Friday, April 11, 2008

On Strategic Managment and its implications

Strategic Management is a concept that is very popular in the business world.

It is a framework that helps businesses make timely decisions in order to deal with a changing environment.

A company can thus respond at one of four levels:
1) Create change: trailblazers, such as Microsoft
2) Those that anticipate change and react before time: Many MNCs
3) Those that react to the environment
4) Those that fail to respond in time

The framework is fairly straightforward for large businesses:
1) Have a vision
2) Identify a mission
3) Understand the external and internal environment
4) Create objectives
5) Develop strategies
6) Implement strategies
7) Evaluate strategies and iterate process

Strategic management requires all the employees of the organization to understand the purpose of the organization, its mission, and objectives; to feel a part of the organization; to have company-employee values aligned and thus have the employees want to contribute to the organization at whatever level they operate – its one big family with everybody wanting the same thing, knowing where they fit in the puzzle, thinking on their feet.

The framework above simply tries to help organizations make timely decisions.

MNCs such as SHELL and PnG implement these concepts better then local Pakistani companies and that is essentially what is different about them.

The same concept applies to not-for-profit and governmental organizations, some of them following strategic management concepts better then the private sector for example the CIA.

The concept of thinking strategically is equally applicable to individual businessmen, although research in this area as i read has not been comparable to that done for middle and larger businesses.

In fact thinking strategically is something one can do in any sphere of one’s life, from how to manage one’s career to managing relationships to how you spend your time. In any area one can with one’s capabilities and passion respond to his environment in a fashion similar to how businesses would: the four categories of response mentioned above.

As for managing one’s career, if I were to decide a career switch, I would have started to do an economic study of Pakistan, to identify industries and sectors that are doing well. Once that step is done I would come down to the functional areas, the different job roles involved and then to specific companies. My study would include the company culture including the values in the company, vision, mission, objectives, purpose of the organization and how closely I can identify with them, training and development opportunities, and remuneration, how close the organization is to following strategic management concepts, profit margins of the company, and stability and growth of the industry.

It is very interesting to note that many people who do well and thus to some degree think strategically do so without being aware of any formal framework of strategy.

I must here state that other then knowing a little about the strategic management concepts that apply to larger organizations I do not know of other formal frameworks of strategic thinking.

All I know is what such a framework would help me achieve: to be able to deal with my environment more effectively, thus improving my ability to live a 'fuller' life.

A little of such a framework that I have come up with can best be summed up with two quotations of Hazrat Ali (AS) that I am paraphrasing:
1) Deep thinking is superior to any knowledge
2) Practice makes knowledge perfect
...and so to think strategically one essential has to:
1) have a set of core values. These could come from religion
2) think about issues in real life with reference to these values
3) 'embrace the pain' and work hard to implement what one thinks is the right course of action

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