Continuing transformation of the global business environment provides for the growth and modification of business risks and requirements for success. The increasing prevalence of ongoing change in competitive environments of various industries calls for an enhancement of strategic management systems so that they could help minimize strategic risks and meet new success requirements. The scope of strategic management enhancement is limited until companies adopt an integrated strategic management approach (Cravens et al., 1997; Koch and Hubbard, 1999). Integration of strategic management can be facilitated by:

  • the definition and adoption of specific criteria against which to evaluate the quality of strategy management effort;

  • further improvement of, and the development of new, tools of dynamic strategic analysis.

This article has the purpose of aiding organizations in the accomplishment of both of these goals.

Strategic management decisions have multifunctional and multibusiness consequences, require broad consideration of the firm’s external and internal environments, and affect the firm’s long-term prosperity (David, 1997; Miller and Dess, 1996; Pearce and Robinson, 1997). Three paramount responsibilities of strategic management appear to be:

  • sustaining/increasing the organization’s capacity to respond to substantial environment change through its early anticipation, corresponding modifications of the organization’s stock of own and accessible resources, and their apt coordination;

  • ensuring a good dynamic match between its own and accessible, current and future resources and market opportunities;

  • bringing about a sufficiently efficient use by the organization of its own, as well as accessible, resources over a long period.

The first of these focuses on signal reception and the company’s reaction capacity. The second has to do with ongoing resource development effort and the objective of ensuring sufficient strategic flexibility. Efforts undertaken in discharging the third responsibility may foster a proactive strategic orientation. All strategic management activities would appear to be conceived and undertaken with intention to discharge these three main responsibilities.

The purpose of strategic management is to help formulate, implement, and evaluate cross-functional decisions in such a way as to assist the organization in achieving its long-term objectives. The strategic management process is seen as “an objective, logical and systematic approach for making major decisions in an organization” (David, 1997: 6) in which both analysis and intuition have a role to play. Another accepted perspective (Pearce and Robinson, 1997) emphasizes information flows through interrelated stages of analysis. It implies:

  • the interconnectedness of all process components;

  • the sequential character of strategy formulation and implementation;

  • the necessity of ongoing feedback to assess the success of strategies as they are implemented;

  • the need to regard strategic management as a dynamic system (components of the process are constantly evolving; formal planning must “freeze” them to achieve its aims).

Strategic management is not a monomodal activity. It has three distinct activity modes: rational planning, incrementalism, and organizational learning (Miller and Dess, 1996). The greatest contribution of rational planning comes from “facilitating communication about strategic issues and achieving integration across organizational levels and functional specialties” (ibid.: 26). An incrementalist perspective depicts businesses as “constantly readjusting their strategies as they are overtaken by developments that are outside management’s ability to predict or control” (ibid.: 30).1 The organizational learning perspective (Mintzberg, 1994; Quinn, 1989; Schon, 1993; Senge, 1990) suggests that managers can make incremental adjustments to rational plans with the hope of moving an organization toward its goals by way of numerous small steps of progress rather than a few major strides.

The 1990s saw a dramatic growth of interest in knowledge management (Argyris, 1977; Barney, 1986; Cyert and March, 1992; Hahn, 1991; McKiernan, 1996; Senge, 1990) and competence-based strategy (Barney, 1997; Hamel and Prahalad, 1994; McKiernan, 1996; Prahalad and Hamel, 1990; Sanchez, Heene and Thomas, 1996; Stalk, 1988). Maturing theoretical and practical strategic management reflection is manifest in the calls for integration of strategic management thought and practice. Stahl and Grigsby (1997) are among those who have explored commonalities in logic and approach between total quality management and strategic management. The Cravens-Greenley-Piercy-Slater integration model (1997) lists five strategic management domains: development of market driven culture and learning process, determination of the value proposition, selection of the strategy for competing on capabilities, making relationship strategy decisions, and implementation of the necessary organizational change. Strategic management performance depends on continuous goal searching, improvement, coordination, and adaptation occurring in all these areas. This improvement and adaptation are achieved through the strategic management process.

Whenever any significant changes to company strategic intent, corporate culture, company market definition, product mix or any part of the management system are introduced, the strategic management process shows itself at work. Volatile and/or very competitive business environments may encourage, or indeed require, continuous improvement of the individual stages of the strategic management process: strategy formulation, implementation, and evaluation and control.2

It is essential that the relationship between the strategic management process and the strategic management system is explained here. A brief literature review (Barney, 1997; Bourgeois, 1996; David, 1997; Heene and Sanchez, 1997; Miller and Dess, 1996; Mintzberg et al., 1995; Pearce and Robinson, 1997; Thompson and Strickland, 1998) suggests that the strategic management process is nothing else than a dynamic framework of the strategic management system. Other strategic management system components are:

  • the organization’s own and accessible resources (intangible assets: capabilities, knowledge, reputation, property rights, relationships, and tangible assets);

  • behavior and decision rules;

  • communication.

Discussion in this article of strategic management as a function and as a process, and of the relationships between these and the strategic planning process, serves to build a holistic model of strategic management. The purpose of strategic management system enhancement has been to increase, in an efficient fashion, a company’s strategic response capacity (Bourgeois, 1996; Hamel and Prahalad, 1994; Hahn, 1991; Mintzberg et al., 1995; Stahl and Grigsby, 1997) and its capacity to attain, and sustain, its global competitiveness.

CONSTRUCTING A HOLISTIC MODEL OF STRATEGIC MANAGEMENT

The design of strategic management systems is believed to be influenced (David, 1997; Miles et al., 1995) by a number of factors: organization size, management styles, complexity of the environment, complexity of production processes, nature of problems experienced by the organization, and the purpose of the planning system. The holistic model of the strategic management system developed in this article will have to encompass them all (Figure 3).

The need for proper contextualization of strategic management theory and an increased reliance on contingency theory has been argued by many (e.g. Barney, 1997; Mintzberg, 1994). Further progress of this theory is largely contingent, believes Mintzberg (1996), on acknowledging the necessity of always making an explicit reference to a certain “organizational configuration.” Mintzberg (1989) proposes seven such configurations—entrepreneurial, machine, professional, diversified, innovative, missionary, and political—and suggests that a thorough study of all these categories explains much of what a strategic management researcher may observe.

The holistic model proposed in this article integrates existing strategic management perspectives with the purpose of eliminating all blind spots inherent in each one of these and improving the content and construct validity of the corresponding theory. The following will be drawn on:

  • the currently dominant logic and structure of strategic planning;

  • the Sanchez-Heene model of the company as an open system (Heene and Sanchez, 1996);

  • the logic and scope of total quality management (Stahl and Grigsby, 1997);

  • McKinsey’s 7S model (Waterman, 1982).

A popular view of the structure of strategic planning is presented in Figure 1. It is based on the well-recognized commonalities of the relevant views (e.g. Assael, 1985; Bourgeois, 1996; Bowman and Asch, 1987; Ch’ng, 1993; Cohen, 1991; Cravens, 1994; David, 1997; Jain, 1990; McDonald, 1995; Mintzberg, 1994; Miller and Dess, 1996; Pearce and Robinson, 1997; Thompson and Strickland, 1998).

The strategic planning model presented in Figure 1 is unidirectional and contains no information loops. In reality, multiple loops caused by inputs’ updates, verifications of assumptions, modifications of strategic alternatives, and corrections of various decisions are very much part of this process (Senge, 1990).

To develop a holistic model of the strategic management system, a systems perspective on the firm is required that would integrate into a single dynamic framework several dimensions of firm behavior and business environments (Sanchez and Heene, 1996). Their model of the company as an open system is founded on that perspective. Their model joins the dimension of managerial cognition, which they consider critically important, with uncertainty, causal ambiguity, and strategic flexibility. Its dynamic character is underscored by the model’s feedback mechanisms, which are responsible for the control of some internal and external environmental conditions, change of strategic direction and adaptation to environment changes.

As already mentioned, ensuring a good dynamic match between its own and accessible, current and future resources and market opportunities is of particular importance in strategic management. The McKinsey framework—shared values, structure, systems, style, staff, skills, and strategy—is often used when examining the compatibility of a company’s

Fig. 1: Figure 1

Strategic planning model. Some SPM elements shown (human resource policies, human resource management, and organizational design) are not commonly considered part of strategic planning; they would be thought of more readily as part of strategic management. Further, elements outside the dashed line are thought to be more characteristic of the “deliberate” strategy-making mode.

Fig. 2: Figure 2

Basic strategy model

culture, resources, strategy, organization, and management systems with changes in its competitive position and capacities it wishes to implement. Elements of that framework are included in the holistic model of strategic management proposed later in this article.

When integrating partial models, appropriate integration prescripts are required. In this case, a simple strategy model will help explain the logic of integration (Figure 2). This basic strategy model serves here as a platform on which to integrate both the structural and dynamic aspects of partial models. It makes it possible to include all external and internal environment factors that could be posited to be capable of influencing a company’s strategic performance.

The holistic model of strategic management developed in this article is compatible with the competence-based strategy paradigm (Hamel and Prahalad, 1994; Sanchez, Heene and Thomas, 1996), very useful in some business environment circumstances: inter-industry competition, increased penetration of new markets by outsiders or coopetition, i.e. cooperation and competition combined. (Dowling et al., 1996).

By integrating two of the partial models—SPM (Figure 1) and the company as an open system—a holistic model of the strategic management system (SMS) emerges (Figure 3). It encompasses all stages and components of the strategic planning process and, at the same time, includes all main categories of factors influencing the strategic management process.

The SMS does not presume any particular level of formalization of the strategic planning process. It can accommodate all three relevant activity modes of formal planning, learning, and incrementalism (Dess and Miller, 1996; Quinn, 1989) and includes all crucial behavioral aspects associated with strategic management.

Fig. 3: Figure 3

Holistic model of the strategic management system

Associated communication flows are represented in the SMS only symbolically, by the way of reference to the strategic planning sequence and the elements of the Sanchez-Heene model. Basic tangible (material resources, business forms, and organization configurations) and nontangible elements (competencies, capabilities and skills, perceptions of competencies, capabilities and skills, perceptions of business environment, leadership style, knowledge, and organizational principles) proposed as affecting the form of strategic management forms as well as its responsiveness, efficiency, and effectiveness are included there.

In constructing a strategic management enhancement framework, some borrowings from total quality management may prove quite useful. Elements of TQM logic—such as customer orientation, focus on business processes, customer and supplier partnerships, prevention-better-thancure approach, zero-defect/error objective, high employee involvement, and participation and striving for continuous improvement (Robinson and Pearce, 1997)—play prominent roles in the proposed development.

The SMS covers both formal and behavioral aspects of strategic management. As its representation of the logic and structure of strategic management systems, and of the strategic management process, is fuller than that of any conventional “partial” model, its content validity can be argued to be superior.

ASPECTS OF STRATEGIC MANAGEMENT ENHANCEMENT

The criteria by which strategic management enhancement should be assessed need to meet the following two basic requirements:

  • all selected criteria taken together cover all conceivable aspects of strategic management enhancement. In other words, as a set, these criteria need to have adequate content validity (Gay and Diehl, 1992);

  • reliable measures, or tests, can be used with regard to each proposed criterion.

The three enhancement aspects of responsiveness, effectiveness, and efficiency are examined in this article. Specific operational criteria corresponding to these aspects can be developed to meet the first of the two requirements above. The spectrum of strategic management activities they cover is vast:

  • an organization’s demonstrated capacity to react to environmental changes, including the promptness of reaction, and response frequency;

  • its capacity to choose appropriate strategic objectives;

  • its capacity to formulate and implement strategies effectively;

  • its capacity to achieve its objectives and develop its resources in accordance with the changing environmental demands;

  • its capacity to achieve its objectives and develop its resources in order to remain sufficiently flexible;

  • its capacity to do all the above within reasonable cost limits.

The capacity of each of the strategic management enhancement criteria to meet the second requirement (reliability) can only be assessed through a detailed analysis of likely strategic management situations. This task cannot be attempted in this article. However, a number of possible criteria can be developed on the basis of some suggestions presented later.

How, then, can each of the three proposed aspects of strategic management enhancement be defined?

RESPONSIVENESS

Responsiveness in strategic management is defined here as the organization’s capacity to receive and make sense of signals from its environment and subsequently to modify its strategic intent and means of achieving its strategic objectives accordingly. Responsiveness is not the same as an organization’s capacity to react promptly to new market situations. The latter includes also policy and behavioral aspects of strategic management.

The promptness of an organization’s reaction to environmental change may determine whether objectives will be achieved (and strategies developed and implemented) within the time available to the company3: as such, responsiveness is a crucial characteristic of a strategic management system. It is a wider concept than adaptability, in that it encompasses both adaptation to environmental changes generated outside the organization, and active modification of its environment by an organization seeking to improve its chances of realizing its strategic intent. While the latter phenomenon may be less common, it should by no means be marginalized.

Strategic management responsiveness is influenced by the following main factors (Anderson and Paine, 1975; Porter, 1980):

  • the organization’s capacity to receive and make sense of signals from its environment;

  • the organization’s ability to process these signals and reach decisions within the allowable time limit (the limit itself is influenced by the volatility of the environment as well as the company’s strategic position and objectives, in other words the stretch required);

  • the intensity of both the adaptation to the environment and the environmental change induced by the company.

EFFECTIVENESS

In keeping with the proposed logic, an organization’s strategic management can be regarded as effective when:

  • it has demonstrated a superior capacity to ensure a good dynamic match between its own and accessible, current, and future resources and market opportunities; or

  • it has shown a sustained capacity to produce successful competitive strategies.

The first alternative is appropriate for periods of substantial change in the organization’s environment; the latter for environmental stability.

It has been shown by a number of authors (e.g. Argyris, 1977; Lewis, 1987; Senge, 1990) that strategic management effectiveness is influenced by:

  • quality of organizational learning;

  • involvement, or otherwise, of multiple perspectives and employees’ strategic management participation levels;

  • amount and reliability of information used in the strategic management process;

  • appropriateness of usage of analytical tools throughout the process;

  • impediments to information flow inside the organization.4

Both the deliberate realization of intended strategies and cases of strategies that were actually realized though they had not been intended (Mintzberg, 1994) lend themselves to the effectiveness measurement. Effectiveness, similarly to efficiency, can be meaningfully measured only in the strategy implementation stage.

Pertinent questions to be used in this kind of investigation are: What competitive objectives/strategies have been selected? How good is the match between the resources and opportunities they produce? Are they narrowing the targeted competitive gaps or developing competitive advantages in agreement with the organization’s strategic intent?

EFFICIENCY

A company’s strategic management can be considered efficient if the resource requirements needed to achieve certain objectives have been smaller than anticipated by the organization itself, or those required by similar organizations pursuing the same objectives in similar situations.

To examine the level of efficiency one needs to ask questions such as: How can this objective be achieved? At what cost? How soon? In all business environments, economical use of resources is a paramount strategic management requirement.

Strategic management efficiency is strongly influenced by the following factors (Mintzberg, 1989; Senge, 1990):

  • organizational maturity (e.g. sophistication and suitability of management systems and individual procedures employed);

  • competence of individual employees;

  • their levels of motivation;

  • their prescience (in particular, employees’ general ability to anticipate accurately enough the outcomes of strategies of which they have no relevant experience).

A specific category of efficiency, efficiency of the strategic change process, has a particular place in this discussion because of this article’s objectives. Quinn (1989, 1996) and Rajagopolan and Spreitzer (1996) are among those who have recently pointed out that deep systemic change involves:

  • questioning and replacing rules and policies that have governed the strategic management activities of the company in question;

  • revision of values and norms;

  • questioning other common wisdom;

  • modification of management style and practices.

At times when radical change to strategic management systems is undertaken, their efficiency and effectiveness may suffer temporarily, due to the vast learning and adaptation effort involved at all organizational levels.

MODEL OF STRATEGIC MANAGEMENT ENHANCEMENT

A basic strategic management enhancement logic founded on the literature and business practice analysis is proposed in Figure 4.

Fig. 4: Figure 4

Critical requirements of the strategic management enhancement model

The proposed logic of the SME model can be explained by following its sequence. Forming a work environment where individuals will learn faster and their work motivation will be stronger is arguably the most natural point from which any improvement of the strategic system should start. Indeed, without improving individuals’ learning capacity and increasing their motivation, few such efforts are successful (David, 1997; Hamel and Prahalad, 1994; Senge, 1990). For employees’ knowledge, competence, and skills to be utilized as proposed, people must be properly motivated, believe in their capacity to favorably influence the future of their company, and benefit from it, materially and otherwise. When this coincides with a non-authoritarian management style, stronger motivation is likely to increase strategic management participation very considerably.

Advances of computer technology have had far-reaching consequences for the ways in which strategic decisions are prepared and taken.

A drastic reduction in the role of middle management on the one hand, and the increasing knowledge and decision-making capacity of employees in non-managerial positions on the other, more than ever stress the need to increase employee participation in strategic management (Hamel and Prahalad, 1994; Senge, 1990). Without tapping this huge potential appropriately, many companies’ medium-term performance may never raise above mediocrity and their long-term viability may be in peril.

No outstanding strategic management performance is achievable without superior-quality communication (Hay and Williamson, 1997). What is the essential mechanism of communication improvement in strategic management system enhancement? Once the benefits of strategic management participation become obvious to the individuals involved, a substantial further improvement of intra-company, or internal, communication is likely to ensue. It will then be reinforced by involving employees’ perceptions of the company’s external and internal environments, which would augment the stocks of knowledge, competence, capabilities, and skills accessible to the company.

The level of employee participation and the range of perceptions involved are positively correlated with the validity and reliability of prediction in strategic management (Anderson and Paine, 1975; Glaister and Thwaites, 1993; Senge, 1990). New perceptions and knowledge will challenge the existing ones and produce, in time, improved, more reliable bases on which judgments and strategic decisions can be made. Better strategic management communication within the organization reduces the chances of strategic failure.

Involving multiple perceptions in the strategic management process is claimed to have a strong positive influence on the reliability of information and the quality of the strategic management decision-making process (David, 1997; Heene and Sanchez, 1997; Schon, 1993). In rapidly growing industries undergoing substantial transformation, such as telecommunications or computer software, companies that make

best advantage of employees’ knowledge, competence, and skills are more likely to sustain superior long-term performance (Hamel and Prahalad, 1994). A high level of employee strategic management participation is likely to produce superior strategic management performance, particularly in volatile and/or very competitive business environments.

The extra time that may be expended by such companies on

  • extra data collection;

  • more thorough examination of strategic options;

  • comprehensive internal communication;

  • gaining employee understanding of, and support for, the strategy to be realized is often recovered later with a vengeance, because of faster strategy implementation (Kono, 1992).

Wide employee participation in the strategic management process advances reflection-in-action and improves their understanding of strategic thinking and processes. Increased strategic management participation will require employees to provide new kinds of information and assume new strategic decision-making-related roles. To meet the new systemic requirements, employees will need to reflect-in-action much more (Schon, 1993); this increased, ongoing reflection will help verify their views and upgrade their skills. It will also enrich intra-company communication, develop the organizational knowledge base and strengthen the organization’s learning capacity (D’hanis and Perneel, 1997).

More reflection-in-action is a prerequisite for faster individual and organizational learning (Schon, 1993). Without interpersonal skills, individual learning is fundamentally adaptive, not generative (Senge, 1990). The pace of learning may be slowed down by such circumstances as:

  • extremely fast change in the business (leading to paralysis by confusion);

  • the amount of time needed to collect, and process, sufficient amounts of data on the outcomes of actions in significantly changed circumstances (after a major discontinuity);

  • any barriers to sharing reflection-in-action.

More reflection-in-action facilitates organizational learning and improves long-term business outcomes. Continuous programmed improvement of business performance helps develop a better understanding of how to design and implement systemic change and presents academics with a superior opportunity to study the factors that affect company performance.

Companies seeking to achieve wide employee participation in strategic management give their employees the best chances for self-development and have a better than average chance of attracting the best people (Hamel and Prahalad, 1994). By encouraging their employees always to be critical of the current situation and strive for excellence, Motorola management makes it possible for its organizational learning to occur at a faster pace than in most other companies. The work attitudes and strategic management contributions induced by these systemic arrangements have been found capable of improving a company’s strategic performance very considerably.

In a rapidly transforming environment, it is the companies that learn faster that adapt better (Hamel and Prahalad, 1994). Not only do they generate stronger competitive strategies, they also implement and modify their strategies more efficiently and effectively than most.

On the basis of the discussion so far, it appears that the critically important means of strategic management system enhancement would be:

  • employee information access;

  • employee motivation levels;

  • employee strategic management participation;

  • intra- and inter-organizational communication;

  • organizational learning capacity.

As with any very complex system, the sequence of steps taken in strategic management system enhancement can be expected to be of critical significance. By its very nature, improvement of complex systems is unlikely to occur except by relatively small increments (Heene and Sanchez, 1997; Senge, 1990).

MEASURES FOR STRATEGIC MANAGEMENT SYSTEM ENHANCEMENT

The measures with which to enhance the strategic management system should be selected with a view to ensuring their appropriate content validity and reliability. The former can be achieved by selecting measures that are capable of enhancing strategic management responsiveness, effectiveness or efficiency.

The availability of suitable information to utilize in these measurements, and feasibility concerns in general, should be signaled here. The specific requirements of systemic change measurement (multiple criteria, time delay, contextualization, etc.) are another aspect to consider. Adding strategic flexibility, environment match, resource growth and access, coordination, particular resource use efficiency, etc. could well extend the list of candidates for measurement.

Responsiveness in strategic management could be measured by:

  • number of strategy modifications in a particular period;

  • number of strategy modifications in a particular period, compared to competitors;

  • time to respond to a certain category of signal;

  • number of environmental signals not responded to in a particular period;

  • number of signals overlooked by the company in a particular period, compared to competitors.

Strategic management effectiveness could be compared between companies by:

  • looking into market share trends;

  • examining market penetration;

  • investigating customer loyalty levels and changes in these;

  • studying perceptions of product quality;

  • examining specific customer value-for-money ratios.

Relative, rather than absolute, measures of strategic management effectiveness are recommended to make the measurement more reliable.

Strategic management efficiency can be measured in a number of ways. The following measures could be adopted in this respect:

  • amount of particular resource(s) the organization required to achieve a strategic objective;

  • amount of particular resource(s) the organization required to achieve a strategic objective, compared to the amount that was anticipated;

  • decrease in the amount of resources required to achieve an objective (shows the effectiveness of organizational learning).

Effective organizational learning is very likely to lead to improved strategic management responsiveness, efficiency, and effectiveness (Senge, 1990).

Since aspects of the strategic management systems to be measured and constructs in use there are extremely complex, none of the measures may have sufficient diagnostic accuracy (Schwenk, 1984). To increase this, it would be better for any such measures to be used in conjunction, rather than separately. None should be regarded as a substitute for any other. Rather, all of them should be deemed complementary to one another.

REPRESENTATION OF STRATEGIC MANAGEMENT RELATIONSHIPS

To ascertain the logic of any complex system is an extremely difficult task. The immense variety of elements that make up such systems and relationships between them erect tremendous cognitive barriers and slow down, if not stop altogether, effective induction-based intellectual processes (Schwenk, 1984). Each of the existing schools of thinking on strategy formation (Mintzberg, 1994) has developed a confined spectrum of analysis that excludes many factors considered capable of influencing the strategic management process. What is required is for intuition and reason to be deployed in an integrated fashion in strategic management (Mintzberg, 1996a; Senge, 1990).

Enhancement of any complex system surely necessitates holding a sufficiently comprehensive and detailed grasp of the system’s mechanism. The perceived complexity of the strategic management system has often been shown to be a truly formidable obstacle. What methods would be effective enough in reducing this complexity and thus be able to open new opportunities for investigating the various mechanisms and relationships of these systems?

A review of the strategic management literature (e.g. Mintzberg et al., 1995; McKiernan, 1996) suggests that the two weakest parts of current theory are:

  • its failure to produce operational definitions of strategic management (system) performance;

  • its apparent failure to express all the main influences on strategic management systems in logical sequences.

After the three proposed dimensions of strategic management enhancement have been briefly explored, the main influences on the strategic management system are presented in a form that would be easy to examine. The form of sequences, or strings, of such influences is chosen for this task.

In formulating some of the proposed sequences, Senge’s findings and suggestions (1990) were particularly useful. Senge argues that lasting, significant improvements in the performance of organizations will increasingly depend on their dogged pursuit of leverage through implementation of systems thinking, personal mastery, mental models, building shared vision, and team learning. He suggests that the interrelationships between most factors in strategic management are other than linear cause-effect chains and encourages us to look into the processes of change rather than taking snapshots. He believes that a thorough review of the literature and a suitably conceived inquiry into the relationships between all main categories of factors would produce “patterns where others see only events and forces to react to” (Senge, 1990: 126) and the much needed capacity for the strategist to see both the forest and the trees.

A sequential explanation of the relationships between the main factors will:

  • help reduce the perceived complexity of the strategic management system (Schwenk, 1984);

  • provide a new, consistent logic for the relevant inquiry;

  • facilitate the relevant inquiry through enabling the use of methods and tools of investigation new to the discipline of strategic management.

The success of the proposed approach is ultimately contingent on the discipline’s capacity to define and verify such a set of these sequences that it could represent the entire mechanism of strategic management enhancement. Yet, we are still ignorant as to whether such universally applicable mechanisms exist. Senge (1990) believes that finding universal formulae for many relationships between strategic management factors should be possible, as not all is unique in management.

WHAT ISA STRONG INFLUENCE STRING?

The operational definitions of strategic management system enhancement offered earlier in this article form a basis on which to propose a related theory development: the strong influence string (SIS) construct.5 Strong influences are defined as systemic influences, which have the capacity significantly to alter the responsiveness, effectiveness, and efficiency parameters of the strategic management system. Responsiveness, effectiveness, and efficiency will be referred to as aspects of strategic system enhancement.

Strong influence strings arrange specific influences on strategic management systems sequentially, each of them relating to some aspects and mechanisms of the systemic enhancement. Some of them might have similar, significant impacts on various structural and performance characteristics of strategic planning systems irrespective of the context. These would be universally applicable. The significance of other SIS might depend on the context. A contextualized analysis focusing on individual aspects of the significance of improvements in strategic management enhancement responsiveness and efficiency would help reveal whether this particular characteristic applies.

In presenting interrelationships in a sequential form, any implication of a simple, linear cause-effect relationships between single factors should be avoided (Senge, 1990). Relationships represented by SIS are likely to be far more complex this.6 Indeed, one can anticipate:

  • a multilevel interdependence of variables ultimately influencing an organization’s strategic management performance;

  • a great variety of possible relationships between individual factors, as well as between any one of them and the strategic management performance there.

The list of these relationships would include: causal (one or more factors required), reinforcing, attenuating, neutral, and excluding7 forms. Study of the influences of each such category on the three aspects of strategy system enhancement—responsiveness, effectiveness, and efficiency—would most certainly produce some interesting observations on which to develop both the theory and the practice of strategic management.

Some elements of SIS would be outside an organization’s control, others within it. Further, some influences would require much less time to influence strategic management system performance than others. This amount of time, and the extent of feasible control, often depend on the business context and bear practical implications for strategic management system enhancement. Analysis of SIS is likely to reveal strong potential leverages between the relevant groups of factors.

THE PROPOSED STRONG INFLUENCE STRINGS

The construction of SIS requires both a holistic strategic management perspective and a capacity to recognize the particular character of relationships between various components of SIS. Any SMS enhancement involves a number of steps. The very complexity of SMS suggests that:

  • the sequence of steps to enhance SMS is essential;

  • only a gradual, incremental recognition of these relationships is possible.

Reflection on the known SMS enhancement when coupled with intuition provides for a powerful tool of internal cognition. A conscious incremental approach (Quinn, 1989) helps management actors:
  • cope with both the cognitive and process limits on each major decision;

  • build the logical and analytical framework that these decisions require; and

  • create the personal and organizational awareness, understanding, acceptance and commitment needed to implement strategies efficiently. (ibid.: 48)

Strong influence strings in strategic management

1 External environment ➡ Strategic orientation ➡ Perceptions of external environment ➡ Evaluation of internal resources ➡ Organization configurations ➡ Corporate objectives ➡ Strategy formulation ➡ Business forms Strategy implementation ➡ Strategy control ➡ Strategic logic ➡ Organizational principles
2 Perceptions of environment ➡ Evaluation of internal resources
3 Organization configurations ➡ Perceptions of external environment and evaluation of internal resources
4 Cognitive style ➡ Decision-making behavior ➡ Strategy formulation Strategy implementation
5 Leadership style ➡ Internal communication barriers
6 Communication filters ➡ Cognitive biases
7 Information technology ➡ Information gatekeeping

Starting with the definition of environment category, String 1 essentially reflects the core logic of the strategic management process of the “fit” type (Hamel and Prahalad, 1989). However, through attaching String 2 to two elements of String 1, the original string is converted into one that represents the “stretch” strategic management process. Multiple environmental perceptions are more likely than a single one to lead to a number of alternative deployment options for company knowledge, resources, and capabilities being contemplated, the corresponding competence gaps being examined, and appropriate “stretch” strategies being developed and implemented.

The relationship between management level and function on one side, and the group and individual perceptions of both external environment and the company resources on the other, is represented by String 3. It shows that many various perceptions of environment and internal resources are the rule rather than the exception (Glaister and Thwaites, 1993). This has some very important implications for organizational and individual learning (Senge, 1990) and for strategic system performance. String 4 demonstrates the dependence of strategy selection on decision-making behavior, which in turn is influenced by the cognitive styles of the participants in strategic management processes (Barnes, 1984; Mintzberg, 1996a; Schwenk, 1984).

String 5 relates to the way leadership styles can contribute to the formation of various internal communication barriers, through encouraging/inhibiting open communication and verifying/distorting information (Lewis, 1987; Stohl, 1995; Wofford et al., 1987). The role of communication filters in creating cognitive biases in company employees is addressed by String 6 (Barnes, 1984). Those filters are a particular feature of the corporate management culture and of the management styles represented by individuals. Sometimes, communication filters are by-products of:

  • a certain strategic vision (some strategic information may be temporarily withheld due to its perceived extreme sensitivity); or

  • the relative positions of individual management functions within the company (those keen to protect their dominant roles in company management may seek to achieve this aim by securing a privileged access to some information).

Finally, String 7 represents the assumed influence of the continuing development of information technology, in particular:

  • the increasing occurrence of intranet-type solutions in business communication;

  • the introduction of very efficient information-processing software on the diminishing role and effectiveness of the gatekeeping function for internally and externally sourced information.

Some strong influence strings may need to be modified to reflect an organization’s context. Definition and empirical verification of other SIS is likely to be a prolific source of ideas enhancing strategic management theory and practice.

Examination of various strains of contemporary theory, and of individual experiences and perceptions, is certain to produce further hypotheses of strong influence strings in strategic management beyond those discussed in this article.

CONCLUSION

Strategic management theory has been developing so far in the form of partial theories. This has made the examination of the overall influence that various factors have on the structure, forms, responsiveness, effectiveness, and efficiency of strategic management systems very difficult. Some recent contributions, such as the theory of learning organizations and the paradigm of competence-based competition, form a basis on which a holistic approach to strategic management can be developed. This article considers a new tool of strategic management inquiry, a tool that would fit the holistic logic.

The holistic model of the strategic management system (SMS) proposed in this article integrates two partial models. The purpose of this integration is to encompass all stages and components of the strategic planning process and to include all main categories of factors known to influence the strategic management process. SMS covers both the formal and behavioral aspects of strategic management and thus it represents the logic and structure of strategic management systems and of the strategic management process more truly than conventional “partial” models. As such, it enables adoption of a holistic perspective on strategic management system enhancement.

Three aspects of strategic management system enhancement are briefly explored in this article: responsiveness, effectiveness, and efficiency. A number of relevant operational variables by which to measure the progress of an organization along these three dimensions are suggested.

The two weakest points of the current strategic management theory appear to be its apparent failure to express all the main influences on strategic management systems in logical sequences, and its failure to produce operational definitions of strategic management (system) performance. To address the former weakness, the strong influence string construct is introduced. The discussion of three aspects of strategic management performance and the subsequent presentation of several examples of strong influence strings have two practical purposes: to facilitate the examination of strategic management mechanisms and relationships, and to guide in the enhancement of strategic management systems.

Strong influence strings provide for a different form of inquiry into the mechanisms of strategic management system improvement. They can facilitate intellectual processes leading to the formulation of hypotheses of systemic relationships and amplify researchers’, or managers’, cognitive capacity. As an analytical tool of considerable versatility, they can also help better embrace strategic management mechanisms, enhance the performance of strategic management systems, and lead to new competitive advantages for companies that avail themselves of the construct.

NOTES

  1. This perspective stresses the importance of flexibility and “muddling through” without a defined and sustained sense of direction. Particular forms and proportions in which these modes appear in different companies may vary vastly. Consequently, there is a point on the continuum proposed by Miller and Dess that corresponds to the characteristics of each concrete strategic management system.

  2. Strategy formulation involves the development of a mission statement, external and internal audits, establishing long-term objectives, generating, evaluating and selecting strategies, while strategy implementation includes establishing policies and annual objectives and allocation of resources (David, 1997).

  3. This time limit is determined by the context: mainly, it would depend on the anticipated pace of change in the external environment, company financial situation, market expansion objectives, market entry mode, and competitors’ reaction time.

  4. Substantial impediments may prevent a company from achieving the necessary connectedness in action (Stohl, 1995). Improvement in this area could be achieved through, for example, removal of communication filters and blocks, legitimization and involvement of various perceptions, and fostering reflection-in-action.

  5. Strong and weak impacts in strategic management discussed by Pearce and Robinson (1997) and high leverage variables introduced by Senge (1990) are cognate constructs to the strong influence string.

  6. A simple causal relationship means that there would a single identifiable factor that would always, on its own, cause a considerable and lasting enhancement of an existing strategic management system, through affecting the state of the subsequent factor of the defined string.

  7. A reinforcing relationship would be a relationship between one or more factors and strategic management performance, where these one, or more factors are capable of affecting other elements of a strong influence string in such a way that a lasting improvement in company strategic management performance results. An attenuating relationship is a relationship between one or more factors and strategic management performance where these one or more factors are capable of affecting other elements of a strong influence string in such a way that a lasting deterioration in company strategic management performance results (neither in the case of reinforcing or inhibiting relationship do these changes need to last over very long periods). A neutral relationship is a relationship where one or more factors have no capacity to influence any part of a strong influence string. An excluding relationship is a relationship where one or more factors would preclude an enhancement of (some dimensions of) strategic management, rendering relevant strong influence strings ineffective.