Boundary Conditions and Specification of decision criteria
This is the first stage in the planning process. It is the job of the Office of Strategy Management to get clarity on the boundary conditions / scope and on the decision criteria upfront, before the commencement of the planning cycle. Often the CEO / Promoters have certain preferences about the markets / business that they wish to be in or not be in. They might also have limitations on the resources available and the time horizon for the strategic plan. It is important to know the scope upfront. Also, it’s important to get buy-in on what would be the criteria that would be used by the management team to choose from various strategic options that the team will subsequently develop. Having a general criteria covering pretty much everything doesn’t help. Maximizing market share and profitability in a manner that increases shareholder value while minimizing cost, basically means that the decision maker doesn’t know what he wants and is hedging his bets. The more specific the criteria, the easier it will be to choose from multiple options. Having loosely defined criteria results in an inability to choose and sign off on a particular strategic direction. Also, it becomes important not to have too many criteria or else the practicising manager faces the possibility of having multiple strategic options, many of which may meet some decision criteria, thereby making decision making difficult if not impossible