Corporate Strategy: From Theory to Practice

By Mostafa Sayyadi

Most organizations have plans going well into the future, including strategic goals spanning five to 15 years, while short-term goals are more tactical and are just as important. Two prominent scholars that are well known in the Academy of Management, one of the largest leadership and management organizations in the world, by the names of Charles Hofer and Dan Schendel see strategy as a "fundamental pattern of present and planned resource deployments and environmental interactions that indicates how the organization will achieve its objectives." Another scholar, Kenneth Andrew, describes strategy as a pattern of decisions and plans which are directed at interacting with the external and internal environment and effectively and efficiently allocating capabilities to achieve organizational objectives. There are different typologies of strategies, and one typology of these existing typologies can create better results for companies when compared to others. Much of what I share comes from my experience as a senior management consultant in San Diego, California.

In my experience working with more than 30 Fortune 100 companies, executives consider the four dimensions of corporate strategy, including analysis, pro-activeness, defensiveness and futurity. Analysis strategy is defined, by Venkatraman, as the tendency to search for problems and their root causes, and generates better alternatives to solve them. When executives analyze strategy, they can create more knowledge and find the best solution using a problematic search of various options. This type of strategy also stimulates companies to apply information systems in their decision-making processes in order to investigate various alternatives and options. Also, executives analyze strategic milestones to meet the goals of employee development. Analysis strategy can develop opportunities for employee development through assessing current situations in details. This strategy provides new and more innovative solutions for organizational problems as they arise. To develop this strategy, executives can particularly contribute to the development of a workplace in which there is/are:

1. Emphasis on the effective coordination among different functional areas.

2. Extensive use of information systems to support decision making.

3. Comprehensive analysis undertaken when confronted with an important decision.

4. Use of planning techniques.

5. Effective deployment of management information and control systems.

6. Use of manpower planning and performance appraisal of senior managers.

Pro-activeness is a strategy element used by executives who take a proactive approach to search for better positions in the business environment. As executives use the pro-activeness strategy which refers to finding new opportunities and proactively responding to current challenges in external environments, they can enhance their span of control. To cultivate a pro-activeness strategy, executives can contribute to the development of a workplace in which there is/are:

1. Constant search for new opportunities.

2. Attempt to introduce new brands or products in the market.

3. Constant search for businesses that can be acquired.

4. More effective expansion of capacities when compared to our competitors.

5. Strategic elimination of those operations that are no longer profitable in later stages of life cycles.

Defensiveness recommends undertaking defensive behaviors that manifest themselves in enhancing efficiency and in cutting costs while maintaining continuous budget-analysis and break-even points. Executives can take an offensive approach and in this case they employ a defensive strategy. A defensive strategy utilizes modifications in order to efficiently and effectively use organizational resources, decrease costs, and control operational risk. Some executives feel that a defensive strategy, while necessary, sets a negative connotation on their span of control. A defensiveness strategic approach, in fact, enhances organizational learning through reusing commercial knowledge. To foster this strategy, executives can particularly contribute to the development of a workplace in which there is/are:

1. Regular modifications to the manufacturing/service technology.

2. Use cost control systems for monitoring performance.

3. Use of current management techniques to ensure that we move smoothly at the required level.

4. Emphasis on product/service quality through the use of work improvement teams.

Futurity is reflected in the degree to which the strategic decision-making process takes a two way approach: an emphasis on both long-term effectiveness and shorter-term efficiency concurrently. Executives use futurity strategy to expand the growth opportunities available to companies to close the gap between success and failure. Futurity strategy implements basic studies to identify and actively respond to the changes occurred in the external environment and provides better outcomes. To create a futurity strategy, executives can contribute to the development of a workplace in which there is/are:

1. Specific criteria used for resource allocation which generally reflect short-term considerations.

2. Emphasis on basic research to provide us with a competitive edge for the future.

3. Key indicators of operations forecasted.

4. Formal tracking of significant and general trends.

5. Regular analyses of critical issues.

This article summarizes my experience as a senior management consultant and is about getting the information needed to be successful in the right hands of executives worldwide. The key for executives is that by channeling organizational processes into corporate strategy, and employing a supportive strategy executives can continue to prosper. Success is, therefore, dependent upon how executives formulate and execute corporate strategy. Executives can now see how they can cultivate an effective corporate strategy, which can enable superior performance to achieve business objectives and satisfy careers.

References

Andrew, K 1971, The Concept of Corporate Strategy, Irwin, Homewood, Illinois.

Hofer, CW & Schendel, D 1978, Strategy Formulation: Analytical Concepts. West Publishing Company, Saint Paul

Venkatraman, N. (1989). Strategic orientation of business enterprises: the construct, dimensionality, and measurement. Management Science, 35(8), 942-962.

Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies, and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.