The Strategic Management Response to the
Challenge of Global Change
Morrison and Ian Wilson
[Note: This is a re-formatted manuscript that was originally published in
H. Didsbury (Ed.),
Vision, Ideas, Insights, and Strategies. Bethesda, MD: The World Future Society,
1996. It is posted here
with permission of The World Future Society.]
Planning is an iterative activity. If the world did not change, we would only have to
develop one plan and stick to it. However, we live in a turbulent world. David Brinkley,
during the breakup of the former Soviet Union, stated that each day seems to bring the
dawn of a new era. Certainly the fall of the Berlin wall, the unification of Germany, the
breakup of the Warsaw Pact, and the breakup of the Soviet Union, have transformed our
world. The European Community may include Eastern Europe in the largest free trade zone
the world has yet seen. In response, other free trade zones are in the making (e.g., the
North American Free Trade Treaty between Canada, the United States and Mexico possibly
incorporating countries in Central and in South America; Australia and New Zealand). Are
these signals of another momentous event--international free trade with its concomitant
dislocations of workforces and industries?
In such a world we need a planning model that allows us to anticipate the future and to
use this anticipation in conjunction with an analysis of our organization--its culture,
mission, strengths and weaknesses--to define strategic issues, to chart our direction by
developing strategic vision and plans, to define how we will implement these plans and to
specify how we will evaluate how well we are implementing these plans. The fact that the
world is changing as we move forward in the future demands that the process be an
We want our organizations to succeed. In order to prosper, we must acquire the support
and resources our organization needs to fulfill its mission. We measure success by how
well we accomplish our organization's mission and vision.
Strategic management is a technique you can use to create a favorable future and help
your organization to prosper. To create this favorable future, you must involve your
organization's stakeholders (i.e., anyone with a vested interest in achieving your
organization's goals) in envisioning the most desirable future and then in working
together to make this vision a reality. The key to strategic management is to understand
that people communicating and working together will create this future, not some words
written down on paper.
Strategic management does not replace traditional management activities such as
budgeting, planning, monitoring, marketing, reporting, and controlling. Rather, it
integrates them into a broader context, taking into account the external environment,
internal organizational capabilities, and your organization's overall purpose and
Strategic management is congruent with the quality movement's emphasis on continuous
improvement. Indeed, the emphasis on anticipating the needs of stakeholders is a critical
component of external analysis. Certainly organizations that adopt a total quality
management philosophy will be better prepared to meet the challenge of competing in the
global economic marketplace.
Each organization's experience with strategic management is unique, reflecting the
organization's distinct culture, environment, resources, structure, management style, and
other organizational features. However, our experience in working with leaders and
managers in a variety of organizations indicates that similar questions and concerns
develop as organizations implement strategic management. Leaders who have addressed these
questions and concerns have developed a common basis of experience that is valuable for
those just beginning a strategic management process. This section summarizes some of the
things we have learned in working with a variety of organizations. First, let's contrast
strategic planning with strategic management.
Strategic planning marks the transition from operational planning to choosing a
direction for the organization. Organizations that use a strategic planning model do so
because they are sensitive to volatility in the external environment. With strategic
planning, the planning focus goes beyond forecasting population shifts and concentrates on
understanding changing stakeholder needs, technological developments, competitive
position, and competitor initiatives. Decisions, then, are better attuned to the external
world. Managers use strategic planning as a management function to allocate resources to
programmed activities calculated to achieve a set of goals in a dynamic, competitive
Strategic planning was pioneered by General Electric in the 1960s, widely adopted in
the corporate world in the 1970s, and introduced to educational organizations in the early
80s. In the 1970s, however, when strategic planning was being widely applied, external
events were still viewed as relatively stable, and planning was typically retrospective,
or, at best, present oriented. Times were still good for businesses and other
organizations. There was often a tendency for staff to prepare strategic plans--and for
management to put them on the shelf. Strategy did not pervade day-to-day operations.
In contrast, strategic management not only creates plans attuned to assumptions about
the future, but also focuses on using these plans as a blueprint for daily activities. The
chief executive of a strategically managed organization must be able to imbue the
organization with a strategic vision so that the organization's members are able to think
big (institutionalized strategic thinking) and act big (institutionalized courage). The
chief executive must be able to deal with the uncertainty of contemporary events and turn
these events to the organization's advantage. Managers must be superb at continually
adjusting competitive strategy, organizational structure, and modus operandi as the
marketplace demands. In a strategically managed organization, top managers accept change
as a permanent condition.
The Strategic Management Model
The building blocks for a comprehensive strategic management model are shown in Figure
1--external analysis, internal assessment, strategic direction, strategic plans,
implementation, and performance evaluation.
A key premise of strategic management is that plans must be made on the basis of what
has happened, is happening, and will happen in the world outside the organization with a
focus on the threats and opportunities these external changes present to the organization.
The external environment includes social, technological, economic, environmental, and
political trends and developments.
There are two major reasons for beginning with an external analysis. First, this
analysis will have implications for organizational change and development. Second, by
having leaders from all functional areas of the organization involved in the analysis, it
should be easier to obtain their cooperation in making adjustments in response to the
We must understand why the organization has succeeded in the past, what it will take to
succeed in the future, and how it must change to acquire the necessary capabilities to
succeed in the future. To do this, we must:
- evaluate the organization's capacities--its management, program operations
- evaluate the organization's resources--people, money, facilities, technology, and
- review the organization's current capacities and future needs.
- compile a list of the strengths and weaknesses that will have the greatest influence on
the organization's ability to capitalize on opportunities.
The organization has a mission, or reason for being. In this component we make explicit
the strategic vision for the organization's future--an idea of where the organization is
going and what it is to accomplish.
We use the information developed in the first two components, external analysis and
internal assessment, to review the organization's mission, set goals, develop strategic
vision, and determine the most critical issues the organization must address if it is
going to achieve this vision. Mission review is the foundation and authority for taking
specific actions. Goals are broad statements of what the senior leadership wants the
organization to achieve. Strategic issues are the internal or external developments that
could affect the organization's ability to achieve stated goals.
We use the following criteria to identify crucial strategic issues: (a) The impact they
could have on the organization, (b) the likelihood that they will materialize, and (c) the
time frame over which they could develop. We limit the list of issues to a manageable
number (three to nine) to enhance the chances of securing the commitment and resources
necessary to effectively act on them.
The objective of the strategic direction component is to help ensure that the
organization's vision and goals:
- are compatible with the organization's capabilities and complement its culture
- foster commitment and cooperation among key constituencies
- maximize the benefits inherent in environmental opportunities and minimize the
liabilities inherent in environmental threats
- enhance the organization's position relative to critical success factors (i.e., those
organizational elements that distinguish success from failure) and its ability to achieve
Once we agree on the direction the organization should take and the issues we must
address to get there, we must derive strategies of how to get there. Developing strategies
is the fourth step in the strategic planning process. We call this step strategic plans.
Strategic plans are the documented, specific courses of action that define how to deal
with critical issues. They result from the development and evaluation of the alternatives
available to the organization. If the critical strategic issues are truly important, and
if the mission statement reflects the organization's fundamental priorities, the strategic
plan should last for three to five years.
In this component we develop plans that reflect the following characteristics:
- creative, reflecting input from all the organization's important constituencies, both
internal and external
- consistent with the organization's direction as expressed in its mission and goals
- position the organization so it can capitalize on its greatest strengths and
opportunities and mitigate the effects of the most serious threats and weaknesses
- action-oriented and flexible.
Strategic management is more than just developing strategic plans. It involves managing
the organization strategically. From day to day, leaders must manage the organization so
that its strategic plans are implemented.
Implementing strategic plans calls for development of the right organizational
structure, systems, and culture, as well as the allocation of sufficient resources in the
right places. Implementation--the execution of selected courses of action--is a crucial
step in the strategic management process. It is essential to involve, from the very
beginning of the process, individuals and groups who will help to carry out the strategic
Implementation also requires ongoing motivation. This means showing individuals and
groups how their work has helped achieve the organization's objectives. The plan must
remain a highly visible driving force within the organization. Implementation of the plan
must become an integral part of day-to-day operations. It is not something extra to do; it
is the thing to do. As such, it is the impetus for motivation, recognition, and reward.
One important system needed to support the strategic plan is a performance evaluation
system. We need this to know if the plan is being carried out and if it is achieving the
Performance evaluation is the comparison between actual results and desired results. It
keeps the planning and implementation phases of the management system on target by helping
the organization adjust strategies, resources, and timing, as circumstances warrant.
In this step, we establish a system to monitor how well the organization is using its
resources, whether or not it is achieving desired results, and whether or not it is on
schedule. The monitoring and reporting system is continuous, with periodic output reviewed
by teams, while major evaluations are conducted on an annual basis. A dual benefit of
performance evaluation is that it subjects the strategic plan to discussion and testing in
the context of the real world.
Environmental Analysis in the Context of Strategic Management
Wayne Gretzky. one of American hockey's all-time greats, once said, "I skate to
where the puck will be." The external analysis component of strategic planning has
the task of ascertaining where the puck will be. This component consists of scanning the
environment to identify changing trends and potential developments, monitoring specific
trends and patterns, and forecasting the future direction of these changes and potential
developments. Merged with an internal assessment of the organization's vision, mission,
strengths, and weaknesses, external analysis assists decision makers in formulating
strategic directions and strategic plans (see Figure 1).
Aguilar (1967) identified four modes of collecting scanning information. Undirected
viewing consists of reading a variety of publications for no specific purpose other than
to "be informed." Conditioned viewing consists of responding to this information
in terms of assessing its relevance to the organization. Informal searching consists of
actively seeking specific information, but doing it in a relatively unstructured way. This
is in contrast to formal searching, a proactive mode entailing formal methodologies for
obtaining information for specific purposes.
Morrison, Renfro, and Boucher (1984) condensed these modes to passive and active
scanning. Passive scanning is what most of us do when we read journals and newspapers. We
tend to read the same kinds of materials--our local newspaper, perhaps a national
newspaper like the New York Times or The Wall Street Journal, and an
industry newspaper. We don't tend to read In These Times or Rolling
organizational consequences of passive scanning are (1) we do not systematically use the
information as intelligence information for the organization and (2) we miss ideas that
may signal changes in the macro-environment that could affect our organization. In order to
broaden our perspective and to fight the myopia inherent in us all, we need to use active
Active scanning focuses attention on information resources that span the broad areas of
social, technological, economic, environmental and political sectors--locally, regionally,
nationally, and globally. In active scanning, it is important to include information
resources that represent different dimensions of the same category (i.e., include The
New Republic and The National Review for the political sector, national level).
The list of information resources described later are in a matrix of information resources
at the national and international social, technological, economic, environmental, and
political (STEEP) levels.
Fahey, King, and Narayanan (1981) described a typology of systems of scanning used by
organizations. Irregular systems are used on an ad hoc basis and tend to be crisis
initiated. These systems are used when a planning committee needs information for planning
assumptions, and conducts a scan for that purpose only. Periodic systems are invoked when
the director of planning or of research periodically updates that scan, perhaps in
preparation for a new planning cycle. Continuous systems use the active scanning mode of
data collection to systematically inform the strategic planning function in an
organization. The rationale undergirding this mode is that potentially relevant
"data" are limited only by one's conception of the relevant macroenvironment.
These data are inherently scattered, vague, imprecise, and come from a host of varied
sources. Since early signals often show up in unexpected places, the scanning purview must
be broad and ongoing.
The goal of environmental scanning is to alert decision-makers to potentially
significant external impingements before they have crystallized so that decision-makers
may have as much lead time as possible to consider and to plan for the implications of th
is change. Consequently, the scope of environmental scanning is broad--like viewing a
radar screen with a 360 degree sweep to pick up any signal of change in the external
The terms scanning and monitoring are often used interchangeably, but monitoring
follows scanning. Every possible change or potential shift in the
be given equal attention. We select items by defining topics or ideas that are incorporated in "the interesting future"--the period in which major policy options
adopted now could probably have significant effect (Renfro & Morrison, 1983, p. 5).
The signals of change identified in scanning, if interpreted as having potential impact on
the organization, must be monitored. The goal of monitoring is to assemble sufficient data
to discern the past and future direction of trends or to enable us to estimate the
strength of indicators of potential events. Thus, scanning enables you to identify
critical trends and potential events. In monitoring use descriptors or indicators of these
trends and potential events as key words in your systematic search to obtain information
about them. When collecting data in the monitoring activity, look for information that
contains forecasts and perhaps speculation about the implications of the trend or event
Forecasting entails ascertaining the future direction of trends or the probability that
potential events will occur within a certain timeframe (e.g., 10 years). Trend forecasting
may be accomplished mathematically (e.g., using regression techniques) or judgmentally. A
problem with mathematical forecasting is that this technique is based entirely on
historical data and a conceptual framework that requires that all relevant independent
variables have been identified and measured. Moreover, this technique cannot take account
of developments that may affect the relationship between relevant variables or the
projected trend itself.
Judgmental forecasting requires that members of the planning team read the information
gathered in the monitoring stage, and, using their judgment, estimate the direction,
speed, scope, and intensity of change in trends and events. How long will it take for a
new development in educational technology to become commonplace? Will present concern over
the education of the children of migrant workers result in legislation? Will the change in
the demographic composition of the population intensify? These are the kinds of questions
that form the grist for forecasting. Their answers can be straightforward projections by
planning team members, or can be addressed by multiple scenarios laying out different
paths of likely developments focused around the immediate question.
Scenarios as a Forecasting Tool
Anyone who has anything to do with planning for any type of organization immediately
and instinctively turns to some sort of forecast of the future as a starting point. Why?
Because we have all been educated to believe that if we are to make decisions about the
future of an organization, we must first know what the future that the organization will
have to deal with will be like.
On the face of it, that is a reasonable proposition. Yet in reality we are asking for
the impossible--certainty and predictability in an uncertain world. The further out the
horizon of forecasting, the more unreasonable is the demand. But, even for the shorter
term the expectation of precision is a snare and a delusion.
The future is, in a profound sense, unknowable. But not everything is uncertain; some
things are relatively predictable. We can do a respectable job of "sensing" the
basic dynamics of the future and the alternative courses they might take. Building on this
foundation, scenarios steer us on a middle course between a misguided reliance on
prediction and a despairing belief that we can do nothing to envision the future, and,
therefore, cannot shape our future.
The term "scenario" is taken from the world of theater and film, and refers
to a brief synopsis of the plot of a play or movie. In a planning context, scenarios can
be described as "stories of possible futures that the institution might
encounter." Scenarios are graphic and dynamic, revealing an evolving future. They are
holistic, combining social, technological, economic, environmental, and political trends
and events, the qualitative as well as the quantitative. They focus our attention on
potential contingencies and discontinuities, thereby stimulating us to think more
creatively and productively about the future.
By basing decisions on alternative futures, and by testing planned actions against the
different conditions these scenarios present, we are better able to prepare for
uncertainty, and to endure that our decisions are as resilient and flexible as possible to
deal with contingencies that we might deem "unthinkable."
The SRI Model
One way to develop scenarios is to turn the job over to a brilliant futurist or an
imaginative planner to sketch out alternative possible futures that our planning should
consider. The fundamental problem with this approach, however appealing it might be, is
that the decision-makers--those who will ultimately use the scenarios--do not
"own" them: the scenarios remain for ever the product of someone else's
thinking, and so lack the credibility necessary for them to be the basis for action.
To deal with this problem a team at SRI International developed an approach that (a) is
a structured blending of rationality and intuition, and (b) relies on decision-makers
themselves to develop their own scenarios. We found, in a wide variety of organizations,
corporate and non-profit alike, that we could build into the process the highest degree of
understanding and commitment to use the scenarios.
The approach utilizes a relatively simple six-step process (See
Step l: Organizational Decision(s): The process starts, not by plunging into a
description of the future, but rather by clarifying the strategic decisions that we are
faced with, and which the scenarios should help us address. The decision can be as broad
as the strategic future of the organization (e.g., "What vision of our future
school/university should we pursue?) or as specific as the development of a new program
(e.g., "Should we use electronic communications networks to promote individualized,
off-campus/at-home educational programs?"). Regardless of the scope of the decision,
clarifying the "decision focus" of the whole process is doubly important. In the
first place, it serves to remind us that scenarios are not an end in themselves: they are
a means to help us make better strategic decisions. They must, therefore, be grounded in
our planning needs. Secondly, this focus considerably eases the problem of how to use the
scenarios. Without it, the scenarios would too easily drift into broad generalizations
about the future of our society; and their implications for our particular organization
would be lost.
Step 2: Key Decision Factors: Having thought through the strategic decision we
want to make, we are then in a better position to examine the "key decision
factors." It is easiest to think of these factors as "the main things we would
like to know about the future in order to make our decision." Granted that we cannot
actually know the future, it would still be helpful--if we are planning for an educational
institution--if we had some "fix" on, say, potential student population,
availability of funding, or the state of information technology in the year 2000 (or
whenever our planning horizon is). Once again, clarifying in our minds what the essential
decision factors are helps to focus the work-process on what is important for our planning
Step 3: Environmental Forces: Next, we need to identify and assess key forces
that will shape the future of these "key decision factors." We can think of
these forces as falling into one of two categories--micro-forces that impact most directly
and specifically on education, such as changing work force skill requirements,
government's role in education, and "privatization" of schools; and macro-trends
such as shifting demographic patterns, economic growth and income distribution, and the
diffusion of information technology. The better we understand the multiplicity,
interaction and uncertainties of these forces, the more realistic our planning is likely
to be and the better able we can be to prepare ourselves for sudden shifts in trends and
the onset of what would otherwise be surprises.
Next, we need to sort out these trends, ranking each in terms of its strength of impact
on the organization and degree of uncertainty of the trend developing as we conjecture (a
simple "High-Medium-Low" scoring system as portrayed in Figure 3 will suffice).
As a result of this sorting out, we can focus our attention on:
- "High impact/low uncertainty" forces--these are (we think!) the relative
certainties in our future for which our planning must prepare.
- "High impact/high uncertainty" forces--these are the potential shapers of
different futures (scenarios) for which our planning should prepare.
Step 4: Scenario Logics: This step is the heart of the process and establishes
the basic structure of the scenarios. If we examine the "high impact/high
uncertainty" forces, we will likely find that most of them can be grouped around two
or three critical "axes of uncertainty." Each of these axes presents two
opposite "logics"--different views or theories of "the way the world might
work" in the future. For example, one axis might pose the alternative views that
"education will continue to be primarily a public sector responsibility" or
"privatization of education will increase dramatically as the role of government in
our society decreases." (Bear in mind that these are polar opposites, with
intervening mid-points: but the essence of scenarios is, not to examine every,
possibility, but to force our planning to consider the possibility of drastically
The interplay of these axes and their alternative logics will present us with the basis
for selecting 3-4 scenarios that we believe effectively bound the "envelope of
uncertainty" that faces us.
Step 5: Scenarios: What do we end up with? What do scenarios look like? There
are many forms that scenarios can take, but the three most important features are:
- Compelling "story lines"--Remember: scenarios are not descriptions of
end-points (e.g., what does education in the year 2000 look like), but narratives of how
events might unfold between now and then, given the dynamics ("scenario logics")
we have assigned to that particular scenario. These story lines should be dramatic,
compelling, logical, and plausible.
- Highly descriptive titles that convey the essence of what is happening in each case.
After people have read the story lines, they should find the titles to be more memorable
encapsulations of the scenario.
- A table of comparative descriptions, to help planners and decision-makers see how the
scenarios differ along given dimensions (e.g., student body demographics, available
funding, business-education partnerships).
Step 6: Strategic Implications. This is the stage at which we seek to interpret the
scenarios, linking them back to the strategic decision(s) we focused on in Step 1. There
are many ways of looking at this question of "strategic implications," but
perhaps the simplest and most direct approach is to answer two questions:
- What are the main opportunities and threats that each scenario poses for our
- How well prepared are we (or can we be) to seize these opportunities and avert or
minimize the threats?
How Can You Use Scenarios?
Beyond the opportunities/threats assessment exercise in step 6, there are several
approaches to using scenarios in strategy development that are worth considering.
Perhaps the most obvious way to use scenarios is to employ them, in effect, as
"test beds" for the organization's current strategy. What is a
"strategy"? In simple terms, a strategy deals with the "how,"
"when" and "where" of an organization's actions to achieve its vision.
Every organization has a strategy (although often it is not clearly spelled out) so this
use should always be possible. This exercise can be as straightforward as a judgmental
assessment by workshop participants as to how well (or badly) the strategy "plays
out" in each scenario. A start would be to go through an opportunities/threats
assessment (see above), and then to use this assessment to address a second set of
questions. Are we satisfied with the resilience of our current strategy, its flexibility
to deal with different possible conditions? Are there things we could do to improve its
resilience? And (importantly) are there contingency plans we should put in place to help
us move in a different direction, should that be necessary?
Another use of scenarios is to stimulate us to explore new strategy options. Look at it
this way: scenarios portray different futures, and these different futures would obviously
require different strategies. Our difficulty lies in not knowing which future will evolve.
We can, however, go beyond evaluating our current strategy to exploring these new options,
scenario by scenario. We do not have to develop a complete strategy for each scenario; we
need merely use our imagination to start some "what if" thinking. Frequently we
will find that a new option, one that we thought of in connection with, say, a "High
Privatization" scenario, might be a good action to take in any case; maybe not to the
same extent, but a "good bet" surely.
The fundamental argument for scenario planning goes somewhat like this. In an age of
incremental change, it is safe to say that incremental changes in our strategies will
suffice. However, an age of discontinuities and massive uncertainties requires
discontinuous strategies, sometimes radical changes from our past practices. The powerful
feature of scenarios is that they stretch the envelope of our thinking, both about the
future and about our strategies.
The tools of environmental analysis--scanning, monitoring, forecasting, scenario
planning--used in the context of a model that uses these tools to expand vision, formulate
strategic direction and strategic plans, implement these plans, and evaluate the
implementation, enable us to shape the future of our organization and meet the challenges
of global change.
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