Review of Strategy Literature

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(1) More than half US state justice systems have embarked upon 'visioning' or future studies. This is a practical means for preparing for the future with advantages over traditional strategic planning. The world is changing rapidly and there is no value in planning for what it was, but for what will be. All projections are wrong thus need several alternative concepts. Characteristics of this system are: planning backwards from goal; involving stakeholders (Judge Richard B. Klein, Futures Studies - Sense or Nonsense?)

(2) We can not predict by extrapolating the past. A Swedish company survived 7 centuries using emergent rather than predictive strategies . We must be concerned with structure of future, not with its detail (ie of processes, change, emergence). Interpretation allows companies to develop adaptive strategies - which do not require ignoring foresight - but interpretation has to move to a deep level. Challenge today is to design organisations to process information to produce foresight - which requires an ability to identify / explore what is viable in the environment. (Mccaster, 'Foresight: exploring the structure of the future', Long Rang Planning, V29, N2, April 1996)

(3) 'Prospective' refers to the need for future orientation in strategic thinking. Scenario method helps stimulate strategic thought. Several possible futures are possible - in two major categories - exploratory and predictive. Probability analysis can be applied to scenarios. Scenario is not future reality, but a way of looking at the future. (Godet and Roubelat, 'Creating the Future: The Use and Misuse of Scenarios', Long Rang Planning, V29, N2, April 1996)

(4) There are examples of both the ability and inability to foresee the future. Science of complexity (which studies complex adaptive systems) is valuable way to understand organisational life - and is alternative to machine metaphor of organisations. It was derived from the life sciences, but applies to social systems. Sees organisations as complex adaptive systems - which are creative (and unpredictable) when they operate at the edge of disintegration. Contrary to expectations, 'mess' is the material from which life is built through spontaneous self organisation (Stacey, Emerging Strategies for a Chaotic Environment, Long Rang Planning, V29, N2, April 1996)

(5) Many criticise lack of foresight - yet admit that it is hard. Foresight may be equivalent to wisdom. Foresight is inevitably coloured by what we want future to be. Future is never what we want it to be. Foresight assumes that we can produce desired outcomes - untestable theory (McDermott, 'Foresight is an Illusion', Long Rang Planning, V29, N2, April 1996

(6) Scope for action now to change the future is the important reason for studying it. Britian in 2010 was prepared on the basis of the most probable scenario - rather than a range of scenarios. (Northcott, 'Mapping the Future for Countries', Long Rang Planning, V29, N2, April 1996)

(7) Foresight needs to be both predictive and creative. Difference between West and East Asia is that one tries to predict the future, while the other views the market as something which can be created. One approach is to set precise targets, benchmark, monitor performance, and make corrections. Another approach is the creative imagination - which invents an ideal future (by using techniques like cognitive mapping and idealised designs). Strategic management requires both commitment and creativity, and analysis and quantification. (Raimond. 'Two Styles of foresight: Are we predicting the Future of Inventing it', Long Rang Planning, V29, N2, April 1996)

(8) Strategy as optimising pre-commitment is no longer a growth industry. Firms do not know enough about their environment. There are three types of foresight horizons: clear, complicated, and complex. Under the first - the range of issues is known - and optimised strategy is viable. Under complicated environment - issues which will arise are too numerous to identify - thus can't optimise - and strategy involves generative relationships across an organisation's boundary which produce new sources of value which could not have been foreseen. For complex, environment itself is constantly changing - and the organisation is itself one influence in this change. Under these circumstances strategy is a means for control - requiring 'populating the world' (identifying characteristics of world) and 'generative relationships'. (Lane etal, 'Strategy under Complexity: Fostering Generative Relationships', Long Rang Planning, V29, N2, April 1996)

(9) Strategy is subject to different opinions. In the early 1980s most concern was with strategy content. Much attention was given to the fit and match of organisations to their environment (latest approach being re-engineering). Few were concerned with those who were trying to change the industry structure, the industry or its environment. But now most concern is about the process for formulating strategy content (taking account of sociology, anthropology and psychology) - because of the view that strategic management is a divergent problem rather than convergent - ie there is no single right answer. Shell's planning systems have been seen as important learning processes. Western society is going through a turbulent period, and scientific theories of complexity have come to our aid in understanding environments as dynamic systems of complex relationships. Strategic thought can deal with: internal strategic management (governance); strategic change (learning) and external strategy (creating the future). (Whilehill, 'Strategy Foresight: the Future of Strategy Research', Long Rang Planning, V29, N2, April 1996).

(10) Companies are finding that they can not shrink to greatness. Growth is linked to two important concepts: anticipation and adaptation. Changes (by competitors, to technology, in customer requirements) make the nature of value a moving target - and failing to anticipate change is deadly. Adaptation is internal responses to anticipated future. A model is developed which involves: strategic assessment; opportunity identification; development; and execution. The first two elements are analytical and involve few persons. The latter two involve many. (Frank D. etal. 'Leadership for Growth', Strategy and Leadership, Oct 1996)

(11) A small number of insightful Japanese managers perceive the country's long-term economic recession as just the visible part of a very large iceberg, with most of it under the water as a major restructuring at a global level in the post-cold-war era. A discussion is presented of the strategic implications of the invisible and submerged parts of a large iceberg for managers and for Japanese managers in particular. A new management paradigm is discussed that can be referred to as management by creation (MBC). The major purpose of MBC is to search for the creation of diverse values for diverse stakeholders and, through this process, ultimately for the creation of the firm's reason for being in society at large. Finally several psychological barriers are pinpointed for typical Japanese managers when they try to perceive strategic implications and to shift to a new management paradigm. (Nakamura, G., 'A search for a new management paradigm in the post-Cold War era: The end of Japan's miracle?', International Review of Strategic Management. 5: 111-131. 1994)

(12) A recent benchmarking consortium study conducted by the International Benchmarking Clearinghouse uncovered ten key best practices in strategic planning, including: 1. The distinction between strategic planning and business planning is increasingly blurred. 2. The strategic planning staff plays a significant role. Six companies were selected to be the study's best practice participants: Alcoa, Deere & Co., Frito-Lay, Shell International Petroleum Co., Whirlpool, and Xerox Corp. The study sought to identify proven and innovative strategic planning practices and revealed a variety of approaches with underlying common themes employed by the selected companies. (Panfely, P; Sonnier, L., 'Learning from best practices in strategic planning', Strategy & Leadership, Vol: 24 Iss: 5 Date: Sep/Oct 1996 p: 48) TRY TO GET COPY

(13)  Traditional strategic planners analyse sound historical data to make projections on whether or not current trends are likely to continue. This is inadequate in a world of rapid change. Scenarios are a way to deal with this. This technique was used by Shell to anticipate the effect of the energy crisis in 1970s, and position it to become major company. Scenarios respond to a variety of driving forces around a focus issue. Schwartz, 'The Art of Long View', 1990 was devoted to this topic. (Robbins, G. 'Scenario planning: A strategic alternative' Public Management. 77(3):4-8. 1995 Mar).

(14)  'Strategic planning is a relatively new innovation to government, and according to some observers, part of a quiet revolution under way in public sector management (e.g., Bryson, 1988; Osborne and Gaebler, 1992; Denhardt, 1993) Recent research suggests that the best public sector managers have been creating strategic management processes to address the unique features of public sector organizations (e.g., Rainey, 1991; Bozeman and Straussman, 1990, Denhardt, 1993). In doing so, managers have been moving away from traditional, hierarchically managed agencies towards a management style that highlights responsiveness to citizens, excellent quality services, employee empowerment in the workplace, and an ongoing strategic planning process emphasizing the organization's mission and values. As part of the growing literature on strategic planning in the public sector (e.g., Eadie, 1983; Bryson, Freeman, and Roering, 1986; Bryson and Roering, 1987 and 1988; Carr and Littman, 1990; Wechsler and Backoff, 1990; Miesing and Andersen, 1991), Bryson (1988, 118) defines strategic planning broadly as a disciplined effort to produce fundamental decisions and actions that define what an organization is, what it does, and why it does it. More specifically, this article defines strategic planning as a management process that combines four basic features: (1) a clear statement of the organization's mission; (2) the identification of the agency's external constituencies or stakeholders, and the determination of their assessment of the agency's purposes and operations; (3) the delineation of the agency's strategic goals and objectives, typically in a 3-to 5-year plan; and (4) the development of strategies to achieve them'. (Berry, F. 'Innovation in public management: The adoption of strategic planning', Public Administration Review. 54(4):322-330. 1994 Jul).

(15)  An 'international advisory council' is a group of distinguished business, financial and former government leaders who come together periodically to advise managements on the economic, political and social environments an organisation operates in (Turner, W., International advisory councils', Directors & Boards, V20 N 2 Date: Winter 1996 p: 43-48)

(16)  The environment of a firm consists of both market and non-market elements, and strategy must deal with both (Baron, D Integrated strategy: Market and nonmarket components', California Management Review Vol: 37 Iss: 2 Date: Winter 1995 p: 47-65

(17)  Australia's federal government is adopting new risk management techniques developed by standards organisations. One benefit will be improved strategic planning. (Tilley K., 'Australian government accepts standards', Business Insurance Vol: 29 Iss: 45 Nov 6, 1995 p: 13-16)

(18)  A UK local government (in cooperation with others) established 'quality in the community' group - together with a team of change agents. In preparing its corporate plan, hundreds of people were involved, and many options for change were identified and implemented (Journal: <11> Title: Beedon, J; Winchurch, D., 'Joining forces for strategic change', People Management Vol: 1 Iss: 20 Date: Oct 5, 1995 p: 42-44)

(19)  A state agency turned an annual management conference into a participative planning, educational and networking event - which increased flexibility and speed of planning and strategic management (Margolis D., 'Management conferences can be your key to change', Journal for Quality & Participation Vol: 18 Iss: 6 : Oct/Nov 1995 p<: 60-65)

(20)  Seven high-priority remedies for city managers are discussed. At macro-levels, broadly participate strategic planning can serve to provide the context and content for the intermediate zone. From this major priorities can be set; this, in effect, provides a template for decision making, and one prime consequence involves the diminution of future role conflict via clearer values, mutually agreed upon. Today, city management reflects substantial staying power in the hardball politics of urban government, but the plan remains the most common form of government only in medium-size communities. (Golembiewski, R; Gabris, G., 'Tomorrow's city management: Guides for avoiding success-becoming-failure', Public Administration Review Vol: 55 Iss: 3 : May/Jun 1995 p: 240-246)

(21)  Strategic planning has been touted as one of the 'hot' management innovations in the public sector, promising managers the benefits of a highly structured, future-oriented management technique taken directly from the best-run business corporations. Little has been known, however, about the actual experience of public agencies with strategic planning. A national survey of state agencies was conducted to determine rates of utilization, types of strategic planning objectives, and outcomes. About 60% of agencies responding were using some type of strategic planning, and an additional 9% planned to do so in the future. Its initiation has been primarily a decision of individual agency leaders, hoping to set program and policy direction, to emulate an exemplary practice drawn from the private sector, or to respond to budgetary pressures. The most commonly employed model of strategic planning used in state agencies builds on elements of the widely discussed Harvard Policy Model. While 1/3 of the states used a 5-year time frame for their strategic plans, most still use one-to-4 years as the plan horizon. (Berry, F; Wechsler, B., 'State agencies' experience with strategic planning: Findings from a national survey', Public Administration Review Vol: 55 Iss: 2 : Mar/Apr 1995 p: 159-168).

(22)  Given internationalisation, changes customer values and other pressures, management leadership requires a strategic focus on business stretch to achieve a competitive position. Goals and supporting plans of strategies are based on analysis and planning by those close to what has to be accomplished. (Feigenbaum, A., 'Quality leadership in the global economy', Journal for Quality & Participation Vol: 17 Iss: 2 Date: Mar 1994 p: 36-41)

(23)  Strategic planning can produce two types of benefits - goal setting and the development of action plans; and building cooperative relationships between elected officials and professional managers. (Gabris, G., 'Strategic Planning in Municipal Government: A Tool for Expanding Cooperative Decision Making Between Elected and Appointed Officials', Public Productivity & Management Review V:16 Iss: 1 : Fall 1992 p: 77-93).

(24) Strategic planning is part of the fabric of management - not something separate. Strategic planning is major support for strategic management - ie management by the top level of an organisation. Previously all management was operational (concerned with efficient use of resources) - but now a rapidly changing environment makes it essential to adapt properly to the environment. Tactical errors don't matter if the strategy is right, but tactic brilliance is useless if strategy is wrong. Strategic planning involves deciding what the business is, setting objectives, development of strategies, and making decisions for tomorrow. This must be done by a segment of business which can see all aspects. Strategic planning can be either intuitive (in the brain of one person) or an organised set of procedures. Strategic planning: involves future (ie consequences of present action); it is a process; it is an attitude (which says that planning is useful); and it is a link between strategic issues, medium range programs and short term budgets. It is not about future decisions - only about future consequences of present decisions. Issues for strategic planning are: organising to do it; relationship with CE; overcoming resistance; alternative planning approaches; situation audit; identify basic business purposes; long range planning objectives; program strategies; medium range functional programming; translate strategies to current decisions; contingency planning / alternative futures; analytical techniques; control systems; and human dimension. Strategic planning has been extensively applied in the private sector over the past 25 years - based on the view that it allowed companies to 'make trends - not just to follow them' - given an aggressive risk taking management team, and careful analysis. Public sector may learn from this - but major differences exist. In government: politics rather than economic considerations dominate; interests to which government respond are pluralist (ie not unified); aims of government are not defined as clearly and specifically as for business; criteria for decisions are much less concrete (ie are not based ROI as in business); plan implementation is harder (eg because of a lack of a clear chain of command); and time horizons are shorter. In government there is a growing acceptance of strategic planning - eg through PPBS established in US in 1965. Managers everywhere are faced with turbulent environments and need to spend time looking ahead at critical issues. Strategic planning works best in government organisations which are most like a business (eg electricity utility), and become much more complex in a huge government department. PPBS is the government equivalent of strategic planning. Pitfalls can be: providing insufficient resources; focusing on current rather than emerging problems; lack of meaningful criteria for program evaluation; trying to be too comprehensive initially; too little training; concern for technique rather than the purpose of PPBS; lack of interaction between decision maker and analyst; lack of climate favouring planning; lack of meaningful program structure; and lack of involvement in PPB process of main operations staff. (Steiner G. Strategic Planning: What Every Manager Must Know, Free Press, 1979)

(25) Strategic planning has been encouraged in government during the 1980s. It involves 'systematic process by which an organisation examines opportunities and threats in its environment, analyses its strengths and weaknesses, reviews or defines its mission, establishes priorities and determines the means to achieve them'. Strategic planning is a tool for organisational development and change. (Charih, 'Strategic Management in the Public Sector' Optimum, V24,N1, Summer 1993)

(26) Success with strategic planning requires: personal involvement and commitment of Deputy Minister (CEO??) and senior management; support of Minister; stable management; orientation of process to specific circumstances; ability to manage conflict; consultation with managers; and integration of strategic planning into central decision making process in departments. (Charih etal, Strategic Planning in a Department: Motives and conditions for Success, Optimum, V24,N1, Summer 1993

(27) Government must interact effectively with clients - requiring: selection of appropriate issues; ability to respond; and relationship of issues to client needs. There are three fundamental functions: environmental scanning capability (the intelligence function); organisational capability to support strategic issues; and management response capability. Strategic goals must be grounded in operational realities, and tempered by resource constraints. (Caro, 'Towards Effective strategic government-client inter-linkages: implications for public sector management', Optimum, V24,N1, Summer 1993)

(28) Strategic and corporate planning is used to align the organisation to successfully meet changes in the environment, threats and opportunities. Strategic planning is synonymous with major policy development, while corporate planning is an annual cycle that directs resource allocation and policy development. In 1960s, agency practiced long term planning, and policy development on individual issues. An integrated approach to strategic issues was adopted in 1975. It was supported by policy analysis group. Corporate planning was also established. Weaknesses were identified in 1983: convoluted planning; management's lack of attention to key documents; lack of tracking functions - resulted in establishing chief corporate planner. Organisation was streamlined from 1984-88 - centralising non-operational policy and planning functions. Strategic / corporate planning was reviewed in 1988 because of: different understandings of goals; lack of understanding of process by managers; and uncertainties about the status of priorities determined. Now strategic planning involves: identification of critical issues; define objectives and strategies with long term importance; provide strategic direction to department through annual corporate planning. Strategic planning is not a fixed cycle. It involves: scanning; strategic options and policy choices; strategic directions; and tracking. The corporate planning cycle is fixed to the annual program. (Kauk, 'Strategic and Corporate Planning in Transport Canada', Optimum, V24,N1, Summer 1993).

(29) Strategic planning has been adopted from the private sector as a means to allow the public sector become more responsive to changing public needs. Private sector methods must be changed because: goals are ambiguous, multiple interests are involved, strategies are constrained by political mandates, and collaboration is favoured over competition. Some suggest much greater use of consultation and political processes, rather than technocratic methods (cost benefit analysis, PPBS etc). Trying to apply strategic planning raises difficulties (a) paradoxes of purpose (theoretically strategic planning is introduced to promote rational decision making - but actually its goal may be symbolic with quite different results). For example, hospital planning was theoretically oriented towards meeting patient needs, but was actually designed to divert attention from dis-satisfaction. (b) Paradoxes of process (theoretically strategic planning is based on analysis of situation, but in practice it requires participation of many stakeholders for success) (c) paradoxes of performance: experience of actual strategic plans is that they put forward a shopping list for major expansion (rather than downsizing) - and proposals were often vague and ambiguous. Despite this most participants were satisfied - because of the benefits of participation in the process. Suggestions are: ..... focus on few issues; use external environmental information to get focus; link planning to action; and don't plan in leadership vacuum. (Denis etal, 'Paradoxes of strategic planning in the Public Sector', Optimum, V24,N1, Summer 1993)

(30) GE (a very large diversified company) found its existing approach to strategic planning unsatisfactory in 1969 - because the chief executive had too many departmental plans to meaningfully assess. Departments also were not real business units. Thus GE was reorganised into strategic business units, established corporate review capability, and adopted a matrix approach to differentiate resource allocation. This became the 'portfolio approach' to strategic planning - which is used by most large US companies. It has however been criticised as the cause of US industrial decline. Portfolio approach to strategic planning is an analytical technique which allows business units to be classified for resource allocation, and for selecting competitive strategy on the basis of growth potential and financial resources. The idea of the 'learning curve' (ie that organisations become more efficient with time) also influenced the portfolio approach. A growth / share matrix uses market share as proxy for experience, and growth which predicts cash usage. Different positions on the matrix imply differences in cash / profit. Business units receive support on the basis of their position on the matrix. Profit impact of marketing strategies can be used to complement this. Portfolio planning is a method of solving resource allocation problem facing CEs. It is appropriate for corporate strategy, but not for business / institutional strategy. There are many definitions of strategy - which can be clarified by distinguishing business strategy (ie how company will compete is an area), corporate strategy (ie what areas company will be in) and institutional strategy (ie basic character of the company). Mintzberg says strategies emerge in three ways: insight of individual; ad hoc reaction to current problems; and formal analysis. Portfolio planning is just one tool in strategic planning. (Hamermesh R. Making Strategy Work: How Senior managers Produce results, Wiley, 1986)

(31) Long range planning has recently become important. It is derived from traditional business concern for planning. Planning is an analytical process which assesses the future, determines desired objectives, develops alternative actions, and selects a course of action. Planning is about improvement, and concerned with future. Planning is needed because of changes in the environment. It also is needed to reveal patterns in the environment. Long range plans concern: where are we going; and how do we get there? The first issue is strategic; the second question is implementational. Strategic long range planning is about making decisions about matters of importance to long term health, which is the unifying basis for other plans. Important aspects of strategic long range planning are: corporate self appraisal; establishing objectives; assumptions about the future; anticipation of technological change; and choice of the strategy. (Scott B. Long Range Planning in American Industry, 1965)

(32) Traditional concept is that managers formulate strategies and them implement them. However in reality thinking and action are inseparable. Basic idea of strategic management is that managers must establish and maintain match between a firm's capabilities and its environment. It involves both strategic choice and organisational change. In the relative stable high growth situation after WWII, the environment was treated as unchanging. Running a business was simple - requiring only basic accounting, budgets and simple information systems. Rapid technological and market changes and business complexity then forced long range planning - focused mainly on capabilities of enterprises (for balanced development) with environmental analysis limited to predictable growth. Forecast based planning has continued in most organisations - however routinisation has resulted in loss of real `strategic' significance. Strategic management emerged from US business policy concepts in the 1960s. It involved analytical process of strategic choice, but was then implemented through administrative policies and changes to structures and systems (also management style and organisational culture). Then Porter turned concepts from industrial organisation economics into a theory of strategy - which allowed managers to use micro-economists tools, and led to great emphasis on a firm's immediate competitive environment. It changed the idea of strategy from reaction to the environment - to trying to shape it. Most recent development in strategic management has involved recognition of the role of innovation in firms' performance. The essence of strategy is then to create tomorrow's competitive advantages (from strategic capabilities) faster than competitors. It is no longer enough to get marginal improvements in technology, marketing etc - but necessary to fundamentally change the competitive game by novel approaches to market entry, advantage building and management of change. Because changes in strategy and capabilities often drive changes in the environment, the management of change has become the key source of competitive advantage. While environment, capabilities and performance are tangible, strategy is not - but involves `doing the right thing' (while tactics involve 'doing the thing right'). Mintzberg proposed defining strategy as a: plan (course of action defined in advance); ploy; pattern (of behaviour); position (of the organisation in its environment); and perspective (collective view based on experience) - it could also be a process of sensing, analysing, choosing and acting. Strategic management is aimed at creation of value - making money - as the measure of success in achieving some purpose (ie achieving a vision). Creating value depends on attractiveness of industry, and competitive position in that industry. Porter's model allows this to be analysed - in terms of structural analysis of industries, competitive advantage, and competitor analysis. Two sources of competitive advantage are costs and product differentiation. Organisational capabilities have become crucial strategic issue because of size and diversity of companies, turbulence of environment, changing social values and institutions. This required major changes to firms - from hierarchical to decentralised arrangements. Traditional hierarchical mechanisms to ensure coordination have failed, and been replaced by mechanisms based on generating commitment rather than compliance - based on socialisation and common culture. This requires shared beliefs and value (eg mission). Managers must be administrators, and also strategists. Change (to create tomorrow's competitive advantages) is the key source of competitive advantage (Lewis, 'Concepts of Strategic management', Ch 1 in Lewis G. Morkel A and Hubbard G. Australian Strategic Management: Concepts, Context and Cases, Prentice Hall, 1993)

(33) Many managers are working hard to match the competitive advantages of their rivals. This is not enough. As strategy has blossomed - performance has withered. Concepts like `strategic fit', strategy hierarchies (goals strategies and tactics) have aided process of decline. Best international competitors do not operate this way. This occurs because strategies are designed for the world as it is, without taking account of changes occurring. Those who have succeeded have had strategic intent, well out of scope of their existing resources. Strategic intent is different to strategic planning. Planning filters out only that which is seen to be feasible on the basis of skills and resources. (Hamel and Prahalad, 'Strategic Intent', Ch 6 in Lewis G. Morkel A Hubbard G. Australian Strategic Management: Concepts, Context and Cases, Prentice Hall, 1993).

(34) During the 1980s companies were judged on their ability to restructure, de-clutter and de-layer their organisations. In the 1990s they will be judged for their ability to identify, cultivate and exploit core competencies. It was once possible to point at markets and seek leadership - but with rapid change such gains are only temporary. Some companies have been adept at inventing new markets. They are the ones to emulate. NEC sought to exploit convergence of computing and communications, and established top management team to develop those core competencies. However US companies saw themselves as a portfolio of businesses. Whilst concerned with price and quality of competition they were overwhelmed by speed with which Japanese could invent new markets. Core competencies are the collective learning of the corporation. The way firms are normally thought of - as hierarchy and as collection of business units is the obstacle to developing core competencies. (Prahalad and Hamel, 'The Core Competence of the Corporation' Ch 7 in Lewis G. Morkel A and Hubbard G. Australian Strategic Management: Concepts, Context and Cases, Prentice Hall, 1993)

(35) Because of rapid change in the environment, and rapid technological change - change has become a source of competitive advantage - and a key part of strategic management. Many traditional approaches see change as possible by structural means - which requires first deciding what do - then using administrative techniques to achieve it. This is now often not enough. Incremental change is different to strategic change. Techniques for managing transformational changes are suggested. (Lewis 'Managing Strategic Change', Ch 13 in Lewis G. Morkel A Hubbard G. Australian Strategic Management: Concepts, Context and Cases, Prentice Hall, 1993)

(36) The lines between strategy formulation and implementation are constantly blurred. Earliest signals of the need for strategic change do not come from formal horizon scanning, planning or reporting systems - but rather from somethings which cause 'unease' about relationship of organisation and some perception of future environment. To avoid own natural biases we have to involve people who scan the world from different viewpoint to the organisation's dominant culture. It is then necessary to build general understanding throughout organisation about new issues - without threatening power centres. (Quinn, 'Managing Strategies Incrementally' Ch 14 in Lewis G. Morkel A and Hubbard G. Australian Strategic Management: Concepts, Context and Cases, Prentice Hall, 1993)

(37) Strategic planning has changed dramatically since the 1970s - and has evolved into a viable system for strategic management (or strategic thinking). Amongst the most important changes involve: a marked shift of planning responsibilities from staff to line managers; decentralisation of strategic planning to business units; and much greater attention to changing markets, competitive and technological environments. Planning techniques are more sophisticated - involving less reliance on a single technique - and more use of methods like scenario planning and TQM which are less mechanistic and more sensitive to the critical uncertainty of many planning variables. However most significant is the growing emphasis on organisation and culture as critical ingredients in implementation - because values, motivation and behaviour of organisations members are critical to performance. (Wilson I., 'Strategic Planning isn't dead - It Changed', Long Rang Planning, V27, No 4, 1994)

(38) Strategy developed by managers can have very little impact if implemented through an organisation's existing systems and structures (for reasons outlined). This can be overcome by the use of a program and project oriented approach. (Pellegrinelli S and Bowman C. 'Implementing Strategy through Projects', Long Range Planning, V27, N4, 1994)

(39) It is often impossible to imagine the future - eg to foresee the effect of technological changes. Managers who do try to do so are however better placed than those who don't. Scenario planning is a disciplined method to imagine possible futures. Shell has used it since 1970s, and been better in forecasts than its competition. Traditional plans ignore uncertainties about the environment. Scenario approach takes account of such factors, but simplifies it. This makes it possible to consider otherwise impossible aspects. Process for developing scenarios involves: define scope; identify stakeholders; identify basic trends; identify key uncertainties; construct initial scenario themes; check for consistency / plausibility; develop learning scenarios; identify research needs to refine; develop quantitative models; and evolve to decision scenarios (Schoemaker P., 'Scenario Planning: A Tool for Strategic Thinking', Sloan Management Review, Winter 1995)

(40) Strategic planning is means to position organisation to achieve specific ends. It assumes that those in control can determine the direction of an organisation. Powers to do so are often constrained in government (by regulation), and goals are to maximise output within budget - not to make profits. However private sector models for strategic planning have been made to fit the public sector. It is necessary for strategic logic to fit the culture of an organisation - which requires a particular set of factors in the public sector (eg reflecting external determination of goals, comparators rather than competitors, and lack of profit motive). Strategic development starts with determining mission statement - in government this will be a given - implicit in the organisation's very existence and structure. To state this mission requires a study of the macro-environment, not just the environment of the organisation itself. Mission can be stated in terms of: purpose organisation exists; vision (future state of organisation); strategy (operating rationale of organisation); values; and standards. Then need to identify operating environment - services demanded; and others providing similar services. Internal factors (how meeting demands) need then be assessed. Culture of the organisation then needs to be considered. Generic strategy must be decided (either cost effectiveness or service enhancement). Targets - based on comparative organisation rather than competitors should be selected to evaluate performance. (Wilkinson G., and Monkhouse E., 'Strategic Planning in Public Sector Organisations', Executive Development, V7, N6, 1996)

(41) Public sector experience with reforms based generally on the private sector have not usually been successful. The Public Accounts Committee proposed an approach to strategic planning in the public sector (similar to the 1979 Canadian Royal Commission on Financial Management and Accountability). Accountable management requires that the permanent head be responsible for administration of the Audit Act. A major problem is that senior management's focus on policy rather than administration or operations. And good policy is an excuse for poor administration. Strategic planning is one of two polar opposites in public sector management - the other being incrementalism. Neither approach is adequate. Incrementalism has obvious limits, yet rational planning encounters problems of political constraints. If one ignores politics, then one merely raises hopes unnecessarily - and makes administration seem worse than it is. Public and private sectors are similar with respect to outputs, but government is much more complex and politically constrained with respect to inputs. (Connelly, 'Planning for Change' in Webb G. 'Strategic Planning and Review of Government Operations', New Developments in Public Sector Management 4: ANU 1982)

(42) There is a distinction between strategy and planning. Every organisation has a strategy even if there is no planning process. In the private sector the planning process has little to do with strategic decisions. There has been a shift over the past 15 years from an emphasis on corporate policy to strategy. It is often said that strategy / goal setting and performance measurement are harder in the public sector than in the private, because of the multiplicity of stakeholders. Also the set of goals is more numerous and more diffuse. The literature on private sector strategic planning is unrealistic. It always involves a rational approach which starts with defining objectives, analysis of the situation, forecast of the future, analysis of capacity of an organisation now and in future, generation of alternative courses, testing, and selection. Most organisations take the view that it is too costly to explore all options, or explore the environment too widely - because on the basis of experience they can reasonably narrow the field. Organisations have unstated assumptions about the world, which are not questioned, which they socialise new recruits to accept - and expect senior managers to adhere to. Some firms value innovation - others take the view that high volume, low cost approach is best. Many strategy options are rejected as inconsistent with organisational culture. Boston Consulting devised a strategy concept in 1968 based on the experience curve - ie that the more experience a firm had the more it could reduce the cost of a product (thus persistent oligopoly would be normal in an industry). However managers can improve short term profitability by reducing market share. Thus management control only in terms of a single profitability objective is damaging to long term prospects. This makes it much harder to specify goals and measure performance - ie market share must be valued not just profitability. This must then be related to a firm's position in the market, and to market growth rate - which can affect cash flow. Thus specifying goals and time horizons is very difficult. Furthermore, because of product life cycle - firms must eventually diversify into new sectors. Strategic planning is important in business mainly as a means to articulate the culture of an organisation, to gain support for the strategy which the chief executive wants to follow anyway, and to educate line managers. Firms who have been in strategic planning for any time, have no large planning staff, and force the task back onto line managers (to get away from the ritualistic element in strategic planning, and get commitment). (Davis, 'Conceptual issues in Strategic Planning', in Webb G. 'Strategic Planning and Review of Government Operations', New Developments in Public Sector Management 4: ANU 1982)

(43) Strategic planning is a process by which management recognises and responds to changes in the company's internal and external environment so that resources are directed appropriately to achieve corporate goals and purposes. Good strategic planning involves: an emphasis on process not just product; clear identification of corporate purpose and goals; understanding of capabilities in relation to the environment; priority issues; strategies and action programs - with resourcing. Planning requires CEO commitment. It is line managers' task - and is required at all levels. Planning officer's job is to help line managers. There is no central planning department. Participation is encouraged for commitment / communication. Qualitative aspects are more important than the quantitative. Forecasts and budgets are to reflect strategies. Efforts are needed to link strategic and operational plans; and plans / budgets / forecasts. Benefits are: sense of direction; encourages strategic thinking; facilitates development; communication / commitment; and an outward view. It takes time, and participative style can be hard for autocratic managers. Lessons are: many years required to get the system right; go slowly; keep it simple; use expert facilitators; focus on process, not just on product. (Locke, 'Private Approach to Strategic Planning - What Lessons can the Public Sector Learn?' in Webb G. 'Strategic Planning and Review of Government Operations', New Developments in Public Sector Management 4: ANU 1982'

(44) There can be strong elements of strategy in the public sector - despite views to the contrary. There must be an opportunistic element in strategic thinking in the public sector (and this is increasingly being accepted in the private sector as well). Political survival of government is the key element in strategy. There is no point in trying to achieve strategies at a whole of government level - but best to encourage a creative level of strategic planning in each policy area. Strategic planning in the public service should be directed to: creating capabilities to deal with realities of political directions; responding flexibly to changes in priorities; organising different kinds of functions differently; defining the limits of effective public sector activity (strategic planning is not the same as detailed long range planning); improving management quality; and developing managerial philosophy. Strategic planning requires: foresight; determination and grasping of opportunity. (Carlton, 'New Approaches to Strategic Planning in the Public Sector', in Webb G. 'Strategic Planning and Review of Government Operations', New Developments in Public Sector Management 4: ANU 1982)

(45) Strategic management (SM) is a process of identifying, choosing and implementing the most effective means of ensuring long term compatibility between the long term skills and resources of an organisation, and the environment in which it operates. It is the means for implementing a strategic plan. SM is directed to both efficiency (related to internal arrangements - which ensure doing the thing right) and effectiveness (doing what is right in terms of the environment). SM is mostly concerned with effectiveness (ie with creating the right capabilities internally in relation to the environment). Emphasis on efficiency without effectiveness (ie without response to the need for fuel efficiency) seriously damaged the US motor industry in the 1970s. SM is concerned with long term; and with senior management decisions. Strategy can exist at three levels: corporate strategy (what business an organisation is in); competitive strategy (how to compete in that activity); and operational strategy. SM requires broad knowledge of organisation. Processes involved in strategic management are iterative, not linear. It requires three processes - strategic analysis (gathering information about strategic positioning - ie about the environment and internal skills / resources); strategic choice (brainstorming, SWOT - but only when data is available); and implementation (via budgeting, re-organisation, or new operational / administrative systems). Mission statement precedes and guides this process. In the public sector strategic processes provide improved means for dealing with change - which is important given high rate of change they face. Issues arising uniquely in public sector are: there is seldom a close link between performance and budget (thus often emphasise efficiency, not effectiveness); resources are obtained from high level lobbying (thus reducing lower level involvement); functions prescribed in legislation prevent innovation; and political agenda prevents efficiency and effectiveness. Advantages of strategic management are: providing a concept of what an organisation is trying to achieve; identifying relevant aspects of environment; creating organisational unity; providing basis for resource allocation; and enabling pro-activity. How strategic management is undertaken depends on the actual environment an organisation faces. The need for it derives from environmental turbulence. Different products need to be managed differently at different times in their life cycle. Strategic management can involve either: formal strategic planning (which is appropriate for organisations requiring major strategic re-orientations); or incremental strategic planning (appropriate for large complex organisations where strategic planning is cumbersome - and produces paper not strategies). Strategic management can be autocratic or collaborative. Strategic thinking is a mental pattern for dealing with strategic issues. It is more important that this be developed in organisation than that they have a strategic plan (because strategic planning by specialists may be divorced from mainstream decision making; generate no ownership; and be based on dubious information). Strategic thinking is developed by encouraging employees to see the big picture; or to think about issues relevant - but external - to the organisation (whilst understanding the resources available to them). Goal is to take these notions of mission, environment, resources and turn them into an action plan. (Viljoen J. Strategic Management: How to Analyse, Choose and Implement Corporate Strategies, 1991)

(46) Strategic planning (scanning environment, evaluating organisation's purpose, identifying critical success factors) is crucial to success. Yet often organisations make decisions, allocate resources without doing so. Strategic planning started in the military, and moved into US corporations in the 1950s. Strategic planning meshes with the whole process for management, and needs to be understood by all managers. Strategic planning involves establishing the major directions of organisation. A one time, all encompassing, strategic plan is impossible in the public sector because of the political process. Strategic planning can be rational and comprehensive, or an incremental response to issues as they arise. Strategic planning must be linked to a strong budgeting system, and provide a link between comprehensive plans and annual budgets. Organisations must constantly deal with change - which organisational development emerged to deal with. Organisational development requires systematic analysis, strategic thinking, intrapreneurial mobilisation of resources. Organisational development was originally managed by human resource specialists, but now by managers. Planning involves actions now to reach tomorrow's objectives. It is deciding in advance what to do. Strategic planning provides management with a framework to make decisions about an organisation. Some persons consider strategic planning as strategic thinking - expanding a person's perspective. Strategic management can be considered as an overall management process, in which strategic planning is a part - or as a means for implementing strategic plan. Key elements in strategic plan are: environmental scan, mission statement, set of strategies, objectives for each strategy, tactics for meeting objectives, and controls (measures of progress) (Mercer J., Strategic Planning for Public Managers, 1991)

(47) Rapid change has replaced stability for the public sector. In the past, changes merely required increased services. Now there can be major changes in services, how they are financed and managed. Planning based on projecting past trends is not enough. Officials are typically concerned with the present and reactive to change - but now need pro-active approach. Forces of change are: political; demographic shifts; urban patterns; technological changes; an economic factors. Strategic planning must be applied to government as means to respond to such changes. (Kemp R. 'The Need for Strategic Planning in the Public and Non-profit Sector', The Practising Manager, Winter 1990)

(48) 10 factors are key to success in strategic management (based on Cain Government's experience with 1980s economic strategy): top level commitment; clear objectives; clear means to obtain objectives; action fronts; communication and consultation; establishing a core team; establishing lead players for new policies; implementation; gingering up the process; and radical review of progress. (Wilson P., 'Strategic Planning in the Public Sector', The Practising Manager, Winter 1990) [Note that this describes 'success' criteria for a process which many might believe not to have been successful].

(49) Strategic management is the process whereby organisations make decisions about a complex changing environment. It involves making and implementing decisions. Mission is present and future business activities - which is needed to make sure things fit together. Long and short range objectives are targets in achieving the mission. Strategic decisions are made at all levels - normally with top managers determining corporate philosophy, mission etc and each business unit undertaking its own strategic planning. Objective setting involves: environmental scanning, competitor analysis, and internal organisational analysis - followed by setting objectives. Strategy selection involves: identifying and evaluating alternatives. Implementation involves: matching strategy and organisational structure; defining functional strategies, budgeting, leadership and motivation; and establishing strategic control systems (Byars L., Strategic Management - Planning and Implementation, Harper, 1987)

(50) Information systems strategic planning is an essential to an organisation's operations, and must be related to business strategic planning which orients the organisation to cope with change in its environment. (Gillenson M. And Goldberg R., Strategic Planning, Systems Analysis and Database Design, 1984)

(51) Starting in 1950s strategic problem emerged because of the mismatch between firms' products and marketplace demand. Strategic planning - to identify and implement change - was seen as the answer. However problem now appears much different, due to better understanding of the nature of this mismatch. However strategic planning is only part of the solution - because it focused on external linkages while assuming internal arrangements stay unchanged. Strategic management is a term applied to deal with the whole problem. Strategic problem is difficult as new real-world problems are constantly emerging. Strategic planning has shifted from dealing with partial deficiencies, to having to create a new organisation. (Ansoff H etal, From Strategic Planning to Strategic Management, 1976)

(52) Frogs are adaptable creatures - and will stay in water as it boils - never jumping out. Strategic planning is essential. Change is constant (eg due to technology), and increasingly discontinuous. To deal with this, must have persons who are both leaders and managers. Strategic decisions deal with what an organisation will do; tactical decisions with how to do it. Keys for strategic success are: base decisions on value; make mission clear; sound a rallying cry; persevere; empower all the people; promote and reward risk taking; encourage innovation; monitor and manage; and maintain market focus. Strategic planning involves organisational self examination, and making difficult choices. It is quite different to long range planning which extrapolates current business trends. It requires not just thinking about services provided, but about customers needs - and changing when those needs change. (Pfeiffer W etal, 'Shaping Strategic Planning', 1989)

(53) Turbulent change has increased for public organisations. Strategic planning can help such organisations think and act strategically. It is a method to produce decisions and actions which shape what an organisation is, what it does, and why it does it. When strategic planning deals with functions which cross organisational boundaries, most key stakeholders are outsiders - an it is much harder to get coherent decisions. Strategic planning differs from long range planning because: strategic planning focuses on resolving issues - while long range planning focuses on objectives and budgets; strategic planning deals with environmental change - where long range planning assumes the environment is fixed; SP generates visions; and SP is more action oriented. Several different corporate approaches to strategic planning exist of which first three deal with process: Harvard policy model (seeks best fit between an organisation and its environment, is best used at business unit level, involves SWOT analysis); strategic planning systems (concerns how managers go about making important decisions); and stakeholder management approaches (involves building relationships with stakeholders). Three other approaches deal with what strategy should be: portfolio model (managing the risks and returns of diverse activities); competitive analysis (Porter model); and strategic issue management (rather than full strategic planning every year - which involves a lot of energy - simply deal with strategic issues). The latter can be applicable to government. It can be seen as strategic negotiation (ie to place it in a political context). Logical incrementalism is a method which addresses linked group of decisions handled logically and separately. Strategic planning can be seen as creating a framework for innovation - avoiding the risk of comprehensive strategies which drive out creativity - by creating mechanisms which encourage creativity and entrepreneurship. A successful strategic planning process in government will involve: initiating and agreeing on strategic planning process; identifying organisational mandates; clarifying missions and goals; assessing external environment; assessing internal environment; identifying strategic issues; formulating strategies to manage issues; and establishing a vision for the future.( Bryson J. Strategic Planning for Public and Non-profit Organisations: A Guide to Strengthening and Sustaining Organisational Achievement, 1988)

(54) Corporate strategic planning emerged in the 1960s because of the increased complexity organisations faced. However in the 1970s it was realised that strategic planning did not guarantee success, and learning from experience grew. Characteristics of successful strategic planning systems are: general manager ownership; orientation to allowing line managers (not planning staff) make important decisions); helping organise line managers to work together to make decisions; it is unique to (and designed to suit) organisation in which it operates; and it is continuously changing. (Lorange P etal Strategic Planning Systems, 1977)

(55) Conventional strategic management is seen as separate type of management concerned with longer term, big issues. Formulating strategy means: determining missions; determining goals and objectives; defining a broad course of action on the basis of anticipated changes in the market place - so as to adapt capability to those requirements. Formal processes, portfolio analysis, SWOT analysis, and separate corporate plans by business units are used with corporate HQ balancing. Many (entrepreneurially oriented) individuals object to this systematic approach - which has swept over them for 15 years. Though flexibility has been introduced in long range planning, the conceptual approach is intact. However conventional strategic planning with its mission statements, and flimsy strategic plans is unrealistic, impractical and static. It proposes better ways of deploying the abilities of its management team - whereas the real challenge of strategic management is to handle the unknowable. The time taken to prepare strategic plans which change in a few months is wasted - and diverts attention from real issues. It raises important issues, if used flexibly - but as a means for control, and managing change it is quite inappropriate - because it assumes that the future can be understood in terms of past experience which is very dangerous in a situation of real uncertainty. Successful firms do not use long term plans in dynamic situations, but rather focus organisational attention on issues at many levels, make experimental responses, and then back successful experiments. They control by trial and error, not by grand design. Innovative, entrepreneurial game playing is not an alternative to strategic planning, but the only viable option in uncertain situations. Firms which try to use strategic planning to respond to change in such situations, are ultimately less flexible. Conclusions are: strategic management is not a separate type of management; strategy is not a hierarchy of grand designs but a consequence of the way challenges are created for organisation, and successful initiatives supported; the processes required are primarily intuitive and political rather than analytical and formal; successful strategic management does not require long term plans, but the fitness and flexibility to respond to dynamic changes in uncertain environments; this requires effective, quantified short term control systems, and political sub-systems which encourage intuitive innovation; and corporate and business unit strategy can not be separated. Conventional strategic management fosters ritualistic behaviour - which produce plans lacking credibility with great effort. (Stacey R. Dynamic Strategy Management for the 1990s: Balancing Opportunism and Business Planning, 1990)

Strategic management (of a complex of business units) is increasingly important. Extensive research has occurred since 1980, and needs to be reviewed. (Fredrickson J., (ed) Perspectives on Strategic Management, 1990)

(56) Strategic management is concerned with actions which enhance the value of businesses. It concerns issues such as: the source of economic rents a firm can capture; limits to size for innovation; benefits of contracting or internal performance; effect of corporate coherence; what capabilities matter; can knowledge assets be managed strategically; what is a business; do firms / industries evolve predicably; what are the best strategic decision methods; and what is needed for clever strategies. Pre-analytical era (until 1970) focused on business policy - which evolved at the Harvard Business School - and involved the role of the general manager, leadership and top down view. Economic analysis was ignored. 1970s were 'golden age' of strategic planning - emphasising portfolio analysis and the experience curve - and the rise of staff strategic planning. Porter's analysis revolutionised the field from 1980 - because the learning curve (from Boston Consulting) had been overused. Analytical techniques declined. Strategic management's main goal is economic rents. Economics has contributed in various ways - as field is not monolithic theory. Different schools deal with production and exchange and make various assumptions about rationality.

Neo-classical microeconomics which is the main basis of academic economics provides a price and production theory in simplified markets - but it is useless to managers because its abstraction caricature reality (eg it treats know-how as given, rather than needing innovation; its analysis is static - where managers deal with a dynamic situation; its focus is on equilibrium - which is fictitious; its theory of the firm is limited to production theory; the role of entrepreneurship in handling change is ignored; markets are stylised; rationality is assumed; and often unrealistic assumptions are made of rising short run marginal costs (because this is needed to reach any conclusions).

Porter demonstrated the relevance of industrial economics (structural theories) in 1980s - by demonstrating relevance of: internal structure; competitors; suppliers; buyers; and substitutes. The method is useful for business units, but not for corporate strategy. Corporate strategy requires an ability to deal with issues such as diversification and horizontal integration.

Different approaches to relationships (eg contracting etc) can be dealt with by transaction cost analysis - which starts with the assumption that contractual relationships are costless, and then demonstrates hazards of contracting. To be more useful this theory needs to be linked to a theory of knowledge (how organisations learn) and production.

Evolutionary economics is an emerging school which has technological change at its core. It focuses on how patterns are maintained in time in the face of change. It has not been applied to strategic management - yet potential exists to do so because of the centrality of technology, recognition of innovation and learning; and concern for dynamic change which is what strategic management is about. Schumpter developed elements of evolutionary economics in the 1930s, which challenged the static approach of neo-classical economics. Key concepts in evolutionary economics of relevance to strategic management include: technological regimes (rather than individual innovations); path dependencies (ie constrained prospects for change); selection (whether the environment is very demanding); technological opportunities; appropriability (intellectual property); and dominant designs (small factors lock in advantages).

Organisational economics sees firms in terms of learning, path dependencies, selection and transaction costs. Core business depend on knowledge base - and best new areas to explore for new opportunities depend on areas of past success.

Recent comparisons of Western and Japanese methods have shown that: strategic process tends to work better in Japanese enterprises; and that processes used in Japanese enterprises are parallel not serial. US companies develop and organise resources after elaborate analysis - where Japanese companies emphasise continuous resource accumulation with a view to survival under any environmental change. (Teece D. 'Contributions and Impediments of Economic Analysis to the Study of Strategic Management' in Fredrickson J., (ed) Perspectives on Strategic Management, 1990)

(57) There are 10 schools of thought on strategy formulation which each deal with one aspect of the overall process. Three refer to how strategy ought to be formed: design school (1960s - a conceptual process); planning school (1960-70s - a formal process); positioning school (more recently - selection of strategic positions). Another six schools focus on specific aspects of the strategy process: entrepreneurial (strategy from vision of leader); cognitive school (related - attempts to see inside a strategist's mind); learning school (strategies are too complex to develop as clear plans - thus must emerge as an organisation learns); political school (strategy evolves from exploiting power); culture school (process is rooted in culture - thus collective / cooperative); environmental school (which sees strategy as passive, and power resides in the environment). Final configuration school sees different elements of strategies as stages in organisational history.

Design school (conceptual process) is particularly associated with Harvard Business School, and with methods (like SWOT) to match a firm's capabilities with its environment. Underlying assumptions were: strategy should be a controlled / conscious process; CEO is responsible; simple process; unique answer; strategies comprehensive; need strategies to be explicit; and implementation follows design. Critique is that: this process not always appropriate; can't completely separate thinking and implementation; and structure must correspond to strategy, but not necessarily follow it. Method only works for simple organisations, in stable environments.

Planning school (formal process) originated from Corporate Strategy (Ansoff, 1965), dominated in the 1970s, but is no longer significant. The planning school promulgated a single idea, warned of the dangers of not planning, but did not research what happened in practice. It took the basic approach of the design school, but prescribed mechanical processes to achieve it. It assumed innovation could be institutionalised. Planners became the major players in the process - with greater emphasis on scheduling, programming and budgeting than on the strategy itself. It was assumed that budgets, objectives, strategies and programs could be in a single process. In reality there was great gap between accountability issues (budget / objectives) and action (ad hoc strategies / programs). Failures of the planning process have been documented. Wildarvsky described the government equivalent (PPBS) as universally failing (The Politics of the Budgeting Process, 1974). Defects were always blamed on a lack of top management support, without asking why. One problem is the loss of commitment for strategic management (by lower and senior managers - who are excluded by planners). People's commitment can be more important to success than the direction chosen. Planning is supposed to be about responding to turbulent environments, but in practice it sets directions rather than encouraging change. Planning is conducted within existing strategy / structures, and preserves them, rather than encouraging change. Core difficulties in the planning approach are: impossibility of forecasting discontinuities; impossibility of separating planning from practice (because of the lack of data); and the impossibility of producing novel strategies from formal process. Strategy is an integrating concept - finding a new sense of direction - which can not result from analysis. Planners can usefully input data, and act as catalysts, and translate strategies into routine plans and budgets. There is a need for a distinction between strategic change, and strategic programming.

Positioning School (an analytical process) emerged from Porter's work in 1980, Competitive Strategy, and added specific content to strategy (rather than concern for process). This swept away the design and planning schools. Approach concentrated more on structure (of industry) than it did on a firm's conduct. Older versions of positioning strategy include Sun Tzu's military strategy (400 BC) - which looked at types of strategy best suited for particular contexts. In the 1960s and 1970s Boston Consulting Group had suggested positioning strategies (based on accumulation of production experience by securing market share). In the positioning approach, strategy forming remained a controlled, conscious thought process (often highly formalised) which preceded implementation. It focused on strategic positioning - and strategy was produced by analysts rather than planners. Critique emerges: because it separates thinking and acting; and (as above) from problems of discontinuities / lack of data / and the impossibility of synthesis from analysis. Problems facing the positioning school include; orientation only to economic (thus missing implications of social and of non-quantifiable economic trends - thus biasing strategies towards areas with hard data (eg cost minimisation) - which may not be the most effective); politics is ignored (which is a major oversight where profit depends on market power - and it is not only competitive economics which can be used to gain market power); context is narrow (only relevant to big business, and to established stable situations); strategy is based on calculation (which impedes learning / commitment), rather than on getting out to learn; and limiting options to generic strategies (where success often comes from doing something completely new). Strategic analysis is a useful input to strategy development (but not part of it). Doing this increased the effective influence of planners (as plans had never worked). However such analysis can not be allowed to dominate (because soft data is as important as hard data, and an integrated perspective is important).

Entrepreneurial school (visionary process) differs from the design school in building on the personality of a leader - not just on their ideas (as in the design school). It focuses on intuition, judgement, wisdom, experience, and insight which leads to a sense of direction / vision. This school is also based on economics (where entrepreneurs have key leadership roles - though mainstream economics which dealt with 'markets' did not discuss them), but it involved person who could make choices. Analysis of entrepreneurship involves their role in; new combinations of things, doing things differently; and handling of uncertainty / risk. Interest has increased in 'strategic vision' and internal entrepreneurship. Problem is that it is not obvious how constructive vision develops, or how it can at times become destructive. Entrepreneurial approach is most useful for start-ups, turn-around, and small enterprises.

Cognitive School (a mental process) deals with aspects of cognitive psychology which contribute to strategy formation: perception (limitations to rationality, distortions in dealing with complexity, and occasional integration of complexity to achieve new cognition); concept attainment (mapping, tacit knowledge); re-conception (problems of blockages to new ideas); and cognitive styles. This approach has not got far, but reminds us than 'funny' things happen in forming strategy. It deals only with individuals, where strategy often emerges from groups

Learning School (an emergent process) argues cognitive problems in developing strategy make design, planning and positioning schools dangerously simplified. Strategy must develop over time, rather than by analysis. Strategies emerge as organisations converge on patterns of behaviour that work. Lindbloom's 'Science of Muddling through' (1959) initiated this school - by describing the process for dealing with situations which are too complicated - which involved 'disjointed incrementalism' - but was not necessarily strategic. The idea of logical incrementalism emerged in the 1980s - which involved managers guiding streams of incremental actions towards conscious strategies. This may be either a means for developing strategy, or for implementing an existing strategy. Another concept involved strategic initiatives, which emerge lower in organisation, and are then championed by the middle level to seek top level support. Deliberate strategies (the only ones recognised by prescriptive schools) can be distinguished from emergent strategies (which involve organisational experimentation). Emergent strategy can be orchestrated by a clandestine player - or by a collective. It produces un-intended order. Theories of learning suggest organisations do things, find what works and make sense of it later (which is the reverse of the three prescriptive schools). The interplay between thought and action is central to the learning school. Key assumptions are; environment is too complex for deliberate strategy making - so it must emerge over time; mostly it is whole organisation (not just leader) who learns; learning follows from making sense of a behaviour that worked; leaders role is to manage the process - not pre-conceive; and strategies appear as patterns in past before becoming deliberate patterns for future. The risk with this approach is of being purposeless - of not converging on anything. Collective learning is a cumbersome way to deal with some changes - and can be expensive. Contribution of this approach is that it works when visionaries not available, or the situation is too complex / novel.

Political School (a power process) can emerge from (say) positioning school by making slight changes. Politics can be internal to an organisation, or used by the organisation externally. This school assumes that: strategy forming is power process and based on formed positions rather than on perspectives; there is no internal dominant political actor; and that internal politics increases with internal change. The implication is that an organisation is driven by parochial, rather than common, interest. This approach is partially correct - ie not every aspect of a strategy is political - but this cannot be ignored.

Cultural School (an ideological process) deals with the opposite to parochial political interest - ie the view is that strategy reflects common interests. While politics seeks to promote change, culture seeks to resist it. Culture became important in the 1980s, because of Japanese success based on organisational culture and ideology. Culture is an established pattern of beliefs shared by members of an organisation - which is organisation's mind. Ideology is a strong set of beliefs. Cultural school assumes: strategy is formed from collective beliefs; thus strategy is a perspective, rooted in intentions; coordination and control are normative, based on shared beliefs; thus organisation appears pro-active (compared with its environment); and culture does not encourage strategic change - but perpetuates an existing strategy. A Swedish school developed in this area in the 1970s, but culture was not emphasised in Anglo-Saxon world before the 1980s - when Japanese cultures began to receive attention. The relationship between culture and strategic change was considered - which went beyond culture as an element in resistance to change. Problems with this school include: vagueness of this approach; sometimes promoting stagnation. It is most applicable to organisations with strong ideologies.

Environmental School (a passive process) focuses on forces outside the organisation (rather than on planners / managers) as the source of strategy. This approach balances the environment, along with leaders and organisational arrangements, as central to strategy development. From this viewpoint, the positioning approach involves determinism pretending to be voluntarism. It was assumed that external conditions force organisations into a strategy. This school is based on natural selection theories. It denies that changes occur because of adaptation or learning. Viewed as populations, firms are subjected to natural selection - eg few firms existing 200 years ago still exist. Critiques of the school deal with the ability of species to adapt through internal change, and to make decisions. Fruit flies respect the laws of natural selection from a distance - but, up close, make decisions. While organisations can make linkages with others to reduce selection pressures, eventually the entire system fails (ie the process of natural selection is lifted to a higher level). Examples exist of organisations which have made significant strategic choices.

Configurational school (an episodic process) sees each approach being used at appropriate time

(Mintzberg H. 'Strategy Formation - Schools of Thought' in Fredrickson J., (ed) Perspectives on Strategic Management, 1990)

(58) The last time the Japanese chemical industry did well was in 1988 and 1989. According to an American analyst at an international securities firm in Tokyo, Japan's chemical producers have too broad product lines, weak R&D, and ridiculously large overheads. Financial outlays to support administrative expenses that might represent a bit over 5% of total sales in US chemical firms are commonly 20% in Japan. And Japan's chemical firms are moving too slowly in rationalising their product mix. Yet even if Japan's chemical firms were to become successful at cutting overheads, improving R&D, and rationalising product lines, they would remain almost powerless to improve the negative odds associated with operating in Japan. (Tremblay, J, 'Japan Inc.--Red or black?' Chemical & Engineering News V74 N40 Sep 30, 1996 p: 18-19+)

(59) It has been argued that the essence of strategy lies in creating tomorrow's competitive advantages faster than competitors can mimic the ones possessed today. If this is true, then the essence of strategy must lie in building an infrastructure for consistent innovation. For decades, bloated companies like IMB, AT&T and Sears could coast along, relying on their sheer mass and market muscle to achieve steady, if unspectacular, profits. Innovation was not a competitive necessity. Today, however, with competition coming from a dizzying range of unanticipated sources, a steady-as-she-goes business strategy has become a recipe for oblivion. Companies must innovate continuously to have any hope of survival, let alone dominance. Companies that have achieved a culture of innovation include 3M, Silicon Graphics, Canon and Honda. (Kiernan, M, 'Get Innovative or Get Dead', Business Quarterly V61 N1 Autumn 1996 p: 51-58)

(60) Criticism of strategic planning is widespread. Its essentially 'programmic' nature is said to be at fault (by Mintzberg) - because its focus on analysis / quantification leads to inflexibility and an inability to predict crucial market shifts or to encourage timely adaptation. Its linear systems are responsible for long time lags, and the myopic short term financial orientation of senior managers. Hamel and Prahlad point out that strategic planning fails to take account of creative processes and discoveries that generate breakthroughs. It is said to stifle creativity and eliminate true vision and synthesis. Rational analysis either repeats the past, or copies activities of others. Attempts to institutionalise innovation stifles self renewal. Strategic planning is also criticised for usurping the role in direction setting of middle managers who know the situation well. Traditional concepts of strategic planning are inappropriate for rapid change today. However organisations need a sense of focus / direction. Traditional planning involved hierarchical values, linear systems, elite planning function, vertical / time bound processes producing formal document. Implementation was considered separate. Planning (by the CEO) was separate from doing. Things were always 'on hold' waiting for the strategy to be announced. There was a clear distinction between strategy and tactics; and between strategic and operational plans. Operational plans were supposed to be based on strategic plans, but only did so nominally. Eventually it was realised that a sense of ownership amongst those to carry out the plan was needed - but this resulted only in meetings for consultation - not in changes to the process. This worked while the environment was stable - and when most changes were obvious to top managers. This stability has now gone. Planning depended on the future being certain and an orderly extension of the present. Insights of those on the front lines are now vital to detecting changes. As a result, vertical pathways and linear planning processes are breaking down. More emphasis is given to the planning process, than to the finished document - in fact the 'plan' document is now often regarded as the starting point. This is partly due to the growing importance of knowledge workers - but more due to environmental change. New processes for planning by internal teams, often extend to involving customers. As participation increases, the strategy process becomes more evolutionary. Bottom up planning is becoming the norm in the 1990s. Advantages of evolutionary approaches to strategy making are: customer focus; flexibility and responsiveness; holding valuable professionals; and optimising use of customer time. Low level tactics become key ingredients of strategy (eg pursuing options which lacked top level support, creates key strategic opportunities when the situation changes). Means for gaining and holding competitive advantage are shrinking - where once product quality and customer services were distinctive advantages - they are now essential. Evolutionary / participate approach to strategy forming is being used in a search for new sources of competitive advantage. (Wall S J and S R., 'The Evolution (not the Death) of Strategy', Organisational Dynamics, Autumn 1995)

(61) Pursuing incrementalism, while other re-invent industries, is not good enough. Industries have leaders who create industry orthodoxy, and others who follow. The situation is now hostile to established industrial oligarchy due to deregulation, technological change, globalisation and social change. To survive, strategy must become revolution. 10 principles for revolutionary strategies are: (a) strategic planning isn't strategic. It tends to: be ritualistic (calendar driven); based on simple rules; work from present to the future (not backwards); assume the future to be like the past; mobilise only small part of an organisation's creative potential; and require little intellectual effort. Planning is only about programming, not about strategising / discovering strategies. (b) strategy making must be subversive (ie seeking new enlightenment - which the establishment sees as subversive). This can be done by considering basic existing beliefs - and seeing what happens when one relaxes them. (c) bottleneck is at the top of the bottle (because of accumulated knowledge of / commitment to the past). (d) there are revolutionaries in every organisation (e) change is not a problem if people are involved in causing it (f) strategy making must be democratic - because it is impossible to know who has the key idea. There is a particular need to involve newcomers (g) anyone can be strategy analyst - traditionally change has not come from the top (h) perspective is important - looking at the world a new way helps - eg seeing a corporation as bundle of core competencies rather than as a collection of business units. (i) top-down / bottom-up are not alternatives. But while ideas do not have to originate at top, they do need to be understood at top. Top down gives unity of purpose / bottom-up gives diversity of views. (j) you can't see the end from the beginning - ie conclusions will be surprising when look into discontinuities (Hamel G., 'Strategy as Revolution', Harvard Business Review, July Aug 1996)

(62) 'New public administration' concepts started in the 1970s - with an increased emphasis on social equity; efficiency / economy / coordinated management; responsiveness to the needs of citizens. Reasons for changes to public sector philosophy include: reduced fiscal sources; and increased services demands. Private sector techniques - such as strategic management - may aid the public sector in doing this - by creating a framework for resource allocation, performance evaluation, resolving conflicts, and gaining support. This can introduce rational / technical process in an otherwise political process. Strategic management is broader than strategic planning - by including strategic thinking. It seeks immediate actions which also address long term requirements. Strategic management seeks to bring an organisation's capabilities into alignment with its environment. Public sector's main focus is service delivery. Many agencies now need to gain Ministerial approval of their strategic plans, which set performance criteria for organisations and managers. Service consumers are the main stakeholders - but others are important. Strategic issue management involves responding to emerging issues - of which: focusing attention is the first stage; followed by assessment; then feasibility study. Public sector stakeholders are political - thus political / economic / legal issues dominate over markets. Stakeholders are not the same for each issue. A stakeholder matrix can classify stakeholders in terms of their level of interest, and power. For governments' response to customers - marketing is increasingly important. Also consultation with customers may be important in assessing the impact of strategic issues on service to customer (in terms of the impact on customers, and the capability to do anything about it). (Perrott B. 'Managing Strategic Issues in the Public Service', Long Range Planning, June 1996)

(63) In most organisations there is no performance measurement system separate from the overall management process. A model for Total Quality based performance management involves - strategy / goal development; process management / measurement; performance appraisal and management; break point performance assessment; and reward / recognition systems. Strategy development involves: developing public mission recognising the needs of all stakeholders; identifing factors critical to achieving the mission (CSFs); defining key performance indicators for each CSF; setting targets for KPI; assigning responsibility for KPI; developing plans to achieve the target performance; deploying mission, CSFs, KPIs to core business processes; managing organisational processes; measuring performance against KPIs; based on this identify areas with potential for improvement; communicating performance enhancement proposals; comparing organisational capability with target; rewarding and recognising superior performance. Strategy development is senior management responsibility - though others should be involved for commitment. Financial performance for external reporting should be seen as the result of non-financial KPIs. A second level of performance measurement is process measurement and management. This requires: identification and modelling of processes; translating goals into process performance measures; etc as for performance targets. Can use some form of balanced scorecard for measuring process performance. Third level is performance appraisal which involves management of individuals - and uses a similar process. Fourth level is break point analysis - similar process. (Sinclair D. etal 'Effective Process Management through Performance Measurement', Business Process Re-Engineering and Management Journal , V1, N3, 1995)

(64) Over the past 20 years many dominant companies were displaced by competitors with fewer resources but greater aspirations. Competitive strategy is a growth industry - but to analyse issues we rely on competitive structure analysis - which points to the 'what' of competitiveness (eg compete on time, be customer led etc). This allows problems to be diagnosed, but not prevented. It allows companies to catch up - but not to lead. For this need to look at 'why' some lead (just as disease prevention requires) looking at genetics. In the corporate world must look at assumptions, the accepted wisdom that frames the understanding of organisations - and what it means to be 'strategic'. This was not needed when all managers came from the same management schools - but is essential now. Competition is now between mind-sets. For managers in large Western firms, being strategic requires 'fit' into the environment; resource allocation; and a long term perspective. But there is a better alternative which involves concept of 'stretch' - which seeks to leverage the use of resources - an attitude which emerges when goals are ambitious relative to available resources. Competition is by encirclement, rather than by confrontation. Rather than more resources, should seek to leverage them (by concentration; accumulating more; complementing resources; conserving; and recovering resources from the market). Risk from ambitious goals can be reduced by acquiring knowledge. (Hamel G and Prahalad C, 'Strategy as Stretch and Leverage', Harvard Business Review, March-April 1993)

(65) Research on individuals links decision outcomes to cognitive processes (eg poor decisions result if one tires to justify previous decisions, or use 'cognitive anchors'). Group decision making process also affects outcomes (eg rationalisation worsens decisions). Managerial choice processes matter because: different processes lead to different choices (despite the strong effect of the environment - with poor choices some make being evidence) ; and different choices produce different outcomes - not all of which are good. Evidence on the link between strategic planning and performance has been criticised - because of uncertainty about the direction of causality, and the effect of the environment. Two techniques - devil's advocacy and dialectic inquiry - have been found to produce better group decisions than consensus - though they do not necessarily show better final outcomes. Comprehensive strategic decision making has been found to negatively affect performance in an unstable industry - but to be positively related to performance in a stable industry. Political behaviour by top managers relates to poor performance. Research shows that strategic decision making process has more effect on outcomes in a stable environment, than in an unstable environment. (Dean J. And Sharfman M. 'Does Decision Process Matter? A Study of Strategic Decision Making Effectiveness', Academy of Management Journal, V39, N2, 1996)

(66) 'Strong leadership can disrupt an orderly planning system and undermine the management hierarchy, while strong management can discourage the risk taking and enthusiasm needed for leadership. But despite this potential conflict, both are necessary if an organisation is to prosper' (Kotter J. - Professor of Leadership at Harvard Business School, undated)

(67) Strategic planning is made both more necessary and harder by turbulent change - such as changes in geopolitics, resources, economics, institutional framework, and attitudes to multinational (MNCs). Corporations are a product of their environment - and as that environment may make free international activity by MNCs more difficult - MNCs must make more effort to understand what their relevant environment is. Planning will need to be much more politically oriented in future, rather than market focused. (Ringbakk K. 'Strategic Planning in a Turbulent International Environment', Long Range Planning, June 1976)

(68) All organisations need to increase productivity - which requires knowing what the future will be like, and what resources are required to survive in that environment. This key strategic planning question, requires a creative approach. However the use of intuitive talent in this has been neglected. Strategic planning can be improved by: finding and properly using intuitive talent; integrating this talent with traditional management; developing intuitive talent; and creating a supportive organisational environment. Intuitive persons are more innovative in strategic planning - ie in telling whether proposals will work in the marketplace. But traditional management drives out this talent (by not encouraging new ideas, resisting unconventional approaches, choosing staff who think like existing managers). Companies have improved their ability to survive in rapid change by training staff in being a catalyst for innovation in strategic planning, and in creative thinking. Process involved are; identification of intuitive staff - and using them for relevant jobs; identification of their opposites - who are not good at generating creative ideas - but are good at critically evaluating the ideas of intuitives. Intuitives produce more proposals for solving problems, than do linear thinkers - but they may not be practical. There is little overlap between the solutions which will be put forward by intuitives and critical thinkers. Best outcome emerges from allowing intuitive thinkers to examine the issue first, followed by critical thinkers. (Agor W. 'Intuition and Strategic Planning', Futurist, Nov-Dec 1989)

(69) When strategic planning emerged in the 1960s, it involved a scientific management style of separating thinking from doing, and specialist strategic planning staffs. This has not worked, but few realise that the problem is that strategic planning is not strategic thinking - and often interferes with it. Successful strategies are visions not plans. Strategic planning as practiced has been only strategic programming - the elaboration of strategies / visions which already exist. The strategy making process requires capturing what managers know from all sources (ie hard and soft data) and synthesising this into a vision of future direction. Strategic planners should not be sacked, but rather involved in new tasks which broaden the consideration of issues - rather than trying to discover right answers. This is needed, because planners typically produce a formalised arrangement. Strategic thinking is about synthesis of information. This cannot be done on schedule. Formal planning depends on preserving / re-arranging existing categories - whereas the ability to invent new ones is needed. The stages used in strategic planning never include synthesis. Planners explain their failures in terms of a lack of management support, but create this problem because of the use of a calculating - rather than a committing - style of management ie they are concerned with goals, not with group member's preferences. Strategic planning is wrongly assumed to be a means for strategy making. This doesn't work because it assumes that: (a) the world holds still for the planner (ie that reliable prediction for some period is possible); (b) that planning can be separated from doing (which misses key point that work processes must be fully understood before they can be programmed - which is not possible as hard data are necessarily out of date, and exclude essential qualitative data). The most effective managers rely on the softest data. Effective strategies often emerge without conscious action by senior management - and need strategists to get their hands dirty. (c) formal systems are better than people in dealing with information overload. They certainly can process more information - but can not comprehend / synthesise it. Planning can not produce strategies, but requires their prior existence. Business unit managers must take full charge of the strategy making process. While planning can not make strategy - it can help their development - especially by posing the right questions. Given a good strategy, planning can program it - which is useful to improve coordination. Planners can also help identify strategies emerging within organisations, and in encouraging (rather than doing) analysis of strategic issues. As catalysts, planners should ensure that strategy making is by line managers - and encourage conventional wisdom to be challenged. Two types of persons operate as strategic planners, analytical thinkers (who seek to create order) and creative thinkers - who seek to open up the strategy process. Both are needed. (Mintzberg H., 'The Fall and Rise of Strategic Planning', Harvard Business Review, Jan-Feb 1994)

(70) Lindbloom (in 'Science of Muddling Through', 1959) argued for 'disjointed incrementalism' (ie comparing limited numbers of alternatives with no attempt at total comprehensiveness). This is the same as Hirschman's view in economics of the superiority of an unbalanced - rather than a balanced approach; and of view that R&D is best with several projects working in different directions, rather than with a single integrated project. The reason for this is that complexity of social system defeats any attempt to optimise the outcome. An unbalanced, disjointed approach is more adapted to human capabilities. The opposite is a planned approach which endeavours to identify variables, build a model, generate alternative strategies, choose the best, and build a control system. The planned approach was used in the USSR economy - with some results but great human and physical cost. Dror points out that the two approaches must be combined. (Lasserre P, 'Planning through Incrementalism', Socio-economic Planning Sciences, V 8, 1974)

(71) 10 years ago Peters ('In Search of Excellence') stressed the need to get back to basics, to get close to customers and to try things without fear of failure. In 1987 this was revised as 'excellent' companies struck problems. He then proposed delegation, delayering, smashing bureaucracy and an emphasis on change. His latest proposals are that listening to customers is not enough - because change is too fast for them to know about. Thus his suggestion is that companies must tear themselves apart - ie rely less on organisation. (Peters T. 'Liberation Management')

(72) A business strategy consists of: product markets in which the business will compete; the level of investment; a sustainable competitive advantage; distinctive competencies / assets relied upon to maintain advantages, to guide decisions about building strategic competencies; functional requirements (ie marketing, manufacturing, service, engineering) to operate in the product markets; the allocation of resources over business units; synergistic effects amongst business units. Generic business strategies include low cost - with pricing to ensure profitable volume / market share; and the highest possible product / service / quality differentiated product - with sufficient margins. Systems for strategy development have evolved from: budgeting control (early 1900s - which controlled deviations on the assumption that the past repeats itself); long range planning (Ansoff associates this with the 1950s - it required anticipating growth and managing complexity - it assumes trends continue. Planning's task is to cope with growth. Strategic planning (in 1960s) concerned strategic thrusts and capabilities. It sought to anticipate discontinuities which require adjustment - which requires in depth understanding of the environment. It usually involved an annual planning arrangement - which was the basis of next year's plans and budgets. Problem was that strategic issues do not only need to be addressed annually - and most changes are precipitated by external events over which managers have no control - and require response through logical incrementalism. Strategic management assumes that the planning cycle is inadequate - ie need decisions outside the planning cycle. This is achieved by contingency planning, issues management, sensitive environmental scanning, strategic flexibility and enhancing the entrepreneurial thrust of the organisation. It is no longer accepted that the environment is given, and that organisations merely need to adapt. There needs to be both a normal period planning process, and techniques to allow organisation to be strategically responsive outside the planning process. Major thrusts of strategic market management are: external market orientation; proactivity (ie to influence, not just react to, environment); concern about getting good information; continuous (not just annual) decision making; an entrepreneurial thrust; multiple strategies; recognising importance of implementation issues; more sophisticated approach to participation in growth markets; recognition of international realities; long term time horizon; reliance on empirical research about strategy; and the use of methods such as portfolio analysis, experience curves, impact analysis, and technological forecasting. Integration of different disciplines (such as marketing, organisational behaviour, finance and accounting, economics, law and strategy) is also involved. (Aacker D. Strategic Market Management, 19??)

(73) Networking is hard to reconcile with traditional theories of strategy based on competition, but networks (eg with suppliers and customers) provide the most important sources of innovation. Networks are in between markets and hierarchies - and involve a complex array of relationships between firms. Competing is achieved by positioning oneself in the network, rather than by attacking the environment. Strategic networks are those a firm can use to position itself for a stronger competitive position. It is a mode of organisation which is not completely dependent, nor related to others only by price. Normally a 'hub' organisation establishes and maintains the network. A network allows a firm to specialise in those areas in the value chain that are essential to its competitive advantage (Jarillo C., 'On Strategic Networks', Strategic Management Journal, V9, 1988)

(74) From the 1940s to the 1960s the Western management approach was based on 'problem solving' - ie if it isn't broke, don't fix it. However the Japanese approach was not to fix what was wrong, but to make things better. This was a different approach, and required Western business to emphasise quality (ie making what was already good better). The German economy has thrived despite high costs - because of its emphasis on creativity. Now organisations realise the need to add creativity to their quality programs (either by devising tools to be used in quality processes, or in parallel). Relevant considerations are that: creativity (ie changing concepts) has little to do with being artistic; the brain is not designed to be creative - but rather to stick to perpetual patterns; both left and right brain functions are needed for creativity; brainstorming is a poor technique for creativity; and there are systematic approaches to creativity. (DeBono E. 'Quality is no Longer Enough', Journal for Quality and Participation, Sept 1991)

(75) US manufacturers have not kept pace with the international competition, and have sought explanations in environmental factors rather than in the way they are managed. Now some have begun to examine how Japanese firms achieved their high levels of competitive success. Traditional approaches were based on mass production - and these are now being replaced by an entirely different approach. Wormack etal in The Machine that Changed the World described the shift from mass production to 'lean production'. Before mass production, specialised craftsmen had operated independently on own aspect of production. Mass production allowed scientific skills to be deployed in creating assembly lines. Lean production involves a different way to view workers, customers and the environment, and a different understanding of how technology improves. Lean production achieves: lower cost, more speed, less labour, higher quality, fewer impacts on health and environment, and an ability to accommodate change. Optimum scale of lean production is that in mass production. Lean production involves: perfection first time; well trained employees who measure their own performance; and suggest ways to improve. The key to this is a new organisational relationship - based on cross functional / cross task teams at all levels, with responsibility sharing and extensive interchange of information. In their external relationships lean production firms focus on customers needs (not on shaping / avoiding them). Suppliers / subcontractors are part of a production team, and brought to new product development early. The key to lean production is organisational, rather than technological. The management of information is the key - and this allows a lean organisation to been better at taking advantage of technological advances. Mass production industrialisation had sought revolutionary technological substitutions, and had used long production runs to lower cost. Labour and functions were highly specialised requiring centralised coordination. Because of the need for coordination, there was little scope for experiments, or changing the assembly line. R&D which had to advance production technology, did not therefore relate well to production. Competition was based on price, which was often achieved by reducing quality. Labour costs were a large part of the production costs, so raising labour productivity was important - by capital / labour substitution. New era industrialisation started about 1960 (accompanying Japan's success, availability of computers, and more discriminating customers). Incremental technological change became favoured. Technologies depended ever more on advanced scientific understanding. Flexible production, short production runs, high product variety, and frequent product changes are characteristic. Extensive networking by individuals is required - coordination is horizontal, rather than top-down. Competition is based on quality not price. Labour costs are only a small factor in production - and the greatest scope for productivity come from adding value to products. Firms engage in webs of strategic alliances, rather than operating independently. Investment is not to minimise changes in share prices, but to maximise the chances of developing new products more rapidly and effectively. Local availability of raw materials is not important, because of miniaturisation and high levels of value adding. (Hill C., 'The New Industrial Revolution', Engineering World, Dec 1991)

(76) The department has sought: a simpler and more purposeful corporate plan; mission and vision statements focused on excellent services; veteran focus, rather than the rigidity of program focused structures; and a national office focused on strategy and policy development. An integrated business planning framework has evolved. Strategic management is the process of identifying, choosing, implementing and evaluating the compatibility between an organisation and its environment. Plans are the formal product, but strategic thinking at all levels is also expected. Process involves: strategic analysis; performance evaluation; resource allocation; and value creation. Purpose of planning is to meet the mission. The process starts with identification with the government of program objectives. The corporate plan specifies business objectives and KRAs - each of which is supported by a policy statement and an implementation plan. Each business objective is surrounded by a statement of strategic intent. Business Unit plans are built around business objectives, and KRAs, policy statements and implementation plans. They are the basis for lower level plans. Corporate plan states why an organisation exists, what it is to achieve, where it is heading and what it will do to get there. Performance evaluation is a process of comparing results with objectives - where gaps show the basis for change. The business planning sequence is designed to integrate parallel activities - strategic and business analysis; performance evaluation and review; resource allocation; and budget package development. The planning sequence is described in detail. (Department of Veteran's Affairs, Vision to Reality: Partners in Planning, October 1996)

(77) In the 1980s companies discovered time as the basis of competitive advantage - but this is just part of far reaching transformation of competition. Firms who compete well on timeliness tend to be good in other ways. Now corporate strategy is based on capabilities. Wal-mart growth relative to KMart demonstrated this potential. The starting point was a focus on customer needs, which led to the concept of cross docking which eliminates warehousing - cutting costs 2-3% and allowing better pricing. Others can't do this because it is hard to manage - and required strategic investments beyond normal return on investment. Wal-mart also has a very fast transport system. Cross-docking required changing the control of purchasing from the corporate level to grass roots - so demand 'pulls' goods, rather than purchasers 'pushing' them. This requires information system allowing stores to learn from the market. It also build personnel with stock ownership and profit sharing. Kmart on other hand used the conventional approach - considering value added at each stage, and subcontracting if functions were cheaper. Kmart also has quality programs, but Walmart emphasised not structure but organisational practices / business processes (ie the infrastructure that supports capabilities). When the economy was static it was possible for strategy to focus on 'what' to compete in, now the key issues is 'how' to compete. Competition is now a 'war of movement' - and the essence of strategy is not structure, but the dynamics of behaviour - is how to identify / develop hard to imitate capabilities that distinguish companies in customer's eyes. Four principles are: business processes, not products and markets, are the building blocks of strategy; success depends on transforming key processes into strategic capabilities that provide superior value; companies create these capabilities by strategic investments in support infrastructure which transcends business units; and the champion of a capabilities based strategy must be the CEO. A capability is a set of business processes strategically understood - which have value to customers. Capabilities are also collective and cross functional. To achieve this senior managers need to see the business in terms of strategic capabilities. (Stalk G. 'Competing on Capabilities: The New Rules of Corporate Strategy', Harvard Business Review, March April 1992)

(78) Management strategy has been so strait-jacketed in recent years (with firm goals) that failure was more likely. Much more flexibility is required. The best companies are those who understand their markets, and what influences them. Many organisations are forced to make very risky shifts because they get out of contact with the way the world is changing. Previous versions of strategic planning never went anywhere because they dealt only with the preferred scenario. (Davis M. 'The Hazards of Wearing a Strategy Straitjacket', Business Review Weekly, 24/7/92)

(79) If they are to escape the mutually destructive battles now ravaging their performance, Japanese companies will have to learn strategy. To do so, they may have to overcome strong cultural barriers. (Porter, M., 'Japanese Companies Rarely have Strategies', Harvard Business Review, Nov-Dec 1996, p63 )

(80) It might be said that strategic management is process by which an organisation forms objectives and is managed to achieve them, and that strategy is the means to an organisations ends. This is controversial as implies only single objectives, where different organisations have goals which are contested. Thus strategy may be 'determination of basic long term goals and objectives of an enterprise .. and the adoption of courses of action and allocation of resources necessary for carrying out these goals' Lindbloom argues that organisations only make successive approximations to this. Strategic planning and strategic management are used interchangeably - though planning and management are not the same thing. Mintzberg identified 10 models of how strategies are formulated (Item 57) - which include: prescriptive; process and configurational approaches. Only the second of these, concerned with developing a process for strategy formation is sensitive to learning, political and cultural factors required for coastal zone management. Mintzberg's approaches all originate in the private sector. Key differences between the public and private sectors for strategic management are: lack of single CEO (especially when different levels of government are involved); lack of unified direction (as many agencies are involved); multiple, contradictory and ambiguous objectives; diverse centres of power; and lack of clear performance indicators. Clearly the prescriptive school of strategic planning will not work under such circumstances. Rather what is required is process to develop the notion of shared interest - which also takes account of the nature of power in public sector - and recognised that outcome will reflect coercion as well as agreement. Networks and strategic alliances arises from recognition that organisations are no longer self contained. (extract from Davis G. Weller P. 'Approaches to Strategic Management', Centre for Australian Public Sector Management, April 1993, draft)

(81) Planning has become so complex, planners can not keep up with it. The difficult is related to understanding of the mechanism of planning. People think through language - and the problems with the word 'planning' mirror planners problems with the world. Planners attempt to transform the environment but are absorbed by it. Planning fails everywhere it is tried. Perhaps planning as presently conceived can not work in the environment it is supposed to operate. Planning attempts to control the consequences of our actions - and needs to be assessed by whether it succeeds. Planning requires knowledge of causality (ie doing this causes that). Such knowledge is particularly important for long range planning, and particularly difficult where many different policy areas interact. However there are no fully effective economic models - they either contain so few variables that they oversimplify the economy, or they contain so many that no one can understand what happens inside them. Power is the ability to cause others to act differently. When there are many goals, power must be exercised for planning. To plan therefore is to govern. But governing may not involve planners - eg governments may not have goals, or may be unable to achieve them. Formal planners are rivals with other agencies. To achieve outcomes they must push effectively at critical times. This might work for advanced economies, but not for poorer countries where large resources must be mobilised. Planning requires the existence of objectives - but where do they come from. What validity is there in political goals. No one knows how to set goals which are right - thus must allow experience to modify goals set. There was nothing scientific about goal setting in USSR - merely hope and negotiation. If planning involves continuous adaptation - why is it different to other processes. The democratic process can be a means to identify goals. When plans fail is it because too little resources were provided, or because the theory behind it was wrong. If planning fails, it is argued that useful things were learnt in the process which justified planning as a process. Planning is said to be good because it is: systematic, efficient, coordinated, consistent and rational. Problems arise from the lack of knowledge needed to plan. Efficiency is meaningless without good goals - and national objectives are always vague, multiple and contradictory. Coordination can involve either efficiency, reliability, consent or coercion. Rationality is different at different levels of society. Planning has been contrasted with liberty - but the real question should be whether a meaningful plan is possible. The USSR had economic planning, but unexceptional growth which did not follow the plan. French indicative planning suggests what wise person would do - but outcomes have not followed the plan. Planning does not work because no large complex organisation can figure out what simple and unambiguous things to do, their priority and how to get them done. Japan had economic plans which under-estimated growth, and were thus irrelevant as guides. Planning suffers costs: being substitute for action; planners may spend money (especially on large and expensive projects); lack of data about the problem may lead to work on imaginary problems. The role of planning may be to divert attention from insurmountable obstacles; to introduce competition into bureaucracy. Belief in planning is not a matter for social sciences, but rather for theologians (Wildavsky A., 'If Planning is Everything, Maybe it's Nothing', Policy Sciences, V4, 1973)

(82) After its heyday in the 1970s, strategic planning lost popularity because of disillusion about its results. In US business GE's strategic planning system led the way in 1970, and GE led in closing these functions 10 years later. GE set up strategic planning because: of complex business environment; intense competition; complex corporate organisation; internal competition for resources. Strategic planning started at business unit level, and only emerged at corporate level in 1976. GE triggered other organisations to copy strategic planning. Planning staff proliferated at corporate level though most planning took place at business unit level. Confidence in value of experience curve (a major tool of corporate strategists) declined. Planning process became routinised, so people participated but did not believe in, or use, results. Strategic planning and operational planning were separate unmeshed systems. Problems in strategic planning were: staff took over the process (empire building which cut out line executives); process dominated the staff (ie too much analysis and little strategic insight); those who had to execute the strategy were little involved; plans focused on acquisitions rather than core business development; planning failed to develop true strategic choices (ie ready, fire aim - resulted in strategy by default); neglect of organisational / cultural aspects of strategy - focused on external environment - but neglected factors needed for implementation; single point forecasting was inappropriate. New developments are occurring in strategic planning - because need for strategic thinking has never been greater - given the pressure for industry restructuring. Strategic thinking and strategic management are far more than strategic planning. GE has also led the way with new approach characterised by: de-emphasis of role of staff, process and documentation; emphasising role of line managers and linkages to operations; back to basics emphasis on market driven strategies; focus on core business rather than diversification. Lessons are: strategic thinking is critical to success; CEO must be own planner; strategic planning must be an integral part of a single management system; require both an outside-in and an inside-out perspective. Strategic planning is becoming more: integrative; issues oriented; qualitative - driven by ideas not numbers; choice oriented in selecting strategy; decision focused; top-down and bottom-up; people oriented; pragmatically visionary. SRI defines strategic management as 'running the business on the basis of a coherent vision of what the business can and should be' (Wilson I. 'The State of Strategic Planning: What went wrong? What goes right?', Technological Forecasting And Social Change, V37, 1990, pp103-110)

(83) Gause's Principle of competitive exclusion (in biology) is that no two species can co-exist if they make their living in identical way. Competition existed before strategy, and began with life itself. Evolution to complex life forms required variety - in number of significant variables to give species a unique edge. For a long time competition involved chance, not strategy (ie survival of the fittest). Now business strategists can use imagination / reason to create strategy which accelerates rate of change. Strategy is deliberate search for plan of action to develop firms competitive advantage. There is value in increasing your market - but not your market share - as you always have 100% of your market. A unique advantage over rivals is the only reasons businesses exist. Strategic competition compresses time for changes to occur. Natural competition is evolutionary - strategic competition is revolutionary (based on understanding). (Henderson B. 'The Origin of Strategy', Harvard Business Review, Nov-Dec 1989)

(84) Optimism in the public and their representatives is a barrier to long term view - because it tends to lead to denial that problems could exist. This allows small issues to grow into big messes. The budget is major means for dealing with the future, but it does so merely by reaction to changes in the past. An office was proposed to study critical trends, and future issues on ongoing basis. (Fields D. 'Governance with Foresight', The Futurist, July-August 1990).

(85) Futurism does not rely on repetition of the past - which is perilous in rapidly changing international environment. Companies which use benchmarking (based on what others are already doing) or SWOT analyses are just projecting the past forward. Futurism seeks to look at a future which is new. But how does one tell which of thousands of possible futures will be good. This is important to Australia as its history involves adapting what exists, not designing the new. Australia's relative wealth has fallen due to its reliance on commodities. Four characteristics of a good future view are: chaining of proposals (a coherent view, not just bits and pieces); relevance to current business issues; change perception of current reality; and ability to be understood by people. Projections based on cultural trends are better than those on technological trends - because it involves slower rate of change. It is better to forecast for whole sectors, than for individual enterprises. (James D. 'How Futurism can win the battle to be competitive', Business Review Weekly, 20/9/91)

(86) It will be increasingly important to realise that organisations in a turbulent environment are more like systems in the chaos theory than like the 'machine-like' systems in the old theory, whose main topic was control. The new topic is increasing an organisation's ability to learn. An extensive study of the strategic reorientations of 6 major companies in the Netherlands before, during, and after a crisis serves as the basis for an examination of the ideas concerning the learning organisation in a turbulent environment. When the environment becomes unpredictable or when technical developments are changing fast, a new approach is necessary, one called the second-generation systems theory. Important topics in this theory include: 1. self-organisation, 2. a complex culture, 3. a simple structure, and 4. emerging, proactive strategies. The organisation in a turbulent environment must be 'learning' to survive. A proactive attitude means creativity and innovation by all those involved. (Bahlmann, T., 'The Learning Organisation in a Turbulent Environment', Human Systems Management, V9 N4: 1990 p: 249-256)

(87) Australia must use clever tools. It is hard for organisations to deal with both entrepreneurship (innovation) and continuity - as these require different cultures. A solution is to incorporate both in new loosely coupled divisions or through spin offs / partnerships. The traditional organisation is hierarchical, but its structure destroys innovation. Thus firms are often broken up. Methods of organising include: horizontal integration (same skills); and vertical integration (all different skills along production process). Further diversification above the level of a single business could involve entities which are: related (where key issue is strategic fit on the basis of technology, common customers, suppliers, skills); or unrelated (ie a conglomerate - where management just sees itself as dealing with a pool of capital). In the 1980s Western companies shifted production to many countries, but Japan concentrated on cost leadership (based on high volume) with production in Japan. Western companies found that too many small plants did not allow them to get economies - and so have moved to partnerships. Characteristics of these are: companies have common long term strategy; reciprocal relationship; their efforts are global including NECs; relationship is horizontal not vertical; each retain their identity and compete in markets not covered by agreement. Technology exchange is arranged through partnerships (Cunnington B., 'The Strategic Alliance: A clever tool for a Clever Country', The Australian Extrapreneur, v2, n1, July 1991)

(88) Managers must have a clear and shared understanding of what their industry will be like in 10 years, which is unique amongst their competitors. However the future is not of concern to most leaders, only re-engineering. Companies found it impossible to cope with declining business and high overheads so they restructured / rightsized (for fewer employees). Most are now only concerned to reduce costs - not to increase the top line. But they are merely selling market share by downsizing. Re-engineering is better than restructuring in that it offers hope to get ahead. But halting erosion of market share not the answer. Creating the future by having a point of view about the future is essential. The way to start is by getting collective views. Foresight must be based on deep understanding. (Hamel etal 'Competing for the Future' , Harvard Business Review, July Aug 1994)

(89) Now have to throw out old ideas about how business runs. For 200 years firms have followed Adam Smith's idea of breaking work up into the simplest tasks. Now need to re-unify these into business processes. Re-engineering means starting from scratch - forget the past. It prefers radical change to incremental - and asks why we do what we do at all? Many tasks are only for internal purposes. A crisis exists because old methods of specialisation (for mass production) do not work because: customers are no longer a mass market; competition makes it harder to get a place in the market; change is constant and rapid, with short product life cycles. Re-engineering involves overall arrangement of tasks. For 200 years firms had complex processes in order to get simple tasks. Re-engineered processes have common characteristics namely: several jobs are combined in one; workers make decisions; steps are performed in a natural order; processes have multiple versions; work is performed when makes most sense; checks and controls are reduced; re-concilliation is managed; case management provides a single customer contact; and hybrid centralised / decentralised operations are prevalent. (Hammer M and Champy J., Re-engineering the Corporation, Harper Business, 1993)

(90) Wiesema in The Discipline of Market Leaders studies the characteristics of firms who are leaders. They have a narrow focus: either product excellence; operational excellence; of customer intimacy - but not do all three. Generalists do not do well. Such companies regard benchmarking as something to do, but not as important because of three risks: a false sense of security; frantic activity being undertaken in areas which are not really important; or de-motivation. The search for 'best practice' leads to having large teams tied down for ages, achieving nothing. Market leaders write their own rules, and value their own way of doing things. Market leaders reject consultants as only providing old solutions. (Haigh G., 'Follow the Leader: Why the Best Companies Go their own Way', Australian, 21/6/95)

(91) After a decade of reorganising, downsizing, delayering, and re-engineering, companies now seek new sources of competitive advantage. Globalisation is the next stage. There are now 37000 transnational companies. New strategies pit all of a companies resources against competitors. Requirement is not just to move facilities to cheapest locations, but to break internal barriers to the free movement of people and ideas. Thus the multicultural company is the issue. The trend is based on two ideas: that innovation the key to success, and that technology is making the world smaller. (Economist, 'Small World', Australian 2/8/94)

(92) The 1990s will bring far-reaching changes in the social and economic environment, and in the strategies, structure, and management of business in 5 areas: 1. The trend toward reciprocity as a central principle of international economic integration will be irreversible. 2. Businesses will integrate themselves into the world economy through alliances. 3. Businesses will undergo increasingly radical restructuring. 4. The basic decisions about the function, accountability, and legitimacy of management will be decided. 5. Rapid changes in international politics and policies are likely to dominate. Going transnational is becoming imperative for any business that aims at a leadership position any place in the developed world. In an age of sharp and violent currency fluctuation, this means a leader must be able to innovate, to produce, and to market in every area of the developed world. Increasingly, world investment rather than world trade will be driving the international economy. (Drucker P. 'The Futures Already Around Us (Part 1)', Modern Office Technology V 37 n10: Oct 1992).

(93) Understanding the strategic heartbeat of an enterprise is fundamental to determining what gives it an edge in the marketplace. There are 10 key components of a company that drive the strategy of the business: 1. product/service, 2. user/customer class, 3. market type/category, 4. production capacity/capability, 5. technology/know-how, 6. sales/marketing method, 7. distribution method, 8. natural resources, 9. size/growth, and 10. return/profit. Although all 10 of these components are present in most organizations, only one of these is the engine that propels the company forward to success. Once a company's management understands which driving force is at the root of the company's strategy, decisions about the types of products, markets, and users that will bring competitive advantage are easier to make. (Robert, M., 'Finding your strategic heartbeat', Journal of Business Strategy, V15 n3 May-Jun 1994). 22

(94) In practice, notions like core competence have too often become a feel good exercise that no one fails. A new framework is proposed that moves strategic thinking forward in 2 ways: 1. by laying out a pragmatic and rigorous set of market tests to determine whether a company's resources are truly valuable enough to serve as the basis for strategy, and 2. by integrating this market view of capabilities with earlier insights about competition and industry structure. Where a company chooses to play will determine its profitability as much as its resources. It is explained in clear managerial terms why some competitors are more profitable than others, how to put the idea of core competence into practice, and how to develop diversification strategies that make sense. Case examples such as Disney, Cooper Industries, Sharp, and Newell Co. illustrate the power of resource-based strategies. It is shown how these organisations have been able to use corporate resources to establish and maintain competitive advantage at the business-unit level, and also how they have benefited from the attractiveness of the markets in which they have chosen to compete. (Collis, D; Montgomery, C,. 'Competing on resources: Strategy in the 1990s', Harvard Business Review, V73 n4 Jul/Aug 1995).

(95) Companies worldwide are transforming themselves for a world where competition is based more on information, and on ability to exploit intangible assets, than on their ability to invest in, and manage, tangible assets. Concept of balanced scorecard was introduced to complement financial measures with those related to: customers; internal business processes; and learning. Some have used this as cornerstone of a new strategic management system. Most organisations' operational and management control systems are built around financial measures and targets which have nothing to do with strategy - but balanced scorecard allows processes which create link. Most organisations separate strategy formulation and financial budgeting, with most emphasis on the latter. Balanced scorecard allows these processes to be integrated - identifies strategic objectives, and critical drivers, and allows organisations various change programs to be managed. In turbulent environment, strategy must be constantly redeveloped. Budget and financial measures do not allow this - but strategic learning is possible. (Kaplan R. and Norton D., 'Using the Balanced Scorecard as a Strategic Management System', Harvard Business Review, Jan-Feb 1996)

(96) To win competitive advantage, companies need to keep eye on non-financial indicators of future performance. Financial measures report on past performance, but are no longer reliable as predictors of future performance. Natwest believed that in getting the balance between short term financial results and long term strategy and sustained future profitability, there was a need to measure key drivers of business performance (which included non-financial indicators such as customer, process and innovation/ learning dimensions). While originally conceived just as a new approach to performance measurement, such techniques have become the main tool for keeping strategy alive in business. Otherwise there is usually a lack of connection between strategy and implementation in companies. Dow has used these methods to maximise returns from innovation / learning (Creelman J., 'Why Money's only part of the score', Financial Director, April 1996)