The Secret Of STRATEGIC Management for Today’s Experiential Marketplace

Let’s get one thing straight about ‘Strategic Management’ right off the bat…

Strategy is NOT just for ‘top-level’ or ‘long-term’ decisions.

Strategy exists at every level, both long-term and short-term, in every single decision and action of an organization.

According to Goldratt and the Theory of Constraints (TOC), ‘strategy’ means: “an answer to the question ‘what for?'” (objective, purpose).  This couples with the TOC explanation of ‘tactics’, which are: “an answer to the question ‘how?'” (process, actions).

This has far reaching implications for management. Mary Parker Follett (1868-1933) succinctly described management as:

“the art of getting things done through people”.

And since all people are involved with objectives, purpose, process and actions in some way, to achieve ongoing competitive advantage, strategic management must become more open to bottom-up innovation and a more open approach to engaging people throughout the entire organization.

This adjustment in perspective (that strategic management does not only apply to long-term or top-level goals and decisions) produces a more mature, natural and dynamic approach to management. Yet a lot of management continues simply to just try and wing it — massaged by academic management models, egged on by ego… always under the bias and preferences of senior management.

All too often, opportunistic senior managers seek short-term gain for honor and glory, giving nothing but lip service to the ‘importance of the customer’ or even ‘long-term growth’, whilst their narrow focus is on short-term cost efficiencies, regardless of profit building throughput, or future-proofing innovation.

That old industrial paradigm is shifting. Six years of research (by James Collins and Jerry Porras) uncovered a key underlying principle behind the 19 successful companies that they studied:

They all encourage and preserve a core ideology that nurtures the company.

These core values encourage employees to build an organization that lasts. In Built To Last (1994) Collins and Porras claim that:

“short term profit goals, cost cutting, and restructuring will not stimulate dedicated employees to build a great company that will endure.”

Most cost-cutting, downsizing, and so called ‘reengineering’ bolsters the immediate P&L but weakens the long-term innovation and competitive advantage of the company.

As such, strategic management should focus far less on the ‘industrial / economic’ approaches to management, and focus more on the ‘sociological’ approaches, because it turns out that in today’s globalised beehive of knowledge management, PEOPLE are the core driver of profit.

This supports Druckers argument for Management by Objectives (http://en.wikipedia.org/wiki/Management_by_objectives) which focuses on participative management. Consider the organization as a group of individuals with their own preferences, interests, strengths, values, and skills.

Alas, in today’s newly rising version of capitalism (minus the political force-backed Corporatism), the purpose of business activity is to add value throughout the value chain (both at the financial level and at the social level by converting disparate raw materials into products that support human values, as well as inside the organization itself with employee lifestyle benefits).

According to John Kay (1993), adding value throughout the value chain requires 3 components: Innovation. Reputation. And Organizational Structure. This depends on the culture between all people in the organization. An innovative culture at every level has and always will be the most competitive strategic management approach. Fostering this culture emerges as the prime responsibility for senior management.

Margaret Wheatley, in her book Leadership and the New Sciences, compares organizations with living systems and the sciences of chaos theory, quantum physics, and field theory. Margaret points out three interconnected dimensions to organizational improvement:

  1. Clarity of purpose
  2. Quality of relationships
  3. Flow of information

This maps remarkably closely with my 3 keys of life management as written about elsewhere:

  1. Planning
  2. Preparation
  3. Implementation

These 3 simple keys can be used as the basis for decision making and implementation at all levels of personal and professional management.

Combining these ideas together, we see a new strategic approach to management with far reaching competitive advantage via…

  1. …disruptive innovation through a decentralized structure of participative organic organizational development…
  2. …focused through strategic change management at all levels (evolving the organizations current state into the desired state of higher value contribution)

Simultaneously, a superior capitalist approach and a superior social approach merges at the frontier of positive experiential consumerism, via:

  • Clarity of purpose
  • Cultivation of relationships – between all things: people, resources, information, tools, etc
  • And the flow of action – which ‘turns thought into things’ or ideas into values… or purpose into profit…

… which is all based on strategy (purpose and objectives) and tactics (process and actions) at every level.

This is the crux of strategic management for today’s new professional.