I’ve found recently many of the enquiries I’ve received revolve around strategic thinking and the way strategy should be driven within the organisation. Whether it’s the economic situation we’re all facing, or the changes we are experiencing in business, it is obvious that management thought patterns are changing along with it, and many managers recognise the need to think strategically is a natural addition to their leadership portfolio. Here’s some thoughts from management expert, Henry Mintzberg.
Mintzberg argued that it’s really hard to get strategy right. To help us think about it in more depth, he developed his 5 Ps of Strategy – five different definitions of (or approaches to) developing strategy.
Each of the 5 Ps is a different approach to strategy. They are:
1. Strategy as a Plan
Planning is something that many managers are happy with, and it’s something that comes naturally to us. As such, this is the default, automatic approach that we adopt – brainstorming options and planning how to deliver them.
This is fine, and planning is an essential part of the strategy formulation process. The problem with planning, however, is that it’s not enough on its own. This is where the other four Ps come into play.
2. Strategy as a Ploy
Mintzberg says that getting the better of competitors, by plotting to disrupt, dissuade, discourage, or otherwise influence them, can be part of a strategy. This is where strategy can be a ploy, as well as a plan.
For example, a grocery chain might threaten to expand a store, so that a competitor doesn’t move into the same area; or a telecommunications company might buy up patents that a competitor could potentially use to launch a rival product.
3. Strategy as a Pattern
Strategic plans and ploys are both deliberate exercises, and a consistent and successful way of doing business can develop into a strategy.
For instance, imagine a manager who makes decisions that further enhance an already highly responsive customer support process. Despite not deliberately choosing to build a strategic advantage, his pattern of actions nevertheless creates one.
4. Strategy as Position
“Position” is another way to define strategy – that is, how you decide to position yourself in the marketplace. In this way, strategy helps you explore the fit between your organisation and your environment, and it helps you develop an advantage over the competition
For example, your strategy might include developing a niche product to avoid competition, or choosing to position yourself amongst a variety of competitors, while looking for ways to differentiate your services.
5. Strategy as Perspective
The choices an organization makes about its strategy rely heavily on its culture – just as patterns of behavior can emerge as strategy, patterns of thinking will shape an organisation’s perspective, and the things that it is able to do well.
For instance, an organisation that encourages risk-taking and innovation from employees might focus on coming up with innovative products as the main thrust behind its strategy. By contrast, an organization that emphasizes the reliable processing of data may follow a strategy of offering these services to other organisations under outsourcing arrangements.
Using the 5 Ps
Instead of trying to use the 5 Ps as a process to follow while developing strategy, think of them as a variety of viewpoints that you should consider while developing a robust and successful strategy.
As such, there are three points in the strategic planning process where it’s particularly helpful to use the 5 Ps:
Using Mintzberg’s 5 Ps at these points will highlight problems that would otherwise undermine the implementation of your strategy.
After all, it’s much better to identify these problems at the planning stage than it is to find out about them after you’ve spent time and money implementing a plan that was flawed from the start.
Many managers practice strategic planning because it offers a clear vision and direction for their department. It’s necessary because, without it, you are driving in the dark with no lights. You’ll get to your destination, maybe, but it will be difficult and take a lot of effort and concentration.
So why should strategic planning be on your list of priorities?
Strategic planning serves a variety of purposes. Here are some of them:
1. It clearly defines the purpose of your business and establishes goals and objectives consistent with that purpose within a stated time frame
2. It allows you to communicate those goals and objectives to the stakeholders.
3. It helps you develop a sense of ownership of the plan.
4. You get the most effective use of your resources by focusing them on the key priorities.
5. You provide a base for measurable progress and establish a process for change when needed.
6. You can listen to everyone’s opinions and build a natural journey towards success for your department
7. You provide a clearer focus for your department, producing more efficiency and effectiveness.
8. It creates a link in working practices between the team and higher management.
9. It develops cohesion between all team members.
10. Everyone sings the same vision statement from the same song-sheet.
11. It increases productivity because of effective goal channeling.
12. It helps solve most major directional inefficiencies in the business.
So there’s many reasons why strategic planning helps you in the short and long-run.
Here’s what you should consider when you are making the strategy:
Mission and Objectives
This is your business vision, including your values and purposes and visionary goals that drive you forward.
You can then perform an industry analysis using a framework like Michael Porter’s five forces.
Then you can match your strengths to the opportunities identified in Porter’s analysis, while addressing its weaknesses and external threats.
To get greater profitability, you seek to develop a competitive advantage. This can be based on cost or differentiation. Michael Porter identified three industry-independent generic strategies from which the firm can choose.
The strategy is then implemented through a series programs, budgets, and procedures. You need to look at your resources and motivation of staff to achieve your objectives.
Evaluation & Control
When you put the strategy into operation it must be monitored and adjustments made as needed.
Take these steps when you evaluate and control:
1. Define parameters to be measured
2. Define target values for those parameters
3. Perform measurements
4. Compare measured results to the pre-defined standard
5. Make necessary changes
When all these have been done satisfactorily, you are well on your way to achieving the goals of strategic planning, and giving yourself and your team the opportunities to achieve the objectives you have aimed for.