Strategy a design

Strategic design is the application of future-oriented design principles in order to increase an

organization's innovative and competitive qualities. "Traditional definitions of design often focus
on creating discrete solutionsbe it a product, a building, or a service.
Its foundations lie in the analysis of external and internal trends and data, which enables design
decisions to be made on the basis of facts rather than aesthetics or intuition. As such it is regarded
as an effective way to bridge innovation, research, management and design.
The discipline is mostly practiced by design agencies or by internal development departments.
Businesses are the main consumers of strategic design, but the public, political and not-for-profit
sectors are also making increasing use of the discipline.

To survive in todays rapidly changing world, products and services must not only anticipate change,
but drive it. Businesses that dont will lose market share to those that do. There have been many
examples of strategic design breakthroughs over the years and in an increasingly competitive global
market with rapid product cycles, strategic design is becoming more important.

It's remarkable how often business strategy, the purpose of which is to direct action toward a
desired outcome, leads to just the opposite: stasis and confusion. Strategy should bring clarity
to an organization; it should be a signpost for showing people where you, as their leader, are
taking themand what they need to do to get there. But the tools executives traditionally use to
communicate strategyspreadsheets and PowerPoint decksare woefully inadequate for the
task. You have to be a supremely engaging storyteller if you rely only on words, and there aren't
enough of those people out there. What's more, words are highly open to interpretationwords
mean different things to different people, especially when they're sitting in different parts of the
organization. The result: In an effort to be relevant to a large, complicated company, strategy
often gets mired in abstractions.

Strategy as Process
The strategic management process means defining the organizations strategy. It is also defined as the
process by which managers make a choice of a set of strategies for the organization that will enable it to
achieve better performance.
Strategic management is a continuous process that appraises the business and industries in which the
organization is involved; appraises its competitors; and fixes goals to meet all the present and future
competitors and then reassesses each strategy.
Strategic management process has following four steps:

1. Environmental Scanning- Environmental scanning refers to a process of collecting,

scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and
external factors influencing an organization. After executing the environmental analysis process,
management should evaluate it on a continuous basis and strive to improve it.
2. Strategy Formulation- Strategy formulation is the process of deciding best course of action
for accomplishing organizational objectives and hence achieving organizational purpose. After
conducting environment scanning, managers formulate corporate, business and functional
strategies.
3. Strategy Implementation- Strategy implementation implies making the strategy work as
intended or putting the organizations chosen strategy into action. Strategy implementation
includes designing the organizations structure, distributing resources, developing decision
making process, and managing human resources.
4. Strategy Evaluation- Strategy evaluation is the final step of strategy management process.
The key strategy evaluation activities are: appraising internal and external factors that are the root
of present strategies, measuring performance, and taking remedial / corrective actions.
Evaluation makes sure that the organizational strategy as well as its implementation meets the
organizational objectives.
These components are steps that are carried, in chronological order, when creating a new strategic
management plan. Present businesses that have already created a strategic management plan will revert
to these steps as per the situations requirement, so as to make essential changes.

Components of Strategic Management Process

Strategic management is an ongoing process. Therefore, it must be realized that each component
interacts with the other components and that this interaction often happens in chorus.

Fallacy of Prediction

Traditional strategic planning was based on the assumption that one could measure all of the
variables that were relevant to the future of a business, analyze the results, and construct
strategies based upon the results that, if followed, would ensure future success. However, even
the best strategies experience unforeseen economic, industry, social, and market shifts. The
fallacy of prediction inevitably led to the downfall of traditional strategic planning, because the
strategies
could
not
deliver
what
they
promised:
predictable
success.

The planning fallacy, first proposed by Daniel Kahneman and Amos Tversky in 1979,[1][2] is a
phenomenon in which predictions about how much time will be needed to complete a future task
display an optimism bias (underestimate the time needed).

This phenomenon occurs regardless of the individual's knowledge that past tasks of a similar nature
have taken longer to complete than generally planned. [3][4][5] The bias only affects predictions about
one's own tasks; when outside observers predict task completion times, they show a pessimistic
bias, overestimating the time needed. [6][7] The planning fallacy requires that predictions of current
tasks' completion times are more optimistic than the beliefs about past completion times for similar
projects and that predictions of the current tasks' completion times are more optimistic than the
actual time needed to complete the tasks. In 2003, Lovallo and Kahneman proposed an expanded
definition as the tendency to underestimate the time, costs, and risks of future actions and at the
same time overestimate the benefits of the same actions. According to this definition, the planning
fallacy results in not only time overruns, but also cost overruns and benefit shortfalls

Fallacy of detachment

Traditional strategic planning assumed that it was better to be detached from the
workers and from middle managers when analyzing data, in order to prevent bias in the
planning process. However, this simply separated the strategy makers from the strategy
implementers, which turned out to be a fatal mistake. When problems of implementation
arose, both sides pointed fingers at each other as the cause for the failure. Additionally,
traditional strategic planning was often based on inappropriately aggregated data, data
that was no longer current, or data that did not have important contextual information
linked to it. Also strategic planners often ignored qualitative data, thus creating huge
blind spots in the final strategic plan.
Fallacy of Formalization
This fallacy is based on the notion that formal systems are superior to human systems in
terms of information processing and decision making. Mintzberg believes that though
formal systems might be able to process larger amounts of data than humans can,
formal systems cannot integrate, synthesize, or create new directions from such
analysesonly humans can perform the latter processes. We think in order to act, but
we also act in order to think. Our experiments that work converge gradually into viable
strategies
The basic framework strategy:

What
is
a
Strategic
Framework?
The Strategic Framework is a comprehensive picture of the organizations strategy. It clarifies
how individual efforts and team projects can be connected to achieve the best outcome. It

includes meaningful target measures and a sequence of activities that help focus on the key
efforts that implement the strategy.
Why
Strategic
Framework?
What good is a strategy if it just sits on the shelf? These unique tools allow you to take your
strategy off of the page (or in our case off of the wall) and implement the plan directly into
every area of your operation. And because your team helped to customize all of the tools, you
will have full understanding of not only what the tools say, but how and why they work.
We
map
strategy.
First, we take a look at everything you already have from your current objectives to your
organizations vision, mission and values. Then, we organize this information and ask critical
questions to form the context of your strategy and effectively define (or confirm) your strategic
goals. Through interactive sessions, we then provide you with a set of visual tools that will help
you keep your priorities clear, increase individual contribution and identify opportunities for
improvement:
The Strategy Map is a key tool. It is a graphic (based on the Balanced Scorecard) that
translates high-level strategy into measurable action. It communicates your vision to your
organization and allows each person to understand how he or she contributes. The Strategy
Map addresses and defines critical objectives, measures and leverages.
The Roadmap then helps integrate your strategy into your operating plans so that you
can implement activities and monitor and reinforce performance.
The
Strategic
Framework
builds
a
foundation.
The Strategic Framework will:
Leverage the Vision, Mission, and Values of the organization
Define internal and external drivers to success
Structure all efforts and clarify how individuals contribute
Prioritize goals and initiatives
Show opportunities to leverage resources

Role of strategy in business

There are many roles of strategy within an organization. This article presents 4
role of strategy which is present in each strategic organization.
1. Framework For Operational Planning.
Strategies provide the framework for plans by channeling operating decisions
and often predeciding them. If strategies are developed carefully and
understood properly by managers, they provide more consistent framework
for operational planning. If this consistency exists and applied, there would be
deployment of organizational resources in those areas where they find better
use. Strategies define the business area both in terms of customers and

geographical areas served. Better the definition of these areas, better will be
the deployment of resources. For example, if an organization has set that it
will introduce new products in the market, it will allocate more resources to
research and development activities, which is reflected in budget preparation.
2. Clarity in Direction of Activities.
Strategies focus on direction of activities by specifying what activities are to be
undertaken for achieving organizational objectives. They make the
organizational objectives more clear and specific. For example, a business
organization may define its objective as profit earning or a non-business
organization may define its objective as social objective. But these definitions
are too broad and even vague for putting them into operation. They are better
spelled by strategies, which focus on operational objectives and make them
more practical. For example, strategies will provide how profit objective can
be sharply defined in terms of how much profits is to be earned and what
resources Of how much profit is to be earned and what resources will be
required for that. When objectives are spelled out in these terms, they provide
clear direction to per-sons in the organization responsible for implementing
various courses of action. Most people perform better if they know clearly
what they are expected to do and where their organization is going
3. Increase Organizational Effectiveness.
Strategies ensure organizational effectiveness in several ways. The concept of
effectiveness is that the organization is able to achieve its objectives within the
given resources. Thus, for effectiveness, it is not only necessary that resources
are put to the best of their efficiency but also that they are put in a way which
ensures their maximum contribution to organizational objectives. In fact,
taking strategic management, which states the objective of the organization in
the context of given resources, can do this. Therefore, each resource of the
organization has a specific use at a particular time. Thus, strategies ensure
that resources are put in action in a way in which these have been specified. If
this is done, organization will achieve effectiveness
Related 7 strategies of market leaders

4. Personnel Satisfaction.

Strategies contribute towards organization effectiveness by providing

satisfaction to the personnel of the organization. In organization where formal
strategic management process is followed, people are more satisfied by
definite prescription of their roles thereby reducing role conflict and role
ambiguity. If the decisions are systematized in the organization, everyone
knows how to proceed, how to contribute towards organizational objectives,
where the information may be available, who can make decisions, and so on.
Such clarity will bring effectiveness at the individual level and consequently at
organizational level. Strategies provide all these things in the organization
through which everything is made crystal clear.
Looking into the role of strategy, Ross and Kami have suggested without a
strategy the organization is like a ship without a rudder, going around in
circles. It is like a tramp; it has no place to go. They ascribe most business
failures to lack of strategy, or the wrong strategy, or lack of implementation of
a reasonably good strategy. They conclude from their study that without
appropriate strategy effectively implemented, failure is a matter of time.
While there are many definitions, strategy usually refers to organisational processes involving the
determination of either goals or the means to attain those goals. This entails the interplay of many
factors external factors relating to the environment and industry, as well as internal factors, such
as capabilities and values. The composite insights generated from these factors lead to the creation of
an organisational strategy.
While the broader contours of a strategy may remain constant for a long period of time, the specific
details may undergo rapid changes. Hence, it is a going concern, just like the overall firm. Given the
proximity of strategy to the principles that impact day-to-day functioning of an organisation, it is
quite surprising that this discipline in its applied form is not as formal as many other disciplines,
such as marketing, operations and others. This is because, while there is an academic unanimity
about the importance of strategy, its protocols in applied and real contexts seem to be rather poorly
defined.
It must be noted that the role of strategy is even more significant in growth of firms, and, at a
broader level, in growth of economies like India, where opportunities may seem immense and
innumerable, but choosing the right may make all the difference.

Levels of strategy

3 Levels of Strategy
There are three basic levels of business strategy:

Corporate

Defining
what
business
the
company
is
Setting the overall structure, systems and processes

Business Level

Deciding
how
to
Identifying
competitive
Selecting key success factors

in

compete
advantage

Functional
(marketing, finance HR,Coordination of company departments or areas to support
achievement of business strategy and objectives.
operations, R&D)

QuickMBA / Strategy / Levels of Strategy

Hierarchical Levels of Strategy

Strategy can be formulated on three different levels:

corporate level
business unit level

functional or departmental level.

While strategy may be about competing and surviving as a firm, one can argue that
products, not corporations compete, and products are developed by business units. The
role of the corporation then is to manage its business units and products so that each is
competitive and so that each contributes to corporate purposes.
Consider Textron, Inc., a successful conglomerate corporation that pursues profits
through a range of businesses in unrelated industries. Textron has four core business
segments:

Aircraft - 32% of revenues

Automotive - 25% of revenues

Industrial - 39% of revenues

Finance - 4% of revenues.

While the corporation must manage its portfolio of businesses to grow and survive, the
success of a diversified firm depends upon its ability to manage each of its product
lines. While there is no single competitor to Textron, we can talk about the competitors

and strategy of each of its business units. In the finance business segment, for
example, the chief rivals are major banks providing commercial financing. Many
managers consider the business level to be the proper focus for strategic planning.

Corporate Level Strategy

Corporate level strategy fundamentally is concerned with the selection of businesses in
which the company should compete and with the development and coordination of that
portfolio of businesses.
Corporate level strategy is concerned with:

Reach - defining the issues that are corporate responsibilities; these might
include identifying the overall goals of the corporation, the types of businesses in
which the corporation should be involved, and the way in which businesses will
be integrated and managed.
Competitive Contact - defining where in the corporation competition is to be
localized. Take the case of insurance: In the mid-1990's, Aetna as a corporation
was clearly identified with its commercial and property casualty insurance
products. The conglomerate Textron was not. For Textron, competition in the
insurance markets took place specifically at the business unit level, through its
subsidiary, Paul Revere. (Textron divested itself of The Paul Revere Corporation
in 1997.)

Managing Activities and Business Interrelationships - Corporate strategy seeks

to develop synergies by sharing and coordinating staff and other resources
across business units, investing financial resources across business units, and
using business units to complement other corporate business activities. Igor
Ansoff introduced the concept of synergy to corporate strategy.

Management Practices - Corporations decide how business units are to be

governed: through direct corporate intervention (centralization) or through more
or less autonomous government (decentralization) that relies on persuasion and
rewards.

Corporations are responsible for creating value through their businesses. They do so by
managing their portfolio of businesses, ensuring that the businesses are successful
over the long-term, developing business units, and sometimes ensuring that each
business is compatible with others in the portfolio.

Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit center that can
be planned independently from the other business units of the firm.
At the business unit level, the strategic issues are less about the coordination of
operating units and more about developing and sustaining a competitive advantage for
the goods and services that are produced. At the business level, the strategy
formulation phase deals with:

positioning the business against rivals

anticipating changes in demand and technologies and adjusting the strategy to
accommodate them

influencing the nature of competition through strategic actions such as vertical

integration and through political actions such as lobbying.

Michael Porter identified three generic strategies (cost leadership, differentiation,

and focus) that can be implemented at the business unit level to create a competitive
advantage and defend against the adverse effects of the five forces.

Functional Level Strategy

The functional level of the organization is the level of the operating divisions and
departments. The strategic issues at the functional level are related to business
processes and the value chain. Functional level strategies in marketing, finance,
operations, human resources, and R&D involve the development and coordination of
resources through which business unit level strategies can be executed efficiently and
effectively.
Functional units of an organization are involved in higher level strategies by providing
input into the business unit level and corporate level strategy, such as providing
information on resources and capabilities on which the higher level strategies can be
based. Once the higher-level strategy is developed, the functional units translate it into
discrete action-plans that each department or division must accomplish for the strategy
to succeed.