O&E literature summary
Chapter 1
Different perspectives about strategy formulation:
- Prescriptive: more concerned with how strategies should be formulated
o Design school
o Planning school
o Positioning school
- Descriptive: more concerned with how strategies do get made
o Entrepreneurial school
o Cognitive school
o Learning school
o Power school
o Cultural school
o Environmental school
- Configuration: combines all other schools:
o Configuration school
General definition strategy: top management’s plans to attain outcomes consistent with the
organization’s missions and goals
Mintzberg 5 Ps for strategy:
- Plan: strategy as a path to get from here to there
- Pattern: strategy as a consistent behavior over time
- Position: strategy as the locating of particular products in particular markets
- Perspective: strategy as an organization’s fundamental way of doing things
- Ploy: strategy as a specific maneuver intended to outwit an opponent or competitor
Types of strategy:
- Intended strategy: plans developed
- Realized strategy: evolved patterns
- Deliberate strategy: intentions that are fully realized
- Unrealized strategy: intentions that are not realized at all
- Emergent strategy: pattern is realized that was not expressly intended
- Umbrella strategy: broad outlines are deliberate, while the details are allowed to emerge
Basic approaches to strategy formation:
- Strategic planning: planning, design and positioning schools
- Strategic visioning: entrepreneurial, design, cultural and cognitive schools
- Strategic venturing: learning, power and cognitive schools
- Strategic learning: learning and entrepreneurial schools
Advantages of strategy and their drawbacks:
- Strategy sets direction:
Disadvantage: can also serve as a set of blinders to hide potential dangers
- Strategy focuses effort
Disadvantage: groupthink arises
- Strategy defines the organization
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, Disadvantage: define organization too simply, sometimes stereotyping
- Strategy provides consistency
Disadvantage: creativity thrives on inconsistency
Chapter 2
Design school: proposes a model of strategy making that seeks to attain a fit between internal
capabilities and external possibilities.
Origins of the design school can be traced back to two books:
- Selznick’s Leadership in Administration: introduced the notion of distinctive competence and
discussed the need to bring together the organization’s internal state with its external
expectations
- Chandler’s Strategy and Structure: established the school’s notion of business strategy and its
relationship to structure
After these books, the real impetus for the design school came from the General Management group at
the Harvard Business School
The design school model places primary emphasis on the appraisals of the external (threats and
opportunities) and internal (strengths and weaknesses) situations. There are two other factors
important in strategy making for the design school: managerial values and social responsibilities.
Tests to see which alternative strategy fits with the organization:
- Consistency
- Consonance
- Advantage
- Feasibility
Most textbooks use the SWOT model as test for the design school.
Basic premises underlying the design school:
- Strategy formation should be a deliberate process of conscious thought
- Responsibility for that control and consciousness must rest with the chief executive officer:
that person is the strategist
- The model of strategy formation must be kept simple and informal
- Strategies should be one of a kind: the best ones result form a process of individualized design
- The design process is complete when strategy appears fully formulated, as perspective
- These strategies should be explicit, so they have to be simple
- Only after these unique, full-blown, explicit, and simple strategies are fully formulated can
they then be implemented
Critique of the design school:
- The school sees strategy formation mostly as a process of conception, rather than a process of
learning
- The school sways that structure should follow strategy, but this is not always the case
- The explicit making of strategy promotes inflexibility
- The separation of formulation and implementation is not always good
- The external environment is not always predictable
In conclusion: the design school has a lot of (too) ambitious assumptions
Four conditions that should encourage an organization to tilt toward the design school model:
- On brain can, in principle, handle all of the information relevant for strategy formation
- That brain is able to have full, detailed, intimate knowledge of the situation in question
- The relevant knowledge must be established before a new intended strategy has to be
implemented – in other words, the situation has to remain relatively stable or at least
predictable
- The organization in question must be prepared to cope with a centrally articulated strategy
Chapter 3
The planning school: most influential book is Corporate strategy by Igor Ansoff.
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, Basic idea of strategic planning models: take the SWOT model, divide it into neatly delineated steps,
articulate each of these with lots of checklists and techniques, and giving special attention to the
setting of objectives on the front end and the elaboration of budgets and operating plans on the back
end
Main steps of the basic strategic planning model:
1. Objectives-setting stage: develop extensive procedures for explicating and quantifying the
objectives of the organization
2. External audit stage: asses the external conditions of the organization: make a set of forecasts
about the future conditions
3. Internal audit stage
4. Strategy evaluation stage
5. Strategy operationalization stage: decomposition: strategies are broken down into
substrategies for successful implementation. And then the whole is brought together into a
system of operating plans (the ‘master plan’)
Comprehensive model of strategic planning: four hierarchies:
- Objectives
- Budgets
- Strategies
- Programmes
Objectives and budgets are performance control, strategies and programmes are action planning
Premises of the planning school:
- Strategies result from a controlled, conscious process of formal planning, decomposed into
distinct steps, each delineated by checklists and supported by techniques
- Responsibilities for the overall process rests with the chief executive in principle;
responsibility of its execution rests with staff planners in practice
- Strategies appear from this process full blown, to be made explicit so that they can then be
implemented through detailed attention to objectives, budgets, progammes, and operating
plans of various kinds
Recent developments in the planning school:
- Scenario planning: planners need enough scenarios to cover the important possible
contingencies, yet few enough to be manageable. When the world changes, managers need to
share some common view of the new world. Scenarios express and communicate this common
view
- Real options: the managerial equivalent of options theory in finance
- Strategic control: a means to review and accept proposed strategies. Goold and Campbell see
strategic control as one of three strategy-making styles available to the headquarters of a
multibusiness, diversified company:
o Strategic planning
o Financial control
o Strategic control
Simon: four levers of control:
o Belief system
o Boundary system
o Diagnostic control system
o Interactive control system
Seven deadly sins of strategic planning:
- The staff took over the process
- The process dominated the staff
- Planning systems were virtually designed to produce no results
- Planning focused on the more exciting game of mergers, acquisitions, and divestitures at the
expense of core business development
- Planning processes failed to develop true strategic choices
- Planning neglected the organizational and cultural requirements of strategy
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