The Interplay of Strategic Management and Information Technology

Strategic Management

Strategic management is concerned with managerial decisions and actions that determine the long-term prosperity of the organization. An organization must have a clear strategy and its strategy must be carefully developed and implemented to match its resources and environment in the pursuit of its organizational goals. Two meanings behind the often-used term “strategy,” as Lowell Steele (1989) pointed out, are the ideational content of strategy and the process of formulating strategy. The former refers to the array of options that one uses to compete and survive, and the latter refers to the planning that leads to the construction of the strategic plan. Thus, IT-enabled strategic management must address the role IT plays in strategy content options and priorities, strategy formulation processes and strategy implementation processes. Strategic management focuses on identifying the direction of an organization, and designing and instituting major changes needed to gear the organization towards moving in the established direction.

Early research in strategic management started in the 1950s, with leading researchers such as Peter Drucker, Alfred Chandler and Philip Selznick. Drucker (1954) pioneered the theory of management by objectives (MBO). He is also one of the first to recognize the dramatic changes IT brought to management. He predicted in the 1960s the rise of knowledge workers in the information age (Drucker, 1968). Alfred Chandler (1962) recognized the importance of a corporate-level strategy that gives a business its structure and direction; as he put it, “structure follows strategy.” Philip Selznick (1957) established the ground work of matching a company’s internal attributes with external factors.