Executive Strategy: Strategic Management and Information Technology

545 Pages·2001·1.92 MB·English

by  Frederick Betz

EXECUTIVE STRATEGY

EXECUTIVE STRATEGY
Strategic Management and
Information Technology
FREDERICKBETZ
JOHNWILEY&SONS,INC.
NewYork / Chichester / Weinheim / Brisbane / Singapore / Toronto
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CONTENTS
PREFACE vii
1. STRATEGYPROCESS 1
2. IMPLEMENTINGSTRATEGY 47
3. STRATEGICBUSINESSMODELS 97
4. PLANNINGSCENARIOS 137
5. STRATEGYTHEORY 183
6. STRATEGICPLAN 221
7. STRATEGICVISION 269
8. MARKETSANDINNOVATION 303
9. COMPETITIONANDSTRUCTURE 331
10. OPERATIONSANDCONTROL 365
11. INFORMATIONSTRATEGY 395
12. DIVERSIFICATIONSTRATEGY 435
13. KNOWLEDGEASSETS 483
BIBLIOGRAPHY 515
INDEX 525
v

PREFACE
This is a concepts and processes book on strategy, adapted to the challenge of
strategic management of companies in an age of information. After gainingun-
derstandingofthefoundationideasofstrategycoveredinthisbook,youwillbe
abletobetterandmoreefficientlyguidetheprocessesof
• Strategicplanning
• Implementingstrategicplans
• Formulatingstrategicbusinessmodels
• Developingcomprehensiveplanningscenarios
• Formulatinginnovationstrategy
• Formulatingcompetitivestrategy
• Formulatingbusiness-driveninformationstrategy
• Strategicallymanagingbusinessdiversification
• Formulatingknowledge-assetsstrategy.
Traditionally, the challenges of strategic management were in its centrality,
complexity,anddifficultyofpractice,butnowwemustaddthenewchallengeof
information.
CENTRALITY OF STRATEGIC THINKING
Strategy is a central intellectual activity of management as it provides for the
long-term leadership for any group, organization, or business. Thus strategy is
vii
viii PREFACE
essential to effective leadership.Without a leader providing long-term direction
ofanorganization,theorganizationwillbestaticandbuffetedbychange.Without
a manager providing long-term direction for a business, that businessinvulner-
abletothesurprisesofchangingcompetition.
COMPLEXITY OF STRATEGIC THINKING
Strategy happens to be a complex idea because it is about the vagaries and ob-
scuritiesofanylong-termfuture.Incontrasttotheideaof“strategy,”theideaof
“planning”seemsmoreunderstandablebecauseitisaboutimmediatecertainties
andthedirectneedsoftheshort-termfuture.Accordinglyandfrequentlyinbusi-
ness practice, real strategic thinking may not occur at all, crowded out by the
immediateneedsofoperationalplanning.Sometimesstrategyevengetsconfused
with planning (e.g., in the U.S. government, all agencies and Congress are run
only by an annual budget, completely withoutstrategy,andevenafter1982,the
annualbudgetbillsofCongressceasedtobeallpassedintimeforthebeginning
of the federal fiscal year). In all organizations, business as well as government,
budgetingisthemostdirectandfamiliarprocess.Nextcomesplanning,andleast
familiarisstrategy.
DIFFICULTY OF STRATEGIC THINKING
Sincebusinessisapracticalactivity,anyintellectualleadershipinbusiness(such
asstrategy)isusefulonlyasitcontributestothesuccessofthepracticalactivity.
Thismakesstrategymoredifficultinpracticethanplanning,becauseofstrategy’s
mediated, indirect, and unclear connection of ideas to the outcomeof action.In
a plan, one has an immediate goal, a direct target, and a clear operationtoseek
the goal and gain the target. And soon it becomes clear (quarterly or yearly)
whetheronehassucceededorfailed.Instrategy,thetimebetweenimplementing
astrategyandaccomplishingitsobjectiveissolongandthegoalsandtargetsso
changedalongtheway—ofteneventheleadershiphaschanged—thatitmaynot
beatallclearhowstrategycontributedtoasuccessorfailure.Theevaluationof
anystrategyisalwaysahistoricalre-creationofmanypastevents.
All this long-term thinking, indirectness, and lack of clarity about the long-
termfuturemakesstrategyadifficultthingtopractice.Forsuccessfulstrategy,a
good strategic leader must have good strategic vision and have thissuccessfully
translated into good operational plans. How is all this possible? These are the
practicalissuesaboutstrategyandplanningthatwewilladdressinthisbook.
Isstrategyevennecessary?Theanswerisaclear,immediate,anddirectaffir-
mationof“yes,certainly.”Alltheactualcasesandpracticalinstancesofplanning
PREFACE ix
and strategy that we will review in this book will show that strategy hasplayed
a major and essential role in the long-term success of any business, firm, or
government (or in failure, the lack of proper strategy). Strategicleadershipmay
becomplexanddifficult,butitremainscentralandessentialtolong-termbusiness
successandsurvival.
INTEGRATING INFORMATION STRATEGY INTO BUSINESS
STRATEGY
Whenthetwentiethcenturyended(andinadditiontothesetraditionalchallenges
about strategy), there had occurred the beginning of electronic commerce (and
with it what many then were calling a “new economy” and “virtualcommerce”
and “virtual corporation.)” Certainly this was something strategically very new
intheworldofbusinessyetitwasalsosomethingstrategicallyveryold—another
ofthemanyimpactsofbasicinnovationuponcommerceduringthelonghistory
ofeconomicdevelopment.
What was new in strategy was the need to explicitly integrate information
strategy into business strategy.What wasold in strategywasthecontinuingand
universalpattern ofhow changein technology hasalwayscreatedmajorchange
in business strategy. The Internet was just one more in a series of major inno-
vationsthatrockedthebusinessworldsofthenineteenthandtwentiethcenturies
anddroveeconomicdevelopmentsfor200years.
We will reconstruct traditional strategy theory to include information and
knowledge strategy. We will find that information technology has altered tradi-
tional strategic management specifically as to focus, techniques, tools, and im-
plementation:
1. In strategicfocus, informationtechnologyhasaddedelectroniccommerce
tothepurviewofallbusinessstrategy.
2. In strategic techniques, information technology has moved strategic busi-
nessmodelstothecenterofstrategicthinking.
3. In strategy tools,progressininformationtechnologyhasmadetheformu-
lationofinformationstrategyamajorinstrumentofmodernbusinessstrat-
egy.
4. In strategy implementation, informationtechnologiesaremakingbusiness
integrationanimportantfeatureofstrategicchange.
To include these kinds of changesin strategicmanagement,wewilluseboth
a survey of the older business literature on strategyand alsomanynewcasesof
electroniccommerce—inordertoconstructamoderntheoryofexecutivestrategy.