The underlying notion for Strategic Management is to ensure the achievement and maintenance of competitive advantage.
Fred R. David, in his book, Strategic Management: Concepts and Cases, defines Strategic Management as ‘the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives’ (David, 2006). In other words, it is the long-range planning, which by studying today’s trends, optimizes for tomorrow by creating new and different opportunities.
Organizations striving for success apply the tenets of Strategic Management by placing emphasis on the integration of management, marketing, finance/accounting, production/operations, research and development, and computer information systems.
Strategic Management is the term favored by the academia while their business counterparts prefer the synonym ‘strategic planning’.
While there is no arguing that Strategic Management is both art and science, my bent, like that of the author’s as well as that of strategy scientists, is that it is more of a science than an art. While this opinion is in contradiction with that of Mintzberg and his followers (who believe in crafting strategies and subjective imagination), it is supported by the fact that Strategic Management goes through a deliberate process of strategy formulation, strategy implementation and then, strategy evaluation. This is much unlike the emergent process purported by proponents of the artistic view which relies on intuition, emotion, hunch, creativity and politics.
This deliberate process starts with strategy formulation, which encompasses the development of a mission and vision, SWOT analysis, the establishment of long-term objectives, coming up with alternative strategies and choosing which of these strategies to pursue. The next stage is strategy implementation, the action stage, which calls for the organization to establish annual objectives, devise policies, motivate employees and allocate resources in order to support the execution of strategies. Finally, we come to the final stage, strategy evaluation, which includes the review of the bases for current strategies as dictated by both internal and external factors, the measurement of performance and the carrying out of corrective action.
The view for Strategic Management in the next 100 years will encompass the art or science debate with a leaning towards the scientific hypothesis. The formulation of strategies is too much of a critical activity than for the executives to be less than thorough in addressing this task. Strategies must be formulated based on research data, competitive intelligence and analysis.
This is the first of three issues arising for the twenty-first century. The other two are the decision on whether strategies should be visible or hidden from stakeholders, and whether the process should be top-down rather than bottom up.
The visible or hidden issue must be firm-dependent. While personal preference is for the strategy process and strategies to be visible and open, it is not always possible. This is especially so in organizations where it may lead to competitive intelligence being openly accessible to rivals and may prove bait for rivals to use in luring staff away from the firm.
The challenge for whether to employ a top-down or bottom-up approach must also be addressed. Current thinking supports the bottom-up approach but one cannot discount the fact that it may be best to rely on perceptions of top managers due to their propensity to have attained considerable experience, acumen and fiduciary responsibility necessary for making these key strategic decisions.
David, F.R. (2006). Strategic Management: Concepts and Cases (11th ed.). Upper Saddle River, NJ: Prentice Hall.