Strategic Management as Organizational Learning

To operate effectively, organizations need to ‘fit’ or align themselves with their environment, strategies, capabilities and leadership skills. To compete successfully in a highly competitive and constantly changing business environment, however, organizations also need to attain ‘fitness’ – the capacity to learn and change to fit new circumstances. The concepts of fit and alignment are not new in business literature, yet the record of change – the many failed initiatives most organizations embark on in an attempt to improve their performance – suggests that many managers do not know how to lead systemic and fundamental change. By employing quick, superficial change programs leaders skillfully avoid learning the truth about poor coordination across vital activities in the value chain and the fundamental organization design, cultural and leadership issues that are blocking organizational effectiveness. The result is cynicism, low commitment to change and ultimate failure to align the organization with strategy. In response to these problems, the Strategic Fitness Process (SFP) was developed as an integrated, disciplined, leadership platform that a senior management team can utilize to create an open conversation about their organization's fit with the strategy and environment as well as their own leadership. SFP enables truth to speak to power, making it possible for the senior teams to conduct a systemic diagnosis of the organization's problems based on valid data, and to identify organizational and leadership barriers that prevent change. Research in 23 organizations has shown that, when fully embraced by senior teams, SFP facilitates dramatic and rapid changes in strategic understanding, organizational design, leadership and the capacity for ongoing learning. This article discusses the theory and premises underlying SFP, describes the step-by-step process and illustrates its effects on the design, culture, leadership and performance of a Hewlett Packard business unit that utilized SFP to solve strategic and organizational problems that were undermining its performance. We propose that honest conversations about the organization and its leadership produced by SFP enable fit as well as fitness - the capacity for continuous learning organizations require to maintain fit as the environment changes.