The traditional strategic planning process hinders good decision making more than it helps, Professor Karnani argues, because in a typical company, strategic planning is driven by the calendar. “Managers initiate the process to analyze and formulate the company’s strategy — not because the firm faces a strategic choice, but because it is, say, June,” he notes.
A better approach is to first determine the strategic opportunities the company faces and then focus the analysis and debate on those choices. A U.S. building products company, for instance, began its planning process by identifying five key strategic options: whether to enter China, what to do with its current operations in Europe, how to best consolidate the company’s distribution channel, how to manage a move from products to services, and how to deal with large commercial customers.
Using this as a guide, the strategic debate was sharply focused on the pros and cons of the alternative choices under discussion. Generating differences of opinion among managers was a crucial part of the process. Two or three different strategic responses to the five options were established and a senior manager was assigned to make the case for each alternative, ensuring sufficient conflict to create a lively debate.
According to Professor Karnani, to use conflict to their advantage, managers should:
1. Be adept at generating different points of view, a recommendation that legendary General Motors CEO Alfred P. Sloan clearly embraced. After a brief boardroom debate, Mr. Sloan reportedly said: “So I take it we are now in complete agreement.” When his fellow board members nodded, Mr. Sloan retorted, “Well, then, I propose we come back and discuss this when we no longer agree.”
2. View the strategic planning process — and the conflict it provokes — as an intellectual debate and not a political dogfight. Differences must not be allowed to become personal, or discord to fester. Hewlett-Packard didn’t handle this step particularly well. The pro- and anti-merger debate became a personal feud between the CEO and the cofounder’s son that was never completely resolved. Consequently, within four years, Ms. Fiorina was dismissed after disagreements with the board. Strategic choices, such as her decision to combine the personal computer and printer operations into one business unit, took on political overtones.
3. Make certain that conflict is not allowed to poison the organization’s ability to move ahead. Much time and energy can be lost by boards or management groups seeking a unanimous decision. It is not necessary to reach a consensus that, in any case, is often the result of a poor compromise. Rather, once the decision has been made, everyone must be bound by it and support its execution.
The Responsibility Paradox
Gerald F. Davis ([email protected]), Marina V.N. Whitman ([email protected]), and Mayer N. Zald ([email protected]), “The Responsibility Paradox: Multinational Firms and Global Corporate Social Responsibility,” Ross School of Business Working Paper Series, Working Paper No. 1031. Click here.
The concept of corporate social responsibility (CSR), defined in this paper as “actions a company takes that are not legally mandated but are intended to have a positive impact on stakeholders,” is long established. Gerald F. Davis, professor of management and organizations at the Stephen M. Ross School of Business, University of Michigan; Marina V.N. Whitman, professor of business administration and public policy at the Ross School of Business and Michigan’s Gerald R. Ford School of Public Policy; and Mayer N. Zald, professor emeritus of social work in the department of sociology at the University of Michigan, provide a condensed history of the concept, beginning with the utopian ideals of Pullman, Ill. (a company town created to support workers making railroad cars); through “welfare capitalism” early in the last century; to Howard R. Bowen’s influential 1953 book, Social Responsibilities of the Businessman; and up to the modern nderstanding of the term.