• Compare and contrast the prescriptive, descriptive and configuration schools of thought with respect to strategic management.
• Explain the reasons for, and implications of, different approaches to strategy for the practising manager.
• The first three schools we shall examine are ‘prescriptive’ – they say how strategy should be formulated. They are:
– The design school
– The positioning school
– The planning school
• In this model strategy formation is viewed as a process of conception
• The design school proposes a model of strategy making that seeks to attain a match, or fit, between internal capabilities and external possibilities (Mintzberg et al. (1998): 24).
• This approach has been the most influential in the development of strategic management, and is the underpinning for all ‘classical’ strategy courses.
– An internal appraisal of strengths and weaknesses are set against an external appraisal of opportunities and threats facing the organisation (a SWOT analysis).
– The environment is simplified into political, economic, social environments and the technological dimension (a PEST analysis).
– Strategy options are then evaluated against managerial values and social responsibility.
– The chosen strategy, thus conceived and designed, is then presented as the blueprint for implementation.
• The key strategist is limited in his ability to assess internal and external conditions; • A solely top-down driven strategy formulation process can fail to tap the organisation’s knowledge
• Formulated strategies are inflexible to change;
• Both external changes in the environment and internal changes in the organization cannot be taken into account until a new round of strategy formulation begins
• Separation of strategy formulation from strategy execution lessens the ability to learn from one’s own mistakes
• In this model strategy formation is seen as a formal process
• It formalizes the strategy formulation process into distinct process steps with timelines.
• Strategies result from a controlled, conscious process of formal planning, decomposed into distinct steps, each delineated by checklists and supported by techniques.
• Responsibility for that overall process rests with the chief executive in principle;
• Responsibility for its execution rests with staff planners in practice.
• The criticisms of the planning school are very similar to those of the design school.
• The formal planning process assumes that the future can be predicted;
• It detaches ‘the plan’ from both the humans who are doing the planning and those who will carry out the implementation
• It can stifle creativity by excessive formalisation of the planning processes
• It pays relatively little attention to the possible influences of the organisation’s environment.
• The positioning school focuses on strategy content and prescribes the use of analytical frameworks for strategic decision making.
• Strategies are generic, identifiable positions in a competitive marketplace.
• The strategy formation process is therefore one of selection of these generic positions based on analytical calculation.
• Analysts play a major role in this process, feeding the results of their calculations to managers who officially control the choices
• It encourages organisations to follow generic strategies, rather than strategies that are specific to them,
• The analysis suggested by this school is narrow, since it considers the most important aspect of the organisation’s environment
• The school is generally biased towards the consideration of the activities of ‘big business’ in competition with each other, rather than studying the internal capabilities and capacity of a firm
• The next six schools we shall examine are ‘descriptive’ of the ways in which strategy is formed in practice. They are:
– The entrepreneurial school.
– The cognitive school.
– The learning school.
– The power school.
– The cultural school.
– The environmental school.
• This school views strategy formation as a visionary process
• It describe strategy as the ‘vision’, created by the ‘intuition, judgement, wisdom, experience, insight’ of a single (and probably charismatic) leader.
• Entrepreneurial strategy exists primarily in the mind of the entrepreneur it may not be very clear to the the people expected to implement it.
• The organisation will be subject to centralised direction from the leader’s office.
• The whole enterprise hangs on the ability and personality of one individual, which may be both undesirable and risky.
• This school views strategy formation as a mental process
• Strategists are largely self-taught: they develop their knowledge structures and thinking processes mainly through direct experience.
• Experience shapes what strategists know, which in turn shapes what they do, thereby shaping their subsequent experience.
• Strategies are based on ‘objective’ approaches of observation, measurement and analysis and the ‘subjective’ interpretation of issues.
• The ideas of this school undermine the relevance and importance of the detailed planning activities of the first three schools.
• It seems unlikely that the human brain could take in and process all the information needed to make the comprehensive ‘objective’ analyses required.
• it is also probable that the inevitable ‘subjective’ interpretation that accompanies the passage of ‘plan’ into ‘action’ means that all strategy contains creative elements that are not explicit in the plan.
• The Learning School views strategy formation as an emergent process
• It states that strategy is a result of learning that occurs at all levels throughout the organization.
• Strategies results from a variety of little actions and decisions made by all sorts of people (sometimes accidentally)
• Strategy is seen as the sum of a whole series of adjustments that people all over the organisation make, based on their own expertise or wishes.
• In a strategic crisis there may be no time to learn – someone has to have a vision of the way forward, or a cunning plan for salvation.
• Some organisations may perform better if there is an explicit overall strategic direction within which learning can take place coherently.
• For some strategic choices, involving major or radical change, the learning, incremental approach will never deliver results.
• No description of external factors in the process of strategy formation
• This school views strategy formation as a process of negotiation
• strategy formation is seen as an overt process of influence, emphasising the use of power and politics to negotiate strategies favourable to particular interests
• Strategy formation is thus seen in this school to be the result of competition or of bargaining and compromise.
• There is a potential for conflict between owners and managers, and between manager and manager,
• Anyone who wields any power within the organisation could attempt to influence the way it is run to satisfy their own interests.
• As power shifts, so do the plans for the future; frequent changes in direction and the lack of rationality can be very demoralising to those expected to implement the strategies;
• Strategy formation as a collective process
• This school is ‘the reverse image’ of the power school
• ‘Strategy formation is a process of social interaction, based on the beliefs and understandings shared by the members of an organization.
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