What Strategic Planning is not?

Clearly, strategic planning is no panacea. Strategic planning is simply a set of concepts, procedures, and tools designed to help leaders, managers, and planners think and act strategically. Used in wise and skillful ways by a “coalition of the willing,” strategic planning can help organizations focus on producing effective decisions and actions that further the organization’s mission, meet in mandates, and satisfy key stakeholders. But strategic planning is not a substitute for strategic thinking and acting. Only caring and committed people can do that. And when used thoughtlessly, strategic planning can actually drive out precisely the kind of strategic thought and action it is supposed to promote.

Furthermore, strategic planning is not a substitute for leadership. There is simply no substitute for leadership when it comes to using strategic planning to enhance organizational performance. At least some key decision makers and process champions must be committed to the strategic planning process, or any attempts to use it are bound to fail.

In addition, strategic planning is not synonymous with creating an organizational strategy. Organizational strategies have numerous sources, both planned and unplanned. Strategic planning is likely to result in statement of organizational intentions, but what is realized in practice will be some combination of what is intended and what emerges along the way. Strategic planning can help organizations develop and implement effective strategies, but they should also remain open to unforeseen opportunities. Too much attention to strategic planning and excessive reverence for strategic plans can build organizations to other unplanned and unexpected—yet incredibly useful—sources of information, insight, and action.

The discipline necessary for strategic planning can be of two sorts. The first harkens back to Latin root of the word “discipline,” emphasizing instruction, training, education, and learning. The second embodies later interpretations of the word, emphasizing order, control, and punishment. Emphasis should be placed on education and learning, although there clearly are occasions when imposing order, taking control, and enforcing appropriate sanctions are appropriate. Certainly, key leaders, managers, and planners can best use strategic planning as an educational and learning tool, to help them figure out what is really important and what should be done about it. Sometimes this means following a particular sequence of steps and preparing formal strategic plans, but not necessarily. The ultimate goal of strategic planning should not be a rigid adherence to a particular process or an instance on the production of plans. Instead, strategic planning should promote wise strategic thought and action on behalf of an organization and its key stakeholders. What steps to follow, in what sequence, and whether or not to prepare formal plans are subsidiary concerns.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Anticipating Events

Events can develop at a frightening pace. Directors need to ensure they and their companies can monitor and react effectively to rapidly changing circumstances. Apparently healthy situations can quickly crumble. Hence directors need to think through the implications of their actions. Corporate reputations can also erode rapidly. Directors must ensure that people throughout the organization act and behave to protect and build internal and external expectations and perceptions.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Shedding Light on Quality Awareness

An organization will not begin the transformation until it is aware that the quality of the product or service must be improved. Awareness comes about when an organization loses market share or realizes that quality and productivity go hand in hand. It also occurs if TQM is mandated by the customer or if management realizes that TQM is a better way to run business and compete in domestic and world markets.

Automation or other productivity enhancements might not help a corporation if it is unable to market its product or service because the quality is poor. The Japanese learned this fact from practical experience. They could sell their products only at ridiculously low prices, and even then it was difficult to secure repeat sales. Until recently, corporations have not recognized the importance of quality. However, a new attitude has emerged—quality first among the equals of cost and service—the customer wants value.

Quality and productivity are not mutually exclusive. Improvements in quality can lead directly to increased productivity and other benefits. The improved quality results in improvement in productivity, capacity, and profit. Many quality improvement projects are achieved with the same workforce, same overhead, and no investment in new equipment.

More and more corporations are recognizing the importance and necessity of quality improvement if they are to survive domestic and world-wide competition. Quality improvement is not limited to the conformance of the product or service to specifications; it also involves the inherent quality in the design of the system. The prevention of the product, service, and process problems is a more desirable objective than taking corrective action after the product is manufactured or a service rendered.

TQM does not occur overnight; there are no quick remedies. It takes a long time to build the appropriate emphasis and techniques into the culture. Over-emphasis on short term results and profits must be set aside so long-term planning and constancy of purpose will prevail.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Mental Models

Mental Models are the deeply held images of how the world works; we all carry mental models. They guide our thinking and action in familiar ways. In order to change, we need to change our mental models. We can’t change these models unless we understand what they are. Surfacing, testing and improving our internal pictures of how the world works is an important aspect of learning and change.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight.

Problems of Conduct

In Japan’s early history, a serious disregard for manners could be punishable by death, and any samurai could kill any common person who failed to show him proper respect. The Japanese were required to behave in precisely prescribed ways—wearing permitted clothing, walking only a certain way, sleeping with their heads pointing in a certain direction and legs arranged a particular way. Eating, greeting, gesturing with hands, opening doors and many work tasks had to be done in assigned ways without deviation. Conduct became a measure of morality, and virtue in manners was visible for all to see. Even today, the code of conduct plays a significant role in the lives of the Japanese. Many societies, not Japan alone, have a prescribed form and manner for every familiar situation that might arise. Unforeseen situations can cause intense embarrassment or discomfort. Throughout East Asia, actions are judged by the manner in which they are performed. More important than the accomplishment of a task is the question of how someone went about trying to complete the task: Did he act sincerely? More important than winning the race is the grace of the runner. More important than expertise is the way one gets along with others. More important than profits is harmony. In contrast, Westerners and particularly Americans are more concerned with the principles of things, hard “measures” and objective facts. Although rules of ethics are extremely important, we are more goal oriented than method-conscious, we say “a good loser is a loser.”

One aspect of form is the concept of “face.” Much has been written about “face-saving” in Japan and China, but face-saving is important absolutely everywhere. The difference is only a matter of degree and nuance. Where an American might feel a little guilty or inadequate, an Asian, Arab or South American may feel deep shame and humiliation. What an American might see as a little honest and constructive criticism, the foreigner may take as a devastating blow to pride and dignity. A foreigner is likely to be sensitive to feelings of others in transactions that an American would consider strictly impersonal, such as returning a defective product or switching hairdressers. The traveler simply must be more conscious of saying things or behaving in ways that cannot be taken as disrespect, criticism or humiliation. In some countries it seems just about anything can be taken personally, even such indirect affronts as not taking your shoes off in a mosque or complaining about the heat.

Harmony with the environment can be as important as sensitivity to people in some cultures. In Japan a woman wears a soft pastel dress to a flower show so as not to take away from the beauty of the flowers. In countries where people believe in reincarnation they are careful about all forms of life. In India, for example, people are careful not to swallow gnats or step on ants—one might be a relative.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight.

Decisions: Considering Alternatives

An ideal alternative perfectly fulfills every condition set for it without adding new difficulties. Unfortunately, ideal alternatives are rare. We must, therefore, evaluate each available alternative by measuring it against all of our objectives. It is the relative quality of that fit that concerns us.

If we must choose among several alternatives, we will have to decide which one will best fulfill our objectives with the smallest acceptable risk. In other words, we try to make a balanced choice. An alternative that best accomplishes the objectives but carries severe risks is not, after all, the best choice. Another alternative, perhaps less exciting but safer, may be the best balanced choice.

If there is only one alternative, we must decide whether it is good enough to accept. In this case our evaluation will focus on its relative worth compared with a perfect but unobtainable alternative.

If we must choose between a current and a proposed course of action, then we consider both to be alternatives. We evaluate their performance against our objectives just as we would if both had been proposed. Whatever is currently being done is, after all, an alternative; the choice is whether to continue that way or find another, better way.

If, in the absence of any alternative, we must create something new, we can usually build an alternative from available components. We then choose the best and most feasable combinations, treat each as a separate alternative, and evaluate all of them against an ideal model of an alternative.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Organizational Mandates

The formal and informal mandates placed on an organization consist of the various “musts” that it confronts. Actually, it is surprising how few organizations know precisely what they are (and are not) formally mandated to do. Typically, few members of any organization have ever read, for example, the relevant legislation, ordinances, charters, articles, and contracts that outline the organization’s formal mandates. Many organizational members also do not clearly understand what informal mandates—typically political in the broadest sense—their organization faces. It may not be surprising, then, that most organizations make one or all of the following three fundamental mistakes. First, not knowing what they must do, they are unlikely to do it. Second, they may believe they are more tightly constrained in their actions than they actually are. Third, they may assume that if they are not explicitly told to do something, they are not allowed to do it.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

The Profit Economics

The following information is required, at a minimum, to understand the profit economics of a business:

1. How many dollars of assets are committed in each stage of each product/market business (e.g., R&D, materials, plant and equipment, finished stock, post-sale support)?
2. What is the fixed/variable cost relationship for each product/market business, that is, for each dollar of sales, how many cents are attributable to bedrock fixed costs, how many to structured or discretionary costs, and how many to out-of-pocket costs?
3. How do costs and profit change with swings in volume?
4. What is the break-even point at current volume and what actions could be taken to bring that break-even point down should volume potential decline?
5. What is the rate of incremental profit on each added increment of volume? What are the volume points where new increments of structured cost must be added?

A net profit and loss statement (after all allocations) and a balance sheet for each product line are essential for generating answers to these questions. Despite their claim that “we know all that,” very few managers actually have this information readily available.

Actually, most accounting systems are not designed to provide these kinds of statements and the accountants will argue that you can’t get them because many products run over the same machines, a lot of indirect costs can’t be allocated, and so on. To which we say, baloney! Shared fixed and indirect charges often represent the most serious cost problems in business situations where a cost disadvantage exists. And they are impossible to attack in the aggregate. They must be broken down and assigned to a discrete business unit even if done arbitrarily. Then a manager with hands-on responsibility can argue about fairness and whether there is value received for the costs involved. Although this is obviously not a precise exercise, it is effective and essential. Without full cost profit and loss and balance sheet statements managers cannot really understand the profit economics of their business. Further, they can’t make the types of intelligent business decisions and plans so important in today’s environment.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Decision Analysis

Every decision we make requires us to think in terms of objectives, alternatives, and potential risks. That choice may involve a thousand criteria plus the inputs and deliberations of a hundred or more people. Or it may involve only five criteria and ten minutes of deliberation by one person. The dimensions are immeterial because the basic process is always the same. And the final judgment is always: “This is what ought to be done.”

The decision situations fall into five categories:

• The complex decision that requires examination of a large amount of information, and involves the judgments of many people.
• The “Yes/No” decision that involves only two alternatives: to take or reject a course of action; to do something in a different way or continue as before.
• The decision as to whether a single proposed course of action is sound enough to be implemented.
• The decision in which an original alternative must be developed by the decision-maker or team.
• The routine decision: hiring, purchase of equipment or services, development of personnel policies, and other everyday decisions.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Customer Needs’ Gap

Not every customer has explicitly defined the gap between his or her present state and desired state. Defining the gap requires converting vaguely defined problems into clear statements of need. The more concrete and explicit the statement, the more likely is to recognize the need to take action.

Prepare for a customer call by speculating about the customer’s probable needs. You can often identify the general needs your potential customers may have before beginning formal discussions with them. This general understanding of problems can then be a springboard for a more detailed exploration of needs.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight