Evolution of Strategic Management
The word ‘Strategy’ is etymologically defined as that which is spread out from the leader. The word is a combination of root words ‘stratos’ (multitude or army or expedition, lit. that which is spread out) and ‘agos’ (the leader). The French word ‘Strategie’ (art of a General) and Greek word ‘Strategia’ (command of a General) are also based on these roots. Based on the etymological definition, the OED defines the word Strategy as : “a plan designed to achieve a particular long term aim or the art of planning and directing military activity in a war or battle”.
While the concept of military strategy is as ancient as modern civilization itself, the concept of Strategic Management as a separate field of study is said to have taken birth in early 1960s. Rumelt, Schendel, and Teece (1994) opined that the birth of the field was primarily due to significant upheavals in the field of organization theory witnessed in earlier decades. Notwithstanding the immediate causes responsible for its emergence, the field of strategic management has remained one of the most exciting field of study ever since its inception.
to ensure that strategic management does not remain a mere buzzword. Drawing from the root meaning of strategy – which sees it as a phenomenon emanating from the leader – the objective of this paper is to critically examine various aspects of the role that needs to be played by the top management in preparing the organizations for effective implementation of the strategic management practices.
The Lingering Questions
Since its emergence as a separate field of study, considerable efforts by the scholars and management experts have gone into identifying the fundamental issues with regard to the theory and practice of strategic management. Experts are also of the view that the self-doubts and fundamental questions that were raised by the experts in the mid-1990s (Mintzberg, 1994 ; Prahalad & Hamel, 1994 ; Rumelt et al., 1994) have now given way to consolidation of dominant frameworks, issues concerning implementation and also to bold experimentations.
While this seems reassuring, doubts regarding efficacy of the solutions – especially those pertaining to strategy implementation – continue to surface from time to time. Some of the scholars, in particular, have been seriously concerned about the inherent lack of clarity with regard to direction of strategic management research and implementation strategies (Rumelt et al., 1994; Furrer et al., 2008) and why organizations fail to execute strategies (Desroches, Hatch, & Lawson, 2014).
The fact that the relevance of the entire field of strategic management is being repeatedly called into question by the experts themselves is perhaps symptomatic of deeper malaise. The ever-changing business environment coupled with frantic pace of technological advancements continues to push the business leaders world over to have a critical look at the ways their business is managed. The prodigious move away from business planning to discussions on future direction has become the leitmotiv of the boardroom discussions. Yet, the business world is apparently still plagued with serious self-doubts when it comes to implementation of strategic management practices in right earnest. In this context, Kaplan and Norton (2005) famously noted that :
“Why is there such a persistent gap between ambition and performance? The gap arises, we believe, from a disconnect in most companies between strategy formulation and strategy execution. Our research reveals that, on an average, 95% of a company’s employees are unaware of, or do not understand its strategy.” While Kaplan and Norton (2005) identified failure of top management to effectively communicate the strategic vision, this may be just one of the many causes. ‘Are the organizations doing enough towards ensuring effective implementation of strategic management practices ?’ therefore remains a very pertinent question. In their article titled ‘Your Strategy Needs a Strategy’, Reeves, Love, and Tillmanns (2012) were of the view that “Companies that correctly match their strategy making process to their competitive circumstances perform better than those that don’t. But too many use approaches appropriate only to predictable environments – even in highly volatile situations. What executives in these cases need is a strategy for setting strategy”.
In the context of the Indian environment, in addition to the lingering doubts regarding organizations’ willingness and ability to implement strategic management practices in right earnest, there is an additional issue of the perceived lack of the strategic thinking culture amongst the Indians. In an article titled ‘Know your own strength’, The Economist (Mar – Apr 2013) referred to India’s weak strategic culture’ and related this to India’s failure to realize her full potential. While the subject is worthy of detailed investigation in itself, it has significant bearing when it comes to implementation of strategic management practices by Indian business leaders. Further, the assertion made by The Economist cannot be simply wished away – especially considering the legendary ‘Chalta Hai’ and ‘Jugad’ propensities of ours.
While the phrase ‘Having a Strategy for Strategy’ faces the risk of sounding just one of those clichés, it may be the need of the hour to have a critical look at what the strategic management field has been able to produce so far. In their path-breaking article ‘Competing for the Future’, Hamel and Prahalad (1994) strongly emphasized the need for an overarching strategic approach which would encompass even the strategic management practices of the organization. The authors termed this approach as ‘the quest for foresight’ and exhorted the senior executives to “capture and exploit the foresight that exists throughout the organization”.
There could be, however, some doubts regarding prior existence of such a foresight throughout the organization and the phrase could be modified to read ‘nurture and then exploit’. Notwithstanding, the emphasis on the need for having a strategic approach to the strategic management practices is obvious. It seems apparent that the emphasis of business leaders must shift from merely implementing the Strategic Management Practices to a much more comprehensive and overarching paradigm – a paradigm which will ensure fundamental transformation of ordinary run of the mill organizations into truly strategic organizations – organizations capable of nurturing and sustaining ‘the quest for foresight’.
While introducing the concept of ‘the quest for foresight’, Hamel and Prahalad (1994), presciently put the onus of the success of strategies on the ability of organizational leaders to prepare the organization for receiving such an insight. The authors also pointed out the possible impact of the actions of the organizational leaders on other factors of strategic management practices by stating “industry foresight is based on deep insights into trends in technology, demographics, regulations, and lifestyles, which can be harnessed to rewrite industry rules and create new competitive space”. In other words, what the authors were pointing out that the core foresight pertaining to the long term sustenance of organization should automatically lead to other foresights which have direct bearing on the various aspects of desired Competitive Advantages – pillars which would ultimately support the organizational edifice in the years to come.