Finding Strategy

December 14, 2012 5:50 am 2 comments Views: 160

Share this Article

  • LinkedIn
  • TwitterTwitter
  • FacebookFacebook
  • DeliciousDelicious
  • DiggDigg
  • StumbleuponStumble
  • RedditReddit
  • Follow Me on PinterestPinterest
  • Google+

Tags:

Author:

 

Most of firms today have separate departments called by different names, but with the sole objective of strategy formulation. While everybody has a department for strategic management or planning, most are still struggling to find the meaning of strategy in reality.

(Where there’s smoke there’s usually a fire. How come so few people see the connection?)

The scope of strategy needs to be as wide as possible.

It becomes very difficult to define what strategy in the business context is. If most organizations have a strategic planning department why do we find organizations struggling in the face of uncertainty? They may not have researched and planned for the various scenarios possible. So where does the problem lie? Is understanding of strategy a problem with firms or is their definition of scope a problem?

As management accountants we need to keep questioning the viability of different plans .The careful scrutiny of these plans will present to us the deficiencies in the plan. The management accountant must gather courage to ask bold questions and challenge assumptions. The strategic planning framework based on defining the purpose of strategy could then be more fruitful.

As in the game of golf, using the right club for different shots is important, as important as is using different strategies in different work situations under different circumstances or environment. Whenever managers are faced with questions as to why an issue or problem is happening, or if they planned for a certain scenario, the managers are often at a loss as to how to provide satisfactory answers, because they haven’t been intimately involved with the strategy plan.

Why do managers struggle with finding a strategy? Since they haven’t looked very hard at the range of possibilities that would accrue. Most importantly the purpose definition is not very clear in most the cases. If, as Cisco’s CEO John Chambers exclaims “The brightest people in the world didn’t see [the recession] coming”, then this is clear from the statement that the purpose was not defined properly. They never built their strategy for the bad times. Why weren’t eyebrows raised at that time? The strategy went unquestioned and the result was more than $2 billion of inventory which needed to be written-off, and more than 8,000 people being laid off. At these very times firms are struggling with finding strategy when the fire has already struck and not seeing the signs (smoke). Consider a building built but without the appropriate safety measures for fire earthquake and different calamities of different magnitudes.

Organizations are often not using strategy to plan. This is clearly evident in the case of the CEO of Johnson and Johnson Ralph Larsen, saying “We saw this recession coming three years ago. It was obvious the booming economic cycle wouldn’t continue. We tightened our belts. We focused on cash flow.” 

Knowing the purpose for the strategy is as important as building the strategy itself. So don’t wait to find your strategy when caught on the wrong foot, rather plan for the right purpose. The purpose should account for the best as well as the worst, and should plan for for issues to come.

By: Md Aslam Khan

2 Comments

  • Very well written. I just wanted to add here that proper strategies are often not formulated because the focus is too much on the problem rather than the possibilities…the focus is too much on oneself rather than the environment………that our thoughts are too much narrowed down.

  • Thanks for the appreciation.

    That’s what is the problem with strategy formulation.
    Richard Rumelt the author of “Good strategy Bad Strategy”; he states that good strategy should concentrate on the problems and strategies which just talk about possibilities with intent of non-action visible in their strategy statements or mere ambitious goals of growing by X% of ROI are vague statements mistaken as strategy.

    Well, that’s just one perspective and your version is also wlecome.
    Thanks

    Aslam Khan

Leave a Reply