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Summary Strategy Safari - Organization & Environment
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- Strategy Safari
This is a summary of the book 'strategy safari' for the course organization & environment.
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Voorbeeld van de inhoud
Chapter 1 ‘And over here, ladies and gentlemen: the strategic management beast’Seven is about the number of ‘chunks’ of information that we can comfortably retain in our short-term
memories.
This book presents ten schools of thought on strategy formation:
- Prescriptive (how strategies should be formulated).
o The Design School (strategy formation as a process of conception).
o The Planning School (strategy formation as a formal process).
o The Positioning School (strategy formation as a visionary process).
- Descriptive (how strategies do, in fact, get made).
o The Entrepreneurial School (strategy formation as an analytical process).
o The Cognitive School (strategy formation as a mental process).
o The Learning School (strategy formation as an emergent process).
o The Power School (strategy formation as a process of negotiation).
o The Cultural School (strategy formation as a collective process).
o The Environmental School (strategy formation as a reactive process).
o The Configuration School (strategy formation as a process of transformation).
A field review
Strategy formation is not just about values and vision, competences and capabilities, but also about the military
and Machiavelli, crisis and commitment, organizational learning and punctuated equilibrium, industrial
organization and social revolution.
Five Ps for strategy
Instead of using one definition of strategy, it is argued that strategy requires five definitions.
Strategies as plans and patterns. Strategy is a pattern, that is, consistency in behaviour over time. There is a
difference between intended and realized strategy.
Strategies as deliberate and emergent. Intentions that are fully realized can be called deliberate strategies.
Those that are not realized at all can be called unrealized strategies. When a pattern is realized that was not
expressly intended it is called an emergent strategy. In this case, rather than pursuing a strategy (read: plan) of
diversification, a company simply makes diversification decisions one at a time, in effect testing the market.
Few, if any strategies are purely deliberate, just as few are purely emergent. An ‘umbrella’ strategy, for
example, means that the broad outlines are deliberate while the details are allowed to emerge en route.
Strategies as positions and perspective. As position, strategy looks down – to the ‘x’ that marks the spot where
the product meets the customer, as well as out – to the external marketplace. As perspective, in contrast,
strategy looks in – inside the organization, indeed inside the heads of the strategists, but it also looks up – to the
grand vision of the enterprise. While changing position within perspective may be easy, changing perspective,
even while trying to maintain position, is not.
All the Ps. A fifth is in common usage too: strategy is a ploy, that is, a specific manoeuvre intended to outwit an
opponent or competitor.
Combining plan and pattern with position and perspective gives us four basic approaches to strategy formation.
Table: Four basic approaches to strategy formation
Strategic process to:
Strategy content as: Deliberate plans Emergent patterns
Tangible positions Strategic planning Strategic venturing
Broad perspective Strategic visioning Strategic learning
There may not be one simple definition of strategy, but there are by now some general areas of agreement
about the nature of strategy:
- Strategy concerns both organization and environment.
1
, - The substance of strategy is complex.
- Strategy affects overall welfare of the organization.
- Strategy involves issues of both content and process.
- Strategies are not purely deliberate.
- Strategies exist on different levels.
- Strategy involves various thought processes.
Strategies for better and for worse
For every advantage of strategy there is an associated disadvantage.
- Strategy sets direction.
o Advantage: to chart the course of an organization in order to sail cohesively through its
environment.
o Disadvantage: direction can also serve as a set of blinders to hide potential damages.
- Strategy focuses effort.
o Advantage: strategy promotes coordination of activity.
o Disadvantage: ‘groupthink’ arises when effort is too carefully focused. There may be no
peripheral vision, to open other possibilities.
- Strategy defines the organization.
o Advantage: provides people a way to understand their organization and to distinguish it from
others.
o Disadvantage: to define too sharply can also mean to define it too simply, sometimes to the
point of stereotyping, so that the rich complexity of the system is lost.
- Strategy provides consistency.
o Advantage: it is needed to reduce ambiguity and provide order.
o Disadvantage: every strategy can have a misrepresenting or distorting effect.
Strategy resolves the big issues so that people can get on with the little details.
→ Strategies (and the strategic management process) can be vital to organizations by their absence as well as
their presence.
Chapter 2 The design school: strategy formation as a process of conception
The design school is the most influential view of the strategy-formation process. At its simplest, the design
school proposes a model of strategy making that seeks to attain a match, or fit, between internal capabilities
and external possibilities (therefore the SWOT is commonly used).
Origins of the design school
The real impetus for the design school came from the general management group at the Harvard Business
School.
The basic design school model
The model places primary emphasis on the appraisals of the external and internal situations, the former
uncovering threats and opportunities in the environment, the latter revealing strengths and weaknesses of the
organization.
- External appraisal (technological, economic, social and political aspects of a company’s environment).
- Internal appraisal (in which it is difficult for both organizations and individuals to know themselves and
the idea that individual and unsupported flashes of strength are not as dependable as the gradually
accumulated product-and-market-related fruits of experience).
Two other important factors are:
- Managerial values: the beliefs and preferences of those who formally lead the organization.
- Social responsibilities: specifically, the ethics of the society in which the organization function.
On the actual generation of strategies, little has been written in this school besides an emphasis on this being a
‘creative act’. A recent extension (Hambrick and Fredrickson, 2005) notes that strategy development is not a
linear process.
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,Once alternative strategies have been determined, the next step in the model is to evaluate them and choose
the best one. This evaluation can be made in terms of a series of tests:
- Consistency: the strategy must not represent mutually inconsistent goals and policies.
- Consonance: the strategy must represent an adaptive response to the external environment and to the
critical changes occurring within it.
- Advantage: the strategy must provide for the creation and/or maintenance of a competitive advantage
in the selected are of activity.
- Feasibility: the strategy must neither overtax available resources nor create unsolvable subproblems.
→ Virtually all of the writings of this school make clear that once a strategy has been agreed upon, it is then
implemented.
Many strategy consultants continue to rely on the SWOT model and other design school notions. In our opinion,
this school has not developed so much as provide the basis for developments in other schools.
Premises of the design school
There are a number of premises that underly the design school (some fully evident, others only implicitly
recognized):
- 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 strategies.
- The model of strategy formation must be kept simple and informal.
- Strategies should be one of a kind: the best ones result from 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 kept simple.
- Finally, only after these unique, full-blown, explicit, and simple strategies are fully formulated can they
then be implemented.
Critique of the design school
The premises of the model denies certain important aspects of strategy formation (incremental development
and emergent strategy, the influence of existing structure on strategy, and the full participation of actors other
than the chief executive).
Assessment of strengths and weaknesses: bypassing learning
This school’s promotion of thought independent of action, strategy formation above all as a process of
conception rather than as one of learning. This can be clearly seen in the assessment of strengths and
weaknesses. In this school, the organization knows it by conscious thought expressed verbally and on paper.
→ Every strategic change involves some new experience, a step into the unknown, the taking of some kind of
risk. Therefore, no organization can ever be sure in advance whether an established competence will prove to
be a strength or a weakness.
Structure follows strategy … as the left foot follows the right
Claiming that strategy must take precedence over structure amounts to claiming that strategy must take
precedence over the established capabilities of the organization, which are embedded in its structure. Structure
may be somewhat malleable, but it cannot be altered at will just because a leader has conceived a new strategy.
→ In effect, the development of strategy and the design of structure both support the organization, as well as
each other. Each always precedes the other, and follows it, except when the two move together, as the
organization jumps to a new position. Strategy is an integrated system, not an arbitrary sequence.
Making strategy explicit: promoting flexibility
To so articulate strategy, a strategist must know for sure where he or she wishes to go, with few serious doubts.
But organizations have to cope with conditions of uncertainty too. Our point is that organizations must function,
not only with strategy, but also during periods of the formation of strategy, which can endure for long periods.
During periods of uncertainty, the danger is not the lack of explicit strategy but the opposite – ‘premature
closure’.
3
, → Explicit strategies are blinders designed to focus direction and so to block out peripheral vision. They can
thus impede strategic change when it does become necessary. The more clearly articulated the strategy, the
more deeply imbedded it becomes in the habits of the organization as well as in the mind of its strategists.
Separation of formulation from implementation: detaching thinking from acting
The formulation-implementation dichotomy is central to the design school. The case study method may be a
powerful device to bring a wide variety of experience into the classroom for descriptive purposes. But it can
become dangerous when used for prescription: to teach a process by which strategies should be made. If case
study teaching has left managers with the impression that, to make strategy, they can remain in their offices
surrounded by documents and think then it may well have done them and their organizations a great disservice
sometimes encouraging strategies that violate the very distinctive competences of their organizations.
→ If the design school model has encouraged leaders to oversimplify strategy, then it may be a root cause of
some of the serious problems faced by so many of today’s organizations.
The assumption that data can be aggregated and transmitted up the hierarchy without significant loss or
distortion often fails, destroying carefully formulated strategies in the process. This assumption is fundamental
to the separation between formulation and implementation. The external environment is a major and
sometimes unpredictable force to be reckoned with.
Behind the very distinction between formulation and implementation lies a set of very ambitious assumptions:
- That environments can always be understood, currently and for a period well into its future (by senior
management or can be transmitted to that management).
- That the environment itself is sufficiently stable, or at least predictable, to ensure that the formulated
strategies today will remain viable after implementation
→ In an unstable or complex environment, this distinction has to be collapsed in one of two ways. Either the
formulator has to be the implementor, or else the implementors have to formulate.
→ As the implementors formulate, the organization learns.
To conclude, this seemingly innocent model in fact contains some ambitious assumptions about the capabilities
of organizations and their leaders, assumptions that break down in whole or in good part under many common
conditions. What we are calling the design school has focused on the process, not the product. But it has
assumed that the two are intrinsically linked (that strategy is a grand design that requires a grand designer).
The design school: contexts and contributions
Our critique has been intended to dismiss, not the design school, but its assumption of universality, that it
somehow represents the ‘one best way’ to make strategy. In particular, use of the model is questionable when
strategy formation has to emphasize learning, especially on a collective basis, under conditions of uncertainty
and complexity. We also reject the model when it tends to be applied with superficial understanding of the
operations in question.
We see a set of four conditions that should encourage an organization to tilt toward the design school model:
- One brain can, in principle, handle all of the information relevant for strategy.
- 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.
→ The design school model would seem to apply best at the junction of a major shift for an organization,
coming out of a period of changing circumstances and into one of operating stability. The design school model
might also apply for new organizations, since it must have a clear sense of direction in order to compete with its
more established rivals. This period of initial conception of strategy is often the consequence of an
entrepreneur with a vision.
→ In critiquing the design model, perhaps we should be careful to preserve the design school.
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