Executives Say That Their Companies Planned to Focus More on Growth Initiatives Than Cost Cutting. Can Management Tools Help Them Toward the Innovation that They Seek? The article of the lecturer of Columbia University and Center for Leadership of UCU Greg Muth.
Over the past few decades, management tools have become a common part of executives’ lives. Whether they are trying to boost revenues, innovate, improve quality, increase efficiencies or plan, executives have searched for tools to help them. The environment for globalization, rapid technological advances and economic turbulence has increased the challenges executives face and therefore, the need to find the right «tools” to meet those challenges.
To do this successfully, executives must be more knowledge than ever as they sort through the options and select the right management tools for their companies. The selection process itself can be as complicated as the business issues they need to solve, i.e., governance, mission & vision through strategic planning, scenario & contingency planning. They must choose the tools that will best help them make the business decisions that lead to enhanced processes, products and services with a view towards delivering superior performance and profits.
Successful use of such tools requires an understanding of the strengths and weaknesses of each, as well as an ability to creatively integrate the right tools, in the right way, at the right time. The secret is not in discovering one simple solution, but in learning which mechanisms to use, and how and when to use them. Let’s examine the three examples mentioned above:
Governance – What is it; Why is it used?
«Good governance” is a term that has become a part of the vernacular of a large range of development institutions, corporations and other actors within the international arena. What it means exactly, however, has not been so well established.
In general, work by multilateral organizations (World Bank, etc.) on good governance addresses economic institutions and public sector management, including transparency and accountability, regulatory reform, and public sector skills and leadership.
Other organizations (United Nations, European Commission and OECD) are more likely to highlight democratic governance and human rights, aspects of political governance. Still others, (private companies or family-owned business) view good governance somewhat in the middle of the two.
Some of the many issues that are treated under the governance programs of most entities are:
– election monitoring
– political party support
– combating corruption
– building independent judiciaries
– security sector reform
– improved service delivery
– transparency of government account
– civil and political rights
– government responsiveness and
– the stability of the regulatory environment for private sector activities (including price systems, exchange regimes, and banking systems).
In short, working uses of the term “good governance” include a variety of generally “good” things. But these “good” things do not necessarily fit together in any meaningful way.
Mission & Vision Statements via Strategic Planning– What is it; Why is it used?
A mission statement is a statement of purpose, a vision statement is a vivid image of the future you seek to create, as well as how will you achieve same. A value statement outlines your organization’s guiding concepts, beliefs or principles.
Strategic Planning is a comprehensive process for determining what a business should become and how it can best achieve that goal. It appraises the full potential of a business and explicitly links the business’s objectives to the actions and resources required to achieve them.
Strategic Planning offers a systematic process to ask and answer the most critical questions confronting a management team – especially large, irrevocable resource commitment decisions.
Typically, with board input, senior managers will write the company’s overall Mission and Vision Statements. Other internal managers may write statements for their particular divisions or business units. The process requires all to:
– Clearly identify the corporate culture, values, strategy and view of the future by interviewing internal and external stakeholders.
– Address the commitment the firm has to its key stakeholders and community.
– Ensure that the objectives are measurable, the approach is actionable, and the vision is achievable.
– Communicate the message in clear, simple and precise language.
– Develop buy-in and support throughout the organization.
Scenario & Contingency Planning – What is it; Why is it used?
Scenario Planning allows executives to explore and prepare for several alternative futures. It examines the outcomes a company might expect under a variety of operating strategies and economic conditions. Contingency Planning assesses what effect sudden market changes or business disruptions might have on a company and devises strategies to deal with them.
Scenario and contingency plans avoid the dangers of simplistic, one-dimensional or linear thinking. By raising and testing various “what if” scenarios, managers can brainstorm together and challenge their assumptions in a nonthreatening, hypothetical environment before they decide on a certain course of action. Such planning allows management to pressure-test plans and forecasts and equips the company to handle the unexpected.
Key steps in a Scenario and Contingency Planning process are:
a.) Chose a time frame to explore;
b.) Identify the current assumptions and thought processes of key decision makers;
c.) Create varied, yet plausible, scenarios;
d.) Test the impact of key variables in each scenario;
e.) Develop action plans based on either the most promising solutions or the most desirable outcome the company seeks;
f.) Monitor events as they unfold to test the company’s strategic direction; and g.) Be prepared to change course if necessary.
By using Scenario and Contingency Planning, an organization can:
– Achieve a higher degree of organizational learning.
– Raise the challenge both implicit and widely held beliefs and assumptions about the business and its strategic direction.
– Identify key levers that can influence the company’s future course.
– Turn long-range planning into a vital, shared experience.
– Develop a clearer view of the future.
– Incorporate globalization and change management into strategic analysis.
*About the author: now a private investor and Lecturer at Columbia University, Muth is the immediate past Chief Executive Office of WSL PURE, the philanthropic arm of the World Surf League, Santa Monica, CA. Following a successful financial career, other accomplishments include the Founder and Chief Executive Officer of StrategicMed, New York, NY, a national disease and population management practice aimed at the chronically afflicted; President and Chief Executive Officer of International Medical Care, Ltd., New York, NY, a staff model health maintenance organization (HMO) offering western-style primary care in emerging markets. He remains active in the medical assistance field as a founder and lead member of the Board of Directors of Assist America, Inc., a Princeton, NJ–based employee benefits company. Muth draws upon 12 years of public service with the US Department of Justice – Federal Bureau of Investigation, and the US Department of Defense. He began his financial career at Chemical Bank [today J.P. Morgan Chase], with stints at HSBC Bank Group, Banque Indosuez and First Boston Corporation.