MGMT ESSAY
Using Southwest Airlines “Activity System” to help explain the Strategic Planning Process. This is from the Association for Strategic Planning. I have modified this with the entries in red.
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Strategy at Different Levels of a Business
Strategies exist at several levels in any organization - ranging from the overall business (or group of businesses) through to individuals working in it.
Corporate Strategy - is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business. (Therefore this is crafted by the CEO). Corporate strategy is often stated explicitly in a "mission statement" (We defined this as a Vision Statement).
Business Unit Strategy - is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc.
Operational (Funtional) Strategy - is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people
Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment. (Therefore everyone must be aware of it and involved in the process of defining it. It should be memorable and, therefore it must be simple and clear). It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful.
What is a Strategic Plan?
A strategic plan is a document used to communicate with the organization the organizations goals, the actions needed to achieve those goals (the Objectives) and all of the other critical elements developed during the planning exercise.
What is Strategic Management? What is Strategy Execution?
Strategic management is the comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization. Strategic management activities transform the static plan into a system that provides strategic performance feedback to decision making (What gets measured gets managed) and enables the plan to evolve (emergent strategies) and grow as requirements and other circumstances change (Note this is the function of Objectives). Strategy Execution is basically synonymous with Strategy Management and amounts to the systematic implementation of a strategy.
What Are the Steps in Strategic Planning & Management?
There are many different frameworks and methodologies for strategic planning and management. While there is no absolute rules regarding the right framework, most follow a similar pattern and have common attributes. Many frameworks cycle through some variation on some very basic phases: 1) analysis or assessment, where an understanding of the current internal and external environments is developed (SWOT analysis or Porter’s Value Chan analysis), 2) strategy formulation, where high level strategy is developed and a basic organization level strategic plan is documented (This is the CEO composing the Vision statement/plan) 3) strategy execution, where the high level plan is translated into more operational planning and action items (Objective setting), and 4) evaluation (the accountability piece of Objective setting) or sustainment / management phase, where ongoing refinement and evaluation of performance, culture, communications, data reporting, and other strategic management issues occurs.
What Are the Attributes of a Good Planning Framework?
1. Uses a Systems Approach that starts with the end in mind (Backward planning from the ultimate goal back to the present. Creating a roadmap presumes you know where you want to get to).
2. Incorporate Change Management and Leadership Development to effectively transform an organization to high performance.
3. Provide Actionable Performance Information (A user defined dashboard) to better inform decision making.
4. Incorporate Assessment-Based Inputs of the external and internal environment, and an understanding of customers and stakeholder needs and expectations (Balanced Scorecard).
5. Include Strategic Initiatives to focus attention on the most important performance improvement projects.
6. Offer a Supporting Toolkit, including terminology, concepts, steps, tools, and techniques that are flexible and scalable (Not stated but implied that these are simple and clear and that anyone can understand and use them).
7. Align Strategy and Culture, with a focus on results and the drivers of results.
8. Integrate Existing Organization Systems and Align the Organization (Magretta’s Fit – every action complements the overall Strategic Plan) Around Strategy.
9. Be Simple to Administer, Clear to Understand and Direct, and Deliver Practical Benefits Over the Long-Term.
10. Incorporate Learning and Feedback, to Promote Continuous Long-term Improvement.