Summary Strategic management of organizations
Clip 1 – Introduction of strategic management
Development:
1. Long range planning (1950s) = long coordinated strategy to be successful. There are business
case studies, much discipline, industrial, profit maximizing, rational decisions, etc.
2. Strategic planning = also planning ahead/long-range plans.
3. Strategic management (1970s/1980s) = not only planning, but also focused on performance
and profitability.
What is strategy?
- Alfred D. Chandler: strategy determines (bepaald) the long-turn goals of an organization and
the adoption (vaststelling) of courses of actions and the allocation (verdeling) of resources
necessary for carrying out these goals.
- Peter Drucker: strategy is a firm’s theory about how to gain competitive advantages, so how
to keep your people motivated, disciplined and competitive.
- Michael Porter: competitive strategy = deliberately choosing a different set of activities to
deliver a unique mix of value, so it’s about being different.
- Henry Mintzberg: strategy is a pattern in a stream of decisions.
Similarity between all: in strategy there is emphasis on making decisions (clear choice, being
consistent, prioritize). So, strategy and decision making are somehow the same = ‘what is the plan of
action for managers to make decisions’.
Strategy = 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 fulfil stakeholder expectations.
There is not one clear definition of strategy, because there are different elements that play a role in
strategic management: The 10 schools of strategy (Mintzberg).
1. Design: a process of conception a design
2. Planning: a formal process a plan
3. Positioning: an analytical process a position
4. Entrepreneurial: a visionary process a vision
5. Cognitive: a judgmental process a perception
6. Learning: an emergent process a patten
7. Power/Political: a process of negotiation an agenda
8. Cultural: a collective process a belief
9. Environmental: a reactive process a response
10. Configuration: a process of transformation a stage.
These 10 schools can again be divided into 3 groups:
1. Prescriptive school of strategy (design, planning, positioning) = prescribe how strategy
should be done, the ideal. The design is the base for the following 2 schools, planning will
guide the strategy, and positioning is focused on the position of organizations.
,Now, not prescribing, but more describe how it’s done in reality.
2. Descriptive school (entrepreneurial, cognitive, learning, power/political, cultural, and
environmental) = the vision for the company will develop and the strategy brings this vision
to life. There are different perceptions people have (cognitive process), so this school
focusses more on the collective/group, instead on individuals.
3. Combination of prescriptive and descriptive / transformative school (configuration) = look
at the external environments and their external pressures, and how the people respond to
this. So, look at stability and changes over time.
Because there isn’t one clear definition of strategy you get paradoxes. There are 2 ways to look at a
strategic question:
1. Tools driven = first you look at the tools you have, and later combine them and try to solve
the problem.
2. Problem driven = first you look at the problem, and doing so you look for the right tools to
solve this problem.
Mintzberg: the 5 ways to conceptualize/define ‘strategy’ The 5 P’s:
1. Strategy as a Plan (intended, forward, ahead): it gives us a path and offers direction. It’s
made before there is action, so it’s conscious and purposeful. It’s specify future choices, and
is calculated towards achieving objectives/goals.
2. Strategy as a Pattern (realized): consistency in behavior, which is driven by action, not
design. You have a plan, but a lot will happen and there is behavior, whether or not intended,
and a more consistent pattern will naturally emerge = realized strategy.
3. Strategy as a Position: trying to find a fit for the organization in the environment and meet
their needs. This position will beat competition or avoid direct competition.
4. Strategy as a Perspective: more focus on the inside heads of decision makers, so more
philosophy (how they understand the world/business. Their identification with their culture,
perspective, routines, etc.)
5. Strategy as a Ploy: smart moves and/or tricks.
You start with the ‘intended strategy’, making a plan. After this there’s a phase of
‘deliberating strategy’ where strategy becomes (un)realized. But, there’s more…
along the way there can emerge ‘emergent strategies’ that were not intended.
All strategies are a combination of deliberateness and emergent.
- Deliberate strategy = ability of acting intentionally, thinking and planning
before acting. There’s no learning happening.
- Emergent strategy = thinking and acting at the same time and letting the strategy emerge
through consistent patterns of behavior and action. There’s no control of what’s happening,
and no mindfulness about what’s realized. Everything happens because there is a chance.
Paradox deliberateness & emergence = organizations have to manage
the tension between strategies forming in the intended way vs. the
strategy emerging way.
,Advantages of deliberate strategizing:
- Clear direction: without plans and objectives organizations would be adrift.
- Commitment: plans enable early commitment to a course of action.
- Coordination: plans can coordinate all strategic initiatives to a cohesive pattern of behavior.
- Optimization: plans facilitate optimal resource allocation (indeling).
- Programming: plans program all organizational activities in advance.
Advantages of strategy emergence:
- Opportunism: organizations must keep an open mind to grab unforeseen opportunities.
- Flexibility: organizations must keep their options open and not commit themselves too early.
- Learning: the best way to find out what works is to give it a try.
- Entrepreneurship: different people in the organization will have different ideas.
- Support: getting things done in firms include understanding political and cultural dynamics.
Managing strategic paradoxes:
1. Navigating: comparing from different perspectives.
2. Parallel process: distinguishing different requirements into internal or external.
3. Balance: weighing against each other, all perspectives.
4. Juxtaposing: managing opposing demands on an ongoing basis.
5. Resolving: creating new balance between contrasting elements.
6. Embracing: embrace tension and use tension as a source of creativity and opportunity.
Benefits of strategic management:
- It ties the organization together with a common sense of purpose and shared values.
- It provides the organization identity with a clear self-concept, specific goals and guidance.
- Helps managers to understand the present, but also recognize the signals that suggest
change (think about the future).
- It requires managers to communicate both vertically and horizontally.
- Improves overall coordination within the organization.
- Encourages innovation and change to meet the needs of dynamic solutions.
Contradictions of strategic management:
1. Strategy set the direction: they put out a course and create and maintain cohesion.
But, strategy can also set blinders and hide some of the problems, then you go in the
wrong direction, so go slowly so you don’t mis the problems.
2. Strategy focuses effort: people prevents chaos, reduces disorder & promotes coordination.
But, too much focus on effort can create “groupthink” and a no peripheral vision with no
other possibilities.
3. Strategy defines organizations: it captures the essential meaning and creates shared
identity/purpose and there is a valued system that connect all the people.
But, it also can create stereotypes and it losses richness along the diverse members.
4. Strategy provides consistency: it reduces ambiguity and creates a model that helps us
explain the world and make meaning in what is valuable, etc.
But, this can reduce creativity and simplifies to the point of distortion (vertekening).
So, having a clear strategy gives us guidance, where we heading, what is important and prioritized,
and how the organization is successful in the longer term !
, Reading 1.1: complexity, the nature of real world problems.
Every problem is unique and finding a solution is difficult in this complex world. When you want to
manage simple problems you look at 3 factors:
1. Divisibility (deelbaarheid)
2. Reducibility
3. One-dimensional goal structure
Characteristics of bad problems: connectedness, complexity, uncertainty, ambiguity, conflicts, social
constraints, etc. You also have two implications/consequences for these problems:
- Participation of different types of parties.
- Use of various sources of information.
Solution to these problems: doubt This will lead to participation, hearing each other, integration,
and management support.
Reading 1.2 Managing strategic contradictions
Balanced strategic decisions are characterized by two criteria:
1. Distributive nature = making balanced trade-offs over time.
2. Integrative nature = identifying synergies (samenwerking) requires teams that recognize
and use conflicts.
Models for managing strategic contradictions:
Cognitive frames = the way how you see something (different perspectives).
Paradoxical frames = mental templates in which managers recognize and accept the
simultaneous existence of conflicting forces.
Cognitive processes = behavioral routines and ways that managers use to think about
and respond to information.
Clip 2 – Dimensions of strategy and strategizing
4 key dimensions of strategy:
1. Organizational purpose = starting point, so visioning the
strategy. What’s the main purpose/mission of why the
organization exist.
2. Strategy process = the way strategy comes about, by who, how,
when, etc. So realizing the strategy.
3. Strategy content = the combination of what choices and
decision the company makes and determines their future, so
the result/output of strategy activities.
4. Strategy context = all the choices people make happen in an environmental context (where).
