5-10 Page Executive Summary (ESSAY) on Lecture Slides

On strategic management: A primer

Dr. Brandon Ofem
Assistant Professor
Global Leadership and Management
University of Missouri-St. Louis

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Learning objectives
Gain a bird’s eye view on strategic management

Deepen appreciation on the importance of accurate knowledge for strategic decision-making

Apply tools of strategic management to analyze companies

Gain greater confidence in leading companies to success!

Instructional plan

On strategy

History of knowledge

Strategic analysis

Tips for growing as a leader

What explains the success of organizations?
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Organizations are social structures created by individuals to support the collaborative pursuit of specified goals.

Why study strategic management?

Organizations control the world’s wealth.

Much of human life is patterned by organizations.

As an applied field, it’s based on very practical knowledge.

The $87 trillion global economy is controlled by organizations. All wealth is actually created by business.  creates wealth when it meets needs at a profit. That’s how all wealth is created. It’s meeting needs at a profit that leads to taxes and that leads to incomes and that leads to charitable donations. That’s where all the resources come from. Only business can actually create resources. Other institutions can utilize them to do important work, but only business can create them. And business creates them when it’s able to meet a need at a profit. 

Organizations are perhaps the dominant characteristic of modern societies.

Can you think of other reasons?

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Elements of organizations

Organizations as systems

Strategy is the process of leading these social systems to success. We study the people and teams at the helm of these organizations and figure out what sort of things they can do to enhance the performance of their social systems.

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On strategy

Skilled action is the product of skilled thought.

Three important revolutions shaped the course of human history:

Cognitive revolution occurred about 70,000 years ago with the emergence of fictive language.

Agricultural revolution occurred about 12, 000 with the domestication of plants and animals.

Scientific revolution started only about 500 years ago with the increased adoption of empirically-tested methods of inquiry.

History of knowledge

Strategy, in its most primal form, can be traced back to the ancient history of our species. How many of you have read this book, Sapiens? The author organizes all of human history around three big revolutions. The first is called the cognitive revolution, which I think is one of the weirdest and deepest mysteries of our existence. From about 2 million years ago until around 10,000 years ago, the world was home, at one and the same time, to several different human species. Then, around 70,000 years ago, one particular species of humans, homo sapiens, evolved the incredible capacity for fictive language. This new capacity for abstract thought proved remarkably powerful for describing and communicating about the external world. It also allowed us to coordinate in complex and unprecedented to achieve objectives, which back in those days usually to do with hunting, survival or warfare.

Then around 12,000 ago we figured out to domesticate plants and animals, which led to the rise of kingdoms, cities, and settlements. We no longer had to depend on a hunter-gatherer lifestyle. This also led to new management challenges among the ruling class of how to allocate resources, such as food, to their people.

The scientific revolution started only 500 years ago and it’s still going on today. With it came increased adoption of empirically-tested methods of inquiry for learning about our world.
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Adaptive benefits of knowledge

Human thought is a powerful instrument in comprehending the environment and dealing with it.

Theory can improve the human condition.
Life, health, wealth, inequality, peace, safety, equal rights, knowledge, quality of life

Life, health, wealth, inequality, peace, safety, equal rights, knowledge, quality of life. Theory has made the world a lot better.

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Germ theory of disease

We didn’t know germs caused the spread of disease until the 19th century!

Germ theory, in medicine, the theory that certain diseases are caused by the invasion of the body by microorganisms, organisms too small to be seen except through a microscope. The French chemist and microbiologist Louis Pasteur, the English surgeon Joseph Lister, and the German physician Robert Koch are given much of the credit for development and acceptance of the theory. In the mid-19th century Pasteur showed that fermentation and putrefaction are caused by organisms in the air; in the 1860s Lister revolutionized surgical practice by utilizing carbolic acid (phenol) to exclude atmospheric germs and thus prevent putrefaction in compound fractures of bones; and in the 1880s Koch identified the organisms that cause tuberculosis and cholera. (Source: https://www.britannica.com/science/germ-theory)
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Simple and brilliant solution

In the 1840s, shortly before the French bacteriologist Louis Pasteur’s (1822–1895) groundbreaking work, Hungarian physician Ignaz Semmelweis (1818–1865) made an important contribution to the future development of germ theory. He concluded that handwashing before delivering a baby prevented the spread of childbed fever (infection after childbirth). Before Semmelweis developed his theory, he observed that physicians often moved directly from performing autopsies on women who had recently died of childbed fever to attend the next live birth. Semmelweis noted that this practice resulted in the new mothers contracting a virulent form of the fever, which often caused their deaths while still in the hospital. He was able to demonstrate that simple hand washing before deliveries prevented childbed fever. This was a crucial link in the experimental chain leading to the synthesis of germ theory.

During his life, his theory was largely rejected by the medical community. At the end of his life he had a nervous breakdown and was committed to an mental hospital, where he died. Ironically, In 1865 he suffered a breakdown and was taken to a mental hospital, where he died. Ironically, his illness and death were caused by the infection of a wound on his right hand, apparently the result of an operation he had performed before being taken ill. He died of the same type of infectious disease against which he had struggled all his professional life.

History hasn’t forgotten him though. He’s now considered the pioneer of what is now standard practice in countless hospitals and organizations around the globe: handwashing.

It makes me wonder: What other principles about our world are waiting to be discovered that could result in new and simple practices that change our lives for the better?
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Deep and accurate understanding of the world is an ethical imperative.

Strategic management process

https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/7247-strategic-management-process.html

1.  Goal Setting: The vision and goals of the organization are clearly stated. The short-term and long-term goals are defined, processes to achieve the objectives are identified and current staff is evaluated to choose capable people to work on the processes. This can be done through proper environmental scanning.

2.  Analysis: Data relevant to achieve the goals of the organization is gathered, potential internal and external factors that can affect the sustainable growth of the organization are examined and SWOT analysis is also performed.

3. Strategy Formulation: Once the analysis is done, the organization moves to the Strategy Formulation stage where the plan to acquire the required resources is designed, prioritization of the issues facing the business is done and finally the strategy is formulated accordingly.

4. Implementation: After formulation of the strategy, the employees of the organization are clearly made aware of their roles and responsibilities. It is ensured that funds would be available all the time. Then the implementation begins.

5. Strategy Evaluation: In this process, the strategies being implemented are evaluated regularly to check whether they are on track and are providing the desired results. In case of deviations, the corrective actions are taken. As shown in the figure, the five stages are not stand-alone and constantly interact with each other in order to ensure better management of the business.

Importance of Strategic Management Process
The strategic management process enables the organization of plan ahead through proper approach in order to gain competitive advantage wrt competitors. The process equips the organization to deal various internal and external factors. The process can differ for various organization depending on their size, domain, focus and core competency but the importance of strategic management process remains the same.

Limitations of Strategic Management Process
Strategic Management process is not an objective one time process which would yield the expected results in the first attempt. Optimizing the strategic management process for the organization may take time. The 5 steps stated above may have to be revisited multiple times and still the results may differ. The main limitation is the time it would take to completely tune and manage the process for a particular organization in order to see real benefits but having said that strategic management process if mastered properly can lead to serious advantage for the organizations.
Hence, this concludes the definition of Strategic Management Process along with its overview.

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1. Study how the company works.
How it makes money.
How it is organized.
Its key resources/capabilities.
Its weaknesses.

2. Study the environment it operates in.
What markets does it compete?
What markets are growing?
What trends should the company respond to?

3. Recommend action.
Adopt a long-term perspective. Wealth is not created in a day.
Craft action(s) that capitalize on opportunities and mitigate threats.
Provide empirically-grounded and well-reasoned justification (i.e. be sensible).
Recommendations should flow from deep knowledge of the company and its environment.
Imagine ways to build/do things that people love!

Strategic analysis (in a nutshell)
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Brilliant strategies are born of deep knowledge of the organization and the environment.

I think this is the essence of strategy. Projects and opportunities of the highest value are best assessed in the crucible of critical and expert thought. So in my capstone course, I try to direct students to developing expertise around a company and its strategic situation.
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A 10 year study reveals what great executives know and do

They know the whole business.

They are great decision-makers.

They know the industry.

They form deep, trusting relationships.

https://hbr.org/2016/01/a-10-year-study-reveals-what-great-executives-know-and-do

As part of our ten-year longitudinal study on executive transitions, which included more than 2,700 leadership interviews, we did a rigorous statistical analysis (including more than 90 regression analyses) to isolate the skills of the top-performing executives. We isolated seven performance factors correlated to strong organizational performance as well as leadership strengths through IBM Watson’s content analysis tools as well as historical performance reviews of these leaders and their direct reports. These seven factors led to our discovery of four recurring patterns that distinguished exceptional executives. What separated the “best of the best” from everyone else is a consistent display of mastery across four highly correlated dimensions, while “good” executives may have only excelled in two or three. Executives who shine across all four of these dimensions achieve the greatest success for themselves and their organizations.
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Professional skills worth cultivating
Due to the rapid pace of technological change and disruptive waves of automation sweeping the global economy, the most valuable skills on the marketplace are social intelligence, complex critical thinking, and creative-problem solving.

What are some ways you can development and practice these skills?

First and foremost, be engaged with people! Get involved with projects that interest you and practice skills of collaboration.
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Strategic management is the “art of arts” because it organizes and uses human talent.

I had a student last semester describe strategic management as the “art of arts.” I agree with her. I think she’s on point. I think executives can be likened to the conductor of a symphony. Just like the conductor needs to orchestrate the individual talents, melodies, and unique styles of the individuals to create music that’s richer and more beautiful than any single individual could produce, executives need to orchestrate the talents and dreams of their teammates to create something even more beautiful, social and economic wealth.
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Last summer I went sailplaning with my Uncle Dan who lives in Tahachapee. He’s an elite pilot. He designs them too. We met at Mountain Valley Airport. Once we got the plane, we went through an equipment and operational checklist to make sure everything was a go for flight. Then a small planed towed us with a rope to lift off. Once we got airborne we had to find a thermal, which is a column of rising air. We found one pretty quickly, entered it, and then began a circling motion and rode the currents to the top of it. Once we reached 10,000 feet, we soared for about 45 minutes. Throughout the flight my uncle shared his thought processes about what he was doing. I was struck by the depth of his knowledge. He was constantly assessing the situation and thinking of contingencies, while simultaneously making expert decisions. Mastery at it finest.

I see a striking parallel between sailplaning and leading companies. Both require reading and following the natural currents. Executives need to be able skillfully navigate their organizations through environmental trends, which requires attentive and accurate assessments of the competitive landscape.

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