Strategy in Action and Contemporary

Strategy in Action and Contemporary Issues in Strategic Management

Overview of LG Corporation

LG Corporation's strategic planning process

Change management

The concept of strategy-in-action

The implications of strategy-in-action

Enhancement of LG's strategic capability by influencing the strategy in action

First Phase. Common understanding

Second Phase: LG's strategic intent

Third Phase .Success indicators

Fourth Phase: Supporting the strategic objective

Fifth Phase. Strong leadership

Sixth Phase. The Catalytic actions

Seventh Phase: Sustenance of momentum

Why the traditional approach will always reign over the strategy-in-action approach at LG

The Myths that surround the traditional approach

Bias of reification (reification fallacy)

Bias due to control

Bias due to linearity

Business related bias

Role of leadership and employees in strategic planning process

Conclusion

Abstract

In this paper, we develop a position paper for the purpose of enhancing LG Corporation's strategic capability by means of an effective strategy-in-action. We then evaluate the corporation's strategic planning processes and then suggest any necessary improvements with proper justifications. We then justify why strategy-in-action would not best suit LG corporation when compared to the traditional approach.

Overview of LG Corporation

LG Electronics Inc. was founded in 1958 and has its headquarters in Seoul, South Korea. The corporation produces electronics, telecommunication and chemical products and has subsidiaries; LG Electronics, LG Telecom, LG Display and LG Chem. The company operates in over eighty countries. The Corporation was founded by Koo in-Hwoi when he established Lak-Hui Chemical Industrial Corp in the year 1947. In the year, 1952, Lak-Hui (currently called LG Chem) which is pronounced "Lucky" became the pioneer Korean company to enter the business of plastics. After some time, the company expanded to form GoldStar Co., Ltd. (in 1958) which is currently referred to as LG Electronics (Tracked,2011). The GoldStar subsidiary was responsible for the production of the first radio in South Korea. In 1995, the corporation in its attempt to compete well in the global and western market got renamed to "LG" which is an abbreviated form of "Lucky Goldstar." Since 2009, the company has associated the letters LG with a catchy tagline that says "Life's good."

LG Corporation's strategic planning process

Strategy is defined as the process of determining the fundamental long-term goals as well as objectives of a given enterprise. This is coupled with the adoption of the appropriate courses of action and allocation of the necessary resources integral for realizing the stated goals (Chandler, 1962).The strategic plan that has been laid down by LG entails the adoption of a series of moves that would see the corporation being among the five best and most sort after electronics brands in Middle East and Africa. Their vision is to venture into totally new marketplaces and proceed to win the hearts of the consumers by providing them with what they need. They are focused in conquering new markets that are promising but unexplored (neglected).Such markets include Algeria, Angola and Sudan among others. Their plan is to use a new marketing strategy which replaces traditional dealers with power retailers who are increasingly commanding more market share just like for Carrefour

Change management

Change management is one of the key issues that must be handled by every company in order to remain profitable. This is through the employment of a productive workforce irrespective of the changes in organization dynamics. The process of implementing change is never an easy one. It is however necessary. The employees of a given company are usually comfortable with a particular way of doing things as it makes their job easier by repetition. This therefore means that companies such as LG must be involved in active change management processes that must be part of their strategic planning. Change management must be encapsulated in their strategy-in-action plans. The change management at LG should be carried out using Kotter's (1996) techniques. The change is to be implemented at LG using Kotter's 8-step model of change as a result of its demonstrated success.

The concept of strategy-in-action

Several organizations do have some sort of a strategy. Despite this, most of them do fail. This is as a result of the strategies being implemented improperly as a result of a missing framework. The framework of which is an architecture that is integral for the process of strategy conception up to the point when the strategy is implemented and the achievement of its sustainability. The concept of implementation as opposed to that of strategy design is not so present in the various extant strategy literatures. There is an element of dichotomy in this domain. The various articles that deal with leadership do lack strategy implementation moves. He work of Bartlet and Ghosalt (1994) have however come close to the subject of discussion. Their effort is however not on strategy implementation but is on the management of change. It is worth noting that most of the literature on effectiveness and strategy do ignore the element of human factor. An exception which is rather valiant is noted in the work of Hamel (1996) which does provide the right principles but with the lack of a process and model. What lacks in the approach used by most corporations such as LG is an approach that can be used to bridge the gap that exists between the formulation of the strategy and the implementation of the strategy. The methodology that is appropriate for bridging this gap is strategy-in-action which has been praised as the most systematic and scientific approach which helps in the formulation of comprehensive strategies.

The implications of strategy-in-action

The traditional approaches to organizational strategy are still dominant in the contemporary business environment. They are however not sufficient in the complex and dynamic global marketplace. There has been a major paradigm shift in terms of management and formulation of corporate strategies. The 21st century has seen ideological and geopolitical issues receding into the dark while issues related to humans have taken top priority. The current business leaders need to adopt a more advanced method of empowerment. This is where the concept of strategy-in-action comes in handy. Since it can be used for effective change management and the maintenance of corporate culture in order to increase productivity

Some companies however blend both aspects of traditional and traditional to organizational strategy in order to encourage systemic innovation (Innovation Point, 2004).

Enhancement of LG's strategic capability by influencing the strategy in action

The strategy in action that is to be used in influencing LG's strategy-in-action is to involve activities that influence the whole of LG's organization structure. It is to involve all the seven phases of strategy in action

Fig 1: Strategy in action pyramids

Sustenance momentum

Catalytic action

Strong leadership

Supporting the strategic objective

Indicators of sucess

Time Time

Work on strategic intent

Common understanding

Source: Zweifel and Tapas (1999)

First Phase. Common understanding

LG Corporation should strive to ensure that a shared and common understanding percolates through its organization structure. The strategy-in-action process basically commences with a group of about fifteen to twenty five leaders and thinkers who are the major stakeholders from all the relevant organizational sectors who come together in order to arrive at a shared understanding of the present situation. They too have the key elements that must be addressed by the strategy. The stakeholders should not comprise of only the top management but also the middle level management who are selected front-line individuals who may include board members, shareholders, and representatives of suppliers as well as customers. The selected group must be small enough in order to be effective and intimate while being large enough to ensure that all of the relevant views are included. It is important that the people who are often ignored by the top management be the one who attend these sessions for strategic analysis. Prior to the commencement of the initial strategic session, it is important that an elaborate background paper is drafted by and independent expert in order to maximize its objectivity. The purpose of the background paper is the establishment of main issues that are relevant to the process of establishing a common understanding. The main purpose of the first session is to serve the work of protecting the results that are obtained for the purpose of protecting business-as-usual as well reveal the elements that are missing, the opportunities and obstacles for convergence and synergy. The LG union and the management should spend a couple of weeks in the formal discussion of the existing competitive landscape and the contemporary business environment. The other thing that should be discussed is the need to have the front-line workforce to develop top notch competencies and be empowered to handle the problems. The professionalism of the workforce should be evaluated at this stage.

The most important thing in this phase is that all the participants should listen and learn a lot prior to jumping to a conclusion. The employees must also be very careful about their beliefs as well as biases. Therefore, a shared understanding is crucial and must therefore be created in a continuous basis. This is because the process of implementing strategies involves the clearing of obstacles which might result in the creation of misunderstanding. The shared understanding is crucial in order to build strength and enough confidence necessary for the implementation of strategy and to necessitate evolution.

Second Phase: LG's strategic intent

In order to remain competitive, LG has to stick to its long-term vision which should act as stabilizers to the corporation in times of uncertainty. The vision in this case refers to as a statement of the things that can be achieved by the corporation. The concept of strategic intent is very crucial to the operating of a corporation since it acts as a magnet that pulls the present corporate dynamics and activities to the future. Any given strategic intent should be formulated in a manner that the corporation's remain with a large vision that can energize the workforce at all times. The formulation of new strategic intent options can help LG in capturing new markets while remaining competitive within the uncertain economic environment since it present anew purpose to the corporation.

Third Phase .Success indicators

LG should make use of indicators of success in order to level of achievement of strategic intent. The indicators must however be chosen wisely since they are bound to heavily influence the lives of people at LG. LG Corporation should use indicators such as increasing the level of mobile telephony penetration in Africa.

Fourth Phase: Supporting the strategic objective

The fourth phase is concerned with the refining of strategic objectives. They are a major source of momentum for the corporation that does help in the provision of the missing link in order to achieve the laid down strategic intent. They do offer the corporation new and improved vantage points as well as pathways that are necessary for ensuring the gaining of competitive advantage for maximum profitability. It is important that LG Corporation treat each of the strategic objectives in order to ensure that the goals are reached. Each and every strategic objective is independent but works in synergetic manner with the rest. It is important that there clear communication within the organization structure as well as appropriate resource allocation in preparation for the realization of the strategic objective of conquering new markets in Africa and Middle East.

Fifth Phase. Strong leadership

The fifth phase of strategy-in-action that must be used in order to influence the strategic plan for LG Corporation is leadership. It is important that the establishing and empowering strong leadership takes a lot of time (Schein,1985, 1992). There are two major types of leadership. The background empowerment and the leaders. LG Corporation must ensure that it prepares itself for the changes that may occur as a result of conquering new markets. The corporation must make its workforce ready for the changes that can occur as a result of mergers and acquisitions (M&as) as it conquers new markets (Tetenbaum,1999). It has been demonstrated it several articles that M&a can have serious consequences on organizational culture. LG Corporation must be ready for establishing strong leadership and change management strategies that can counter the negative impacts to the organization culture. Kavanagh & Ashkanasy (2006) successfully investigated the positive influence of leadership as well as change management strategy on the culture of an organization and on employee acceptance of change during a merger

Sixth Phase. The Catalytic actions

The catalytic actions are responsible for altering the business environment. The acquired environment could either transform or inform the strategic processes in an organization through the provision of a rapid feedback mechanism to a certain strategy. The catalytic actions are to be responsible for taking care of the deficiencies in the existing services and programs while eliminating duplication of various efforts in order to save on corporate resources. They also create convergence with the firms' the existing initiatives.

Seventh Phase: Sustenance of momentum

This phase is concerned with attempting to sustain success. This is through the constant taking of stock, innovate, engage other partners and enrich the existing strategy for the sake of continuity, future and profitability.

Why the traditional approach will always reign over the strategy-in-action approach at LG

A close analysis of the strategy-in-action approach reveals that it has several loopholes that make in not a preferred choice for managers of large corporation such as LG. The first reason is that it is organic when most of managers are used to the mechanistic paradigm / Newtonian paradigm that was inherited from Newton. This is to say that most humans do believe in as well rely on computers and machines. This tends to make human beings to appear unreasonable. The second reason as which makes me believe strongly on the traditional approach as opposed to the strategy-in-action approach is that the latter may make managers to have a fear associated with empowerment; This is because strategy-in-action demands that there is an element of power sharing with the rest of the people in the organization as well as the sharing of extremely sharing and proprietary information with everyone in the corporation which can be likened to breeding chaos and anarchy. This is in line with the opinion of Tschohl (1997) who observed that empowerment can eliminate the role played by the middle managers. The executives and middle level managers do think that empowerment is tantamount to control and therefore they will experience a general power loss if they empower others. On the other hand, if they think of empowerment as the giving of power of performance to others, then this would be beneficial since the empowered lot would reciprocate the given power in the form of good performance and profits! Unfortunately, this is never the case on the ground. The other reality which is hard to admit is that working with other people is always a pain irrespective of the ultimate gains. This is to say that if managers would rely on pushing of computers (mechanistic devices which epitomizes strategy-in-action), and then they do it gladly in order to produce the much needed results alone. The only reason as to why they team up in form of organizations is so as to get the opportunity of producing the relevant outcomes that do lie beyond the scope of a single person. The current competitiveness in the global market therefore demands that certain survival moves such as involving the entire organization in the corporate process be embraced in order to realize good outcomes (profitability).The traditional approach therefore reigns over strategy-in-action due to these dynamics.

The Myths that surround the traditional approach

There are certain myths that people do hold regarding the traditional approach to organization strategy. Most strategies do fail as a result of the managers falling prey to certain unrecognized biases and assumptions which are unexamined. These assumptions are then responsible for the filtering of critical information which results in the damaging of productivity as well as creativity that are existent in potent form in most organizations. The following roadblocks have been noted to prevent the successful implementation of organization strategy;