The concept of “strategic management” exists in constant evolution in both academia and practice. Kim Chan, the co-director of the INSEAD Blue Ocean Strategy Institute, once noted that “Today we can hardly speak of strategy without referencing competition or using a war analogy. Because land is limited, the only way to advance one’s territory or market share is at the expense of another – a zero-sum game.” (W Chan Kim & Mauborgne, 2007)

Strategic management originally served to create plans to out-produce rivals, but in the knowledge-centric business of today, this approach has necessarily adapted. Strategic management in the 21st century focuses on tailoring an organization’s goals, management, and culture to be competitively superior.

History of Strategic Management

In the world of academia, strategic management is a fairly young discipline, beginning in the 1960s. The Classical school of strategic management was essentially synonymous with business policy and involved aligning a business’ purpose with an identified market need. Strategy, according to the Classical school of strategic management, is designed and developed by matching “key success factors” and “distinctive capabilities.” In the era before the internet, this strategy was effective. Market areas were clearly delineated, and so focusing on doing one thing very well was an effective and prudent strategy.

Development of Strategic Management

Moving into the 21st century, strategic management has necessarily changed. Following the dot-com bubble and the massive explosion of information, the very nature of business changed, and logically following, so did the way one strategically manages a business. In the 21st century, strategic management theorists emphasized creating new paradigms and market spaces by “reconstructing market boundaries.”

Current State of Strategic Management

Contemporary strategic management, the most modern school, is firmly rooted in psychology, biology, and anthropology. Emphasis is placed on learning to formulate strategy through experiences and lessons learned. Knowledge, in all its modern abundance, is also exploited and utilized to develop an effective strategy.

Blue Ocean Strategy

Blue Ocean Strategy is a prominent theory in the modern school of strategic management. In this theory, there are two types of oceans- red oceans, which are the identified industries and areas of work; and blue oceans, which are the business spaces that have yet to be identified. This analogy serves to help the strategist identify un-competed market space where a business could set the paradigm. Innovation, entrepreneurship, and boundary re-definition are essential to blue ocean strategy, and are utilized intensively to extend beyond the boundaries of conventional thinking.

Putting Ideas into Practice

While determining the appropriate strategic management approach for an individual organization to implement may be time consuming, it is also a valuable exercise that will lead to better outcomes and stronger organizational and financial health.

Quote from W Chan Kim, & Mauborgne, R. (2007). Blue Ocean Strategy. Leadership Excellence, 20.