Twenty-First-Century Challenges in Strategic Management

Three particular challenges or decisions that face all strategists today are (1) deciding whether the process should be more an art or a science, (2) deciding whether  strategies should be visible or hidden form stakeholders, and (3) deciding whether the process should be more top-town or bottom-up in their firm.

“Organizations are most vulnerable when they are at the peak of their success.”
(R.T. Lenz)

The Art or Science Issue

This site is consistent with most of the strategy literature in advocating that strategic management e viewed more as a science than an art. This perspective contends that firm need to systematically assess their external and internal environments, conduct research; carefully evaluated the pros and cons of various alternatives, perform analyses, and then decide upon a particular course of action. In contrast, Mintzberg’s notion of “crafting” strategies embodies the artistic mode, which suggests that strategic decision making be based primarily on holistic thinking, intuition, creativity, and imagination. Mintzberg and his followers reject strategies that result from objective analysis, preferring instead subjective imagination. “Strategy scientists” reflect strategies that emerge form emotion, hunch, creativity, and politics.
 Proponents of the artistic view often consider strategic planning exercises to be time poorly spent. The Mintzberg philosophy insists on informality, wheras strategy scientists and in this site insists on more formality. Mintzberg refers to strategic planning as an “emergent” process where as strategy scientists use the term “deliberate” process.

The answer to the art versus science question is one that strategists must decide for themselves, and certainly the tow approaches are not mutually exclusive. In deciding which approach is more effective, however, consider that the business world today has become increasingly complex and more intensely competitive. There is less room for error in strategic planning. We also discussed in over view category posts that the importance of intuition and experience and subjectivity in strategic planning, and even the weights  and ratings discussed in preceding posts that  certainly, in smaller firms there can be more informality in the process comrade to larger firms, but even for smaller firms, a wealth of competitive information is available on the Internet and else where and should be collected, assimilated, and evaluated before deciding on a course of action upon which survival of the firm may hinge. The livelihood of countless employees and shareholders may hinge on the effectiveness of strategies selected. Too much is at stake to be less than thorough in formulating strategies. It is not wise for strategies to rely too heavily on gut feeling and opinion instead of research data, competitive intelligence, and analysis in formulating strategies.

The Visible or Hidden Issue

There are certainly good reasons to keep the strategy process and strategies themselves visible and open rather that hidden and secret. There are also good reasons to keep strategies hidden from all but top-level executives. Strategists must decide for themselves what is best for their firms. This site comes down largely on the side of being visible and open but certainly this may not be best for all strategists and all firms. As pointed out in our first category Sun Tzu argued that all war is based on deception and that the best maneuvers are those not easily predicted by rivals. Business is analog ours to war.

Some reason to be completely open with the strategy process and resultant decision are these;

  1. Managers, employees, and other stakeholders can actively contribute to the process. Hey often have excellent ideas. Secrecy would forgo many excellent ideas.
  2. Investors, creditors, and other stakeholders have greater basis for supporting a firm when they know what the firm is dong and where the firms is going.
  3. Visibility promotes democracy, whereas secrecy promotes autocracy. Domestic firms and most foreign firms prefer democracy over autocracy as a management style.
  4. Participation and openness enhance understanding, commitment, and communication within the firm.
 Reasons why some firms prefer to conduct strategic planning in secret and keep strategies hidden form all but the highest-level executives are as follows.

  1. Free dissemination of a firm’s strategies may easily translate into competitive intelligence for rival firms who could exploit the firm given that information.
  2. Secrecy limits criticism, second guessing, and hindsight.
  3. Participants in a visible strategy process become more attractive to rival firms who may lure them away.
  4. Secrecy limits rival firms form imitating or duplicating the firms’ strategies and undermining the firms.
 The obvious benefits of ht evisible versus hidden extremes suggest that a working balance must be sought between the apparent contradictions. Parnell says that in a perfect world all key individuals both inside and outside the firm should be involved in strategic planning, but in practice particularly sensitive and confidential information should always remain strictly confidential to top managers. His balancing act is difficult but essential for survival of the firm.

The Top-Down or Bottom-Up Approach

Proponents of the top-down approach contend that top executives are the only persons in the form with the collective experience, acumen, and fiduciary responsibility to make key strategy decisions. In contrast, bottom-up advocates argue that lower- and middle-level managers and employees who will be implementing the strategies need to be actively involved in the process of formulating the strategies to ensure their support and commitment. Recent strategy research and this site emphasize the bottom-up approach, but earlier work by Schendel and Hofer stressed the need for their firms at a particular time, while cognizant of the fact that current research supports the bottom-up approach, at least among U.S. firms. Increased education and diversity of the workforce at all levels are reasons why middle-and lower-level managers and even non mangers should be invited to participate into he firm’s strategic planning process, at least to the extent that they are wiling and able to contribute.