Wednesday, January 6, 2010

"Making strategy, once an Event, is Now a Continuous Process."

January 5, 2010
by Fred Victor

The environmental conditions in today’s local and global economy differ from those days. Early 1960s, the general environment was stable, and intensity of competition seemed less. Therefore, strategy was needless. However, technological changes and the continuing growth of information gathering and processing capabilities demand more timely and effective competitive actions and responses.

Hence, to achieve strategic competitiveness, companies must be aware of and understand the different dimensions of both its internal situation and external business environment. Companies must continuously embark on an environmental analysis (or scanning) to identify these dimensions to be able to read future trends, and be able to handle changes that are most rampant in today’s business environment.

Accordingly, the formulation of series of strategies (or game plans) is required. A brief 5-step strategy formation and implementation flow is depicted as follows:-

FIRST, to form a strategic vision of where your company is headed, so as to provide long-term direction, delineate what kind of enterprise your company is trying to become, and infuse your company with a sense of purposeful action.

SECOND, to set objectives and convert the strategic vision into specific performance outcomes for your company to achieve.

THIRD, to craft a strategy to achieve a desired outcome.

FOURTH, to implement and execute the chosen strategy, by teamwork, efficiently and effectively.

FIFTH, to evaluate performance and initiate preventive (by scenario planning) and corrective adjustments to your company’s vision, long-term directions, objectives, strategies, or execution in light of actual experience, changing conditions, new ideas and new opportunities.

Even the best-laid plans can fall apart if contingencies occur and, as noted earlier in the FIFTH step, unforeseen events occur all the time.

Scenario planning is recommended. According to one survey, more than 50% of the FORTUNE 500 companies use some form of scenario planning. Rather than trying to forecast the future, your company planners/managers should attempt to model your company’s environment by predicting possible scenarios. In other words, strategies ought to be devised to cope with possible scenario A, B, and/or C.

The objective is to get your managers to understand the dynamic and complex nature of the ever-changing business environment, to think through problems in a strategic fashion, and to generate strategic options that your company may pursue under different circumstances … in timely manner.

“None of the Four Seasons can Last Forever.”
Sun Tzu, 500BC

Environmental uncertainties, changes and globalization are good enough reasons why does your company should continuously embark on environmental scanning of the general environmental variables when formulating strategies. Successful environmental scanning alerts your company to critical trends and events before the changes have developed a discernible pattern and/or before competitors recognize them. Otherwise, your company may be forced into a reactive mode instead of being proactive.

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