I'm going to be realistic and begin this course by recognizing that not all organizations execute strategic management by the book, or using the conceptual model as represented here. How do I know? Well, I pulled a few hundred people from the pro formative community, and only 17% of those poll participants could point to having a strong strategic management process inside their organization. So before we start exploring what a more formalized strategic management process entails, let's spend a few minutes talking about how strategy gets developed even in the absence of formalized strategic management. Organizations differ in their approaches to developing strategy and there are generally three approaches that are used in varying proportions to develop strategy and insight approach comes from developing a very high level strategic thinking, connecting ideas and possibilities to the capabilities of the organization. Insight changes our understanding of the situation.

It changes how we act, how we see how we feel, and what we desire. It's easy to identify how Steve Jobs use an insight approach as he created various Apple products. He saw opportunities to redefine traditional markets in music and cell phones and alike, and then work tirelessly with his engineers and programming teams to develop products to serve customer needs in those markets. The second approach for developing strategy is to use formal planning. Planning is particularly useful as the organization evolves and grows. Formal planning forces us to think outside of the comfort zone of today and what we know to consider the bigger picture.

Planning helps management reach a common understanding of context, established harmonized goals and targets gets in planning for unified and coordinated rollout of strategy. The downside of planning is that it can be time consuming to do and be a distraction to all the other nagging operational issues that we are confronted with every day. Planning is also limited as strategic issues arise more frequently than a formal planning cycle can address which leads us to our third approach for developing strategy, a response approach. This approach deals with the strategic issues that arise as the situation is changing. You can avoid a response approach all together, but nor should it become a crutch that you rely on exclusively for strategy development. The biggest problem with a response approach is it becomes exhausting to put out all those fires.

And when there's no context for decision making mistakes happen, inefficiencies creep in, and balls get dropped. This is draining on our people and likely sub optimizing our full potential. So if insight is our target, how exactly do we get insight? There's a really good book out there that I recently read by Gary Klein, specifically on developing this skill, and he suggests that there are three paths that can lead to insight. The first path that can give rise to insight happens when we identify a contradiction, or find an inconsistency in something around us. when something doesn't feel right.

Don't dismiss it noodling around and try to identify and discredit the weakest link, you may be rewarded with an important strategic insight. The second path comes from making a connection. Noticing coincidences that seem odd or allowing yourself to explore your own natural curiosity. You may be looking for ideas and totally unrelated matters, that suddenly give you insight into something of relevance to your work. For example, I've read a lot of books in a wide variety It is subject matter. This book itself had nothing to do with strategic planning.

However, when I read it, I suddenly made a connection of this author's process for gaining insight with my own interest to explain strategic insight a little bit better than than just referencing, say, Steve Jobs. A third path comes from creative desperation. The best business example I can give you is a story about the CEO of Intel in the 1980s. They were confronted with the decision of whether to continue emphasizing the business that had made them successful, or to begin innovating new products which might cannibalize their existing business. With his job on the line. The epiphany for the CEO happened when he asked himself the very important question, what will my successor do if I lose my job, and suddenly it became clear that he had to move the company forward and stop clinging to the crutch of this is the way we've always done business.

Now that's insight. So let's return to this graphic of our four phases of strategic management. The future state and the current state bookend our current location and our desired destination. And the strategic development process creates a roadmap to get us from here to there. Performance Management is all the systems and processes we put in place to keep us on track and adjust courses necessary. Now, let me return and layer on our approaches to strategy development.

Because I think this is where you need a combination of all three approaches to be successful. I think of attaining strategic insight as most likely to arise as you focus your thinking on articulating the future state and the current state. The formal development of strategic plans and operating budgets is well aligned to using a planning approach. And finally, the project performance management processes we put in place help us to respond as conditions change. So this is going to lay groundwork for our next four lessons which will explore each of the strategic management phases further. So I'll see you in the next lesson.