by Mark W. Sickles
The Impact process enabled us to seriously look at ourselves, our competition, where we are now, where we are going and how we are going to get there in an atmosphere outside the realm of "business as usual". Since all key managers participated in deciding what we need to do as well as how we are going to do it, everyone is totally committed to getting it done. Besides channeling our energies in the right direction, there has been a marked improvement in the teamwork, cooperation and communication within our company since we went through Impact Systems.
Now that we have gone through Impact Systems, virtually all of our activities can be viewed against our strategic imperatives. Through the Impact process, we achieved a better business plan, better strategies, better teamwork, cooperation and communication -- Impact Systems worked for us!
Kenneth C. Cwick, Vice President & General Manager,
Rubber Chemicals and Pigment Division, Degussa Corporation
In general terms, business strategy describes what the firm must do to be successful in both the ďhere and nowĒ and the ďthere and thenĒ. Business strategy should be linked to organization - the capability to implement strategy, and operations - getting it done. This triadic segmentation of work covers all activities required for long-term success. John Kotter of Harvard uses these three work categories to articulate the similarities and differences between management and leadership. Powerhouse consulting firm Mckinsey & Company structures its services and organization into these three areas.
Business strategy can and does take on different meanings based on the unit of analysis and time-frame. If the unit of analysis is a work group within a function, and the time frame is one work day, business strategy means what that group of people should do that day to be successful. On the other hand, if the unit of analysis is an entire Fortune 100 firm, and the time period is 3-5 years, business strategy means something all together different.
In this broader, long term context, business strategy is the focus of the strategic planning process. In 1992, GE produced a strategic plan so good, Welch declared it the best plan ever and acknowledged the strategic planning process as being the most productive in the firmís history. Shortly thereafter, the Dessert Storm War broke out, invalidating GEís business assumptions to such a degree that the recently completed strategic plan was rendered valueless. Welchís response: Reduce the time frame for strategic planning at GE from 5 to 3 years.
The take-away from this story is not that three years is the right time frame for strategic plans. The take-away is that the right time frame for strategic planning depends on your point of view. While GE feels a three year time frame is most effective, Toyota has a 100 year strategic plan. This vast difference in strategic planning time frame for these two great organizations begs the question, ďWhat makes planning strategic?"
Tony Khuri of Case-Western University offers several criteria for a strategic plan:
Entity Interdependencies are critical linkages between your firmís structural parts - its organizational pieces. For example, entity interdependencies are the relationships between your corporate entity and, if your firm is big enough, your group entities, and your business unit entities, and then those business unitís relationships with line function entities, and then those line entities in relationship to staff function entities. (By line functions, we mean R&D, Manufacturing, Marketing, Sales, Distribution and Remittance; by staff functions, we mean Human Resources, Finance, Information Technology, Quality, Public Affairs and Law.)
Procedural Interdependencies are critical work linkages between your firmís work flows. For example, while working with a multinational industrial products firm, we designed a general management system referred to as the battle controls - the shared values of the organization, which create a context for strategic planning, which in turn integrates with operational planning and human resource planning, which then integrates into budgeting and control, which in turn integrates with performance management, including objective setting and action planning.
Another broader set of Procedural Interdependencies is the triadic flow previously covered in the chapter - strategy - deciding what to do; organization - developing the capabilities to do it; and then operations - getting it done - managing those organizational resources to achieve your strategic goals.
Itís very important to understand the interrelationship between entity and procedural interdependencies. I remember working with one organization, and noticing how the head of business planning asked the entire organization to submit their business plans on the same date. Whatís wrong with this picture? This is a picture of an organization that does not know what they do not know about entity interdependencies. How could an information systems function, whose purpose is to support line functions and the business, develop a business plan at the same time that the business and line functions are developing their plans? A value added information systems plan has to be derived from the business plans of the business units, line functions, and non-IT staff functions to whom it provides IT support. In this sense, the business planning process is a permutation, a whole where sequence is relevant, as distinct from a combination, a whole where sequence is not relevant.
Itís very important that when you are building capability, you first ask yourself whether youíre dealing with a combination or a permutation. If itís a permutation, where sequence is important, then you have to manage those sequential dependencies. If A needs to precede B, which needs to precede C, which needs to precede D, and so on, you need to take that into consideration and go through the development in that order.
If, on the other hand, itís only important that when itís done - A, B, C, D & E are present and interacting with each other, then thatís important to know because you donít have to take the time and effort to plan the work in a predetermined, sequentially correct order. For example, if you are building a skyscraper, you should not try to start building the first floor if the foundation is not complete. Conversely, if you are making a ham & cheese sandwich, you do need to have both the ham and cheese for the sandwich to be complete, but which goes on first is irrelevant.
This distinction was hidden at this firm and was missing as an opportunity to improve their performance, which was being called for by the shareholders, employees, and regulatory agencies - a call that went unanswered.
Another system-related term of strategic planning is Intrafunctional Alignment - a synergistic design and implementation relationship between the functional areas of a specific business function - and that could be line or staff - such that the performance of the whole is greater than the sum performance of its parts. A related term is Interfunctional Alignment. This is a synergistic design and implementation relationship between a given function, the general management system and other functional systems such that the performance of the whole business if greater than the sum performance of its part. These alignments are integral to managing at the systems level. They are a critical difference between managing a whole instead of a heap.
Hereís an introductory strategic planning statement from an executive who understands these distinctions:
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