Introduction Strategy is the direction andscope of an organisation over the long term which achieves advantage in achanging environment through its configuration of resources and competenceswith the aim of fulfilling stakeholder expectations (Johnson, G., Scholes, K.and Whittington, R.,2008).
Strategy is an action managers take to achieve oneor more of an organization’s goals. The process by which managers choose a setof strategies that will allow a company to achieve superior performance isdefined as Strategic management process. Strategy and strategic managementholds importance for any organisation because it is the basis on which dependsthe long-term success or failure of the organisation.
It is a central part oforganisational life and is therefore an important activity to be aware of andto consider in more detail.Strategy is about how peoplethroughout the organization should make decisions and allocate resources inorder accomplish key objectives. A good strategy provides a clear road map,consisting of a set of guiding principles or rules, that defines the actionspeople in the business should take (and not take) and the things they shouldprioritize and not prioritize to achieve desired goals. As such, a strategy isjust one element of the overall strategic direction that leaders must definefor their organizations.
A strategy is not a mission, which iswhat the organization’s leaders want it to accomplish, missions get elaboratedinto specific goals and performance metrics. A strategy also is not thevalue network the web of relationships with suppliers, customers, employees,and investors within which the business co-creates and captures economic value.Finally, a strategy is not a vision, which is an inspiringportrait of what it will look and feel like to pursue and achieve theorganization’s mission and goals. Visioning is part along with incentives ofwhat leaders do to motivate people in the organization to engage in aboveaverage effort.To begin, it’s helpful to firstunderstand what a core competency is. Johnson,G. et al., (2008) defined”a competence is used to mean the skills and abilities by which resourcesare deployed effectively through an organisation’s activities and processes.
Core competencies differentiate an organization from its competition, theycreate a company’s competitive advantage in the marketplace. Typically, a corecompetency refers to a company’s set of skills or experience in some activity,rather than physical or financial assets. An organizational corecompetency is an organization’s strategic strength. Honda’s strategic strength,for example, lies in its small engine design and manufacturing, Sony has a corecompetency in miniaturization, DHL has a core competency in logistics andcustomer service. Because these companies were focused on their corecompetencies, and continually worked to build and reinforce them, theirproducts were more advanced than those of their competitors, and customers wereprepared to pay more for them. And as they switched effort away from areaswhere they were weak, and further focused on areas of strength, their productsbuilt up more and more of a market lead. Prahalad and Hamel (1990) argue thatcore competences are some of the most important sources of uniqueness, theseare the things that a company can do uniquely well, and that no-one else cancopy quickly enough to affect competition. Conversely, this idea gained speed after the introduction of the idea of internally developed coreabilities or organisations having a unique quality abilities as extremelyimportant means to develop a competitive edge rather thanthe environment.
However, traditional research onstrategic management implies that firms need to look for a strategic fitbetween the external environment, for example opportunities and threats, andinternal resources, for example strengths and weaknesses. However, considerableemphasis has usually been given to a firm’s competitive environment and itscompetitive position (Das & Teng, 2000). Considering the source of sustainablecompetitive advantage of a firm, it is widely accepted that the main viewpointin the strategic management theory throughout the 1980s was the competitiveforces approach presented by Porter (1980). Meanwhile, Rumelt (1991) hadclearly explained that industry didn’t matter very much and resource basedreasoning has been extended since it pays attention to the internal resourcesof the organisation thus, the heterogeneous resources that a firm possesses.
The aftermath of Porters competitivestrategy (1980) and competitive advantage (1985) saw the focus of some companiesmove toward what was popularity referred to as quality (Belohlav, 1996). One of the more successful approachesto quality was through Total Quality Management. Several elements wereidentified as integral to this approach: a focus on customers, continuous improvementin operations and processes, total employee participation. Organisations nowadopted the new business setting emphasized by quality (Belohlav, 1996). Itsapproach included value, continuousrenewal, core competence, timeand building network. This Portfolio views of strategy reignedduring the 1970s.
Generic strategies took over in the 1980s. Then, Qualitymanagement replaced generic strategies in the 1990s. All of the differentstrategic perspectives have led to successful results.
However, all views werealso modified to more effectively create competitive advantages. From a systems perspective, it may be arguedthat such approaches represent partial approaches to strategic management thatneglect the complex, embedded and dynamic nature of modern organizations (Gregory,2007). In light of this, a systems approach to strategic management is proposedthat sees value not only in the using the approaches in isolation but also inusing them in a complementary and flexible way. Further, the reasons whystrategic plans fail are taken to provide a framework for the evaluation of thepotential contribution of a range of systems methodologies to the strategicmanagement process. The systems methodologies considered in this essay include:Viable System Methodology, Strategic Assumption Surfacing and Testing, SoftSystems Methodology, and Critical Systems Heuristics.
Following thisevaluation, the argument will be advanced that such systems methodologies canmake a significant contribution to the effectiveness of the strategic managementprocess. The complex, embedded and dynamicnature of modern organizations requires a systemic approach to strategicmanagement. Whittington (2001) goes some way towards recognising this insuggesting that “In the Systemic view, the norms that guide strategy derive fromthe cultural rules of the local society. The internal contests of organizationsinvolve not just the micro-politics of individuals and departments but thesocial groups, interests and resources of the surrounding context.”(Whittington, 2001, p27). However, in favoring contextual aspects oforganization, Whittington’s approach may be said to be aligned with merely thecultural school and as such fails to realize the full potential of a systemsapproach to strategic management.
The systems discipline has a rich history ofhow to use methodologies in combination that has culminated in an approachknown as critical systems practice (Jackson, 2003). This meta-methodology wouldnot only provide guidance on which strategic planning approaches to use whenbut also on how to view them as a complementary set that is capable of beingused in a flexible way to address all aspects of the strategic managerial task.Such an approach might make a significant contribution to the effectiveness andefficiency of the strategic management process. The approach of Viable SystemsDiagnosis uses a cybernetic model, the Viable System Model (VSM) (Beer, 1979,1981, 1985), to try to tackle issues of complexity and turbulence. The VSMseeks to help us design complex organizations to make them viable in rapidlychanging environments. It sets out the necessary functions of implementation,co- ordination, control, intelligence and policy that must be present in anyviable enterprise and suggests what information systems have to be in place tosupport viability. Recursion, variety and black-box theory are essentialbuilding blocks of the VSM that serve to ensure participation at all levels,ensure that tasks and responsibilities are undertaken at the most appropriatelevel and ensure maximum autonomy.
As such, it may be claimed that the VSDmight help overcome the following reasons for strategic management failureSAST(Mason and Mitroff, 1981) and SSM (Checkland, 1981) may be taken asrepresentative of soft systems thinking. The emphasis in soft systems thinkingis on how to cope with ill-structured problems. Rather than attempting toreduce the complexity of such problems so that they can be modelledmathematically, soft systems thinking seeks to explore them by working with thedifferent perceptions of them that exist in people’s minds. Multiple views ofreality are admitted and their implications are examined. Values are includedrather than being excluded fromthe methodological process. The privileged role of experts is questioned and anattempt is made to include problem-owners and other concerned individuals in carryingout the study and finding possible ways forward. The immediate aim is to reachan accommodation about action to be taken.
This should emerge from a debateinvolving all those interested in the decision and its implementation. Alonger-term aim is to encourage and institutionalise a process of continuallearning among the participants of the social system being addressed. SASTand SSM are alternative examples of soft systems approaches. One, SAST,proceeds by taking advantage of divergent viewpoints to articulate thedialectical process of thesis, antithesis and synthesis. The other, SSM, seeksto institutionalise learning through the continual seeking of ‘accommodations’between the world-views of the different stakeholders concerned with a problemsituation.Critical Systems Heuristics(CSH), following Ulrich (1983), represents a forerunner in the development of asystems methodology that takes as a major concern the need to counter possibleunfairness in organizations and society at large. This unfairness is manifestedthrough the exclusion of certain stakeholder parties from having an input intothe decisions making process about issues that affect their lives. Themethodology serves to reveal and challenge the underlying value assumptions,particularly about who is and who ought be involved, that inevitably enter intoplanning and decision making.
Consequently,the second potential contribution of the systems discipline relates to howsystems methodologies, in isolation and in combination, can be put in serviceof strategic management. Albert Einstein once said, “we can’t solve problems by using the samekind of thinking we used when we created them”. With the rapid changes insociety, the methods we have previously used to solve many of the problems weface are no longer effective. We need to develop new ways of thinking in orderto design better solutions, services and experiences that solve our currentproblems. Many organizations have the consistent, problematic tendency tounwittingly sacrifice long-term plans in order to get immediate results.Strategic planning and the ability to think in a strategic manner is often expectedonly from senior executives or managers, and only in relation to setting annualbudgets for tactical operations.
However, today’s business environment requiresthat every member of the organization not only add tactical value but bestrategically relevant in order for the organization to create economic value.Each person must develop his or her own strategic thinking and be willing totake his/her performance to the next level. Rather than focusing directly onthe organization’s overall strategy, a lot of companies are now focused on theability of individuals and teams to contribute and add distinctive value to thecorporate strategy. At ASI, we have a staff e-learning program whichapplies a framework and road map to help staff think ahead, add value, and beeffective at acting in entrepreneurial and innovative ways. We believe once a staffdevelops these hands-on skills and begins to use them on a daily basis, he orshe will find that thinking strategically has become second nature.
Participants begin to strategize instinctively, they see subtle patterns moreoften, weigh consequences more quickly, and make innovative decisions with moreconfidence. The e-learning program is designed to sustain these skillslong-term which will produce positive, bottom-line results.