Strategic analysis: approaching continuous improvement proactively

Review of Business, Fall, 2008 by Lisa B. Ncube, Mara H. Wasburn

Abstract

This paper examines the experience of introducing a continuous improvement tool to the management of an advance technology software engineering company. The model, Strategic Analysis, applies Appreciative Inquiry, an intervention that builds on organizational success, to the needs assessment process. The case highlights the potential of Strategic Analysis to encourage innovation.

Introduction

Surviving in today's global business environment requires that organizations have the capability to respond efficiently and effectively to continuing and emerging economic and political challenges, even those that might be extremely difficult to anticipate. They must be flexible enough to make strategic changes in response to those challenges, with no discernible lapse in productivity (15, 28). Beyond survival, success in competition demands continuous improvement of both business performance and quality of product (8).

The continuous process improvement of an organization requires its leadership to understand its history of competitive successes and failures (31). There appears to be universal agreement that a thorough needs assessment should be an integral part of all continuous improvement plans and budgets, yet the literature also acknowledges that it often is not done in organizations (15). Strategic Analysis, described below, provides the vision and direction that can promote organizational success (4). This is accomplished in two ways: by continually focusing the strategic plan and establishing the context for continuous process improvement and (8) by developing the organization's enterprise portfolio, specifying the businesses that should be included and the level of performance required, the partnerships that are likely to be most profitable and the strategies by which organizations are most likely to achieve well-defined goals and objectives (10), (16), (17).

Needs Assessment

Needs assessment is a process of identifying deficiencies between current and desired results (30). The process systematically attempts to identify gaps between needs and capabilities. The identified needs are prioritized based on such criteria as the cost of eliminating the need against the cost for ignoring it, and selecting the most important needs (problems or opportunities) for reduction or elimination (18). A needs assessment "evaluates whether there is a 'case for action' or a 'business case' for modifying, enhancing, or replacing the current system" (19, p. 13). Exhibit 1 below outlines the steps in a needs assessment.

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There are a number of reasons to undertake a needs assessment. The assessment can identify and clarify the challenges facing an organization, and the policy options available to the organization's leadership to confront these challenges. When a performance problem has emerged, the first step is to determine its exact nature. Next, data suggesting ideal performance standards are collected. From those data, the current performance can be compared to the ideal performance standards, revealing the gaps between the two. Once the causes of these gaps have been determined, appropriate strategies for closing those gaps can be identified and prioritized (19).

Appreciative Inquiry

By contrast, Appreciative Inquiry is more of a sufficiency model, focusing on what the organization is doing satisfactorily. Appreciative Inquiry uses positive dialogue as a means of uncovering stories of organizational successes (5). The process then builds upon those stories to promote future success. The model was developed in response to action research, which concentrates on finding organizational problems in need of solutions, and then proposing the development of an action plan to correct the problems that are identified (12).

Appreciative Inquiry posits that people construct reality through their social interactions, as opposed to the positivist paradigm that states social knowledge is the result of objective observation (6). The model is based on the premise that there is something already present in every organization that can be leveraged to help achieve its goals (14).

Critics of Appreciative Inquiry point out that the process is too focused on the positive, often at the expense of the organization's shortcomings (9), (11), (23) Perhaps most telling of all, Rogers and Fraser (26) argue that Appreciative Inquiry is ill suited to identifying underlying organizational problems, which can be ignored by focusing solely on building organizational strengths. Exhibit 2 shows the Appreciative Inquiry process.

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The Strategic Analysis Model

Today's highly competitive international business environment requires that organizational strategies must be deliberate and proactive (1). Anderson argues that such strategies " must be perceived as a proactive process which anticipates trends and future changes and which prepares people to meet them" (1, p.23) Needs can be identified reactively by responding to a problem, or proactively by identifying current and future needs before they develop into problems (25). Therefore, while needs assessment is a critical process to determine the cause of a problem before making a decision, it is by definition a reactive process.