Business Strategy Development

Today’s Topic: Business Strategy Development
Henry Mintzberg once said, “We can’t know anything about the future because it hasn’t happened yet.” Given the unpredictable nature of the future, many corporations are faced with serious dilemmas concerning their strategic planning. However, corporations must not give up on forecasting and thereby leave strategy to chance. People, just like corporations, need a clear direction in order to maximize their potential. Therefore, many successful corporations operate under the fundamental thesis that it is indeed possible to plan your way to long term success.
However, forward planning is fraught with risks. Many corporations look for trends in the past with expectation that they will continue on into the future. Extrapolation of previous conditions can be useful in formulating strategy. Nevertheless, basing all decisions on the past is like walking through the world with blinders on. Corporations must take into account the changes in the business environment if they wish to be sustainable.
In order to reduce the risk of strategic planning, many firms have come to rely on two models of thought. The Planning School model consists of step by step procedures for planning and evaluating performance. The first step in the planning school model is to develop the concept of a Corporate Mission. This is a general statement that can include basic information about the corporation. In this statement firms can stipulate the exact industry they wish to operate in. They can clarify what products and services they will offer. They can also establish an ethical framework for the corporation.
The second step is to Develop Goals. These goals are more specific and intensive than the mission statement. Goals must be both quantifiable and realistic. For example, corporations can stipulate the level of market share they wish to have in their given industry. They can also set quotas for profits and Rate of Return. Clear, concise goals are critical to the development of the firm. The Third step is to Develop Plans and Strategies. This is the roadmap to the achievement of the firms’ goals. The fourth step consists of implementation of policy and procedures that will follow strategies to meet goals. Lastly, each corporation must evaluate their performance with a focus on achievement of goals. Upon evaluation, corporations will begin the process once more to fix possible shortcomings.
There are several impediments to the planning school approach. For example, corporations that have been in business for a while may have trouble implementing changes. These firms must take into account what is; namely, how their infrastructure is set up. Firms must take into account that previous strategies may have allocated resources in a fashion that is inconsistent with new goals. Therefore, disengaging these resources to pursue a new strategy may not be cost effective. Consequently, corporations must find a commonality between what “is” and where they wish to go.
Another approach to developing strategy is the learning school approach. The learning school takes into account both intended and emergent strategies. A corporation begins with intended strategies. After implementation these strategies become deliberate strategies. However, through everyday interactions with the business environment corporations may be presented with emergent strategies. By combining deliberate and emergent strategies the corporation can obtain realized strategies. This school of planning understands that flexibility is critical to continued success. Sometimes strategies are just born and corporations can learn from them.
While both of these strategies have great potential for increasing the effectiveness of future planning, perhaps a multi-faceted approach is the best. By combining the school, corporations can get the best of both worlds. They can have the structure of the planning school in addition to the flexibility of the learning school.
In order for corporations to be sustainable they must plan for the future. They must have a clear vision of where they are going and what it will take to get there. Through the process of strategic management corporations can allocate scarce resources to ensure a successful future.