Strategic planning is a method whereby an organization can position itself to create an advantageous situation for its future by capitalizing on its opportunities, addressing diverse challenges and providing adequate leadership qualities that facilitate and promote progress and change. The process of strategic planning incorporates an in-depth planning model that takes place over time with both individual and community involvement. Ten deeply embedded concepts tend to dominate modern concepts of strategy; ranging from the early Design and Planning Schools to the more contemporary Learning, Cultural and Environmental schools.
Consultants and academics keep focusing on these narrow premises, but managers will be better served if they try to fathom the wider picture. In accordance to the fundamentals of the strategically formulated design school lies in the fact that it considers the basic balance between opportunities and threats with basic strength. This process of thinking is directly implemented on the employees by the board of senior management groups and the consolidation is executed in the process of implementations.
The fundamentals of this view became a very influential teaching and learning form from 1970s onwards. (Hoskisson, 1999) Planning schools regard strategy formation as a formal process. It provides clear direction and facilitates firm resource allocation. Analysts can judge the crafted strategies and even pre-screen the data under consideration. Planning and research schools in USA offer major international interdisciplinary resource for professionals and scholars in architecture, design and planning. Documentation of international research findings and innovative ideas are their forte.
Such schools also provide a link between theory and practice for researchers. The development of the design and planning school took place almost in the same period and they are remarkably similar in their approaches to strategy formation with only one single difference. This specifies that strategic planning is not just cerebral but formal and can be effectively handled by making checklists and innovative techniques which must underline the imperatives of budget making, operating plans, programs and other strategic regulations.
According to the positioning school strategy formation is an analytical process that converts strategic management to the level of a scientific enquiry consolidates the content in such a systematic way to align it perfectly with the prevalent dictums of approaching strategy. Economics, industrial organization and military history are the focal points of this school of strategy making and Harvard professor Michael Porter provided major impetus in 1980 who furnished important information on the aspects of strategic positioning in academic and military strategy dating as far back as 500BC.
Porter’s “five forces model” – a strategy model that analyzes competitive external environment situations has emerged as a defining force in strategy formulation. Writers, consultants and people with an analytical frame of mind find the strategic program of the positioning school rather helpful and are wholesomely facilitated by its deployment. The message emanating from this school is to critically analyze, evaluate and calculate situations before committing to it or trying to create something new.
However, it is unfortunate that such extremely cautious approach debilitates strategy making to mere formal analysis bound in generic positions and stands as an impediment to actual progression and growth. (Kotelnikov, 2008) Since the goal of the positioning school was to concentrate solely on bare facts and dispense all other possibilities it actively engineered planners and analysts to penetrate the surface realities of industry situations and delve into the hard core of data that underlies strategy formation.
As such, these analysts were effectively trained to promote scientific truths and provide information to adapt to diverse situations and gained immediate popularity among analytical strategic groups. As such, the theory of the positioning schools became a lucrative deal and was readily implemented as the dominant view of strategy formulation in 1980’s. Like the design and planning school, the positioning school also belongs to the category of prescriptive schools. (Mintzberg, 2005) The entrepreneurial school defines strategy formation as a visionary process.
Such a process is essentially the intuitive creation of a visionary leader and is closely connected with prevalent economic theories. Thus this process takes place within the mind of a leader who seeks to establish his beliefs on people who arte willing to share and act on the same vision. Traditionally, the people who have been enormously impressed by the regime of the entrepreneurial schools are small businesspersons and the popular business press – especially people from Latin America and China.
The most prominent entrepreneurial schools in USA are University of North Carolina-Chapel Hill, University of Notre Dame and Louisiana State University. (Kotelnikov, 2008) The central goal of the entrepreneurial school is to envision innovative ideas and theories and seek to centralize them to facilitate future developments. The single most important flaw that riddles this school is that often the intuitive ideas of the leader are lost on the group and as a result, much confusion ensues out of the misinterpretation of goals.
The entrepreneurial school belongs to the category of descriptive schools, though at times it also appears to belong to the domain of the prescriptive. At the center of the strategic planning unit of the entrepreneurial school is the chief executive, just like the design school. However, in marked contrast to the design and planning schools the entrepreneurial enshrouds the whole process in an enigma belonging to the deep recesses of the human mind and psyche.
The powers of intuition obtain ultimate significance and usher in a remarkable shift in emphasis precise plans or theories to vague and often incomprehensible ideas, which are expected to be decoded with the help of visionary interpreters using a set of symbolisms. This school advocated the theory that it is the visionary discernment of a charismatic leader who can effectively influence a group, which leads to the successful running of small companies, niche players and start-ups. (Lamb, 2004) According to the cognitive school strategy formation is a mental process, which uses cognitive psychology as the main discipline.
The cognitive school is of the opinion that people function according to a set of patterns, which have been instilled into their minds by culture, and society and they act according to the influences of such dictums. Thus, they simply function according to the preconditions of certain regulations deeply embedded in their psyche. As such, these theories are developed in the human mind as definitive frames, maps or models, which significantly determine the mental process and decision taking faculties, and should be used as interesting case studies to throw light on the dark recesses of the mind and its alignment with strategy formulation.
Research on cognitive basis in strategy making and on cognition as information processing was rather popular in the 1980’s and continues to be influential even today. (Kotelnikov, 2008) A more subjective, interpretative or constructivist view was later to be inaugurated which put forward the theory that cognition is essential in constructing strategies as creative interpretations and not merely an objective reading or interpretation conducted on the basis of so called realism.
The Hampshire College, New York University and Teacher’s College, Columbia University offers the best education in cognitive psychology in USA. The champions of this school are people with a prominent psychological bent of mind and include both pessimists and optimists. The prominent messages, which reach out from this school, are that it encourages people to grapple or cope with difficult situations and try to innovate or create new theories and to think penetratingly on the difficulties encountered, worry about them and prescribe viable solutions.
The one major drawback of the cognitive school is that it is much too subjective and dependent on the ideas of an individual and is often led astray by individual mistakes or lack of proper interpretation or implementation. This school also belongs to the category of purely descriptive schools like learning, power, cultural and environmental schools. (Kotelnikov, 2008) The learning school views strategy formation as an emergent process peripherally related to learning theory in psychology and education and chaos theory in mathematics.
Individuals who are inclined to experimentation, adaptability and ambiguity find the regulations of the learning school helpful as it is governed by principles of theory and knowledge, fact and experimentations, visionary ideals as well as practical and time-tested reality. Thomas Jefferson High School for Science and Technology is perhaps one of the best examples of the learning school in USA. The two important messages of the learning school are that one must involve oneself in the process of learning as well as try out innovations and encourage the play of new ideas rather than actively pursue such results.
However, the strategy development in the learning schools is often confusing chaotic and unpredictable as it seeks only to educate and inculcate ideas rather than actually test them out realistically and establish concrete results. (Mintzberg, 2005) Eventually the learning school became a veritable force that challenged the omnipresent prescriptive schools. The learning school highlights the emergent theories incrementalism and concepts like venturing and emerging strategies, which examines the growth of individual ideas rather perceiving them as perfectly conceived decisions.
Retrospective sense making is an important issue, which emphasizes that thought, and action are curiously interrelated – “we think in order to act as much as we act in order to think. ” This view further specifies the importance of the emergent strategy in the process of strategy formation and seeks to mark the importance of the closely tied up processes of strategy formulation and implementation. Strategy formation as a process of negotiation is the dictum of the power school, which regards political science as its base discipline.
Individuals with a lust for power, a keen sense of ambition and predilection for conspiracy and political intrigues are the disciples of the power school. Phillips Exeter School, Andover, Exeter, Groton and St Paul’s are supposed to be the best power schools of USA. The power school fosters the messages that it is imperative to promote and hoard assets for personal benefits rather than shares it for the greater good of humankind, and as such is hideously flawed by clash of self-interests and petty jealousies of stakeholders and other members, which severely debilitate the process of strategy development.
The power school deals exclusively in strategies distilled in power equations and differ from the previous schools in two main aspects. Firstly, micro power develops strategies within the organization on a political basis involving bargaining, persuasion and confrontation among the stakeholders. In the second instance, macro power identifies the organization as a venture that uses its power to control its partners in alliances, and joint ventures. (Mintzberg, 2005) With anthropology as its base discipline, the cultural school seeks to propagate the process of strategy making as a collective process.
The aim of this school is to kindle awareness regarding social, cultural and spiritual traditions of any particular society or religion. People who evince interest in the social, cultural and spiritual are the benefactors of such schools. Fieldston School and Irish American Cultural Institute and Institute of Cultural affairs USA are prominent cultural schools of USA. The cultural school presents a well-formulated planning process, which acts in full synchronization with the group facilitation methods and actively engenders productive action and concrete benefits to suit the individual requirements and aspirations.
Further, it also promotes the individual capacity for strategic planning and aids the entire group to build a unified vision intricately interweaving realities, visions, contradictions, strategic directions and implementation. The dictum of the cultural school is the importance of coalition and perpetuation of prevalent ideals rather than change. In addition, does not actively encourage innovative changes. Thus, in itself, it can lead to stagnation of creative ideas and stick to ideas, which have already been, tested ands proven as worthwhile.
The power school emphasizes the dictum of self-interest and fragmentation; in direct opposition, the cultural school fosters common-interest and integration. According to the cultural schools, strategy formations are rooted in culture and society. Deftly, the theory examines the influence of culture in discouraging significant strategic change. In 1980’s culture emerged as a vital issue in USA and Europe after the impact of Japanese management on the global scenario. It became quite clear that strategic advantage could be the product of unique cultural factors, which are rather difficult to imitate.
The environmental school sees strategy formation as a reactive process, which is created, as a direct response to the challenges of dire circumstances of the external forces. It actively formulates plans of how to cope with the adversities imposed by the environment, comes to terms with hard-core realities, and generally involves people such as organization theorists, positivists and population ecologists. The subject, which forms the base discipline of the environment school, is biology.
In USA, the most important environmental schools are the Yale School of Environmental Studies, the McGill School of Environment and Nicholas School of Environment, which offer BA and BSc degrees in environmental science. The two prominent ideas of the environmental school are that people should react immediately to the changes in the external environment and capitulate to the demands imposed by such forces rather than actively confront the forces of disruption and try to conquer or come to terms with them.
The environmental school, however, imposes severe limits to strategic choice, as it does not advocate active confrontation and thereby hinders in surmounting hardships. (Mintzberg, 2005) The environmental school differs from the previous schools in that it is not strictly strategic management if one considers the term as how organizations use their freedom to create strategies. Nevertheless, the environmental school deserves attention as it emphasizes the role of the environment in strategy making.
The most important theory propagated by this school is the contingency theory, which seeks to analyze responses of organizations inhibited by specific environmental problems, and population ecology, which effectively limits strategic choice. (Kotelnikov, 2008) The Configuration school, which perceives strategy formation as a process of transformation, has history as its base discipline. In the USA, the process of transformation is regarded to be of immense importance for such as integrators, change agents and lumpers. Exposure to configuration strategies can be sought by taking admission to various SAP training courses and workshops.
The watchwords of the configuration school are to integrate and transform ideas rather than split and adapt. Like the entrepreneurial school, it displays the traits of both descriptive and prescriptive category of schools. Its major drawback is that it hardly marks a line of demarcation between radical or incremental change and exhibits ambiguity of values and applicability. (Mintzberg, 2005) As of today, indeed the configuration school can boast of the most extensive and integrated literature and practice of strategy planning.
The academic and descriptive side of this school perceives organization as a configuration of coherent clusters of behaviors and characteristics and thereby effectively integrates the claims of all the other schools. Thus if organizations can be described by states such as relative stability and dynamic configurations, then change must be analyzed as dramatic transformation – a leap from one state to the other. Therefore, it was that literature; actual transformation emerged as the two sides of the same coin – prescriptive, practitioner oriented, and consultant promoted yet complimentary to one another. (Mintzberg, 2005)
Ideally, the strategy formulation of the present day should be a combination of the ten traditional approaches and synthesize concepts of judgmental decision, intuitive visioning and emergent learning. It should be capable of generating transformation as well as enhancing perpetuation. It has to deal with such disparate elements as individual cognition and social interaction, co-operative as well as conflicting ideas. Situations must be meticulously analyzed before and after programming as well as negotiating during the process. The entire endeavor must emerge as the logical solution of what can be termed as a demanding environment.