Summary Strategic Management
Week 1: Strategic Management
Strategic Thinking and Competitive Advantage (Chapter 10 in: Shortell and Kaluzny’s
healthcare management: Organization design & behaviour)
Strategic management
Strategic management involves the creatin implementation, and overall direction for a firm.
As such, it requires both external and internal management functions to facilitate
development, implementation and monitoring of strategy within an organization. Steps in the
process of strategic management may include:
1. Goal formulation
2. Environmental scanning
3. Strategy formulation
4. Strategy evaluation
5. Implementation
6. Strategic control
Internally, strategic management involves the participation of everyone in the organization,
especially the leadership. Externally, strategic management enhances organizational success
by anticipating possible changes in the environment in which the organization operates, and
by enabling organizations to change and maintain their competitive advantage, the long-term
market position and uniqueness that is not easily duplicable by rivals.
Environment
No organization is immune to influences that come from its external environment and
strategic management is a process that helps organizations respond appropriately to potential
threats and opportunities.
One external factor that will have a direct impact on health care strategies is the
demographics of our communities. In all, the health care industry exists in a very large
dynamic, complex and challenging environment with many opportunities as well as threats.
With an aging and diverse population making up a changing customer base, increased
competition, technological innovations, and a changing political landscape, health care
organizations must have a good grasp of the relationship between the larger environment and
its future.
What is strategy?
Modifying the definition, strategy is identified as the development of a broad formula
prescribing a way in which a business competes and collaborates, sets goals, and establishes
policies to carry out these goals in order to achieve the organizational mission. Strategy has
been described as a plan or guide for future action, a pattern of past behaviors, the process of
launching products into a particular market, the fundamental way an organization operates, a
ploy or feint to outwit a competitor, etc.
Strategy has these characteristics, where it:
1. Concerns both organizations and the environment
2. Is complex
3. Affects the welfare of the organization
4. Involves issues of content and process
, 5. Is not purely deliberate
6. Exists on different levels
7. Involves various thought processes
8. Involves the allocation of resources
9. Should be mission based
Strategy ultimately is about making better decisions. Strategic planning consists of making
decisions that are concerned with positioning a firm relative to its competitors and the
allocation of assets for current and future activity. Strategy must be flexible enough to allow
for changing circumstances.
Strategy has two important functions:
- Good strategies should improve decisions about resource allocation to yield long-term
benefits for the organization
- Developing strategies should challenge existing assumptions and be open to new
possibilities
The Strategic Process
Successful strategies require direction, resources, and institutionalized processes. Strategic
thinking involves crafting direction that eventually evolves into goals and objectives.
Strategies require action, which involves assigning responsibilities, assignments, expected
outcomes, and follow-through. Many strategies fail as a result of improper or inattentive
implementation.
Within an organization, strategic priorities should be elaborated, and projects with goals and
objectives should be developed, implemented, and monitored for each area. Appropriate
individuals should be assigned responsibility and authority for achieving strategic goals, and
key performance indicators should be established to measure progress.
Strategic planning processes must involve the right people.
- The top executive should lead the strategic planning and exhibit his/her commitment
by the dedication of time, resources, and intellect
- Organizational boards, if appropriate, should also be involved in the strategic
planning process and its monitoring.
It is important to identify all stakeholders who should be involved and clearly define the
terms of their involvement and responsibilities.
,The plan should outline steps to be taken, establish the committees and meeting, and the time
frames involved should be explicit.
The most difficult aspect of strategic action is the actual implementation of strategic plans.
To facilitate implementation, health care organizations should seek to:
- Establish the competencies, capabilities, and resources needed to achieve strategic
action.
- Identify responsibility and outcomes with definitive timelines and key performance
indicators.
- Develop and promote policies that facilitate strategic action.
- Appropriate use information and operating systems to drive the strategies.
- Tie rewards to the achievement of strategic action.
- Tie budgets to strategies.
- Establish a monitoring and evaluation process that will communicate the progress and
challenges implementing the strategies.
- Incorporate strategic action into annual evaluations. Annual employee evaluations
should be tied into the organizational strategies. Especially, organizational values
should be directly reflected in each evaluation. Employees and managers should
determine how closely the employees are living the values in their work.
Values, mission and vision
Values
Values are the expression of the ethics that guide employees’ actions. They should constrain
how the mission and vision is accomplished. If during a mission the values have been
violated, the organization has failed.
, Formalized, written organizational values are important for a number of reasons.
1. They may serve as an ethical compass, the absence of which could leave an
organization without a viable rudder to direct its strategies.
2. Written values serve as visible reminders of the organization’s commitment to basis
beliefs.
3. Written values assist in grounding organizational ethics over time.
Organizational leaders are responsible to move values and to make sure that they are lived
throughout the organization. Expressed values can also be the means by which an
organization shapes the attitudes of its members toward selected categories of stakeholders.
How should values be established and evaluated?
- Obtain key stakeholders’ expectations for the organization.
- Identify common values among stakeholders
- Values should be visible and tangible to employees
- Values should be memorable
Mission
A mission should be the foundation of strategic direction. A mission keeps management
focused on what their primary purpose is. A mission provides the reason for the company’s
existence and forms the basis for strategy.
Most successful statements have measurable, definable, and actionable content. Key
components should include the definition of product or service, the standards employed, and
the population or segment served by the organization. The mission should represent the
essence of the organization’s competitive advantage. The mission statement may also target a
specific customer base. Missions should also be crafted to express the core function and
purpose of the organization’s existence. A mission should also not be too restrictive.
Vision
A vision is a statement about what the organization wants to become. The vision should
resonate with members of the organization and help them feel proud, excited, and part of
something much bigger than themselves. A vision should challenge and stretch the
organizations capabilities and image of itself.
A vision should describe the desired future state of the organization, while the mission
provides a description of the existing purpose and practice of the firm.
Strategy and Health Care
Competitive advantage: a competitive business environment of winners and losers in which
firms struggle to gain an advantage over their market competitors.
What is competitive advantage in health care?
Strategic advantage for for-profit firms is frequently based on a “win-lose” perspective.
Strategic gain and success depends on finishing ahead of competitors in terms of market
share, earning, or another comparative figure. Healthcare organizations, especially those that
are not for profit and whose mission involves service to vulnerable or disadvantaged
populations, may not prioritize gaining a strategic advantage over their competitors as a top
organizational goal.
