Managing Strategy Session 1

Introduction to Strategic Management

Introduction to Strategic Management

This Session will explore:
Alternative definitions of strategy

The four strategy lenses: design, experience, ideas, and discourse

The different levels of strategy The main elements of strategy

Introduction to Strategic Management

What is Strategy?

There is no one definition of strategy.

There are many competing definitions

There is no one definition that is universally accepted.

Introduction to Strategic Management

A Classical Definition of Strategy

the determination of the basic long-term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.
Alfred D. Chandler, 1963

Introduction to Strategic Management

The Classical View of Strategy
Earlier writers on strategy, like Chandler, were mainly prescriptive & viewed strategy as part of a deliberate planning process. For strategy to be effective it needed to be both rational & logical & under the control of senior management. Consequently, strategy development was viewed as a 'top-down' process. Strategy had to be both deliberate & planned, with the strategic process divided into discrete stages that more or less followed a certain sequential order. This gave rise to what came to be called the 'systematic approach to strategy'.

Introduction to Strategic Management

The Classical View: A critique
Since the 1980's the classical approach to strategy has come under increasing criticism. One of the earliest & most influential critics was Henry Mintzberg. He observed that whilst many organisations pursued intended strategies that were deliberate these strategies were often only partially realised or not realised at all. Such strategies appeared to have emerged with or without prior intention or plan. Strategy development could therefore be a bottom-up as well as a top-down process. As a consequence, strategy development & implementation will more likely occur simultaneously rather than sequentially.

Introduction to Strategic Management

The 5 Ps of Strategy

Henry Mintzberg (1987)

Distinguished between five different definitions of strategy :

Strategy as Plan
Consciously intended course of action (deliberate);

Strategy as Ploy
A manoeuvre intended to outwit competitors;

Strategy as Pattern
A pattern in a stream of actions (emergent);

Strategy as Position
Locating an organisation in its environment ;

Strategy as Perspective
An ingrained way of perceiving the world.

Introduction to Strategic Management

The 5 P's of Strategy

Strategy as Plan
consciously intended course of action, a guideline (or set of guidelines) to deal with a situation.

By this definition, strategies have two essential characteristics:

They are made in advance of the action to which they apply, and They are developed consciously & purposefully.

Strategy as a Ploy
a specific manoeuvre intended to outwit an opponent or competitor ... a corporation may threaten to expand plant capacity to discourage a competitor from building a new plant. Here the real strategy is the threat, not the expansion itself, and as such is a ploy.

Introduction to Strategic Management

The 5 P's of Strategy

Strategy as Pattern
. Strategy is a pattern specifically, a pattern in a stream of actions by this definition, strategy is consistency in behaviour, whether or not intended.

Mintzberg distinguishes between:

Intended strategy & Realized strategy. Deliberate strategies, where intentions were realized. Emergent strategies, where patterns are developed in
the absence of intentions, or despite them.

Strategy as Pattern

Unrealised Strategy

Realised Strategy

Mintzberg, 1987

Introduction to Strategic Management

The 5 P's of Strategy

Strategy as Position
By this definition, strategy becomes the mediating or match between an organization and its environment, that is, between the internal and the external context, this definition can be compatible with either (or all) of the preceding ones.

Strategy as Perspective
This definition views strategy not just as a chosen position but more an ingrained way of thinking. In effect, when we are talking of strategy in this context, we are entering the realm of the collective mind individuals united by common thinking and/or behaviour, This is often referred to as corporate culture.

Introduction to Strategic Management

The Strategy Lenses
The strategy lenses are four different ways of looking at issues of strategy development for an organisation.

Strategy as Design

Strategy as Experience
Strategy as Ideas Strategy as Discourse
Johnson et al, pp. 19

The Strategy Lenses

Strategy as Design Strategy as a deliberate, formal & systematic planning process. A top down process that views strategy development & implementation as separate & distinct stages in the process. Foresight and strategic fit are key to success.
Examples : Chandler & Ansoff (Planning), Andrews (Strategy as Fit), Porter (Positioning),

The Strategy Lenses

Strategy as Experience Strategy as an emergent process. Bottom-up as much as or more than top-down. Strategy development & implementation are parallel & overlapping processes. Flexibility & adaptability are key to success.
Examples : Mintzbeg (Pattern, Perspective), Quinn (Logical Incrementalism),
Pascal (Strategic Accommodation), Senge (Learning Organization), Hamel & Prahalad (Strategy as Stretch).

The Strategy Lenses

Strategy as Ideas Strategy as the emergence of order & innovation from the variety & diversity which exist in & around organizations. New ideas emerge within & outside the organization in competition with each other & battle for survival against forces of conformity & commitment to past strategies (eg survival of fittest). Diversity & variety key to success.
Examples:
Brown & Eisenhardt (Competition on the Edge application of complexity theory & evolutionary theory), Eisenhardt & Sull (Strategy as simple rules), Stacey (Complex Responsive Processes)

The Strategy Lenses

Strategy as Discourse
This views strategy development in terms of language as a resource for managers by which strategy is communicated, explained and sustained and through which managers can gain influence, power and establish their legitimacy and identity as strategists.
Johnson, et al, pp.42

This suggests that concepts and models of strategy are less to do with substance and more to do with image, identity and power. Strategy development then becomes a means through which the power and influence of senior managers and consultants may be enhanced and sustained.

Introduction to Strategic Management

A working definition of Strategy

Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.
Johnson et al, pp. 3

Introduction to Strategic Management

Levels of Strategy

Corporate-Level Strategies
is concerned with the overall purpose and scope of an organisation and how value will be added to the different parts (business units) of the organisation

Business-Level Strategies
is about how to compete successfully in particular markets...A Strategic Business Unit (SBU) is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU

Operational Strategies
are concerned with how the component parts of an organisation deliver effectively the corporate and business-level strategies in terms of resources, processes and people
Johnson et al, pp. 7

Introduction to Strategic Management

The Three Elements of Strategy

Strategic Position
Is concerned with the impact on strategy of the external environment, an organisation's strategic capability (resources & competences) and the expectations and influence of stakeholders

Strategic Choices
Involve understanding the underlying bases for future strategy at both the business unit (SBU) and corporate levels and the options for developing strategy in terms of both the directions and methods of development.

Strategy into Action

Is concerned with ensuring that the strategies are working in practice.
Johnson et al, pp. 13-16

Introduction to Strategic Management

Structure of Online Course

Course Modules
1. 2. 3. 4. Strategic Process Strategic Analysis Strategic Options Strategic Architecture

Case Study 1
The Honda Effect
Please read the two Honda case studies 1. 'The Honda Effect (1)', based on the BCG Report; 2. The Honda Effect (2), based on Pascales observations & analysis.

Discussion Questions
Compare & contrast these two accounts of Honda's entry into the US motorcycle market : 1. What are the key differences between these two accounts of Hondas entry into the US motorcycle market? 2. To what extent was Hondas apparent strategy deliberate and/or emergent? 3. What key lessons may be learned from any comparison of these two quite different accounts of the same strategic decision?

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