Strategic Control

21st-Century Strategic Planning

The sophistication of the planning now required by health care organizations is a reflection of several decades of fast-paced growth and consolidation in the industry. In such a rapidly changing environment, the effectiveness of strategic control depends on both the quality and the time-liness of the performance measures, which translate to an organization's ability to communicate throughout all levels of hierarchy. Even organizations that have been extremely successful in the past can become complacent and miss important shifts when they rely too heavily on a lengthy planning cycle. The demands on the organization change too quickly to rely on a static, detailed strategic plan, particularly at the business unit level. As a result, effective strategic control involves constant monitoring of the internal and external environment. Change proceeds incrementally as information is fed back to the system, with managers serving as resources to the system. Their job is to judge the feedback in the context of the bigger picture and make judgments concerning the appropriateness and timing of changes to the strategic plan.

Strategic Control at the Corporate Level

As strategic planning has evolved, a clear distinction has been drawn between corporate-level strategic control and business-level strategic control. Control at the corporate level assesses the top-level strategies of the organization, and is typically subjective in nature, relative to more quantifiable financial controls common at the business level. Corporate-level strategic control focuses on establishing an information system that shares strategic factors such as knowledge, markets, and technologies across business units. This in turn requires that top management have a thorough understanding of the business-level strategy for each unit. As a consequence, as organizations grow, either internally or through acquisitions of existing businesses, a strong case can be made for a strategy of related diversification. Strategic controls are sometimes difficult to apply in situations where an organization has grown through a strategy of unrelated diversification. Managers simply cannot synthesize the needs for disparate controls into one meaningful set of strategic, subjective performance objectives. In these situations, managers must rely on more quantitative financial measures in judging each business unit's contribution and long-term strategic fit.

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