TM600.88 Spring 1997 Module 1
Instructional Overview

The following material defines and describes the strategic planning process. The roles of technology in a business strategy are also considered. Specific emphasis is placed on two technology strategy practices: the use of a core competency framework and the consideration of the evolution of technologies.

Definitions

It is helpful to begin a discussion of strategy with a clear definition of the constructs to be used, particularly as strategy is often a term used loosely. The following definitions are from Steele (1989, p. 181):

• Strategy is the array of options and priorities with which one elects to compete (offer superior value to the customer) and to survive (sustain a level of financial performance that will continue to attract capital and to retain the autonomy of a business…).
• Strategic planning addresses the continued viability of strategy; it probes the need for change. Is change necessary? In what direction? At what rate?
• Strategic management is the implementation of modifications in the fundamentals of how one competes and survives. It controls the action and behavior required to implement change.

When you consider that technology is the "knowledge of how to do things" and that innovation is a "source of creating wealth", you can begin to see how it important technology and innovation are in a business' strategy.

The Process of Strategic Planning

Strategic planning is one of those management practices that has endured, despite having been a fad in the 1970s. It may not always be called "strategic planning" -- and it may be performed with various degrees of formality -- but it is hard to imagine a company succeeding without it.

Although the following process description has a logical flow to it, the process is rarely a serial one. The main elements of the process are: the assessment of the current state; the anticipation of the future environment; the definition of the strategic direction; the validation of the vision; and the implementation and ongoing assessment. In lay terms, you are: taking stock of your current performance and capabilities, setting targets for future performance and capabilities, and figuring out how to achieve the desired change.

Assessment of Current State

There are a variety of ways in which to perform this assessment; a combination of several should be used. The important thing in this step is to develop a common, multi-faceted view of the company's competitive advantages and weaknesses. The context of this view is also important, and should be considered from an internal perspective (i.e., the company culture and corporate identity) as well as an external one (e.g., competitive threats and environmental forces). Your text refers to these as the "organizational context" and the "industry context".

A mission statement is one tool to use in the assessment process, as it forces the lead management to express a common view of the organization. It can be especially helpful in communicating the internal context for the current state.

A corporate evaluation is another essential element in the assessment. You could approach this any number of ways, but possibly the most "strategic" way is to use a core competency framework. For more information about this technique, click here (Core Competency Framework).

To round out the assessment, these capabilities should be considered vis-à-vis the context. Matrices are often used to synthesize the information. Your text has an example, a product/technology matrix (p. 5) that can be helpful in assessing the company's core competencies. Another example is a market/technology matrix:

Cell entries could be the company's current products -- as well as proposed ones.

Steele (1989, p.193) suggests the use of an industry attractiveness (high-medium-low) and business position (strong-average-weak) matrix. In this approach, the cell entries might be vectors, indicating a position and position trend for a product or business unit. Targets could also be depicted in this matrix.

These techniques simply help to reduce a variety of perspectives and a wealth of information and a diversity of opinions to a common view of the organization.

Anticipation of Future Environment

A (potentially) parallel effort is the anticipation of the future environment -- how are the rules of competition likely to change? How are the firm's capabilities likely to sustain an advantage and provide value? Steele (1989) suggests three main forces for change:

1. A Perceived or Anticipated Vulnerability: for example, too much reliance on a single customer or client.
2. A Desired Increase in Performance: such as a greater emphasis on total quality and customer satisfaction.
3. Sustained Growth Objectives: for example, shifting from an entrepreneurial management style.

• The emergence of global markets, where the field of competition is expanded.
• The popularity of virtual organizations, whose boundaries are dynamic and opportunistic.
• The reliance on knowledge workers, whose needs and work content are more sophisticated.

Definition of Strategic Direction

At this point, you should be prepared to answer questions such as:

• How will the organization create value?
• How will it sustain a competitive advantage?
• How does that compare with the current assessment?
• What has to be done to achieve the necessary changes?
• What resources (i.e., financial, human, technological) are needed?

Validation of the Vision

Do not mistake this for a deterministic process. It is highly stochastic. Therefore, it is imperative that you identify and test the assumptions you are making as you build this strategic vision. Hoffman (1994, p. 26) suggests:

For each major strategic thrust, you must ask three questions:

1. What are the basic assumptions on which this strategy is based? That is, what assumptions have been made that, if events prove them to be wrong, will make this strategy ineffective?
2. How can you monitor these assumptions to see whether they are proving to be correct or incorrect?
3. What will you do if an assumption proves to be wrong?

In a word, your strategy must be flexible, even as your vision is enduring.

Implementation and Ongoing Assessment

Like any process, once the strategic planning process is instituted it can require less effort to maintain. It should be noted, however, that the process of planning adds value beyond the end result of the plan (Steele, 1989, p. 236), specifically the:

• education of management
• consideration of shared objectives
• clarification of assumptions
• awareness of inadequacies
• contemplation of alternatives.

The Role of Technology in Strategic Planning

At this point, you should begin to anticipate what role technology plays in strategic planning. It is really central to the question of sustainable competitive advantage. This role can be manifest in three main ways (Steele, 1989):

1. Keeping Products Competitive. Technology may be exploited as the technology matures, to add features or reduce process costs. Alternatively, technology substitution may be undertaken, supplanting an older technology with a new one. The latter option tends to be less successful, for several reasons. First, it is generally not a one-for-one replacement of technologies, potentially creating integration problems. Second, there are organizational issues such as resistance to change and a technology champion's tendency to overstate virtues and underestimate problems.
2. Providing the Basis for New Products. This is the essence of innovation, something we will cover extensively in Module 2.
3. Changing Operational Conventions. This is a more fundamental, yet less tangible, role of technology. It is really a matter of changing institutional beliefs and expectations about what is possible:

These conventions are frequently expressed as set points -- tolerance limits beyond which corrective action is required. Technology can change these set points (p. 218).

These changes in conventions cannot be achieved in a fragmented (e.g., functional) manner; a holistic view must be taken -- one of the recurring themes of this course.

Integrating Technology with Strategic Planning

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