In many corporations, especially service and manufacturing companies, strategic planning occurs at the highest level of management (executive level and the board of directors--where should we focus our efforts and how do we succeed?); middle level management carries out the company's strategies with tactical planning (that is, implementing the strategies given the company's strengths and weaknesses, as well as the business environment--are the strategic goals reachable given the company's limitations and abilities?); and operational managers, who manage the people who actually carry out the company's activities, focus on the company's ability to meet strategic and tactical goals on a day-to-day basis--can we do this with our current personnel and systems?. In the real world, however, there is a constant cross-over of management understanding because, in a well-managed company, all levels of management must understand the company's strategic goals, its tactics to implement those goals, and the operational capabilities to meet those goals. The three levels of management, then, are linked by their common understanding of strategy, tactical concerns, and operational capabilities.
Executive-level management, along with the company's board of directors, concern themselves with fundamental issues like the following: what the company does most successfully; whether the company needs to change in order to meet the demands of the current business environment; what infrastructure (personnel, IT, facilities) changes might need to me made in order to ensure the success of the company's strategic goals. In other words, the executive level management tries to understand what can kill the company, and what can make the company succeed over the next 5-10 years. It then creates strategic goals to ensure the success of the company.
Middle-level managers, who usually are responsible for several large functional groups (facilities and IT, for example), focus on the company's ability to meet the strategic goals with it current capabilities. This group must be able to translate strategy into achievement, so the question middle-managers usually ask--sometimes on a daily basis--is, "Do we have the capability to carry out the strategy with our current personnel, systems, and facilities?" Because the answer is almost always, "We need to make some changes," these managers take actions (tactics) to enhance or change the company to meet the new goals.
Even the lower-level managers, those who actually manage the people who carry out day-to-day functions, are usually completely aware of both the strategic goals and the overall strategies they must implement to meet the goals. They become rapidly focused on whether people, systems, and facilities can achieve the new strategy, and, always with the consent of middle-level management, operational managers begin to make necessary changes, which might include hiring and firing personnel, enhancing IT capabilities, and increasing or decreasing facility space (which might even include relocating the company).
As I noted above, in a well-run company, all levels of management understand each other's goals, as well as problems in reaching those goals, and communicate freely through the chain of command. Success depends upon the integration of management, from executive to operations, and failure is almost always the result of mis-communication or misunderstanding among management levels. With respect to risk, the greatest risk of failure is usually at the strategic and tactical levels, rarely the result of operational issues.