Equilibrium analysis - Strategic Management

One problem I have found in practice is stimulating managers to take a balanced view of strengths and weaknesses. Often all that results from a self-appraisal is a shopping list which is often painfully inadequate. To help managers be more objective I often use what I call the equilibrium approach in group discussions. This is illustrated in Figure and is probably the simplest technique ever designed. It consists of a scale and a line. The line represents the current state of something – anything – that is to be considered.

Examples are current market share, state of labour turnover, present profitability. Above the line the group are asked to identify the factors which keep it as low as it is. Below the line they are asked to say what keeps it as high as it is. In practice it helps to switch to and from with remarks like ‘You’ve identified so much that holds it down that I’m surprised you have any business at all! Why is it that you are doing as well as you are?’Arrows can be drawn from each key item identified, using the scale to provide a judgemental view of the importance of the factor. Longer lines are more important than short ones. The final stage is to identify what issues (a) can and (b) should be addressed, to remove negative factors or strengthen positive ones. This simple approach is very effective in achieving balance and consensus. It is perfectly feasible to use this approach as well as one of the other methods.

Equilibrium-Analysis

One of the most difficult things to encourage is a continual inward-looking approach. It is very easy to regard a corporate appraisal as a once-and-for-all exercise, which, of course, it should never be. While the process of studying environmental opportunities, which are readily perceived to be always changing, is a planning tool which becomes sharpened with use, the internal self-criticism of the company’s affairs, which do not always appear to be altering, can easily become a very blunt probe.


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