TITLE : IMPLANTING STRATEGIC MANAGEMENT. 2ND ED.

PREFACE

The first edition of this book was based on a speculative strategic success hypothesis which states that a firm's performance is optimized when its external strategy and internal capability are both matched to the turbulence of the firm's external environment. In the interim between the first and second editions, the strategic success hypothesis has been empirically validated by seven extensive research studies performed in different industries and different countries (see section 2.1.7).

Therefore, this edition is based on the strategic success hypothesis which has been empirically validated.

A number of momentous events also took place in that period which have dramatically increased the relevance of both the subject and the content of this book for managers and policy makers.

The seemingly inexorable competitive success of Japan and the Pacific rim nations points to two conclusions:

1. The American preoccupation with shareholder value, leveraged buyouts and takeovers, and the consequent fixation on the near-term performance of firms continue to contribute to the already alarming loss of American competitiveness.

In sharp contrast, Japan and its Pacific neighbors continue to focus on the long-term profit potential while they continue to gain competitiveness.

In doing so, they recognize the importance of focussing on strategic management. In the words of a senior and respected Japanese consultant: 'The 1980s and the 1990s will be an era of strategic management.' This book provides a comprehensive treatment of strategic management which can help Western managers address the problem of future profit potential.

2. Japanese, Taiwanese and Korean successes in the marketplace are not being attained through free market capitalism in which the government 'stays out of businesses' hair,' to quote President Ford. The success is being attained through corporate capitalism under which the government and the business sector are cooperative partners.

If business success is to be judged by the bottom line, rather than to continue to pay lip service to adherence to the vintage 1776 economic ideology of Adam Smith, it becomes necessary for both business firms and governments in Western countries to re-examine this ideology and to redefine the future role of the firm in Western capitalist societies. Chapter 2.8 provides the concepts and a framework for such a re-examination.

At least equal in importance to the challenge from the Pacific is the revolutionary, two-part transformation of Europe which is taking place.

The first part, which has been almost buried by the news avalanche of recent discontinuities in Eastern Europe, is the emergence of a European Common Market. For all firms both inside and outside, this emergence raises imperative challenges of internationalization which heretofore have been a discretionary activity of multinational firms. Chapter 2.9 of this book summarizes the issues and the experiences which confront firms in the process of internationalization and provides tools for managing the process.

The second part of the European transformation are the series of mind-boggling events in Eastern Europe. Two aspects are relevant to this book.

The first is the gleeful self-congratulatory assumption in the US that the death of the communist ideology and the yearning of the East Europeans for an improved quality of life represents a victory of free market capitalism. Chapter 2.8 suggests that this assumption is simplistic. Certainly the Eastern Europeans are yearning for more goods and services, and certainly they accept a movement toward a free market as the essential way of making the goods and services available. But it is an oversimplification to assert that Eastern Europeans are yearning to become deficit-ridden, competitively aggressive countries with a large gap between the rich and the poor.

In fact, a careful reading of recent pronouncements from Eastern European countries shows that many of their citizens yearn for, as Dubcek put it, 'socialism with a human face,' or as Gorbachov put it, 'market socialism' which avoids both extremes of the economic disaster of communism and the inhumanity of laissez-faire capitalism. Chapter 2.8 provides a model which can be used to select a position between these two extremes.

The second aspect of the Eastern European transformation which is addressed in this book is the resistance which accompanies discontinuous change in what Machiavelli called, 'the present order of things.'

Repeated references by Gorbachov, who pioneered and triggered the East European avalanche, to the obstacles that he encountered in managing resistance to change in the USSR is an early signal of the problems in store for other East European countries. Part Six of this book is devoted to analyzing the sources and causes of resistance and the ways to anticipate and manage it, both in firms and other purposive organizations.

Another significant discontinuity which occurred during the 1980s was emergence of concern with management of technology. Chapter 2.7 of this book discusses the reasons for this concern and provides tools for strategic management of technology.

All of the trends and changes discussed add up to a climate of turbulence characterized by discontinuous, novel and surprising changes.

The central focus of this book is on management in turbulent environments. In particular, Part Two presents a modern technology for periodic strategic planning which takes into account future unpredictability and uncertainty, and Part Five complements periodic strategic planning with tools for real-time strategic response which anticipates surprising events in the environment.