The five step process used in this book:
 Step I---Defining Business and Segmentation
This involves answering four key questions: what the business offers?, namely its products and services. To whom it offers?, namely the key customer groups; Where it is offered?, the geographic focus, and how the company plans to make money? Using this information, a segmentation grid is developed to show the business portfolio and enable the selection of the key segments to be evaluated in depth.
Step II—Determining the Attractiveness
Using the business description, key segments are selected and evaluated in depth. These evaluations include evaluating the key customer groups, how they purchase and why. The entire value chain; namely suppliers, producers, resellers, service providers is assessed to determine where the money is made and who has the most power. This includes determining changes in the supply chain and the power base. External and macro-environmental forces, including socio/political, economic, governmental and technological factors, are assessed to determine how they impact the ability to make money and succeed. These evaluations are used to determine the current and future attractiveness of each segment. The next step is to assess the competition, your resources and abilities and determine your relative competitive position, now and in the future. There are four assessments made. First is the nature of the competition, that is whether the key competitors are specialists or generalists and where they focus, namely locally or globally. This is called competitive demographics. Next the “value chain” is used to identify changes in competition and substitution.
Step III_-- Competitive Position
            Key competitors and your company’s abilities are the next steps. The abilities evaluated are: ability to conceive and design the product or service; ability to market and sell; ability to produce or outsource; ability to finance and ability manage and lead. Each are assessed from a current and future perspective.
Step  IV—Developing Three Levels of Strategy.
Level I---Investment Strategies  (Prioritization and Strategic Direction)
            This is called “investment strategy” and it provides insights into where scarce financial, human and physical resources will be allocated and the major priorities of the company. This is determined by using the results of the attractiveness and competitive position evaluations. Based on these plots strategic priorities and strategic direction are determined. The strategic direction options include: aggressive growth, selective growth, hold/ defend, harvest and exit/ divest. Each segment is plotted individually to see their relative attractiveness and competitive position.
Level II—Strategic Differentiation
            The second level of strategy identifies how the company will gain and maintain a competitive advantage. This is done by using the results of the market, competitive and external assessments. “Leadership/ Success” factors are developed and used to assess your company and the key competitors. An illustration is provided below. Strategic differentiators are based on uniqueness of the product/ service, marketing/ sales, production/ outsourcing, financial and other external factors. The most effective differentiators build on strengths and include combinations of selective differentiators.
Level III—Strategic Implementation and Executive Strategies
The third level of strategy deals with what is required to make the investment and
Strategic differentiators successful. It focuses on each of the business functions, including engineering, marketing, sales, manufacturing, financial and human resource areas. The process outlines all of the options available and determines which option is most appropriate for the investment strategy, strategic direction and strategic differentiators.
Step  V- Creating Realistic Expectations and Communications
Once the entire strategy has been determined for each of the major business segments, the
financial results are developed to determine realistic expectations. The final steps include developing a strategic plan and executive summaries for employees, management and other key stakeholder groups. The key is to provide the right type of information to those responsible for execution and those who are key investors. There are chapters on how to avoid or minimize surprises and how to develop contingency alert systems to minimize the impact of negative changes.  Documentation, presentation summaries are illustrated to show how to provide the essential information to each of the key stakeholder groups.
Step  VI- Making It A Living Process 
Strategic Leadership requires using the strategies and implementing them as
planned. However, it clearly recognizes that the dynamics of the market, competition, external environment, internal resources require change. We provide a software package to permit this type of execution.

Preface

CREATING, MEETING
REALISTIC EXPECTATIONS   
In the late 1990’s, we witnessed the “dot-com boom and bust” era. Companies were founded, immediately given millions, if not billions, of investment capital based on a dream or a concept. No one seemed to do the basic homework, such as, asking: Is there a market? Will customers pay for it? Will they be able to successfully substitute for existing product and service offerings? Could they ever get a return on their investment? In short, no one did any thinking, let alone strategic thinking. It was all the “impossible dream turned nightmare.”
In the early 2000’s, the entire telecommunications moved from a high- flying, profitable industry which resulted in high price/ earnings ratios and huge returns for stockholders, into a group of confused, over capacity, over-staffed losers. Giant companies, like American Telephone & Telegraph (ATT), decided to become the cable utility giant, invested billions into acquisitions and then in a few years decided to dismantle the assets they collected. There was little or no sign that sound strategic thinking had taken place, or if it had, the implementation plan was poorly executed.
We witnessed Enron, the “new energy company” go from the darling of Wall Street into bankruptcy, with several of its senior executive going to jail. Tyco announced that it wanted to be the next General Electric. After many billions of dollars of acquisitions and a year later, Tyco totally confused its investors and the world, by announcing, that it was going to dismantle the conglomerate that had just been put together. Its CEO also went to jail.
We have seen the mighty consulting and accounting giants grow so large that they were either unable or unwilling to prevent a conflict of interests. Even the giant General Electric and its legendary leader, Jack Welch, were embarrassed, because GE failed to anticipate the power of the European Common Market  to prevent GE from acquiring Honeywell.     
In the 2000 era, the game across all industries has been to GO BIG/GO GLOBAL, to acquire, acquire and acquire, and use the acquisitions to inflate revenues and earnings. Because of the combination of the Enron, Arthur Anderson and Tyco situations, the entire world became skeptical and even General Electric and International Business Machines (IBM) were challenged to prove that their earnings were valid and not just creative bookkeeping.
In 2008, we witnessed the decline and fall of mighty automobile and financial institutions, Lehman Brothers was allowed to go bankrupt, Merrill Lynch was forced to merge with Bank of American, Citicorp, Goldman Sachs and most of the major global banks and both General Motors, Chrysler and even the Japanese and European automobile giants were forced to take Government funds to just stay afloat. But the unthinkable happened, when the mighty General Motors (GMC) was forced into bankruptcy and became a “ward of the federal government.” In short, the entire United States banking, insurance industry and automobile industry were practically nationalized. This was almost as comprehensive and extensive of the Roosevelt nationalization and socialization of the banking and lending industry and the panic of the United States Government during the “Great Depression” to bail them out and save the U.S. economy.
It amazes us, as we update this book that companies can lose “billions” and have no real strategies. The problem is that there has been few real strategic leaders, little objective assessment of key assumptions, few reality tests and contingency plans.
In 2009, the world was in a financial and management panic and desperate actions were taken to prevent a complete collapse of the economic structures. But unfortunately, effective strategy development and change must be done when companies and organizations are healthy and not when they are in the intensive care ward. So most of these crisis management changes are likely to fail and not achieve the desired results.

So what needs to be done?

  1. Do Homework! Study your business and organization’s

successes and failures and determine their causes. Evaluate your markets, customers, competition and be sure to understand and anticipate socio/political, governmental, technological and other external changes that can impact your ability to succeed and make a profit.

  1. Set Priorities based on what you think is attractive that build

onyour relative competitive strengths and then, allocate financial, human and physical resources consistent with these priorities.“Avoid trying to be all things to all people” and “Going Big/ Global” for its own sake. This involves doing a complete portfolio analysis and selecting the most attractive parts or segments of the business or organization, where you can gain and maintain a sustainable competitive advantage and then allocating the proper human, financial and physical resources to make it happen. In simple terms, this means being selective and focused and not investing in all of the business segments equally.

  1. Find out how to really be different so that you can create a

sustainable competitive advantage. Winners are best at something! It is vital that you determine how you can create a sustainable differentiation and competitive advantage. This involves both building on strengths and assessing the current and potential competitors. Further, you must recognize that “no strategy, regardless of how successful it has been, lasts forever” and just because you have had an advantage in the past, it doesn’t mean you will have it in the future.

  1. Have the right leader and team. There is no one leader for

all times and situations. The strategic leadership team must fit the situation and the strategies. The type of leader must change to meet the new challenges. This means that new leadership must be developed and ready to move into organizations when they need a new type of leader.

  1. Be sure that the execution and implementation strategies

are consistent with the investment priorities, strategic direction and competitive advantage you have selected. This involves being sure that all of the key functional strategies, namely the engineering, sales, pricing, production, financial and human resource strategies, fit the investment and differentiation strategies.

  1. Be sure that the financial expectations and promises are

viable and consistent with the strategies. The financials and market results will vary from one type of business to another and from one strategy to another. It is vital, that you clearly understand the expectations and needs of key stakeholders, including employees, investors, governments, communities, and match the results with these different expectations and needs. However, you must recognize that you can’t satisfy all of the stakeholders and some will be supporters and others foes of your selected strategies.

  1.  Avoid surprising yourself and be prepared if thing

dramatically change. It is important to recognize that change can be positive or negative and that in either case, it can impact an organization. We tell our clients that is equally important to “be prepared for success’ as it failure.
This book outlines and describes how each of these can be done. The first edition was published in 1976 and there are over 100,000 books in print. The approach has been used successfully in many companies, ranging from new ventures to major corporations. It is not a magic formula, but a complete, comprehensive process that requires doing the right analyses, anticipating changes and making decisions. If it is used and the hard work and analyses are performed, it will significantly improve an organizations ability to set realistic expectations and avoid devastating surprises.
It works! we know since we have been using the process with our clients and it has dramatically improved their success. Take some time to try it out and we are sure you too will benefit!

 

Bill Rothschild
Steve Rothschild
August 2009

“Seat of the Pants” Leadership

Never Works!

Experience, intuition, and judgment alone aren’t enough to cope with the mushrooming complexities. An organization must understand what is happening outside, as well as inside. This is not the a day’s work, but a continuing process. Every organization functions in a dual setting: there is a micro-environment, consisting of customers, markets, related industries, and competition; and a macro-environment, a four-dimensional overlay of societal, government, economic and technological forces that affect the organization’s ability to prosper, operate and even survive. These external forces impact the overall attractiveness of a business and influence the type of talents and skills it will need to be successful.
Today’s strategic leaders must explore each of these elements through objective comprehensive and systematic analyses, syntheses, and anticipation of how the future may differ from the past. This method for carrying out these multiphase tasks we call  the Strategic Leadership process
The strategic leadership process begins with an understanding of what the business is today and how successful it has been. Success is judged by you and the key stakeholders of the business and its definition will vary from one organization to another. In some cases, success may be defined as being profitable, in other cases it may be to create jobs, or make converts or feed the needy and so you must define what success means to you and you key stakeholders.
Once there is an understanding of what the business is today, the process moves outside and examines two key groups that can influence any business.
First are the customers and their needs and expectations;  the second group are the competitors. Other elements of the external world are also examined to determine the overall attractiveness of the business and to identify what it takes to be the leader now and in the future. These analyses make it possible to set priorities, determine how to create a competitive advantage and specify the actions required to make it happen.
Ultimately, this allows you to assess the rewards, costs and risks and to set realistic, do-able financial and market objectives and goals. This approach is very different than the traditional Management By Objective (MBO) approach, which begins with setting objectives and then determining how to achieve them, without asking whether the objectives are viable in the first place. It differs from the “build on strengths” mentality which starts with identifying strengths and then determining how these can be used to achieve the best results. The Strategic Leadership approach we will describe, focuses on what is achievable and do-able and not on wishful thinking.
“Reality” is vital to success. This doesn’t mean that you can’t stretch or try and do more, (some call this “thinking out of the box”) but it does mean that you should not adopt the “Don Quixote” school of management and continually attack the windmills.
In addition, we are not promoting that this is a magic formula to success and that all it takes is analyses and hard work. Successful strategies require a blending of analyses, creativity, intuition, good timing, commitment, perseverance and some luck. The process is iterative and continuing. It is not an annual form filling exercise. It must be based on a willingness to think, seek other’s perspectives and challenge the “folklore”. It needs to be done when the business is healthy and not when it is sick or in the emergency room. Healthy organizations, like individuals, have options; those who are sick and dying have few options. Profitable growth is the reason, not survival or defending a shrinking turf.
Note, as we are updating this book, the world is in an economic and leadership crisis and the so called leaders are desperately trying to fix and create a financial strategy, while the patent is in the intensive care ward. This is not the time or place to do strategic leadership. It should been done before the crisis.
Continuing Illustration- Susan Mitchell’s Service Business
Rather than make this academic, we would like to use a discussion with a hypothetical client and her management team. We will call this client, Susan Mitchell, who heads up $100 million, medium sized executive search firm in the Northeast, called” “Human Advantage” LLC. Although fictitious, it is quite typical of the many consulting assignments we have had over the past three decades.
Here’s how Susan starts our discussion: “Business is terrific! Revenues are up 25% and earnings have set a record. It has been a pleasant surprise, and I hope it will continue. After all, this is my own  business, and I grew it myself.”
Susan launched this company 10 years ago. Last year, revenues reached $100 million and she made a 20% return on her investment. Susan began her career as a human resource professional in a major company and held a number of senior management positions. She decided to leave the corporate world and start her own “executive recruiting and development company” because she was tired of the bureaucracy and unwillingness to try new ideas. She now employs 40 people, a quarter are professional, experienced senior level recruiters and the other management development consultants.
Susan, like many business people, is highly skilled in her profession and has been very successful. She has been trained in “executive recruiting” management, but is not an experienced strategist or strategic leader. She has financial consultants and lawyers to guide her in accounting and legal matters, but she has not hired a strategic planner nor does she plan to do so in the immediate future.
Recognizing the need to develop a longer-term vision and strategy for the business, Susan has been considering how to develop a strategy for her business. She wants to know where to start, the type of information to collect and analyze, and what to include in her strategy. She read several books, attended several seminars and even subscribed to journals, but these have not been able to do the job and so she is seeking professional help. She contacted us based on the recommendation of another business associate.
She continued: “My business really took off three years ago. It has many small and medium sized firms and two major clients, HealthCare Inc. and Back to Basics Software LLC. Both are located within 50 miles of my office and have been using my services for over 5 years. About three years ago, both had excellent years but for entirely different reasons.
HealthCare, Inc. is the provider of management systems for hospitals and health care organizations. They developed a highly sophisticated patient tracking and monitoring system that permitted their clients to track patients, monitor progress, schedule visits and automatically file claims to all governmental and health insurance providers. They got so many orders that they had a critical and urgent need to recruit programmers, systems analysts and project leaders that could interface with their clients. They called on me to do the entire job and it almost wiped me out. I had the same problem as they had and had to recruit quality people fast. In addition, I lacked office space and management systems to handle their needs, we were unprepared for success!”
Susan is describing one of the most critical analyses required for sound strategic thinking, customer analysis. Her description is brief and not comprehensive, but it illustrates an understanding of a key customer and their business strategy and situation. She also pointed out that “sudden, unanticipated” success can be as threatening as an unexpected loss.
“Back to Basics” Software LLC had a different situation.  It, too, develops software but it is not sophisticated or complex. This customer sells to wholesalers and retail chains and competes aggressively on price and service. Its primary product is a tax accounting package which is very seasonal and requires that the software conform to both federal and state tax laws and procedures. The continuing changes in tax law and the seasonal nature of the offering create very complex staffing and training problems. They need a flexible workforce that is very knowledgeable.”
Susan is now describing a different type of client, one in a seasonal, consumer retail and wholesale business. In this case, the customer’s business has highs and lows that in turn affect Human Advantages’ revenues and profitability, but the reasons for the cyclicality and its duration are quite different.
Many businesses need to examine only a few large customers in-depth, as these account for the great majority of sales; others must classify and group all their customers in order to see relationships and to draw implications for strategy.
Continuing the conversation, “I want to add to my customer mix and focus on the major “healthcare teaching institutions, like Johns-Hopkins Sloane Kettering and others, while maintaining our strong relationships with our existing customers”.
A later chapter will describe various ways of classifying customers to help determine the total portfolio and which pieces are most attractive. It will include a checklist of key questions, which will assure that the evaluations are comprehensive and that only the most significant factors are scrutinized and monitored.
Customer analysis provides the basis for sound business segmentation and projections, and it is fundamental to  any business strategy and plan.
Susan discusses other factors that have influenced her organization’s progress. “When I first started my business, things were not as prosperous. It was in early 2000 and there was an overcapacity of executive search and development companies in my area. This caused very aggressive price competition. To make matters worse, several of my major customers began to build their own staff organizations to do this work”. This is very typical. When business is weak, many companies decide it is cheaper to do the work themselves, rather than use vendors. When business expands, customers go in the opposite direction. At certain times, the customer is a friend, while at other times they can become competitors.
“So, like most businesses we have cyclical and even seasonal swings. Customers can change, along with competition. Now business is good, but the key issue is, will it remain so?
This is the time that it is easy to sit back and relax and believe that things will always be good.  But, I know this isn’t true. I need to prepare for changes and be able to respond both to positive and negative situations. Timing is key, but it is difficult to predict timing and degree of change.”
Susan’s comments are very insightful, though they only represent the tip of the iceberg, but she has made a number of key points worth remembering. She has described the changing competitive situation. First, she has illustrated that a customer can become a competitor. Second, she has observed that competitors may increase or decrease in numbers.
We will describe in a later chapter, that there is a need to understand both direct and indirect competitors, including firms that are vying for limited funds, people and resources. This process will make it possible to anticipate changes in competition as well as to evaluate a competitor’s strategy and gain some insights into how and why the competitor may change. This discussion will summarize some of the data sources that you can use to gain both customer and competitive intelligence.
Susan’s next remarks focused on her company’s macro-environment and how it can impact the bottom line. “You may have noted from my annual report that sales grew faster than earnings. The primary reason was the cost incurred because of new employment regulations.
First, I was required to hire a higher percentage of minority employees. Then, the company was required to install new safety and acoustical ceilings in the office. In addition, we had to fund our health plans more and provide a new disabled restroom. Each of these expenditures cut into profits as an added complexity to my planning and decision making. It is clear that a business must evaluate the impact of social, political and governmental demands on the firm along with customers and competition. This comprehensive tracking and thinking is more complex and time consuming.”
Susan is right. Today’s leader must extend his or her planning work to include the macro-environmental factors that can change the rules and the way business is conducted. This must include governmental actions at the federal, state and local levels, as well as social trends and values. Profitability is still the primary goal, but it can’t be achieved without understanding and addressing these issues. Later, we will discuss how a macro-environmental overlay of society, government, economy and technology can be used to identify changes in these areas and impacts on customers, the market, competition and our own resources. Further, we will provide conceptual approaches to reviewing the impact of these factors on strategy, and ways of testing viability and establishing contingency alert systems.
In her next remarks about her firm, Susan switches the focus of her thinking from external to internal conditions. These statements are the essence of what we call resource analysis. “New laws were not the only reason for changes in my workforce. Another change, which had a positive impact on profits and revenues, was the emphasis on training and development. When we saw the changes in the competition in executive search, we decided to add a few key people whose expertise was in developing customized, on-site training programs. They created a whole new, but complementary business. These are now paying off and have stabilized the swings in our sales.
Another area I’ve improved is my cash flow. A few years ago, I was able to negotiate a deal with a local bank to provide cash when I needed it and to enhance my accounts receivable abilities. This has made it possible for me to obtain cash more readily when I need it without extensive paperwork. This has permitted me to hire and pay top talent even when the payment cycle has slowed”.
Like Susan, managers typically think in terms of tangibles such as people, money and equipment. But Susan is also aware that her “assets” include intangibles such as know-how and experience. Resource analysis focuses on assets and abilities you and your associates have in all your organization. It takes into account the conceiving and designing of products or services, their cost and quality, marketing and sales capabilities, as well as require control over financing, leadership and management talents. All of these can be major assets and converted to competitive advantages.
Shaping a Strategy
The conversation with Susan Mitchell had covered enough ground for us to probe: “Could you briefly summarize your strategy and the results you would like to achieve?” Susan took a few minutes to reflect and then answered: “I don’t have a written or even a comprehensive strategy, but I do know where I’m taking the business and how I intend to get there.
I am focusing on the software and related markets and companies that are growing in these markets. I am not interested in expanding my scope. I intend to invest in new software and “web-based” systems that will enhance the productivity of my search and development experts. This will also provide a quality advantage. Most of my competitors are ‘body shops’ that hire and fire their people. They don’t have systems and are not efficient.
      In addition, I plan to add to my geographic scope by acquiring a small but talented group in mid-Long Island, New York. I have hired two project managers to increase our education and development offering. In fact, I plan to jointly develop these programs with a major university in the area. If all goes well, I intend to increase revenues at a consistent 15 % per year and earnings at the same rate”.
Although Susan has not developed a written and formal strategic plan, she clearly demonstrates that she is thinking strategically.  First of all, she has set priorities, thought about how she wishes to differentiateher organization from the rest of the pack and has identified several major implementation/ execution strategies and plans. In short, she has verbally described a strategy, if not in detail, and is on the way to implement it. She has converted this into results that from first glance appear to be realistic and not just wishful  thinking.
Let’s review what a strategy really is. A strategy has four key elements. It describes where the organization plans to focus and allocate its scarce resources, which we have summarized into four letters: PDDI.

  1.  “P” stands for Prioritization, We call this “investment strategy, since it determines where you wish to allocate your scarce resources, namely people, money, facilities and time.

  2.  “D” stands for the strategic Direction of the segment.

  3. “D” stands for Differentiation, namely how you will create a sustainable competitive advantage.

  4.  “I” stands for Integrated, Implementation strategies,  which means that you must have all of the “business functions” (like product development, marketing, production etc.) working in the same direction and supporting each other.  

Once you have determined our priorities and other key strategies, you are in a position to determine the “expected results”. As we said earlier, this approach is different than other approaches, like Management By Objective, which sets the objectives first and then describes how they will be achieved. In our process, the anticipated or expected results are determined after you understand what you want to do and the complexity of doing it, and have realistic strategies at all levels.
Leadership systems are vital and this means that you must  develop effective communications systems to assure that all of the key stakeholders are on board and will support the strategies. However, since it is unlikely all of the stakeholders will be supportive you must have in place “contingency” alerts to know, if things are not going according to plan and know what your options are. This is particularly true in this increasingly complex world.
A Team Activity.
Some believe that strategy development is reserved only to the highest echelons of management and is not the concern of lower levels of management. This is not true since if  the strategies are not shared and mutually developed, they will fail. Top Management makes the decisions on how an organization’s financial and human resources are allocated and invested, but it is the middle and front line management/ professionalswith the first hand knowledge and skills and who are responsible for implementation, that must be involved to have a successful strategy.  
Each decision level requires different forms, skills and levels of detail. If any of these levels is given short shrift or omitted, the overall strategy will suffer, and possibly the enterprise will fail. Let’s examine the questions suggested by this breakdown and relate them to the conversation with Susan Mitchell.

  1. How will the financial and human resources of the organization

be allocated andfocused? This is the investment prioritization / strategic direction (or some call it the portfolio strategy) phase and Susan said she intends to focus on  adding some new clients (e.g. major medical institutions) and enhance her software offerings.

  1. How will the organization create a sustainable competitive

difference that may lead toa competitive advantage? We have called this by a variety of names. In the first edition of this book, it was entitled “management strategy”. Later, we called it “strategic driver” or “strategic differentiator”. Regardless of the name,  the concept is based on the recognition that every winning organization has strong abilities or skills and they use these “strengths” to gain and maintain a strong, sustainable competitive position. Susan tells us that she wants to be best at quality and productivity to differentiate her organization from the rest of the pack. One of her differentiators will be using software and web-based systems to enable the customer to access information and improve their selection processes.

  1. What are the key actions or programs that will enable the

organization to implementboth the investment priorities and strategic differentiators? This is called an implementation strategy and it may focus on a variety of functional areas. Susan said that she would use systems to gain the quality and productivity differences, and the talents of new hires to increase the organization’s education and training position.
Thus, Susan has answered the three key questions in a general way. If she explores the following subcategories of each group, she will have a more complete strategic plan: what will be achieved, how, when, where and by whom?
All phases of the business must be linked to these three levels of strategy. The strategy must deal with how the product or service will be designed and developed (the engineering function), how it will be produced (the manufacturing or outsourcing function), sold (sales and marketing elements), financed (financial area), and how the operations will be directed and led (the leadership and management strategies). Just as a strategy will be incomplete if it stops at the investment strategy level and does not include differentiation and implementation strategies, it will be ineffective if it doesn’t include all of the key business functions, including engineering, financial, management and so on.
Every leader has a strategy, whether it is expressed or not. we highlight this fact when we tell our clients that “strategy is what you do and not what you say”.
Strategy is doing what you say! Some strategies are built purely on intuition and judgment, while others are the result of systematic and disciplined thinking and analyses, syntheses and forecasting. The final test of soundness is whether a strategy is consistent with reality and feasibility to implement. It is when “what you do is the same as what you say.”
The process of strategic leadership blends your experience and leadership’s “sixth-sense” with systematic questioning and communicating. This must include formulating, deciding, implementing and monitoring the strategy. It is not just collecting and analyzing data or writing fancy documents. It requires that at each step you ask “so what?” to assure that the evaluations are relevant and not just an “exercise”. Further is always looking at relativity It is important to recognize that no market or segment is perfect and that attractiveness is relative to other opportunities. You must select the best available and not try to create “ pretend” opportunities. In addition, it must also be recognized that there are no “absolute” strengths or limitations; all are relative to the specific market, segment and the competition.
Creativity, imagination and vision are all important. This requires that you try and look at the business differently from the rest of your competitors and see ways to provide you and your organization with a real difference.
The strategic leadership process will culminate in a series of strategic programs, issues or actions. These must be tangible, relevant and understandable to those who must implement them.
Further, they must be continually monitored to assure that they remain realistic and relevant and address what is happening and not what has happened. The future is uncertain and, to a large extent, beyond our control. Yet, you must anticipate and make assumptions to create a strategy. The key is to identify critical assumptions and be prepared to respond and change if we are wrong. In simple terms, strategy is making decisions to guide future actions in an uncertain and often unpredictable world.Susan Mitchell recognized that she was making assumptions. “I am assuming that I can hire the talents I need and that I will be able to make an attractive acquisition in the Northeast. If I can’t, then I must change my strategy or my expectations. Further, I must be willing to change my plans if one of my competitors changes their strategy and becomes more aggressive in my targeted markets or is able to develop better systems”.
Throughout the book, we will emphasize the need to think future and not get trapped by the tendency to base strategies and plans on merely an extrapolation of the past. This is particularly difficult for “market / industry leaders” who are either unwilling or afraid to think what the future may require they change their current, proven ways of doing things. Strategic leadership entails a conscious effort to anticipate future change as well as similarities. Both are important, for strategy development builds on the past and present to deal with the future.  It must be remembered that not everything will change and that the timing and degree of change is likely to evolve. The approach we will detail requires an understanding of who we are and why we have been successful  or unsuccessful, and the ability to see how we can build on what we are really good at and change when required.
Although strategic leadership is future-oriented, it does not require psychic powers or a gift of predicting. No one, except God, can see into the future. But since we must make decisions today that affect our abilities and performance tomorrow, we have to know what we assume will happen. Thus, it is critical to identify our predictions or assumptions and then track those that have a significant bearing on our potential success or failure. The point is, that if we see something occurring that deviates from our suppositions, we must be ready to think through its implications and be willing to modify our strategy or objectives. To be specific: since an underlying premise of every strategy today is that inflation will remain low and the economy will continue to grow, it would be ridiculous not to re-strategize when events shake this premise.
In closing, let me emphasize again that strategic leadership is continuous and not an annual ritual. Although the following pages will describe where to start and imply there is a beginning and an end, strategic leadership must be an ongoing activity. As conditions alter and resources change, organizational leaders must be continually alert to determine how changes can affect their planned results and strategic decisions and plans. This means that a tracking, monitoring and contingency alert system must become an integral part of their entire management system.
The following chapters will dissect and expand each phase of strategic thinking and decision making in sufficient depth for you to apply the concepts and steps to your own business situation. By the end of the book, you will have a better feeling for your business, markets, customers and whether your expectations are realistic.