Strategic Plans

A strategic architecture and strategic planning are crucial elements of successful company’s performance and development. They involve deciding upon the major goals of an organiza­tion and what policies will be used to achieve them. It involves a longer time period and relies on more unreliable long-term forecasts and occurs at more senior levels in an organization (political and technological changes). Although, the main problem of organizations is that “a strategic architecture, and therefore a strategic plan, cannot be a detailed plan”.

The strategic architecture cannot be detailed, because it involves selecting enterprise goals and department objectives, then finding ways of achieving them. Plans depend upon the existence of alternatives, and then decisions have to be made regarding what to do, how to do it, when to do it and by whom it is to be done. Organizations operate in rapidly changing environment, and for this reason it is impossible to stipulate minor details and predict all changes needed for strategy implementation. Following D. Mihelich the strategic architecture and the strategic plan can be described as “vision of an input” or “a general direction for a firm to follow” (Mihelich, 2004 a).

The strategic plan cannot be detailed because it is only a pre-determined course of action which helps to provide purpose and direction for members of an enterprise. The planning process is aided by working in an environ­ment which is conducive to it. The dilemma of the strategic architecture is that “the more accurately one can predict, the less effectively one can prepare” (Ackoff, 1983, 93 cited Mihelich, 2004 b). The strategic plan involves deciding upon how resources will be used to help the organization achieve its strategic goals. It relies more on past records and involves shorter time periods.

The strategic plan cannot be a detailed plan, because it gives only a sense of direction for the activities of an organization. They give broad guidelines towards which more detailed and specific plans are directed. The greater the time span, the greater the number of mistakes. Present condi­tions are usually dominant in the planner’s mind when the organization initiates a plan and these may be overstressed. Also, many events are obviously unforeseen, but planning can be aided by tech­niques giving suggested probabilities of events taking place.

The strategic architecture is closely connected with strategic intent which is “a heart” of the planning process (Hamel, Prahalad, 1996, p. 141). The strategic plan cannot be detailed because based on strategic intent it “implies a particular point of view about the long-term market or competitive position that a firm hopes to build over the coining decade or so” (Hamel, Prahalad, 1996, p. 142). To some extent, the strategic plan can be interpreted as a necessary preliminary forecast to the construction of budgets which can be used to set targets to achieve the objectives which become effec­tive when they are set out in policies.

The most important way management can contribute to growth is by sys­tematic planning. Constant attention must be given to changing cir­cumstances and many revisions of plans may be needed. The strategic plan cannot be detailed because it is only a bridge between resources available and organizational goals. “Strategy as stretch is strategy by design in the sense that top management does have a relatively clear view of the goal line” (Hamel, Prahalad, 1996, p. 160). In this situation, the strategy architecture can be described as a frame for further actions according to environmental changes and market situation. It is impossible to develop a detailed plan because organizations are affected by many factors which include trends relating to the general economy, political, international and industrial trends, the strength of competitors and manufacturing cost trends. The strategic plan makes management think ahead and give a singleness of purpose to planning by concentrating attention on the future.

The strategic plan cannot be detailed because it plays a leverage role helping organizations to foresee opportunities and threats (Hamel, Prahalad, 1996, p. 163). It is concerned with probable events. The future is uncer­tain and numerous techniques have been evolved to try and limit the amount of uncertainty. It is impossible for organizations to determine the level of prices and taxes, political and economic situation, labor market fluctuations and competition which will affect organizations in a 5-year period of time. In addition, the strategic plan cannot determine the optimum combination of manpower and costs to meet future organizational objectives. It is impossible for managers to take complete account of resources and often, when a number of projects are being carried out simultaneously, there will be fairly severe restrictions on available resources (Hamel, Prahalad, 1996, pp. 184-186).

In sum, the changing environment, the increasing complexity of organizations, the fact that members of organizations make mistakes are the main factors preventing organizations to develop detailed strategic plans.

References

1. Hamel, G., Prahalad, C.K. (1996). Strategy as Stretch. Chapter 6.Competing for the Future. Harvard Business School Press; Reprint edition, 138-161.
2. Hamel, G., Prahalad, C.K. (1996). Strategy as Leverage. Chapter 7.Competing for the Future. Harvard Business School Press; Reprint edition, 163-193.
3. Mihelich, D. (2004 a). What if Strategy? from Doctoral papers
4. Mihelich, D. (2004 b). Strategic Management. from Doctoral papers