Leading and Managing Change in the Age of Disruption and Artificial Intelligence by Donald Mathew;

Author:Donald, Mathew;
Language: eng
Format: epub
Publisher: Emerald Publishing Limited
Published: 2019-04-19T00:00:00+00:00

Strategic Management

Organisations are built upon processes and resources, where goal alignment is necessary to prevent confusion and inefficiency. Strategy may have emerged over 2,000 years ago based on skills of administration, power, communication and leadership (Mainardes, Ferreira, & Raposo, 2014; Quinn, Mintzberg, & James, 1988). Whilst strategy can be disunited, it has been successful (Nag, Hambrick, & Chen, 2007) and is often used by organisations to develop long-term goals. The topic emerged in the last 40 years, derived from a number of fields including finance, marketing and economics, where disparities remain on the definition (Hambrick, 2004; Nag et al., 2007). Strategy definitions may require amending as students have found it a difficult concept to apply (Mainardes et al., 2014), where it has been described as being the conduit between the inner organisation and the outside world (Mainardes et al., 2014). The topic is concerned with the long-term survival and growth of the organisation rather than the many other management aspects (Bao, 2015). It is also important to assess and understand existing strategic management systems prior to introducing new systems (Melander, Löfving, Andersson, Elgh, & Thulin, 2016).

The process of setting strategy varies between organisations, where some update the strategy annually and others less frequently, some set a strategy for a next five-year horizon, whilst others set it for 10 years. The process may start differently in various organisations, where strategy may be described as having five elements and the plan arising is aimed at gathering competitive advantage (Mintzberg, 1987). The mission and vision statement for an organisation is often an area where the planning may commence, descriptions and forecasts reviewed for the potential competition type and the competitive advantage. The forecasts are rarely unique or in a single direction in the early phases, as there may be alternate paths and scenarios to rate before deciding on a particular one to use in the more formal strategic plans.

The strategy development has historically been completed by small groups that may have worked autonomously, hidden away in an attempt to keep the longer-term organisational directions and assumptions confidential. More recently, there have been discussions about opening up the strategy process to deliver new benefits (Hautz, 2017). There are clear benefits in setting a strategy as it enables the organisation to coherently set goals that can be communicated with staff and other stakeholders. A strategy, once agreed with shareholders and financiers, can be a reference point to use in investment decisions as they occur. Organisations that do not set strategy formally, may lose the support of stakeholders and appear to be confusing, where ad hoc decision making may occur due to the lack of cohesion between ideas and plans.

The process of approving strategy is important to most organisations as it clarifies stakeholder expectations and informs the stakeholders of the potential options and reasons for direction. There would be little point in management setting a 10% return on equity as a vision if the shareholders or banks required 15%. The goal gaps and subsequent alignment may be just as important to the organisation as the numeric targets finally set.

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