Contents
Chapter 1: "AND OVER HERE, LADIES AND GENTLEMEN: THE STRATEGIC MANAGEMENT BEAST".......2
Chapter 2: The Design School.................................................................................................................6
Chapter 3: The planning school: strategy formation as a formal process.............................................10
Chapter 4: The positioning school: strategy formation as an analytical process..................................14
Chapter 5: The entrepreneurial school: strategy formation as a visionary process..............................23
Chapter 6: The cognitive school: strategy formation as a mental process...........................................27
Chapter 7: The learning school: strategy formation as an emergent process......................................33
Chapter 8: The power school: strategy formation as a process of negotiation....................................42
Chapter 9: The cultural school: strategy formation as a collective process..........................................49
Chapter 10: The environmental school: strategy formation as a reactive process...............................55
Chapter 11: The configuration school: strategy formation as a process of transformation.................59
Chapter 12: 'Hang on, ladies and gentlemen, you have yet to meet the whole beast'.........................66
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,Chapter 1: "AND OVER HERE, LADIES AND GENTLEMEN:
THE STRATEGIC MANAGEMENT BEAST"
Strategy formation is like the blind men touching an elephant an all think it represents something
different. Strategy is more than the sum of its parts. Yet to comprehend the whole we also need to
understand the parts.
In this book ten schools of thought on strategy formation are discussed. Each has a unique
perspective that focuses on one major aspect of the strategy-formation process. Each of these
perspectives is, in one sense, narrow and overstated. Yet in another sense, each is also interesting
and insightful.
1. The Design School: strategy formation as a process of conception (1960s)
2. The Planning School: strategy formation as a formal process (1960/70s)
3. The Positioning School: strategy formation as an analytical process (1980s)
4. The Entrepreneurial School: strategy formation as a visionary process
5. The Cognitive School: strategy formation as a mental process
6. The Learning School: strategy formation as an emergent process
7. The Power School: strategy formation as a process of negotiation
8. The Cultural School: strategy formation as a collective process
9. The Environmental School: strategy formation as a reactive process
10. The Configuration School: strategy formation as a process of transformation
Our ten schools fall into three groupings. The first three schools are prescriptive—more concerned
with how strategies should be formulated than with how they necessarily do form. The other schools
consider specific aspects of the process of strategy formation, and are more concerned with
describing how strategies do get made.
These schools have appeared at different stages in the development of strategic management. A few
have already peaked and declined, others are now developing, and some remain as thin but
nonetheless significant publication and practice.
A Field Review
The literature of strategic management is vast and it grows larger every day. All kinds of other fields
make important contributions to our understanding of the strategy process.
At the limit, strategy formation is not just about values and vision, competences and capabilities, but
also about the military and the Moonies, crisis and commitment, organizational learning and
punctuated equilibrium, industrial organization and social revolution.
This is a field review, not a literature review. We seek to cover the literature and the practice—to set
out its different angles, orientations, tendencies. In so doing, we cite published work either because
it has been key to a school or else because it well illustrates a body of work.
Five Ps for Strategy
1. Plan
2. Pattern
3. Position
4. Perspective
5. Ploy
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,Most of the standard textbooks on strategy offer the definition more or less as follows: "top
management's plans to attain outcomes consistent with the organization's missions and goals"
We offer no such easy definition here. Instead, we argue that strategy requires a number of
definitions, five in particular (Mintzberg, 1987).
It turns out that strategy is one of those words that we inevitably define in one way yet often also
use in another. Strategy is a pattern, that is, consistency in behavior over time.
Both definitions appear to be valid: organizations develop plans for their future and they also evolve
patterns out of their past. We can call one intended strategy and the other realized strategy. The
important question thus becomes: must realized strategies always have been intended?
There is a simple way to find out. Just ask people who happily describe their (realized) strategies over
the past five years what their intended strategies were five years earlier. The vast majority of people
give an answer that falls between these two extremes. They did not stray completely from their
intentions, but neither did they achieve them perfectly.
Intentions that are fully realized can be called deliberate strategies. Those that are not realized at all
can be called unrealized strategies. The emergent strategy is when a pattern realized was not
expressly intended. Actions were taken which converged over time to some sort of consistency or
pattern.
Few, if any, strategies are purely deliberate, just as few are purely emergent.
One means no learning, the other means no control. All real-world strategies
need to mix these in some way. Strategies have to form as well as be
formulated. An umbrella strategy, for example, means that the broad
outlines are deliberate, while the details are allowed to emerge.
Emergent strategies are not necessarily bad and deliberate strategies good;
effective strategists mix these in ways that reflect the conditions at hand,
notably the ability to predict as well as the need to react to unexpected events.
To some people, strategy is a position, namely the locating of particular products in particular
markets. As perspective strategy looks in—inside the organization, inside the heads of the
strategists, but it also looks up—to the grand vision of the enterprise. We need both definitions.
Changing position within perspective may be easy; changing perspective, even while trying to
maintain position, is not.
Strategy is a ploy, that is, a specific "maneuver" intended to outwit an opponent or competition. The
real strategy (as plan, that is, the real intention) is the threat as such is a ploy.
Five definitions and ten schools. As we shall see, the relationships between them are varied, although
some of the schools have their preference. There may not be one simple definition of strategy, but
there are by now some general areas of agreement about the nature of strategy.
Strategies for Better and for Worse
1. Strategy sets direction
- Advantage: The main role of strategy is to chart the course of an organization in order for
it to sail cohesively through its environment
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, - Disadvantage: Strategic direction can also serve as a set of blinders to hide potential
danger. While direction is important, sometimes it is better to move slowly so that
behavior can be shifted at a moment's notice.
2. Strategy focuses effort
- Advantage: Strategy promotes coordination of activity. Otherwise chaos
- Disadvantage: "Groupthink" arises when effort is too carefully focused. There may be no
peripheral vision, to open other possibilities.
3. Strategy defines the organization
- Advantage: Strategy provides people with a shorthand way to understand their
organization and to distinguish it from others.
- Disadvantage: To define an organization too sharply may also mean define it too simply,
sometimes to the point of stereotyping, so that the rich complexity of the system is lost.
4. Strategy provides consistency
- Advantage: Strategy is needed to reduce ambiguity and provide order.
- Disadvantage: Every strategy is a simplification that distorts reality. Strategies are not
reality themselves, only representations of reality in the minds of people. Every strategy
can have a misrepresenting or distorting effect.
We function best when we can take some things for granted, at least for a time. And that is a major
role of strategy in organizations: it resolves the big issues so that people can get on with the little
details.
There is a tendency to picture the chief executive as a strategist with big ideas, while everyone else
gets on with the little details. But the job is not like that at all. A great deal of it has to with its own
little details.
Situations change—environments destabilize, niches disappear, opportunities open up. Then all that
is constructive and effective about an established strategy becomes a liability. That is why, even
though the concept of strategy is rooted in stability, so much of the study of strategy focuses on
change.
The management of change, especially when it involves shifting perspective, comes hard. Retooling is
expensive, especially when it is human minds that have to be retooled. Strategy, as mental set, can
blind the organization to its own outdatedness. Strategies (and the strategic management process)
can be vital to organizations by their absence as well as their presence.
Strategic Management as an Academic Discipline
Strategic management has become an academic discipline in its own right. Its literature is vast and,
since 1980, has been growing. For the most part, the teaching of strategic management has
highlighted the rational and prescriptive side of the process, namely our first three schools (design,
planning, and positioning). Strategic management has commonly been portrayed as revolving around
the discrete phases of formulation, implementation, and control. This bias is heavily reflected in
practice, particularly in the work of corporate and governmental planning departments as well as of
many consulting firms.
This book departs from this traditional view in its attempt to provide a more balanced survey of the
field, with all of its contradictions and controversies. Significant space is given to the
nonrational/nonprescriptive schools, which point to other ways of looking at strategic management.
To maintain balance among our critiques of the ten schools would only help to perpetuate the
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