Monday, November 21, 2011

Frame works for strategic thinking

I have been studying strategy for more than five years.I am still studying it to this very day.The one thing that i have conluded is that it is a complex field.Many authors immediately re-aasure the reader or student that complex does not neccesarily mean impossible or not attainable.It simply means that strategy is not that straight forward.I am sure that any student of strategy or strategic planning realises that the discipline of strategic thinking occurs in models or structures of thought that guide the asessment of the data or information that forms in puts into strategic thought and then also organises the result. Simplification tends to be the generic approach.The real world provides a myrid of variables and combinations that make it hard to pin down certain aspects.The best strategic minds are those that can intergrate all this information and then define a course of action.There are models for assessing the operating environment such as the famous PEST.There are models for defining the market such as the revenue model,the differentiation and price model,the BCG Model and the demand and supply curve models to mention a few.I recall when studying manufacturing strategy,which infact opened the door for me to study strategy a model based on price,product and service was defined.Underling that were manufacturing objectives and tasks. The models i am discussing are all preset.I just want us to reflect on the capability of using mathematical tools and available data to define a frame work,that suits the problem set and then derive the strategy or aspects of it from there.For example about two weeks ago i was focsing on liniear programming,the simplex methods,it comes in soft ware packages like "Whats best, from Lindo.This approach enables you to define the key variables and come up with the objective function.This approach results in you being able to define a framework however it will be on a basis of simplifying the problem into clear and seperate variables.The good thing about it is that you are defining your own frame work for thinking.The key issue for high level strategy can be how to maximise profits or minimise costs.Linear programing(not as hard as it sounds) will give you a basis for working out how to optimise your variables. Lets work through an example.If you have a distribution net work in a competitive set up and you want to focus on specific volumes per product that will minimise your distribution costs the tool suggested is linear programming.Lets say you distribute products A,B,C,D.Each product has unit distribution costs depending on location ,staff handling and so on.The logic of the calculation will be such that to Minimise(cost)=Ax+Bx+Cx+Dx with A to D being specific distribution costs and x being the number of units.The software will process the calculation and provide with insights on how to minimise your distribution costs.This is a simple,how ever deliberate thought processes around this approach can aid in defining your distribution strategy. I recently came across an MBA programe thats teaching creativity and the application of artistic abstract thinking in problem solving.It was a Canadian business school i think.The bottom line is that ,you can not only solve a real life problem,complex problem that does not have a fitting frame work in existance without thinking abstractly and then translating abstract thinking through a frame work you can use o organise your information in the real world. The long and short in the midst of all the complex strategies is that if the frame work does not exist,don't panic,create one.

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