Strategic Management FAIL

 

When Cameron sent us the editorial calendar, the theme for February was of particular interest. There is so much, well, idiocy out there with respect to strategic management, that the real threat to this blog is that it would turn into a particularly catty snarkfest, my inability to tolerate management science charlatanism being what it is. But, hey, Cameron served up a nice, slow straight pitch, so why shouldn’t I knock it out of the park?

What, exactly, is strategic management? Well, for this subject, the quackery presents early. That home for conjectural consensus, Wikipedia, defines it so:

Strategic management analyzes the major initiatives taken by a company's top management on behalf of owners, involving resourcesand performance in external environments.^[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.[1]

I’m going to be polite, and say, umm, no. To be fair, this definition is consistent with the textbooks I had to read during my graduate work on the subject. Also, on the header of this particular article, Wikipedia posts up front that “This article has multiple issues.” (Ya think?) I don’t know what parts of the article Wikipedia thinks are problematic, but let me address just the definition.

·         What, exactly, constitutes a “major” initiative? Does that imply that the decisions taken under the rubric of strategic management are a matter of perspective?

·         Same issue for “top management.”

·         Aren’t all management actions taken on behalf of the company’s owners?

·         About that “specifying the organization’s mission, vision and objectives” business: when was the last time you saw an organization’s documented mission, vision, or objectives that were materially different from any other organizations’ in their industry?

But this is often what passes for the very definition of strategic management, even by the most prestigious business schools in the land. The problem, of course, with such a mushy, self-contradictory definition is that almost any assertion can be made as a strategic management truism, and there’s virtually no way of testing (or refuting) such an assertion. Additionally, these “truisms” are held out as somehow superior to all other management theories, dealing, as they do, with “major initiative taken by a company’s top management…” It’s as if when Cavendish discovered the element Hydrogen, in 1766, he was told by the thinkers of the time to shut up about it until the alchemists said it was okay.

“Okay, Hatfield” you say, “if you’re so smart, exactly what is strategic management?” As I point out in my recently-released, must-have book, Game Theory in Management, strategic management is that set of management decisions that directly influences the organization’s standing with respect to its competitors. It is distinct from asset management, which focuses on the decisions about the organization’s assets, as well as project management, which centers on the organization’s customers. Strategic management has its own goals and objectives, which means it requires its own management information products in order to be conducted intelligently. In other words, information generated by the general ledger has very little value in the strategic management realm, and the information generated by the organization’s project management system is only a bit more valuable here. As far as Wikipedia’s definition is concerned, the decision to, say, change the organization’s general ledger software, if it’s big enough of an effort and the decision made by the company’s top executives, is considered “strategic,” even though it really isn’t. Conversely, a mid or low-level marketing analyst who decides to change an advertising campaign to include vampire ads (ads that mention, or even mock, the competition) without changing the marketing budget at all would not qualify under the Wikipedia definition, but is most certainly a strategic management decision.

In the strategic management realm, what’s needed is information about the organization’s proposal backlog, contract win rate, and a few other internal tidbits; however, the focus of any serious strategic management information system has to be on market share, and where the organization and its competitors are situated with respect to each other.  Once this information is gathered and presented, it must be evaluated with input from the other two management realms in order to provide informed insight as to how the organization’s strategy should be adjusted or executed. How does such an evaluation take place? Well, for that answer, you can purchase my previously touted book, or wait for more of February’s blogs.

Or else bait me into a further discussion on the comments section.