Beruflich Dokumente
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Misti Walker
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In 1993, Henry Mintzberg, widely recognized in the field of strategic
inherent and realized shortcomings of strategic planning. Three years later, in 1996,
Michael Porter published one of several articles on the topic, entitled What is Strategy?
Both men are widely respected in the field and while some of their ideas are in
congruence, many are at odds. In this paper, I will discuss the similarities and
Benefits of Planning
Strategic planning has been in the business literature since the 1960’s and, as
Mintzberg points out, has enjoyed popularity at times when the marketplace was
extrapolating past results, or an educated guess, if you will. Planning is not strongly
planning scholars have deemed every generation since WWII to be the most turbulent.
Yet, this fact has not affected the popularity of strategic planning. Mintzberg contends
that even the best laid plans cannot effectively deal with. In essence, although plans
are ill prepared to tackle big changes in the marketplace, they are precisely what
companies cling to in uncertain times. Companies continue to plan for several reasons,
such as to increase confidence, guide employees, boost productivity, attain capital, and
This view directly conflicts with Porter’s competitive strategy theory wherein he
claims that a unique positioning strategy is necessary for a firm’s sustainability. While
Porter agrees that operational effectiveness (OE) is also needed for sustainability, he
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rejects the notion that it is sufficient by itself. For a company to prosper, it must have a
unique strategic position coupled with superior OE. In the absence of competitive
strategy, firms must compete with one another on OE. While this strategy may work in
the short term, eventually it will lead to competitive convergence and stagnant profits.
Strategy Defined?
Porter and Mintzberg diverge on the topic of strategy. While Porter sees strategy
Mintzberg contends that all three processes - that is, visionary, planning, and learning -
planning alone will only set a company back because strategies begin to emerge
through these processes. and to force a business to develop a plan before its time
leads to a loss of productivity and can ultimately endanger the emerging strategy.
Porter, on the other hand, believes that strategic positions come from three
sources and often overlap. The first source is variety-based positioning because it is
based on the variety of goods or services offered by the firm. The second type of
group’s needs. The third positioning, access-based positioning, focuses on the means
by which customers are served. This can be geographical or any method by which a
surrounding the field of strategic management. Porter belongs to the positioning school,
an analytical school of thought with beginnings in the military. Mintzberg belongs to the
learning school of thought where it is believed that strategies emerge as part of the
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learning process. This school of thought found its basis in education and learning
theory. Both schools of thought have important aspects to take away and key ideas are
summarized below.
quickly adopt best practices in the industry, homogeneity occurs. To combat this trend,
companies must identify their strategy - that is companies must decide what to do and
what not to do. Porter suggests that trade-offs are necessary to maintain a sustainable
certain areas and not to compete in others. Consider the alternative, by trying to be all
things to all consumers, companies risk losing their unique position and, ultimately,
customers. Why? When a company has distinguished itself as a low cost provider, for
instance, it has chosen not to compete on quality. In other words, some strategies are
complementary while others detract from one another. Another point about trade-offs is
that the longer a company competes in any given industry, the more necessary trade-
offs are to maintaining competitive edge. This is true because as the external
environment goes through changes over time, new opportunities will emerge within the
industry. Industry incumbents will face trade-offs, such as whether to continue with the
current strategy or shift focus in response to the changes. The failure to choose
eventually erodes a company's competitive advantage and causes flat returns. Both
men agree that incumbent firms in mature industries are at a disadvantage because as
changes occur, newcomers will have an easier time exploiting opportunities because
they face no trade-offs and do not have to deal with rich histories or complex business
realignments.
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Examples
Kodak was a technologically innovative company that made the bulk of its profits from
film. With the proliferation and commoditization of digital technology, Kodak began to
see its cash cow crumble. While Kodak was at the front of the digital revolution, it was
unable or unwilling to change course, perhaps not ready to admit to the slow death of its
number one business. Because Kodak did not respond rapidly or effectively to changes
in the environment, it forfeited much of the early digital camera sales to Asian
competitors. As a result, by the time Kodak entered the digital camera arena, profit
The mistake made by Kodak was an unwillingness to choose. Because film had
been such a success in the past, the leaders of the company didn’t want to make the
hard choice to go exclusively digital. Instead, the company combined its digital division
with the film division, in an attempt to introduce its digital line faster and more efficiently.
However, these two strategies were not complementary and success in one area most
likely would mean failure in the other. Another factor working against Kodak at the time
was its rich hierarchical culture left over from Mr. Kodak’s time at the company. This
way of doing business was a huge impediment to the company when it most needed to
Threats to Strategy
While it may seem that market forces pose the greatest threat to a firm’s
strategy, Porter asserts that more commonly it is internal struggles that pose the
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grow” (Porter, 1996). Take Kodak for instance. Technological advances threatened its
livelihood, but instead of capitalizing on the changes, Kodak simply wanted to wait for
the digital trend to run its course. It is easy to see why the company wanted to continue
along the same course. That course was familiar, comfortable and, at one time, very
successful. This is the effect that Donald Sull calls active inertia, or contentment with
the status quo (Sull, 1999). Successful companies are more prone to this because past
policies and practices have contributed to their success, making it more difficult for
these companies to face trade-offs. Porter suggests that for this very reason,
companies should have a clear strategic position that changes only once a decade or
so. The tool to use to respond to market changes, Porter contends, is the operational
agenda, as it should be dynamic, flexible, and constantly striving for best practices.
Fittingly, even companies with good strategies will suffer if operational effectiveness is
not up to par.
Mintzberg states that companies infatuated with planning are, indeed, flirting with
risk. The Kodak example highlights the fact that even industry leaders must embrace
risk and change, at times. This is because the marketplace is dynamic and influenced
havoc on the company’s strategy. Kodak could have stemmed the losses if it would
have embraced the new opportunity early on. Sull, Porter, and Mintzberg all agree that
industry leaders have the most to lose and are the least capable of responding to
change. The second behavior that Mintzberg warns against is conflict among planners
and those for whom they plan. He argues that coordination and planning are forms of
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control and that when a company engages in control, it risks drowning the spontaneity
Recommendations
While there are pitfalls to strategic planning, the benefits strongly outweigh the
risks. To minimize risk while obtaining the most value from a strategy, a company
Works Cited
. Businessweek,
http://www.businessweek.com/magazine/content/06_48/b4011421.htm.
Sull, Donald (1999). Why Good Companies Go Bad. Harvard Business Review, 77(4),
42-50.
Mintzberg, Henry (1993). The Rise and Fall of Strategic Planning. Macmillan, Inc.
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Porter, Michael (1996). What is Strategy? Harvard Business Review.