MSC ORGANIZATION STUDIES
ORGANIZING STRATEGY &
ENTREPRENEURSHIP (OSE)
SUMMARY (2023) | THEORY SESSIONS
Learning Goals
At the end of this course, students are able...
1. To analyse and evaluate challenges organizations face based on technological disruptions and market as well as
nonmarket environments;
2. To reflect upon how the organization can engage in strategic renewal through, e.g., (corporate and/or social)
entrepreneurship;
3. To interpret the role of strategic leadership in renewal;
4. To discuss how participatory policy exercises (serious games) can help organizations to tackle the challenges they
face and to engage in strategic renewal;
5. To investigate a strategic problem in an organization or between organizations and to build a portfolio of relevant
strategy process tools for this problem (including systems analysis, scenario development, strategy and impact
tables, and a serious game).
,INDEX
General | Course description .......................................................................................................................... 3
Theory session 1 | Introduction, Strategy, & Strategic Renewal ...................................................................... 3
Theory session 2 | Technological disruptions ................................................................................................ 12
Theory session 3 | Market and nonmarket environments ............................................................................. 28
Theory session 4 | Strategic leadership ......................................................................................................... 41
Theory session 5 | Corporate Entrepreneurship ............................................................................................ 57
= a theory (or model)
2
,GENERAL | COURSE DESCRIPTION
Central in this course is the idea that our world is evolving in a rapid pace and that we are in dire need of a
‘transformative change’ – a fundamental, system-wide reorganization across technical, political, economic and
social factors, including adaptations in paradigms, goals, and values. This implies a shift from the ‘old’
paradigm, in which profitability and (short-term oriented) financial results were key, toward a ‘new’ worldview,
focused on resilience and the realization of long-term benefits for society at large.
In this course, we focus on the role organizations and their strategies play in this matter. In order to survive,
remain successful and help build a more resilient society, both young and established organizations
continuously adapt and renew their strategies – both proactively (because they want to drive change) and
reactively (because external changes force them). In doing so, they have to overcome internal barriers to
change. These barriers may prevent them from capitalizing on external opportunities originating, for instance,
from technological disruptions or from challenges proceeding from the market and/or nonmarket
environments. In this course, we discuss ways in which different organizations propel and cope with a
transitioning world by renewing their strategy through, e.g., (corporate and social) entrepreneurship, and we
address the role of strategic leadership in initiating and managing this process.
Today’s challenges are so vast and far-reaching that no one single actor can take total ownership. Only by
taking a systems approach, involving all stakeholders, can organizations start to explore possible ways out. In
order to assist organizations and entrepreneurs that aim to engage in strategic renewal, we focus on serious
gaming as an instrument for strategy design, and in particular for the design of the strategic renewal process.
Serious gaming originated in the military world (war games and scenario writing), but it became a popular
technique in many (large and small) organizations to develop strategies. Serious gaming especially focuses on
the participatory production of strategy for extremely complex and dynamic (‘wicked’) problems, in which
multiple stakeholders are involved. In this course, students will learn in theory and in practice how to design a
serious game for strategy development in a transitioning world.
THEORY SESSION 1 | INTRODUCTION, STRATEGY, & STRATEGIC RENEWAL
Ø Key questions
1. How can organizations adapt and renew their strategies, in order to survive, remain successful and
help build a more resilient society?
2. What is strategy?
o Which are the main components of a successful strategy?
3. What is strategic renewal?
o What are the different ways in which organizations can renew their strategies?
4. How can organizations optimally prepare for the future?
o How can they survive and remain successful in a highly dynamic and connected environment?
Ø Introducing theory
We feel the need to transition towards a more resilient society and in this course we will be focusing on the
role organisations can play in this matter through their strategies, so renewing their strategies to cope wits as
well as proactively drive this transition.
“Organizing Strategy and Entrepreneurship”
- Organizing is…
o to arrange and plan (an event or activity)
o to arrange by systematic planning and united effort
- Strategy is…
o Generally, about a plan, something intentional and aimed at the longer term
o More clearly defined, a careful plan or method for achieving a particular goal over a long
period of time
o the skill of making or carrying out plans to achieve a goal
o Hambrick & Fredrickson (2001) indicates that we should see strategy as a diamond
comprising five different elements or component, which all need to be aligned with each
other.
3
, - Entrepreneurship is…
o “entrepreneur”: a person who starts a business and is willing to risk loss in order to make
money
o the organization, management, and assumption of risks of a business or enterprise
So, Organizing Strategy and Entrepreneurship is the process through which (established or young)
organizations engage in strategy development and renew themselves.
- So the process, the organizing part, through which organizations develop strategy (plans for the longer
term to achieve the organization’s goal), and undertake efforts to renew themselves (which is the
entrepreneurship part).
- This relates to the core concept of the course: strategic renewal
Ø Strategy
The Five Major Elements of Strategy
Hambrick & Fredrickson (2001) indicate that we should see strategy as a diamond comprising five different
elements or component, which all need to be aligned with each other: arenas, vehicles, differentiators, staging,
and economic logic.
Each of these are related to different types of questions that need to be answered to get a sound and coherent
strategy for an organisation:
1. Arenas: Where will we be active? (and with how much emphasis?).
• What's going to be the markets, both in terms of product offerings or each and geographical
areas?
o Which product categories?
o Which market segments? A massive market product or are we going for specific niches,
specific segments of the market?
o Which geographic areas? Are we going to be just only in the Netherlands or maybe Europe or
the whole world?
o Which core technologies?
o Which value-creation stages?
2. Vehicles: How will we get there?
• how do we get there if we've determined the arena that we want to be active in? How will we
make sure that we reach that arena? So this has to do with the resources.
o Internal development? Can we get there through internal organic growth?
o Joint ventures? Should we maybe engage in cooperation with other companies or acquire
other companies or engage in a joint venture?
o Licensing/franchising?
o Acquisitions?
3. Differentiators: How will we win?
• How will we make sure that customers choose our product offerings? E.g., are we the lowest cost
provider or do we have the highest quality? Or is there another unique feature that will make
customers choose our product instead of one of our competitors?
o Image?
o Customization?
o Price?
o Styling?
o Product reliability?
4. Staging: What will be our speed and sequence of moves?
• Staging is about when to do what, it is all about the speed and the sequence of our moves. So
what are the things that we need to do first? Are there specific hurdles to deal with first?
• Will this be a complete overhaul in which we just go through the whole market at once? Or will
this be a staged growth in which we take specific small steps before we go through the whole
market.
o Speed of expansion?
o Sequence of initiatives?
5. Economic Logic: How will we obtain our returns?
4
, • The economic logic that makes sure that we also get some money from this. How do we make
sure that we will make money, so that we obtain returns from this? E.g., it could be about
economies of scale or economy, economies of scope.
• It could also be about that our customers are willing to give some premium prices for some things
that we offer.
o Lowest costs through scale advantages?
o Lowest costs through scope and replication advantages?
o Premium prices due to unmatchable service?
o Premium prices due to proprietary product features?
The most important thing about the diamond is that everything fits together, so that all elements or
components of this strategy diamond are coherent with each other, that they match each other.
- E.g., if your arena is the mass market (so, whole markets in the whole world), it needs to be matched
with an economic logic of economies of scale so that you can be sure that this is something you
benefit from in a mass market.
- E.g., if you want to just cater for a specific niche of high-end luxury products, then your economic logic
is mostly related to premium prices. So, then skill economies, if that's what's determining the market
in that moment, is probably not a good idea because that's not just very coherent.
Strategy framework of Hambrick & Fredrickson (2001: 50)
Strategy: The central integrated, externally oriented concept of how we will achieve our objectives.
How does a sound and coherent strategy come about? According to Heinrich and Fredrickson, such a strategy
does not come in isolation, but is developed and influenced using multiple factors.
We have the mission and the objectives leading to a sound and coherent strategy. They form the basis, the
foundation of developing a strategy. There's also strategic analysis, which includes multiple different types of
analysis, internal and external. These types of analysis are used to get to know the organisation's environment:
the system in which the organisation is operating and its internal resources, its resource base.
The mission and objectives on the one hand and the strategic analysis on the other hand, lead to the strategy.
The strategy in turn will lead to different types of arrangements within the organisation such as the structure,
processes, reward systems, nature and policies, etc. So....
1. The strategy comes from…
- Mission
o Fundamental purpose
o Values
5
, - Objectives
o Specific targets
- Strategic analysis
o Industry analysis
o Customer/marketplace trends
o Environmental forecast
o Competitor analysis
o Assessment of internal strengths, weaknesses, resources
2. With the strategy formed, input can be provided in...
- Supporting Organizational Arrangements
o Structure
o Process
o Symbols
o Functional policies and profiles
o Rewards
o People
o Activities
à In this figure it looks like a linear and clean process, but in reality, it includes feedback loops and arrows
between all of the different parts.
The strategic analysis is one of the main drivers of strategy and strategic renewal.
Many tools and models have been developed by strategy scholars, but also by consultancy firms to do some
strategic analysis in the last decades. The key is to do the right analysis to help the organisation to develop a
sound and coherence integrated strategy.
Some tools for strategic analysis
- PEST analysis: a type of external analysis that gives organisations an idea of its macro environments
through the political, economic, social and technological factors that play a role in their
environments.
- Porter's Five Forces: a type of external analysis that gives organisations an idea of its industry. So, of
the main competitive forces that are important for the organisation itself.
- Porter's value chain analysis: an internal type of analysis which distinguishes the different activities in
an organisation and gives an idea of the cost structure and the value added of each of these activities.
- McKinsey's 7S model: an internal type of analysis to get to the shared values, the skills, the style, etc.
of an organisation.
- Stakeholder analysis: a list of all of the other organisations or interest groups which have a stake in
the organisation. With a stakeholder grit, you can rank them in terms of their power over the
organisation and how much of an interest they have in the organisation.
- SWOT-analysis: links the strengths, weaknesses, opportunities and threats that are important for the
organisation. Both an internal and external analysis tool which lists both positive and negative
elements.
6
, - BCG matrix (Boston Consulting Group): a tool for corporate analysis and portfolio management.
Placing all of your products on a matrix based on how they are doing now, so, the market share and
how the market is doing in terms of market growth. You can do this for the whole portfolio of
products of an organisation to get a good idea of this portfolio.
- Ansoff matrix: similar to the BCG matrix in the sense that it lets you think about products and
markets. But it is more related to determining the growth strategy of an organisation for which there
are four possibilities based on whether you intend to develop new products or not and and whether
you intend to venture into new markets or not. These four quadrants require other types of
techniques and tactics.
“The use of strategic tools tends to draw the strategist toward narrow, piecemeal conceptions of strategy that
match the narrow scope of the tools themselves” (p. 49)
“The key is (...) in achieving a robust, reinforced consistency among the elements of the strategy itself.” (p. 50)
Ø Strategic Renewal
Strategic renewal (Agarwal & Helfat, 2009): it includes the process, content, and outcome of refreshment or
replacement of attributes of an organization that have the potential to substantially affect its long-term
prospects.
- Refreshment or replacement of attributes – It's about doing new stuff, and the attributes can be seen
as different elements of strategy, e.g., the different elements in the strategy diamond.
- Substantially affect its long-term prospects – It's not something transitory, not something that will be
different tomorrow or something. It's about substantially critically affecting the future of the
organisation and its long-term prospects. So, it's about the future of the organisation in the longer
term, so not something that will then go away again tomorrow.
↳ Split the concept up: strategic renewal
Agarwal & Helfat define strategic as “that which relates to the long-term prospects (so, the longer-term future)
of the organization and has a critical influence on its success or failure.”
- So, it has a substantial impact and it's very important for the organisation's future.
↳ Split the concept up: strategic renewal
Synonyms include “to refresh” by restoring strength or animation or “to replace” that which is damaged,
decayed, old, or worn out.
- It's clear that it's about something new that should be in place. But it could be partial or full, and it
could be extending beyond the original attributes in size or scope.
Strategic renewal as a concept can refer to both the process of the strategic renewal, the contents about what
exactly is renewed, and/or the outcome (the result of a strategic renewal process). So, strategic renewal can
refer to all three of them.
(In)equality to other concepts
Strategic renewal =/= strategic change
Strategic renewal is not equal to strategic change. Renewal always involves some kind of change, but not every
strategic change also equals a strategic renewal. E.g., a strategic change could also entail that specific parts are
discarded, not done anymore. So, then there's no renewal but there is a strategic change.
Strategic renewal =/= innovation
Strategic renewal is not equal to innovation. Not all innovation is strategic renewal, because innovation could
also be in the very fringes of the organisation. E.g., it's innovating its processes in terms of the administration
or H.R., which is not strategic to reorganisation. It doesn't have a substantial impact on the long-term prospects
of the organisation. So, in that case, there is innovation, but it's not strategic renewal.
- This is a subtle difference, as strategic renewal almost always includes some kind of innovation to
doing something new, something novel.
Agarwal & Helfat (2009) argue that there are two types of strategic renewal
1. Discontinuous transformation
7
, Discontinuous transformation is about fundamental change. It's about large amounts of change in
many dimensions. Usually this is driven by changes in technology or changes in the environments, for
instance, a major change in customer demands. E.g., looking back at the strategy diamond by
Hambrick & Fredrickson (2001), it's about changes in every aspect, changes in everything in this
strategy diamond.
o Fundamental alterations of one or more aspects of an organization’s strategy
o Large amounts of change, and change along multiple dimensions
o Generally driven by major change in technology or customer demand
o Receive the most attention in analyses of strategic renewal
2. Incremental strategic renewal
Incremental strategic renewal is about continuous renewal efforts. It could be about strategic renewal
within or outside the core business of the organisation, but it involves lots of experimentation,
incremental things and changes in the organisation. This type of strategic renewal is more
incrementally of nature and less cost intensive than a discontinuous transformation.
a. Continuous renewal efforts
b. “[I]f undertaken proactively, [incremental renewal] may enable firms to cope with changes in
the external environment as they take shape, and thereby reducing the need for much larger
and more difficult transformation later on.” (p. 283)
c. Incremental alterations/experimentation within or outside of the core business
Both discontinuous transformations and continuous incremental strategic renewal efforts have the potential
for major strategic change.
- E.g., in the IBM India article, you see that both a major discontinuous transformation and a whole
series of incremental renewal efforts can result in or have resulted in major strategic change for IBM.
- E.g., Amazon have had some disruptive and major discontinuous renewal acts, such as the
introduction of the Kindle, which was something completely different than of before. Besides that,
the innovations of Amazon are mostly based on incremental alterations, such as small extensions of
the scope. Different products, different geographical arenas, etc. These incremental efforts were
game changing all together.
à Shouldn't organisations not only focus on this incremental strategic renewal because it's less cost incentive?
No. If there is a major disruption in the environment, that will still force the organisation to also engage in
discontinuous transformation.
Overarching framework of strategic renewal
The framework shows the process content and outcome parts of strategic renewal, which is about how an
organisation gets somewhere more than what they do.
↳ Building blocks of the framework
- Strategic renewal is the first building block of the framework and like every strategic process, strategic
renewal also has two parts: formulation on the one hand and execution or implementation on the
other. Together, both parts form a strategic renewal process.
8
, - There are initiators or antecedents of strategic renewal and then, of course, the outcomes of the
strategic removal process and the strategic renewal steps. As a final addition to the model, there are
also feedback loops added as strategic renewal efforts can in turn affect new strategic renewal
efforts.
- On the left-hand side of the framework, there is focus on two of the most important initiators or
antecedents: technological disruptions and trends occurring in the markets and the non non-market
environment.
- Then we will turn to the process of strategic renewal itself. We focus on how established
organisations can manage and organise strategic ventures or strategic renewal efforts to corporate
entity inertia. Discuss social entrepreneurialism.
- Strategic leadership is discussed, which is about the people who are overseeing this whole process.
Ø Strategic planning
Strategic planning is a formalized process to prepare strategic decisions.
- Strategic planning is all about preparing the organisation for the future. It's about looking ahead and
planning for what is coming.
↳ Strategic planning as argued by scholars and Hambrick & Fredrickson (2001)
- More and more scholars are saying that strategic planning is dead. They argue that in today's ever
changing hyper competitive markets, plans become obsolete (=outdated).
- “There might be those who wonder whether strategy isn’t a concept of yesteryear, whose time has
come and gone.” (Hambrick & Fredrickson, 2001: 58)
That doesn't mean that organisations do not have to develop strategic plans, long live strategic planning! It's
just going to be a bit different than it was in the earlier years. So, to retreat critical characteristics of strategic
planning in the past that need to be adapted or updated in order to make them still viable for today's world.
Long live strategic planning!
• Past: The past is a good predictor of the future. à Now: Experimentation and design for flexibility.
It used to be that the past was a good predictor of for the future. That's not anymore the case,
organisations have to experiment and engage in rapid prototyping. So, to be agile and designed for
flexibility.
• Past: Collect as much information as possible. à Now: (Big) data and pattern recognition.
It used to be about collecting as much information as possible, however, in today's world there's so
much information available that you simply cannot collect as much information as possible. But it is
about data still. It's about big data and about recognising patterns in this and use all of the possibilities
in big data that will help you in this pattern recognition.
o Big data: extremely large data sets that may be analysed to reveal patterns, trends, and
associations.
• Past: Top-down execution. à Now: Involvement of the whole organization.
It used to be about top-down execution, the top of the organisation their managers know best and see
what the rest of the organisation should do. Now, we need involvement of the whole organisation.
Everybody should be included, so all leaders of the end of the organisation should be included in
strategic planning, strategic strategy, development.
o So, top management should still drive strategic planning, but they should be aware that
valuable information can also be found anywhere in the organisation.
• Past: Strategic planning for islands in a static environment. à Now: Strategic planning for connected
systems in a hyper-dynamic world
Strategic planning was in the past about dealing with the organisation as islands in a static
environment. Now, this has changed to strategic planning for connected systems in a hyper dynamic
world. It's about going from islands to connected systems and from a static environment to a hyper
dynamic world.
o This is about dynamism, which requires flexibility, creativity in the planning process and
connectedness between different players, explicit recognition that the whole system in which
the organisation operates matters and that there should be collaboration between various
partners in the whole system of the organisation.
§ Dynamism requires flexibility and creativity
9
, § Connectedness requires an open-systems approach and collaboration
The formalized process of strategic planning to prepare strategic decisions, consists of the components:
• (Intentional) Design
Though there is much more uncertainty and data cannot be relied upon to predict the future directly,
there is still a strong need for a logical and analytical process involving information and analysis of
data internal and external to the organisation. Implementation needs to be planned into the
organisation and the top management plays an essential role. Not in solely doing and steering
everything but ensuring commitment, actively being involved, and driving the strategic planning
process.
o Logical analytical processes
o Planned implementation
o Top management involvement and commitment
• Experience
The past cannot be relied upon solely, but it is still essential. Past experiences can still help to adapt
strategies to make them work in the future. Another way in which experience is important is through
culture and the taken for granted assumptions in the organisation.
o Adaptation of past strategies based on experience
o Culture/taken-for-granted assumptions
• Creativity
Rigour and logical design is important but also the ability to be flexible and to be creative, to increase
the variety and diversity of inputs and ideas. Being creative allows to capitalise upon potential
emergent strategies both within and outside of the organisation and as such to being more agile.
o Variety and diversity of ideas/input
o Emergent strategy from within and around the organization
↳ Now, what organisations need in order to prepare for the future to introducing and implementing strategic
renewal, are strategy process tools or instruments that combine these three elements.
• They need participatory techniques that combine these three elements. Techniques that allow for
rigorous analysis together with flexibility and creativity. E.g., serious games combine all these three
elements.
o Participatory technique, combination of rigorous analysis and flexibility
Ø Serious gaming
What is serious gaming / policy gaming / gaming-simulation?
Geurts et al. (2007) argues that serious games, particularly in terms of policy gaming, are meant to assist
organisations when they are trying to develop strategies of policy exploration, decision making, and strategic
change. “Policy gaming uses gaming-simulation to assist organizations in policy exploration, decision making
and strategic change.” (Geurts et al., 2007, p. 535)
The article of Geurts et al. (2007) gives an overview of eight cases in which serious gaming was used in practice.
The main idea is that based on rigorous analysis, you come to a specific schematic, a systems analysis that you
use to create a game in which various participants of the organisation or of other stakeholders play out
different scenarios about the future. So, this is a very participatory process in which multiple people come
together and play a game.
Why is serious gaming important?
Serious gaming is important because of a combination of two different things: (1) Simulation rigorous analysis
based on a very rigorous and thorough analysis of the system of the organisation, together with (2) flexibility
and creativity which is involved in the gaming part (the playful part). So, while a serious game allows you to
plan and prepare yourself, it still allows you to safeguard enough flexibility to experiment with different
outcomes in a safe environment.
• So, a combination of tools to integrate simulation/rigor (“serious”) with flexibility/creativity
(“gaming”).
The five C's of policy gaming
1. Mastering Complexity
10
