Strategic management as group of human beings


Published on

There is vast content on strategic management as managerial activity or process in literature and internet too. On opposite, there is almost no material on strategic management as organizational body comprising human beings in these sources. The goal of this presentation is to find exact borders of strategic management in an organization and explain in a few examples why such exact definition matters.

Published in: Business
1 Comment
1 Like
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Strategic management as group of human beings

  1. 1. Strategic management as group ofhuman beingsYou can’t develop clear strategy without clear definition ofyour strategy makers ...May 2013By Miroslav ŠebekMission, vision, future, responsibility,implementation, values, culture, long-term,goals, structure, customer preference,competition, position, SWOT, environment,changes, financial crisis, credit, focus, advantageMotto:
  2. 2. What is this presentations about ?There is vast content on strategic management as managerial activity orprocess in literature and internet too. On opposite, there is almost no materialon strategic management as organizational body comprising human beings inthese sources. To make matters worse, the rare definitions are as vague asfollowing one in Wikipedia:“Strategic management includes the management team and possibly the Boardof Directors and other stakeholders.”In result, many organizations really don’t know what is their strategic management, letalone why. They suppose tacitly that the word ‘strategic’ is mere label for top ranks and‘strategy’ is a substance diffusing from top management to the rest of an organization.The goal of this presentation is to find exactborders of strategic management in anorganization and explain in a few examples whysuch exact definition matters.
  3. 3. Strategy has been defined many times in many ways. Author personally preferes following definition :Successful strategy – such strategy which ensures attainment of selectedgoals or at least survival in real world conditions (=limited resources, limitedinformation, uncertain future)Strategic management – such part of an organizational management, whichactually faces decision making on strategy.Strategy is a pattern of behavior consistent over some period of time.A few definitions :Such definition of strategy is very general, usable even for non-thinking entities likesharks, ants or collective leaderships.
  4. 4. Let’s imagine that strategists of some organization just identified following‘needs’ of their organization’ (8 resource points for full satisfaction of a ‘need’) :TechnologicEquipmentHumanResourcesAdvertisingCampaignsResearch &DevelopmentPrestigiousaddress of HQExpansioninto newmarketsCompetitiveIntelligenceLegal defenceSo in this simplified example, they have 8x8=64 ‘need’ pointsUnfortunatelly, they have only 42 universal(next simplifaction !) resource points tosatisfy all their needs aboveNote: Neither methods of identifying of the ‘needs’ nor development of necessary strategic metric is subject of this presentation.What to do ?
  5. 5. Supposing they are honest (so they avoid ‘solutions’ like to pretend 42 = 64,do nothing or hand it over to a consultant) , they may develop e.g. followingstrategic solution :TechnologicEquipmentHumanResourcesAdvertisingCampaignsResearch &DevelopmentPrestigiousaddress of HQExpansioninto newmarketsCompetitiveIntelligenceLegal defenceNow the strategists can formulate Clear, Unambiguous, Attainable and Fullyfunded instructions for the rest of the organization.This is the accurate spot, where strategic management ends (and whereoperational, tactical or project management begins)
  6. 6. Previous example from non-strategic managers’ point of view:Strategic management to technical director:Buy or refit your technological equipment up to 7/8 of the best available. You’llbe provided with sufficient funds for such task. We realize that some competitormay be at 8/8, however such competitor would have to have weaknesses inother fields. Don’t try to surpass your goal (7/8) by overloading of yoursubordinates. Their morale is very important for us.Sufficient level of Human Capital will be only 4/8 of the best available. We realizein our strategy that HR will be our obvious weakness, so we want to exploit it asa bait for our competitors. Our employees will be notified we don’t expect verymuch from them with respect to their low wages. Nonetheless, their morale isvery important for us.Strategic management to HR director:If feeling of sanity of strategic management is very important for the rest of anorganization, feeling of its competency does even better work!
  7. 7. By the way, business is not military, higher number of divisions doesn’tguarantee victory.OrganizationalUnit AOrganizationalUnit BOrganizationalUnit COrganizationalUnit DOrganizationalUnit EOrganizationalUnit FOrganizationalUnit GOrganizationalUnit HThinking in categories of organizational units insteadmeasurable strategic qualities (like the ones at previous slides)causes many hard to solve problems and is not strategic at all –it’s mere portfolio management, if any.
  8. 8. Once again :Strategic management is the part of an organization, which transformsScarcity of resources, Uncertainty about future and Complexity ofenvironment into Clear, Unambiguous, Attainable and Fully fundedinstructions for the rest of an organization. This is for which is strategicmanagement responsible.The rest of an organization carries out the clear and attainable instructionsfrom strategic management. It also provides strategists with necessaryinformation and feedback too. This is for which is the rest of an organizationresponsible.Graphics used in this slide will be used in the rest of this presentation : strategists ingreen, rest of an organization in blue and red line separating them.Next slides exploit the definition above to identification of strategic management bodyand assessment of its functionality in most common types of corporate structures.
  9. 9. 1. CEO is the only strategistCEO &AdvisorsThe rest of an organizationTop officersIn this model of strategic management, CEOalone or with advisors (which are notmanagers) decides on resources allocationand formulates clear and attainableinstructions for top officers of staff.Simplicity; clear motivations ofparticipantsOverloaded CEOThis model is common in SME, start-ups
  10. 10. 2a. C-suite is collective strategistC-suiteThe rest of an organizationTop officersIn this model of strategic management, C-suite is collective strategist deciding onresources allocation and formulating clearand attainable instructions for top officers.C-suite members have no greatorganizational structures below them, this isrole of Top officers of staff.Sufficient ‘brain power’ forcrafting of strategy even inlarge organizationHigh costs of strategicleadership; C-suite membersmay have higher ambitionsthan ‘mere’ crafting ofstrategyThis is just theoretical model. In reality thismodel has mutated into the one on the nextslide...
  11. 11. 2b. C-suite sitting on two chairsCEOThe rest of an organizationCXOs = topofficersIn this model of strategic management, C-suite tries (unsuccessfully!) to decide onresources allocation, giving up formulationof clear and attainable instructions for topofficers of staff, because the officers are thesame members of C-suite.Feel free to imagine all kinds of problems(motivational, managerial, strategic, politicaletc.) which are introduced by suchdichotomy in role of C-suite members.Unfortunatelly, this is the most common modelof corporate strategic management. Its frequentusing results in general impression that businessstrategy is something vague and blurred.Could you imagine an executive which wouldagree with allocation of modest resources forHIS/HER department ?!Could you imagine an executive which wouldagree with inferior role of HIS/HER departmentin corporate strategy ?!
  12. 12. 3. SBU (=Strategic Business Unit) modelCorporate topmanagementIn this model, corporate top managementhas only portfolio management role, maybedoing some little transfers of money. Realstrategic role lies with SBU’s leaderships,because they really deals with Scarcity ofresources, Uncertainty of future andComplexity of their environments.Robust structure of corporation =no single strategic mistake canendanger whole corporationLittle resources at hand for SBUleadership;‘Little’ leaders in SBUs, becauseyou can’t expect great strategistin such small unitsMost famous corporation for using of this modelis GE.SBU’sleadershipsSBU 1 SBU 2 SBU 4SBU 3 SBU 5
  13. 13. 4. Pockets of strategyAny top managementIn this unwanted model top managementpretends to be strategic, but really does nodecisions on allocation of scarce resources.Instead usually demands infinite stream of‘analyses’ and ‘decision materials’. So otherpeople and groups of people must donecessary strategic decisions instead of topmanagement. Some of them are driven bytheir own personal responsibility, the otherssimply can’t carry out all tasks assigned tothem owing to insufficient resources.Many companies just beforecollapse use this ‘model’.Obviously, this is not a viable model.Desperate decisions of uninformed andinsufficiently sourced middle-managerscan’t substitute for missing decisions oftop management for a longer period.
  14. 14. 5. External strategistsAny topmanagementExternal strategists may not be necessarilysome consultants. In-house strategicplanning staff acts in the same way. Theessence of this model is in passivity of topmanagement which only ‘rubber-stamps’ready-to-use decisions on resourcesallocation made by external strategists.ExternalstrategistsReady-to-use strategyExternal strategists may beexperienced experts in the field ofcorporate strategyCosts of ‘outsourcing of strategy’ –experts may be expensive;Limited motivation of externalstrategists to daring decisions andgreat changes;Collection of data for strategistsmay be seen as audit-like botheringby staff;Corporate top management isperceived as non-functionalThis model is in fact very commondespite strong belief of all top managersof the world that they are the ‘real’strategists and some advisors onlysupport them.
  15. 15. It hides itself behind cloudsof inkAre you still unsure who is real strategist in yourorganization? Here is the simplest key:How the suspect usually behavesin difficult or unclear situation?He/she makes decisions(even painful)No, this is not strategist but an octopus Yes, he/she may be your strategist
  16. 16. All my presentations on strategy andcorporate culturePersonal planning of strategist glosses to famous Sun Tzu’s The Art of War roots of bad organizational culture roots of bad organizational culture – shortened version management as group of human beings
  17. 17. Thank you for your attention!Looking forward to your feedback, you can use my e-mailmiroslav.sebek@seznam.czor send me message at LinkedIn