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729738 research-article2017 JOMXXX10.1177/0149206317729738Journal of ManagementMaritan, Lee / Resource Allocation and Strategy Special Issue: Resource Allocation and Strategy Journal of Management Vol. 43 No. 8, November 2017 2411­–2420 DOI: 10.1177/0149206317729738 © The Author(s) 2017 Reprints and permissions: Special Issue Editorial Resource Allocation and Strategy Catherine A. Maritan Syracuse University Gwendolyn K. Lee University of Florida Resource allocation is fundamental to strategic management. Yet, surprisingly, there is not a large body of literature specifically about the allocation of financial, physical, technological, and human resources that support firm strategies. This special issue seeks to bring renewed attention to resource allocation as an important topic for strategy research. The curated set of articles and commentaries offer conceptual and empirical contributions that assess the current state of research on the topic, present analyses and new insights, and propose promising directions for future research. Through this special issue, we hope to encourage more research that examines resource allocation as a central focus of study for achieving deeper and better understandings about firm strategies. Keywords: resource allocation/management; strategic decision making; strategic planning systems (vision/mission); structure; design and boundaries Few strategy scholars would take issue with the claim that resource allocation is fundamental to strategic management. Chandler defined business strategy to include not only the determination of goals and objectives but also the “allocation of resources necessary for carrying out these goals” (1962: 13). Ansoff emphasized resource allocation as an essential element of a strategic plan and the need for a “resource budget” (1965: 218). Hofer and Schendel argued that a key reason why firms need to formulate strategies was to “assist in the allocation of discretionary strategic resources” (1978: 5). Contrasting strategic management and economics, Rumelt, Schendel, and Teece describe the latter as being “chiefly concerned with the performance of markets in the allocation and coordination of resources” while the former “is about coordination and resource allocation inside the firm” (italics in original; 1991: 19). Corresponding author: Catherine A. Maritan, Whitman School of Management, Syracuse University, 721 University Avenue, Syracuse, NY 13244, USA. E-mail: 2411 2412   Journal of Management / November 2017 Given its importance to strategic management, it is surprising to find that there is not a larger body of strategy research specifically about the allocation of financial, physical, technological, and human resources that support firm strategies. A search of major management journals for strategic management research with resource allocation or closely related terms, such as capital allocation, capital investment, and strategic investment, in the abstract, title, or keywords yielded 10 years old. Corporate Capital Allocation Like the resource allocation process literature, strategy research on corporate capital allocation also emerged as a reaction to finance models. Traditional finance research on resource allocation focused on technical aspects of valuing investments. But, in the 1980s and 1990s, finance scholars developed a stream of work that placed investment decision making in an organizational context and incorporated some features of the types of behaviors that had been observed by Bower and others (see Haka, 2006, for a review). These analytical models of capital budgeting and capital allocation apply agency theory to cast a decision-making manager in a decentralized organization with asymmetric information. Typically, the models are solved for incentive schemes that result in optimal investment or demonstrate how structural or managerial characteristics result in suboptimal allocation. There is also a related stream of empirical research based on similar agency and information arguments that examines capital allocation inefficiency in multibusiness firms with cross subsidization of underperforming units (e.g., Rajan, Servaes, & Zingales, 2000). Although observed practices and behaviors play a role in the framing, the models in both streams are highly stylized. Recently, strategy scholars have responded to these finance studies and begun to examine corporate capital allocation, offering behavioral, managerial, and organizational explanations as alternatives to agency problems and information asymmetry for misallocations of capital. Bardolet, Fox, and Lovallo (2011) bring a lens from social psychology and propose that cross subsidization of underperforming units in multibusiness firms is due to cognitive bias toward uniform allocation across businesses that operates even in the absence of agency 2414   Journal of Management / November 2017 problems and asymmetric information. Arrfelt, Wiseman, and Hult (2013) draw on the behavioral theory of the firm to highlight the tension between investment in businesses to correct current performance problems and investment in businesses with superior performance prospects. Other strategy research proposes a more active role for corporate management in capital allocation across businesses than the finance models incorporate. Studies offer alternative measures of allocation efficiency that take into account additional features of the individual businesses (Bardolet, Lovallo, & Rumelt, 2010; Vieregger, 2012) and therefore better represent factors considered by managers in practice. Like the resource allocation process research that preceded it, strategy research on corporate capital allocation aims to address factors that determine how allocations actually are made. Specific Types of Resource Allocation The third category of research includes studies that examine factors influencing specific types of resource allocations. The research may focus on allocation of financial resources to particular uses. For example, Souder and Shaver (2010) examine how current performance constrains and how managerial compensation incents or deters firms from investing in capital projects with long-horizon payoffs; Maritan (2001) compares the processes used to invest in new versus existing operational capabilities. Or, the research may focus on the allocation of particular types of resources, such as Danneels’s (2007) study of organizational impediments to allocating financial, human, and technological resources to new market entry. Studies that focus on specific types of resource allocation complement and extend research on the resource allocation process and capital allocation. Resource allocation process models have identified commonalities and patterns; focused studies can examine details of mechanisms or contingencies that exist within the broader patterns. Capital allocation research is concerned with allocation of financial resources to divisions; focused studies can bridge that corporate allocation with the ultimate purposes for which the financial resources are allocated. Overview of the Special Issue It is against this backdrop of prior research that we introduce the contributions in this special issue. There are 11 papers in the issue: Six are research articles that underwent the Journal of Management blind review process, and five are nonrefereed invited commentaries that offer the authors’ views on specific conceptual lenses and research opportunities. The issue opens with three contributions that identify challenges to research on resource allocation. The first paper is a commentary from Joseph Bower (2017), whose field study of the resource allocation process in a large industrial firm provided the foundation for viewing resource allocation as a distinct topic of strategic management research (see Bower, 1970). Bower captures the premise underlying the special issue when he notes, “In management, the problem of resource allocation is the essence of strategy.” He goes on to argue that despite developments since the time of his original study, management theory of the resource allocation process remains wedded to a financial model of capital budgeting that poorly fits the problem facing companies and that more work is needed on the basic problem of resource allocation—a difficult undertaking given the complexity of interrelated technical, economic, and organizational forces involved and the changing environment in which they operate. Maritan, Lee / Resource Allocation and Strategy   2415 Busenbark, Wiseman, Arrfelt, and Woo (2017) focus on corporate capital allocation and review the body of research on that topic. The authors’ goal is to bring clarity to the questions of what the purpose of capital allocation is and what constitutes successful allocation, ultimately strengthening the link between capital allocation and firm strategy. They offer a framework that not only organizes the disparate approaches that scholars have taken but also highlights key allocation strategies and the primary impediments to allocation success. The practical implication of the framework is that managers may employ a number of allocation strategies and that not all corporate managers employ the same strategy. The challenge for future research is to delve further into organizational issues that may help explain why managers select one allocation strategy over another. The commentary from Ahuja and Novelli (2107) addresses a specific type of resource allocation—in this case, allocation of financial resources to functional activities. While the consequences of underinvestment have been the subject of critiques of investment practices, less attention has been paid to overinvestment. In their commentary, the authors focus on overinvestment in research and development (R&D) and discuss the effects that a variety of external and internal organizational factors characterizing technological contexts can have in making overinvestment in R&D likely, urging scholars to turn their attention to systematically studying activity overinvestment. Prior research has provided evidence that behavioral factors—cognitive, social, and political—and organizational features shape resource allocation. However, the relevant behavioral factors and organizational features are many and varied, and there is still much to be learned about their effects on resource allocation decisions and outcomes, especially as tested across multiple firms and industries. It is not possible to capture the complexity of the resource allocation process in a large-scale quantitative empirical study; however, careful analysis of particular aspects of organization and managerial behavior can inform our understanding of their influence on resource allocation. The next four contributions to the issue report empirical studies that do just that. Bardolet, Brown, and Lovallo (2017) begin with the observation that capital allocations to business units in a multibusiness firm are not made independently but through comparisons among the options, a feature long established from field studies of the resource allocation process. The authors then question the boundaries of findings from prior research, including their own (Bardolet et al., 2011), which has supported a naive tendency to spread allocations evenly across a firm’s business units due to cognitive bias, favoring smaller businesses. This study examines the effect of a particular organizational feature, business unit size, on allocations and offers a competing hypothesis predicting larger allocations to larger business units due to their political power. The analysis finds that both the smallest and the largest of segments benefit in the capital allocation process, consistent with a complex combination of cognitive and political factors at play, leading to the favoring of extreme relative size types within corporations. Vieregger, Larson, and Anderson (2017) also challenge the notion that capital is spread evenly across a firm’s business units. Building on research demonstrating that resource allocation is shaped by organizational power and politics, the authors draw on upper echelons research and classic contingency theory of organizational design to examine the impact of executives having a business unit orientation represented on the top management team. They argue that business unit orientation emphasizes differentiation rather than integration and 2416   Journal of Management / November 2017 leads to changes in capital allocation patterns. Using a measure constructed to capture business unit influence based on publicly available data, the analysis finds that a greater year-toyear change in capital allocation across business units is associated with more business unit influence in the top management team of a firm. Both the Bardolet et al. (2017) study and the Vieregger et al. study identify capital allocation patterns and propose plausible explanations that warrant further, more detailed examination, as Busenbark et al. (2017) advocate. The following two articles focus on aspects of the structural context within which resources are allocated. Like the Vieregger et al. (2017) study, Sengul and Obloj (2017) also examine aspects of organizational design in a multidivisional firm, but their focus is on gaining insights into managing the structural context—specifically, the allocation of decision rights and the provision of incentives—to exert influence on resource allocation behaviors of business unit managers. Drawing on the behavioral theory of the firm and behavioral decision theory, the authors hypothesize that business units performing below aspirations are less likely to be given discretion over investment decisions and less likely to be provided with incentives that promote risk taking. Based on survey data to capture the key structural context variables, the analysis provides evidence consistent with corporate management intentionally allocating decision rights and providing incentives to influence resource allocation behaviors of business unit managers. Souder and Bromiley (2017) also consider incentives and their link to resource allocation behavior but examine a more specific case of behavior. They focus on stock options as longterm managerial incentives for making investments in R&D and capital expenditures, two spending categories with long-term performance implications and ones typically associated with relatively higher degrees of managerial discretion. Drawing on behavioral agency theory, the authors argue that the incentive effect of options on spending decisions depends on managerial beliefs about how the stock market reacts to firm behavior. There is empirical evidence suggesting that stock prices increase in the short term from increased spending on R&D but not on capital expenditures; therefore, the incentive effect of stock options on resource allocation to these two categories should differ. Based on data on option exercisability that dictates when managers receive option payout, the study confirms the hypothesized effect and finds evidence of resource allocation behavior that increases managerial payoffs but not necessarily firm performance, thus presenting a more complex picture of the role of incentive compensation than previously considered. Finally, there are four contributions aimed at suggesting theoretical directions for moving research on resource allocation forward. Like the preceding empirical articles, Levinthal’s (2017) commentary addresses organization and its effect on resource allocation. However, in contrast to those studies, which examine the effects of particular organizational features on resource allocations, Levinthal proposes an approach that views organizations as mediating the allocation of resources—financial and nonfinancial. This mediating role is quite expansive and is presented as an overarching conceptual framing that has multiple applications, as illustrated by three sets of arguments, each oriented toward a focal level: across firms, within a firm, and within an initiative over time. First, organizations have privileged access to different investment opportunities and face different opportunity costs, thereby leading to different choices; second, organizational structures lead to diversity of beliefs and perspectives, which lead to heterogeneous bases of selection in resource allocation processes within an organization; third, firms mediate the allocation of resources over time to a given initiative. Maritan, Lee / Resource Allocation and Strategy   2417 The perspective is behavioral and evolutionary, thus providing linkages to a large literature base that can inform resource allocation research. In a conceptual article, Leiblein, Chen, and Posen (2017) combine insights from multiple literatures—strategic factor market, feedback learning, and real option valuation—to propose a theory of resource allocation decision making under uncertainty. Underpinning the model is the notion that competitive advantage from acquiring resources in factor markets may emerge not only from luck, differences in information, or complementary assets, as prior research has argued, but also because firms differ in the ability to integrate new information to exercise a contingent claim on an asset in a factor market. Differences in learning ability lead to different resource allocation decisions and, potentially, competitive advantage. Maritan and Lee’s (2017) commentary applies a resource and capability lens and offers illustrations of the potential that resource-based theories have for contributing to resource allocation research. First, framing resource allocation as investing in capabilities provides a theoretical path connecting the strategic purpose of investments, through value creation from resource commitments, to the creation of competitive advantage. Second, resource allocation for the purpose of capability development can be related to a resource-based model of asset accumulation, thus suggesting how key features of the asset accumulation process can usefully inform research on the resource allocation process. Last, a resource and capability lens provides a means of linking corporate capital allocation to research on resource redeployment in a multibusiness firm, explicating ways in which corporate headquarters can add to firm value. In the final commentary, Bettis (2017) offers the potential of a theory of strategic management heuristics. He contends that there exists no theory in strategic management or related fields to tackle decision problems that cannot be solved by organizations using rational analytical technologies. Drawing on the metaphor of computational intractability from computer science, Bettis develops the concept of organizational intractability, which is demonstrated via the joint decision problem of strategic planning and the associated resource allocation, and he argues for the use of heuristics for dealing with such problems. He goes on to sketch issues relevant to a theory of strategic management heuristics, and he makes related research suggestions. Directions for Future Research The papers in the special issue point to a research agenda in which resource allocation is examined as a central focus of study. A potential area of study is the distinct features of resource allocation. Bower (2017) and Bettis (2017) note that complexity poses a challenge to resource allocation research; the resource allocation problem is more complex than what the current models and tools of analysis used by researchers can accommodate. Future research can examine this complexity as a distinct feature of resource allocation. Following Bower, this might be accomplished through continuing the tradition of qualitative field research but with a more multidisciplinary approach that captures the interrelated technical, economic, cognitive, organizational, and interpersonal forces that shape the resource allocation process. Alternatively, following Bettis, it might be accomplished by examining intractability of resource allocation as an organizational decision problem. Both approaches are ambitious and treat the resource 2418   Journal of Management / November 2017 allocation process in its entirety. Other papers in the issue suggest tackling elements or aspects of the resource allocation process. Although research that is focused on specific elements or aspects of the process, by definition, overlooks important connections and relationships that create complexity, it provides theoretical and empirical details that can inform more holistic research. The papers in the special issue suggest two areas of further study. One of those is the antecedents of resource allocation. Following Levinthal (2017), future research can focus on ways in which organizations mediate between resources and resource allocation decisions. Several aspects of organizations are highlighted by other authors. One aspect is managerial incentives. Souder and Bromiley (2017) investigated the use of stock options in incentivizing managers for making investments in R&D and capital expenditures. Sengul and Obloj (2017) studied the provision of incentives as well as the allocation of decision rights as governance mechanisms in multiunit firms. Another aspect is top management team structure. Vieregger et al. (2017) examined, also in the context of multiunit firms, the influence of business units within the top management team on resource reallocation. An additional aspect is the size of a business segment relative to the rest of the organization. Bardolet et al. (2017) focused on the relative size comparison and unpacked two possible mechanisms that explain why smaller segments are favored over larger ones, and vice versa. A further aspect is an organization’s learning ability. Leiblein et al. (2017) posited that organizations differ in the ability to integrate new information to exercise a contingent claim on an asset in a factor market. This specific type of learning ability is proposed as an antecedent to resource allocation decisions. The other area of study is the outcomes of resource allocation. Future research can more closely link resource allocation decisions to intermediate and firm-level outcomes resulting from allocations such as corporate value creation (Maritan & Lee, 2017), competitive advantage (Leiblein et al., 2017; Maritan & Lee, 2017), firm performance (Busenbark et al., 2017), and overinvestment in activities such as R&D (Ahuja & Novelli, 2017). By studying the distinct features, antecedents, and outcomes of resource allocation, future research can achieve deeper and better understandings about firm strategies, as strategies are formed, adapted, and improved with the allocation of financial, physical, technological, and human resources. Our goal for this special issue was to spark interest in strategy research on resource allocation. Our hope is that the ideas presented, evidence provided, and directions suggested by the articles and commentaries will do so and encourage scholars to pursue work on this important topic. Notes 1. Sources of publications included in the search were Academy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Journal of Management, Journal of Management Studies, Organization Science, and Strategic Management Journal. Search terms used were resource allocation, capital allocation, capital investment, strategic investment, investment decision, and variations of those terms, such as allocation of resources. No date limitations were imposed. An initial set of 249 articles were identified. Based on the content of those articles, 172 were determined to address research in the domain of strategic management (with the remainder falling in other areas of management, such as organizational behavior), and 38 of those focused explicitly on some aspect of resource allocation, such as resource allocation as strategy making or strategy implementation, or on factors affecting the allocation of specific types of resources, such as financial, physical, technological, or human resources. The remainder referred to resource allocation in only a general sense or focused on another topic, with resource allocation playing a secondary role. Our goal was to estimate the approximate size of this body of research Maritan, Lee / Resource Allocation and Strategy   2419 and not to calculate an exact number. Judgment was used to apply field and topic boundaries, and we erred on the side of inclusion rather than exclusion. 2. There are also books and monographs reporting major resource allocation field studies, including Bower’s (1970) seminal work (see also Bromiley, 1986; Butler et al., 1993), and book chapters on the topic (see Bower & Gilbert, 2005). However, the numbers remain relatively small. 3. There is also research in which resource allocation is featured but is not the focus. For example, studies of strategic decision making may include investments among the decisions; however, the content of what is being decided is secondary to decision behavior. Studies of innovation often incorporate R&D investment as a variable, but the investment decisions are of less interest than other factors driving innovation outcomes. Our interest here is research undertaken with the primary purpose of understanding resource allocation. References Ackerman, R. W. 1970. Influence of integration and diversity on the investment process. Administrative Science Quarterly, 15: 341-351. Ahuja, G., & Novelli, E. 2017. Activity overinvestment: The case of R&D. Journal of Management, 43: 2456-2468. Ansoff, H. I. 1965. Corporate strategy. New York: McGraw-Hill. Arrfelt, M., Wiseman, R. M., & Hult, G. T. M. 2013. Looking backward instead of forward: Aspiration-driven influences on the efficiency of the capital allocation process. Academy of Management Journal, 56: 1081-1103. Bardolet, D., Brown, A., & Lovallo, D. 2017. The effects of relative size, profitability, and growth on corporate capital allocations. Journal of Management, 43: 2469-2496. Bardolet, D., Fox, C. R., & Lovallo, D. 2011. Corporate capital allocation: A behavioral perspective. Strategic Management Journal, 32: 1465-1483. Bardolet, D., Lovallo, D., & Rumelt, R. 2010. The hand of management: Differences in capital investment behavior between multi-business and single-business firms. Industrial and Corporate Change, 19: 591-612. Bettis, R. A. 2017. Organizationally intractable decision problems and the intellectual virtues of heuristics. Journal of Management, 43: 2620-2637. Bower, J. L. 1970. Managing the resource allocation process. Boston: Harvard University, Graduate School of Business Administration. Bower, J. L. 2017. Managing resource allocation: Personal reflections from a managerial perspective. Journal of Management, 43: 2421-2429. Bower, J. L., & Doz, Y. 1979. Strategy formulation: A social and political process. In D. E. Schendel & C. E. Hofer (Eds.), Strategic management: A new view of business policy and planning: 152-166. New York: Little, Brown. Bower, J. L., & Gilbert, C. G. 2005. From resource allocation to strategy. Oxford: Oxford University Press. Bromiley, P. 1986. Corporate capital investment: A behavioral approach. New York: Cambridge University Press. Burgelman, R. A. 1983. A process model of internal corporate venturing in the diversified major firm. Administrative Science Quarterly, 28: 223-244. Busenbark, J. R., Wiseman, R. M., Arrfelt, M., & Woo, H.-S. 2017. A review of the internal capital allocation literature: Piecing together the capital allocation puzzle. Journal of Management, 43: 2430-2455. Butler, R., Davies, L., Pike, R., & Sharp, J. 1991. Strategic investment decision-making: Complexities, politics and processes. Journal of Management Studies, 28: 395-415. Butler, R., Davies, L., Pike, R., & Sharp, J. 1993. Strategic investment decisions: Theory, practice and process. London: Routledge. Chandler, A. D. 1962. Strategy and structure: Chapters in the history of American enterprise. Cambridge, MA: MIT Press. Christensen, C. M., & Bower, J. L. 1996. Customer power, strategic investment, and the failure of leading firms. Strategic Management Journal, 17: 197-218. Danneels, E. 2007. The process of technology competence leveraging. Strategic Management Journal, 28: 511-533. Gilbert, C. G. 2006. Change in the presence of residual fit: Can competing frames coexist? Organization Science, 17: 150-167. Haka, S. 2006. A review of the literature on capital budgeting and investment appraisal: Past, present, and future musings. In C. S. Chapman, A. G. Hopwood, & M. D. Shields (Eds.), Handbook of management accounting research: 697-728, Boston: Elsevier. Hofer, C. W., & Schendel, D. 1978. Strategy formulation: Analytical concepts. St. Paul, MN: West. 2420   Journal of Management / November 2017 King, P. 1975. Is the emphasis of capital budgeting theory misplaced? Journal of Business, Finance and Accounting, 2(1): 69-82. Leiblein, M. J., Chen, J. S., & Posen, H. E. 2017. Resource allocation in strategic factor markets: A realistic real options approach to generating competitive advantage. Journal of Management, 43: 2588-2608. Levinthal, D. A. 2017. Resource allocation and firm boundaries. Journal of Management, 43: 2580-2587. Maritan, C. A. 2001. Capital investment as investing in organizational capabilities: An empirically grounded process model. Academy of Management Journal, 44: 513-531. Maritan, C. A., & Lee, G. K. 2017. Bringing a resource and capability lens to resource allocation. Journal of Management, 43: 2609-2619. Marsh, P., Barwise, P., Thomas, K., & Wensley, R. 1988. Managing strategic investment decisions. In A. M. Petttigrew (Ed.), Competitiveness and the management process: 86-134. Oxford: Blackwell. Noda, T., & Bower, J. L. 1996. Strategy making as iterated processes of resource allocation. Strategic Management Journal, 17(S1): 159-192. Rajan, R., Servaes, H., & Zingales. 2000. The cost of diversity: The diversification discount and inefficient investment. Journal of Finance, 55: 35-80. Rumelt, R. P., Schendel, D., & Teece, D. J. 1991. Strategic management and economics. Strategic Management Journal, 12(S2): 5-29. Sengul, M., & Obloj, T. 2017. Better safe than sorry: Subsidiary performance feedback and internal governance in multiunit firms. Journal of Management, 43: 2526-2554. Souder, D., & Bromiley, P. 2017. Timing for dollars: How option exercisability influences resource allocation. Journal of Management, 43: 2555-2579. Souder, D., & Shaver, J. M. 2010. Constraints and incentives for making long horizon corporate investments. Strategic Management Journal, 31: 1316-1336. Vieregger, C. 2012. Do firms really allocate capital so inefficiently? Working paper available at SSRN: http:// Vieregger, C., Larson, E. C., & Anderson, P. C. 2017. Top management team structure and resource reallocation within the multibusiness firm. Journal of Management, 43: 2497-2525. Strategic Planning and Research Priorities in Private Industry Karen A. Raposa, RDH, MBA Colgate–Palmolive Company Prior to any strategic planning of industry–supported research work, it is important to identify the priorities of the corporate organization. These priorities will be critical to understand in order to ensure that the research you are proposing is relevant to the corporation and meets their strategic needs. Corporations will identify their priorities based on many different approaches. One approach might be to look at market research results to consider feedback and insights from both consumers and professionals. These studies might be conducted at conventions, through experts or key opinion leaders in the field, via advisory board meetings, through focus groups (qualitative research) and/ or broad surveys (quantitative research). Often during these research studies, unmet consumer/patient needs may be uncovered or an unmet need within the profession may be revealed and explored. Many companies will also review new and emerging trends in the marketplace. These can be either product or procedure trends. Some examples of emerging markets today might be dry mouth, erosion, sensitivity, minimally invasive dentistry or even spa dentistry. In addition to considering what research needs to be conducted in the future, companies will look to explore the research that may already exist on a specific topic to date. This research may have been conducted within the company or outside of the organization. It may be research conducted on other products, on a specific ingredient(s) or on a specific subset of the population. Organizations seeking to identify priorities must also be aware of 206 competitive activity within the category they may be exploring. They need to understand the activities and products in the competitive landscape that are gaining traction. In addition, the internet can be a wonderful tool to acquire knowledge about trends and fads via Google, You Tube and various blogs. Understanding technology, activities, products and procedures that are approved and available in other parts of the world can also be a key driver in identifying research priorities. In some cases this learning may come from a competitor, but often times it is a result of exploring worldwide trends, fads and emerging sciences. Finally, and probably most importantly, a corporate organization must be mindful of its core competencies, but must also understand if there is opportunity to move beyond the competencies that exist today to a competency that may be acquired. Ultimately, any new competencies would need to be a strong strategic fit in order to avoid potential disastrous results. Once the corporate priorities are identified, they must then be prioritized in order to come to a key decision on what research should be pursued. For example, recognizing the corporate strategy for the study (i.e. long or short term, local, regional or global) will be critical to the design of the study. In addition, the core competency of the organization is critical to the decision making and prioritizing process. In reviewing this aspect, it is important to determine how the option expands the current portfolio and if it does so in a meaningful way. In looking at the possibility of a product line extension, a company must consider whether the additional products in the line will contribute meaningful product benefits or will move the product line into a different or new and meaningful area. Finally, the timeline to get the results, the cost of getting those results and the reThe Journal of Dental Hygiene turn on the investment will all need to be considered. If it is determined that the research priority will be in a non–core competency or new area, then it is important to first evaluate the cost of entry. This can be accomplished by reviewing and applying Michael Porter’s “Five Forces” in his 1998 publication On Competition.1 The company must also consider how this expansion of the corporate brand image would be perceived and what the options to entry are. For example, is it in the organization’s best interest to research and develop a new product or procedure alone? Or is a strategic partnership the better choice? Is an acquisition of the product/procedure/ technology the best approach? Once the plan of entry is decided, a plan after entry must be formulated including a timeline, cost and return on investment. Now that the key priorities have been listed, they need to be prioritized in rank order. Strategic plans, both short and long term, must then be developed around these priorities. It will be important to ensure that the appropriate resources are allocated for all proposed research and that key performance indicators are in place in order to consistently monitor the progress of the research project. It is important to consider both the advantages and challenges associated with merging research interests between academia, government and industry. Several advantages do exist, including the fact that these types of collaborations are relationship based and develop as a result of solid relationships between academia and industry. Because of this platform, funding support is usually straightforward and predictable. In addition, there is solid support for proposed methodologies and techniques, as well as a dedicated, reliable team of corporate research and development employees who are always available as an ongoing Volume 83 Issue 4 Fall 2009 resource. Once the data has been collected, an additional advantage to this type of collaboration is that there are corporate employees who are able to run the statistical analyses that are needed for final report and article submissions. Finally, the end result of this type of collaboration can lead to even more interaction between these groups, such as additional studies, consulting or ongoing long–term collaborations. Volume 83 Issue 4 Fall 2009 The challenges with these merging research interests include the need for common interests, the fact that the priorities of either team may change mid–stream or the economic pressures that may exist as the research study progresses, as well as the level of oversight the corporation may choose to impose on the researcher. Overall, however, the advantages far outweigh the challenges and great opportunities exist The Journal of Dental Hygiene from these types of academic, government and industry research interactions and collaborations. Disclosure: The author of this manuscript is employed by Colgate–Palmolive Company. References 1. Porter M. On competition. Boston: Harvard Business School Publishing; 1996. 207 Copyright of Journal of Dental Hygiene is the property of American Dental Hygienists Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. STRATEGIC PLANNING AS AN ORGANIZATION DESIGN EXERCISE William F. Roth, PhD The major challenge faced by modern day strategic planning efforts is the accelerating rate of change in both the internal and external environments. Most companies are bogged down in traditional approaches that take too long, lack the required flexibility, and produce results that are frequently obsolete before they are implemented. Interactive planning, with its core concept of idealized design, focuses initially on shaping an organization capable of learning continually and adapting so that the improvements implemented make sense. FOUR PHASES OF STRATEGIC PLANNING Strategic planning efforts traditionally have four phases: (1) environmental scanning, (2) definition of long-term objectives and shorter-term goals, (3) definition of an implementation strategy, and (4) evaluation and control of the resultant changes (Wheelen, Hunger, Hoffman, & Bamford, 2014, pp. 13–22). During environmental scanning, participants examine both the internal and external environments to discover what is happening and how it might be affecting the organization. A strengths, weaknesses, opportunities, and threats analysis can be used to identify internal strengths and weaknesses as well as external opportunities and threats. The much more comprehensive internal audit can also be used to study the flow of the organization, including inputs, throughputs, and outputs and to identify strengths and weaknesses. Trend analysis is another popular tool, especially when addressing the external environment. Surveys and group brainstorming sessions can be used to facilitate the identification of internal strengths and weaknesses. In larger companies, a department is usually given responsibility for organizing this phase and gathering the desired information. Another tool frequently introduced during an environmental scan is the reference projection. Its purpose is to identify past and present trends and to project them into the future. For example, car sales have increased 6 Performance Improvement, vol. 54, no. 6, July 2015 ©2015 International Society for Performance Improvement Published online in Wiley Online Library ( • DOI: 10.1002/pfi.21487 an average of 13% during the last 10 years. The project indicates that they will continue to do so for the next five. Reference scenarios are an elaboration of the reference projection. While projections are framed solely in terms of numbers, scenarios add nonquantifiable factors to draw a picture of what will be happening in the future if the defined trend continues concerning the environment, the target population, the competition, and the community. The second phase of strategic planning is the definition of long-term objectives and shorter-term goals related to each objective; this phase makes use of the information gathered during environmental scanning to decide how the organization is going to improve productivity during the next year, the next two years, or the next five years and to decide what its long-term objectives and shorterterm goals will be. This definition has traditionally been pursued in one of two ways: top-down or bottom-up. In companies that use the top-down approach, a planning department makes recommendations to the board of directors or to top-level management, which, in turn, defines objectives and goals and then passes its decisions down through the hierarchy. Once units receive their marching orders, they are supposed to begin implementing the required changes. The major weakness of this approach is the lack of input from lower levels in defining objective and goals. While top management has a good idea of the company as a whole and how it fits into the marketplace, top While most people focus on the definition of the objectives and goals phase of a planning effort as the most difficult and challenging, implementation rapidly becomes the most demanding. The culprit, quite simply, is the increasing rate of change in both the internal and external environments that organizations must effectively deal with if they hope to succeed. management knows relatively little about what is going on below and about what is going on in each individual unit. A strengths, weaknesses, opportunities, and threats analysis or internal audit might provide some of this information, but not in an ongoing manner and not in the required depth. In addition, some of the modifications required by top management might not be possible or might have a negative rather than positive effect on the involved unit or on other units that it interacts with. When the bottom-up approach is used, the lowest level units are told to develop a list of the improvements they wish to make in terms of products, the manufacturing or service delivery processes, management systems, and the work environment. These lists are then passed up and consolidated at the next level, all the way up the hierarchy. When they reach the top, decisions are made as to which projects should be funded and this information is passed back down. The major problem with this approach is that units are forced to compete blindly for resources because they have little or no idea of how their requests and how their part of the operation fits into the organization’s overall priorities. The primary building block for a strategic planning exercise is obviously the budget. Because companies never have enough money to accomplish everything desired in terms of organization improvement and growth, priorities have to be set. The company has to decide which of its objectives are most important and then allocate funds accordingly. A tool used by corporations during this process is the Boston Consulting Group growth share matrix (Stern & Stalk, 1998, pp. 125–131). It helps identify which product units or businesses should receive funding for projects and which product units or businesses should provide those funds by dividing them into four categories. The first category includes stars, those units that are growing steadily in terms of productivity and the amount of revenues generated so that they need no assistance. The second category includes question marks, units that show potential for growth and increased profitability and, therefore, merit additional financial support. Cash cows are the third category. These are units bringing in more revenue than needed for operational expenses, units that have peaked in terms of potential growth, thus losing their star status, so that they now function as contributors. The final category is dogs. Units in this category are losing market share and have little chance of turning things around. They should be sold off as quickly as possible or liquidated. The Boston Consulting Group matrix is a simple but effective starting point for defining priorities. It is a flexible tool that can be elaborated on and made more sophisticated in terms of how units in the four categories are described, though, as we shall see, over-sophistication is too frequently becoming the enemy of effective strategic planning. SHIFTING OUR FOCUS The third phase of all planning paradigms is the generation of an implementation strategy including the spelling out in detail of action steps necessary for the achievement of goals and objectives. This is followed by the development of a timeline for accomplishment of these action steps, taking into account the need for integration not only of the steps themselves, but also integration of the decided-upon steps with ongoing and everyday activities of the organization. While most people focus on the definition of the objectives and goals phase of a planning effort as the most difficult and challenging, implementation rapidly becomes the most demanding. The culprit, quite simply, is the increasing rate of change in both the internal and external environments that organizations must effectively deal with if they hope to succeed. For example, while we are implementing action steps in our department, something changes in another department that is triggered Performance Improvement • Volume 54 • Number 6 • DOI: 10.1002/pfi 7 When do the ongoing changes that make planning so difficult end or even slow down? The real-world answer is, of course, never. In fact, the rate of change is constantly speeding up. by a change in its external environment. That department might have lost a key supplier, or a new technology might have been introduced. The involved change affects us only indirectly but requires us to rethink one of our action steps. In turn, the rethinking of that action step requires the rethinking of the related goal. Then, during our period of rethinking, something else happens that requires more rethinking; then something else happens, generating a nonstop parade of happenings so that we are constantly reevaluating and making changes to our decisions. When do the ongoing changes that make planning so difficult end or even slow down? The real-world answer is, of course, never. In fact, the rate of change is constantly speeding up. Technology is increasingly important to success in both the primary industry sector and the service industry sector. Technological innovation in these sectors plays a major role in triggering the something and the something else that implementation efforts stumble over. As Donald Schon says, half in jest, “The time required for the diffusion of major technological innovations would appear to be approaching zero as a limit” (1971, p. 24). Later, he adds, “We are no longer able to afford the relatively leisure process of adaptation which has until now allowed us to keep the illusion of a stable state” (1971, p. 27). This realization leaves us with three alternatives. The first is simply to quit trying to generate a formal strategy. Companies adopting this approach end up basing definitions of their objectives and goals on somebody’s gut feeling, usually the CEO’s. This approach, at least in the short term, saves a lot of money. But in the long term, it frequently runs into serious problems. The second alternative is to go through the motions to keep up appearances, then to ignore the results and satisfy the desire for improvement by making piecemeal and fragmented changes. The third alternative, the one on which this article focuses, is to think out of the box and look for a nontraditional way to ensure that the company is headed 8 • DOI: 10.1002/pfi • JULY 2015 in the right direction and stays headed in the right direction, no matter how many unexpected twists and turns pop up in the road. The fourth phase of a successful planning effort is the evaluation and control phase. We already know of the problems encountered during implementation of the improvements supporting new organization goals and objectives. Most of these problems result from changes occurring in the customer market, the financial market, and the market for needed resources. By evaluation, we mean keeping track of the obstacles that arise during each step of the implementation process. We must also be cognizant of the fact that an obstacle arising in one part of the company almost invariably creates ripples that affect other parts. Employees need to be capable of adapting when something unexpected occurs. This is the control part of the phase and involves making adjustments when things do not go the way we want them to go. THE APPROACH TO PLANNING WE ARE TALKING ABOUT IS VERY DIFFERENT Russell Ackoff, in his book Re-creating the Corporation, talks about four types of management and planning efforts: reactive, inactive, preactive, and interactive (Ackoff, 1999, pp. 45–60). Reactive planners are constantly trying to return to a previous state, to a time when things were good, or at least when the problems currently faced did not exist. Their challenge is: What do we need to do to get back to where we were? Success in such efforts, of course, is fleeting at best. The obvious reason that the previous and desirable state lost traction was because it could no longer deal with the changes occurring in its environment. These changes are still occurring and will not stop, so regaining a previous state is impossible. Inactive planners want to stop change. They like the way things are currently and want them to stay that way. But again, change cannot be stopped, and ongoing change forces companies to adapt if they want to remain competitive. The inactive approach to planning does not work either, although it is enticing, especially to companies that are presently doing well. Preactive planners spend their time trying to predict the future so they can prepare for it and so they can take advantage of what is going to happen. Obviously most corporations and most planning departments still use this approach and base the recommendations they provide to top-level management on trend analysis, reference projections, reference scenarios, and a multitude of other predictive tools. However, the period during which these Thus, the evaluation and reward process, which more than any other process shapes the corporate culture and makes it either cooperative or competitive, must be designed to encourage cooperation. predictions remain accurate is getting shorter and shorter as a result of the increasing rate of environmental change. Russell Ackoff notes that “preparing for an inaccurately forecasted future is often worse than doing nothing” (Ackoff, 1986, p. 181). Finally, interactive planners are the ones thinking out of the box. They are the ones taking the most realistic approach. Instead of trying to reverse change, to stop it, or to predict it, they focus on designing organizations capable of monitoring continuously the changes occurring in the environment and adapting rapidly to them. As a result, at least the initial part of a strategic planning effort in such organizations becomes an exercise in organization redesign. Interactive planning and organization redesign efforts must have three critical characteristics. If any of the three are lacking, the effort will not produce the desired results. First, they must be participative—truly participative. I have been a corporate consultant for some 20 years now. Whenever I go into an organization, one of the first questions I ask is: How participative is your company; how much involvement does your workforce have in decision making? The answer is always the same. We are very participative. We know the value of involving our workers. However, when I ask for an explanation of what they mean by participative, the answers break down into four categories. The first category includes “we tell the workers what to do and they do it”; that is participation. The second version is a little less rigid and is built around the approach of asking workers for their opinions and then telling them what to do. The third and most rapidly growing category of responses offers the sentiment that the company allows its employees to make decisions and to help implement the results of these decisions once management approves them. And finally, the smallest category, indeed very small, hires good people, trains them well, and then empowers them to make decisions and implement improvements in their area of expertise. The role of the manager in such a company is, upon request, to facilitate the employees’ efforts in any way possible, to address any questions they might have, and to help integrate their efforts with those of other units. This fourth level of participation is necessary when an organization’s goal is to truly become an adaptive learning system. There is no way top-level management can gather all of the information from the environment requisite to success. There is no way a planning department can do so. There is no way middle-level managers can keep track of all the information that is pouring in on top of their other responsibilities. For an organization to learn everything necessary for effective adaptation, every employee has to be continually listening and learning. The second critical characteristic of interactive planning and organization redesign efforts is that they are integrated organization wide. For the information brought in through true participation to reach the functions where it can be most effectively utilized, channels must be open and passage guaranteed. In-house competition between units and between individuals in those units is no longer acceptable (Roth, 2015, pp. 27–42). Emphasis must be on cooperation and mutual support. Thus, the evaluation and reward process, which more than any other process shapes the corporate culture and makes it either cooperative or competitive, must be designed to encourage cooperation. Without this happening, the necessary degree of organization-wide integration requisite to the necessary level of communication will not occur (Roth, 2014, pp. 24–25). The third critical characteristic is that the design must encourage continual learning, without which effective participation and integration cannot occur. Employees need to know what resources their organization is seeking, how to look for them, and where to look for them. Employees need to understand how parts of the organization interact, how they support each other, what channels of communication are available, and to whom information concerning change in the external environment should be sent to. Employees need to understand and be committed to achieving the long-range objectives of the organization. The best way to gain such commitment is to encourage employees to help define the involved objectives. Of course, this approach ties the need for continual learning to the need for participation and the need for organizationwide integration. These three characteristics are interdependent, just like the four phases of strategic planning are interdependent. None of them can exist without the others. Performance Improvement • Volume 54 • Number 6 • DOI: 10.1002/pfi 9 The challenge presented by an idealized design exercise is quite simple and reads thus: When you came in this morning you found that your organization was destroyed last night. It is now your job to redesign your part of it as it ought to be, to come up with an ideal model for right now. HOW TO TURN AN ORGANIZATION INTO AN ADAPTIVE LEARNING SYSTEM As has been noted, the interactive approach to strategic planning begins as an organization redesign process that possesses three critical characteristics. Instead of beginning the planning effort by scanning the environment, companies tend to skip directly to the definition of long-term objectives and shorter-term goals phase. The long-term objective defined at the beginning of all interactive planning exercises is to shape the organizations in a way that allows it to deal most effectively with and to take the greatest advantages of continuous change. The goals defined have to do with reshaping of the company’s purpose, its structure, and its processes so that it can do so. The company’s purpose has to do with the role it currently plays and the role it ought to play in the larger whole of which it is a part. This whole includes the market, the competition, suppliers, the government, and the community. Its structure includes the different departments that contribute, including finance, accounting, production, marketing, human resources, and research and development. But just as important—or even more important—it includes the interactions between these departments and their subdepartments. The key processes include communication, access to information, decision making, problem solving, work design training, evaluation, and rewards. In terms of communication, who gets to talk to whom and through what 10 • DOI: 10.1002/pfi • JULY 2015 channel? In the old hierarchical management structure, bosses wanted to know what was going out of their unit and where it was going, as well as what was coming into their department and where it was coming from. Thus, a message or request had to pass through several levels. With modern technology and with the network structure becoming increasingly popular, more rapid communication can be facilitated. But at the same time, the channels have become more complex and the involved risk greater. In terms of access to information, how transparent should an organization be both internally and externally? Who should have access to what information and how should that access be gained? In terms of problem solving and decision making, who should be allowed input? Concerning work design, how much of a say should the people actually doing the work be allowed? When we talk about training, who should be responsible for identifying training needs and who is best suited to deliver the desired training? And finally, with evaluation and rewards, how do we design an approach that encourages cooperation between employees and between units rather than competition or conflict, given that cooperation is an important ingredient to success in the modern-day economic struggle? Once the redesign exercise is completed and the key characteristics embedded, the company will be more effective in its environmental scanning efforts, leading to further improvements. The tool most often used to accomplish this reshaping is idealized design, the essence of interactive planning. Traditional planning paradigms start where an organization is using information gained from the environmental scanning effort to identify desired improvements. They then prioritize these improvements, basing decisions mainly on the level of need and on budgetary constraints and then begin making them. Idealized design starts by defining what the organization’s purpose, its structure, and its key processes ought to be and how they ought to be shaped ideally. Participants focus on modeling the reality they would desire right now for their organization if given the power to make relevant decisions. The challenge presented by an idealized design exercise is quite simple and reads thus: When you came in this morning you found that your organization was destroyed last night. It is now your job to redesign your part of it as it ought to be, to come up with an ideal model for right now. This approach, once the model is finished, gives the company a comprehensive target to aim for when it begins defining priorities. The approach also generates commitment by getting every employee involved so that a degree of ownership is established. Finally, it unleashes creativity in that anything goes, so long as the suggested improvement does not require technology not yet available, can survive in the current economic climate, and can adapt continually to meet new circumstances (Midgley, 2000, p. 299). The idealized design process is obviously participative. A ground rule requires that everyone affected by a designed change must be made cognizant of that change, must be asked for input, and must agree to it before implementation, ensuring integration. And finally, all participants are learning continually about how their piece of the puzzle fits into the whole and about how the whole operates. An idealized design effort has three phases. A majority of corporate design efforts begin by creating both a mission statement and a vision statement. The mission statement identifies how the corporation plans to progress from where it is, what changes it is going to make, and what priorities it wants to define. The vision statement identifies what the company wants to look like in the future if it can afford the necessary changes. Interactive planning differs in that during this phase corporations create an idealized design. There is no upfront mission statement because there is no organization to develop a mission statement for. Remember, the company was destroyed last night, so participants are forced to start from scratch and redesign it, including functions, structure, and key processes, in a way that best allows the company to generate the most desirable results. One could say that idealized design combines the mission and vision statements of traditional planning into something we will call a target statement that includes not only a brief explanation of the role that the company wants to play in the larger environment of which it is a part, but also what the company should provide ideally for its different stakeholder groups. These groups include employees, customers, suppliers, investors, and the community. Once the target statement is completed, idealized design goes on to identify the characteristics that the involved product or systems need to possess to reach the defined target. For example, if the target is to produce and distribute to customers the highest quality widget on the market at a reasonable price, and if at the same time the target in terms of the customer stakeholder group is that customers should be satisfied with their purchase and feel no need to return it, an idealized characteristic might be that no defective widgets should be allowed to leave the assembly plant. In the service sector, for example, if a bank’s target is for customers to consider the service delivered by the bank branches superior to those of other banks, the target may include making sure that customers have to wait no more than three minutes for a teller. After the characteristics have been identified, design elements including the nuts and bolts of how to actualize these characteristics are spelled out. For the widget operation, to ensure that no defective pieces leave the assembly plant, a design element might be that any employee who finds a defect has the right to stop the assembly process until the defect’s cause is identified and corrected. Concerning the three-minute wait for customer services at a bank branch, tellers might be given a buzzer to ring if the line grows too long so that employees doing other things can move away from their normal tasks and assist with waiting on customers. This is how idealized design works using target statements, systems characteristics, and design elements. This is how interactive planning works and why it differs greatly from traditional approaches. The only absolute in the economic sector is change, and change is accelerating continually. Companies that want to survive in this increasingly unstable environment have three choices. First, find some way to slow the rate of change. Second, try to predict where the change is leading so that the organization can prepare for it. And third, design the organization so that it is capable of monitoring change continually and adapting rapidly or even shaping it. A growing number of organizations are opting for the last choice, because it makes the most sense. References Ackoff, R.L. (1986). Management in small doses. Hoboken, NJ: John Wiley and Sons. Ackoff, R.L. (1999). Re-creating the corporation. Oxford, England: Oxford University Press. Midgley, G. (2000). Systemic intervention: Philosophy, methodology, and practice, New York, NY: Kluwer Academic/Plenum Publishers. Roth, W. (2014, September). Evaluation and reward systems: The key shapers of organization culture. Performance Improvement, 53(8), 24–29. Roth, W. (2015). Out of the box thinking for successful managers. Boca Raton, FL: Productivity Press. Schon, D. (1971) Beyond the stable state. New York, NY: The Norton Library. Stern, C., & Stalk, G. (Eds.). (1998). Perspectives on strategy from the Boston Consulting group. Hoboken, NJ: John Wiley and Sons. Wheelen, T., Hunger, D., Hoffman, A., & Bamford, C. (2014). Strategic management and business policy: Globalization, innovation and sustainability (14th ed.). Boston, MA: Pearson Press. Performance Improvement • Volume 54 • Number 6 • DOI: 10.1002/pfi 11 WILLIAM F. ROTH, PhD is currently a professor at Kutztown University in Pennsylvania where he teaches courses in strategic planning, organization design, ethics, and management theory. Previously he taught for sixteen years at DeSales University, where he held the McCabe Endowed Chair for Business and Society. He earned his PhD at The Wharton School, his master’s degree in social work at the University of Pennsylvania, and his bachelor’s degree in economic geography at Dartmouth College. As a consultant, he has worked on design and regional planning projects in Saudi Arabia, Iran, Mexico, and several locations in the United States. Previously he spent five years with the Poverty Program and the Civil Rights Movement in the Deep South. He has authored nine books; the last two, Comprehensive Healthcare for the U.S.: An Idealized Model and Out of the Box Thinking for Successful Managers were published by Productivity Press. Sixty of his articles have been featured in a wide range of professional journals. He also writes fiction and has published several prize-winning short stories. He can be reached at 12 • DOI: 10.1002/pfi • JULY 2015 Copyright of Performance Improvement is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from The Five Priorities of Strategic Planning Strategic Thinking Footprints to Success... The Five Priorities of Strategic Planning Strategic planning is a management tool. It is used to help an organisation clarify its future direction - to focus its energy and to help members of the organisation work toward the same goals. The planning process adjusts the organisation's direction in response to a changing environment. Strategic planning is a disciplined effort to support fundamental decisions and actions that shape and guide what an organisation is, what it does and why it does it, with a focus on where it wants to go and how it is going to get there. Discipline is a prerequisite to this process because it requires laser-like persistence to bring about a productive strategic planning initiative. The process raises a sequence of questions that helps planners examine current reality, test assumptions, gather and incorporate information about the present, and perform trend analysis on the future industry environment. Fundamental decisions, actions and choices must be made in order to develop a plan that provides the "Footprints to Success." The plan is ultimately no more, and no less, than a set of decisions about what to do, why to do it, and when and how to do it. The scope of the strategy development process for any distributor is dependent upon individual business needs. The strategic planning process is a time and resource-consuming endeavour that involves many people in the organisation. This process includes both tactical and strategic application. Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from A critical factor in developing a strategic plan is looking at the end game first. Just exactly what do you want your company to be when it grows up? Ask yourself the following questions from the perspective of looking five years into the future. 1. What markets will your company be serving five years from now? 2. What products will you be distributing? 3. Who are your primary competitors? 4. What are your strengths? 5. What are your competitors' strengths? 6. How has your marketing strategy changed? 7. What are your core competencies? 8. What is the size of your revenue stream? 9. How is your revenue stream segmented? These are just a few sample questions, but don't stop there. After you've tried to visualise your corporate profile five years in the future, the next step is scenario planning. It's the old "What If" analysis. What if you lose your major product line? What if your three biggest competitors become part of a consolidator roll up? What if you dramatically change your product offering so it doesn't even resemble the industry you represent today? How will e-business impact your strategy? Recognise that an e-strategy should not exist in isolation from your overall company strategy. Remember that e-anything is only a tool while your company vision is the guide on how you use your tools. Follow the Strategic Thinking Process Strategic thinking by a strategy team leader provides a platform for the distributor that identifies the "end game" vision, determines core initiatives to achieve the vision, develops associated SIPs (Strategic Implementation Plans), and coaches the executive strategy team in preparing a presentation of their strategic document to the ownership or Board for approval. After approval is granted, this document becomes the basis for launching the total company planning process. Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from Tactical issues such as sales strategies, performance accountability and compensation issues may also be included. The Strategy Development Process Phase I: Company Internal Survey Preparation A web-based survey is developed focusing on all aspects of the organisation. This generates valuable, precise feedback from the employees. This survey is synthesised, analysed and discussed at the strategy kickoff meeting. End Game Definition Through the use of brainstorming and scenario planning, the CEO and ownership create a picture of what the company will be and how it will function 5 to 10 years into the future. This process can be as simplistic as developing a well thought out visionary mission statement to doing an actual "what if" scenario analysis identifying specific desirable future objectives. Phase II: Kick off Strategy Development Meeting - End Game Presentation The CEO/Owner presents the endgame analysis developed to the strategy team. Open discussion may or may not occur at this juncture. However, further discussion will take place after the CEO excuses himself from the meeting. This discussion will be moderated by a facilitator to get a consensus on the end game by the strategy team. The end game may be challenged only if another alternative is offered. Survey Presentation A copy of the completed survey is handed out. A facilitator presents the analysis of the survey identifying key issues. A discussion of the issues is conducted but the discussion is controlled and kept informal without trying to solve world hunger at this one-day meeting. Strategy Development Kickoff A brief 60-minute strategy planning presentation is conducted by the facilitator to walk the participants through the process. The end game exercise is discussed and defined. This is meant to explain the beginning of the process. After the plan is completed a presentation will be made to the ownership, President and Board, gaining approval of the strategic plan prior to actual launch and execution of the strategy. Doing Nothing Is Not An Option Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from As we've discussed, strategic planning involves anticipating the future environment and creating an endgame analysis so the decisions are made in the present. This means that over time, the organisation must regularly perform trend analysis in order to make the best decisions it can at any given point - it must manage, as well as plan, strategically. Strategic planning is not a substitute for the exercise of judgement by leadership. Ultimately "the buck stops somewhere." The strategic planning process does not make the organisation work - it can only support the sound judgement and reasoning skills that people bring to the organisation. Strategic planning is a creative process. The fresh insight it engenders might very well alter past initiatives. Planning also consumes resources which are precious commodities. It can be an overwhelming and daunting task, but it is a process that eventually defines the direction and activities of the organisation. Despite its overwhelming nature, the benefits of planning can far outweigh the hard work and pain involved in the process. I cannot emphasise enough that the true value of a strategic plan is not in the document itself. It is in the process of creating it, involving many of your employees from the bottom up. This empowers them to be more effective and better-informed leaders, managers and decision makers. The time devoted to the planning process varies from organisation to organisation and you must decide how much time you will devote to the kick off planning process meeting. This can take the form of a two-day retreat or it can be an extended process. The organisation will begin to realise benefits from the start. Fundamental benefits to the planning process include: 1. A framework and a clearly defined direction with unified support 2. A clear vision and purpose that is owned by all employees 3. Commitment to the organisation and its goals by the employees 4. Set priorities that match company resources 5. Trend analysis that creates confidence in the ability to take risks 6. Accountability Readiness Factors The planning process is a major endeavour and timing is critical. There are certain organisational elements that must be in place in order to ensure that the planning process will provide the maximum benefit to the organisation. Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from You must clearly understand the organisation's current state and readiness to engage in the planning process. There are a number of preparatory steps that should be concluded prior to the start. An internal honestgut-check assessment is recommended. Preferably an outside consultant with a fresh pair of eyes does this. Additionally, as mentioned earlier, third-party customer, vendor and employee surveys should be conducted. Other items to secure at the onset include: 1. A commitment on the part of executive management and ownership 2. Resolution of all crises and life-threatening issues 3. Ownership and board support 4. A commitment of necessary resources 5. A willingness to think outside the box and to look at new approaches to performing and evaluating the "business" 6. A basic understanding of scenario planning The key resources required for planning include staff time, executive management time and finances (e.g., market research, consultants, etc.). Staffing demands include: 1. Collecting and analysing data 2. Scenario planning 3. Engaging key stakeholders 4. Gathering historical financial information, projecting future budgets and cash flow projections 5. Analysing options and consequences for potential organisational and program strategies 6. Endgame analysis Project Management Project management becomes critical to the strategic planning process. Execution is the key to success. People have different expectations when they hear the word "planning." Everyone must understand and share the same set of expectations. It is very helpful if one or two key staff members are skilled in project management. A team leader will facilitate the development of a work plan which is an outline of the steps and activities that will take place during the planning process. The plan specifies the tasks, outcomes and resources to be expended, as well as the people responsible for each phase of the process. How Do You Get Started? Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from 1st Priority: If you have determined your readiness factors through assessment and you have performed the necessary preparatory research, then you are ready to launch the process. The following items should become your first priority. 1. Create a Planning Committee 2. Assign a team leader 3. Identify specific ongoing initiatives 4. Clarify roles (who does what in the process) 5. Identify any additional research or outside resources necessary to assist you during the process 2nd Priority: The second priority is to create the end game vision with clarification from ownership and the executive staff. The core strategy statement is an introductory paragraph that clearly defines the end game in understandable and measurable terms; it lets the reader know where the company intends to go. The end game must communicate the essence of the organisation. Articulating the end game indicates your focus and purposefulness. The end game and its clarifying core strategy statement should contain: 1. Purpose - why the organisation exists and what it seeks to accomplish 2. Business - the main method or activity through which the organisation tries to fulfil this purpose 3. Values - the principles or beliefs that guide an organisation's members as they pursue the organisation's purpose 4. Specific-long term financial objectives 5. What the company's future expectations are The core strategy statement summarises the what, why and how much of an organisation's objectives. It presents an image of the character, the culture and the core values of the organisation. 3rd Priority: The third priority entails performing the S.W.O.T. analysis (strengths, weaknesses, opportunities and threats). A S.W.O.T. analysis means obtaining current information about the organisation's strengths, weaknesses and performance information that will highlight the critical issues that the organisation faces. These become key issues the strategic plan must address. These could include a variety of primary concerns, such as funding issues, new program opportunities, changing regulations or changing needs in the client population, and so on. The point is to choose the most important issues to address. Critical constraints should naturally emerge from this process. Identifying critical constraints is the primary reason for doing a SWOT analysis. 4th Priority: The fourth priority is to begin to develop departmental initiatives required to support the end game. Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from Strategies, goals and objectives may come from individual inspiration, group discussion, formal decisionmaking techniques and so on - but the bottom line is that leadership agrees on how to address the critical issues. This can turn into a negotiating process and eat up considerable time and flexibility. It is possible that new insights will emerge which change the thrust of the end game. It is important that planners are not afraid to go back to an earlier step in the process and take advantage of available information to create the best possible plan. "Changing the end game is not a crime." 5th Priority: The fifth priority and conclusion to this explanation of the process, is producing the completed, documented plan. The end game has been articulated, the issues identified and the goals and strategies agreed upon. This step essentially involves putting all that down on paper. A planning consultant can be used to draft the final document and submit it for review to all key decision makers (usually the board, CEO and ownership). This is now the beginning of the process of developing individual departmental business plans congruent to, and supportive of, the strategic plan. These business plans should include departmental budgets. Conclusion Strategic planning involves looking at a longer time horizon, identifying future trends and developing action plans based on the highest probabilities. A good strategic planning process will enable a business to anticipate changing trends and implement actions that will enable them to gain or maintain a competitive advantage. Add scenario planning and they can be ready for just about any consequence the market may throw their way. Developing a well thought out strategy that involves much of the entire organisation provides the "Footprints to Success." It is now up to the executive team to lead the organisation along the path these footprints follow. The following article was contributed by Rick Johnson Week 4: Conceptual Learning Summary Assignment Instructions GOAL: Create a concise expose of two strategic planning concepts that may be utilized in your own organization. Instructions: Do some research and write a 500-600-word summary (body content length) that discusses two different strategic planning concepts. Locate a minimum of two scholarly journal articles for each concept—a minimum of four articles for the paper altogether (these articles must be new to this assignment for this course). You want to select research that presents each concept and its usefulness in strategic planning within organizations. If you elect to write the paper, then keep your writing in third person if you discuss how these concepts work in your sector. Suggestions to help your writing: • • • • • • Use level headings (APA) to distinguish the various parts of your paper. No abstract is required, but a title page and references page are required. Visit the following website to help you set up your APA paper: You may use any level of sources—scholarly, popular press, or websites—to provide foundational information used to inform you about each organization. However, make sure to properly cite and reference these sources according to chapter seven of APA. Regardless what sources you use gain information about the companies, you are still required to list and use FOUR scholarly journal sources in the assertions and references in your paper. References must not be over 10 years old. Nothing past 2009. The paper should be written in third person and is not reflective (first person not acceptable). Concepts to use: 1. Strategic planning involves choosing specific priorities 2. Strategic planning guides the acquisition and allocation of resources References for number 1. Raposa KA. (2009). Strategic planning and research priorities in private industry. Journal of Dental Hygiene, 83(4), 206–207. Retrieved from =ccm&AN=105279938&site=ehost-live&scope=site Lippitt, M. B. (2003). Six priorities that make a great strategic decision. Journal of Business Strategy, 24(1), 21-24. doi: Johnson, R. (n.d.). Impact Factory Ltd. Retrieved from References for number 2. Maritan, C. A., & Lee, G. K. (2017). Resource Allocation and Strategy. Journal of Management, 43(8), 2411–2420. Roth, W. F. (2015). Strategic Planning as an Organization Design Exercise. Performance Improvement, 54(6), 6–12. You can use other credible sources BUT I must use the ones from school.
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Explanation & Answer




Week 4: Conceptual Learning Summary
Strategic planning



In today’s modern management, strategic planning has become a vital component in
every organization. Given its significance in modern management, it is important to define
strategic planning and its role in an organization. Strategic planning is a management process
utilized in setting priorities, focusing energy and resources, reinforcing operations and
safeguarding that the staff and other stakeholders are operating towards shared goals, creating
consensus around targeted outcomes as well as evaluating and modifying the direction of the
organization in a reaction to a dynamic environment (Balanced Scorecard Institute, n.d.). An
effective strategic planning outlines the direction of the organization, the actions necessary for
improvements as well as measures for evaluating success. Some of the two key concepts of
strategic planning critical for organizations today include setting specific priorities and the
acquisition and allocation of resources.
a) Strategic planning involves setting specific priorities
Strategic planning involves choosing or setting specific priorities. Setting specific
priorities focuses on prioritizing objectives and goals and how to meet the objectives. Priority
setting in strategic planning helps in determining which organizational needs will be met and
when the needs will be meet in order to achieve organizational goals and objectives. According
to Johnson (n.d.), one of the key benefits to strategic planning entails setting priorities that match
organizational resources. Johnson (n.d.) outlines five key priorities that organizations must set
when getting started on their strategic planning (Johnson, n.d.). The first priority involves

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