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Kennisclips Strategic Management of Organizations
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Kennisclip Week 2 - Strategic Management of Organizations - 07&09-11-2023Origins of contemporary Business Strategy:
- Comes from roots meaning: “stratos: army” and “agein: to lead”
- Many terms associated today with strategy were developed by the military.
- Work and education in the western world -> planning in strategic operations in detail
and leaded to success.
- Businessworld: modern businesses begin to use strategies.
Development of Strategic Management:
● Long-Range planning: Normandy Landings, it had a lot of impact.
● Strategic Planning: Focus on the business environment.
● Strategic Management: Alfred Chandler was considered as one of the founding fathers of
strategic management. Companies, businesses need to look into the future. This was
very important for their survival and success. A long term coordinated strategy was
necessary to give a company structure and direction.
● Moving from long-range planning -> strategic planning -> strategic management:
○ Long-range planning: a plan far ahead, then:
○ -> Making it in charge of the business environment: Strategic planning and
then:
○ -> Moving into management issues and strategy, interacting with management
and the implementation of specific plans and working with people and
organizations at the same time: Strategic Management.
Strategic Management: intensified in the seventies.
In the eighties, the first journal. The emphasis is not just on planning but also on performance
and profitability.
What is strategy?
- Chandler: The determination of the long-run goals and objectives of an enterprise and
the adoption of courses of action and the allocation of resources necessary for carrying
out these goals.
- Drucker: A firm’s theory about how to gain competitive advantages.
- Emphasis on the perception. How does everyone see their competition?
- Porter: Competitive strategy is about being different. It means deliberately choosing a
different set of activities to deliver a unique mix of value.
- Mintzberg: A pattern in a stream of decisions.
- There is some coherence in the decisions that are made overtime. This will
dictate a particular way of behavior over time.
● Similarities: emphasis on decisions, choice, prioritization and consistency. Making
difficult decisions where you need to have clear priorities.
Strategy: Strategy is the direction and scope of an organization over the long term which
achieves advantage for the organization through its configuration of resources & capabilities
within a changing environment to meet the needs of markets and to fulfill stakeholder
expectations.
- Agreement of the core aspects of strategy, based on Johnson and Scholes definition.
, - Giving direction and the sense of purpose and scope.
- The long term: fundamental decisions that make organizations look into the future.
- Emphasis about the organizational achieving and advantages, advantages in the eyes of
key stakeholders: will they fulfill their expectations? But also: competitive environment,
goes ahead of the competitions which improve the performance and the possibilities to
successfully survive on long term.
- Emphasis on the inside of an organization. Controls and key knowledge within an
organization.
- Organizations need to constantly reflect on the external environment, look forward to
the future and not only focus on what happens today. External environment changes all
the time, as well as the internal environment: technology, employees change, etc.
Ten schools of strategy: ten perspectives: Mintzberg
- There is no clear agreement about what strategy is all about.
● Design: a process of conception -> A design.
● Planning: a formal process -> A plan.
● Positioning: an analytical process -> A position.
● Entrepreneurial: a visional process -> A vision.
● Cognitive: a judgmental process -> A perception.
● Learning: an emergent process -> A pattern.
● Power/Political: a process of negotiation -> An agenda.
● Cultural: a collective process -> A belief.
● Environmental: a reactive process -> A response.
● Configuration: a process of transformation -> A stap.
- These ten can be separated into 3 groups:
- Design, planning and positioning: The prescriptive schools of strategy: They
deal with how strategy should be done. They prescribe the ideal types of
strategy. They don’t reflect necessarily on how strategy is actually done. It is a
normative perspective: ideally, in a very rational way of thinking and analytical
way of thinking: strategies should be formed in one of those three processes.
- Design: First developed in a process of conception. Informal design that
we might have in mind when we design a strategy of an organization. It
was the basis of the other two perspectives.
- Planning: Developed more or less in parallel with the design school and
became much more popular a decade later, in the seventies. Reflects
more on the strategy being a more formal process where the outcome is a
formal, strategic plan that will be the guiding principal for all the
activities, actions and decisions the company has to make in the future.
- Positioning: Dominated the field. Michael Porter in the eighties.
Analytical process. Focuses on the strategic positioning of the
organization in the economic world. A formal, analytical, very detailed
process organizations have to choose one set of choices that they have of
generic strategies that they have to follow.
- The six groups that follow: Consider specific aspects of the process of strategy formation
and have been concerned less with proscribing ideal strategic behavior than with
describing how strategies actually do in reality get made. Schools 4 till 9. The
descriptive schools of strategy:
, - Entrepreneurial: Focuses on the entrepreneur that has a vision and creates a
vision for the company. The strategy carriers forward that vision.
- Cognitive: Focuses on what happens in the mind of key, cognitive processes that
happen in the mind of strategists.
- Both: entrepreneurial and cognitive: focus on the individual and the key
strategists.
- Learning, power/political, cultural and environmental: Don’t truly focus on
individuals, but they focus on the collectives, a group of people that they reflect
in the organization on the strategy on the behavior needed.
- Learning: Sees strategy as an emergent process. It is something that you
don't have a pretty advantage in, but it is fine and you learn while you do
and you reflect on the process, it is a pattern.
- Power/Political: Strategy as a negotiation among a number of diverse
groups with different interests and power bases. The strategy is setting
and controlling the agenda of when the negotiation takes place.
- Cultural: Focuses on the culture of the organization. How the strategy fits
with the culturals and prominent values and the key assumptions. They
see strategies as a collective process. How is the organization being seen
and what is the perspective of the members of the organization and how
do they reflect with the outside world: how do they see success, relations,
fitting and adapting to the environmental needs.
- Environmental: Mainly reactive process organizational theories that they
inform this particular school. Main focus on the external environment.
They look at the pressures and the influence of the external environment
on the organization and the way the organization responds to this.
- The configuration school: Combination of all the other schools. They see the strategy
as a process of transformation. Organizations are going through a long time of stability,
and then, over time, they have to adjust and have to make a transformation to adapt to a
change that happens internally and externally in their environment. Organizations
follow a life cycle: start with entrepreneurial, they mature over time so there is a stable
period and then followed by a leap into a different type of periode and a different state in
the life that occurs with a different kind of strategy and way of behavior.
, Mintzberg 5 definitions of strategy: Different perspectives and practices around strategy.
● 5 definitions of strategy according to Mintzberg: P’s of strategy:
○ Strategy as a plan;
○ Strategy as a pattern;
○ Strategy as a position;
○ Strategy as a perspective;
○ Strategy as a ploy.
● Cumulatively with the ten schools of strategy they cover most of the essence of strategy
in the field of strategic management.
● Key concept of Mintzberg around the essence, the key definition of strategy:
○ It is a plan: It offers direction, it is intended. And it specifies future choices, which
are made in advantage of action. It is conscious, purposeful and it guides the
course of action in the future. It gives us a path to go from here to there.
■ Specify future choices;
■ Made in advance of action;
■ Calculated towards achieving objectives;
■ Conscious and purposeful.
○ It is a pattern: Focuses on the consistency of behavior, whether that was intended
or not. Focus on what actually happened. We didn't have a plan, a preconception,
it is driven by actions. We look back instead of forward.
■ Without preconception;
■ Driven by actions; not design;
■ Consistency in behavior (whether or not intended).
■ Strategy as a plan and strategy as a pattern happen more or less at the
same time in real life. There is a combination of the two.
○ It is a position: Look outside, in the marketplace, to try to find a fit of the
organization in the particular marketplace into a situation with a context to beat
the competition or to avoid the competition. Unique place in the environment in
meeting the needs of a particular customer segment.
■ A match between organization and context;
■ A unique place in the environment: a niche;
■ Beat competition or avoid direct competition.
○ It is a perspective: Focuses on what happens inside the heads of the mature
decision makers in organizations. The philosophy of the key people in the
organization. The way they understand the competition, their world, the
business in which they are operating. It is shared across the organization and it is
always difficult to articulate in a clear way. It is the character of an organization.
■ Collective concept;
■ A world view;
■ Intensely shared;
■ The character of an organization.
■ The position and the perspective needs to be seen in a combination.
Changing position within a perspective may be easy. But a changing
perspective even with trying to maintain a position is not. The
perspective needs to support the position of the organization in the
marketplace. They need to be able to support what is needed in the
marketplace.
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