolves preparing the best way to respond to the circumstances of the organizationsenvironment, whether or not its circumstances are known in advance; nonprofits often mustrespond to dynamic and even hostile environments. Being strategic, then, means being clearrbout the organizations objectives, being aware of the organizations resources, andincorporating both into being consciously responsive to a dynamic environment.The process is about planning because it involves intentionally setting goals (i.e., choosing adesired future) and developing an approach to achieving those goals. The process isdisciplined in that it calls for a certain order and pattern to keep it focused and productive.The process raises a sequence of questions that helps planners examine experience, testassumptions, gather and incorporate information about the present, and anticipate theenvironment in which the organization will be working in the future.Finally, the process is about fundamental decisions and actions because choices must bemade in order to answer the sequence of questions mentioned above. The plan is ultimatelyno more, and no less, than a set of decisions about what to do, why to do it, and how to do it.Because it is impossible to do everything that needs to be done in this world, strategic
planning implies that some organizational decisions and actions are more important thanothers - and that much of the strategy lies in making the tough decisions about what is mostimportant to achieving organizational success.The strategic planning can be complex, challenging, and even messy, but it is always definedby the basic ideas outlined above - and you can always return to these basics for insight intoyour own strategic planning process.What is the difference between strategic planning and long-range planning?Although many use these terms interchangeably, strategic planning and long-range planningdiffer in their emphasis on the "assumed" environment. Long-range planning is generallyconsidered to mean the development of a plan for accomplishing a goal or set of goals over aperiod of several years, with the assumption that current knowledge about future conditions issufficiently reliable to ensure the plans reliability over the duration of its implementation. Inthe late fifties and early sixties, for example, the US. economy was relatively stable andsomewhat predictable, and, therefore, long-range planning was both fashionable and useful.On the other hand, strategic planning assumes that an organization must be responsive to adynamic, changing environment (not the more stable environment assumed for long-rangeplanning).Certainly a common assumption has emerged in the nonprofit sector that the environment isindeed changeable, often in unpredictable ways. Strategic planning, then, stresses theimportance of making decisions that will ensure the organizations ability to successfullyrespond to changes in the environment.What is strategic thinking and strategic management?Strategic planning is only useful if it supports strategic thinking and leads to strategicmanagement - the basis for an effective organization. Strategic thinking means asking, "Arewe doing the right thing?" Perhaps, more precisely, it means making that assessment usingthree key requirements about strategic thinking: a definite purpose be in mind; anunderstanding of the environment, particularly of the forces that affect or impede thefulfillment of that purpose; and creativity in developing effective responses to those forces. Itfollows, then, that strategic management is the application of strategic thinking to the job ofleading an organization.
Dr. Jagdish Sheth, a respected authority on marketing and strategic planning, provides thefollowing framework for understanding strategic management: continually asking thequestion, "Are we doing the right thing?" It entails attention to the "big picture" and thewillingness to adapt to changing circumstances, and consists of the following three elements:formulation of the organizations future mission in light of changing external factors such asregulation, competition, technology, and customers development of a competitive strategy toachieve the mission creation of an organizational structure which will deploy resources tosuccessfully carry out its competitive strategy. Strategic management is adaptive and keepsan organization relevant. In these dynamic times it is more likely to succeed than thetraditional approach of "if it aint broke, dont fix it."What Strategic Planning Is Not!Everything said above to describe what strategic planning is can also provide anunderstanding of what it is not. For example, it is about fundamental decisions and actions,but it does not attempt to make future decisions (Steiner, 1979). Strategic planning involvesanticipating the future environment, but the decisions are made in the present. This meansthat over time, the organization must stay abreast of changes in order to make the bestdecisions it can at any given point - it must manage, as well as plan, strategically. Strategicplanning has also been described as a tool - but it is not a substitute for the exercise ofjudgment by leadership.Ultimately, the leaders of any enterprise need to sit back and ask, and answer, "What are themost important issues to respond to?" and "How shall we respond?" Just as the hammer doesnot create the bookshelf, so the data analysis and decision-making tools of strategic planningdo not make the organization work - they can only support the intuition, reasoning skills, andjudgment that people bring to their organization.Finally, strategic planning, though described as disciplined, does not typically flow smoothlyfrom one step to the next. It is a creative process, and the fresh insight arrived at today mightvery well alter the decision made yesterday. Inevitably the process moves forward and backseveral times before arriving at the final set of decisions. Therefore, no one should besurprised if the process feels less like a comfortable trip on a commuter train, but rather like aride on a roller coaster. But even roller coaster cars arrive at their destination, as long as theystay on track!
What is a strategic plan? In strategic planning it is critical to formally consider how your organization will accomplishits goals. The answer to this question is a strategy. There are a variety of formal definitionsfor strategies, but everyone fundamentally agrees that a strategy is the answer to the question,"How?" "Strategies are simply a set of actions that enable an organization to achieveresults." MAP for Nonprofits, St. Paul, MN. "Strategy is a way of comparing yourorganizations strengths with the changing environment in order to get an idea of how best tocomplete or serve client needs." Jim Fisk & Robert Barron, The Official MBA Handbook.Essentially, there are three different categories of strategies: organizational, programmatic,and functional. The difference among the categories is the focus of the strategy:Organizational strategy outlines the planned avenue for organizational development (e.g.,collaborations, earned income, selection of businesses, mergers, etc.). Programmatic strategyaddresses how to develop, manage and deliver programs (e.g., market a prenatal care serviceto disadvantaged expectant mothers by providing information and intake services in welfareoffices). Functional strategies articulate how to manage administration and support needs thatimpact the organizations efficiency and effectiveness (e.g., develop a financial system thatprovides accurate information using a cash accrual method).When should a strategic plan be developed?Strategy development follows the creation and affirmation of the organizations purposestatement, environmental and program data collection and analysis, and identification ofcritical issues. It is critical that strategy development follow these steps because theinformation gathered and decisions made in these phases are the foundation for strategycreation and selection. Each of these steps provides the following: The purpose statement, thestatement of the organizations ultimate goal, provides the direction to which the strategiesshould ultimately lead.External market data and program evaluation results provide critical data to support strategydevelopment. Without this information and insight, the organizations strategies will not be inalignment with or effective in the marketplace. The critical issues list serves as the specificfocus and framework for the activities of the organization and the pattern of these activities(developing and selecting the strategies).
How are strategies developed?Strategy formulation is a combination of rational, scientific examinations and educated,intuitive best guesses. Many individuals are overwhelmed by the idea of developingstrategies, but it can be a fun and invigorating process.The process entails: examining the organizations critical issues determining how theorganizations strengths and skills can be employed to address the critical issues analyzingopportunities and strengths and looking for ways to synthesize the two exploring andchoosing the best approaches for the organization. During this evaluation ask these keyquestions: Does the strategy meet/address critical issues? Is this aligned with our mission? Isthis approach financially viable? One effective method of strategy generation is to list criticalissues and organizational strengths onto flipcharts and then have staff or board membersbrainstorm possible uses of those strengths or other skills to address the critical issues.Once the brainstorm session is completed, use a roundtable discussion to investigate andevaluate the possible strategies. Remember to develop a list of alternative strategies toinvestigate and keep in the contingency planning file. It is important not to discount the ideasthat come to people during non-working hours.The Polaroid camera is the result of a three year olds question to her father: "Dad, why cant Isee the picture now?"What are some tools for for analysis and planning? A number of analytical tools have been developed to assist organizations with the planningprocess. Many nonprofit organizations have adapted these tools, modifying the questions andcriteria to align with their own specific services and markets. Listed below are analyticaltools frequently used by nonprofit and for-profit organizations.What is SWOT Analysis?SWOT analysis is a methodology of examining potential strategies derived from the synthesisof organizational strengths, weaknesses, opportunities and threats (SWOT). The partneringof the different elements and the extensive data collected as a result of the analysis can serveas a spark for roundtable discussions and refinement of current strategies or generation ofnew strategies.
What is the MacMillan Matrix?This strategy grid, developed by Dr. Ian MacMillan, is specifically designed to assistnonprofit organizations to formulate organizational strategies. There are three assumptionsunderlying this approach: the need for resources is essentially competitive and all agencieswanting to survive must acknowledge this dynamic given that resources are scarce, there isno room for direct duplication of services to a single constituency -- this is wasteful andinefficient mediocre or low quality service to a large client population is less preferable todelivering higher quality services to a more focused population. These assumptions haveimplications that are difficult and painful for many organizations and individuals. It mightmean terminating some programs to improve core services and competencies, givingprograms and clients to more efficient, effective agencies, or competing aggressively withthose programs that are less effective or efficient. MacMillans matrix examines fourprogram dimensions that guide placement on the strategy grid and indicate implied strategies.Alignment with Mission Statement: Services or programs that are not in alignment with theorganizational mission, unable to draw on existing organizational skills or knowledge, unableto share resources, and/or unable to coordinate activities across programs should be divested.Competitive Position: Competitive position addresses the degree to which the organizationhas a stronger capability and potential to fund the program and serve the client base than thecompetitive agencies.Program Attractiveness: Program attractiveness is the complexity associated with managinga program. Programs that have low client resistance, a growing client base, easy exit barriers,and stable financial resources are considered simple or "easy to administer." The level ofprogram attractiveness also includes an economic perspective or a review of current andfuture resource investments.Alternative Coverage: Alternative coverage is the number of other organizations attemptingto deliver or succeeding in delivering a similar program in the same region to similarconstituents.The MacMillan Matrix provides ten cells in which to place programs that have been reviewedin terms of these four dimensions. Each cell is assigned a strategy that directs the future of theprogram (s) listed in the cell (e.g., aggressive competition, joint venture, orderly divestment,etc.). One cell of the matrix, "Soul of the Agency," requires additional explanation. These arethe difficult programs for which the organization is often the clients "last, best hope."
Management must find ways to use the programs in other cells to develop, piggyback,subsidize, leverage, promote, or otherwise support the programs in this category. KNOWLEDGE MANAGEMENTWhat is knowledge management?Getting the right information to the right people at the right time -- to enable the right actions.How are innovation and knowledge management related?Innovation is the most evolved stage in the development of knowledge management. The firststage is data, the second is information, the third is knowledge, and the fourth is innovation. INFORMATION MANAGEMENTWhat is information management?Information management (IM) is the harnessing of the information resources and informationcapabilities of the organization in order to add and create value both for itself and for itsclients or customers. Information management is the management of organizationalprocesses and systems that acquire, create, organize, distribute, and use information. Weadopt a process view of information management. In this view, IM is a continuous cycle offive closely related activities:identification of information needs;acquisition and creation of information;organization and storage of information;information dissemination;information use.
The idea underlying IM is that just as an organization purposefully and systematicallymanages its human resources or financial assets, it should do likewise for its informationresources and processes. All the classic functions of managing an organizational activityapply to IM as well: defining goals, providing leadership, developing policies, allocatingresources, training staff, evaluation and feedback.What are the benefits of information management?Generally speaking, there are four kinds of benefits from managing information strategically:reduce costs;reduce uncertainty or risks;add value to existing products or services;create new value through new information-based products or services.What is the difference between data, information and knowledge? Consider a document containing a table of numbers indicating product sales for the quarter.As they stand, these numbers are Data. An employee reads these numbers, recognizes thename and nature of the product, and notices that the numbers are below last year’s figures,indicating a downward trend. The data has become Information. The employee considerspossible explanations for the product decline (perhaps using additional information andpersonal judgment), and comes to the conclusion that the product is no longer attractive to itscustomers. This new belief, derived from reasoning and reflection, is Knowledge. Thus,information is data given context, and endowed with meaning and significance. Knowledge isinformation that is transformed through reasoning and reflection into beliefs, concepts, andmental models.What is an information strategy?An information strategy describes the overall direction and general framework in which theorganization’s information resources and processes should be managed so that theorganization would achieve its most important goals. An Information Strategy typicallyconsists of the following: IM goals and objectives that are well aligned with theorganization’s mission and vision IM principles that articulate desirable outcomes and formthe foundation for developing information policies One or more areas of strategic focus: thiscould be some critical information content; common information to be shared; someinformation-intensive process; or new information-based products or services.
PROJECT MANAGEMENTWhat is the purpose of project management?To provide management with valid, auditable status on which to base management decisions.Why should the project be planned?The main reason for planning a project is for cost expediency. Proper project planning willinsure that the amount of work to be accomplished, the time allotted to satisfactory completethe work scope, and the resources required to complete the work scope are equally balanced.Every project undergoes some amount of change while in progress. Proper planning allowsfor the assessment of the impact of change prior to implementing the change.What is the most important safe guard provided by project planning?Proper planning includes the documentation of the work scope in language that isunderstandable by the individuals who must accomplish the work scope. This single stepwhen properly accomplished will save many false starts as well as preventing the waste ofresources working on efforts which are not required to obtain the desired goals of the project.Why should a company have a project management system?The customer may wish to know how the company manages a project. The customer wantssome assurance that the company can deliver the project on time and within budget. Seniormanagement wants a valid insight on how the project is progressing. History is required ofpast performance so that new proposals can be created based on fact. The company desires tobe a superior performer when compared to the competition.Does each project have to create its own management system?The style of the individual project manager will normally vary for each project. It is theresponsibility of senior management to put in place a policy and procedure, supported by aselection of project management tools and formats, which will assure that the status reportingis readable, auditable, and valid.
What are the tools needed for a project management system?A work definition policy and format, a scheduling procedure, a resource budgetingmethodology and format, a real time data collection/reporting system, a material control andaccountability subsystem, a change control subsystem, and a monthly formal status reviewformat to be used by senior management.What should the project manager look for in a scheduling system?The three basic elements that the project scheduling systems should provide are; a commonbasis for communication at all operational levels of the project, a basis for regular statusreporting, the use of the management by exception technique.What is a Work Breakdown Structure (WBS)?The work breakdown structure defines the total project. A work breakdown structure is aproduct oriented, family tree composed of hardware elements, software elements, and serviceelements. The work breakdown structure relates project elements or work scope definitions toeach other and to the end product. The work breakdown structure is not an organization chartof company personnel. DELEGATION MANAGEMENTWhy use delegation? Although delegating is one of the most difficult aspects of any management job, there aremany important benefits derived by the organization as well as the manager when tasks andresponsibilities are properly delegated. Through delegation, you can ease the job of managingand thereby increase your own effectiveness and that of the work group.What are the benefits of delegation to the manager? Everybody wins with effective delegation, but delegation is especially important if you wantto survive and grow in an organization. Here is how delegation can help the manager:Allows the manager to achieve more. Probably one of the most signifi- cant benefits is thatyou can achieve greater productivity. Through the proper selection, assignment, andcoordination of tasks, you can mobilize resources to achieve more than would have beenindividually possible.Allows time for managerial activities. Delegation gives you an opportunity to handle aspectsof the job that no one else can do. These activities might include project planning, monitoring
team members, and handling personnel problems as they arise. Using delegation, you canfocus on doing a few tasks well rather than too many tasks poorly. Increases managerialpromotion potential.Personal advancement. If you dont have people in the department who are trained to handleresponsibilities, you will be shackled to one area and wont be considered for promotion. JohnHenry Patterson, founder of National Cash Register Company, used to walk into hisdepartments and order the managers to take two-week vacations. His motive: to determinewhether a team member had been adequately trained to take over the supervisors job on shortnotice. The key to such training, Patterson believed was delegating--providing the teammember with the experience, knowledge, and responsibility needed for a smooth transition.Managers who dont delegate dont have trained team members to take their places. Managerswho arent able to delegate at their current level wont be able to delegate at the next. Theirineffectiveness thus multiplies with each level in the organization.What are the benefits of delegation for team members?Your team members are more highly motivated with effective delegation.Develops team members skills. Failure to effectively delegate deprives team members ofopportunities to improve their skills and assume greater responsibility. Team members realizethat they are not learning and gaining the experience they could. As a result, they may leavethe firm for more challenging and supportive environments. Unfortunately, the most talentedteam members are the most likely to leave and those you least want to lose. A routine task foryou is often a growth opportunity for a team member. Delegating a wide variety ofassignments not only serves to train team members, it allows for backup personnel in times ofemergency or termination of other employees. When others are well-versed in handling theresponsibilities of different areas, you attain maximum flexibility and ensure that the projectwill not be at a standstill in your absence.Increases team member involvement. Proper delegation encourages team members tounderstand and influence the work the department does. It allows team members a chance toincorporate their values in the workplace and, in many cases, to work on activities thatespecially interest them. Increasing team members involvement in the workplace increasestheir enthusiasm and initiative. Increases promotion potential. As with managers, a teammember who receives extensive delegation will be ready and able to advance to newpositions. In this regard, delegation serves both to train and to test an employee. Benefits tothe Organization If both managers and team members benefit from delegation, it follows thatthe organization as a whole benefits.Maximizes efficient output. When you delegate tasks according to the skills and abilities ofeach member of the work group, the department as a whole is likely to produce a higher levelof work. Work will also be completed more efficiently. Delegation helps you make the bestuse of available human resources and achieve the highest possible rate of productivity. Inaddition, it allows new ideas, viewpoints, and suggestions to flourish. Produces faster, moreeffective decisions.
How does delegation help decision making? Effective delegation makes for faster, more effective decision making. An organization ismost responsive to change in the environment when decisions are made by those individualsclosest to the problems; that is, responsibility and decision making are pushed further downin an organization. Individuals closest to the problem have the most information on which tobase an intelligent decision. Decision making can be achieved more expediently throughdelegation, thus allowing the organization to be more responsive and hence morecompetitive. When team members participate in decision making there is an increase inemployee motivation, morale, and job performance. The greater the employee participation,the greater the employee commitment to the job and the organization! Increases flexibility ofoperations.Effective delegation trains many people to do the same assignments. This overlap allows forgreater flexibility of work assignments. When someone is absent or a crisis requires people toassist with tasks not regularly a part of their jobs, they will already be familiar with theassignment. Delegation prepares more individuals for promotion or rotation ofresponsibilities. And it allows you to appoint someone to supervise the work group whenyoure absent.