Principle of preventive strategic control.

Understanding Strategic Control

Strategic control involves establishing standards, measuring performance, comparing performance against standards, and taking corrective action. It differs from operational control, which focuses on day-to-day activities, by concentrating on the overall direction and long-term goals of the organization.

Reactive vs. Preventive Strategic Control

Strategic control can be broadly categorized into two types:

• Reactive Control: This is a traditional approach where control measures are implemented *after* a deviation from the plan has been identified. It involves analyzing the causes of the deviation and taking corrective actions to get back on track. This is often a costly and time-consuming process.
• Preventive Control: This proactive approach focuses on anticipating potential problems and implementing measures to prevent them from occurring. It aims to minimize deviations before they happen, leading to more stable and predictable results.

Techniques of Preventive Strategic Control

Several techniques can be employed for preventive strategic control:

1. Feedforward Control

This involves identifying potential problems *before* they occur and taking action to prevent them. It focuses on inputs to the process rather than outputs. For example, a company planning to launch a new product might conduct thorough market research and competitor analysis to identify potential risks and develop mitigation strategies *before* investing heavily in production and marketing.

2. Concurrent Control

This involves monitoring ongoing activities to ensure they are aligned with the strategic plan. It allows for real-time adjustments and prevents minor deviations from escalating into major problems. Examples include regular project status meetings, quality control checks during production, and continuous monitoring of key performance indicators (KPIs).

3. Premise Control

This technique involves identifying the key assumptions underlying the strategic plan and monitoring their validity. If the assumptions prove to be incorrect, the plan needs to be adjusted. For instance, a company’s expansion plan might be based on the assumption of continued economic growth. If economic conditions deteriorate, the plan needs to be revised.

4. Strategic Surveillance

This involves continuously monitoring the external environment for changes that could affect the organization’s strategy. This includes tracking competitor actions, technological developments, regulatory changes, and economic trends. Early detection of these changes allows the organization to proactively adapt its strategy.

5. Implementation Control

This focuses on ensuring that the strategy is being implemented as planned. It involves setting clear milestones, assigning responsibilities, and monitoring progress against those milestones. Regular reviews and feedback sessions can help identify and address implementation challenges.

Example: Toyota Production System (TPS)

The Toyota Production System (TPS) is a prime example of preventive strategic control in action. TPS emphasizes ‘Jidoka’ (automation with a human touch) and ‘Just-in-Time’ (JIT) inventory management. Jidoka prevents defective products from moving down the production line, while JIT minimizes inventory costs and reduces the risk of obsolescence. These techniques proactively address potential problems, ensuring high quality and efficiency.

Control Type	Focus	Timing	Example
Feedforward	Inputs	Before activity	Market research before product launch
Concurrent	Ongoing activities	During activity	Regular project status meetings
Premise	Underlying assumptions	Throughout strategy	Monitoring economic growth for expansion plans