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MANAGEMENT
FAQs STRATEGIC MANAGEMENT What
is strategic management? Strategic management
can be used to determine mission, vision, values, goals, objectives,
roles and responsibilities, timelines, etc. What is strategic planning? Strategic planning is a management tool,
period. As with any management tool, it is used for one purpose only: to help
an organization do a better job - to focus its energy, to ensure that members
of the organization are working toward the same goals, to assess and adjust
the organization's direction in response to a changing environment. In short,
strategic planning is a disciplined effort to produce fundamental decisions
and actions that shape and guide what an organization is, what it does, and
why it does it, with a focus on the future. (Adapted from Bryson's Strategic
Planning in Public and Nonprofit Organizations). A word by
word dissection of this definition provides the key elements that underlie
the meaning and success of a strategic planning process: The process is
strategic because it involves preparing the best way to respond to the
circumstances of the organization's environment, whether or not its
circumstances are known in advance; nonprofits often must respond to dynamic
and even hostile environments. Being strategic, then, means being clearr bout the organization's objectives, being aware of
the organization's resources, and incorporating both into being consciously
responsive to a dynamic environment. The
process is about planning because it involves intentionally setting goals
(i.e., choosing a desired future) and developing an approach to achieving
those goals. The process is disciplined in that it calls for a certain
order and pattern to keep it focused and productive. The process raises a
sequence of questions that helps planners examine experience, test
assumptions, gather and incorporate information about the present, and
anticipate the environment in which the organization will be working in the
future. Finally,
the process is about fundamental decisions and actions because choices must
be made in order to answer the sequence of questions mentioned above. The
plan is ultimately no more, and no less, than a set of decisions about what
to do, why to do it, and how to do it. Because it is impossible to do everything
that needs to be done in this world, strategic planning implies that some
organizational decisions and actions are more important than others - and
that much of the strategy lies in making the tough decisions about what is
most important to achieving organizational success. The
strategic planning can be complex, challenging, and even messy, but it is
always defined by the basic ideas outlined above - and you can always return
to these basics for insight into your own strategic planning process. What is the difference between strategic
planning and long-range planning? Although many use these terms
interchangeably, strategic planning and long-range planning differ in their
emphasis on the "assumed" environment. Long-range planning is
generally considered to mean the development of a plan for accomplishing a
goal or set of goals over a period of several years, with the assumption that
current knowledge about future conditions is sufficiently reliable to ensure
the plan's reliability over the duration of its implementation. In the late
fifties and early sixties, for example, the US. economy
was relatively stable and somewhat predictable, and, therefore, long-range
planning was both fashionable and useful. On the other hand, strategic
planning assumes that an organization must be responsive to a dynamic,
changing environment (not the more stable environment assumed for long-range
planning). Certainly
a common assumption has emerged in the nonprofit sector that the environment
is indeed changeable, often in unpredictable ways. Strategic planning, then,
stresses the importance of making decisions that will ensure the
organization's ability to successfully respond to changes in the environment. What is strategic thinking and strategic management?
Strategic
planning is only useful if it supports strategic thinking and leads to
strategic management - the basis for an effective organization. Strategic
thinking means asking, "Are we doing the right thing?" Perhaps,
more precisely, it means making that assessment using three key requirements
about strategic thinking: a definite purpose be in
mind; an understanding of the environment, particularly of the forces that
affect or impede the fulfillment of that purpose; and creativity in
developing effective responses to those forces. It follows, then, that
strategic management is the application of strategic thinking to the job of
leading an organization. Dr. Jagdish Sheth, a respected
authority on marketing and strategic planning, provides the following
framework for understanding strategic management: continually asking the
question, "Are we doing the right thing?" It entails attention to
the "big picture" and the willingness to adapt to changing
circumstances, and consists of the following three elements: formulation of
the organization's future mission in light of changing external factors such
as regulation, competition, technology, and customers development of a
competitive strategy to achieve the mission creation of an organizational
structure which will deploy resources to successfully carry out its
competitive strategy. Strategic management is adaptive and keeps an
organization relevant. In these dynamic times it is more likely to succeed
than the traditional approach of "if it ain't
broke, don't fix it." What Strategic Planning Is Not! Everything said
above to describe what strategic planning is can also provide an
understanding of what it is not. For example, it is about fundamental
decisions and actions, but it does not attempt to make future decisions
(Steiner, 1979). Strategic planning involves anticipating the future
environment, but the decisions are made in the present. This means that over
time, the organization must stay abreast of changes in order to make the best
decisions it can at any given point - it must manage, as well as plan,
strategically. Strategic planning has also been described as a tool - but it
is not a substitute for the exercise of judgment by leadership. Ultimately,
the leaders of any enterprise need to sit back and ask, and answer,
"What are the most important issues to respond to?" and "How
shall we respond?" Just as the hammer does not create the bookshelf, so
the data analysis and decision-making tools of strategic planning do not make
the organization work - they can only support the intuition, reasoning
skills, and judgment that people bring to their organization. Finally,
strategic planning, though described as disciplined, does not typically flow
smoothly from one step to the next. It is a creative process, and the fresh
insight arrived at today might very well alter the decision made yesterday.
Inevitably the process moves forward and back several times before arriving
at the final set of decisions. Therefore, no one should be surprised if the
process feels less like a comfortable trip on a commuter train, but rather
like a ride on a roller coaster. But even roller coaster cars arrive at their
destination, as long as they stay on track! What is a strategic plan? In
strategic planning it is critical to formally consider how your organization
will accomplish its goals. The answer to this question is a strategy. There
are a variety of formal definitions for strategies, but everyone
fundamentally agrees that a strategy is the answer to the question,
"How?" "Strategies are simply a set of actions that enable
an organization to achieve results." MAP for
Nonprofits, St. Paul, MN. "Strategy is a way of comparing your
organization's strengths with the changing environment in order to get an
idea of how best to complete or serve client needs." Jim Fisk & Robert
Barron, The Official MBA Handbook. Essentially,
there are three different categories of strategies: organizational,
programmatic, and functional. The difference among the categories is the
focus of the strategy: Organizational strategy outlines the planned avenue
for organizational development (e.g., collaborations, earned income,
selection of businesses, mergers, etc.). Programmatic strategy addresses how
to develop, manage and deliver programs (e.g., market a prenatal care service
to disadvantaged expectant mothers by providing information and intake
services in welfare offices). Functional strategies articulate how to manage
administration and support needs that impact the organization's efficiency
and effectiveness (e.g., develop a financial system that provides accurate
information using a cash accrual method). When should a strategic plan be developed? Strategy
development follows the creation and affirmation of the organization's
purpose statement, environmental and program data collection and analysis,
and identification of critical issues. It is critical that strategy
development follow these steps because the information gathered and decisions
made in these phases are the foundation for strategy creation and selection.
Each of these steps provides the following: The purpose statement, the
statement of the organization's ultimate goal, provides the direction to
which the strategies should ultimately lead. External
market data and program evaluation results provide critical data to support
strategy development. Without this information and insight, the
organization's strategies will not be in alignment with or effective in the
marketplace. The critical issues list serves as the specific focus and
framework for the activities of the organization and the pattern of these
activities (developing and selecting the strategies). How
are strategies developed? Strategy formulation is a combination of rational,
scientific examinations and educated, intuitive best guesses. Many
individuals are overwhelmed by the idea of developing strategies, but it can
be a fun and invigorating process. The
process entails: examining the organization's critical issues determining how
the organization's strengths and skills can be employed to address the
critical issues analyzing opportunities and strengths and looking for ways to
synthesize the two exploring and choosing the best approaches for the
organization. During this evaluation ask these key questions: Does the
strategy meet/address critical issues? Is this aligned with our mission? Is
this approach financially viable? One effective method of strategy
generation is to list critical issues and organizational strengths onto
flipcharts and then have staff or board members brainstorm possible uses of
those strengths or other skills to address the critical issues. Once the
brainstorm session is completed, use a roundtable discussion to investigate
and evaluate the possible strategies. Remember to develop a list of
alternative strategies to investigate and keep in the contingency planning
file. It is important not to discount the ideas that come to people
during non-working hours. The
Polaroid camera is the result of a three year old's
question to her father: "Dad, why can't I see the picture now?" What are some tools for for analysis and planning? A number of
analytical tools have been developed to assist organizations with the
planning process. Many nonprofit organizations have adapted these tools,
modifying the questions and criteria to align with their own specific
services and markets. Listed below are analytical tools frequently used by
nonprofit and for-profit organizations. What
is SWOT Analysis?
SWOT analysis is a methodology of examining potential strategies derived from
the synthesis of organizational strengths, weaknesses, opportunities and
threats (SWOT). The partnering of the different elements and the
extensive data collected as a result of the analysis can serve as a spark for
roundtable discussions and refinement of current strategies or generation of
new strategies. What
is the MacMillan Matrix? This strategy
grid, developed by Dr. Ian MacMillan, is specifically designed to assist
nonprofit organizations to formulate organizational strategies. There are
three assumptions underlying this approach: the need for resources is
essentially competitive and all agencies wanting to survive must acknowledge
this dynamic given that resources are scarce, there is no room for direct
duplication of services to a single constituency -- this is wasteful and
inefficient mediocre or low quality service to a large client population is
less preferable to delivering higher quality services to a more focused
population. These assumptions have implications that are difficult and
painful for many organizations and individuals. It might mean terminating
some programs to improve core services and competencies, giving programs and
clients to more efficient, effective agencies, or competing aggressively with
those programs that are less effective or efficient. MacMillan's matrix
examines four program dimensions that guide placement on the strategy grid
and indicate implied strategies. Alignment with Mission Statement: Services or
programs that are not in alignment with the organizational mission, unable to
draw on existing organizational skills or knowledge, unable to share
resources, and/or unable to coordinate activities across programs should be
divested. Competitive Position: Competitive
position addresses the degree to which the organization has a stronger
capability and potential to fund the program and serve the client base than
the competitive agencies. Program Attractiveness: Program attractiveness is the
complexity associated with managing a program. Programs that have low
client resistance, a growing client base, easy exit barriers, and stable
financial resources are considered simple or "easy to administer."
The level of program attractiveness also includes an economic perspective or
a review of current and future resource investments. Alternative Coverage: Alternative coverage is the number of
other organizations attempting to deliver or succeeding in delivering a
similar program in the same region to similar constituents. The
MacMillan Matrix provides ten cells in which to place programs that have been
reviewed in terms of these four dimensions. Each cell is assigned a strategy
that directs the future of the program (s) listed in the cell (e.g.,
aggressive competition, joint venture, orderly divestment, etc.). One cell of
the matrix, "Soul of the Agency," requires additional explanation.
These are the difficult programs for which the organization is often the
clients' "last, best hope." Management must find ways to use the
programs in other cells to develop, piggyback, subsidize, leverage, promote,
or otherwise support the programs in this category. KNOWLEDGE MANAGEMENT What is knowledge management? Getting the right
information to the right people at the right time -- to enable the right
actions. How are innovation and knowledge
management related?
Innovation is the most evolved stage in the development of knowledge
management. The first stage is data, the second is information, the third is
knowledge, and the fourth is innovation. INFORMATION MANAGEMENT What
is information management? Information management (IM) is the
harnessing of the information resources and information capabilities of the
organization in order to add and create value both for itself and for its
clients or customers. Information management is the management of
organizational processes and systems that acquire, create, organize,
distribute, and use information. We adopt a process view of information
management. In this view, IM is a continuous cycle of five closely related
activities:
The idea
underlying IM is that just as an organization purposefully and systematically
manages its human resources or financial assets, it should do likewise for
its information resources and processes. All the classic functions of
managing an organizational activity apply to IM as well: defining goals,
providing leadership, developing policies, allocating resources, training
staff, evaluation and feedback. What are the benefits of information management? Generally
speaking, there are four kinds of benefits from managing information strategically:
What is the difference between
data, information and knowledge? Consider a document containing a table of
numbers indicating product sales for the quarter. As they stand, these
numbers are Data. An employee reads these numbers, recognizes the name and
nature of the product, and notices that the numbers are below last year’s
figures, indicating a downward trend. The data has become Information. The
employee considers possible explanations for the product decline (perhaps
using additional information and personal judgment), and comes to the
conclusion that the product is no longer attractive to its customers. This
new belief, derived from reasoning and reflection, is Knowledge. Thus,
information is data given context, and endowed with meaning and significance.
Knowledge is information that is transformed through reasoning and reflection
into beliefs, concepts, and mental models. What
is an information strategy? An information strategy describes the
overall direction and general framework in which the organization’s
information resources and processes should be
managed so that the organization would achieve its most important
goals. An Information Strategy typically consists of the following: IM
goals and objectives that are well aligned with the organization’s mission
and vision IM principles that articulate desirable outcomes and form the
foundation for developing information policies One or more areas of strategic
focus: this could be some critical information content; common information to
be shared; some information-intensive process; or new information-based
products or services. PROJECT MANAGEMENT What
is the purpose of project management? To provide management with valid,
auditable status on which to base management decisions. Why should the project be planned? The main reason
for planning a project is for cost expediency. Proper project planning will
insure that the amount of work to be accomplished, the time allotted to
satisfactory complete the work scope, and the resources required to complete
the work scope are equally balanced. Every project undergoes some amount of
change while in progress. Proper planning allows for the assessment of the
impact of change prior to implementing the change. What is the most important safe guard provided by
project planning? Proper
planning includes the documentation of the work scope in language that is
understandable by the individuals who must accomplish the work scope. This
single step when properly accomplished will save many false starts as well as
preventing the waste of resources working on efforts which are not required
to obtain the desired goals of the project. Why should a company have a project management
system?
The customer may wish to know how the company manages a project. The customer
wants some assurance that the company can deliver the project on time and
within budget. Senior management wants a valid insight on how the project is
progressing. History is required of past performance so that new proposals
can be created based on fact. The company desires to be a superior performer
when compared to the competition. Does
each project have to create its own management system? The style
of the individual project manager will normally vary for each project. It is
the responsibility of senior management to put in place a policy and
procedure, supported by a selection of project management tools and formats,
which will assure that the status reporting is
readable, auditable, and valid. What are the tools needed for a project
management system?
A work definition policy and format, a scheduling procedure, a resource budgeting
methodology and format, a real time data collection/reporting system, a
material control and accountability subsystem, a change control subsystem,
and a monthly formal status review format to be used by senior management. What should the project manager look for
in a scheduling system? The three basic elements that the project
scheduling systems should provide are; a common basis for communication at
all operational levels of the project, a basis for regular status reporting,
the use of the management by exception technique. What
is a Work Breakdown Structure (WBS)? The work breakdown structure
defines the total project. A work breakdown structure is a product oriented,
family tree composed of hardware elements, software elements, and service
elements. The work breakdown structure relates project elements or work scope
definitions to each other and to the end product. The work breakdown structure
is not an organization chart of company personnel. DELEGATION MANAGEMENT Why use delegation? Although
delegating is one of the most difficult aspects of any management job, there
are many important benefits derived by the organization as well as the
manager when tasks and responsibilities are properly delegated. Through
delegation, you can ease the job of managing and thereby increase your own
effectiveness and that of the work group. What are the benefits of delegation to
the manager? Everybody
wins with effective delegation, but delegation is especially important if you
want to survive and grow in an organization. Here is how delegation
can help the manager:
What are the
benefits of delegation for team members? Your team members are
more highly motivated with effective delegation.
How does delegation help decision making?
Effective
delegation makes for faster, more effective decision making. An organization
is most responsive to change in the environment when decisions are made by
those individuals closest to the problems; that is, responsibility and
decision making are pushed further down in an organization. Individuals
closest to the problem have the most information on which to base an
intelligent decision. Decision making can be achieved more expediently
through delegation, thus allowing the organization to be more responsive and
hence more competitive. When team members participate in decision making
there is an increase in employee motivation, morale, and job performance. The
greater the employee participation, the greater the employee commitment to
the job and the organization! Increases flexibility of operations. Effective
delegation trains many people to do the same assignments. This overlap allows
for greater flexibility of work assignments. When someone is absent or a
crisis requires people to assist with tasks not regularly a part of their jobs,
they will already be familiar with the assignment. Delegation prepares more
individuals for promotion or rotation of responsibilities. And it allows you
to appoint someone to supervise the work group when you're absent. |