Strategic Priorities Fifteen survival strategies for the new millennium.

Your company is "really in trouble" if right now you're not thinking strategically about connecting to customers through e-commerce, warns C. Davis Fogg. A management consultant, Fogg is a former executive at Bausch & Lomb Inc., Johnston & Murphy Inc., and Corning Inc., and author of Implementing Your Strategic Plan (1999, AMACOM). Equally in danger, just 15 weeks before the new millennium dawns, are the hundreds of companies, large and small, that in the rough-and-tumble of intensifying global competition have lost track of their strategic commitments to quality, innovation, and resource development. Such strategic priorities as General Electric Co.'s "Growth through globalization," Solectron Corp.'s "Delighting the customer every day," SmithKline Beecham PLC's "Striving to make peo-ples' lives better," Air Products & Chemicals Inc.'s "To be the first choice of our employees and customers," and Omron Corp.'s "To contribute to society by offering innovative products and services" are no less critical now than they were 5, 10, 20, 25, or even 50 years ago. They "drive a corporation into what it really becomes," Fogg stresses. Generally well-phrased, some even noble-sounding, strategic priorities set destinations and bring a sense of urgency to the ultimate strategic priority: success. Explains C. Richard Panico, president of Integrated Project Management Co. Inc. (IPM), Chicago, and a former Johnson & Johnson executive, "A strategic priority is the halfway step between the vision and the tactic." And as such it's important far beyond its use as an arresting headline in a company annual report. Significantly, many of the strategic priorities companies are embracing at the cusp of the new millennium concentrate on their relations with customers and employees. And in doing so they reflect what strategic management thinker Adrian Slywotzky dubs "a couple of double shifts" in business direction during the last 20 years -- the first from products to customers and the second from assets to employees. Alarmingly, however, the management of most companies has not kept pace with these shifts, asserts Slywotzky, a vice president of Mercer Management Consulting, Lexington, Mass. "We have lousy systems for managing talent and customers," he claims. "And we have the lousiest systems for managing the interaction between our best talent and our most profitable customers." As a result, this consultant contends, the big strategic challenge of the next five to 10 years -- for senior managers generally, not only those in information technology and production -- will be moving from a conventional business design to a digital design that embraces the customer. Fogg sounds a similar theme. With virtually every product a commodity -- something easily copied or substituted for -- the new millennium's winning companies will be those that produce at lowest cost with, thanks to information systems, the highest degree of product differentiation, he believes. In reality, employing information systems effectively won't be the only major strategic challenge of the new millennium.

Consider, for example, that in the U.S. alone an estimated 80 million youngsters, the sons and daughters of the Baby Boomers, will enter the workforce during the next several years. And unlike their parents, stresses Donald Tapscott, chairman of the Alliance for Converging Technologies, Toronto, and president of New Paradigm Learning Corp., these digital-culture kids value independence, innovation, knowledge sharing, and collaboration.

Contemplate the prospect that in the new millennium companies will have to capture growth opportunities in a world subject to economic and political terrorism.

Reflect on the reality that not even the largest companies in the world in the decade ahead will have within their individual organizations all the human, technical, and financial capital they need to attain and maintain competitiveness.

Think about the virtual certainty that manufacturing, redefined during the last decade, will be further altered-maybe radically so-during the next decade as the so-called developed nations of the world account for smaller share of global GDP and the developing countries represent an ever-larger portion. Only nine months ago, executives around the world were wondering when Japan would rebound as an economic power, when oil prices would rise again, and when inflation would again come alive in the U.S. economy. Now, as the world is about to enter 1999's and this millennium's final calendar quarter, Japan is showing tentative signs of economic recovery, crude oil prices are about 77% higher, and inflation has yet to do a negative number on the U.S. economy, now in its 102nd month of expansion. However, focusing finely on the hows and whens of specific changes is less important than "growing a culture that is both challenged by the unexpected and confident in, as well as capable of, dealing with whatever comes along," believes John F. Welch Jr., chairman and CEO of Fairfield, Conn.-based General Electric Co. Indeed, the companies that promise to be the best performers in the new millennium will combine clear vision with clear direction-their strategic priorities -- and the tactics by which they expect to achieve success. "As critically important as it is to have the strategic priorities, it is just as important to identify the tactics," stresses IPM's Panico. "Some companies do a very good job of establishing strategic priorities and then are handcuffed by their inability to translate those into a workable plan that is understood by the organization and that can be manipulated to produce the results that they are looking for." Fogg, for example, counsels his corporate clients to set two or three strategic priorities, to stay with them even in the face of resistance, and to "spend your time on the implementation tools." The companies that you'll read about in this report definitely are not constrained by an inability to translate strategic priorities into the tactics that promise to work for them in the year 2000 and beyond. They possess workable plans that are easily understood. And although the definitive verdict on the success of their efforts remains in the future, these companies clearly are poised to lead the way into the new millennium with a variety of best practices and better ideas. *** Setting strategic priorities -- and putting tactics to work to achieve them -- assumes that a lot about business is predictable. But consider what the sudden arrival of a new CEO would do to your company and your job. Or the impact an unexpected merger would have. A whole lot of assumptions and carefully prepared plans suddenly would be called into serious question. The frenetic pace of such upsetting changes -- which also include bursts of new information and new technologies, and economic and social and political upheavals -- requires a new kind of strategic thinking, assert complexity theorists Howard Sherman and Ron Schultz, authors of Open Boundaries (1998, Perseus Books). They're not trashing planning or prioritization altogether. "You simply have to allow new ways of thinking to occur," stresses Sherman, managing director of the Sante Fe Center for Emergent Strategies. At the heart of their thinking are beliefs that winning strategies will emerge from unanticipated events and that teams organized around emerging ideas will stimulate innovation. They urge executives to get more comfortable with ambiguity and unpredictability -- and to listen to others in ways they've not done before. Distributed knowledge and distributed leadership become much more than buzzwords -- they are critical to business success, states Schultz, a senior consultant at the Senn-Delaney Leadership Consulting Group Inc., Long Beach, Calif. "What we're really looking at here is how people relate to one another." Among the companies putting new strategic thinking to work is PE Applied Biosystems, Foster City, Calif. "They have 200 research scientists working there on new products. And when a new product emerges, they will flock their resources to get [it] out more quickly," notes Schultz. Other companies he and Sherman cite approvingly include Xerox Corp.'s Palo Alto Research Center (PARC) in California; Patagonia Inc., Ventura, Calif.; and Hewlett-Packard Co., Palo Alto.