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back to index backGLOBALtalk June,  2005

Strategic management in a flat world: The imperative of best practices

Shanghai - Why is strategic management so much more important and challenging today? Answer: Because now we are operating in a flat world. New York Times' Pulitzer Prize winning columnist, Thomas Friedman, clearly explains ten reasons why business challenges are continuously accelerating in an outstanding new book, titled: The World Is Flat. Friedman identifies ten "flatteners" that are creating a level playing field for global business: 1) fall of the Berlin Wall on Nov 9, 1989; 2) launch of Netscape on Aug 9, 1995; 3) work flow software; 4) open-sourcing; 5) outsourcing; 6) offshoring; 7) supply-chaining; 8) insourcing; 9) in-forming [Google, Yahoo, MSN search]; and what he calls "the steroids" [digital, personal, mobile, virtual].

Flattener #6, offshoring, is all about China and India. The other nine flatteners have dramatic implications for the ongoing acceleration of business opportunities and risks. Strategic management in China has become all the more difficult and dynamic because of these flatteners. What is a company and its senior management to do? How can they cope with these catalysts for accelerating change? Answer: look to global best practices in strategic management for guidance.

Dr. Randall Russell is Director of Research at the Balanced Scorecard Collaborative [BSCol]. He says: "Until now, best practice research and analysis has focused almost exclusively on operational processes. Little attention has been paid to management processes and almost nothing has been done to advance our understanding of processes used to manage strategy. During the past twelve months we have begun to share the results of a multi-year program of research directed at defining categories of best practice in strategy management and execution." Dr. Russell and his colleagues have defined a taxonomy of best practices that describe the management processes of a Strategy Focused Organization [SFO]. They have reviewed the files of more than 500 business cases, and documented 27 specific practices that differentiate companies who have achieved breakthrough financial results.

This body of practical knowledge and quantitative results is forming the basis for an evolving science of strategic management. There is no body of knowledge more important in a flat world. This is because the content of any strategy is more likely to change more quickly because of the ten flatteners identified by Friedman. Given this degree of accelerating change, a senior management team has little to rely on for stability. This is so, unless they establish a strategic management process they will use to guide their organization through the dynamically changing circumstances presented by a flat world.

What I find deeply reassuring about this body of knowledge is that it enables the identification and implementation of a repeatable management process. I learned the practical value of repeatable business processes in China from 1993-1998. During that time period I observed more than 75 MNCs use cross functional teams to map, analyze and redesign their core business processes. More recently I have been observing how Chinese organizations are benefiting from a similar disciplined approach. This time, however, the focus is on the highest level process a company can deploy: the management of its strategy. The tools, vocabulary, concepts and skills are different from before; the similarity lies in the systematic nature of the approach.

In our book on the subject I explained the organizational reasons for why the Balanced Scorecard methodology is practically useful for strategic management. Thomas Friedman has now clearly explained and documented a critical global context for strategic management: We must now manage strategy in a flat world. To become successful and remain so in a flat world, organizations must develop the internal competency for strategic management. The optimum approach for accomplishing this is to learn how to deploy the best practices that have been identified as the differentiators for creating breakthrough results. The best practice research done by Russell and the Balanced Scorecard Collaborative is changing management in a flat world.


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Other articles from the same issue (June,  2005).

Workaholism in Asia
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MG Rover becomes the first client for the Pension Protection Fund
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Brazil: Benefit Survey 2004
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Making yourself at home in the United States
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Protect company trade secrets from in-house thieves
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Strategic management in a flat world: The imperative of best practices
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India: Fringe benefit tax ("FBT") proposed
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Relocating to Latin America
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Ten Reasons to Provide Language Training
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Learn the Chinese language to strengthen China relationships
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Relocating to China: Meeting the challenges head on
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Many Expatriates, Many Voices: A Look Beyond the Assignees
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