This article serves a purpose to illustrate some of the flaws that are currently used by western organizations in regards to strategic planning. In this article we see are shown the detriment of the methods in practice at the time of the article, and examples of alternative strategic approaches in use by Japanese firms which have allowed them to have sustained success. Strategic Intent and Characteristics
As indicated in the article, Japanese companies “began with ambitions that were out of all proportion to their resources and capabilities”, but “created an obsession with winning at all levels of the organization and then sustained that obsession over the 10- to 20-year quest for global leadership”. Inspired by this obsession, the concept of “strategic intent” is introduced to the world of strategy. Strategic intent captures the essence of winning, is stable over time, and sets target that deserves personal effort and commitment. It comes with an ambition in the pursuit of global leadership that used to be outside the range of traditional strategic planning. By implementing strategic intent, a company can create long term objectives despite of considerable resources, whereas thinking in a traditional way, decisions should be made on the degree of fit between existing resources and current opportunities. Description
The key points to this article refer to the differences in strategic approach that the Japanese firms use, in contrast to the approaches used by western organizations. Japanese firms use four main techniques when constructing their strategy: Building layers of advantage
Searching for “loose bricks”
Changing the terms of engagement
Competing through collaboration
Strategic Intent is a breakthrough concept in the field of Strategic Management. It has strongly influenced how strategy is defined, and is responsible for main changes in the functioning style of many organizations. Key ideas brought together with “strategic intent” such as “core competence” and “stretch”, have been introduced to every company. With the same amount of resources and capacity, many companies have become much more successful than they were before under the inspiration of this strategy.
One example that emerges from the article is when Canon changed the terms of engagement in an effort to compete against Xerox. Xerox had created many advantages where other competing firms (most notably Kodak and IBM) were not able to directly compete against Xerox. Canon changed the terms of engagement by: standardizing their components, distributing through office supply stores instead of their own sales force, sold instead of leased, and appealed to secretaries and administrative positions within companies. All of these factors helped Canon change the terms of engagement, and not directly compete against Xerox who already held a sizable advantage. Questions and concerns
In the article Making Strategic Planning Work there is reference that ineffective planning may be a result of failure to develop clear policies, where those policies would guide decision making. However, in Strategic Intent, a global executive describes how they look for competitors who operate on a portfolio system (where businesses may be sold if a certain market share is reached). Therefore, could having a strategic policy hurt decision making? Connection to Prior Thoughts
In Making Strategic Planning Work, the author talks about some requisites for strategic planning. Strategic intent share the same way. It requires the management to conduct internal self-appraisal and future environment assessment to ensure the strategy is on the right track. The main reason for failure could be the same – lack of commitment for planning. In Crafting Strategy, it mentions how detecting the subtle discontinuities that may undermine a business in the future is crucial. This opinion is also shared in Strategic Intent, where it references the problem how managers operating on a 3-5 year window can cause damage as they are not looking out for the long term interest for the company. While both articles share the same thoughts, why aren’t more companies willing to pay for those managers with several years’ experience—instead of hiring outside the company?