Corporate Strategy and Grand Strategy
Can not Get any Easier!
By Osama El-Kadi 2008
Corporate Strategy is the overall Glue that binds the organisation together. It sets the guides and principles for the rest of the functions to follow. Thus ensuring that they become Strategic in their own right.
What does this "mouthful" of a statement means?
All functions in an organisation are tactical in nature, until the time the organisation decides to put a "Corporate Strategy" in place.
Corporate Strategy to companies is the Grand Strategy to a country.
Both are not interchangeable as companies do not have a "Grand Strategy", they only have Corporate strategy.
For example, Microsoft corporate mission is to "To enable people and businesses throughout the world to realize their full potential".
Google Corporate mission is "to organize the world's information and make it universally accessible and useful".
Microsoft and Google Chiefs sat about developing the Corporate Strategy to fulfil these "Higher" missions.
Google sets "page rank", soft sell, response time as critical elements of their corporate strategy to get the funds that will enable them to fulfil their very costly mission.
Microsoft sets their IPR (intellectual property rights), e-mail hosting, Web search, applications, operating system etc as critical elements of their corporate strategy. This enables them to get the customers and funds to realise their higher mission.
The Marketing, IT, Sales, HR departments in the case of Microsoft and Google cannot operate on a strategic level unless they set their respective functions strategies in line with the declared corporate strategy.
These functions should not worry about the actual mission in formulating their strategies; it is not their job to do so. The Corporate Strategy is the responsibility of the main Board of the organisation.
For example, we cannot call Marketing Strategy a Strategy unless it is derived from and essential to the Corporate Strategy.
Let's take a more interesting example to see corporate strategy and its relationship to other strategies within British Gas Corporation in the UK.
When the government deregulated the gas industry in 1997, British Gas decided to expand its activities to other services that intended to make people's life easier.
They created the "mission" of "we take care of the essentials".
Such is a "mission" and "corporate strategy" in the making.
In order to become Strategic, other functions within the organisation must build their own strategy to fit in with this Corporate strategy.
British Gas continued to develop its corporate strategy in order to achieve such a mission of "taking care of the essentials".
What British Gas did, was to state the parameters of the corporate strategy as such:
- Helping people at the Homes.
- Helping people on the road.
What therefore was an essential beside Gas were:
- Pipes and so on
On the Road what was Essential:
- Road Side recovery
- Windscreen replacement
- Tire replacement
Get the idea...
Other Functions within British Gas, must now set about to build their strategies to fulfil the corporate strategy.
- Information technology must now get ready to create "dual Bills"
- Marketing Department must now reach new customers for the additional services
- Sales department must now start to create processes and train people on serving multiple customers
- HR must now focus on recruiting people with new skills needed
- Procurement department must now create new categories to deal with new businesses requirements.
- Finance department must now create planes to implement various industry accounting practices.
Any respectable business must have a corporate Strategy to set the direction and the purpose for the rest of the organisation's functions to follow.
It is incorrect to call a function within the organisation strategic unless it develops a strategy that serves the corporate strategy. Grand Strategy for Nations works in exactly the same way.
The nation's assemblies create their "mission", build a Grand Strategy and then monitor, and guide the various governments' departments in creating their own strategies that fits into the Grand Strategy of the nation.
Finally, we now need to make an important observation regarding the guardians of the Corporate Strategies.
The Chief Executive Officer of an organisation' sole job is to ensure that all the main functions of the organisation have a strategy to support the corporate strategy.
How many times we hear about directors being "fired" or replaced, Governments being replaced, Minsters being retired, and army generals being deposed.
Why the organisations fire these executives?
Mostly because, the CEO, the Prime Minster or the president of the "Entity", have found them incompetent in understanding the Corporate Strategy or the Grand Strategy., let alone following it.
Nevertheless, this is another story all together...
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