What is strategy for?

Today I have been...

Reading the reader about what strategy is for (p8)
 Why?

At some time in the life-cycle of virtually every organisation, its ability to succeed in spite of itself runs out. (Brier's First Law).

So What? 

This strikes me as the sole reason that managers and organisations need to learn. Learn to develop and learn how to develop, but importantly learn in which direction to develop. Hamel and Prahalad (1989) indicated that a clear strategy in place can lead to drive and strategic intent.We need to be able to state where the organisation wants to be in the future. Porter (1996) points out that if operations are focused on separately from strategy then you can only win if you're the only one in the game.

I notice that our new CIO has put an "IT Programmes" person in-place. I wonder if this is an attempt to link strategy with operational issues.

Strategy as an academic subject exists because there is a need to better understand making and implementing strategies. Because strategy in our society is closely associated with business, commerce and economics, the impact of good and bad strategy can be felt in society as a whole. Was the last government's bank bailout strategy the right one? Is the current deficit reduction strategy the right one? Was the strategy with respect to risky lending in the US prior to the credit crunch the right one? We're all seeing the consequences of these playing out in our daily lives.

Rumeld (1994):-

Strategic management as a field of enquiry is firmly grounded in practice and exists because of the importance of its subject

Outcomes are affected by the strategic choices made. I can think of organisations that have at times plodded along quite happily during stable periods, with low environmental turbulance and little competition. But this scenario is rare, and at the time of writing is certainly not the case.

Rationale for strategic management: identification, build and deployment of resources most effectively towards attainment of objectives.

Henderson(1994) said this needs:-

• a critical mass of knowledge concerning the competitive process
• the ability to integrate this knowledge and understand cause and effect
• imagination to forsee alternative actions and logic to analyse their consequences
• availability of resources beyond current needs in order to invest in future potential

(Reader p9)

The important thing to take from this is that this is about the analytical part of strategic thinking, not about the actual making of strategy. Strategic Analysis is a way to help understand the issues, it does not provide the answers, just like systems analysis in the IT world. The important thing to remember is that there are numerous frameworks that can be relied on but no recipes for strategy! Analysis is a necessary but not standalone part of the process.

Judgements -> Decisions


^^ The strategic thinking process. All is contextual (contingency theory).

So how do management consultants do it? If judgements and decisions need to be made with a deep understanding of the firm and its context, how can they do that when it's not something they necessarily posess?

Maybe this could help explain the failure of many IT projects; a lack of understanding of the organisation at the analysis stage.


How will I use it?

This is more valuable background information but helps to put in context the importance of strategy, including how you develop it and how you use it.