What is strategy, and how do we align vision, resources, and execution for success? That is what we will discuss in this video.
In this video, we have the following learning objectives:
Understand the integration of two different forms of management—normative and operational—within strategic frameworks. Explore the significance of aligning goals and resources to ensure effective strategy implementation. Learn how strategy influences resource allocation, decision-making, and organizational success. Different Forms of Management
We can view some forms of management as more future- and externally-oriented, while others are more inward-focused on the present.
Outward-looking toward external concerns and interests, determining what is desired by society. Focuses on gaining legitimacy, meaning acceptance and approval from external stakeholders and society. Based on normative inputs: after understanding what society perceives as legitimate, strategic management determines how to do the “right things.” Involves having a clear mission and vision, giving purpose to the organization. Concerned with effectiveness—ensuring the right actions are taken. Operative (Operational) Management Inward-looking, focused on the present and daily business operations. Concerned with efficiency—doing things right once the goals are set. Besides these management levels, organizations must also address areas like human resources, planning, controlling, and organizing. Managers must ensure information flows between the different levels (normative, strategic, and operational) and across various functional tasks.
Normative, Strategic, and Operational Elements
Normative Management: Corporate philosophy, values, ethics, policies, and guidelines. Strategic Management: Translating the company’s philosophy into a vision and a mission—this is the direction-setting function. Operational Management: Managing processes, business operations, and daily efficiency. Vision and Mission
An organization’s vision has two dimensions:
Material Dimension: Which of society’s needs does the company fulfill? This focuses on increasing company value by directly meeting social needs. Spiritual Dimension: How can the company make the world a better place? This addresses how an organization contributes to the common good. The mission defines the organization’s unique contribution and fundamental purpose, answering:
What value do we want to create? For whom do we want to create this value (i.e., user groups)? How do we want to create it? Examples of Vision and Mission
Vision: “We want to be an energy company with purpose—trusted by society, valued by shareholders, and motivating for everyone who works at BP.” Reflects material (being an energy company) and spiritual (trusted by society, motivating for employees) aspects. Mission: “Reimagining energy for people and our planet. We want to help the world reach net zero and improve people’s lives.” What: Reimagining energy. For whom: People and our planet. How: Helping the world reach net zero. Vision: “More quality of life through sustainable products and forward-looking business practices.” Spiritual dimension: improving quality of life. Material dimension: sustainable outdoor products, forward-looking practices. Mission: “We create innovative product solutions and services that are environmentally friendly and fair. By prioritizing sustainable quality and implementing circular systems, we minimize our ecological footprint. In doing so, we respect planetary boundaries and strive to lead by example, driving responsible global business practices.” The for whom aspect is broad, implying society and business in general. From these examples, we see different ways organizations define vision and mission. Not all dimensions are always equally explicit, depending on the company.
Strategy as a Source of Direction
Strategy aligns with the mission and vision to guide the organization’s development. The organization operates within a broader environment that includes society, nature, technology, and the economy, interacting with many stakeholders (e.g., competitors, investors, employees, suppliers, the state, and the public).
Organizations must handle management processes, business processes, and support processes, constantly renewing or optimizing them. Strategy—along with structure and culture—helps give order and direction in a complex world.
Mission and Vision: Define purpose (“Why do we exist?”). Strategy: Outlines a long-term plan and steps to reach goals aligned with the purpose. Usually, strategy has a timeline longer than one year (often aiming at targets for 2030 or beyond). Based on strategic direction, organizations set annual goals and develop structures, personal development plans, and control mechanisms.
Definitions of Strategy
Chandler (1962): Strategy involves determining the long-term goals and objectives of an organization and adopting courses of action. Porter (1996): Strategy is about trade-offs—choosing what not to do. Competitive advantage arises from deciding where to focus and where not to. Mintzberg (1987): Strategy can be seen as: A plan (how to get from here to there). A pattern of actions over time. A position in the market. A perspective that offers direction. Characteristics of Strategy
Involves strategic decisions on organizational fields of activity (which markets or products to focus on, and which to avoid). Addresses competition (how to relate to competitors). Refers to environmental situations and developments (identifying opportunities and risks). Considers internal strengths and weaknesses (what we can or cannot do). Includes statements about future development (long-term perspective for the company and its business fields). Has a long-term impact on organizational value, assets, and profitability. Reflects the attitudes, desires, and values of decision-makers (combining future orientation with the current state). Principles of Effective Strategy
Empirical research highlights several principles for successful strategy-making:
Concentration of Forces: Select specific markets or products and focus efforts there. Resource Allocation: Prioritize the use of resources to support strategic decisions. Focus on Competitive Advantage: Build on strengths, avoid weaknesses. Exploit Opportunities: Understand the market, seize developments, and minimize risks. Innovation as a Means to Strategic Ends: Use innovation to achieve strategic goals, not for its own sake. Search for Synergies: Leverage existing resources in similar or related markets. Balance Risks: Be moderately conservative unless in a critical emergency. Communicate the Vision: Break the strategy into steps and goals to guide employees toward the desired future. Persistence: Maintain a firm will to achieve long-term goals. Unity of Doctrine: Ensure a unified understanding of direction and goals throughout the organization. Measuring Strategic Goals
Organizations commonly set both classical goals (e.g., profit, growth) and relational or societal goals (e.g., employee welfare, supplier relationships, community contributions). To track progress:
SMART Goals: Specific, Measurable, Achievable, Realistic, Time-bound. Facilitates strategic control by allowing managers to see if goals are being met and to take corrective action if necessary. Key Takeaways
Strategy unifies normative, strategic, and operational management, guiding the company’s purpose and aligning goals with resources. Strategic principles—like concentrating on core strengths and balancing risks—must adapt to environmental changes and be linked to a competitive advantage. Long-term success requires persistent focus on strategy, risk management, goal alignment, and effective organizational structures. We hope you found this video helpful and look forward to seeing you in the next one!
