Summary for the course Strategy taught at Radboud University Nijmegen. Based on the book Strategy an international perspective by Bob de Wit, 6th edition. Whole book is summarized including the readings.
Brede samenvatting Strategie en Besluitvorming (2019)
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STRATEGY
An international perspective
Bob de Wit
Table of content
Chapter 1 Introduction.......................................................................................................................................3
Reading 1.1 Complexity: the nature of real world problems..........................................................................5
Reading 1.2 Managing strategic contradictions..............................................................................................6
Reading 1.3 Cultural constraints in management theories.............................................................................9
Chapter 2 Strategizing......................................................................................................................................10
Reading 2.1 Explicating dynamic capabilities................................................................................................13
Reading 2.2 Exploring intuition and its role in managerial decision making.................................................13
Reading 2.3 Psychological foundations of dynamic capabilities...................................................................14
Chapter 3 Missioning and visioning..................................................................................................................15
Reading 3.1 The social responsibility of business to increase its profits.......................................................19
Reading 3.2 Stockholders and stakeholders: a new perspective on corporate governance.........................19
Reading 3.3 Creating shared value...............................................................................................................19
Chapter 4 Business level strategy.....................................................................................................................20
Reading 4.1 Strategy from the outside in.....................................................................................................23
Reading 4.2 Firm resources and sustained competitive advantage..............................................................24
Reading 4.3 Dynamic capabilities and strategic management......................................................................25
Chapter 5 Corporate level strategy...................................................................................................................28
Reading 5.1. Strategy and the business portfolio.........................................................................................31
Reading 5.2 The core competence of the corporation.................................................................................33
Reading 5.3 Seeking synergies......................................................................................................................34
Chapter 6 Network level strategy.....................................................................................................................37
Reading 6.1 Collaborate with your competitors – and win...........................................................................40
Reading 6.2 Creating a strategic center to manage a web of partners.........................................................41
Reading 6.3 Coevolution in business ecosystems.........................................................................................43
Chapter 7 Strategy formation...........................................................................................................................45
Reading 7.1 Managing the strategy process.................................................................................................47
Reading 7.2 Logical incrementalism.............................................................................................................48
Reading 7.3 Strategic planning in a turbulent environment.........................................................................48
Chapter 8 Strategic change...............................................................................................................................50
Reading 8.1 Reengineering work: don’t automate, obliterate......................................................................53
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, Reading 8.2 Building learning organizations.................................................................................................54
Reading 8.3 Ambidextrous organizations: managing evolutionary and revolutionary change.....................55
Chapter 9 Strategic Innovation.........................................................................................................................57
Reading 9.1 Kaizen........................................................................................................................................60
Reading 9.2 The innovator’s dilemma..........................................................................................................60
Reading 9.3. Exploration and exploitation in organizational learning...........................................................61
Chapter 10 The industry context......................................................................................................................62
Reading 10.1 How industries evolve.............................................................................................................65
Reading 10.2 Blue ocean strategy.................................................................................................................66
Reading 10.3 Living on the fault line.............................................................................................................67
Chapter 11 The organizational context.............................................................................................................69
Reading 11.1 Defining leadership and explicating the process.....................................................................71
Reading 11.2 Strategy as order emerging from chaos..................................................................................72
Reading 11.3 Dual leadership.......................................................................................................................73
Chapter 12 The international context...............................................................................................................75
Reading 12.1 The globalization of markets...................................................................................................78
Reading 12.2 The myth of globalization........................................................................................................79
Reading 12.3 Clusters and the new economics of competition....................................................................81
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,Chapter 1 Introduction
There is no widespread definition of strategy. Therefore, it is not given in this chapter. The term cannot be
summarized into broadly agreed upon definitions, rules, matrices and flow charts because of different
opinions and disagreements on key concepts of strategy.
Abraham Maslow hammer and nail analogy: If the only tool you have is a hammer, you treat everything like a
nail. Do not only view strategic issues (nails) with only one theory (hammer).
2 approaches to look at issues:
- Tools driven
Problem driven; understanding problems comes first, while searching for the appropriate tools is based on
the types of problems. This approach is adopted by the book. Each chapter discusses a large strategy issue
led by paradoxes (page 13 figure 1.6). In the book, strategy tensions are presented as strategy paradoxes.
Overview of the book
Section I
Strategists: rational actors who identify, determine, evaluate, translate and carry out, based on rigorous
logic and extensive knowledge of all important factors (=cognitive process).
However, writers argue that the true nature of strategic thinking is more intuitive and creative (imagination
and judgement) than rational (analysis and logic).
Making strategy is a means for reaching particular objectives, and thus not an end in itself.
Organizations exist to fulfil a purpose and strategies are employed to ensure that the organizational mission
and vision are realized. The purpose of existence for organizations is not universal even though this purpose
might seen self-evident. E.g. make money (serve shareholders) versus fulfil interests of stakeholders (serve
stakeholders).
Three distinguishable dimensions of strategy that can be recognized in strategic problem situations:
- Strategy content (part II): the combined decisions and choices that lead a company into the future.
Concerned with the what of strategy.
- Strategy process (part III): the manner in which strategies come about. Concerned with the how,
who, when of strategy.
- Strategy context (part IV): the set of circumstances under which both the strategy content and the
strategy process are determined. Concerned with the where of strategy.
Page 5 figure 1.1
The three dimensions interact. In order for a strategist to have a real depth of comprehension,
understanding of all three dimensions is needed. It is possible to focus on one dimensions whilst keeping the
other two in mind (e.g. to have a focused discussion).
Most strategy research is atomistic (>< holistic); focusing on just a few variables at once. E.g. focus on one
dimension of strategy.
Section II
Each strategy is essentially unique.
Most common levels of aggregation distinguished in the strategic management literature: functional,
business and corporate.
Page 7 figure 1.2
- Functional: refer to questions regarding specific functional aspects of a company (e.g. marketing,
finance, operations).
3
, - Business: requires integration of functional level strategies for a distinct set of products and/or
services intended for a specific group of customers. Most often until this level.
Should organization be market-driven (outside-in)or resource-driven (inside-out)?
- Corporate: aligns the various business level strategies. Only when there are many companies within
two or more businesses.
Should organizations run as federations of autonomous business units or as highly
integrated organizations?
Add a higher level of aggregation to multi-company groups, called network level. It consists only of a few
parties (e.g. strategic alliances, joint ventures, value-adding partnerships).
Should organizations develop long-term collaborative relationships with other firms or
remain essentially independent?
In real life, the three levels of strategy do not exist as tidy categories; they are interrelated and overlapping.
Section III
The strategy process is usually portrayed as a linear process. Usually, a split is made between the analysis
stage, strategy formulation stage, and strategy implementation phases. But this distinction has received
much criticism as the process is messier, and not simple. In their view, strategies are usually formed
incrementally letting strategies emerge as they think and act in small iterative steps. Also, strategies should
not be seen as made for the entire organization and that it can be changes radically all at once.
The alternative to the strategy process consists of strategy formation, strategic change, and strategic
innovation (page 9 figure 1.3). These are NOT phases/elements/steps/etc. but rather are different aspects of
the strategy process that are strongly linked and partially overlapping.
Section IV
Every strategy context is unique. There should be fit between the strategy content and process, and the
specific circumstances in the strategy context. But, the context is dynamic and cannot be influenced by
strategists, and thus, you should not be driven by context (debate).
The strategy context can be determined, instead of letting it determine!
page 10 figure 1.4 ; aspects of strategy context
There is no universal agreement on how to solve strategic problems. If there would be right or wrong
approaches, the wrong ones will disappear automatically and thus finishing the debate. However, this
doesn’t seem to be the case in the field of strategy. Also, it is difficult if not impossible to identify so called
wrong theories.
It is wise for a problem solver to look at the problem from different angles, each suggesting a different
perspective on how to solve it, to combine the various theories.
Many of the major disagreements within the field of strategic management are rooted in the different
assumptions made about coping with the strategic tensions that strategists are challenged by.
Two kinds of problems: page 15 figure 1.7
- Either/or problems: can be solved
Puzzles: a challenging problem with an optimal solution, just like a puzzle.
Dilemmas: a vexing problem with two possible solutions, neither of which is logically the
best, just like the prisoner’s dilemma. Leading to the ‘horns of a dilemma’ of neither choice
being comfortable.
- Both/and problems: can only be ‘managed’
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