16.1. WHAT IS STRATEGY?

Strategic management is a conscious thought process in which individuals and organizations set goals and means to reach them that guide action. In the military context, General Maxwell D. Taylor has characterized strategy as consisting of objectives, ways and means, which can be expressed as follows (Lykke, 2001, p. 179):

Strategy = Ends + Ways + Means

While the processes proposed for use in strategy formulation and implementation are often data based, analytical, and rational, it is imperative to recognize that strategy is also a synthetic process in which creativity is key in envisioning entirely new directions as well as novel approaches to reaching goals. And while strategy may seem highly abstract, it is truly among the most practical subjects related to organizations. It requires operating in between the forest and the trees, and integrating the various functional areas of an organization into a cohesive whole. An effective strategist will heed the advice of the sixteenth-century philosopher Francis Bacon (Russell, 1972; p. 544), who said, "We ought to be neither like spiders, which spin things out of their own insides, nor like ants, which merely collect, but like bees, which both collect and arrange."

Andrews (1980; p. 45) defines strategy as "The pattern of decisions in a company that determines and reveals its objectives, purpose or goals, produces the principle policies and plans for achieving these goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and noneconomic contributions it intends to make to its shareholders, employees, customers and communities." The interdependence (and coherence) of plans and policies," Andrews continues, "crystallizes formless reality into a set of problems an organization can seize upon and solve." Strategic thinkers are adept at taking what appears to be messy quantitative and qualitative data and paint a picture that gives the organization a sense of direction.

At the most basic level, strategy consists of:

• Objectives, which describe what the organization wants to achieve, and when they want to achieve it

• Policies, which are general guidelines the organization follows

• Programs, which are step-by-step action sequences that, within the guidelines, help an organization reach its objectives

James Brian Quinn (1980) makes an important distinction between strategic issues and decisions versus operations. Strategy determines the overall direction of an enterprise and its ultimate viability in light of the predictable, the unpredictable, and unknowable changes that may occur in the surrounding environment. Strategy:

• Delineates broad limits within which the enterprise operates

• Dictates the resources the enterprise will have accessible for its tasks

• Determines the effectiveness of the enterprise, and whether the thrusts are in the right direction

Operational decisions focus on managing for efficiency and involve day-to-day issues. Strategic objectives are long term, transcend functional areas, and are often but not always quantifiable (Andrews, 1980).

A mission underpins an organization's objectives, policies, and programs. It is the foundation of the strategy and expresses the organization's philosophy—why the organization exists—and what it aspires to be. In his syndicated cartoon, "Dilbert," Scott Adams parodies the corporate world in a humorous and insightful, though sometimes scathing, manner. Mission statements are among his targets of ridicule, and the Dilbert website even provides a mission generator, which creates a statement by organizing a random set of terms. Adams surely has a point, and the development of mission statements and strategic plans often elicits criticism as a waste of time and resources. But it need not be that way. If accomplished in an inclusive manner—and in a genuine manner—crafting a mission can be an enlightening and even inspiring process in which people consider what deeply motivates them, and what sort of organization they wish to create. A good mission statement:

• Gives stakeholders a sense of what the organization values and what it aspires to be

• Provides a fundamental sense of values to return to during down times

• Establishes criteria for decision making regarding personnel, growth, and reacting to changes in the environment

What can be done if participants in a strategy process resist crafting a mission? One antidote is to ask them why they chose to work in their organization and not another, or why they chose their profession over another, or even their spouse over another. Their own responses typically help to convince them that considering the deeper purposes for their choices is a worthwhile and even necessary activity. Who wants to approach life without a purpose? An organization devoid of purpose has no meaning.

An organization's mission is typically long-lasting. Consider, for example that America's mission as expressed in the Declaration of Independence has guided the country for over two hundred years. Other elements of strategy typically have less longevity. Strategic objectives often cover a three- to five-year time frame, as do policies. Programs, however, may vary frequently and often change year to year. There appears to be a cultural difference in strategic time frames. Although admittedly a generalization, American companies tend to have a shorter time frame than companies in Europe or Asia, and this needs to be recognized, especially when pursuing international collaborative endeavors. Time frames can also vary depending upon industry. For example, the pharmaceutical industry and hybrid seed industry have longer time frames related to their longer product life cycle than, for example, a personal computer manufacturer. A research-intense company often has to consider multiple strategic time frames, which vary for products and longer-term technological development.

While some elements of strategy are common to all organizations, regardless of whether they emphasize technological innovation, R&D organizations need to adapt the elements of strategy—objectives, policies, and programs—to their unique situation. Selected strategic objectives related to degree and type of technology-based innovation provided in Chapter 12, section 2, should be among those considered as strategy is shaped. Policies consistent with these objectives include, among many others, the funding associated with R&D, often expressed as a percentage of sales. Other desirable policies and programs will center on the innovation process or processes employed in an organization (e.g., stage gate and/or venture board); whether open innovation is emphasized; how global the organization's research needs to be; how actively involved the customer is to be in innovation; what the organization's policies in regard to intellectual property protection are, whether personnel time is allowed to pursue projects of interest beyond the corporate thrusts, and so on. For example, if a university develops a policy to encourage formation of interdisciplinary research teams, programs might include having the university college research offices:

• Provide seed money to develop ideas and working relationships among researchers that lead to interdisciplinary research programs

• Actively assist in preparing a minimum number of interdisciplinary research proposals each year, with a goal of successfully acquiring a specific dollar goal for interdisciplinary research annually