Strategy and organization week 3: Strategic planning (the process of strategy)
General information lectures
Process: how to develop strategy: the design school and the planning school
Keywords:
Strategy formulation & implementation
Desing & planning, process & sequencing
Informal vs formal rules
CEO versus planning staff, employees alignment
Logical incrementalism, stepwise approach
Long-term vision, thinking vs doing
Bureaucratization, time consuming, loss of creativity
Strategic intent vs simple rules
Design school (key contributor: Kenneth Andrews):
Selznick et al. Harvard: a fit between firm’s internal capabilities and external
possibilities
Strategy formation: “…the intellectual process of ascertaining what a
company might do in terms of environmental opportunity, of deciding what
it can do in terms of ability and power, and of bringing these two
considerations in optimal equilibrium”
Key premises and assumptions
Strategy formation = a deliberate process of conscious thought
By the ceo
The model used should be simple and informal
The strategy = unique, based on distinctive competence (one of a kind)
At 1 point design process finished, strategy = explicit and simple
Strategy formulation and implementation are separate activities
(implementation follows formulation)
Limiting assumptions
One person as the strategist
o Has full, intimate knowledge of the situation
o No cognitive limitations
o The organization can cope with a centrally articulated strategy
No feedback loops
o Underplays the importance of hands on learning
o The situation has to remain stable
The planning school (key contributor: igor ansoff)
The specification of a firm’s strategy and the assignment of responsibilities for its
execution
Key premises and assumptions
Strategies result from a controlled, conscious process of formal planning,
decomposed into distinct steps
Responsibility for the overall process rests with the CEO, responsibility for
its execution rests with staff planners
, Explicit, full-blown strategies: so that there is a detailed and specific plan
for implementation
Main critiques
Information overload
Detached nature
Time-consuming
Inflexible, assumes “full” knowledge is possible
Design vs planning school
Design school:
Strategy formation should be based on simple and informal model
(explicit: strategy as perspective)
CEO is fully responsible for formation (separated from implementation)
Planning school:
Strategy formation should be based on an elaborate and formal model
(fully-blown strategy)
Planning staff is partly responsible for strategy formation, planning staff
also (separated from implementation)
Strategic planning:
“A disciplined and well-defined organizational effort aimed at the complete
specification of a firm’s strategy and the assignment of responsibilities for
its execution” (Hax and Majluf (1991)
“Take the SWOT model, divide it into neatly delineated steps, articulate
each of these with lots of checklists and techniques, and give special
attention to the setting of objectives on the front end and the elaboration
of budgets and operating plans on the back end” (Mintzberg et al., 1998:
49)
A rational, stepwise approach to strategy formation with a strong focus on
formalization & quantification
Ansoff on content of strategy
Articles
Hax & Maljuf (1991): formal strategic planning
What is it → a disciplined and well-defined organizational effort trying to
completely specify firm’s strategy and assign responsibility for its execution
Strategic planning occurs at all levels of the organization: corporate, business
and functional.
General information lectures
Process: how to develop strategy: the design school and the planning school
Keywords:
Strategy formulation & implementation
Desing & planning, process & sequencing
Informal vs formal rules
CEO versus planning staff, employees alignment
Logical incrementalism, stepwise approach
Long-term vision, thinking vs doing
Bureaucratization, time consuming, loss of creativity
Strategic intent vs simple rules
Design school (key contributor: Kenneth Andrews):
Selznick et al. Harvard: a fit between firm’s internal capabilities and external
possibilities
Strategy formation: “…the intellectual process of ascertaining what a
company might do in terms of environmental opportunity, of deciding what
it can do in terms of ability and power, and of bringing these two
considerations in optimal equilibrium”
Key premises and assumptions
Strategy formation = a deliberate process of conscious thought
By the ceo
The model used should be simple and informal
The strategy = unique, based on distinctive competence (one of a kind)
At 1 point design process finished, strategy = explicit and simple
Strategy formulation and implementation are separate activities
(implementation follows formulation)
Limiting assumptions
One person as the strategist
o Has full, intimate knowledge of the situation
o No cognitive limitations
o The organization can cope with a centrally articulated strategy
No feedback loops
o Underplays the importance of hands on learning
o The situation has to remain stable
The planning school (key contributor: igor ansoff)
The specification of a firm’s strategy and the assignment of responsibilities for its
execution
Key premises and assumptions
Strategies result from a controlled, conscious process of formal planning,
decomposed into distinct steps
Responsibility for the overall process rests with the CEO, responsibility for
its execution rests with staff planners
, Explicit, full-blown strategies: so that there is a detailed and specific plan
for implementation
Main critiques
Information overload
Detached nature
Time-consuming
Inflexible, assumes “full” knowledge is possible
Design vs planning school
Design school:
Strategy formation should be based on simple and informal model
(explicit: strategy as perspective)
CEO is fully responsible for formation (separated from implementation)
Planning school:
Strategy formation should be based on an elaborate and formal model
(fully-blown strategy)
Planning staff is partly responsible for strategy formation, planning staff
also (separated from implementation)
Strategic planning:
“A disciplined and well-defined organizational effort aimed at the complete
specification of a firm’s strategy and the assignment of responsibilities for
its execution” (Hax and Majluf (1991)
“Take the SWOT model, divide it into neatly delineated steps, articulate
each of these with lots of checklists and techniques, and give special
attention to the setting of objectives on the front end and the elaboration
of budgets and operating plans on the back end” (Mintzberg et al., 1998:
49)
A rational, stepwise approach to strategy formation with a strong focus on
formalization & quantification
Ansoff on content of strategy
Articles
Hax & Maljuf (1991): formal strategic planning
What is it → a disciplined and well-defined organizational effort trying to
completely specify firm’s strategy and assign responsibility for its execution
Strategic planning occurs at all levels of the organization: corporate, business
and functional.
