Today many managers, businessmen, politicians and "unclassified intellectuals" like to talk of strategies. Strategies are even mentioned in seemingly irrelevant areas, for example: "Essay-writing strategies", "Strategies in psychotherapy", "Presentation-giving strategies" and so on. There is so much talk of strategies, the strategic approach and strategic enterprises that we wonder when these expressions will "go out of fashion", as they are becoming commonplace in every context where someone is trying to be taken seriously. The intention of this article is to "defend" the strategic approach, together with the basic concepts that form it, from superficiality and misuse, whilst limiting the discussion to the area of strategic company management.

Why is strategic management important to us anyway? The answer to this question is straightforward if we replace the expression "strategic management" with the words "creating and managing the future of the company". The future of the company is a matter of interest to the owners, the employees, their families, customers, suppliers, banks and all others who have some contact with it, including the local and wider community. This is normal, for we are all conscious of the fact that we will spend the rest of our lives in the future and that we will have to live off something "there", too. The future does not create itself. If we have no idea of what it might look like, or how we might reach the desired destination, we will become part of somebody else's future, tailored to the visions and interests of others. Those who adopt the role of creators of the future take on an exceptionally significant, worthwhile and responsible task, which requires much knowledge, familiarity with the situation, trends, techniques and tools and of course business and life wisdom.

Good decisions are based on wisdom, which is the result of great experience. Experience, for its part, is gained most rapidly and remembered best through bad decisions and failure. Let us use some of the wisdom of others, which can be transferred in the form of lessons and recommendations that have arisen through the analysis and study of recorded mistakes, ones which unfortunately get repeated.

1. Inconsistent use of concepts and terms

There is a great amount of inconsistency in the use of the terminology of strategic management, due in most part to the different schools and their adherents. When we add to this those people who "like to dabble in this area", the confusion becomes significant. It is beyond dispute that we need a good-quality glossary of strategic management concepts, but to begin with we need to harmonise the meanings of basic terms and the contexts in which they are used.

• Vision is the desired, possible "ideal picture" of the company in the future, that is, a view of a "new state of affairs" which does not yet exist. Vision is not time-limited, but rather reflects a picture of the future that we can imagine and "see" today. Vision is what everything begins with - if we do not have it, everything else will be just a collection of artificial constructs without a common thread which connects and focuses them.
  

• Life and business philosophy, however strange that may sound, is the most important conceptual framework in strategic management. The original meaning of philosophy is "friend of wisdom". Wisdom, which is a threefold "distillation" of knowledge, is something that we need today more than ever, for it is becoming ever more difficult to find valid signposts in an increasingly complicated world, a world which is changing more dramatically and at a greater rate all the time. It is a kind of eclectic mix of spiritual and business "laws", ethical principles, knowledge of human nature, principles for achieving success and, in recent times, principles of the knowledge economy. All great people - business and political leaders, scientists, great artists and all those creative people in general whose deeds we remember for their achievements and their philanthropy - had their own "philosophical system" which influenced their most significant and far-reaching decisions. We should not confuse tactical cunning with wisdom, which is the highest form of knowledge, or with philosophy, which is systematised wisdom.
  

• The general business landscape and business model describes the general and business environment, with its key players, interest groups and main business trends. This represents the first flesh on the bones of the ideas conceived in the vision, within the limits of a conceivable and, from the business point of view, acceptable time-frame.
  

• Mission defines the domain of our operations and our activities in the next three years. The mission is a binding document which clearly states our intentions and comprises a further fleshing-out of the part of the vision which we believe we will achieve in the stated time-frame, together with the values, supporting principles and relationships we have adopted and which we wish to build on and foster. The purpose of the mission is to focus the entire company on the most important changes and create a basis for the structure of the organisation.
  

• Business policy sets the boundaries for the operation of the company, the management board, the management and the most important subdivisions, for the next three years. Through the business policy we define the most important decision-making principles at the level of the organisation as a whole and at the level of its key parts. Without these principles it is difficult to lead, coordinate and integrate an organisation.
  

• Goals specify the intentions which arise from the mission, business policy, various analyses and the specific demands of the owner. Goals describe, in clear terms, the difference between the current and the desired future state.
  

• Strategies answer the question of how we can achieve the most important goals in the most rational and, from the business point of view, productive way. Not all goals have strategic significance, but those goals which are vital for the future of the company must have strategies for their achievement. Strategies are in fact the "best ways" of achieving the stated goals in a specific time period, within the environment in which we do business, with the resources we have available and within the limitations which we have to take into account.
  

• Objectives clearly and precisely define what needs to be done, by when, how to measure results, the necessary resources and the persons responsible. Without converting goals into specific objectives and developing them, it is impossible to get the organisation moving in the desired direction.
  

• Tactical decisions direct our manoeuvres on a daily, weekly and monthly basis in order to achieve the goals, in accordance with the strategies and business policy.
  

• Tasks communicate clear duties and responsibilities to the specific individuals and teams who are directly involved in the achievement of objectives, which are defined by the strategies and tactical decisions.
  

• The Strategic control system is a model by which we monitor the implementation of strategies. It involves the introduction of measures for the monitoring of changes in tangible and intangible assets, as well as the organising of periodic meetings where reports are submitted, problems discussed and decisions taken regarding corrective measures.

If there is confusion with regard to these basic concepts from strategic management, it will be difficult to have constructive discussions, establish logical connections within the structure and management process and to determine the proper order of steps to be taken.

2. Strategic management without a consistent model

The use of the different sources and techniques on offer is good for research purposes, but is fatal when inconsistent models are applied in practice.

Although most models utilise similar components and tools, a clear connection and logical order of priority must be established between them, together with the inputs and outputs for each component, analysis or result of the use of a tool. Each of the basic components of the model (vision, mission, business policy, goals, strategies etc.) must have:

• a clear purpose

• a structure connecting the elements which comprise it

• a procedure for their creation

• a clear connection with other components

Of particular importance is the order in which components are created and
harmonised, which in a consistent model must be logical and unambiguous.

3. Belief in "magic words"

We often encounter statements, visions, missions and strategies which are nothing more than brief or expanded slogans or catchphrases. It seems as though the authors are competing with one another as to who can write the shortest statement which will, in a few words, be "etched in people's minds" and become the "force for change". Slogans should not be rejected out of hand, but they are no substitute for strategic plans and documents. The word "slogan" has its roots in a Celtic expression which literally means, "battle-cry". We can agree that a battle-cry is no substitute for the strategy by which battles are won or lost.

4. Non-recognition of spiritual, business, ethical and other laws and principles

Building a future without any kind of caring, ethical, business and other guidelines can lead a company or a country into disaster. All of us have the opportunity to leave behind us a better world than the one we came into. Decent and successful people understand this, others do not. There is an obvious connection between the invisible thoughts and emotions of our minds and the visible actions we take in consequence of them. There are "laws" and principles, tried and tested in practice, which can enrich the lives of every individual, group or organization. Of course, even though they are universal, these laws and principles demand certain personal adaptation to the conditions of life and business, and the meaning that comes from all this. Life and business philosophy form an invisible aura which surrounds many strategic decisions. Without this, the whole process of strategic management is left without the vital human aspect, regardless of short-term successes that we may admire for a time. Without a clear philosophy of life and business, we are wasting time, energy and emotions on trivial tasks and mundane concerns. We need it as an inspiration, as a positive view of the world, as a commitment to looking to the future full of anticipation and hope of a more useful and happier life. If we apply spiritual, business, ethical and other constructive laws and principles, we can turn life and labour into a more profound, more worthwhile and more joyful experience.

5. An unclear or warped view of one's own company

An unclear assessment of where the company is, what it has in terms of resources, and what problems it is faced with, can lead to wrong decisions and moves. A wrong diagnosis cannot facilitate the proper therapy. It is interesting just to what extent some owners and directors will seek to avoid facing up to a specific and accurate picture of what is happening in the company.

6. Forgetting sources of revenue

It can happen, and not infrequently too, that "great strategies" and "comprehensive strategic plans" are devised in which there is no mention of how income is to be increased from the sources on which the company is focused. So, for example, products are often incorrectly regarded as a source of income. Products in and of themselves do not generate any income - they can sit in a finished goods warehouse for years. A source of income is a combination of products and/or services that we sell and deliver to a customer who belongs to a specific target group and who is in a specific geographical location at a specific time. Sources of income are the basic building blocks of any business strategy.

7. Wrong order of steps - starting from the "middle"

We have come across strategies that are not based on previously-defined goals, and even more often across goals which are not based on a mission and which have no connection with business policy. These attempts to work "from the middle" create many difficulties and require later modifications in development, and often end "in the middle", with no beginning or end.

8. Indistinct separation of goals into strategic and operative goals

Not all goals are strategic, and a strategy is not needed for every goal. Furthermore, it is normal that not all the desired goals can be achieved in the given time-frame. Differentiating, prioritising and connecting goals in a logical order is one of the critical steps in strategic management.

9. Neglecting the customer

Customers are the most important elements of our sources of income, and therefore of every business strategy. Yet it can happen that everything is taken into account except the customer - their needs, desires and expectations. This kind of neglect is the most costly.

10. Neglecting employees

Employees are a team which either makes the customer happy or turns them away. The attitude that we cultivate towards employees is the attitude that they will very quickly take towards the customer. Strategic management, in all its aspects, must incorporate a stance towards employees, both at the company level and at the level of the teams and individuals who are responsible for implementation of the strategies.

11. Lack of concern for financial aspects

A business strategy must consider the influence on income and not just of individual income streams, profit centres or units, but also their influence on income from other sources. The "cannibalism" phenomenon is well-known and must be taken into account. Besides this, the influence of every strategy on cash-flow, on availability of working capital and on profit is of fundamental importance. Proactive consideration of the possible financial risks, especially when significant investments are being made, is also a part of this segment of strategic management.

12. Neglect of intellectual capital - focusing only on the financial aspects

An analysis of the financial aspects of every strategy is essential, but is it no longer enough. In the last decade or so, we have witnessed an explosion in the significance of "invisible assets", comprised of the intellectual capital of any company. Analyses have shown the real value of a company is on average 3-10 times greater than its book value, and there are even cases where this ratio is 1: 500 in favour of "invisible assets" (Microsoft). So precise management of something which comprises the smaller part of the property of a company is no substitute for less precise management of something which is its dominant asset.

13. Lack of interest in the competition

It is positively shocking how some companies disregard the competition and its activities. A consequence of this is "sudden loss of customers". Since we live in an era of hyper production and hyper competition, the daily monitoring of the activities of key current and potential competitors is an obligatory task.

14. Wrong view of critical success factors

In conversation with managers, they often list as their competitive advantages such factors as a modern information system, effective accounting, equipment automation, well-trained production-line employees and so on.

All of these we can regard as "internal supports" or "inner strengths", but not as competitive advantages - generally speaking, customers are not in the least bit interested in these. The lynchpins of success are those factors of competitive advantage which our customers regard as being most important for them, and which at the same time make us better than the leading competitors.

15. Lack of attention to global and local trends

Today we are conscious of the fact that what is going on in one part of the world very quickly spreads its influence to the rest of mankind, regardless of whether we are interested in the "hot-spot" or not - the rapid spread of influences is much greater than in previous decades. Monitoring global and local trends should be the regular task of strategic management, which it shares with the marketing and research and development departments.

16. Ignorance of what "world-class" companies are doing

It is normal to compare ourselves with someone from time to time, regardless of whether this is a direct competitor or a company operating on another continent. Whom should we be comparing ourselves to? The only correct answer is, "With the best in the world," even though this can sometimes be painful. This will guard us from a false sense of security that we are "the best in the region". We must have our role models, not so that we can imitate them uncritically, but to see how we can use some of their ideas and best practices. If we are not doing it, then at least some of our competition will be doing it.

17. Disconnection between the speed of management and the rate of change in the environment

Strategic management demands serious analysis and discussion. A common trap is the "analysis paralysis" phenomenon. The crux of the matter is that we must not be slower than the rate of change in the environment. Although in this case we are talking about long-term decisions, they must not be allowed to lag, nor allowed to continue without revision once changes in trends are identified.

18. Lack of synchronisation of strategies

We hear and read of corporate strategies, business strategies, marketing strategies, sales strategies, production strategies, financial strategies, human resource strategies, maintenance strategies etc. The list could fill several pages. If these strategies really do exist in a given company and if they are not synchronised, then it would be better if they did not exist - this kind of strategic chaos could easily lead to disaster. For this reason, the connection, synchronisation and harmonisation of strategies into a single strategic plan is an exceptionally important aspect of strategic management.

19. Neglecting documentation

No vision, mission or strategy effectively exists until they are formed into the relevant documents. Also, the results of earlier analyses, ideas, postponed goals etc. need to be kept for later comparison. In other words, orderly documentation of everything, from vision, analysis, goals and strategies, to specific tasks, is all part of the process of strategic management.

20. Lack of a system for monitoring of implementation

Some goals and strategies cover a period of several years, and for this reason there is a danger that monitoring of implementation will be put off under the pressure of short-term obligations and problems. Our attitude is that progress towards the achievement of our goals must be assessed at least once a month, regardless of the time-frame that has been allotted to a goal. In the event of delays and other problems, the appropriate corrective action must be taken.

Strategic management today represents a complex system of management, since both the environment we live in and modern business are changing rapidly, constantly producing new challenges and problems. Our task is not to make things more complicated, but nor is it to crudely simplify them to the extent that we violate their nature and the purpose of their existence. Strategic management must be integrated with all other management and functional subdivisions in the company. It is a methodological framework for shaping the future of the company and is a matter of interest to all - owners, managers, employees, their families, customers, suppliers, banks, and the community. For all these reasons, an understanding of the issues and of developments in this field is a prerequisite for the successful functioning and progress of any serious company.

Mistakes are costly and somebody must pay. The time to correct a mistake is before it is made. Mistakes are lessons of wisdom. The past cannot be changed. The future is yet in your power.

Nebojsa Caric, Senior Associate, Professional Director, Adizes Southeast Europe