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"It's often being said that without a strategy the organization is like a ship without a rudder, going around in circles" (Joel Ross and Michael Kami). A firm needs to know where it's going and why. A job of a manager is not only to see a company as it is and also what it can become. It also called "forward thinking". A strategy is seen to be a commitment to undertake one set of actions rather than another. It looks at a range of options a firm can undertake. It's like an explorer who will have a choice of a number of routes but has to take a choice of the best route.
Strategy doesn't only have to position, it also has to inspire. So an uninspiring strategy is no strategy at all. The most interesting companies we know (Ex General Motors, IBM, Mitsubushi, Apple) often the most successful are not boring. They have novel, creative, inspiring, sometimes even playful strategies. As Gary Hamel (cited in Mintzberg, Lampel and Ahlstrand, 2008) put it, "The dirty little secret of the strategy industry is that it doesn't have any theory of strategy creation". Strategy has to come out of a creative process conducted by thoughtful people. No Single subject has so dominated the attention of managers, consultants and management theorists as the subject of corporate strategy. A growing number of businessmen now question whether thinking consciously about an overall strategy if of any benefit at all to big firms. Due to this problem it was also said that "Grabbing opportunities or coping with blows as they arise make more sense" (Mintzberg, Lampel and Ahlstrand, 2008).
The strategic planning process is to articulate the company's major
objectives and implementation plans. This process is of particular interest to GE. Strategy formulation is the process of selecting the best methods for the company. The three factors that play a key role in strategic planning are customer needs, competitive position and internal capacity. Each manager must have at least a simple concept of strategic planning for the development of strategic plans. Strategic Planning is a broad and complex issue. Strategy Management background is an essential core of every organization.
Corporate companies plan their various multi-level activities. Strategy is the planning of how the company uses its resources on internal and external environment to achieve its objectives. Resources include finances, HR, facilities and technology. Jeffery Immelt the CEO of GE said that "as Resources are limited, this is why we have priority in GE to support the company's goals". The installation and use of resources develops the company's strategic decisions.
GE's strategic planning objective is to increase savings and at the same time increase the customer benefits in the company. Three
basic steps in the acquisition of strategic planning in the GE are
1.The development of a major business strategy. This is to build a serious competitive advantage.
2. The adaptation of large business strategy in all markets where company's products are presented and
3. Globalization used as a major business strategy. This means that the company has integration strategy in all areas of doing business.
The effective strategic planning of General Electric, helped increase its annual income. The strengths, weaknesses, opportunities, and threats still form the basis of GE's strategic planning. The development of GE culture is its strength and human resources. Competitive advantage is strength as competition in healthcare is high. Technology plays an important role in any business and this presents great opportunities for GE.
The company's vision, mission and the general objectives influence its strategic plan. The management has to convey the "Vision" to its people. Mission is a broader concept of "Vision" of the company. "The visionary in business often the entrepreneur, but sometimes also niche players and turnaround artists in established organizations see beyond the designs, plans and positions of the earlier views to strategy as a perspective - a unique worldview" (Mintzberg, Lampel and Ahlstrand, 2008). The mission gives the company a reason to exist.
A good strategic planning process is through sharing the "vision" of the company with its stakeholders and a strong physical culture. Strategies are developed to help achieve the goals and aims of GE. The GE culture forms part of the strategic plan. As Mintzberg et al commented that "when you hold power up to a mirror, the reverse image you see is culture". Strategy is social process deeply rooted in culture. GE's Information Systems are built to take advantage of the various resources in GE.
Strategic planning is the process of development and analysis of the company's mission, near and long term objectives, strategies and resources. Strategy planning process takes place at the business and product level. It begins with the analysis of the present and goes to plan the
future. Strategic planning helps meet the future challenges and opportunities for the company.
This is necessary, since it helps in creating the right decisions and affects the future of GE. It is obvious that an effective strategy planning is a sound environmental analysis to implement changes in environment and transforming them into opportunities. It allows the company to manage or avoid adverse environmental effects.
Using GE's Strategic plan, short and long term goals are developed. Its strategy is developed to obtain long-term goals of the company. Goals focus on vital changes. Overall, GE has long-term targets for aspects such as earnings per share, return on investment and size. A mission statement constitutes a specific set of policies, programs, or management objectives for programs and actions related to the strategic plan.
Tactical plans are less time-frames and a narrower scope of the strategic
projects. Business plans support tactical plans and tools performance daily, weekly, and monthly activities. These include political, procedures, processes and rules.
Theory of the business
The theory of the business is the set of fundamental premises on which the business is run. It is the success formula. Drucker suggests that it is usually based on three broad assumptions. These are assumptions about
1. the external environment in which the organization operates: markets, customers, technology and society as a whole
2. the organization's specific mission (purpose, role, ambition)
3. the core competencies that are required to achieve this mission and that specify where the organization must excel to maintain leadership.
At GE Healthcare, we strive to see life more clearly. Our "healthymagination" vision for the future invites the world to join us on our journey as we continuously develop innovations focused on reducing costs, increasing access and improving quality and efficiency around the world. In an effort to make even greater strides toward realizing this vision, GE Healthcare recently realigned its operating structure into five product P&Ls and five regional P&Ls, divided by geography. GE Healthcare Regional P&Ls
Headquartered in the United Kingdom, GE Healthcare is a $17 billion unit of General Electric Company (NYSE: GE). Worldwide, GE Healthcare employs more than 46,000 people committed to serving healthcare professionals and their patients in more than 100 countries (GE Healthcare, 2009). Drucker acknowledges that this sounds deceptively simple but warns that "it usually takes years of hard work, thinking and experimenting to reach a clear consistent and valid theory of the business. Yet to be successful, every organization must have one" (Drucker, 1994).
Citing examples of long run successful companies that have stumbled because their theory no longer works, (like General Motors and IBM), Drucker points to others, like Marks and Spencer, whose theory still works. Drucker lists four specifications in a valid theory. They are
1. all three sets of assumptions must fit reality
2. the three areas of assumptions must fit each other
3. the theory must be known and understood throughout the organization
4. the theory of the business has to be tested constantly
GE achieves this through discourse and communication throughout the organization. It promotes best practice sharing and lean ideas from individuals. It promotes its senior managers and process leaders to convey this message of its vision, mission and goals to every individual employee. This theory is tested constantly through business metrics, evaluation systems and growth and profit numbers. From its vision, we understand that Globalization is the answer to a more successful GE Business. GE Healthcare's strategy is based on having operations and warehouses throughout the world for a faster, cost saving and maximum profit earning process. He healthcare also believes in the "Change is constant" concept.
When changes have invalidated the original assumptions on which the theory was based, the theory itself becomes increasingly out of date. During this period, the management is often paralyzed as rivals overtake the business and customers migrate elsewhere. Drucker argues that the only answer to this is to think afresh.
Apart from becoming out of date, the theory of business or success formula, sometimes simply disperses. Drucker explains that while it is easy to retain knowledge and understanding of the underlying theory in the early days of an organization, success often means that the theory is increasingly taken for granted. Over time, consciousness of it reduces, sloppiness sets in, corners get cut and the current expedient is followed rather than the original philosophy that bred success. Ultimately, thinking and questioning stops until the remnants of the theory exist only in the form of an overall culture. The organization "remembers the answers but has forgotten the question".
To avoid the theory dating or getting lost, Drucker suggests two precautions
1. Abandonment - every 3 years an org should question all that it does - products, services, policies, distribution, channels etc. This challenge needs to be fundamental. "If we were not already doing it, would we do it now?" If something we have done has not worked, why not?" Unless an org has the courage to ask these questions, it will continue to expend scarce resources, "especially capable people", on things it should not be doing.
2. attention to non-customer - in a classic Drucker statement of the obvious to provide new insights, he points out that non-customer always out number customers. Drucker suggests not spending all the time researching just your own customer because that refines what you already know. Instead, find out what non customer are thinking, valuing or wanting. This is where change first reveals itself. It is, in his view the critical difference between being own-customer focused or being market aware.
Drucker suggests that there are other easily recognizable diagnostics such as
Rapid growth which often means that the original theory have been outgrown - especially in terms of initial policies, behaviors and communications.
unexpected success which means whether one's own or a competitors success usually signals a market shift to which detailed attention should be paid to the assumptions as they might be wrong.
unexpected failure which again a rivals or one's own may suggest that a long running theory is suddenly obsolete.
Drucker warns against the magician with his wand. The cure he suggests "is not genius, it is hard work" (Drucker, 94). Arguing that many CEO's usually use "diagnosis and analysis", he suggests that "they accept attaining objectives and rapid growth demands a serious rethinking of the theory of the business.
Organizational Strategic Exchange Constituencies
GE Healthcare is a part of GE Technology Infrastructure, which is a unit of General Electric (GE). It employs more than 46,000 people worldwide and is headquartered in Little Chalfont, Buckinghamshire, United Kingdom. John Dineen is the CEO of GE Healthcare. GE Healthcare is the first unit of the GE business to be headquartered outside the United States. In 2004, shortly before the completion of 9 billion U.S. dollar acquisition of British company Amersham plc. GE Healthcare was formerly named GE Medical Systems (GE Healthcare, 2010).
GE Healthcare currently has 6 primary business units; they are Global Diagnostic Imaging, Clinical Systems, IT, Medical Diagnostics, Life Sciences and Surgery.
(GE Healthcare, 2010)
The view regarding strategic stakeholder management described by Berman, Wicks, Kotha, Jones using earlier work of Edward Freeman is an Instrumental Approach (Academy of Management Journal, 1999). Instrumental approaches towards stakeholder theory hold that: To maximize shareholder value over an uncertain time frame, managers ought to pay attention to key stakeholder relations.
Firms have a stake in the behaviors of their stakeholders. Practical management of firms in operating environments, including relationships with their stakeholders, is a part of proper management in general. Therefore good stakeholder management is a clear instrumental value for the firms.
A fundamental assumption of this type of model is that the ultimate objective of corporate decision is marketplace success. Firms view their stakeholders as part of an environment that must be managed in order to assure revenues, profits and ultimately to provide returns to stakeholders. Attention to stakeholder issues may help a firm avoid decision that might prompt stakeholders to undercut or ruin its objectives. This possibility arises because stakeholders can control resources that can facilitate or enhance the implementation of corporate decisions (Pfeifer, Salancik, 1978). Employing the terminology used by Donaldson and Preston (1995) and Quinn (1995), we see the concern of the firm for stakeholder relationships as instrumental and contingent on the value of those relationships to corporate financial success. Quinn and Jones (cited in Berman et al, 1999) stated that "Instrumental ethics enters the picture as an addendum to the rule of wealth maximization for the manager agent to follow".
In this formulation, stakeholder management is part of a company's strategy but in no way drives that strategy. Implicit in this perspective is the assumption that modes of dealing with stakeholders that prove upon adoption to be unproductive will be discontinued, as will those that involve resources that are no longer needed. The concerns of stakeholders only enter a firm's decision making processes if they have strategic value to the firm.
Two variants of the strategic stakeholder management approach are the direct effects and the moderation model. In the direct effects model, the attitudes and the actions of managers toward stakeholders are perceived as having a direct effect on firm's financial performance, independent of the corporate strategy. In the moderation model, the managerial orientation towards stakeholders does impact the corporate strategy by moderating the relationship between strategy and financial performance.
(Berman et al, 1999)
The various internal and external stakeholders of GE Healthcare are
Nature of stake
Metrics or measures of success
Level of Interest
Services / Employees
Hardware and Software
(Own work based on the leading - following model)
In the above diagram, The Squared boxes represent the External Constituencies of the business while the Oval circles represent the Internal Constituencies. The Black straight arrows represent leading, while the Red curved arrows represent following.
The Customers (Hospitals) lead the Field Engineer's with their part problems. The Fe's follow the customer requests. The Fe's and the customer solutions are a part of the Operations. Whenever a medical part stops working, the Fe's are informed. The FE's try fixing the part and if the fail they would place an Order with the Customer Solutions team. This way the FE's are leading the employees with their Orders. The Fe's lead the "Quality team" to maintain TAT and performance standards to solve the customer problems. The quality team leads the employees to maintain the required Six Sigma standards followed by GE. Henceforth the employees have to follow the Quality standards. Employees lead the IS based on the requirements of the process. In the same way IS leads IT based on what hardware and software technologies are required for the smooth running of the business. Six sigma standards are followed in GE healthcare and maintaining Quality is critical to the business. IT plays an important role as in the systems being used. IT failure can cause a lot of business loss. Telephone services, to LAN connection, Systems, software's such as Oracle, Mainframes, Siebel, Cognos and various other IT devices lead and maintain the Operations. IT leads the employees in getting the job done. Employees lead Suppliers to have the parts delivered to the Hospitals. Suppliers in turn follow the employees and lead the carrier services to do the delivery. Suppliers lead the asset management team to forecast demand. Employees and suppliers work together to balance the demand and supply. Having a shortage of stock can cause great problems to the business as the site temperature could be a Red Down. Suppliers lead Carrier services such as FedEx, AirNet, Sonic, DHL etc to deliver the parts the warehouses. There could be requests such as Overnight delivery; One day delivery and other urgent requirements based on site temperature. Carrier services is one the external contingencies which play a very critical role. The delivery based on the Turnaround Time (TAT) leads to customer satisfaction. Competitor's performance leads Hospitals to make decisions on whether to use GE or the Competitor's. Customer satisfaction is extracted from Surveys. Customer satisfaction leads the Quality team to understand, where the organization stands based on customer feedback and henceforth continues the cycle of the business.
The government also leads hospitals by placing quality standards for medical solutions. The Hospitals have to follow these standards in order to continue business.
(^Own Work based on the Leading first model)
The SECI Model in GE healthcare
In Ge Healthcare, I have encountered how new employees tend to learn a lot about the organization and the process through Tacit and Explicit forms of knowledge. Let's look at the way we use language and discourse to lead organizations.
Tacit - Tacit through socialization - At first the new employees generally understand a lot of procedures, styles, jargons, metaphors, culture and methodologies of an organization though tacit knowledge and socialization. Starting from simple things such as how to as how to use a fax machine to complex activities of how to browse different pages and software's while handling a customer call are quickly picked up through socialization and interaction.
Tacit - Explicit through Externalization - Understanding that what we say, the way we say it, is critical in developing our organization's performance (Fredricks, 2009). This is where my role as a process trainer comes in when a lot of questions are thrown at me about "Why this" and "Why that". The newly hired employee's gain a lot of information though tacit knowledge but this knowledge gained is still unclear to them. They have to assemble all the pieces of info to make it a solid base of understanding. When these mysteries are explained to them it all starts to make sense. Communication between Fe's and hospitals is through Externalization is some cases.
Explicit to Explicit through Combination - It is important to listen to and
work through the way we use language and discourses to lead organizations (Fredricks, 2009). Process training is generally Explicit to Explicit where theory of how the process works in explained in a conference room. For the new employees, it all seems interesting like a history lesson until they hit the operations. Explicit knowledge sharing is very important as it's the best means of making people understand the basic concepts of work. Henceforth even the education system is a form of Explicit to Explicit knowledge transfer where practicalities are looked into only in the later part of life. The communication occurring between most stakeholders is through combination.
Explicit - Tacit through Internalization - This is the final stage of the cycle, where the explicit knowledge gained in converted into practical working. The working on different software's and tools for the effective running of the process becomes very simple for the agent as he gains the tacit experience.
A central purpose of organizational knowledge creation theory is to identify conditions enabling knowledge creation in order to improve innovation and learning (Nonaka and Takeuchi 1995).
The context for knowledge creation is Ba, a Japanese concept that roughly translates into the English 'space'. Ba is a shared space for emerging relationships. It can be a physical, virtual or mental space, but all three have knowledge embedded in Ba in common, where it is acquired through individual experiences, or reflections on others' experience. GE Healthcare creates a Ba for its employees in the form of Team meeting, Value Chain mappings, Kaizens and Process reviews in order for employees to exchange information and knowledge. Transfer of information and knowledge also takes place between various stakeholders through Process Reviews, Yearly surveys, Re-engineering projects and client feedbacks. To participate in Ba means to become engaged in knowledge creation, dialogue, adapt to and shape practices, and simultaneously transcend one's own limited perspective or boundaries.
The cyber Ba is a place of interaction in the virtual world rather than in the physical world. Cyber Ba is one of the benefits of IT. As GE has its branches across the world, face to face meetings are not possible. Cyber Ba takes place through virtual meetings, screen sharing and online messenger services. The cyber Ba can involve many hundreds of individuals in the organization by using information and communication technology. Finally, the exercising Ba supports the individual's internalization of explicit knowledge.
The importance of organizational-stakeholder relationships has and continues to be of interest in the organizational studies literature. The relevance of this topic is even greater given the recent governance failures involving Enron, Tyco, and WorldCom. Indeed, an excessive emphasis on stockholders is blamed for the neglect of other legitimate stakeholder groups. We should acknowledge that the central focus of studying any organizational relationship is the Establishment, development, and maintenance of relationships between exchange partners (Morgan and Hunt, 1994). This study investigates the determinants of stakeholder relationship importance and the role it plays in determining whether relationships will continue. For managers, these results suggest that an organization's ability to develop and maintain strong relationships with their salient stakeholder groups improves the chance that relationships will continue (Christopher S, Miesing P, Parsons A, 2005).