Strategic management is a word that many managers like to say, but unfortunately few of them execute well. In this series we will look at what strategic management truly is, how to formulate it, implement it, and how to keep it alive and vibrant through monitoring and improvement.
A synonym for strategic management is goals-oriented management. It is initiated by the highest level of management in an organization. These should communicate the mission and long term objectives planned for the business over the next few to several years. Top management must make the process clear for all stakeholders and convince them that this is where we are going and that this is the guiding rationale for all we do.
When properly implemented, strategic management creates an atmosphere where lower level managers and employees can easily see what choices they should make to head the firm in the right direction. Mandates of strategic management influence all departments. Human resources, purchasing, R&D, sales, marketing and accounting all have a role to play in the grand scheme. Teamwork becomes second nature in an environment of properly implemented strategic management so that silo building and information asymmetry can be dispensed with. Resistance to change is reduced.
The first consideration in achieving superior performance through strategic management is conceiving of a vison statement. Where is our organization now and where do we feel it should be at some give point in the future? The answers to those questions define our vision. By applying them at every level of decision making, focus and unity are created. People begin doing their jobs better because they have a reason to do so.
To successfully manage strategically, the next thing that must be done is to succinctly answer the question, “What business are we in?” This becomes the basis of formulating a mission statement. In the process of answering, we can contemplate what market we intend to compete in, how we plan to obtain and defend our competitive advantage (we look into this more deeply in Part Two), and what management structures should we put in place to achieve this. A well-considered mission is an enduring statement of purpose that captures our justification for being in this line of business and what differentiates us from other similar entities.
Having a mission statement attracts customers who are our reason for being. They give meaning to our enterprise. Our business converts economic resources into wealth and materials into goods through the willingness of customers to pay for them. So the mission must be stated in terms of what our customers perceive us as, rather than a declaration of what business we think we are in. For example if we are a jewelry manufacturer, our mission would not be to produce unique pieces from gold, silver and precious stones, but to provide our customers with the distinction and prestige of wearing one of our creations. We state the mission in terms of utility, in other words, what our product or service does for our customer.
A thoughtfully constructed mission statement reflects a philosophy of anticipating customer needs and providing goods or services to fulfill those needs, this as opposed to developing consumer products and then chasing to find a market for them. Here the mission provides a focal point that minimizes risk and is more likely to maximize profit. It offers the basis of criteria for screening strategic opportunities.
In short, we could say that vision is what we want to become and our mission is how to get there. If a company falters at analyzing and communicating these two, it loses an opportunity to present itself in a favorable light to existing and potential stakeholders. Every business relies on repeat customers, loyal employees and committed managers. Most organizations also need creditors, vendors, and a distribution network. Strong vision and mission statements afford firms a solid platform for saying who they are and what they are doing to their vital internal and external stakeholders. It contributes to the perception that the company is successful, well managed, genuine and worthy of investment.
As a consultant, I often see weak, poorly written vision and mission statements. Most of these are ineffective because they are vague, too broad, unattainable, have been written without much input from stakeholders, or are mostly ignored by all levels of management. Humanology Academy will hold training on how to overcome these pitfalls. Be sure to follow us and look for Parts Two and Three of this article.
In closing, please consider this quote from former Porsche CEO Peter Schultz. “Three people were at work on a construction site. All were doing the same job, but when each was asked what his job was, the answers varied: “Breaking rocks,” the first replied; “Earning a living,” responded the second; “Helping to build a cathedral,” said the third. Few of us can build cathedrals. But to the extent we can see the cathedral in whatever cause we are following, the job seems more worthwhile. Good strategies and a clear mission help us find those cathedrals in what otherwise could be dismal issues and empty causes.”
by Dr. David Evans
