The following infographic from Opentext highlights the importance of CIOs focussing more on strategy:
Corporate planning allows organisations to review and analyse their current position, examining their internal activities and their external environment. It allows them to create a Strategic Plan which outlines their key business objectives and goals over time and their actions to achieve them. In this video Erica Olsen describes what Strategic Planning is:
Information technology has been increasing in its importance in corporate strategy in many organisations. John Pickett, Principal with the IT Media Group and an experienced and respected IT community advocate, was interviewed for students of the University of Waterloo’s course in the Strategic Management of Technology. John spoke about the relationship between information technology and the business:
This article discusses strategic analysis and strategic planning, highlighting the importance of the careful development of corporate strategy for business success. Strategic analysis develops understanding of where the business is now. Most large businesses frequently evaluate their position and strategic analysis has many methods to assess their current position. Erica Olsen provides an overview of the typical strategic planning process. A version of this is used by most successful organisations:
There are two types of strategic analysis, external and internal. Audits are used to establish where the business is now. Internal audits use data and information from within the business. Often an outside consultant will be used for this to gain an independent view. External audits use data and information from outside the business analysing areas that will sometimes be outside of the control of the business. The analysis undertaken will influence business decision making.
Internal audits may consider many factors. Productivity of human resources and capital, efficiency using ratio analysis, investment data etc, costs, looking at wastage of resources and opportunities for cost cutting may all be examined, Internal data such as labour turnover, absenteeism, customer satisfaction surveys, quality statisitics, financial data, sales trends and skills audits can all be used. SWOT (Strengths Weaknesses Opportunities and Threats) analysis is used by many organisations. Core competencies are considered to determine what the business is good at. The following video explains the conduct of SWOT analysis:
The following video emphasises the need for consistency in pursuit of a coherent strategic direction and argues that there are only three strategic options for organisations and that a failure to select and focus on one will cause organisations to be “mediocre”:
External audits consider the environment that the business operates in. They might look at inflation, competitiveness, unemployment, growth and consumer spending. They will usually look at competitors with the business, what they are doing and what threats they may provide.
Analysis of PEST factors (Political, Economic, Social and Technological) can feature in external audits and is explained in the following video:
and this is an example of PEST analysis as applied to the music industry:
Exdternal audits will also consider changes in the market for the products or services that the business produces. Is the market growing, stagnant or declining. Is the market share of the business changing? Is future growth possible or is the business at the mature stage. What are the market trends – are there new fashions or potential new market opportunities that the business needs to be aware of? The Boston Matrix is often used to analyse products:
Gaps may exist where there is a market that is not being served.
Strategic planning considers where the business will go in the future, often over a ten year period. Some businesses look further than ten years. Some Japanese companies have strategic plans that look at a one hundred year period. However, not all businesses have strategic plans. Some do not beleive that strategic planning is a worthwhile use of time, but these are a minority. Most businesses executives understand that having a clear strategy that is understood throughout the organisation will guide basic principles for working and making operational day to day decisions.
Strategic planning seeks to identify areas of competitive advantage. It looks at ways to add value to an organisation, considering whether businesses should focus on mass or niche markets, whether a cost based strategy should be used, reducing costs to compete and grow and / or a market based strategy, focused on satisfying consumer needs to create increased demand for the business’ products or services.
Strategic planning will often also include contingency planning – strategies in case things don’t go as planned and growth plans that will look at how the business will grow in the future.
Blackberry are currently enduring difficult times and provide a useful example of the application and importance of strategic decisions. Blackberry was once valued more than the Royal Bank of Canada but it has declined rapidly over the past few years:
The reasons for Blackberry’s difficulties are outlined in this interview with a journalist from the Wall Street Journal:
The Globe and Mail suggested a couple of years ago that Blackberry had five possible options:
1. Sell the company
2. Break it up
3. Find a partner
4. Become a niche company
5. Stay the course
and their possible options today are summarised in this news item from Global News:
Recently, John Chen, the Blackberry CEO, was interviewed about their turnaround strategy. The interview provided details of elements of their strategic plan and is a good example of strategic plan implementation in practice:
This article has described the strategic planning process that most organisations use today. It has introduced some of the common tools that are used as part of that process and an example of strategic plan implementation in the strategy for the turnaround of Blackberry. It should provide engineers and technologists with awareness of the processes that will be used in the organisations in which they work and help them to participate to ensure that technology plays a valued role in corporate strategy.