What is strategic management?

Hi, my name is Dave Ketchen. I serve as the Harbert Eminent Scholar and Professor of Management at Auburn University in Auburn, Alabama, in the United States. I'm going to talk to you about the concept of strategic management and try to answer the question, what is strategic management?

When we think about strategic management, a really nice way to conceptualize it is in terms of five Ps. These are five different ways of thinking about strategy that all start with the letter P. The first one is one that you're probably fairly familiar with, the notion of strategy as a plan. So if you were to walk out into the street and stop somebody and ask them, what does the concept of strategy mean to you? They would probably say something like this: companies will lay out a plan in advance, maybe it covers 3-5 or 10 years. But it talks about where they hope to get to and how they plan to get there. So a couple of examples, on the left side you see a picture of Tim Cook, he's the CEO of Apple Incorporated. We're going to talk about Apple a few times in this presentation. As the previous CEO of Apple, Steve Jobs, was unfortunately in the process of dying, Apple created a succession plan, whereby Tim Cook would take over as CEO, once Mr. Jobs was no longer able to do his tasks as CEO. By all accounts, Mr. cook has done an exceptional job as CEO and I'd like to also mention briefly that he is a graduate of Auburn University. On the right side we see Mike Tyson, who at one time was the most fearsome boxer on the planet. He had an opponent who was promising a new plan to defeat Mr. Tyson, a plan that Mr. Tyson had never seen before. Tyson's reaction was, "Everybody has a plan until I punch them in the face". That's a good way to think about what an organization is up against when it faces the environment. The environment will metaphorically punch an organization in the face. At that point, the best-laid plans may be irrelevant. So part of the downside of planning is that it doesn't account for unexpected events that may occur as time goes on. That's one reason why we need multiple ways to think about the concept of strategy.