BUS402: Strategic Management & Business Policy week 4

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Ashford 5: - Week 4 (Jun 16 - Jun 22)

Week Four Learning Outcomes This week students will:

· Assess the benefits and challenges of globalized expansion.

· Evaluate strategy for the multibusiness corporation.

Overview

Assignment	Due Date	Format	Grading Percent
Operational Planning	Day 3 (1st post)	Discussion	2.5
Deliberate and Emergent Strategies	Day 3 (1st post)	Discussion	2.5
Program Comprehensive Exam	Day 7	Exam	20

Required Readings Abraham, S. (2012). Strategic management for organizations. San Diego, CA: Bridgepoint Education. This text is a Constellation™ course digital materials (CDM) title.

· Chapter 8: Operational and Budget Planning

· Chapter 9: ImplementationStrategies

Required Resources Article

Moore, K. (2011). Porter or Mintzberg: Whose view of strategy is the most relevant today? Forbes. Retrieved from http://www.forbes.com/sites/karlmoore/2011/03/28/porter-or-mintzberg-whose-view-of-strategy-is-the-most-relevant-today/

Recommended Resources

Articles

Clark, D., & Legge, B. (2013). The right way to execute your strategic plan . Forbes. Retrieved from http://www.forbes.com/sites/dorieclark/2013/05/08/the-right-way-to-execute-your-strategic-plan/ Deeb, G. (2013). If you build it, they may not come: Budget ahead for startup marketing . Forbes. Retrieved from http://www.forbes.com/sites/georgedeeb/2013/11/06/if-you-build-it-they-may-not-come-budget-ahead-for-startup-marketing/ Moore, J. (2012). 7 tips on building your business with better metrics . Forbes. Retrieved from http://www.forbes.com/sites/ciocentral/2012/07/09/7-tips-on-building-your-business-with-better-metrics/

Discussions To participate in the following discussions, go to this week's Discussion link in the left navigation.

1. Operational Planning [CLO: 5] Discuss how an organization benefits from operational planning, and how operational planning and budget planning are related. Explain how “system thinking” improves operation decision making. Guided Response: Respond to at least two of your fellow students’ posts in a substantive manner and provide recommendations to extend their thinking. Agree or disagree with your classmate’s post. Defend your position by using information from the textbook and this week’s lecture.

2. Deliberate and Emergent Strategies [CLO: 5] Read the following article: “Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today?”. What is the difference between deliberate strategies and emergent strategies? How might emergent strategies help with a future strategic planning process? In your opinion, what are the potential consequences of ignoring emergent strategies? Article: Moore, K. (2011). Porter or Mintzberg: Whose view of strategy is the most relevant today? Guided Response: Respond to at least two of your fellow students’ posts in a substantive manner and provide recommendations to extend their thinking. Agree or disagree with your classmate’s post. Defend your position by using information from the article, your textbook and this week’s lecture.

Assignment To complete the following assignment, go to this week's Assignment link in the left navigation.

Program Comprehensive Exam Complete the exam, which will take approximately two hours and will be graded based on your score. The full instructions for the exam are posted on the exam site.

Ashford 5: - Week 4 - Weekly Lecture

Weekly Lecture

Operational Planning The purpose of operational planning is for a company to create a set of detailed organizational plans for the coming fiscal year. Such planning will have two parts: 1) programs, projects, and activities that the company already has; and 2) new programs, projects, and activities that will be required by any change in strategy. (Abraham, 2012, p. 234). Operational plans will also involve plans for each of the company’s organizational units. Activities for each unit will be coordinated to make sure they support current and future strategies. To get a better understanding of what operational planning involves, check out this video: https://www.youtube.com/watch?v=Bhri9yrnhhE Budget Planning Budget planning is one part of operational planning. Budget planning is the process of matching the financial resources the company has available with what the company needs to spend to implement its strategies. Financial resources can include cash on hand, a line of credit or loan, or other investments. (Abraham, 2012, p. 238). To create the budget plan, each of the company’s organizational units needs to update its request for financial resources and those requests are evaluated in terms of financial resources and overall strategic goals. The money each of these units has to spend for the year comes from what is approved in the budget. Keep in mind, company units do not always get what they originally ask for! Sometimes strategic goals of the organizational units have to be modified due to what money is available. One of the outcomes of budget planning is cost reducing. Sometimes organizational units have to get creative to meet their intended goals for less money. For further information, see: http://www.infoentrepreneurs.org/en/guides/budgeting-and-business-planning/ System Thinking Operational planning is most effective when all parties involved in the process understands that each unit is part of a larger system and anything that happens to an individual unit can affect that larger system. This process is referred to as system thinking. Management who is responsible for making many of the decisions that will affect these organizational units needs access to the right information. The following article outlines the basic principles of systems thinking as applied to management and leadership: http://www.systemicleadershipinstitute.org/systemic-leadership/theories/basic-principles-of-systems-thinking-as-applied-to-management-and-leadership-2/ How could a company operate without knowing what each organizational unit wants? Most companies require a type of management-information system (MIS). A MIS must supply the basic information needed by managers for making decisions regarding the different company units. (Abraham, 2012, p. 228). Policy Making and Participation Companies also need policies. Policies are rules that guide behavior in often-encountered situations. Policies within a company can have several roles and purposes. (Abraham, 2012, p. 233). For example, policies can determine who makes a decision, so that decisions are not always made at the level of higher management. Policies can also spread the decision-making, often letting those who know the most information about a situation to make a decision regarding that decision. Policies can also set forth procedures for problems that occur frequently. Typically, middle managers are most involved with operational planning because they will be called upon later in the year to implement the plans. Yet, they should not be the only ones involved. (Abraham, 2012, p. 240). Typically, all involved parties should approve any operational decisions because if only a majority agrees, it means a minority disagrees, and as a result the plan will be harder to implement. Like with any process, operational planning and budget planning have deadlines. Both plans should be finalized before the start of the fiscal year. Keep in mind that this planning is completed on top of day- to-day operations. To reach this deadline, compromises have to be made—and quickly. Finally, for a final look at operational planning, please check this website: http://education-portal.com/academy/lesson/what-are-operational-plans-for-a-business-definition-types-examples.html#lesson Organizational Plan Implementation Once both the organizational and budget plans are improved, the organizational plan must be implemented. This is easier said than done. Remember that the organizational plan specifies which projects and tasks must be accomplished to reach overall operational goals and objectives. To do this, the operational plan will include names of those involved, who will manage those individuals, which resources are needed, deadlines, and estimated costs. (Abraham, 2012, p. 248). To assist with this process, many of the organizational units of a business will use Gantt charts, which graphically depict a project schedule and include start and finish dates of each section of the project. For more information on Gantt charts, please see: http://www.mindtools.com/pages/article/newPPM_03.htm Negative Variances Managers are heavily involved in the implementation process and meet with their direct reports periodically to evaluate the plan’s progression. One of their responsibilities is discussing any negative variances. Negative variances are instances where a project’s process is delayed, could miss a deadline, or a situation where more money might be spent than was included in the projected budget. (Abraham, 2012, p. 253). Managers need to meet with their direct reports so they can understand the reasons for these negative variances and find solutions for such problems. Plans might need to be revised by direct reports who will then report back to their managers with the proposed changes. Emergent Strategies and The Strategy Paradox When strategies are often executed, they can evolve into something different than what was originally intended. Henry Mintzberg referred to this as an “emergent strategy.” (Abraham, 2012, p. 256). The “emergent strategy” can merge with the intended or “deliberate” strategy to become the final “realized strategy.” When intended or deliberate strategies fail, they are considered “unrealized strategies.” For an article that compares Mintzberg’s emergent strategies to Porter’s (from Week two), please see: http://www.forbes.com/sites/karlmoore/2011/03/28/porter-or-mintzberg-whose-view-of-strategy-is-the-most-relevant-today/ Strategic planning is a formal process, which gets a group of people within the business to coordinate their efforts and work as one. (Abraham, 2012, p. 257). Typically, strategic planning is the responsibility of the operational unit’s manager, a specific vice-president, or for smaller businesses, the CEO. To see more on the strategic planning process, please see: http://www.strategicmanagementinsight.com/topics/strategic-planning-process.html The company’s Archilles’ heel refers to a situation when conditions abruptly change to a current working strategy. Often businesses can have trouble adapting to this turn of events. This is what is meant by Raynor’s strategy paradox. For an explanatory video on the strategic paradox from its creator, please see: https://www.youtube.com/watch?v=4dfB1AAKlaM

References:

Abraham, S. (2012). Strategic management for organizations. San Diego, CA: Bridgepoint Education.

Ashford 5: - Week 4 - Discussion 1

Your initial discussion thread is due on Day 3 (Thursday) and you have until Day 7 (Monday) to respond to your classmates. Your grade will reflect both the quality of your initial post and the depth of your responses. Reference the Discussion Forum Grading Rubric for guidance on how your discussion will be evaluated.

Operational Planning [CLO: 5]

Discuss how an organization benefits from operational planning, and how operational planning and budget planning are related. Explain how “system thinking” improves operation decision making. Guided Response: Respond to at least two of your fellow students’ posts in a substantive manner and provide recommendations to extend their thinking. Agree or disagree with your classmate’s post. Defend your position by using information from the textbook and this week’s lecture.

Ashford 5: - Week 4 - Discussion 2

Deliberate and Emergent Strategies [CLO: 5]

Read the following article: “Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today?”. What is the difference between deliberate strategies and emergent strategies? How might emergent strategies help with a future strategic planning process? In your opinion, what are the potential consequences of ignoring emergent strategies? Article: Moore, K. (2011). Porter or Mintzberg: Whose view of strategy is the most relevant today? Guided Response: Respond to at least two of your fellow students’ posts in a substantive manner and provide recommendations to extend their thinking. Agree or disagree with your classmate’s post. Defend your position by using information from the article, your textbook and this week’s lecture.

Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today?

Comment Now

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There are two people, and only two, whose ideas must be taught to every MBA in the world: Michael Porter and Henry Mintzberg. This was true more than 25 years ago, when I did my MBA at USC. These are two academics who have had real impact for a long time. Part of their success, beyond having big relevant ideas, is due to their clear and concise writing skills (There is certainly a lesson in there for many of us business school academics).

Both have been very influential in the study of strategy, an area of considerable interest to many Forbes readers. You can contrast their two views as Porter’s taking a more deliberate strategy approach while Mintzberg’s emphasize emergent strategy. Both are still taught, in fact, I taught Porter’s 3 Generic Strategies and his 5 Forces Model not two weeks ago in an undergraduate strategy course at McGill. Which is most useful today?

The world of deliberate strategy is one that I remember well from my days as a corporate manager at IBM and then as an executive teacher at Oxford and LBS. It was a world of strategy planning weekends at posh hotels in the English countryside, where we sat in rooms discussing the 5 Forces in our particular industry and what would we change in the model if we had a fairy’s magic wand. The output was 3 ring binders in North America and 2 ring binders in Europe. This worked well in its day, back in the 80s and part of the 90s, wonderful times now looking back on it, when the past was quite helpful in predicting the future. However, the nature of the world today no longer lends itself, by in large, to this type of strategy.

Emergent strategy is the view that strategy emerges over time as intentions collide with and accommodate a changing reality. Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. Emergent strategy implies that an organization is learning what works in practice. Given today’s world, I think emergent strategy is on the upswing. Here’s why.

But first, in the interest of transparency, I have worked closely with Henry co-directing and co-teaching on Leadership Programs at McGill, where we are both on the faculty, for more than a decade. In fact, many times, I have presented key parts of Porter’s ideas on strategy for a couple of hours and then Henry presents his ideas as a contrast to Michael’s. We started doing this tag team effort about 11 years ago and it has become increasingly easy for Henry to shoot me down in the last few years. And the executives in the class agree with Henry.

It seems the relatively stable world of (at least part of) my corporate career has gone the way of the dodo. At times, it seems the world‘s gone nuts. Let me count the ways: Japan, the PIGS, 9/11, Hurricane Katrina, SARS, the financial collapse of 2008 and 2009, the BP oil spill, and many more examples. As one writer put in it this weekend’s Sunday New York Times, “For a moment, all the swans seemed black.” However, as my friend Dick Evans, ex-CEO of Alcan, pointed out that my memory was being a bit selective, as it was not only recently that stability seems to have gone out the window. He reminded me of the time he was stationed “in Africa experiencing 3 coups – and then back in the USA in the midst of the junk bond raiders, a wrenching manufacturing recession and the fall of the Iron Curtain – not to mention personally experiencing the Loma Prieta earthquake. All of these seemed pretty “black swanish” to me at the time!” Fair point, nevertheless, it seems that strategy has shifted in the last decade to where the planning school no longer has the street cred it once had. It is precisely because we cannot, try as we may, control the variables that factor into business decisions that Mintzberg’s emergent strategy is so useful.

Porter’s ideas are still relevant, my colleagues and I still teach them, so I still believe in them and when I talk to corporate CEOs they still use them as part of their strategy planning thinking. But they are getting a bit long in the tooth for today’s different world. Henry’s emergent strategy ideas simply seem to be more relevant to the world we live in today – they reflect the fact that our plans will fail. This is not to say that planning isn’t useful, but other than some long term technology plans, the day of the 5 year and even 2 year plans has faded and emergent strategy is the reality in most industries that I work with. You must be much more fleet of foot, strategic flexibility is what we are looking for in most industries. The boundaries are more fluid now. For many, albeit not all, knowing what industry you are in is not as clear cut as it once was. This makes industry analysis less easy. The value chain is now shared across firm boundaries and at times, in part, in common with competitors.

Though I think that Henry’s ideas have pulled ahead of Michael’s, I very much keep on an eye on Porter’s thinking. I interviewed him recently for a weekly videocast I do for the Globe and Mail, Canada’s National Newspaper, because his new ideas are very much current. Interestingly both Porter and Mintzberg started to put a great deal of their attention on Health Care about 8-10 years ago. They approach the topic differently. Porter is in the U.S. and Mintzberg in Canada, which have quite different health care systems, yet when I realized this it was clear signal to me that this is an area that I should pay attention to. The other thing Porter has been working on, Corporate Social Responsibility, suggests a fairly fundamental change in how corporate American runs itself. Meanwhile, Henry is working on Rebalancing Society…radical renewal beyond Smith and Marx.

So when it comes to Strategy I think Henry’s ideas are au courant. Yet when I consider their most recent respective work I see that they are looking at two not dissimilar topics, albeit in different ways. We are indeed fortunate that these two outstanding minds are still at it when many others are retired. Still two, too very much keep an eye on!

This new Forbes.com column is called Rethinking Leadership. What I will do one week is to feature video interviews with top business professors from the world’s leading business schools on their latest thinking, how they are rethinking what we teach in B-schools. The other week I will write an on-line column like this one. A key theme is to ruminate on how younger people, what I call the PostModern Generation, want to be worked with. A book I am working on is entitled: PostModern Management: ~~Leading, Managing~~ Working With Under 35s The Way They Want To Be Worked With. They don’t want to be lead or managed, those words are too strong for them, they want to be worked with, more on that soon.