strategic management activities

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The strategic management principles and activities is one of the three fundamental elements making up the strategic management framework, the primary organizing construct for strategic management knowledge and understanding.

The strategic management activities form and execute strategy. They produce the understanding necessary to develop innovative strategy, the business designs to be deployed, plan the deployment, and carry out the deployment. Collectively, this portfolio of activities develops competitive advantage, transforms the business organization, and develops the capabilities for the organization's members.

Defining the activities --
The strategic management activities are defined based on their fitness for the function of developing and sustaining a competitive advantage. This fitness screening filter comes from the broad understanding of the factors involved, such as, the creative destructive nature of the economy, people's cognitive capabilities, and the nature of organizations as complex systems.

Establishing the principles --
Whenever possible, first principles are identified as a basis for the strategic management activities and constructs. Examples include - classification of a business organization as a complex social system, iterative inquiry as a legitimate means of understanding and designing complex social systems, and understanding of people's cognitive nature. Following from these first principles come the following principles considered in defining the strategic management activities -

  • cognitive activities are more effective when separated into common types
  • different types of cognitive activities are naturally conflicting and interdependent
  • new ideas and intuition are fragile and must be protected in order to assess their value
  • the future is not knowable but is imaginable
  • diversity of thought leads to better decisions
  • pluralism is a natural condition to be harnessed, not extinguished
  • strategy formation and execution are naturally in conflict while interdependent
  • complex systems are inherently self-organizing
  • changes to complex systems are unknowable and experimentation is necessary for an organization to endure
  • people are drawn to and inspired by a moral purpose
  • learning is essential to survival

Deriving the activities --
The strategic management activities are defined based on their requirement to produce and sustain a competitive advantage, which requires the development of an organizational competency in strategic management. The activities also adhere to the principles above in order to effectively take advantage of the nature of things such as the economy, cognition, complex systems, and competitive advantage.

Organizing and integrating the activities --
The strategic management activities are organized by themes that emerge from the research of strategic management competency --

Cognitive optimization and integration --
The strategic management activities are grouped into four categories based on the similarity and compatibility of the cognitive processes. By grouping these activities in this way, the activities become more explicit and effective in what they produce, while the integration of the activities between the groups becomes explicit as well. In this way the activities can both be optimized and integrated. If they were not separated in this manner, the execution processes would tend to dominate the creative processes.

These groups are called stages because of their somewhat sequential nature.

  • Strategy formation -- From a strategy perspective, the exploration activity of the business organization is where strategy formation occurs. The two stages of activities are generate wisdom and create art.
    • Generate wisdom -- The distinctive type of cognitive activity in this stage is that of problem and opportunity formulation - analytical assessment and pattern recognition.
    • Individuals who excel at this type of thinking should dominate this stage. They should be valued for defining problems, revealing opportunities, and updating mental models.

      For this stage to be effective, it must be separated from problem solving and design. If this separation does not occur, thinking tends toward viewing the world through the lens of existing solutions. This is particularly harmful when the world is changing and the existing tools are no longer the most effective in solving the current problems.

      The objective is to develop an understand why the business organization is the way it is and what its trajectory is. Out of this understanding comes the clarification of problems and opportunities, the impetus to change, contextual understanding for insight and imagining possibilities.

      At this stage, the business organization model is used to understand.

    • Create art -- The distinctive type of cognitive activity in this stage is that of imagining new possibilities and, ultimately, making those possibilities tangible enough to further define and exploit them. This produces a novel order, or pattern.
    • Individuals who excel at this type of thinking should dominate this stage. They should be valued for their free thinking, creativity, and inventiveness.

      For this stage to be effective, at its core, separate it from both problem solving and problem definition, but especially problem solving. If problem solving is engaged too soon, the ideas for the future begin to look a lot like the existing ones.

      To tap its value, link it into exploitation in the form of hypotheses to be tested, models to be pursued, and high-level deployment plans.

      The objective is to develop ideas, define solutions, and even holistic designs unencumbered by the current state. This is similar competitive mindset as business start-ups or those new to the industry who have no particular preconceived notions of how to conduct themselves in the industry.

      At this stage, the business-organization model is used to inspire.

  • Strategy execution -- From a strategy perspective, the exploitation activity of the business organization is where strategy execution occurs, exploiting the resources of the business organization and testing the hypotheses that is the strategy.
    • Applying science -- The distinctive type of cognitive activity in this stage is that of analytical problem solving, design, and planning.
    • Individuals who excel at this type of thinking should dominate this stage. They should also be valued for their problem solving creativity and practical solutions.

      Creativity is needed here as well, but it is a different type of creativity than that which produces novelty in the prior stage. People with the problem solving gift might describe their creativity as pragmatic or realistic vs. idealistic.

      This stage separates the pragmatists and problem solvers to give the other groups the freedom and protection to bring idealism and creativity to a state of development that the problem solvers can take over.

      The objective of this stage is to plan deployment and execution, aligning resources and objectives - strategic and operational performance objectives.

      At this stage, the business-organization model is used to design - to the degree possible - what is to be deployed.

    • Waging war -- The distinctive type of cognitive activity in this stage is that of doing - controlling, directing, accomplishing missions, taking actions and reacting to and resolving immediate issues.
    • Individuals with this orientation should dominate this stage. They should be valued for their taking decisive action in the ""heat of battle"" -- their ability to lead, control, and immediate problems solving creativity.

      It is often a significant challenge to keep them from dominating those who excel at the activities of the other stages. Given the opportunity, that is what they will tend to do. When going head-to-head, the ""pragmatic-realists"" tend to dominate the ""impractical-idealists.""

      They should also be valued for their execution capabilities.

      A key challenge of this stage may be to gather the objective feedback needed to test the hypotheses inherent in the decision made that are being acted upon. The doers tend to value results more than reflection on whether the hypothesis behind a decision was correct or not.

      At this stage, the business-organization model is used to guide - guide, not direct.

Paradox of formation and execution --
Strategy formation and strategy execution are inherently conflicting. There are costs to the exploration activities required for strategy formation that don't have quick or visible payback. The exploitation activities of execution tend toward optimization and stagnation of the business model. These two types of activities are paradoxical and always will be. The strategic management process needs to give both formation and execution their freedom to operate while integrating them for their mutual benefit. See exploration for further discussion.

Multi-loop learning --
Multi-loop learning stems from the concept of double loop learning. Learning is essential to the development of the business organization - the ongoing increase in the organization's competence and capability. Development is what results from the resolution of conflicting objectives into higher order solutions which eliminate, or dissolve, the conflict. In order to learn, the conflicts must be discovered. In order to learn and adapt effectively, this process must occur on a rapid enough cycle to drive the evolution of the organization at least as fast as its environment's evolution.

The loops of learning are on multiple levels, but can be roughly classified into three categories. All feedback originates in the waging war stage. The feedback loops return to each of the other three stages --

  • planning loop -- This is the loop between applying science, the planning process, and waging war, where the feedback from the current actions is produced. In many cases deviations from expected results are simply due to such factors as mistakes in resource allocation or task prioritization. These types of deviations are corrected between these two stages.
  • strategy loop -- This is the loop between creating art, the strategy forming process, and waging war, where the strategy is executed. When the plans for execution were sound and effectively carried out, the feedback may indicate the need to reconsider the strategy being pursued. This type of learning loop involves three stages.
  • mental model loop -- This is the loop between generating wisdom, where the mental model for the business organization is developed, and waging war, where the effectiveness of this model is put to the test. Feedback from waging war is analyzed for evidence of weaknesses in the existing mental model. The mental model is updated as needed. This feeds into the strategy formation process that produces the business design, that drives the plans that drive the execution.

    These feedback loops are operating at all times. Thus the strategic management ""process"", as defined by the four stages, is not a linearly sequential set of activities, but an interactive set of activities that are dynamically executed or altered based on the feedback produced. This has a great deal of significance when these activities are configured into a strategic management process for a particular business organization.

Self-improving and developing process --
This theme overlaps with the others, especially multi-loop learning. The process overall must be self-improving - improving the effective use of the process. It also must be self-developing, changing the process as feedback indicates that it no longer is as effective as it could be. There are parallels between the Shewhart cycle of plan-do-check-act, or plan-do-study-act, and the strategic management stages of apply science (plan), wage war (do), generate wisdom (study), and create art (act).

Forming a strategic management process --
The strategic management activities are a collection of activities, with inherent interdependencies, based on strategic management principles. To be effectively applied to an organization, these activities need to be tailored to a particular organization. The strategic management methodology is the approach to developing a specific business organization's strategic management process. This methodology applies the strategic management discipline to a specific business organization, at a specific time, in a specific context, in order to transform the organization through the development of a stronger strategic management competency.