THE STRATEGIC MANAGEMENT PROCESS

BY

TANKO AHMED fwcSenior Fellow (Security & Strategic Studies)

Research Directorate, NIPSS, Kuru – Jos, NIGERIA

A Paper Presented to Participants of the NIPSS Policy, Strategy and Leadership Course No. 21 (4th – 29th April 2016)

Monday, 11 April 2016

A Preamble• Strategic management process involves complex

cross-functional relationships of organizational components geared towards attainment of set objectives.

• It is a veritable tool of strategy for navigating the complexity of applying the tenets of mission and vision of organizations.

• This paper discusses, explains and relates how leadership of organizations harnesses resources in series of decisions and actions that determine performance and results.

Nature of Strategic Management Process

• The Strategic Management Process requires that various organizational components are put to work for attainment of common objectives.

• The complex and contingency nature of strategic management process blends an agenda resource-based, structure-conduct-performance, agency and other theories.

• Literature survey on the subject reveals emphasis on ways to simplify and understand the multifarious nature of strategic management process.

Challenge to Organizational Leadership

• The challenge and burden of strategic management process rest on the shoulders of organizational leadership or senior executives charged with decisions and actions.

• The paper breaks down this process into strategic formulation; strategic implementation; and, strategic evaluation and control.

• An exercise is designed for senior executives to practice on the workings of strategic management process in groups representing organizational situations.

Some Captions on SMP

• Strategy is the great work … in situations of life and death. It is the ‘Tao’ (or ultimate reality) of survival or extinction. Its study cannot be neglected. – Sun Tzu, The Art of War

• Strategy without process is little more than a wish list. – Robert Filek

• Leaders establish the vision for the future and set the strategy for getting there. - S. P. Kotter

• However beautiful the strategy, you should occasionally look at the results. – Sir Winston Churchill

Comments on CaptionsThese 4 captions sum up needs for

organizational strategy to be: designed or formulated; applied or implemented; analysed or evaluated.

It is in a continuous cycle or process, by leadership, on dictates of situations, over time.

INTRODUCTION

Background• Strategic management process (SMP) involves cross-

functional relationship of organizational components geared towards attainment of common objectives.

• It is often divided into five main stages of goal setting, analysis, strategy formulation, strategy implementation, and evaluation and control (Tse, 2010; Clayton, 2016).

• It is a veritable tool for navigating the complexity of applying the tenets of mission and vision of organizations to routine activities by leadership or senior executive cadre.

Burden of Strategy

• The challenge and burden of strategy rests on the shoulders of senior executives who handle the management and decision making components and processes of organizations.

• Management and managers are central in running the affairs of an organization as well as critical to strategic principles and practice of leadership.

• The SMP reflects the application of day-to-day activities aimed at achieving the overall goals or objectives of an organization.

• This paper discusses, explains and relates the alignment of routine affairs and activities to the mission and vision of organizational leadership.

Literature• Literature on SMP tends to focus on ways to counter

the complexity and obscurity of the subject for ease of clarity and understanding.

• Guerras-Martin, Madhok & Montoro-Sanchez (2014) trace the historical background, recent trends and current directions of SMP and observe the need for decipherment of its difficult terrain.

• An earlier work (Hunger & Wheelen (1997) points to managerial decisions and actions contributing to performance toward goal attainment as aggregated SMP.

More Recent Works• Aremu (2003) and Parnell (2005) also establish

correlation of SMP with performance, as basis for strategic philosophy of organizations.

• More recent works incline towards modelling and breaking down of SMP stages and activities for better understanding and more effective application (David, 2008; Vasile & Iancu, 2009; Clayton, 2015).

• Particular contributors of interest bring in contents history of SMP and case studies with emphasis on the need for elucidation.

Literature View Point

• This paper treads on same guiding principles as aforementioned;

• That is, the decipherment of SMP for clarity and understanding.

Theorem• The contingency nature of strategic

management process tends to harbour multiple but synergic theoretical foundation including resource-based, structure-conduct-performance, agency, and other related approaches.

• Theories used in SMP share common core elements of simplification, assumptions, concepts, processes and cross-functional relationships (Parnell, 2005; Bettis, et al. 2014).

A Theoretical Framework• An Assemblage of various theories of SMP

produces cumulative cross-functional relationship of organizational resources harnessed for attainment of common goals or objectives (Ologbo, et al. 2012).

• This paper dwells on the contingency nature of SMP in building a theoretical framework based on cross-functional relationship of organizational resources.

STATEMENT OF THE

PROBLEM

The Statement• As leadership of organizations harnesses resources

in series of decisions and actions, it is often difficult to grasp and understand what goes around in complex activities.

• The need to control and direct affairs of organizations in sequential order in response to changing situations and larger environment is harder to absorb.

• Also, the desire to evaluate and control performance and results is critical in directing resources at attainment of set goals.

The Problem

• The SMP is a veritable and necessary tool for navigating the difficult terrain of applying organizational mission and vision to routine activities.

• It involves complex series of decisions and actions further compounded by natural or situational occurrences.

• The challenges and burden of SMP rest on the shoulders of leadership who must seek to understand and direct the affairs of organizations towards attainment of set goals.

Aims and Objectives of the Paper

• This paper aims at decipherment of complex and contingency nature of the SMP for its clear understanding and application by organizational leadership or senior executives.

• The paper defines and discusses the SMP and its associated key components;

• It breaks the SMP into segments for ease of discourse and explains the complex cross-functional relationship of organizational components;

• It determines the challenges faced by leadership in application of the SMP in organizational mission and vision for attainment of set goals.

Style of the Paper

• The single-phase title of the paper – ‘THE STRATEGIC MANAGEMENT PROCESS’ - without a rider signifies a fast-track monorail discourse.

• The discussions may infer and/or bypass familiar tracks like strategic planning, organizational culture, organizational resource dimension, data synthesis, environmental scanning and many others.

• These are reserved for further discourse and exercises in papers assigned to oncoming presentations.

CONCEPTUAL DISCOURSE

Organizational Leadership • Organization and Leadership studies are wide fields

often defined in many ways depending on purpose and direction of discourse, including situational process of strategic management.

• Organizations are groups, ventures, affairs, arrangements or relationships characterized by common or shared interests, purposes, goals or objectives.

• Leadership is the complex system of effects influencing decisions and actions in setting and achieving goals or objectives (Scouller, 2011).

Organizational leadership (Contd…)

Organizational leadership is the management staff that provides inspiration, objectives, operational oversight and other administrative services to the organization often seen in Mission and Vision Statements (BusinessDictionary.com).

Mission and Vision

• Mission refers to assigned task, goal, objective set for attainment.

• Vision is a mental picture, an image or concept in one’s imagination often called a dream, a plan at individual or group levels.

• Mission and Vision Statements are formal documents or pronouncements stating aims and objectives of an organization.

• They represent the proficiency to plan, set goals or anticipate future events and developments.

Mission and Vision Statements• In organizational studies, mission and vision are

associated with future plan, intention, direction, strategy or strategic plan often expressed as ‘mission and vision statement’.

• Mission and Vision Statements usually imply well thought-out ideas, mental picture, far-sightedness, conceptualization, visualization, foresight, forethought, imagination or prescience for direction.

• They are used for communicating set objectives and direction in short, simple, but adjustable pronouncements responding to situational dictates of organizational strategy.

Organizational Strategy

• Strategy is a carefully devised plan of action to achieve set objectives and ways for carrying it out.

• It is the practice of higher level plans or leadership in achieving set goals of organizations under ever changing situations or environments.

• It also involves patterns in streams of decisions and actions that shape the future into desirable ends by means of available resources (Mintzberg, 1978; Mintzberg & Quinn, 1996; Kvint, 2009; Freedman, 2013).

Organizational Strategy (Contd…)• Organizational strategy is an expression of how

organizations need to evolve over tie to meet their objectives along with detailed assessment of what needs to be done and by who (BusinessDictionary.com).

• In a wider view, it is the overall plan of action on how to develop or response to the ever changing organizational environment in attaining set goals.

• According to Johnson (2016), organizational strategy sums up decisions and actions expressed by leadership intent in achieving set goals or objectives in a charted course as strategic management process.

Strategic Management Process

• The strategic management process (SMP) is an objective, logical, systematic and continuous approach for making major decisions and taking actions in an organization (Yousuf, 2016).

• It is defined as a dynamic process of strategy formulation, implementation, evaluation and control (Parnell, 2005; David, 2008; Vasile & Iancu, 2009; Vatchkova, 2010; Hill, Jones & Schilling, 2015; Yousuf, 2016).

Strategic Management Process (Contd…)

• Yousuf (2016) reflects on central cross-functional feature of the SMP, synonymous to strategic planning, in exploiting and creating new opportunities for the future based on present trends or conditions.

• The various stages or tasks of the SMP include strategy formulation, strategy implementation, and strategy evaluation and control.

• They are created and guided by organizational leadership, expressed by the mission and vision statements and run by organizational strategy.

Strategic Formulation

• Formulation involves the assemblage, arrangement or putting together of different components into a working structure or relationship for the purpose of attaining set objectives.

• Strategy formulation is the task of analyzing the organization’s internal and external environments, and selecting or devising appropriate plans or strategies in setting goals or objectives and ways of achieving them.

Strategic Formulation (Contd…)• Strategy formulation is the baseline task of

the SMP involving the establishment of mission and vision statements, environmental analysis or scanning, setting goals or objectives, and the ways and means for attainment (Nabradi, n.d; Mitchell, n.d).

• Strategy formulation embeds in the SMP or strategic plan as a living document that changes and grows as organizational situation changes with time or events.

Strategic Implementation

• Implementation is the process of carrying out, fulfilling, realization or execution of a task, an application or a plan.

• Strategy implementation is the second stage task after strategy formulation, involving the application or execution of plans through series of decisions and actions in pursue of set goals or objectives.

• Brinkschroder (2014) put this task on the shoulders of organizational leadership for communication of mission; allocation of tasks and resources; and coordination of cross-functional relationships.

Strategic Evaluation and Control

• Evaluation is the act of considering, examining, assessing, calculating or appraising activities, functions or situation to ascertain expected value, quality, quantity, extent or condition.

• Control involves the exercise of power or authority to oversee, manage or adjust activities, tasks or ventures in line with set direction.

• Strategy evaluation and control constitutes the final tier completing the tasks of the SMP cycle.

Strategic Evaluation and Control (Contd…)

This stage weighs performance data and activity reports to appraise and adjust undesired performance due to improper application of the SMP for the purpose of adjustment in line with organizational strategy (Gomes, 2010).

UNDERSTANDING THE STRATEGIC MANAGEMENT

PROCESS

Essentials of the SMP

Understanding the SMP is best by capturing its main stages of strategy formulation; strategy implementation; and strategy evaluation and control all charged to organizational leadership tasks.

Hunger & Wheelen (1997) built on same concepts and explanation of the SMP to propose its essentials with the following components:

o Environmental Scanning;o Strategy Formulation;o Strategy Implementation; ando Strategy Evaluation and Control.

Environmental Scanning• The obvious addition or inclusion of

‘environmental scanning’ or assessment of internal strengths and weaknesses; and external opportunities and threats is to underscore the importance of preparations.

• This proposal runs through decades of trials and rests strongly on the shoulders of organizational leadership (Aremu, 2003; Parnell, 2005; David, 2008; Vatchkova, 2012; Clayton, 2016).

Modelling of the SMP

• Models provide simplified versions of complex processes for ease of understanding and analysis.

• Vasile & Iancu (2009) and Niere (2012) explain the SMP model as useful in the prediction and evaluation of the environment for possible modifications to harmonize with and achieve organizational mission and objectives.

• According to Vasile & Iancu, the SMP Modelling originated from ‘The First International Conference of Strategic Management’ in 1973 and still applied to facilitate organizational leadership.

STRATEGIC MANAGEMENT PROCESS AND ORGANIZATIONAL

LEADERSHIP

Strategic Responsibilities

• Organizations run on multiple and overlapping functions and components with strategic responsibilities on certain level of leadership.

• Parnell (2005) identifies the middle-to-high level executives as top managers who “… view strategy formulation as an art and science.” (p. 157).

• Organizational leadership therefore exercises influence through timely decisions and actions on how missions are performed and objectives attained (Vigoda-Gadot & Drory, 2006).

The SMP and Organizational Leadership Cadre

The Policy Strategy and Leadership Course (PSLC) of the National Institute for Policy and Strategic Studies (NIPSS) or the NIPSS-PSLC describe its Participants as:

“… middle-to-high level executives in both the public and private sectors … who amongst other responsibilities, provide key input into organizational/national policy formulation and implementation as well as facilitate the effectiveness of the top managers and decision makers in their organizations.”

Leadership Cadre for the SMP• This leadership cadre or core group facilitates

general management; relates strategy and operations; re-orient performance to set objectives; and establish long-term directions and results.

• By implication the Participants of the NIPSS-PSLC represent the organizational leadership cadre or core group charged with the Strategic Management Process of their various organizations.

CONCLUSION

Summary

• Strategy without process is little more than wishful thinking. • Organizations of various forms require the strategic

management process to initiate, run or achieve set objectives.

• A particular cadre of organizational leadership is charged with the responsibilities for the strategic management process.

• This paper sets out to discus and simplifies the strategic management process as a veritable tool for navigating the complexity of applying organizational mission to routine activities by a specific leadership cadre know as senior executives.

Conclusion

• The paper explains the common grounds of literature and synergic theorem for simplification; and deciphers the SMP to its basics and practice.

• It concludes that responsibilities for the SMP are charged to the leadership cadre or core group of middle-to-higher executives.

• The NIPSS-PSLC Participants drawn from the public and private sectors of Nigeria are defined and established as representatives of organizational leadership cadre charged with responsibilities of the strategic management process of their organizations.

RecommendationsRecommended: Appendix 1 – Exercise on the SMP Planning

An exercise on the SMP planning is designed for senior executives to practice on the workings of strategic management process in groups representing organizational situations.

• Aremu, M. A. (2003). Enhancing organizational performance through strategic management: Conceptual and theoretical approach. Ilorin, NG: University of Ilorin. http://www.unilorin.edu.ng/publications/maaremu/Ehancing-Organizational-Performance-through-Strategic-Manag.htm

• Bettis, R. A., A. Gambardella, C. Helfat, & Mitchell, W. (2014). Theory in strategic management. Strategic Management Journal, June 25. Http://www.wileyonlinelibrary.com DOI:10.1002/smj.2308

• Brinkschroder, N. (2014). Strategy implementation: Key factors, challenges and solutions. A Presentation at the 4th IBA Bachelor Thesis Conference, November 6th. University of Twente, Faculty of Management and Governance, Enschede, The Netherlands.

• BusinessDictionary.com http://www.businessdictionary.com/definition/-organizational-leadership.html • Clayton, J. (2016). The five stages of the strategic management process. Houston Chronicle.

http://smallbusiness.cohn.com/five-stages-strategic-mamngement-process.18785.html • David, F. R. (2008). Concepts of strategic management. (6th Edition). Upper Saddle River, NJ: Prince-Hall• Freedman, L. (2013). Strategy. Oxford, UK: Oxford University Press.• Gomes, S. (2010). Strategic management process. https://xisspm.files.wordpress.com/2010/10/sm-chapter-2.pd • Guerras-Martin, L. A., Madhok, A. & Montoro-Sachez, A. (2014). The evolution of strategic management research: Recent trends and current directions.

BRQ Business Research Quarterly, 17(2), April-June, 69-76 • Hill, C. W., Jones, G. R. & Schilling, M. A. (2015). Strategic management theory. (11th Edition). London, UK: Cengage Learning• Hunger, J. D. & Wheelen, T. L. (1997). Essentials of strategic management. HR Folks International. Retrieved from http://www.hrfolk.com • Johnson, S. (2016). What is the meaning of organizational strategy? Houston Chronicle Small Business. Retrieved from

http://www.smalbusiness.chron.com/meaning-organizational-strategy-59427.html • Kvint, V. (2009). The global emerging market: Strategic management and economics. New York, NY: Routledge Publishing • Mintzberg, H. & Quinn, J. B. (1996). The strategy process: Concepts, contexts, cases. Upper Saddle River, NJ: Prentice Hall• Mintzberg, H. (1978). Patterns in strategy formation. Management Science, 24(9), 934-948• Ologbo, A. C., O. S. Oluwatosin, & Okyere-Kwakye, E. (2012). Strategic management theories and linkage with firm competitive advantage from the human

resource-based view. International Journal of Research in Management and Technology, 2(4), August, 366-376• Parnell, J. A. (2005). Strategic philosophy and management level. Management Decision, 3(2), 157-170. Retrieved from

http://www.emeraldinsight.com/0025.1747.htm • Scouller, J. (2011). Three levels of leadership: How to develop your leadership presence, knowhow and skills. Cirencester, UK: Management Books 2000• Tse, E. (2010). The China strategy: Harnessing the power of the world’s fastest growing economy. New York, NY: Basic Books• Vasile, T. & Iancu, A. (2009). A model of the strategic management process.• Vatchkova, E. (2012). Contents historical development of strategy: Strategic management. Retrieved from

http://www.iuc.edu.eu./group/mba_learning/2012STRATMAN/EV-L1-introduction.pdf • Vigoda-Gadot, E. & Drory, A. (ed). (2006). Handbook of organizational politics. Cheltenham, UK: Edward Elgar Publishing • Yousuf, M. (2016). The nature of strategic management Chapter I, What is strategic management. Academia.

https://www.academia.edu/6349510/THE_NATURE_OF_STRATEGIC_MANAGEMENT_I_WHAT_IS_STRATEGIC_MANAGEMENT

Reference

SIMULATION EXERCISE

STRATEGIC MANAGEMENT PROCESS FOR THE NATIONAL INSTITUTE FOR

POLICY AND STRATEGIC STUDIES (NIPSS), KURU-JOS, NIGERIA

INTRODUCTION

BackgroundThe National Institute for Policy and Strategic Studies (NIPSS) was established by Decree No. 20 of 1 January 1979 (now NIPSS Act CAP 262 of 1990) to conduct policy research for government and train senior executives in policymaking and implementation skills, with the following aims and objectives:

NIPSS Aims and Objectives To conduct courses for top level policy makers and

executors on conceptual capacity, quality of analysis and decision making;

To conduct research into social, cultural, economic, political, scientific, technological, security and other problems for their solutions;

To conduct seminars, workshops and other action-oriented programmes for leaders and potential leaders;

To organize brainstorming sessions for urgent national issues and policy measures for their solutions; and

To disseminate information of its activities.

NIPSS Mission and Vision Statements

• NIPSS Mission Statement - “To serve as the centre for policy, advocacy, advice and training for Nigeria and Africa in the context of a dynamic and changing world.”

• NIPSS Vision Statement - “To be the apex centre of policy, research and reflection for better Nigerian and human society”

• NIPSS Motto - “Towards a Better Society”

NIPSS Retreat• The Institute had recently conducted a

Retreat for its internal and external stakeholders and discovered an internal weak resource base and external competition by similar agencies of government.

• There is an urgent need to come up with a strategic management beginning with amending the Institute’s vision and mission statements.

THE EXERCISE

Task• This simulation exercise is specially designed

for the NIPSS Policy Strategy and Leadership Course (PSLC 21) to bring out the knowledge, understanding and practice from the Lecture on ‘The Strategic Management Process’.

• The task is for the Course Participants to extract and apply the essentials of the SMP in amending the mission and vision statements of the NIPSS and its sub-units.

NIPSS – National Institute for Policy and Strategic Studies, 1979

NIPSS Consult – Policy, Strategy & Leadership Course (PSLC) 2007

NIPSS Centre for Excellence – Political Parties Leadership & Policy Development Centre (PPLPDC)

2013

Mandate *To conduct courses for top level policy makers and executors;*To conduct policy research;*To conduct seminar, workshop and other action-oriented programmes;*To organize brainstorming session for urgent national issues; and*To disseminate information by publication.

*To conduct short term capacity enhancement and management development programmes and courses; and*To render management consultancy services

*To organize series of trainings for political party leadership and other stakeholders;*To improve understanding of party development, renewal and revitalization processes; and*To build capacities in strategic policy development, governance processes and respect for democratic principles, values and culture

Vision To be the apex centre of policy, research and reflection for better Nigerian and human society

To become the preferred choice locally and international in consultancy industry, and through its activities, expand the intellectual frontiers of knowledge for a better Nigerian and human society

To promote an inclusive democracy in Nigeria, and indeed Africa, deepened by strong, issue-based political practices whose policies serve as the interest of citizens

Mission To serve as the centre for policy, advocacy, advice and training for Nigeria and Africa in the context of a dynamic and changing world.

To consistently produce excellent services which are of the best standard, using the best practices in the industry

To build capacity of political parties and leaders for an inclusive democracy, serving the needs of citizens by networking with national, regional and global partners, undertaking research, training, conferences, and workshops.

Motto “… Towards a Better Society …” “… Leadership, policy & strategy enhancement … ”

“… Capacity building for Leadership in a Democracy …”

NIPSS MAIN MANDATE AND SUB-MANDATES

Instructions

• The time for planning and execution of the exercise is 30 minutes.

• Group Representatives will brief the Class on the result.

• Thank you.