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Strategic planning—The role of the chief executive
0024-6301/92 $5.00 + .OO Pergamon Press Ltd
Long Range Planning, Vol. 25, No. 2, pp. 97 to 104, 1992 Printed in Great Britain
Strategic Planning the Chief Executive
The Role
97
of
A. Lynn Daniel
Failure to see strategic planning as a process and ineffective CEO involvement are two reasons for failures in strategic planning. This article outlines the stages in an effective strategic planning process, discusses the appropriate role or roles for the CEO or leader in each stage, and defines the expected results from effective strategic planning.
Today, strategic planning is a much used business management tool. However, given the recent performance of the U.S. economy, and of some U.S. companies in particular, we might wonder to what extent it is a beneficial management activity. For example : the U.S. merchandise trade balance has gone from a surplus of $9+lbn in 1975 to a deficit of $100.9bn in 1990;’ in the early 1960s nearly 90 per cent of the world’s televisions were manufactured by the U.S. By 1987, more than 50 per cent were manufactured in Japan.2 Over the last 5-8 years, many U.S. companies have lost market position as they failed to respond to changing markets. General Motors’ share of the U.S. auto market declined from 44.6 per cent in 1981 to 35.7 per cent for 1990.3 Videocassette recorders are no longer manufactured in the U.S., and Japanese companies possess much of the leading technology in this area. The litany could continue with many other examples. There are also other, less obvious, indications that strategic planning is not living up to expectations. Milton Lauenstein, writing in thejotlrnal ofBtlsinesr Strategy, asserts that, ‘Hundreds of companies squander significant amounts of management time and effort on preparing five-year plans that are only filed away and forgotten.‘4 Many managers would wholeheartedly agree with this statement. Lynn Daniel is President of The Daniel Group, Charlotte, NC. He was formerly a Vice President of Ronald A. Norelli & Companv and was an executive with Rexham Corporation.
It is not appropriate to lay all the blame for poor business performance on ineffective strategic planning. Governmental policies and a more competitive world environment have also contributed. But since a central argument for doing strategic planning is to help an organization respond profitably to a changing environment, clearly strategic planning is not working as well as it should. It is not working
well for several
reasons:
(1) Management
has lost sight of the overall planning process. Too much time is spent on strategic planning ‘tools’ (e.g. portfolio analysis, value chain, experience curve, etc.) and too little time is devoted to goal development, creative strategy setting, and plan implementation.
(2) There
is ineffective CEO involvement in strategic plan development. Sometimes the CEO distances himself from the strategic planning process, waiting to approve the final plan. When employees see no commitment at the top, they feel little commitment to either the plan or its implementation. Other CEOs can become so involved in the planning process that new ideas are squelched. The plan then becomes the CEO’s plan, and not the organization’s.
This article will focus on these two impediments to effective planning. It will describe the overall process of strategic planning and place the individual planning elements in an overall context. It will also describe and define the most effective role for the top manager or CEO to play in the strategic planning process.
Effective Strategic Planning: Should be Expected?
What
For strategic planning to be effective, it is first necessary for top management to define clearly what is expected from the process. At least three results are expected:
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of the business should
implementation without ever uncovering the necessary facts upon which to set a strategic direction. In this case, management is suffering from the ‘ready, fire, aim’ syndrome. Something will happen, even if it is wrong.
improve;
zl a better understanding
of the business’s strengths and weaknesses and the basic economics that drive it should be developed;
A change in the organization that the organization tivcly and profitably future environment.
should be nurtured so is able to respond effecto its prcscnt and expected
The effective strategic planning process is iterative. During development of a strategic plan, new strategies or action plans will create the need for additional evaluation to determine what impact they may have on the business. Over time, the healthy strategic planning process is also iterative in another way. As strategies are implemented, a business’s financial performance and competitive position change.
These results arc expected no matter whether the strategic planning is done at the corporate, divisional. or business unit level.
Effective Strategic Planning Understanding the Process
Stage I-Evaluation
:
This stage begins with a realistic examination of the external situation facing the business and a determination of the competitive position of the business vi+his the external environment. There are three major elements in this evaluation: the environmental analysis, the competitor analysis, and the internal firm analysis. These elements arc outlined in Figure 2.
Figure 1 shows the overall process involved in strategic planning. In Stage I, Evaluation, a thorough analysis of the environment and the competitive position are developed. In Stage II, the Planning-to-Do stage, the objectives, mission, and strategy of the business are determined. Stage III, or Implementation, is just that: taking the steps necessary to implement the plan so that objectives are achieved.
The environmental analysis includes consideration of industry growth, past and expected; impact of technological change on the industry in the future; and barriers to the entry of competitors, among others. Particular attention needs to be paid to potential threats from substitute products in adjacent market segments. For example, manufacturers of minicomputers pay close attention to the personal computer market since the ever-improving performance of the PC products is placing pressure on the minicomputer market.
Keeping a perspective on these three stages to insure that an appropriate amount of evaluation, planning, and implementation is done can be a problem. At one extreme, there is too much time spent in evaluation or analysis and very little time spent determining what to do about the issues arising from the analyses: ‘analysis paralysis’. At the other management rushes to set objectives, extreme, establish a mission, develop strategies, and begin
Stage I - Evaluation industry Analysis Competitive Position of the Business Performance Measures Issues l
*
l
l
l
A
7 Stage II - Planning-to-Do Objectives Mission Strategies l
l
l
A
L
Stage III - Implementation/Action Implementation Feedback Financial Proformas/Results l
l
l
Figure
1. Strategic
planning
process
overview
Plan
The Role
ENVIRONMENTAL l
l
l
ANALYSIS
Industry Growth Technological Change Barriers to Entry
COMPETITOR l
l
ANALYSIS
Performance vs Key Competitors Apparent Competitor Strategies
of the Chief
Executive
99
INTERNAL FIRM ANALYSIS l
l
l
Historical Operating Trends Productivity Issues
Evaluation of Business’s Competitive Position and Industry Attractiveness
Figure
2. Key elements
of evaluation
A particularly helpful set of tools for analysing industries is presented by Michael Porter.’ He presents a useful framework for looking at the interplay of competitor rivalry, supplier and buyer power, and threats from new entrants.
The second major element in the evaluation stage is competitor analysis. This is an often overlooked but extremely valuable part of the evaluation stage. The management of a trucking company was developing its first strategic plan. A detailed analysis of each key competitor was conducted and the results were surprising. It revealed that the company compared favourably with competitors in most areas, except for fleet utilization. Competitors with similar service strategies were able to generate far more miles and revenue per tractor and trailer than this company. Given the competitive nature of the U.S. trucking industry, such a disadvantage was unacceptable. The client company immediately began to devise strategies to improve utilization. In developing a useful competitor analysis, it is important to know not only, for example, what the competitors’ sales and profitability are, but also to formulate an understanding of their apparent strategies. What types of customers does the competitor in question focus on? What are its apparent service strategies? Is the competitor always the lowest or the highest priced? These are just some of the questions to ask in defining apparent competitor strategies. The importance of defining the apparent strategies of competitors should not be underestimated. In one situation, the top managers of a division felt their industry was unattractive and that diversification out of the industry was needed. However, a detailed
evaluation of two competitors revealed that each was performing significantly better than this division. A closer look at the apparent strategies of these competitors revealed that each had a more narrowly focused sales and marketing effort to different market segments. This narrow focus was creating a significant cost advantage in sales and marketing due to more loyal customers, higher repeat sales, and lower costs. This caught the attention of the division managers and they changed their direction, finding other attractive segments within the industry. A useful competitor analysis should identify any strategic cost and/or productivity advantages competitors possess. Let us return to the example of the trucking company mentioned earlier. Because competitors were better utilizing their equipment and thus had lower depreciation and maintenance charges, the competitors had a significant cost advantage. If such an advantage were allowed to continue, it would only result in tougher, stronger competition in the future. Getting accurate and sufficiently detailed competitor information is sometimes difficult, but there is more information available than many managers realize. The amount of publicly available information is surprising, and with the number of electronic databases now available, getting such information is much easier than in the past. A useful book on sources for competitive information is
Competitor Intelligence: How to Get It-How
to Use kh
This book provides sound suggestions on where to find competitive information and how to organize an intelligence-gathering effort. The third element of the evaluation is internal firm analysis. This element is concerned with the financial performance and structure of the business and
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opportunities,
and
Understanding the financial performance of the business begins with a clear understanding of where the financial resources are being spent (e.g. selling, marketing, customer service, manufacturing). Understanding the basic economics of a business focuses on three principles: the size and growth activity,
of the cost represented
the cost behaviour
of the activity,
competitor activity.’
differences
in
by the
and
performing
the
An example of understanding costs and how they can be effectively used strategically is found in the U.S. beer industry. Anheuser-Busch has a significant per-case advertising cost advantage due to its high volume. For Anheuser-Busch, this is a significant opportunity; for a competitor, particularly a new competitor to the market, this represents a significant and almost intractable barrier. To formulate specific answers regarding the comparative economics and historical performance of a business, it is helpful to consider the following financial indicators: Sales growth rate: How do the company’s most recent l-year, 3-year, and 5-year compound growth rates compare with those of key competitors? What Product margins: margins as a percentage
is the trend of sales?
in
gross
Investment in new plant and equipment: Investment levels that are substantially below those of key competitors suggest a business heading for trouble Percentage of salesfrom new products: How does the percentage of sales from new products compare with those of key competitors? Return on investment: Has the return on invcstment been adequate to fund the growth of the business? An interesting, albeit complex, analytical technique presented by Harry Ernsts is a helpful tool in looking at the interplay of profitability, growth, and liquidity. Working capital management: Arc working capital needs increasing or decreasing? How do these needs compare to more profitable competitors? An unfortunate shortcoming ofthe Evaluation stage typically is that it deals only with ‘hard’, objective facts. Attention should also be paid to nonquantitative indicators. One of the best ways to do employees, this is to survey an organization’s particularly those dealing with customers on a daily can identify problems, employees basis. These
1992 define internal barriers market opportunities.
to change,
and uncover
new
Unfortunately, there are barriers to getting sound employee involvement in many companies, and the top manager must make the extra effort to see that these barriers are overcome. In one client company, management has overcome these barriers by bcginning the strategic planning process with a scrics of in-depth meetings involving the CEO, other members of top management, and employees. Management uses these meetings as an opportunity to develop a better understanding of the key issues to bc faced during the strategic planning process. Employees see thcsc meetings as an opportunity to raise important issues, both long and short term. To the extent possible, employees throughout the company arc involved in creating the strategic plan. The final strategic plan is communicated to all employees. Another overlooked group in the strategic planning process is customers. They are left out, except perhaps through formal surveys or indirectly through sales reports. Although market surveys are certainly helpful and should be used, surveys cannot replace direct top management visits. One client, as part of their strategic planning process, had top managers and development people spend several weeks in the field as a group interviewing customers about future product needs. The impact on technical strategies was significant. Management felt reassured about their technical direction in several product areas, but they also saw a clear need to change their development direction in another. In another example, MCI Communications Corporation has institutionalized top management contact with its customers. Thcrc, senior executives have customer account responsibilities.” When the strategies are developed at MCI, top management is likely to know a lot about what customers need. Even Kodak, a company not known for paying much attention to customer needs in the past, is now sending its manufacturing people out to visit professional users of its products.“’ The role of the top manager in this stage of strategic planning is critical. There arc two important things that the top manager can do. First, he must clearly establish the importance of having an honest and realistic evaluation and not one that is aimed to ‘please the boss’. Second, he must temper managcrial optimism (or pessimism) by insuring that facts and not opinions or rules of thumb are the bases for the top During this stage, decision-making. manager must serve as devil’s advocate, or see that someone else serves this function, to develop the needed factual evaluation. The result of the Evaluation thorough understanding of: Y? industry
attractiveness
Stage
should
bc
a
The Role the competitive industry the major business the business’s
position
strengths relative
of the business
and
weaknesses
cost and quality
of
the
position
a detailed list of the business’s issues (strengths, weaknesses, opportunities and threats). In the Evaluation Stage, the groundwork is laid for effective strategic planning. It is only groundwork, however, and not the strategic plan.
Stage II-Planning-to-Do In the second, or Planning-to-Do stage, the mission of the business is determined, objectives are established, and strategies are formulated. In this stage, all the internal and external information is integrated and evaluated, and plans are created to act upon this This is the stage where the top information. manager’s input and vision are most important. The top manager must be actively involved with the management team in developing the fundamental directions for the business. When he takes an active part in the Planning-to-Do stage, employees interpret this as a commitment to planning and they gain a better understanding of the top manager’s vision for the business. There are several elements in the Planning-to-Do stage, but the first and most critical is the mission statement. If properly done, this element of a strategic plan provides clear and practical guidelines for the growth and development of a business. It expresses the vision that the top manager has for the organization. This vision ‘is not [just] a set of goals, it is a set of ambitions that once internalized by subordinates, create[s] powerful intrinsic motivation to work in that direction’.” A well-crafted mission statement following critical questions:
is the present domain of the business? Which markets are served? Which selling and distribution channels are used? What are the important characteristics of the customer?
(2) What
fundamental customer needs are satisfied by the products or services offered? differentiate
itself from
(4) How does the business make a profit? Are prices higher than, equal to, or lower than competitors? (5) What are the boundaries for the future expansion of the business? No business has strengths in all functional areas. Therefore, management must identify the functional strength that serves as the present ‘driving force’ for the business,
which
101
Executive
future diversification
will be
An example of a Mission Statement is shown in Exhibit I.-This statement clearly identifies what this company is now and what it is trying to become in the future. It states in unequivocal terms what values are important to the organization-something that is often overlooked in organizations, both large and small. Jean Riboud, former chief executive of made a succinct argument for Schlumberger, expressing values when he said, ‘When you fly through turbulence, you fasten your seat belt. The only seat belt I know in business turbulence is to determine for oneself a few convictions, a few guidelines, .and stick with them.‘13
Exhibit I. Mission Statement Transit Carriers, Inc.
for
Present Domain Transit Carriers, Inc. is a contract and common carrier of liquid and dry bulk commodities. Transit’s customers are primarily midwestern speciality chemical companies. Customers generally have stringent service requirements. These requirements arise because the chemicals produced are ofhigh value, they are difficult to handle and transport, or their timely pickup and delivery are critical to manufacturing schedules. The services of Transit Carriers, Inc. are marketed by a direct sales force located in the field, augmented by a telemarketing effort in the home office. Customer Needs Satisfied Transit Carriers, Inc. satisfies These are:
several
basic customer
A pickup and delivery of products in a consistent, competitive, and dependable manner;
needs.
timely,
cost
6
transportation of products safely, and with no contamination to the environment, so that the customer incurs no liabilities and the customer’s image is not harmed;
*
delivery of products that are not contaminated so that the quality of the customer’s final product is the best it can be; and,
should answer the
(1) What
(3) How does the business the competition?
and around built.12
in that
of the Chief
f7 serving as an adjunct to the customer’s marketing providing the complete distribution or logistical for the customer. Bases for Di$erentiation Transit Carriers, Inc. differentiates ways:
~2 providing are : -pickup -no
superior
and delivery
environmental
-providing -billing
measurably
which
its service in the following service.
that is error-free.
Elements
is consistently
spills or product
equipment
effort by function
as specified
of this
on time;
contamination; by the customer;
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The second clement in the Planning-to-Do stage is establishing the longer term objectives for the business. Specific, measurable objectives are important to an organization to know if sales, profit, or other objectives have been reached. There is also a definite place for non-quantifiable objectives or goals. A goal such as ‘being the best’ in a given arca clarifies top management’s vision of the business and defines what the business is trying to become. For example, a client was struggling with how specific to be in establishing objectives. The management group had developed some specific objectives but still felt these did not describe fully what they wanted to accomplish with the company. As a result, they developed a set of less specific goals, shown in the following exhibit:
Exhibit
II. Strategic
Carriers,
Inc.
(1) Immediately management operations.
(2) Be
Goals of Express
perceived indurtry.
improve communication in the corporate office
and
among with
top field
as the best service carrier in the bulk tranrporration
team that is regarded as the best in the (3) Have a management industry and be thought of as a place where people want to work. (4) Be viewed as the industry leader in the use of information technologies to enhance service and improve equipment and employee productivity. (5) Establish program.
a planned
equipment
replacement/rcinvcstment
approach of pursuing (6) Continue the disciplined marketing only those customers that are less price conscious and more concerned with quality service.
Though these goals are few, and definitely not quantitative, they define the major directions for the company for the next 5 years. The third element in the Planning-to-Do stage is developing strategies. Simply defined, a strategy is a framework that guides the actions of an organization to achieve sustainable competitive advantage at an acceptable cost. Competitive is stressed because strategies must always be created with the competition in mind. An example of a strategy being developed without adequately taking the competitive situation into proper account was the apparent U.S. pricing strategy of BMW and Mercedes in the late 1980s. In both cases, U.S. prices rose as the exchange rate became more unfavourablc for U.S. buyers. Toyota and Nissan, sensing an opportunity, announced new car lines in the $30,000-$40,000
1992 price range, priced end line.” Both particularly
both lines aimed squarely at the lowerof the BMW and Mercedes product ‘new’ competitors have been successful, Toyota.
Strategy development is a creative and painful activity. Creative because management has the opportunity to form something new, different, and at least potentially more profitable. Painful because making the leap from analysis or evaluation means and this entails risks for the doing something, manager charged with carrying out the strategy. Again, the role of the top manager is critical in encouraging appropriate risk-taking bchaviour. He or she must set an example by taking chances also. Without a risk-taking chief executive there cannot be a risk-taking organization. In one company, the top manager very cffcctively encourages needed risk-taking behaviour. He has staked his reputation on encouraging and nurturing Although not all have several major projects. succeeded, the successes have clearly profited the when a project failed, the company. Moreover, was the first to recognize it, accept manager responsibility, and move to the next opportunity. Another pattern for effective CEO involvement in a strategy creation process is shown by Raymond Smith, Chief Executive Officer of Bell Atlantic Corporation. When he assumed the chairman and CEO responsibilities for this company in 1989, he realized a new strategic direction was needed for the company. He then took the next step by being actively and visibly involved in the implementation of these strategies, particularly in the strategy of changing the Bell Atlantic culture. In his words, we must ourselves model what we are asking l[the?s to do . . . . We are asking people to change their behaviour, to accept a new set of conventions And I try to provide for working together. reinforcement in every way I can’.” Both of these examples highlight the two dimensions of the CEO’s involvement in strategy dcvclopment. In the first, the top manager was the inventive individual who was willing to take the initiative and risk of doing something new. In the second example, Raymond Smith created an atmosphere that encourages subordinates to be innovative and willing to take risks.‘” When developing strategies, questions to consider:
there
are
several
How sustainable is the strategy? If it is not sustainable over a several-year period, then it is not a very robust strategy. If a strategy is sustainable, how defensible is it under various scenarios of competitive attack? Does the strategy offer a significant competitive advantage? Is that advantage truly meaningful?
The Role
Stage III-Implementation The Implementation or ‘doing’ stage is a too-often overlooked part of strategic planning. ‘The best plan is only a plan, that is, good intentions, unless it In implementation, an action degenerates to work.“’ plan should be developed which focuses on those key milestones that must be accomplished to successfully implement a strategic plan. It is the ‘who, what, and when’ of the strategic plan. It should be specific as to who is responsible, when it is to be done, and at what cost. Action plans should outline the key steps to be taken over a 12-18 month period to begin implementing a strategy. Not every step to implementing a strategy needs to be defined, but the key actions must be identified. Review of the action plan is critical. One client meets quarterly with his managers to review what has been accomplished on the action plan and make any needed changes to the plan. The meeting is brief and the management group focuses only on those steps accomplished in the previous quarter and those which must be accomplished in the following quarter. Not only does this client have a strategic planning process that works, but the financial performance of the division is above average. Focusing on plan implementation has salutary effects on an organization. First, it reinforces the notion that management is serious about strategic planning. Second, nothing strengthens a strategic planning process like seeing actual results. If the organization is able to see concrete and profitable results from their planning efforts, then this success lays the groundwork for future success.
Further Suggestions Strategic Planning
for Improving
Top manager commitment to the strategic planning process is essential. Without such commitment, the strategic planning process is doomed to failure.18 Companies spend excessive time involved in formal planning. Doing an entire strategic plan on an annual basis is not required in most organizations. It is appropriate to redo strategies, objectives, and mission every other year or every third year. During the years in which the entire plan is not being redone, management should focus on those areas with special problems or opportunities. The action plan should be revised and updated quarterly. Keeping plans as brief as possible is important. The value of a strategic plan diminishes when the length exceeds 20 pages.” A plan should focus on the really important issues facing the business and not be a listing of every issue facing the business. No business organization can solve every issue facing it simultaneously. So, an important aspect of strategic planning is determining what the true issue priorities are.
of the Chief
Executive
The most significant opportunity to improve the practice of strategic planning is to tie financial rewards to successful strategic plan implementation. This subject is beyond the scope of this paper.*O effectively connecting management However, financial rewards with the long term performance of the business causes managers to pay attention to both strategic planning and implementation. When financial rewards are tied to successful implementation of strategic plans, managers come to see strategic planning as a necessary and normal part of their jobs. A healthy strategic planning process must allow for both ambiguity and opportunism. A strategic plan is not a straitjacket, nor does it result in the elimination of all uncertainty. Attractive opportunities will arise that were not identified in the strategic plan, and these should be discussed. Management should be encouraged to pursue these opportunities as long as they arc consistent with the overall mission of the business. Some of the most profitable strategies can and from ambiguity emerge sometimes opportunism.”
Conclusion Strategic planning can be an effective management tool for the business organization of today. When top managers constantly ask what they want a company to be in the future, they begin to define that future and establish the objectives, strategies and actions necessary to realize the future. Such ‘strategically-led companies [will have] a great competitive advantage over other companies which have no goals’.** For strategic planning to work well, it must be an ongoing process of change and not a collection of analytical tools or a rigid, inflexible management practice that inhibits change. It is a systematic approach to thoroughly understanding a business and focusing an organization’s energies so that it continuously changes to meet the needs of the changing environment facing the organization. The top manager’s role in strategic planning is both critical and varied. Critical because he provides the basic leadership and impetus for the planning process. His role is varied because in the Evaluation stage, he serves as devil’s advocate to insure that the real picture facing the business is seen. In the Planning-to-Do stage, he is an active participant, helping to establish the mission, objectives, and vision for the business. Finally, in the Implementation stage, he is the manager/reviewer of the strategic plan, insuring it is implemented and modified as needed. There model
is not a single strategic planning process appropriate for all businesses. Strategic
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planning processes reflect the nature of the organization, and they range from very complex to very simple. What separates successful from less successful strategic planning is a determination on the part of management, particularly top managers, to have a process that f OSt ers creativity and ultimately improves the financial performance of a business.
1992 (9)
U.S. Department of Commerce, Bureau of the Census, Statistical Abstract of the United States, 110th edn, p. 790, Government Printing Office, Washington, D.C. (1990). 1990 figure from The Department of Commerce News, Foreign Trade Report 900 (9012), December (1990).
(International
(10)
Seth Lubove, Aim, focus, and shoot, Forbes, p. 67,26 (1990).
(11)
Mansour Javidan, ance organization, (1991).
(12)
Benjamin B. Tregoeand John W. Zimmerman, Top Management Strategy, What It is and How to Make It Work, Simon & Schuster, New York (1980). The discussion of the concept of ‘driving force’ begins on p. 39.
(13)
Ken Auletta, York (1983).
(14)
Have the Europeans got a deal for you, Business July (1988).
(15)
Rosabeth Moss Kanter, Championing change: an interview with Bell Atlantic’s CEO Raymond Smith, Harvard Business Review, pp. 119-l 30, January/February (1991).
(16)
Javidan, Leading a high-commitment ization, p. 31.
References (1)
MCls IS leader is customer focused, Datamation Edition), pp. 101-l 07, 1 June (1990).
November
Leading a high-commitment high-performLong Range Planning, 24, 28-36, April
The Art of Corporate
Success,
p. 98, Penguin,
New
Week, p. 38,25
(2)
Norman America
(3)
Tuning up GM, March (1991).
1, 22,
(17)
Peter F. Drucker, Management: Tasks, Responsibilities, tices, p. 128, Harper & Row, New York (1974).
(4)
Milton C. Lauenstein, The failure of strategic planning, The Journal of Business Strategy, 6, 75-80, Spring (1986). Related concerns are expressed by T. G. Marx in, Removing the obstacles to effective strategic planning, long Range Planning, August (1991).
(18)
Thomas G. Marx, Removing the obstacles to effective strategic planning, Long Range Planning, 24, 26, August (1991).
(18)
Ibid. 24.
(20)
See particularly: Charles H. Zent, Using shareholder design business-unit manager incentive plans, Review, 16, 4044, March/April (1988).
(21)
Henry Mintzberg, Crafting strategy, Harvard Business Review, pp. 66-75, July/August (1987). Perhaps the best example of a strategy ‘emerging’ as opposed to being ‘crafted’ is 3M’s experience with Post-ltTM notes. Due of the ‘failure’ of an adhesive and the curiosity of some research people, a major product was launched for 3M.
(22)
Hugh Parker, The company chairman-his role and responsibilities, Long Range Planning, 23, 40, August (1990).
Jones, Aaron Bernstein, Joan Berger, et a/., Can compete? Business Week, pp. 72-78, 20 April (1987). Corporate
Detroit
Magazine,
Section
(5)
Michael E. Porter, Competitive Advantage, Creating and Sustaining Superior Performance, The Free Press, New York (1980).
(6)
Leonard M. Fuld, CompetitorIntelligence: How to Get It-How to Use It, John Wiley & Sons, New York (1985).
(7)
Porter, Competitive Advantage, ior Performance, p. 65.
Creating and Sustaining
Super-
(8)
Harry Ernst, New balance sheet for managing liquidity and growth, Harvard Business Review, 62, 122-l 35, March/April (1984).
high-performanceorgan-
Prac-
value to Planning
Long Range Planning, Vol. 25, No. 2, pp. 97 to 104, 1992 Printed in Great Britain
Strategic Planning the Chief Executive
The Role
97
of
A. Lynn Daniel
Failure to see strategic planning as a process and ineffective CEO involvement are two reasons for failures in strategic planning. This article outlines the stages in an effective strategic planning process, discusses the appropriate role or roles for the CEO or leader in each stage, and defines the expected results from effective strategic planning.
Today, strategic planning is a much used business management tool. However, given the recent performance of the U.S. economy, and of some U.S. companies in particular, we might wonder to what extent it is a beneficial management activity. For example : the U.S. merchandise trade balance has gone from a surplus of $9+lbn in 1975 to a deficit of $100.9bn in 1990;’ in the early 1960s nearly 90 per cent of the world’s televisions were manufactured by the U.S. By 1987, more than 50 per cent were manufactured in Japan.2 Over the last 5-8 years, many U.S. companies have lost market position as they failed to respond to changing markets. General Motors’ share of the U.S. auto market declined from 44.6 per cent in 1981 to 35.7 per cent for 1990.3 Videocassette recorders are no longer manufactured in the U.S., and Japanese companies possess much of the leading technology in this area. The litany could continue with many other examples. There are also other, less obvious, indications that strategic planning is not living up to expectations. Milton Lauenstein, writing in thejotlrnal ofBtlsinesr Strategy, asserts that, ‘Hundreds of companies squander significant amounts of management time and effort on preparing five-year plans that are only filed away and forgotten.‘4 Many managers would wholeheartedly agree with this statement. Lynn Daniel is President of The Daniel Group, Charlotte, NC. He was formerly a Vice President of Ronald A. Norelli & Companv and was an executive with Rexham Corporation.
It is not appropriate to lay all the blame for poor business performance on ineffective strategic planning. Governmental policies and a more competitive world environment have also contributed. But since a central argument for doing strategic planning is to help an organization respond profitably to a changing environment, clearly strategic planning is not working as well as it should. It is not working
well for several
reasons:
(1) Management
has lost sight of the overall planning process. Too much time is spent on strategic planning ‘tools’ (e.g. portfolio analysis, value chain, experience curve, etc.) and too little time is devoted to goal development, creative strategy setting, and plan implementation.
(2) There
is ineffective CEO involvement in strategic plan development. Sometimes the CEO distances himself from the strategic planning process, waiting to approve the final plan. When employees see no commitment at the top, they feel little commitment to either the plan or its implementation. Other CEOs can become so involved in the planning process that new ideas are squelched. The plan then becomes the CEO’s plan, and not the organization’s.
This article will focus on these two impediments to effective planning. It will describe the overall process of strategic planning and place the individual planning elements in an overall context. It will also describe and define the most effective role for the top manager or CEO to play in the strategic planning process.
Effective Strategic Planning: Should be Expected?
What
For strategic planning to be effective, it is first necessary for top management to define clearly what is expected from the process. At least three results are expected:
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of the business should
implementation without ever uncovering the necessary facts upon which to set a strategic direction. In this case, management is suffering from the ‘ready, fire, aim’ syndrome. Something will happen, even if it is wrong.
improve;
zl a better understanding
of the business’s strengths and weaknesses and the basic economics that drive it should be developed;
A change in the organization that the organization tivcly and profitably future environment.
should be nurtured so is able to respond effecto its prcscnt and expected
The effective strategic planning process is iterative. During development of a strategic plan, new strategies or action plans will create the need for additional evaluation to determine what impact they may have on the business. Over time, the healthy strategic planning process is also iterative in another way. As strategies are implemented, a business’s financial performance and competitive position change.
These results arc expected no matter whether the strategic planning is done at the corporate, divisional. or business unit level.
Effective Strategic Planning Understanding the Process
Stage I-Evaluation
:
This stage begins with a realistic examination of the external situation facing the business and a determination of the competitive position of the business vi+his the external environment. There are three major elements in this evaluation: the environmental analysis, the competitor analysis, and the internal firm analysis. These elements arc outlined in Figure 2.
Figure 1 shows the overall process involved in strategic planning. In Stage I, Evaluation, a thorough analysis of the environment and the competitive position are developed. In Stage II, the Planning-to-Do stage, the objectives, mission, and strategy of the business are determined. Stage III, or Implementation, is just that: taking the steps necessary to implement the plan so that objectives are achieved.
The environmental analysis includes consideration of industry growth, past and expected; impact of technological change on the industry in the future; and barriers to the entry of competitors, among others. Particular attention needs to be paid to potential threats from substitute products in adjacent market segments. For example, manufacturers of minicomputers pay close attention to the personal computer market since the ever-improving performance of the PC products is placing pressure on the minicomputer market.
Keeping a perspective on these three stages to insure that an appropriate amount of evaluation, planning, and implementation is done can be a problem. At one extreme, there is too much time spent in evaluation or analysis and very little time spent determining what to do about the issues arising from the analyses: ‘analysis paralysis’. At the other management rushes to set objectives, extreme, establish a mission, develop strategies, and begin
Stage I - Evaluation industry Analysis Competitive Position of the Business Performance Measures Issues l
*
l
l
l
A
7 Stage II - Planning-to-Do Objectives Mission Strategies l
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A
L
Stage III - Implementation/Action Implementation Feedback Financial Proformas/Results l
l
l
Figure
1. Strategic
planning
process
overview
Plan
The Role
ENVIRONMENTAL l
l
l
ANALYSIS
Industry Growth Technological Change Barriers to Entry
COMPETITOR l
l
ANALYSIS
Performance vs Key Competitors Apparent Competitor Strategies
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INTERNAL FIRM ANALYSIS l
l
l
Historical Operating Trends Productivity Issues
Evaluation of Business’s Competitive Position and Industry Attractiveness
Figure
2. Key elements
of evaluation
A particularly helpful set of tools for analysing industries is presented by Michael Porter.’ He presents a useful framework for looking at the interplay of competitor rivalry, supplier and buyer power, and threats from new entrants.
The second major element in the evaluation stage is competitor analysis. This is an often overlooked but extremely valuable part of the evaluation stage. The management of a trucking company was developing its first strategic plan. A detailed analysis of each key competitor was conducted and the results were surprising. It revealed that the company compared favourably with competitors in most areas, except for fleet utilization. Competitors with similar service strategies were able to generate far more miles and revenue per tractor and trailer than this company. Given the competitive nature of the U.S. trucking industry, such a disadvantage was unacceptable. The client company immediately began to devise strategies to improve utilization. In developing a useful competitor analysis, it is important to know not only, for example, what the competitors’ sales and profitability are, but also to formulate an understanding of their apparent strategies. What types of customers does the competitor in question focus on? What are its apparent service strategies? Is the competitor always the lowest or the highest priced? These are just some of the questions to ask in defining apparent competitor strategies. The importance of defining the apparent strategies of competitors should not be underestimated. In one situation, the top managers of a division felt their industry was unattractive and that diversification out of the industry was needed. However, a detailed
evaluation of two competitors revealed that each was performing significantly better than this division. A closer look at the apparent strategies of these competitors revealed that each had a more narrowly focused sales and marketing effort to different market segments. This narrow focus was creating a significant cost advantage in sales and marketing due to more loyal customers, higher repeat sales, and lower costs. This caught the attention of the division managers and they changed their direction, finding other attractive segments within the industry. A useful competitor analysis should identify any strategic cost and/or productivity advantages competitors possess. Let us return to the example of the trucking company mentioned earlier. Because competitors were better utilizing their equipment and thus had lower depreciation and maintenance charges, the competitors had a significant cost advantage. If such an advantage were allowed to continue, it would only result in tougher, stronger competition in the future. Getting accurate and sufficiently detailed competitor information is sometimes difficult, but there is more information available than many managers realize. The amount of publicly available information is surprising, and with the number of electronic databases now available, getting such information is much easier than in the past. A useful book on sources for competitive information is
Competitor Intelligence: How to Get It-How
to Use kh
This book provides sound suggestions on where to find competitive information and how to organize an intelligence-gathering effort. The third element of the evaluation is internal firm analysis. This element is concerned with the financial performance and structure of the business and
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opportunities,
and
Understanding the financial performance of the business begins with a clear understanding of where the financial resources are being spent (e.g. selling, marketing, customer service, manufacturing). Understanding the basic economics of a business focuses on three principles: the size and growth activity,
of the cost represented
the cost behaviour
of the activity,
competitor activity.’
differences
in
by the
and
performing
the
An example of understanding costs and how they can be effectively used strategically is found in the U.S. beer industry. Anheuser-Busch has a significant per-case advertising cost advantage due to its high volume. For Anheuser-Busch, this is a significant opportunity; for a competitor, particularly a new competitor to the market, this represents a significant and almost intractable barrier. To formulate specific answers regarding the comparative economics and historical performance of a business, it is helpful to consider the following financial indicators: Sales growth rate: How do the company’s most recent l-year, 3-year, and 5-year compound growth rates compare with those of key competitors? What Product margins: margins as a percentage
is the trend of sales?
in
gross
Investment in new plant and equipment: Investment levels that are substantially below those of key competitors suggest a business heading for trouble Percentage of salesfrom new products: How does the percentage of sales from new products compare with those of key competitors? Return on investment: Has the return on invcstment been adequate to fund the growth of the business? An interesting, albeit complex, analytical technique presented by Harry Ernsts is a helpful tool in looking at the interplay of profitability, growth, and liquidity. Working capital management: Arc working capital needs increasing or decreasing? How do these needs compare to more profitable competitors? An unfortunate shortcoming ofthe Evaluation stage typically is that it deals only with ‘hard’, objective facts. Attention should also be paid to nonquantitative indicators. One of the best ways to do employees, this is to survey an organization’s particularly those dealing with customers on a daily can identify problems, employees basis. These
1992 define internal barriers market opportunities.
to change,
and uncover
new
Unfortunately, there are barriers to getting sound employee involvement in many companies, and the top manager must make the extra effort to see that these barriers are overcome. In one client company, management has overcome these barriers by bcginning the strategic planning process with a scrics of in-depth meetings involving the CEO, other members of top management, and employees. Management uses these meetings as an opportunity to develop a better understanding of the key issues to bc faced during the strategic planning process. Employees see thcsc meetings as an opportunity to raise important issues, both long and short term. To the extent possible, employees throughout the company arc involved in creating the strategic plan. The final strategic plan is communicated to all employees. Another overlooked group in the strategic planning process is customers. They are left out, except perhaps through formal surveys or indirectly through sales reports. Although market surveys are certainly helpful and should be used, surveys cannot replace direct top management visits. One client, as part of their strategic planning process, had top managers and development people spend several weeks in the field as a group interviewing customers about future product needs. The impact on technical strategies was significant. Management felt reassured about their technical direction in several product areas, but they also saw a clear need to change their development direction in another. In another example, MCI Communications Corporation has institutionalized top management contact with its customers. Thcrc, senior executives have customer account responsibilities.” When the strategies are developed at MCI, top management is likely to know a lot about what customers need. Even Kodak, a company not known for paying much attention to customer needs in the past, is now sending its manufacturing people out to visit professional users of its products.“’ The role of the top manager in this stage of strategic planning is critical. There arc two important things that the top manager can do. First, he must clearly establish the importance of having an honest and realistic evaluation and not one that is aimed to ‘please the boss’. Second, he must temper managcrial optimism (or pessimism) by insuring that facts and not opinions or rules of thumb are the bases for the top During this stage, decision-making. manager must serve as devil’s advocate, or see that someone else serves this function, to develop the needed factual evaluation. The result of the Evaluation thorough understanding of: Y? industry
attractiveness
Stage
should
bc
a
The Role the competitive industry the major business the business’s
position
strengths relative
of the business
and
weaknesses
cost and quality
of
the
position
a detailed list of the business’s issues (strengths, weaknesses, opportunities and threats). In the Evaluation Stage, the groundwork is laid for effective strategic planning. It is only groundwork, however, and not the strategic plan.
Stage II-Planning-to-Do In the second, or Planning-to-Do stage, the mission of the business is determined, objectives are established, and strategies are formulated. In this stage, all the internal and external information is integrated and evaluated, and plans are created to act upon this This is the stage where the top information. manager’s input and vision are most important. The top manager must be actively involved with the management team in developing the fundamental directions for the business. When he takes an active part in the Planning-to-Do stage, employees interpret this as a commitment to planning and they gain a better understanding of the top manager’s vision for the business. There are several elements in the Planning-to-Do stage, but the first and most critical is the mission statement. If properly done, this element of a strategic plan provides clear and practical guidelines for the growth and development of a business. It expresses the vision that the top manager has for the organization. This vision ‘is not [just] a set of goals, it is a set of ambitions that once internalized by subordinates, create[s] powerful intrinsic motivation to work in that direction’.” A well-crafted mission statement following critical questions:
is the present domain of the business? Which markets are served? Which selling and distribution channels are used? What are the important characteristics of the customer?
(2) What
fundamental customer needs are satisfied by the products or services offered? differentiate
itself from
(4) How does the business make a profit? Are prices higher than, equal to, or lower than competitors? (5) What are the boundaries for the future expansion of the business? No business has strengths in all functional areas. Therefore, management must identify the functional strength that serves as the present ‘driving force’ for the business,
which
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will be
An example of a Mission Statement is shown in Exhibit I.-This statement clearly identifies what this company is now and what it is trying to become in the future. It states in unequivocal terms what values are important to the organization-something that is often overlooked in organizations, both large and small. Jean Riboud, former chief executive of made a succinct argument for Schlumberger, expressing values when he said, ‘When you fly through turbulence, you fasten your seat belt. The only seat belt I know in business turbulence is to determine for oneself a few convictions, a few guidelines, .and stick with them.‘13
Exhibit I. Mission Statement Transit Carriers, Inc.
for
Present Domain Transit Carriers, Inc. is a contract and common carrier of liquid and dry bulk commodities. Transit’s customers are primarily midwestern speciality chemical companies. Customers generally have stringent service requirements. These requirements arise because the chemicals produced are ofhigh value, they are difficult to handle and transport, or their timely pickup and delivery are critical to manufacturing schedules. The services of Transit Carriers, Inc. are marketed by a direct sales force located in the field, augmented by a telemarketing effort in the home office. Customer Needs Satisfied Transit Carriers, Inc. satisfies These are:
several
basic customer
A pickup and delivery of products in a consistent, competitive, and dependable manner;
needs.
timely,
cost
6
transportation of products safely, and with no contamination to the environment, so that the customer incurs no liabilities and the customer’s image is not harmed;
*
delivery of products that are not contaminated so that the quality of the customer’s final product is the best it can be; and,
should answer the
(1) What
(3) How does the business the competition?
and around built.12
in that
of the Chief
f7 serving as an adjunct to the customer’s marketing providing the complete distribution or logistical for the customer. Bases for Di$erentiation Transit Carriers, Inc. differentiates ways:
~2 providing are : -pickup -no
superior
and delivery
environmental
-providing -billing
measurably
which
its service in the following service.
that is error-free.
Elements
is consistently
spills or product
equipment
effort by function
as specified
of this
on time;
contamination; by the customer;
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The second clement in the Planning-to-Do stage is establishing the longer term objectives for the business. Specific, measurable objectives are important to an organization to know if sales, profit, or other objectives have been reached. There is also a definite place for non-quantifiable objectives or goals. A goal such as ‘being the best’ in a given arca clarifies top management’s vision of the business and defines what the business is trying to become. For example, a client was struggling with how specific to be in establishing objectives. The management group had developed some specific objectives but still felt these did not describe fully what they wanted to accomplish with the company. As a result, they developed a set of less specific goals, shown in the following exhibit:
Exhibit
II. Strategic
Carriers,
Inc.
(1) Immediately management operations.
(2) Be
Goals of Express
perceived indurtry.
improve communication in the corporate office
and
among with
top field
as the best service carrier in the bulk tranrporration
team that is regarded as the best in the (3) Have a management industry and be thought of as a place where people want to work. (4) Be viewed as the industry leader in the use of information technologies to enhance service and improve equipment and employee productivity. (5) Establish program.
a planned
equipment
replacement/rcinvcstment
approach of pursuing (6) Continue the disciplined marketing only those customers that are less price conscious and more concerned with quality service.
Though these goals are few, and definitely not quantitative, they define the major directions for the company for the next 5 years. The third element in the Planning-to-Do stage is developing strategies. Simply defined, a strategy is a framework that guides the actions of an organization to achieve sustainable competitive advantage at an acceptable cost. Competitive is stressed because strategies must always be created with the competition in mind. An example of a strategy being developed without adequately taking the competitive situation into proper account was the apparent U.S. pricing strategy of BMW and Mercedes in the late 1980s. In both cases, U.S. prices rose as the exchange rate became more unfavourablc for U.S. buyers. Toyota and Nissan, sensing an opportunity, announced new car lines in the $30,000-$40,000
1992 price range, priced end line.” Both particularly
both lines aimed squarely at the lowerof the BMW and Mercedes product ‘new’ competitors have been successful, Toyota.
Strategy development is a creative and painful activity. Creative because management has the opportunity to form something new, different, and at least potentially more profitable. Painful because making the leap from analysis or evaluation means and this entails risks for the doing something, manager charged with carrying out the strategy. Again, the role of the top manager is critical in encouraging appropriate risk-taking bchaviour. He or she must set an example by taking chances also. Without a risk-taking chief executive there cannot be a risk-taking organization. In one company, the top manager very cffcctively encourages needed risk-taking behaviour. He has staked his reputation on encouraging and nurturing Although not all have several major projects. succeeded, the successes have clearly profited the when a project failed, the company. Moreover, was the first to recognize it, accept manager responsibility, and move to the next opportunity. Another pattern for effective CEO involvement in a strategy creation process is shown by Raymond Smith, Chief Executive Officer of Bell Atlantic Corporation. When he assumed the chairman and CEO responsibilities for this company in 1989, he realized a new strategic direction was needed for the company. He then took the next step by being actively and visibly involved in the implementation of these strategies, particularly in the strategy of changing the Bell Atlantic culture. In his words, we must ourselves model what we are asking l[the?s to do . . . . We are asking people to change their behaviour, to accept a new set of conventions And I try to provide for working together. reinforcement in every way I can’.” Both of these examples highlight the two dimensions of the CEO’s involvement in strategy dcvclopment. In the first, the top manager was the inventive individual who was willing to take the initiative and risk of doing something new. In the second example, Raymond Smith created an atmosphere that encourages subordinates to be innovative and willing to take risks.‘” When developing strategies, questions to consider:
there
are
several
How sustainable is the strategy? If it is not sustainable over a several-year period, then it is not a very robust strategy. If a strategy is sustainable, how defensible is it under various scenarios of competitive attack? Does the strategy offer a significant competitive advantage? Is that advantage truly meaningful?
The Role
Stage III-Implementation The Implementation or ‘doing’ stage is a too-often overlooked part of strategic planning. ‘The best plan is only a plan, that is, good intentions, unless it In implementation, an action degenerates to work.“’ plan should be developed which focuses on those key milestones that must be accomplished to successfully implement a strategic plan. It is the ‘who, what, and when’ of the strategic plan. It should be specific as to who is responsible, when it is to be done, and at what cost. Action plans should outline the key steps to be taken over a 12-18 month period to begin implementing a strategy. Not every step to implementing a strategy needs to be defined, but the key actions must be identified. Review of the action plan is critical. One client meets quarterly with his managers to review what has been accomplished on the action plan and make any needed changes to the plan. The meeting is brief and the management group focuses only on those steps accomplished in the previous quarter and those which must be accomplished in the following quarter. Not only does this client have a strategic planning process that works, but the financial performance of the division is above average. Focusing on plan implementation has salutary effects on an organization. First, it reinforces the notion that management is serious about strategic planning. Second, nothing strengthens a strategic planning process like seeing actual results. If the organization is able to see concrete and profitable results from their planning efforts, then this success lays the groundwork for future success.
Further Suggestions Strategic Planning
for Improving
Top manager commitment to the strategic planning process is essential. Without such commitment, the strategic planning process is doomed to failure.18 Companies spend excessive time involved in formal planning. Doing an entire strategic plan on an annual basis is not required in most organizations. It is appropriate to redo strategies, objectives, and mission every other year or every third year. During the years in which the entire plan is not being redone, management should focus on those areas with special problems or opportunities. The action plan should be revised and updated quarterly. Keeping plans as brief as possible is important. The value of a strategic plan diminishes when the length exceeds 20 pages.” A plan should focus on the really important issues facing the business and not be a listing of every issue facing the business. No business organization can solve every issue facing it simultaneously. So, an important aspect of strategic planning is determining what the true issue priorities are.
of the Chief
Executive
The most significant opportunity to improve the practice of strategic planning is to tie financial rewards to successful strategic plan implementation. This subject is beyond the scope of this paper.*O effectively connecting management However, financial rewards with the long term performance of the business causes managers to pay attention to both strategic planning and implementation. When financial rewards are tied to successful implementation of strategic plans, managers come to see strategic planning as a necessary and normal part of their jobs. A healthy strategic planning process must allow for both ambiguity and opportunism. A strategic plan is not a straitjacket, nor does it result in the elimination of all uncertainty. Attractive opportunities will arise that were not identified in the strategic plan, and these should be discussed. Management should be encouraged to pursue these opportunities as long as they arc consistent with the overall mission of the business. Some of the most profitable strategies can and from ambiguity emerge sometimes opportunism.”
Conclusion Strategic planning can be an effective management tool for the business organization of today. When top managers constantly ask what they want a company to be in the future, they begin to define that future and establish the objectives, strategies and actions necessary to realize the future. Such ‘strategically-led companies [will have] a great competitive advantage over other companies which have no goals’.** For strategic planning to work well, it must be an ongoing process of change and not a collection of analytical tools or a rigid, inflexible management practice that inhibits change. It is a systematic approach to thoroughly understanding a business and focusing an organization’s energies so that it continuously changes to meet the needs of the changing environment facing the organization. The top manager’s role in strategic planning is both critical and varied. Critical because he provides the basic leadership and impetus for the planning process. His role is varied because in the Evaluation stage, he serves as devil’s advocate to insure that the real picture facing the business is seen. In the Planning-to-Do stage, he is an active participant, helping to establish the mission, objectives, and vision for the business. Finally, in the Implementation stage, he is the manager/reviewer of the strategic plan, insuring it is implemented and modified as needed. There model
is not a single strategic planning process appropriate for all businesses. Strategic
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planning processes reflect the nature of the organization, and they range from very complex to very simple. What separates successful from less successful strategic planning is a determination on the part of management, particularly top managers, to have a process that f OSt ers creativity and ultimately improves the financial performance of a business.
1992 (9)
U.S. Department of Commerce, Bureau of the Census, Statistical Abstract of the United States, 110th edn, p. 790, Government Printing Office, Washington, D.C. (1990). 1990 figure from The Department of Commerce News, Foreign Trade Report 900 (9012), December (1990).
(International
(10)
Seth Lubove, Aim, focus, and shoot, Forbes, p. 67,26 (1990).
(11)
Mansour Javidan, ance organization, (1991).
(12)
Benjamin B. Tregoeand John W. Zimmerman, Top Management Strategy, What It is and How to Make It Work, Simon & Schuster, New York (1980). The discussion of the concept of ‘driving force’ begins on p. 39.
(13)
Ken Auletta, York (1983).
(14)
Have the Europeans got a deal for you, Business July (1988).
(15)
Rosabeth Moss Kanter, Championing change: an interview with Bell Atlantic’s CEO Raymond Smith, Harvard Business Review, pp. 119-l 30, January/February (1991).
(16)
Javidan, Leading a high-commitment ization, p. 31.
References (1)
MCls IS leader is customer focused, Datamation Edition), pp. 101-l 07, 1 June (1990).
November
Leading a high-commitment high-performLong Range Planning, 24, 28-36, April
The Art of Corporate
Success,
p. 98, Penguin,
New
Week, p. 38,25
(2)
Norman America
(3)
Tuning up GM, March (1991).
1, 22,
(17)
Peter F. Drucker, Management: Tasks, Responsibilities, tices, p. 128, Harper & Row, New York (1974).
(4)
Milton C. Lauenstein, The failure of strategic planning, The Journal of Business Strategy, 6, 75-80, Spring (1986). Related concerns are expressed by T. G. Marx in, Removing the obstacles to effective strategic planning, long Range Planning, August (1991).
(18)
Thomas G. Marx, Removing the obstacles to effective strategic planning, Long Range Planning, 24, 26, August (1991).
(18)
Ibid. 24.
(20)
See particularly: Charles H. Zent, Using shareholder design business-unit manager incentive plans, Review, 16, 4044, March/April (1988).
(21)
Henry Mintzberg, Crafting strategy, Harvard Business Review, pp. 66-75, July/August (1987). Perhaps the best example of a strategy ‘emerging’ as opposed to being ‘crafted’ is 3M’s experience with Post-ltTM notes. Due of the ‘failure’ of an adhesive and the curiosity of some research people, a major product was launched for 3M.
(22)
Hugh Parker, The company chairman-his role and responsibilities, Long Range Planning, 23, 40, August (1990).
Jones, Aaron Bernstein, Joan Berger, et a/., Can compete? Business Week, pp. 72-78, 20 April (1987). Corporate
Detroit
Magazine,
Section
(5)
Michael E. Porter, Competitive Advantage, Creating and Sustaining Superior Performance, The Free Press, New York (1980).
(6)
Leonard M. Fuld, CompetitorIntelligence: How to Get It-How to Use It, John Wiley & Sons, New York (1985).
(7)
Porter, Competitive Advantage, ior Performance, p. 65.
Creating and Sustaining
Super-
(8)
Harry Ernst, New balance sheet for managing liquidity and growth, Harvard Business Review, 62, 122-l 35, March/April (1984).
high-performanceorgan-
Prac-
value to Planning