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RESEARCH ARTICLE
Andrew Isherwood
Pico Digital Inc., San Diego, CA, USA
hile managers use a variety of tools, they overwhelmingly continue to use those
that are well established and focus on the management of internal and
external resources, whereas tools aimed to foster more innovative, dynamic, and blue
ocean strategies are not widely applied in practice.
Introduction
The term strategy has become prevalent in both public and private sectors and a
large number of definitions abound (Zegveld, 2006; Gunn and Williams, 2007).
The literature on strategic management provides a number of different perspectives
and assumptions, with increasing attempts to define what strategy is and where it
comes from esoteric debates that are often impenetrable and largely irrelevant
to practitioners.
In a review of articles published over 40 years, Cummings and Daellenback
(2009) find, among other things, that strategy is about balancing the understanding of external environment and internal practices and about processes and practices. The practice of strategic planning is reported to have suffered a decline,
losing popularity in the 1970s due to the inability of strategic planning tools to
deliver on their promise (Glaister and Falshaw, 1999). This observed decline is
something that Cummings and Daellenback (2009) attribute to a change in terminologies resulting from their analysis of words used in article abstracts, where
the word planning hands over primacy to the word strategy (p. 245), rather than
proof of a decline in the actual practice of strategic planning. According to Glaister
and Falshaw (1999), there was a revival of strategic planning in the 1990s due to
the emergence of the resource-based view of strategy, providing firms with practical
strategic advice on improving performance through resource management. Despite
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Description
SWOT
analysis
PEST (or
PESTEL)
Ansoff matrix
Porters five
forces
Game theory
Scenario
planning
Value chain
analysis
Mission and
vision
statements
The cultural
web
Strategic clock
BCG matrix
(Boston
Consulting
Group)
Financial
forecasting
Financial predictions and plans of how much a product costs and how much it can be sold for and
hence the profit.
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In addition to Brews and Purohits planning dimensions, we build on the work of Zegveld (2006), who
identifies four generic models of strategic management
based on three reference points external, internal, and
time (static/dynamic) which he superimposes on the
original strategy frameworks of the industrial organizations school and the resource-based school. The internal
reference point considers internal variables used to define
the success of an organization, while the external reference
points use external benchmarks such as competitors, suppliers, and customers. The use of time as a reference point
stresses the impact of adaptation or learning, where game
theory and dynamic capabilities can be considered to be
strategic frameworks that are dynamic versions of the
industrial organization and resource school, respectively.
Figure 1 illustrates the four main generic models of strategic management adapted from Zegveld (2006), and
incorporates the four dimensions of strategic planning
(Brews and Purohit, 2007).
Industry-based strategic management is directly
related to industrial organization theory influenced by the
Michael Porter school of thought. The focus is on external
competition between firms and industry attractiveness.
With industry-based strategic management, technology
Symbolic Planning
Rational Planning
Generative Planning
Transactive Planning
External
Strategic Focus
Clarks study also highlighted notable country-specific differences in the use of tools and this relationship between
country and usage of tools will be explored here.
67
Game theory
Dynamic capabilities
Resource based
strategic management
Internal
Static
Dynamic
TIME
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Research method
The research method applied was a quantitative survey of
managers use of strategic tools. For this, an online survey
was conducted and 458 responses received. The analysis
of this data is split into two parts. The first part is to
categorize the strategic planning tools using factor analysis. The second part is to test the impact of respondent
demographics on the use of each of the categories of strategic planning tools (identified as H1H4) using a PLS
structural equation modeling technique. Specifically, the
demographics include management educational background (H1), major responsibilities within their role
(H2), and the country (H3) and business sector (H4) in
which the manager is operating. It is expected that these
demographics will have an effect on the different kinds of
strategic tool and the model in Figure 2 illustrates these
hypothesized relationships.
Survey methodology
One of the authors is chief technologist at a leading telecommunications company, responsible for both technology and business innovation including development of
new start-up business units within the telecommunications sector. As such, he is a member of a leading global
business-oriented networking site and participates in
20 professional groups on this networking site. These
groups are organized around specific technology interests
within the telecommunications sector and mainly discuss
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Educational
Background
H1a-d
Management
Task/Role
H2a-d
Business
Sector
Country of
Work
H4a-d
H3a-d
(a)
(b)
(c)
(d)
69
Results
* H1-H4 is expected to have an impact on each of the four categories of strategy tools (a-d)
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Sector
Engineering
Strategy
Sales/purchasing
Operations
General line management
Finance
Other
31%
26%
16%
13%
7%
1%
6%
Media
Manufacturing
IT
Telecommunications
Engineering
Education
Consulting
Health
Retail
Finance
Other
23%
23%
15%
11%
8.5%
3.5%
3%
2%
2%
1.5%
7.5%
73%
North America
USA
Canada
15%
Geographic location
European Union
UK
France
Germany
Netherlands
Belgium
Denmark
Finland
Italy
Switzerland
Norway
Spain
Rest of EU
50%
3.5%
3%
3%
2%
2%
1%
1%
1%
1%
1%
4.5%
12%
3%
4%
1%
1%
1%
0.5%
0.5%
4%
12%
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Strategic tool
SWOT
Financial forecasting
Mission/vision statement
Scenario planning
Value chain analysis
Five forces
PESTL
Frequency
of use (%)
Strategic tool
Frequency
of use (%)
75.8
68.6
68.1
52.2
45.4
28.8
26.6
BCG
ANSOFF
BOS
Game theory
Cultural web
Strategic canvas
Strategic clock
26.4
21.4
20.5
17.9
14.2
11.8
8.7
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variables loading substantially onto a respective component. The interpretation of the four components is found
to be consistent with the four categories of generic models
of strategic management and planning illustrated in
Figure 1, namely industry-based, resource-based, game
theory, and dynamic capabilities.
Resource-based strategic management focuses on
company-based vision and strategic intent with tools such
as SWOT, financial forecasting, mission/vision statement,
scenario planning, and value chain analysis which are
related to internal strategic focus and are largely static.
Industry-based strategic management focuses on an
industry-based vision and competitive analysis with tools
such as PESTL, ANSOFF, five forces, and BCG which
are related to external strategic focus and are largely static.
Game theory deals with competitive strategy and interaction strategy and here the only strategic tool that fits this
category from our list of tools is game theory itself, which
Table 4. Factor analysis rotated component matrix and KMO Barletts test
Strategy tools
Component
1
PESTL
ANSOFF
Five forces
BCG
SWOT
Scenario planning
Value chain
Mission vision
Financial forecasting
Cultural web
Strategic clock
Strategic canvas
BOS
Game theory
0.829
0.841
0.761
0.706
0.437
0.350
0.613
0.712
0.673
0.704
0.780
0.366
0.331
0.376
0.727
0.774
0.668
0.484
0.815
0.881
2330.335
91
.000
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Subject of analyses
Strategic tools/instruments
Resource-based strategic
management
Company-based vision
Industry-based strategic
management
Industry-based vision
Game theory
Competitive strategy
Interaction strategy
Organizational learning
SWOT
Financial forecasting
Mission/vision statement
Scenario planning
Value chain analysis
Five forces
PESTL
BCG
Ansoff
Game theory
75.8
68.6
68.1
52.2
45.4
28.8
26.6
26.4
21.4
17.9
BOS
Cultural web
Strategic canvas
Strategic clock
20.5
14.2
11.8
8.7
Dynamic capabilities
Strategic intent
Competitive analysis
Path dependencies
has a dynamic and external strategic focus. Dynamic capabilities relate to organizational learning and path dependencies within organizations with an internal strategic
focus and dynamic time scale; the strategic tools that fit
this category are cultural web, strategic clock, strategic
canvas, and BOS. Table 5 summarizes the categories,
subject of analyses, strategic instruments, and frequency
of use.
It can be seen that resource-based strategic management is the most frequently used group of strategic tools,
followed by industry-based strategic management to a
lesser extent, with game theory and dynamic capabilities
being the least used by managers.
The model
The conceptual model developed in Figure 2 was fitted
to the data using partial least squares (PLS) structural
equation modeling software SmartPLS2.0 (beta) (Ringle
and Alexander, 2005). The research hypotheses were
tested by PLS, as shown in Figure 5 and Table 6. PLS
was used because it is robust to non-normality data and
when the sample size is at least 10 times greater than the
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Table 6. Standardized path coefficients, bootstrap mean, standard error, and t-values
path
coefficient
Standard
deviation
Standard
error
t-Statistics
0.3146
0.3129
0.1774
0.2213
0.2062
0.1278
0.0335
0.1067
0.0794
0.0451
0.0838
0.0206
0.1069
0.0083
0.0279
0.111
0.0424
0.0308
0.0461
0.0468
0.0447
0.0452
0.0441
0.0449
0.0453
0.0479
0.0437
0.0386
0.0401
0.0449
0.0401
0.05
0.0424
0.0308
0.0461
0.0468
0.0447
0.0452
0.0441
0.0449
0.0453
0.0479
0.0437
0.0386
0.0401
0.0449
0.0401
0.05
7.3641*
10.0769*
3.8356*
4.6421*
4.7067*
2.9194**
0.7636
2.3769
1.7821
0.9911
1.8891
0.5454
2.6661
0.1838
0.6955
2.2207
Accept/reject
hypothesis
Accept
Accept
Accept
Accept
Accept
Accept
Reject
Reject
Reject
Reject
Reject
Reject
Reject
Reject
Reject
Reject
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Structuralist Approach
Reconstructionist Approach
Generative Planning
Transactive Planning
Symbolic Planning
Rational Planning
Industry based strategic
management
Strategic Focus
External
Internal
Game theory
PESTL
ANSOFF
FiveForces
BCG
GameTheory
Dynamic capabilities
CulturalWeb
StrategicClock
StratCanvas
BOS
Static
TIME
Dynamic
In practice, managers most frequently use the traditional structuralist strategy tools which can be seen to
focus on symbolic and rational planning dimensions,
where symbolic planning develops high-level visions/missions and rational planning results in more specific and
detailed goals, action plans, and outcomes. Their contextual application is largely static, with a strategic focus
primarily on internal resource-based strategic management and to a lesser extent external industry-based strategic management. This kind of strategic planning
obviously remains highly relevant for managers operating
in a turbulent environment, confirming previous research
(Brews and Purohit, 2007).
The findings further show that the reconstructionist
strategy tools, which can be seen to focus on transactive
planning (that is iterative and amenable to ongoing incremental adjustment) and generative planning (that stimulates innovation), are less frequently used by managers but
appear to be in use by at least 1 in 10 of respondents.
While 40% of respondents had heard of BOS, only 4%
of these considered it to be unhelpful in practice, suggesting that BOS must feel right to practicing managers,
which was the original intention of Kim and Mauborgne
(2005) in their aims for BOS. However, this is not the
same as proving that the tools actually work, which is one
of the major criticisms of BOS (Kim et al., 2008; Aspara
et al., 2008; Burke et al., 2009). Although the reconstructionist approach has not gained universal and mainstream
academic adoption because of these limitations, they are
to a certain extent being used in practice and more so by
those with formal management qualifications. This further
suggests that publications from the likes of Kim and
Mauborgne and the Harvard Business Review are being
read and applied by practitioners.
It appears from the findings that the simpler the tool
the more the respondents used them. This could potentially be due to either limited time of managers (more
difficult tools take longer to work through) or a difficulty
in communicating more complex tools to senior management who may not understand them. The use of tools by
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egy models, and planning dimensions through the selection of strategy tools is not mutually exclusive and in fact
they co-exist in their use by managers.
Interestingly, neither the country in which the
manager works nor the business sector in which they
operate had an impact on the kinds of strategic tool they
used. This, however, could have been as a result of the
sample which was heavily biased toward the UK/USA/
Europe.
The categorized strategy tools (CaST) framework
developed from this study, provides managers with a sense
of what the tools can do and how they might contribute
to the overall organizational strategy. To be more dynamic
and focus on generative and transactive planning, there is
a need to utilize some of the tools in this category to
facilitate innovative strategies that are dynamic and both
internally and externally focused. The concentration of
managers who overwhelmingly use resource-based, and to
a lesser extent industry-based, strategic tools highlights
the potential dangers for effective management in a turbulent environment. According to Brews and Purohit
(2007), Mission/statements of strategic intent do more
harm than good . . . and symbolic planning is detrimental
to performance representing empty PR exercises or pious
platitudes. They stress the need for a balance of paradoxical or opposing forces for effective planning in the face of
unstable environments. The CaST framework will help
managers evaluate the tools they are using in the context
of different planning approaches to facilitate them in
getting the balance right.
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Conclusion
With globalization, intensifying competition, interconnected worlds and markets, and an increasingly unstable
environment, more and more organizations are seeking
new markets and new innovative products to sustain
growth and address rising consumer demand and diverse
needs. This study reviewed the use of strategy tools by
managers to better understand their actual practice and
application in the real world.
By conducting a review of the extant literature and
empirical studies, the main issues surrounding the use of
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Ringle CMW, Alexander SW. 2005. SmartPLS (2.03), University of Hamburg. Available at: http://www.smartpls.de.
Strategic Change
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Webster JL, Reif WE, Bracker JS. 1989. The managers guide
to strategic planning tools and techniques. Planning Review
17: 413.
Turocy TL, von Stengel B. 2001. Game theory. CDAM Research Report LSE-CDAM-2001-09, October 8. Available
at: http://www.cdam.lse.ac.uk/Reports/Files/cdam-2001-09
.pdf.
BIOGRAPHICAL NOTES
Correspondence to:
Rana Tassabehji
University of Bradford School of Management
Emm Lane
Bradford BD9 4JL
UK
e-mail: r.tassabehji@bradford.ac.uk
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