Global Logistics Management: A Competitive Advantage for the 21st Century, 2d ed., by Kent N. Gourdin. (Malden, MA: Blackwell, 2006). Chapter 12
Read the supplemental reading passage titled “Mission and Strategy” in this module. Then, in your own words, discuss what a corporate strategy is and how a logistics strategy can be vital to accomplishing the overall mission of the organization. Illustrate with examples.
Mission and Strategy
While previous readings have attempted to provide a framework of common terms for understanding events in a descriptive, passive sense, in the latter half of this course we are integrating logistics management, global management and strategic management concepts. The purposeis to acquire a contemporary perspective on a relatively new business emphasis: global logistics management. Here we focus on strategic management, drawing implications for logistics managers.
Strategic management is the academic source of several theoretical buzzwords that are poorly understood and applied in everyday practice. As such it is important to clarify them here. Perhaps no management buzzwords are met with more cynicism and derision than vision and mission. It is true that one can easily find organizations where mission and vision statements abound and where employees scoff because these statements simply do not reflect reality. The best thing to do is just just to start over.
Vision and Mission
What is a vision? A vision is an idea.
From the standpoint of strategic management, a vision is an idea of what the organization might do or become, but will not do or become without executive leadership. Anybody can have an idea. The difference between a vision and a delusion is the quality of the visionary.
It is often said that history is written by the winners. Some of the most famous “winners” in business were very lucky, while some of the infamous “losers” were very unlucky. Other than that, their visions may have been very similar. What is backed by research, though, is that the difference between the winners and the losers lies in execution. In this course, logistics management is considered part of overall strategy execution. So the difference between a buzzword and an inspiring vision is, to an extent, up to logistics people and their managers.
Some people combine vision and mission statements, but others believe they should be different. People can be inspired by an idea (a vision), but what gets them out of bed is a more definite sense of mission, or overall purpose in life. Why, then is there often a disconnect between the mission statements posted on organization walls and the real reasons why workers get out of bed and go off to work? To put it another way: the popular press and the scholarly literature are full of genuinely good technical advice about what should be included in mission statements. So why are so many employees so cynical about them?
One reason is that many mission statements were not written for employees’ consumption. Mission statements are published prominently in annual reports, on Web sites—everyplace an external stakeholder might look. These days, mission statements are considered legally-binding statements of intent. Mission statements are even crafted for the eyes of the competition and community watchdogs, who are ever-watchful of the statements that important companies make.
With all this in mind, following is a list of things to consider when crafting an organization’s vision/mission statement: According to Thompson, Strickland, and Gamble (2005) it should address:
- The business activities to be pursued.
- A firm’s present and future market position.
- The appropriate level and type of customer focus.
- The kind of company that management desires.
Therefore, and for the same of internal stakeholders rather than external stakeholders, it should also:
- Guide management.
- Inspire employees
- Prepare the entire company for the future.
Next in the logical process is the development of a strategy. For our purposes, business strategy and corporate strategy will be considered synonymous. In this course, also, we will stress the importance of having a logistics strategy. As implied, no logistics strategy should stand on its own. A logistics strategy should be wholly supportive of the overall business/corporate strategy. The main point for now is to understand the difference and the similarity between an organization’s vision/ mission/strategy and its logistics strategy. and/or mission, and a project’s vision and/or mission. Vision and mission, together, are the starting point for developing a business/corporate strategy that in turn provides a context for a supportive logistics strategy. We will now look this idea in more detail.
Strategy is a term we use all the time, and we seem to be able to use it without suffering too many breakdowns in communication. But here, we need a more precise understanding. Every textbook on management defines strategy. The following is a simple definition of business strategy, followed by a description of what a strategy should look like in real life:
A strategy is how an organization plans to accomplish its mission and realize its vision.
What does this definition imply? First, it implies that strategic management is ultimately the responsibility of upper-level management. This is not to say that executives should lock themselves in an ivory tower, making pronouncements, as they remain aloof from day-to-day operations and logistics. Indeed, there are models of strategy that insist on participation from lower-level managers and operational employees. In fact, such models generally suggest that strategy should evolve in grassroots fashion. Logistics management has a role to play in such models, because logistical imperatives constantly emerge from global trends. It is best to acknowledge (rather than fight) these trends and let them lead broader business concepts and future direction. Logistics ideas inspired by the emerging global business environment may be conceived as experiments in the future direction of an organization. In the more top-down models of strategic planning, logistics may be thought of as the logical tactics by which overall objectives are accomplished.
Either way, top-level executives will be held accountable for accomplishing the strategic interests of the organization. Logistics managers, knowingly or not, are responsible for the execution of strategy.
Second, the definition implies that a strategy should guide everyone in the organization in a common mission, with common objectives. Thus an organization has one strategy or none at all. Please read that sentence again: An organization has one strategy or none at all. One can hope this will be accomplished seamlessly, and that the strategy helps to reconcile differences within the organization and among functional (marketing, operations, finance, logistics) imperatives. At the very minimum, a strategy should not create conflicts of interest in the organization or sub-optimize the interests of one orgnaizational function for the benefit of others. For example, marketing might propose a new product rollout date for an ad campaign, yet that date is logistically impossible to achieve. Such a situation is indicative of a failure of strategic leadership.
Third, the strategic view should address the longest relevant time frame. This can be a source of controversy, since some people assert that the rate of change in the modern business climate makes planning not only a waste of time but actually counterproductive. A more sensible position is that the time frame depends on the competitive landscape under analysis. Some industries still move slowly and are quite stable. Perhaps a compromise for the purposes of this course is to assert that logistics plays an important role in strategic planning and execution in an evolutionary fashion. But logistics should always have an eye to super-ordinate goals and objectives. At the very least, planning is a paramount management competence at all levels and in all functions.
Therefore, obsessing on immediate crises is exactly what strategic managers must avoid. This does not mean that strategic managers do not get involved in crises or day-to-day project operations such as logistics glitches like a weather delay in the transportation of products. It does mean that the resolution of crises and making operational decisions should be guided by the “big picture.”
Fourth, a strategy commits an organization—an entire organization—to a direction that is very difficult or costly to reverse. A good strategy is flexible and adaptable to change but does not equivocate. A good strategy is clear about what the organization is and will do. It is also clear about what the organization is not and will not do. Here project methods, practices, tools, and techniques play crucial roles, because they do not equivocate but do leave room for risk management and unforeseen events.
Finally, and this is a very common misunderstanding, any single product or project outcome is not a strategy. A strategy is a plan, or at least a consistent pattern of choices and decisions and actions. A strategy is a staked-out and defensible position in the marketplace; it involves moves and countermoves and may even require politics, ploys, and a degree of guile. Logistics always plays a key role in the execution of a strategy, whether it be in the defense of a traditional delivery channel or in the creation of a new one through technological innovation.
Altogether, the ultimate goal—the Golden Fleece, the Holy Grail—of strategic management is to create and sustain a competitive advantage. We have already dissected this term in an earlier reading, which you may want to revisit now. (This term has also become obscenely overused in everyday management conversation.) Whereas it seems that every practicing manager boasts of his or her organization’s competitive advantage, research shows that a sustainable competitive advantage is very rare!
Thompson, A.A., Strickland, A. J., III, & Gamble, J. (2005). Crafting and executing strategy: The quest for competitive advantage. New York: McGraw-Hill Irwin.