Burnes - Managing Change Chapter 6 (L4) "MANAGERIAL CHOICE AND CONSTRAINTS"

Strategy: common understanding & multiple-definition view of strategy

- NOT CLEAR, to what degree there is a common UNDERSTANDING and perspectivess exist among those collected under the analytical umbrella - multiple-definition view of strategy (Mintzberg et al), and their proposition that various defintions of strategy are both competing and complemetnary, offers another perspective. This raises a known issue, namely whether 'ONE BEST WAY' is NECESSARY?

Strategic management: Schools of thought, Design school (2/2)

- adopted a less formal and less machine-like approached - focused on finding a 'FIT' between an organization's INTERNAL CAPACITIES and the external challenges - Adam Chandler and General Management Group.

Strategic management: Schools of thought, Planning school (1/2)

- focused on FORMAL TRAINING and analysis, which were the basis to strict, MACHINELIKE planning - Igor Ansoff: product-market matrix - purpose of firm is PROFIT MAXIMIZATION and strategic management is concerned with the EXTERNAL, rather than internal, concerns of the firm, especially the PRODUCT-MARKET MATCHING

Analytical perspective: choice is limited (5)

1) NATIONAL OBJECTIVES - follows systemic argument - organizations reflect the social system that they operate in 2) INDUSTRY AND SECTOR - follows the argument of Child and Smith: objective conditions, understanding of sector (culture & norms) determine success 3) BUSINESS ENVIRONMENT - follows the Classical approach, which is based on stability and predictability 4) ORGANIZATIONAL CHARACTERISTICS -structure: mechanic (hostile attitude toward processural, evolutionary) /organic (incapable of operating a classical form of strategy) -culture -politics -managerial style: transactional (prefer classical; convergent) or transformational (prefer evolutionary or processual; divergent, in not classical environment) 5) managers DECISION MAKING LIMITATIONS: - garbage can model (also commpare human factors) -tendency to satisfy: just take the first satisfactory decision -decisions are not taken, they happen -though potential for choice exists, in reality managers do not use it: stick to routine regardless of suitability

Design School: JOHNSON's definitions of strategy (3)

1) RATIONALISTIC view: strategy as outcome of preplanned action designed to achieve goals 2) ADAPTIVE/incremental view: strategy evolves through small changes over time 3) INTERPRETIVE view: strategy as product of individual and collective attempts to interpret events

Prescriptive stream: Characteristics (3)

1) aimed at PRACTITIONERS of strategy (planning school) 2) dominated the practice of strategy in 60s and 70s 3) strategy as ECONOMIC RATIONAL PROCESS, options and usefulness targeted on market share and profit maximization

Design School: Johnson's lenses on strategy (4)

1) as design: systematic, analytical, logical 2) as experience: personal experience of manager influences future strategy 3) as variety: look for future strategies at the bottom + periphery of orgs 4) as discourse: using language to shape strategy to their personal views to gain power, influence, legitimacy

Analytical stream: Characteristics (4)

1) more sceptical + ACADEMICALLY oriented 2) strategy as OUTCOME of process = focus on organization and social aspects of strategy formation 3) CAPABILITIES (structure, system, tech, mngmt) of org restrict the strategic options that the org can pursue 4) key figure: Mintzberg and his notion on emergent strategy

Approaches to strategy: streams (2) and questions (2)

1) strategy PROCESS or OUTCOME? 2) economic/rational phenomenon or organizational/social? Competing streams: 1) PRESCRIPTIVE stream: strategy as controlled, intentional, and prescriptive process based on economic-rational decision making, which produces complete, deliberate strategies 2) ANALYTICAL stream: understanding how orgs actually formulate strategy rather than prescribing how they should formulate it. Outcome of complex social and political processes involved in org decision making

Strategy: Generic approaches to strategy (4)

1. CLASSICISTS: Strategy is a RATIONAL process of long-term planning ainmed at maximizing profit - planning, design, positioning 2. EVOLUTIONISTS: Purpose of strategy is PROFIT maximization, but regard the future as too VOLATILEand unpredictable to allow effective planning and instead advise organizations to focus on maximizing changes of survival today - Complexity, Mintzberg, Population ecology 3. PROCESSUALISTS: sceptical of long-range planning, and see strategy as an EMERGENT process of learning and adaptation - Mintzberg, Pettigrew, postmodernism 4. SYSTEMIC proponents: Nature and aims of strategy are dependent upon the particular SOCIAL CONTEXT in which the organization operates

Differences prescriptive / analytical stream (3)

1. prescriptive: -strategy formulation as RATIONAL based on mathematical models -prescribes how organizations should undergo strategy but ignore irrational nature of organizational life -more impact and influence on PRACTICE 2. analytical: -organizational, SOCIAL POLITICAL aspects of strategy formulation -analyze, understand, describe complexity + range of forces that affect how orgs actually build strategy -wins ACADEMIC arguments but not so influential on practice

Design School: Mintzberg's definitions of strategy (5 P's)

Definitions can be seen complementary, or alternatives. Strategy as... 1) PLAN: intended course of action, created ahead of events 2) PLOY: maneuver to outwit an opponent 3) PATTERN: conciously or not, orgs exhibit a consistent pattern of behavior 4) POSITION: positioning in the org in order to achieve a sustainable competitive advantage: position where competitors cannot challenge them 5) PERSPECTIVE: abstract concept in ppls minds: common view of purpose and direction that informs and guides decision making and actionnone better than the other

Strategic management (2 general + 3 critique)

Emerged from FAILURE OF LONG-RANGE PLANNING, and focused on the environmental forces in the market. 1) ultimate focus: WINNING MARKET SHARE 2) described as RATIONAL PROCESS whereby managers gather quantitative data and come to rational decision based on this info Criticism: 1) hard data no more reliable than qualitative 2) orgs and managers are not rational entities, no rational decision making 3) orgs strategy emerges from unplanned actions and unintended consequences as well as planning and implementation

Prescriptive stream: Rise of positioning school (3)

Growing criticism toward Planning school and Design school gives rise to Porter's POSITIONING school: 1) only a FEW KEY STRATEGIES are desirable in any given industry; the ones that defend against competitors (compare design school: strategy has to be unique) 2) SET OF TOOLS for matching right strategy to the conditions at hand 3) Reasons for success in the 60s/70s a) provide industry with blueprint for strategy (easier, addressing their needs) b) close interaction with leading consultants and business schools who promote work c) able to promote and develop their strategy (business activity: selling strategy as product)

Complexity theory's influence on strategy

Influence on strategy literature has been LIMITED by the fact that the complexity theorists do not appear to share a common view of complexity and organizational strategy.

Analytical stream: Mintzberg's notion on EMERGENT STRATEGY

Intended strategy is seldom realized strategy, because it is the outcome of a process (analytical stream). a) organizations start out with INTENDED STRATEGY b) unrealistic expectations, CHANGING CIRCUMSTANCES; many of the elements of the intended strategy fall by the wayside c) STRATEGY DEVELOPS and changed with some elements dropped and others emerging (impact of day2day decisions on strategy) d) intended strategy x emergent strategy = REALIZED STRATEGY

Analytical stream: Other views on strategy (Population ecologists, Child, Pettigrew)

POPULATION ECOLOGISTS: challenge the extent to which achieving fit or correspondence between an organization and its environment is a conscious and planned process. - organization's SURVIVAL (fit with its environment) depends on a combination of the organizations's own (planned and unplanned) actions, the activities of other organizations in its field and a strong element of luck. >>> they view the ENVIRONMENT as unpredictable and VOLATILE CHILD's notion of EQUIFINALITY takes the challenge even further, as equifinality states that the end state can be reached by many means in open systems. ("Many roads lead to Rome") Furthermore, PETTIGREW (1985/7) is in favour of a change theory, which takes environmental as well as the dynamic and POLITICAL nature of strategy into account. He rejects the view that strategy is a rational process of deliberate calculation and analyses. CHILD AND SMITH (1987) favour a firm-in-sector approach without taking organizational politics into account. they draw on economic theories. The suggest three areas of firm-sector linkage that shape/constraint the strategies: - objective conditions: strategies may be different, but the success factors within a sector are the same and the organization's fit will be it's viability - managerial consensus: managers within a sector hold the same constructs - collaborative network: a competitor is also a potential collaborator

Conclusion Chapter 6

Prahalad, Mintzberg, Ohmae, and Stacey - not a process at all, but the outcome of a process: an outcome that is shaped not by mathematical process but by human creativity. The move towards this more emergent perspective on strategy has been brought about by the mounting criticism against the Classical or Prescriptive approach to strategy. The argument of MANAGERIAL CHOICE (e.g., choose markets) would seem equally applicable to the constraints managers face when choosing an approach to strategy. The point is that the POSSIBILITY EXISTS for managers to choose not only their approach to strategy but also, to an extent at least, the CONSTRAINTS they face.

Long range planning techniques (what it is and why failed)

Stems from the building time of the US Railways and their use of ex-military personnel as managers. 1) Focus: reducing the gap between expected demand and actual demand 2) But: could not cope with environmental turbulence which limits forecasting accuracy (unforeseen opportunities + trends) 3) Because: planning using past sales trends (extrapolation) 4) Because: little attention for external economic, social, and technological trends, competitors