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Art, science of strategic management

EACH time I facilitate a leadership course, I find myself gravitating towards the issue of strategy as a leadership imperative. However, I must admit teaching strategy is not an easy endeavour as it requires participants to reflect on various functional aspects of management that characterise their leadership experience such as marketing, finance, and accounting.

People Management Issues with Robert Mandeya

This reflection forms the basis of understanding of how top executives make the strategic decisions that drive whether organisations succeed or fail.

Mastering strategy as art, science

Exploring this subject of strategy involves an articulation of such issues that underpin the concept of “strategy” where one needs to distinguish between strategic management and strategy, understand why strategic management matters as well as explore the elements that determine a firm’s performance. Perhaps looking at the experience of Apple technology company will assist in unpacking some of these very important issues.

Strategic management: Apple Concern

March 2, 2011, was a huge day for Apple. The firm released its much-anticipated iPad2, a thinner and faster version of market-leading Apple’s iPad tablet device. Apple also announced that a leading publisher, Random House, had made all seventeen thousand of its books available through Apple’s iBookstore. Apple had enjoyed tremendous success for quite some time. Approximately fifteen million iPads were sold in 2010, and the price of Apple’s stock had more than tripled from early 2009 to early 2011.

However, Apple’s future success was far from guaranteed. The firm’s visionary founder Steve Jobs was battling serious health problems. Apple’s performance had suffered when an earlier health crisis had forced Jobs to step away from the company. This raised serious questions. Would Jobs have to step away again? If so, how might Apple maintain its excellent performance without its leader?

Meanwhile, the iPad2 faced daunting competition. Samsung, LG, Research in Motion, Dell, and other manufacturers were trying to create tablets that were cheaper, faster, and more versatile than the iPad2. These firms were eager to steal market share by selling their tablets to current and potential Apple customers. Could Apple maintain leadership of the tablet market, or would one or more of its rivals dominate the market in the years ahead? Even worse, might a company create a new type of device that would make Apple’s tablets obsolete?

The Apple case

Issues such as those faced by Apple are the focus of strategic management because they help answer the key question examined by strategic management — “Why do some firms outperform other firms?” More specifically, strategic management examines how actions and events involving top executives (such as Steve Jobs), firms (Apple), and industries (the tablet market) influence a firm’s success or failure. Formal tools exist for understanding these relationships, and many of these tools can be used to understand the dynamics faced by Apple. However formal tools are not enough; creativity is just as important to strategic management. Mastering strategy is therefore part art and part science.

In this installment I will attempt to enable you to understand what strategic management is and why it is important.

Defining strategy: Five Ps

Defining strategy is not simple. Strategy is a complex concept that involves many different processes and activities within an organisation. To capture this complexity, Professor Henry Mintzberg of McGill University in Montreal, Canada, articulated what he labeled as “the five Ps of strategy.”

According to Mintzberg, understanding how strategy can be viewed as a plan, as a ploy, as a position, as a pattern, and as a perspective is important. Each of these five ways of thinking about strategy is necessary for understanding what strategy is, but none of them alone is sufficient to master the concept.

Strategy as plan

Strategic plans are the essence of strategy, according to one classic view of strategy. A strategic plan is a carefully crafted set of steps that a firm intends to follow to be successful. Virtually every organisation creates a strategic plan to guide its future. In 1996, Apple’s performance was not strong, and Gilbert F. Amelio was appointed as chief executive officer in the hope of reversing the company’s fortunes.

Strategy as ploy

A second way to view strategy is in terms of ploys. A strategic ploy is a specific move designed to outwit or trick competitors. Ploys often involve using creativity to enhance success. In 2011, a pizzeria owner in Pennsylvania was accused of making a rather unique attempt to outmanoeuvre two rival pizza shops. According to police, the man tried to sabotage his competitors by placing mice in their pizzerias. If the ploy had not been discovered, the two shops could have suffered bad publicity or even been shut down by the authorities because of health concerns. Although most strategic ploys are legal, this one was not, and the perpetrator was arrested.

Strategy as pattern

Strategy as pattern is a third way to view strategy. This view focusses on the extent to which a firm’s actions over time are consistent. Apple is very consistent in its strategic pattern: It always responds to competitive challenges by innovating.

Strategy as position

Viewing strategy as a plan, a ploy, and a pattern involve only the actions of a single firm. In contrast, the next P — strategy as position — considers a firm and its competitors.

Strategy as perspective

The fifth and final P shifts the focus to inside the minds of the executives running a firm. Strategy as perspective refers to how executives interpret the competitive landscape around them.

Mandeya is an executive coach in human capital development and corporate education, a certified leadership and professional development practitioner and founder of the Leadership Institute for Research and Development (LiRD). — robert@lird.co.zw, info@lird.co.zw or +263772466925.

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