Strategic Decisions for Sustainable Business

Strategic Management is a constant object of curiosity among psychologists and thinkers. On several occasions, senior managers are asked how they come up with strategic decisions. They have one pattern of making these crucial and company-light decisions. One would suppose these to be mathematical, based on rigid rules of logic or statistical treatments. But here’s the catch: The managers decisions were product of informal data gathering, intuition, innovation, and oral exchanges in 2-way communications. These managers have the feel of the whole situation besetting their companies and their impulse always has an accompanying relevance. Their minds transcend logical rules that are immutable and mechanical and perhaps by age and experience, they acquired an almost instantaneous and discrimination of what is effective and practical. They give a whole new meaning to the words feeling, judgment, common sense, proportion, balance, and appropriateness. They use these terms to effect viable actions that would sustain their companies in the tests of domestic or external competition, recession, changing market attitudes, inflation, to mention only the majors. These street-smart guys are not much into science when they make a decision. Instead, they stay at the helm of art which is a combination of wisdom, experience, common sense, and a lot of prudence and daring.

Senior managers usually see problems of their companies as big opportunities in disguise. They remain flexible in finding ways but that does not mean foolish weighing the indefinite till the situation clears or worsens. They are flexible in making solutions to give provisions for modifications, adjustments, shifts, or even u-turn without compromising company principles. They are not namby-pambies who are easily swayed by fashion. They are as hard as nails on standards of excellence. Hence, they inspire, and prod those below them to follow suit and commit to live action. They are virtuoso’s in motivating people and so people tick to grow the limbs of their action plans and visions.

It was noted in many studies conducted in most industrialized countries that executives are investing much of their time developing a circle of relationships. Thence, they gain insights and details to be applied in forming concrete strategic decisions. They have the inclination to use mental simulations and they display some gift of “seeing with their minds.” Intuition is the guiding light of the day and even after office hours, they would re-run what else can be done if strategy A should need a remedy. So before any pitfall or backsliding, there reserved a fallback program to reinforce the existing. Funny as it sounds but executives can sense first what they are going to do before they can explain why. No calculations but deep in their brain cells and feeling, this is the way to salvation and promised land. The way might not be a bay of plenty but they are sure when the dusts subside the rays of their strategy would save the organization. Information may change overnight and strategic planning is complex but they know how to combat challenges with concrete interventions.

With the advent of technology, senior managers are more and more relieved of the so called strategic planning. Information Technology at last has created a great divide between senior managers and operational level managers. Through sophisticated programs on the computer, any manager can already function as an independent segment albeit following the general threads of the company culture. All that top brass management would do is to inspire, delegate, assess and appraise their subjects. They provide the vision, specify the substance, and direct the institutional goals. Their managers are expected to facilitate process, action plans, and fill out forms to make way for effective documentation, work accomplishment, accounting procedures, marketing, manpower accountability and networking.

Executive leaders have followers, while managers have subordinates, according to an analyst. Managers are oftentimes blamed for the bankruptcy of businesses in America in the 1970s and 80s. Leaders make decisions while managers usually execute them. Leaders are careful to choose their managers because lack of leadership down the line can antagonize the growth of the whole organization.

Normally, strategic decision-making takes place on two levels: aggregate and individual. Both of these are geared towards getting attention, storing information through encoding, retrieval thereof, strategic choosing, feedback and outcome. Aggregate and individual strategies are interdependent and they harmonize with each other in all stages of the organization. While it is true that aggregate is more supreme than the individual strategy, it is the individual that feeds to the strength of the aggregate. The aggregate can only sound strong on paper but without the individual strategy which is the action level that extends to clients, customers, consumers, financiers, lenders and debtors, it can just be a lame duck-a print of strong accent without teeth or bite because there is no execution by junior vice presidents, section managers, team leaders, and the rank and file.

Johnson, Scholes and Whittington present a model in which strategic alternatives and options are evaluated against three key success criteria: suitability, feasibility, and acceptability.

  1. Suitability. It gears to answer security questions such as “Would it work?”, “Does it make sense to economy?”, “Would the organization obtain economies of scale, economies of scope, or experience economy?” “Would it be suitable in terms of environment and capabilities?” Ranking strategic options and decision trees are the measuring tools to evaluate suitability.
  2. Feasibility. “Can it be made to work?”. It is concern whether the resources required to carry the strategy are available and can be obtained and developed. Its resources include funding, people, time, and information. Consequently, cash flow analysis and forecasting, break-even analysis, and resource deployment analysis are the scaling tools for it.
  3. Acceptability. Would this make sense among stakeholders? Would shareholders, company employees and customers respond with the targeted product or performance outcomes? What about returns? Will it yield the projected benefits by the stakeholders in terms of dollars or other essentials (financial and non-financial)? For instance, shareholders would anticipate the growth of their capital or wealth, employees would aim for the upliftment in their careers and customers would expect added value for money.

When strategy fails, the probability of risks arises–financial or otherwise. These risks could be shareholders going against the issuing of new shares or employees and unions picketing against outsourcing for fear of losing their jobs. Most likely too, customers would have paranoia over a merger as regards quality and support. What-if analyses are tools employed to evaluate acceptability.