Organization and environment
Lecture one: The strategic management beast (chapter 1)
The ten schools
1. The design school: strategy formation as a process of conception
- Strategy formation as a deliberate process of conscious thought
2. The planning school: strategy formation as a formal process (plan)
3. The positioning school: strategy formation as an analytical process (position)
- Focuses on the selection of strategic positions in the economic marketplace
4. The entrepreneurial school: strategy formation as a visionary process (perspective)
5. The cognitive school: strategy formation as a mental process
- Seeks to use the messages of cognitive psychology to enter the strategist’s mind
6. The learning school: strategy formation as an emergent process (pattern)
- Strategies must emerge in large steps, as an organization adapts or learns
7. The power school: strategy formation as a process of negotiation (ploy)
- Treats strategy formation as a process of negotiation
8. The cultural school: strategy formation as a collective process
- The strategy process is viewed as fundamentally collective and cooperative
9. The environmental school: strategy formation as a reactive process
- Strategy formation is a reactive process in which the initiative lies not inside the organization
but within its external context
10. The configuration school: strategy formation as a process of transformation
- Integrative, clusters multiple schools
- First three schools: prescriptive, concerned with how strategies should be formulated
- Other six schools: descriptive in nature, concerned with describing how strategies are made
Five P’s for strategy
1. Plan: organizations develop plans for their future and they also evolve patterns out of their past
2. Pattern: strategy is a pattern, it has a consistency in behaviour over time
3. Position: strategy is a position, the locating of particular products in particular markets
4. Perspective: strategy is a perspective, an organization’s fundamental way of doing things
5. Ploy: strategy is a ploy, a specific manoeuvre intended to outwit an opponent or competitor
Combining plan and pattern with position and perspective
Four basic approaches to strategy formation:
- Strategic planning: planning, design and positioning of schools
- Strategic visioning: entrepreneurial, design, cultural and cognitive schools
- Strategic venturing: learning, power and cognitive schools
- Strategic learning: learning and entrepreneurial schools
Advantages and disadvantages associated with strategy
1. Strategy stets direction:
- Advantage: strategy charts the course of an organization to sail through its environment
- Disadvantage: strategic direction can serve as blinders to hide potential dangers
2. Strategy focuses on effort:
- Advantage: without a strategy to focus effort, chaos can ensue as people pull in different directions
- Disadvantage: groupthink arises when there is too much focus
1
,3. Strategy defines the organization:
- Advantage: strategy provides an understanding of the organization to distinguish it from others
- Disadvantage: defining too sharply can mean too simply, so that the complexity of the system is lost
4. Strategy provides consistency:
- Advantage: strategy is needed to reduce ambiguity and provide order
- Disadvantage: every strategy can have a misrepresenting effect, the price of having a strategy
2
, Lecture two: The design school (chapter 2)
The design school
- Design school: represents the most influential view of the strategy-formation process
- It proposes a model of strategy making that seeks to attain a match or fit between internal
capabilities and external possibilities
- According to this school: strategy development is not a linear process
- Offers little room for incrementalist views or emergent strategies
- Separates thinking from acting
The basic design school model
- Primary emphasis: on the appraisals of external and internal situations (SWOT)
- Internal appraisal: the difficulty for organizations and individuals to know themselves
- The idea that individual flashes of strength are not as dependable as the gradually
accumulated product-and-market-related fruit of experience
- Two other factors important for strategy making: managerial values and social
responsibility
- Implementation is done directly after a strategy has been agreed upon
Premises of the design school
1. Strategy formation should be a deliberate process of conscious thought: effective strategies
derive from a tightly controlled process of human thinking
2. Responsibility for that control and consciousness must rest with the CEO: there is only one
strategist, which is the person at the top (manager or CEO)
3. The model of strategy formation must be kept simple and informal: one way to ensure strategy
is controlled in one mind is to keep it simple
4. Strategies should be one of a kind, the best ones result from a process of individualized design:
strategy making should be a creative act building on distinctive competencies
5. The design process is complete when strategy appears fully formulated: strategy appears as a
perspective, fully formulated
6. These strategies should be explicit, they have to be kept simple: strategies should be explicit for
those who make them and articulated so that others can understand them
7. Only after these unique, full-blown, explicit and simple strategies are formulated, can they be
implemented: structure must follow strategy
Critique of the design school
- The premises of the school deny certain important aspects of strategy formation
- Assessment of strengths and weaknesses: a firm can never be sure in advance whether an
established competence will be a strength (often narrower) or weakness (often broader)
- Structure does not follow strategy: a firm does not start with a clean slate when changing strategy
- Early explicit strategy formation can be dangerous: when you think you know what you want,
changing is very hard
- Ambitious assumptions about leaders: ‘a grand design needs a grand designer’
- This school is often oversimplified
When to apply this school best: when there is a junction of a major shift for an organization, coming out of
a period of changing circumstances and into one of operating stability
- Also apply to new firms: must have a clear sense of direction to compete with established rivals
3
, Lecture three: The planning school (chapter 3)
4
Lecture one: The strategic management beast (chapter 1)
The ten schools
1. The design school: strategy formation as a process of conception
- Strategy formation as a deliberate process of conscious thought
2. The planning school: strategy formation as a formal process (plan)
3. The positioning school: strategy formation as an analytical process (position)
- Focuses on the selection of strategic positions in the economic marketplace
4. The entrepreneurial school: strategy formation as a visionary process (perspective)
5. The cognitive school: strategy formation as a mental process
- Seeks to use the messages of cognitive psychology to enter the strategist’s mind
6. The learning school: strategy formation as an emergent process (pattern)
- Strategies must emerge in large steps, as an organization adapts or learns
7. The power school: strategy formation as a process of negotiation (ploy)
- Treats strategy formation as a process of negotiation
8. The cultural school: strategy formation as a collective process
- The strategy process is viewed as fundamentally collective and cooperative
9. The environmental school: strategy formation as a reactive process
- Strategy formation is a reactive process in which the initiative lies not inside the organization
but within its external context
10. The configuration school: strategy formation as a process of transformation
- Integrative, clusters multiple schools
- First three schools: prescriptive, concerned with how strategies should be formulated
- Other six schools: descriptive in nature, concerned with describing how strategies are made
Five P’s for strategy
1. Plan: organizations develop plans for their future and they also evolve patterns out of their past
2. Pattern: strategy is a pattern, it has a consistency in behaviour over time
3. Position: strategy is a position, the locating of particular products in particular markets
4. Perspective: strategy is a perspective, an organization’s fundamental way of doing things
5. Ploy: strategy is a ploy, a specific manoeuvre intended to outwit an opponent or competitor
Combining plan and pattern with position and perspective
Four basic approaches to strategy formation:
- Strategic planning: planning, design and positioning of schools
- Strategic visioning: entrepreneurial, design, cultural and cognitive schools
- Strategic venturing: learning, power and cognitive schools
- Strategic learning: learning and entrepreneurial schools
Advantages and disadvantages associated with strategy
1. Strategy stets direction:
- Advantage: strategy charts the course of an organization to sail through its environment
- Disadvantage: strategic direction can serve as blinders to hide potential dangers
2. Strategy focuses on effort:
- Advantage: without a strategy to focus effort, chaos can ensue as people pull in different directions
- Disadvantage: groupthink arises when there is too much focus
1
,3. Strategy defines the organization:
- Advantage: strategy provides an understanding of the organization to distinguish it from others
- Disadvantage: defining too sharply can mean too simply, so that the complexity of the system is lost
4. Strategy provides consistency:
- Advantage: strategy is needed to reduce ambiguity and provide order
- Disadvantage: every strategy can have a misrepresenting effect, the price of having a strategy
2
, Lecture two: The design school (chapter 2)
The design school
- Design school: represents the most influential view of the strategy-formation process
- It proposes a model of strategy making that seeks to attain a match or fit between internal
capabilities and external possibilities
- According to this school: strategy development is not a linear process
- Offers little room for incrementalist views or emergent strategies
- Separates thinking from acting
The basic design school model
- Primary emphasis: on the appraisals of external and internal situations (SWOT)
- Internal appraisal: the difficulty for organizations and individuals to know themselves
- The idea that individual flashes of strength are not as dependable as the gradually
accumulated product-and-market-related fruit of experience
- Two other factors important for strategy making: managerial values and social
responsibility
- Implementation is done directly after a strategy has been agreed upon
Premises of the design school
1. Strategy formation should be a deliberate process of conscious thought: effective strategies
derive from a tightly controlled process of human thinking
2. Responsibility for that control and consciousness must rest with the CEO: there is only one
strategist, which is the person at the top (manager or CEO)
3. The model of strategy formation must be kept simple and informal: one way to ensure strategy
is controlled in one mind is to keep it simple
4. Strategies should be one of a kind, the best ones result from a process of individualized design:
strategy making should be a creative act building on distinctive competencies
5. The design process is complete when strategy appears fully formulated: strategy appears as a
perspective, fully formulated
6. These strategies should be explicit, they have to be kept simple: strategies should be explicit for
those who make them and articulated so that others can understand them
7. Only after these unique, full-blown, explicit and simple strategies are formulated, can they be
implemented: structure must follow strategy
Critique of the design school
- The premises of the school deny certain important aspects of strategy formation
- Assessment of strengths and weaknesses: a firm can never be sure in advance whether an
established competence will be a strength (often narrower) or weakness (often broader)
- Structure does not follow strategy: a firm does not start with a clean slate when changing strategy
- Early explicit strategy formation can be dangerous: when you think you know what you want,
changing is very hard
- Ambitious assumptions about leaders: ‘a grand design needs a grand designer’
- This school is often oversimplified
When to apply this school best: when there is a junction of a major shift for an organization, coming out of
a period of changing circumstances and into one of operating stability
- Also apply to new firms: must have a clear sense of direction to compete with established rivals
3
, Lecture three: The planning school (chapter 3)
4
