Stoelhorst, 2008. “Thinking About Strategy: Teaching note”
Three aspects of strategic management can be dis nguished:
• The process: where strategies come from - how
• The content: what good strategies are
• The context: how speci c organisa onal or environmental contexts a ect the process or
content of strategy
Standard model of strategy: joint product of design school and planning school, a 3 step
process:
1. Strategic analysis: formulate organisa onal objec ves (basis), internal and external
analysis, SWOT analysis, iden ca on of strategic issues. “the strategic issues highlight
the main ques ons that a rm needs to confront to meet its objec ves”
2. Strategic choice: generate possible strategies to deal with the strategic issues. Consider
suitability, acceptability, and feasibility
3. strategy implementa on: chosen strategy is broken down into detailed plans,
responsibili es & budgets assigned, measures to control the strategies are agreed upon.
Prescrip ve schools of thought: Design school (60s), Planning school (70s), Posi oning
school (80s), Resource-based school (90s). Inspired the standard model of strategy;
norma ve approach. Prescribes managers what to do.
Descrip ve School of thought: Process school (80s +), argues against the norma ve
approach of prescrip ve schools; descrip ve approach, observes how strategy takes shape
in everyday prac ce.
➡ Prescrip ve Schools of thought
The Design school: Strategy As A Conceptual Process —> Process
- Origins: 1960s, Harvard Business School, Kenneth Andrews & co. inspo by Selznick
- Core: the speci c characteris cs of the rm should be confronted with the external
situa on it faces - actualised in the SWOT analysis. CEO architect of the strategy
- Assump ons about strategy by the design school (Mintzberg, 1998):
1. Strategy forma on should be a deliberate process of conscious thought
2. Responsibility for that control and consciousness must rest with the chief execu ve o cer
3. The model of strategy forma on must be kept simple and informal
4. Strategies should be one of a kind, tailored to the speci c rm
5.The design process is complete when strategies appear fully formulated as perspec ve
6. These strategies should be explicit and simple
, 7. Only a er strategies have been formulated can they be implemented
- Cri ques: Design school underplays the importance of hands-on learning. Strengths and
weaknesses are situa on speci c should also be observed in prac ce, at level of daily
opera ons. Speci c competences are more/less relevant based on changes in external
circumstances. Separa on of formula on and implementa on limits the necessary link
between thinking and ac ng.
- Important contribu ons: laid founda ons of standard model of strategic management with
its emphasis on confron ng internal and external situa on of a rm. also introduced
important concepts such as environmental t and dis nc ve competence to the literature.
The Planning School: Strategy As A Formal Process —> process
- Origins: 1965, Igor Anso ’s Corporate Strategy.
- Core: similar to design school but advocates a formal and very elaborate system for the
development of strategy (opposite of Informal and simple in design school) More
responsibility to the planning sta , CEO s ll head of strategy. Ra onal and stepwise
approach; suggests breaking down overall strategy into speci c strategic plans. Creates a
hierarchy of plans, budgets and controls.
- Assump ons of Planning School (Mintzberg, 1998)
1. Strategies result from a controlled, conscious process of formal planning, decomposed
into dis nct steps, each delineated by checklists and supported by techniques.
2. Responsibility for that overall process rests with the chief execu ve in principle;
responsibility for its execu on rests with sta planners in prac ce.
3. Strategies appear from this process full blown, to be made explicit so that they can be
implemented through detailed a en on to objec ves, budgets, programs, and opera ng
plans of various kinds
- Cri ques: empirical research shows that the planning approach simply does not work. This
formal strategy process is too detached from real implementa on. Issues with breaking
down a strategy into even more detailed analysis as it goes against the nature of strategy as
synthesising informa on.
- Important contribu ons: was successful in pu ng ideas into prac ce. Sparked research
about why strategic planning o en does not work as envisioned.
Por olio models: 1970s, developed by big strategy consultancy rms. They told rms what
good strategy was; they suggested diversi ca on. They saw cash ow as the main link
between business units in a mul -business rm and investment decisions as the core of
strategy.
The packaging techniques of por olio models o en did not work. Cri ques: resulted in risk
adverse behaviour, undermined long-run compe ve advantage. Too detached to give in-
depth understanding of the markets/technologies needed. Now we no longer put emphasis
on diversi ca on, market share, and cash ows.
