The neglected firm
Dual management imperative: current and prospective
Description
Management faces the critical task of balancing current operations with future planning. Often, managers focus too much on immediate tasks, neglecting long-term strategy, which can disadvantage the company against competitors who plan ahead. Strategic planning should be a core part of a company's activities, ensuring that both present and future business are equally managed.
A manager must act as both a caretaker of today's business and an architect of tomorrow's, reconciling the urgent with the important to achieve success.
Table of contents
01Envisioning tomorrow's enterprise
In the landscape of commercial enterprises, the concept of dual firms operating in tandem emerges as a pivotal strategy for securing a sustainable competitive edge. The "present firm" embodies the current operational state, focusing on delivering products and services that meet customer desires, addressing their needs to provide value, targeting the appropriate markets, and operating within designated geographic locales. This focus on operational efficiency often leaves little room for contemplating future strategic shifts, necessitating the existence of a "future firm."
This entity, typically embodied by the strategic planning department, serves as the visionary arm, guiding top management towards innovative methods to remain both effective and efficient in the forthcoming landscape. The essence of the future firm lies in its planning-centric approach, diverging from the execution-focused nature of the present firm. Its responsibilities encompass organizing and participating in strategic planning meetings, ensuring the inclusion of both line and senior managers to reassess current strategies. It also involves the logistical aspects of these meetings, such as scheduling, attendee coordination, and location planning. Providing essential materials like agendas and study documents to facilitate informed decision-making is another critical function.
Moreover, the future firm manages information gathering systems to centralize and structure decision-relevant data, integrates departmental plans into a unified corporate strategy, and evaluates alternatives to enhance operational efficiency and effectiveness within the present firm. The strategic planning department's role extends beyond mere planning; it ensures the business adapts to market changes, guiding the present firm towards necessary operational adjustments. This dual firm concept underscores the importance of both managing the present and envisioning the future.
02Steering the upcoming enterprise
The document outlines a comprehensive strategy for managing the planning department, emphasizing the importance of optimizing the future firm for the company's benefit. This optimization, when paired with effective management of the current firm, positions the enterprise to capitalize on all forthcoming commercial opportunities.
The strategic planning process begins by defining the current business strategy, which involves understanding the company's market position, client base, and market segments. Unless a significant overhaul is necessary, the future strategy will likely build upon the existing one. It's crucial to recognize that a firm might operate under three perceived strategies: the actual current strategy, a future strategy, and what managers believe the current strategy to be. Reconciling these requires factual data, primarily from invoice files, to understand whom the firm bills and for what services or products.
This analysis, especially in firms with international operations, should be region-specific due to differences in market segments and competitive landscapes across geographies. The document further breaks down the consumer market into six segments based on income and education, illustrating this with a financial institution's client distribution example.
03Structuring tomorrow's organization
For a company to thrive in the future, it must be structured in a logical and systematic manner. This involves critical steps to ensure peak efficiency. Firstly, the company must select a planning manager with the necessary competencies. Following this, the planning department should be organized for optimal functioning. Additionally, the company should consider establishing decentralized planning units.
The success of any strategic planning division depends on the capabilities of the planning manager, who must possess a blend of interpersonal and technical skills. There are seven essential skills that a planning manager must have. Firstly, they should have a natural aptitude for human relations, as they will be involved in planning discussions across the entire corporation. Secondly, they need to have empathy to connect with and comprehend the perspectives of the organization's members. Thirdly, emotional stability is crucial, given the constant interaction with various stakeholders. Fourthly, an open-minded approach is necessary to embrace new planning methods and ideas. Fifthly, the ability to logically process new techniques and challenges is important. Sixthly, technical skills are required for the preparation of essential planning documents. Lastly, a comprehensive understanding of business management is needed.
Once the right planning manager is in place, they can structure the planning department to fulfill its intended purpose. This will likely involve the creation of three distinct sections within the department:
1. The administrative section will handle the development of corporate planning manuals, coordination of planning meetings, collection of analysis and planning documentation, organization of planning meeting logistics, and preparation and distribution of meeting agendas. 2. The information section will supply the necessary data for informed planning decisions, including anticipated industry growth rates, current sales volumes and margins, critical success factors, strengths and weaknesses, client profiles and analyses, segmentation data, and potential opportunities for synergy. 3. The organization section will primarily monitor the implementation of strategies and the restructuring of departments to enhance enterprise efficiency. This includes designing the corporate organizational chart, setting objectives for each Strategic Business Unit (SBU), tracking progress towards objectives and incentives, developing budgets for each SBU, and overseeing all initiatives.
Related books
