Introduction
The purpose of this paper is to explain the concepts of strategic planning, tactical planning, business policy, innovation and change management through an examination of a student’s response to an MBA-level assignment. The premise is that a student’s answer to strategic change and innovation by citing self-scanner checkout terminals in a British supermarket is a wrong example of the concepts under question. This paper seeks to provide the correct answer by defining these concepts and then providing the correct business framework for the question asked.
Strategic Planning and Tactical Planning are two concepts that are closely related because both refer to business practices. Strategic planning is a business terminology that is defined as the process in which an objective is planned or organized, indicating the ways the organization would be achieving these objectives (More Business, 2009). Strategic planning is often long-term in nature and may include series of plans and objectives that may also include tactical planning. On the other hand, tactical planning provides the necessary substance for the strategy to work and is, in lay man’s terms, are the actions needed for the strategic plan to happen. If the strategic plan requires “thinking” and “planning”, tactical planning requires “planning operations” or real-life actions and day-to-day work agenda. In strategic planning, the leaders of the organization are thinking of how its personnel should behave and act and will often include a number of tactical actions that would lead to the organization reaching its strategic objectives. That being said, strategic planning is a higher-management function whereas tactical planning is implemented by the entire organization.
Strategic Planning
Strategic planners think about what the organization will do and where it will go in the next year or in the next ten years or the next 100 years. Strategic planners focus on the health and viability of the entire organization and not just a small program or business function. Strategic planners examine the most efficient way the company’s strengths and capabilities could be utilized, with respect to the external environments and threats the company faces. As such, strategic planners examine many internal factors that may affect the company’s future. These factors include the type of leadership the organization possesses, the all-important culture that characterizes the organization, the size and scope of the organization’s activities as well as the many other complexities that are examined by different types of models, approaches and business perspectives that are available to experienced strategic planners. Strategic planning can be characterized as any of the following (McNamara, p3):
- Goal-based
In goal-based strategic planning, the organization begins with the determination of its mission and visions. While this may be simple catch-phrases, the formulation of the organization’s vision and mission determine the long-term plans of the organization. Once these are set, the organization then focuses on goals to achieve successful completion of their mission and realize their vision. Goals then are set and are delegated to responsible parties.
- Issues-based
Issue-based strategic planning is an intermediate kind of strategic planning, usually conducted within a working organization. The organization in this sense has already been in existence and has operated viably, but has to react to issues that may impact its long-term business viability (i.e. a change in law). As such, strategic planners would take a look at the relevant issues and consider these and their long-term impact.
- Organic approach
An organic approach is often done by strategic planners as well. This is conducted to further articulate the company’s mission and vision statements and may include the refinement of the company’s planning and implementing activities.
Strategic planning is not confined to any particular time period. As a matter of fact, the implementation of a strategic plan may be as short as one year and may include only top-level managers or may be implemented in a span of 50 years and include the entire organization. What is critical for strategic planning is that everyone understands the direction and actions needed to be taken by the organization to be successful.
Tactical Planning
The online business resource Business Dictionary defines “tactical planning” as “the steps or tactics needed to achieve the goals defined in a strategic plan” (Business Dictionary, p.1). A tactical plan is very important to any company because it follows the principles set by the strategic plan of the organization. The tactical plan is the action plan and is the step in the management process that gets the results that strategic planners and organization leaders want. Tactical plans are short-term in nature. They are developed very specifically and are planned with respect to the employees or personnel that will be tasked to implement them that shall be delivered at specific periods of time. As such, tactical plans are more focused in that they zero-in on specific organizational goals. The fragmentation helps in ensuring that each personnel assigned to a particular task focuses only on that task but it is often helpful to explain the larger-picture impact (i.e. importance) of those tasks for the employee’s wellbeing. Tactical plans are quantifiable and are excellent measures of performance.
The Relationship of the Strategic Plan to the Tactical Plan: The Case of Self-Scanner Checkout Terminals in a British Supermarket
The student’s response on linking innovation and change by answering that a self-scanner checkout terminal in a British supermarket is an ideal example is clearly erroneous. This is a specific action or program implemented by an organization and does not address strategic planning nor does it clearly say why it could be considered tactical in nature. It also does not represent innovation in the correct context or change management, both of which are critical evolutionary steps of any organization. Strategic planning and tactical planning endeavour to come up with a desirable outcome. The example given by the student does not provide any specific, beneficial outcome for the organization and cannot be examined under any relevant framework, which could be competitive, market or attitudinal in nature. Since setting up the checkout counters is a specific task, it could be construed as a tactical activity. However, it is by no means a tactical plan since it does not express an end goal explicitly, who the responsible parties are for implementing the action or the time frame for implementation.
- Students should also explain exactly what innovation is and what impact it might make on growth strategies. In this respect reference to the Austrian economist Joseph Schumpeter’s idea of major innovation sending "gales of creative destruction’” through the economic systems should be discussed particularly with regard to long wave business cycle theory. Refer also to the short and medium range business cycles (e.g. the Kitching and Juglar) and their relevance in this context.
Innovation
When an idea is turned into a product or a service that provides value to customers, it is called the “innovation process”. There are many good ideas out there but they rarely become true innovations in the market place. This is because, an innovative idea must be highly replicable at a cost that is economical (competitive). An innovative idea builds on a particular need or identifies and satisfies a new one. In some cases, innovation creates a new need.
All innovations utilize imagination, information and initiative. An innovation will use a resource different than what the conventional uses make of it and will result to a provision of service or product that surpasses the current level of expectations of the market. Thus an innovation can be an evolutionary innovation which is a product of incremental changes mostly due to technology or revolutionary innovation which completely disrupts the norm and creates a new environment for competition. Companies that are high risk takers are said to be innovative while those that are more conservative (risk averse) are less innovative and are satisfied with imitating leaders.
According to Joseph Alois Schumpeter, an Austrian economist, capitalism will not survive if the entrepreneur does not continue working on creating innovative products and services (The Concise Encyclopaedia of Economics, p. 1). He said that the innovative process leads to gales of creative destruction. This is because with new ideas comes the destruction and replacement of the old ones. The creation and destruction is to Schumpeter, the sign of progress.
This idea is shared by Professor John Kitching of the Kingston Business School in London who stated that small businesses, having the flexibility, innovativeness and ability to take large risks are leading the way to economic recovery. In a study conducted by Kitching, et.al. in 2012 on the responses of small to medium enterprises on the economic recession through the measurement of post-recession performance, it was found out that there is a very strong correlation between the actions that SMEs have taken before the recession to improve their performance despite the economic slowdown. This indicated that the SMEs were very much in touch with the realities of the market, having sensed a change in the competitive environment earlier on that larger corporations. While these organizations innovated and changed in anticipation of the economic slowdown as much as the planned action of larger corporations, their study indicated that these companies were more successful in innovating and recovering faster due to their more agile responses during the global economic slowdown period. The adaptation of new activities by SMEs varied at a great pace, indicating very sharp decision making and highly responsive management that acted and reacted to changing circumstances, company performance and competitor actions.
Innovation can be framed in many aspects including the creation of new businesses itself. This is called Business Model Innovation which is a growing trend since more and more companies re-invent themselves to become relevant in the marketplace. Using the student’s failed response, it is noteworthy to say that the student’s answer does not indicate any innovative process as well. If it were a real business innovation, then it would explicitly state how this approach would provide a new need or exceed the current expectations of the clients. Using the business planning hierarchy discussed above, we can add that a correct way of stating an innovative process is the “adoption of a new customer-service lane wherein no cashiers will be utilized to effect speedy transaction by customers”. This is a new approach to doing business simply because cashiers are the collectors of cash from supermarkets. With more and more people using electronic payment systems, this innovation is beneficial to customers because of the time savings it will promote and will make the company more competitive because its operating costs are reduced. There is much to develop with this program however which are best conducted using tactical planning procedures.
References
Business Dictionary. Tactical Planning. Retrieved from http://www.businessdictionary.com/definition/tactical-plan.html, 2013.
Business Improvement Architects. What is Innovation. Retrieved from http://www.bia.ca/what-is-innovation.htm , 2013.
Concise Encyclopaedia of Economics. Joseph Alois Schumpeter. Retrieved from http://www.econlib.org/library/Enc/bios/Schumpeter.html, 2013.
Kitching, J. Have Small Businesses Beaten the Recession. Academia.Edu. Retrieved from http://www.academia.edu/799452/Have_small_businesses_beaten_the_recession, 2013.
McNamara, C. All About Strategic Planning. Free Management Library. Retrieved from http://managementhelp.org/strategicplanning/ (n.d.)
More Business. The Difference Between Strategic and Tactical Planning. Retrieved from http://www.morebusiness.com/strategic-planning February, 2009.
