Strategic Management Process

The term strategic management process refers to the means by which critical human, technical, financial, and informational resources are obtained, combined, and discarded so that an organization can survive and prosper. Typically, upper-echelon managers take responsibility for this process, but progressive managers involve the entire organization as much as possible in this process. Because there are many misconceptions about this process, it is helpful to examine what it is not before further exploring what it is.

First, the strategic management process is not the same as the strategic planning process. This process subsumes [Page 533]strategic planning, particularly in dynamic and uncertain environments. Increasingly, the aim of the strategic management process is to promote effective resource allocation decisions and activities, whereas the strategic planning process is an important communication tool that promotes coordination within the organization.

Second, this process is not the same as strategic leadership. Management deals with the effective use of organizational resources within an existing order; leadership deals with showing others the way so that a new organizational order can be created. Both sets of activities are important and sometimes overlap, but each activity has a different aim and usually requires different skills sets.

Finally, this process is not the same as strategic thinking or decision making or control. Although strategic managers often think carefully and make important decisions, they also act on those decisions and oversee the execution of those decisions. As such, the strategic management is a holistic process that subsumes these three activities.

Top managers in the health care industry have not historically used the strategic management process because tactical excellence was emphasized in a cost-plus-reimbursement framework. Today, this has all changed. Tactical excellence is still important, but attention to “big picture” strategic issues within the strategic management process is essential as well.

The strategic management process, if done well, should ensure the long-run health and viability of the organization. Organizational health is best judged from a balanced and holistic perspective that considers financial and nonfinancial considerations as well as a broad range of organizational stakeholders. The balanced scorecard is a useful framework to create a strategy-focused organization from a holistic perspective.

In our information-based global economy, innovation is increasingly the only option that strategic managers and leaders can pursue to be successful. Because information is increasing in comprehensiveness and velocity, cost efficiencies are quickly apparent and eventually copied by competitors. Although continuous attention to cost efficiencies will always be important to “remain in the game,” the only viable option for long-term growth is for the strategic management process to focus on creative ways to produce new and valuable products and services or to literally “change the game.” As such, strategic managers must work with strategic leaders to deal with the increasingly paradoxical strategic situations that demand maintaining stability while trying to change, balancing short-term goals with long-term ones, and acting to reconcile the multiple, and sometimes conflicting, interests of organizational stakeholders.