Strategic Market Management

Strategic market management, or, simply, strategic management, is motivated by the assumption that the planning cycle is inadequate to deal with the rapid rate of change that can occur in a firm's external environment. To cope with strategic surprises and fast-developing threats and opportunities, strategic decisions need to be precipitated and made outside the planning cycle.

Recognition of the demands of a rapidly changing environment has stimulated the development or increased use of methods systems, and options that are responsive. In particular, it suggests a need for continuous, real-time information systems rather than, or in addition to, periodic analysis. More sensitive environmental scanning, the identification and continuous monitoring of information-need areas, efforts to develop strategic flexibility, and the enhancement of the entrepreneurial thrust of the organization may be helpful. An information-need area is an area of uncertainty that will affect strategy, such as an emerging consumer-interest area. Strategic flexibility involves strategic options that allow quick and appropriate responses to sudden changes in the environment.

Strategic market management is proactive and future oriented. Rather than simply accepting the environment as given, with the strategic role confined to adaptation and reaction, strategy may be proactive, effecting environmental change. Thus, governmental policies, customer needs, and technological developments can be influenced—and perhaps even controlled—with creative, active strategies.

Gary Hamel and C. K. Prahalad argue that managers should have a clear and shared understanding of how their industry may be different in 10 years and a strategy for competing in that world. They challenge managers to evaluate the extent to which

* Management has a distinctive and farsighted view, rather than a conventional and reactive view, about the future.

* Senior management focuses on regenerating core strategies rather than on reengineering core processes.

* Competitors view the company as a rule maker rather than a rule follower.

* The company's strength is in innovation and growth rather than in operational efficiency.

* The company is mostly out in front rather than catching up.

In that spirit, strategic market management actually includes all four management systems: the budgeting system, the projection-based approach of long-range planning, the elements of strategic planning, and the refinements needed to adapt strategic decision making to real time. In strategic market management, a periodic planning process is normally supplemented by techniques that allow the organization to be strategically responsive outside the planning process.

The inclusion of the term market in the phrase "strategic management" emphasizes that strategy development needs to be driven by the market and its environment rather than by an internal orientation. It also points out that the process should be proactive rather than reactive and that the task should be to try to influence the environment as well as respond to it.