Benefits of Strategic Management

Benefits of Strategic Management As you learned in Chapter 1, strategic management consists of three elements: strategic thinking, strategic planning, and managing strategic momentum (see p. 12). In an ever changing industry, what are the benefits of strategic management for health care organizations? Please share a specific example from your experience or research. Page 12 The Dimensions of Strategic Management Many ways are possible to think about strategic management in organizations.14 These approaches can be broadly grouped into two distinct views – those that assume that with proper analysis a workable strategy can be prescribed in advance, then carried out, versus those with the underlying assumption that too much complexity and change exists for a complete and viable plan to be worked out in advance, thus the strategy will emerge over time. These two fundamental views of strategic management are referred to as the analytical or rational approach and the emergent approach.15 Specifically, analytical or rational approaches to strategic management rely on a logical sequence of steps or processes (linear thinking) to develop a predetermined logical plan and carry it out without change. An emergent approach, on the other hand, relies on intuitive thinking, leadership, and learning with the understanding that because of external change, strategic plans evolve as strategy unfolds and the organization learns what works and what does not. Both approaches are valid and useful in explaining an organization’s strategy and neither the analytical approach nor the emergent view, by itself, is enough. As one author explains: The key question is not which of these approaches of action is right, or even which is better, but when and under what circumstances they are useful to understand what managers should do. Modern organizational life is characterized by oscillations between periods of calm, when prospective rationality seems to work, and periods of turmoil, when nothing seems to work. At some times, analysis is possible; at other times, only on-the-ground experiences will do.16 As a result, both approaches are required. It is difficult to initiate and sustain organizational action without some predetermined logical plan. Yet in a dynamic industry, such as health care, managers must expect to learn and establish new directions as they progress. The analytical approach is similar to a map, whereas the emergent model is similar to a compass. Both may be used to guide one to a destination. A map is a convenient metaphor for a predetermined plan, guideline, or method. Maps are better in known worlds – worlds that have been charted before. A compass serves as a useful metaphor for an intuitive sense of direction and leadership. Compasses are helpful when leaders are not sure where they are and have only a general sense of direction.17 Managers may use the analytical approach to develop a strategy (map) as best they can from their understanding of the industry and by interpreting the capabilities of the organization. Once they begin pursuing the strategy, new understandings and strategies may emerge and old maps (plans) must be modified. Harvard Professor Rosabeth Moss Kanter concluded from her research that pacesetter organizations “did not wait to act until they had a perfectly conceived plan; instead, they create the plan by acting.”18 Therefore, managers must remain flexible and responsive to new realities – they must learn. However, the direction must not be random or haphazard. It must be guided by some form of strategic sense – an intuitive, entrepreneurial sensing of the “shape of the future” that transcends ordinary logic. The concept of the compass provides a unique blend of thinking, performance, analysis, and intuition.19 Similar to the scientific method, which in theory has clear specific steps to be followed, in reality strategy making is a messy process with many starts and stops. What is needed is some type of model that provides guidance or direction to strategic managers, yet incorporates learning and change. If strategy making can be approached in a disciplined way, then there will be an increased likelihood of its successful implementation. A model or map of how strategy may be developed will help organizations view their strategies in a cohesive, integrated, and systematic way.20 Without a model or map, managers run the risk of becoming totally incoherent, confused in perception, and muddled in practice.21