The Optimum Profitable Growth Strategy –
more important today than ever
In business management strategy is probably the most frequently used and most misused term.
The Profitable Growth imperative : the strategy, which preceeds operative management and is superposed to it, must generate results on a sustaining basis. Experience gives evidence, that a professionally sound strategic management approach in combination with demonstrably effective tools and methods is key to the successful realization of Profitable Growth.
The enterprise and external stakeholders
Operative management often focuses on internal processes, which are highly steerable and observeable (with other words : manageable). Strategic management in contrast must adress the enterprise’s external stakeholders (markets being linked to the business)
‚Operative‘ versus ‚Strategic‘ : the Criteria
The criteria of relevance for strategic management in contrast to operative management are listed subsequently :
A management topic which – to the largest extent – is determined by criteria in the
- green pillar -> defines operative management
- red pillar -> defines strategic management
- orange pillar -> describes a hybrid management task
In practice almost any arbitrary nuance between operative and strategic issue occurs; the transition is transeunt and not abrupt.
Classes of Strategic Management – from District League to Premier League
Regarding Strategic Management tools and methods, the wheat can be separated from the chaff by means of only two simple criteria :
- Criterium 1 : does the method adress all or at least the majority of the strategy critera ?
- Criterium 2 : is the approach bases on qualitative methods (e.g. text, principles, rules or the like) or is it based on quantitative methods,
with other words it is data-driven and allows for computations, simulations, demos, validations and optimizations ?
Thus the variety of Strategic Management tools and methods boil down to four categories .
these are Strategic Management methods, which work on a pure qualitative basis (often backed up by the manager’s individual experiences and by so-called ‘common sense’) and which do not explicitely adress strategy criteria.
Classified as ‘Pop’ , because they are very popular in management practices.
these are methods, which work qualitatively and which do adress strategy criteria (or at least try to do so … ).
Classified as ‘Philosophy’, because in real world’s practice the Strategic Management problem space can not be adressed without quantitative methods (nor in planning, neiter in execution)
Some well-known strategy-philosophy classics :
- Efficient Managers do the things right. Effective Managers do the right things. (Peter Drucker)
- Strategy without execution is useless and execution without strategy is aimless (Morris Chang)
- The rear view mirror is much clearer than the windshield (Warren Buffet)
- Plans are nothing – planning is everything (General Eisenhower)
- Companies who do not plan, plan to fail (General von Clausewitz)
these methods work on a quantitative basis (digital era like) but do not adress the entire strategy space. Typical example is the Balanced Scorecard like target and execution planning.
Classified as ‘Mainstream’, because the usage of these approaches (pseudo-strategy approaches) is widespread
these are scientifically-mathematical approaches, almost always quantitative computerised methods, which do adress the real world strategy problem space in major or in all aspects.
Classified as ‘Professional’, because professionals use such tools when it comes to investment grade management quality
Each Strategic Management method category has a justification of existence, as long as it is applied in an appropriate situation and as long as it delivers the expected results. In case not : go for professional methods.
The subsequent graphics shows an overview of typical Strategic Management methods per category and over time.
Optimal Profitable Growth Strategy
Strategy B2B’s methods focus for sustaining Profitable Growth is in the quadrant ‘Professional‘, the application of professional quantitative methods of Strategic Management as Advanced Analytics, (numerical) Optimization and Artificial Intelligence.
Only such methods are able to really adress key Strategic Management factors (e.g. complexity, uncertainty etc.).
Profitable Growth by means of effective Strategics Management
It is a widespread practice in Strategic Management to hide the influential factors or to consider them as constant or only slowly changing for the upcoming business year (so-called ‘big moves’ planning).
The five-stage CMM model can be enriched with a sixth stage ‚Strategic Management’, thus extending the performance optimization focus towards a joint performance and strategy optimization focus. Profitable Growth can be realized on a sustaining basis while taking into account all strategy criteria.
Strategy B2B’s slogan ‚Strategize, Optimize, Profitize‘ is derived from this methodical approach.