What is Strategic Management?

 By Eric A. Denniston, Managing Director

The term “Strategic Management” seems to cause more quizzical looks than most topics that I talk about when I describe to people what our consulting practice specializes in. The reason may be that even when people and organizations manage strategically, they do it with only a vague sense of the structures and processes they may be using.  They may even be unaware that there is a large body of knowledge, the International Association for Strategy Professionals (IASP) and other sources of support for helping organizations of all sizes improve their ability to create and manage strategic initiatives.

While much has been written about strategic management and strategic thinking, these remain disciplines that are new to many managers, executives and business owners, partly because it has not been emphasized in our education programs until very recently. This is likely why it is often easier to find training in strategic management offered by consulting firms than by colleges and universities. In fact, there has been a recent trend by universities to contract consultants to deliver such programs as part of their executive education initiatives. It is also possible that because it is a discipline that is much better learned in a hands-on, live-practice environment rather than in a typical classroom setting. Highly interactive, facilitated workshops are the best environment for training in strategic management. This may be why workshops that include live case studies for executives and business owners have become more popular over the past 30 years.

Strategic management fundamentally requires strategic thinking. This is an important assertion because it turns out that our education system actually teaches and emphasizes only short-term, tactical, or analytic thinking. Think about it. We are taught to analyze and break down problems into their various unique parts and solve for each of the parts, thus ignoring the whole. In strategic thinking, you concentrate on solving for the whole. Don’t believe for a minute that strategic thinking is a panacea or the BEST way to think, it is just that we need to know the distinction between strategic and analytic thinking and understand when to apply each type of thinking, either separately or in combination. It is almost always the case that we need to use them in combination but with careful consideration of the outcomes we desire from each type of thinking.

Managing Strategically Requires Shared Objectives

I earlier mentioned the processes and structures people use to manage strategically. It is highly useful to be deliberate in defining those processes and structures in order to consistently apply the necessary management techniques AND, more importantly, to SHARE WITH, COACH, and EDUCATE others in the organization in the practice of strategic management.

Managing strategically means establishing broad, long-term SHARED objectives that require consistent alignment from all the stakeholders involved. It also means maintaining consistent accountability for achieving the milestones necessary along the path to shared desired outcomes. It is also important to maintain a culture that supports the discipline required to sustain that long-term focus.

A Strategic Management System consists of the following basic components:

1. A strategic plan
2. A yearly planning cycle or calendar
3. A change management team
4. An individual whose responsibility it is to maintain accountability for and compliance with the strategic initiatives
5. A deep commitment to creating a culture of learning in the organization

An effective way that I have learned to help implement and maintain a strategic management system is the ABC framework created by the Haines Centre for Strategic Management. It is based on five questions:

1. What are our future desired outcomes, or what is our future desired state?
2. What will keep us on track during our journey?
3. What is our current state, or where are we now?
4. How do we close the gap between where we are now and where we want to be?
5. What will be going on in our external environment, in the broadest terms possible, that will be affecting us along our journey to our desired outcomes?

It has proven to be extremely important to address these five questions in the order that they appear because they help to keep us focused on those “future outcomes” and not allow our “today problems” to distract us. The only possible exception is question #5 which can actually be applied at any time one is working on the prior 4 questions and is sometimes useful as the first question.

The framework offered above is a proven aid in achieving one of the foundational elements that establish a clear competitive advantage for any organization. That is “a clarity of purpose”, a focus, that is articulated in writing for everyone’s reference and reminder about the journey’s roadmap and the milestones or metrics toward the objectives. A purpose that bears repeating to gain “Stay In”. This one element is proven in the many case studies offered by author Jim Collins in his book Good to Great.

Another key element in strategic thinking is the concept of seeking solutions that provide “AND” results or outcomes. In analytic thinking, we are generally looking for an “EITHER – OR” solution or outcome. In strategic thinking, we need to concentrate on looking for “AND” solutions that produce more than one desirable outcome mainly because we have SHARED objectives with multiple outcomes.

Looking further into strategic management, we find that once long-term objectives have been formulated, the next big challenge is gaining the alignment of all the stakeholders in executing the initiatives. This is where the processes and structures come into play to be able to articulate not only what the objectives are but also the role of each department and individual in contributing to achieving the desired outcomes. Holding people accountable for communicating the objectives and the processes to be followed is a critical step at this point. Ensuring that the resources of time, money, coaching and training are in place and are timely is equally critical. This requires good planning and a commitment to following through on all the activities required to achieve the long-term desired outcomes.

Some of this may sound onerous for small and medium-sized organizations. However, whether they are large or small, for-profit, non-profit, or government organizations, or an auto shop or an accounting firm, incorporating some aspects of strategic management will enhance performance substantially and may even be the difference between growth, simply surviving, stagnation, or closing the doors.

So how can people and organizations become proficient and even master strategic management and strategic thinking? My suggestions are to seek out the experts in this field and engage them in coaching and mentoring either individuals or teams. This is by far the quickest and most valuable manner in which to achieve a higher level of performance in leading and managing your business or organization or team of workers. You can find these folks on the internet and through the International Association for Strategy Professionals. (IASP).  This same association has many other resources to offer on these subjects. There are numerous blogs on the internet and many really valuable groups on LinkedIn, for example. Also, study books by strategic planning and strategic thinking thought leaders. People like Jim Collins, Jack Welch, Peter Senge, Stephen Haines, Stephen Covey, Peter Drucker, Ken Blanchard, and Garry Ridge, to name just a few. Of course, we are a resource for you as well.

Strategic Management is fundamentally the interaction of leaders who are creating and guiding the changes needed in the organization to ensure the long-term sustainability and growth desired that will eventually lead to their shared vision with the engagement of all the stakeholders. It is guided by a strategic plan document that is reviewed and updated annually. Strategic Management involves executive, middle, and line staff, board members, customers, and vendors, and is always focused on the best outcomes for the customer.

Systems Thinking - Simplicity Wins

 By Eric A. Denniston, Managing Director

Takeaways: The simplicity of Systems Thinking; a quick review of Systems Thinking; a couple of examples of both physical and organizational systems and a call to action for you to practice Systems Thinking.

Systems Theory.

Those two words likely conjure up dread that someone, usually a consultant or university professor, or both, is pitching the latest theoretical fad about managing an organization. Also, that this likely requires a highly complex processes and learning curve to implement. I find the latter statement to be mostly untrue. Having recently read two books by Timothy L. Johnson which are in the business fable genre, I am reminded how simply and very effective Systems Thinking can provide superior results in any type of organization. I have witnessed public school districts, animal feed companies, city park departments, law enforcement organizations, a world-class zoo and a major healthcare organization, achieve and sustain exemplary results using Systems Thinking.

In hoping that both experienced systems thinkers and those who are new or curious about Systems Thinking are reading this, I offer this simple review of a system in action: inputs, through-puts and outputs with a feedback loop tied to the desired outputs (outcomes) and a routine evaluation of the external environment the system is operating in. We most often think of systems in terms of technical or mechanical systems. But we also have various systems in our organizations and the organizations themselves are systems too.

Consider an automobile engine for a moment. 

The desired outputs are motion to move the car. The inputs are a combination of fuel, oxygen and the systems to control the inputs. The through-puts are the motions created by the combustion, and I admit this is a bit oversimplified. The feedback loop includes the gauges that inform the driver as well as the driver’s senses about what is happening. The environment consists of the air around the engine, its temperature and cleanliness and the condition of its lubricants. Again, a bit oversimplified. If the ambient temperature gets way too high or way too low we need to adjust how we use the engine right? The engine must stay in air because it won’t work underwater right? So the overall environment is important. What happens if the car drives through a heavy cloud of volcanic ash? One system may stop working, and that is the air filtration system which may clog up and prevent air from reaching the combustion chambers. So we also see an example of interrelated systems. Once we understand this we are engaged in Systems Thinking.

Generally speaking, the systems in organizations consist of people, departments, divisions, operating units, profit centers, committees, boards and of course some physical systems such as IT and Telecom. Today, IT and Telecom are more interrelated than ever before and that relationship is growing deeper day by day. The relationships between the other systems are perhaps even more important because the people themselves create ongoing variables due to job changes, promotions, departures, new hires, etc. If we apply Systems Thinking to the issues that we face in managing all these “systems” we can start with simply defining and reviewing the systems, their components and then work through how a system delivers the outputs we are seeking.

What are some tricks to using this in managing an organization? The first one is to remove our tendency to over-complicate things and focus first on the outcomes we desire and work backwards from there. This means not starting by conducting a SWOT analysis. When we start with a SWOT analysis, we tend to focus on today’s results based on yesterday’s trends and information. This takes our minds away from thinking about the future which is something we can actually influence by anticipating the trends and forces that will be affecting us in the future.

The next one I find useful is to stop thinking and planning in a linear fashion. Systems Thinking reminds us that it is really a circular process, one where we keep coming back to check in on and adjust to what is going on today. We should continually be verifying that our strategies are valid and adjust to the daily bumps in the road. If a strategy is not working we find out rather quickly and then we should change or eliminate that strategy immediately.

 Seek Root Causes.

Also, be rigorous and candid in seeking the root causes of the challenges we encounter because overlooking these is one the most frequent reasons why plans don’t achieve our desired outcomes. By seeking out these root causes early on we are more likely to have really clear objectives. If an organization is working on making improvements in customer service but are ignoring their inventory controls and the internal reporting to the sales arm, they may be overlooking the root cause of the problem and possibly never correct it. This is an example of looking at the interrelationships of systems within an organization. Then there are of course interrelationships with systems outside of an organization. An example of a breakdown in systems thinking could be the disaster that befell the space shuttle Challenger in 1986. NASA’s exemplary record of the space shuttle program up to then had been a supreme exercise in systems thinking to prevent the type of problem that reportedly was the cause of the Challenger to break up after launch. The processes originally put in place to ensure proper manufacture and testing of its various parts seem to have been deliberately overlooked to meet deadlines. It was simply a departure from continuing the rigorous systems thinking processes developed by NASA’s high standards of management early on.

By applying Systems Thinking we are most likely going to avoid the one thing that most often derails any plan, and that is following through on the plan. Systems Thinking helps to keep us focused on the outcomes, basically applying Stephen Covey’s 2nd Habit, “Begin with the end in mind”.

So take a ride on the Systems Thinking train and work on one challenge where you can define the outputs you want, work backwards from there to define your feedback loop, then do a SWOT analysis of your current situation. Next define your strategies and actions to close the gap from today toward your outcomes and don’t forget to scan the Future External environment of the system and systems involved. See if that doesn’t help to achieve better results.

What is Strategic Thinking?

 By Eric A. Denniston, Managing Director

We hear a lot about strategy and strategic thinking. But what do they really mean? What does it mean to think strategically, let alone ACT strategically? Thinking strategically is thinking with conscious intent. It encompasses a way of thinking that is holistic, involving the world around you, not just focusing on the details of your project or event.

For example, we attend a lot of networking events. For each one, we need to plan ahead what we want to accomplish at each event. What’s the purpose of attending the event? Do we have a goal of how many people we want to meet? What will we say when they ask what we do? What will we ask them and why? And where is the event anyway? We need to plan the most direct route there from wherever we might be.

That’s thinking strategically….looking ahead at some future date or time, identifying the outcomes or expectations that you want to accomplish, setting some metrics so you know how well you did (or didn’t do), and planning your arrival so you can minimize travel time and accomplish your objectives. For the example above, you must also have some key strategies and actions in mind that will help you accomplish your desired outcomes. Who you want to meet, what you intend to say, and how you will follow up after the event.

Apply Strategic Thinking Daily

Think about applying this thinking to your business each day. What are your outcomes for today? What measures will you use to identify your level of success in achieving these outcomes? Do you need input from others, and if so, who are they and what input or resources do you need? Then list the strategies and actions to achieve these outcomes. At the end of the day, look at your plan. How well did you do? Did you take the actions you had planned or did other things get in the way?

Denner Group offers a variety of workshops, one-on-one coaching, and group training sessions on strategic and systems thinking to help executives at all levels learn to internalize this new way of thinking. It’s new because in North America we’ve been trained to think analytically instead of strategically. We start with where we are today and jump right in to solving problems without any idea of what we’re really trying to achieve.

It’s like setting sail and pointing the boat out of the harbor with no plan in mind about what destination
you’re headed towards, what storms might be brewing that you’ll have to deal with, whether or not you have enough food and fuel for the journey ahead, etc.

Not very smart or strategic is it? Yet that’s how we run our businesses, focusing on the day-to-day, and forgetting about the future we’re trying to create, until we wake up one day and wonder why things aren’t going the way we thought they would. 

Take Time to Think and Plan

A little more time thinking and planning before acting will make a world of difference.

If you need help in this area, drop me an email at eric@dennergroup.com. We’ll set up a no obligation call to determine HOW and IF we can help you achieve your desired results.