Organizations exist to make contributions to society. An organization is a collective enterprise, a group of individuals that provides society with more than individual enrichment. If it fails to maintain its contribution to society, especially through value creation, it can disintegrate. When an American automobile manufacturer stops providing customers with quality cars, customers buy cars elsewhere, perhaps from a Japanese automobile company. If too many customers buy foreign cars, the American manufacturer can become bankrupt. If a church fails to serve its members, it will lose its congregation. And if a university no longer offers sound academic programs, students will transfer to other schools.
Thus when an organization no longer provides beneficial services or products to its stakeholders, society perceives little need for its existence. Strategy is concerned with the grand picture of how organizations serve society, and strategic planning is concerned with how organizations intentionally and systematically make decisions about products, services, customers, and human resources vital both to itself and to society.
In their landmark book In Search of Excellence, Thomas J. Peters and Robert H. Waterman, Jr, note that managers of the best firms are adroit at planning, using the best information their firms can generate: “Show us a company without a good fact base, a good quantitative picture of its customers, markets, and competitors, and we’ll show you one in which priorities are set with the most Byzantine of political maneuvering”. Peters and Waterman are not advocating quantitative analysis; they are reporting a pattern of effective research coupled with innovative management among America’s best firms. In fact, they observe that many disintegrating firms have relied too heavily on detached, analytical decisions at the expense of inquisitiveness and innovation.
Several messages emerge from this and similar studies. First, intuition alone does not suffice for planning in a complex society. Second, analytical research is essential to enhance managers’ ability to make good strategic decisions. Third, strategic planning is a blend of meticulous research and managerial verve to make better decisions. We should add that the process is also future-oriented compelling managers to seek plausible courses of action today to assure the organization’s future.
Credit: Advanced Strategic Management-MGU