• Understand what is meant by deliberate and emergent strategy development.
• Identify deliberate processes of strategy development in organisations.
• Identify processes that give rise to emergent strategy development such as: logical incrementalism, political processes and organisational structures and systems.
• Consider the implications and challenges of managing strategy development in organisations.
Deliberate strategy involves intentional formulation or planning.
Deliberate strategy can come about through:
• Strategic leaders;
• Strategic planning mechanisms;
• External imposition.
Strategy may be the deliberate intention of a leader. This may manifest itself in different ways:
• Strategic leadership as command.
• Strategic leadership as vision.
• Strategic leadership as decision making.
• Strategic leadership as the embodiment of strategy.
• Strategic planning takes the form of systematic analysis and exploration to develop an organisation’s strategy.
• Government can determine strategy in public sector organisations (e.g. schools).
• Government can shape strategy in regulated industries (e.g. public utilities).
• Multinational companies may have elements of strategy imposed by host governments (e.g. the requirement to form local alliances).
• Business units may have their strategy imposed by head office (e.g. part of a global strategy).
• Venture capital firms may impose strategy on companies they buy into.
Emergent strategy:strategies emerge on the basis of a series of decisions, which forms a pattern that becomes clear over time.
Strategy is not a ‘grand plan’ – managers draw together emerging themes of strategy from lower down the organisation rather than direct strategy from the top.
• Logical incrementalism is the development of strategy by experimentation and learning ‘from partial commitments rather than through global formulations of total strategies’.
There are three main characteristics of logical incrementalism:
• Environmental uncertainty – constant environment scanning and change.
• General goals – avoiding too early commitment to specific goals.
• Experimentation – building a strong but flexible core business but engaging in ‘side bet’ ventures to test out new strategies.
The political view of strategy development is that strategies develop as the outcome of bargaining and negotiation among powerful interest groups.
The approach of different people to strategic problems is influenced by:
• Position and personal experience.
• Competition for resources and influence.
• The relative influence of stakeholders.
• Different access to information.
• Strategy development as the outcome of managers making sense of, and dealing with, strategic issues by applying established ways of doing things.
• Strategy development is influenced by the systems and routines with which managers are familiar in their particular context.
• Multiple strategy development processes – most organisations develop strategy through several different processes.
• There is no one right way to develop strategy but the context can be important.
Strategy will be seen differently by different people:
• Senior executives tend to see strategy as intended, rational and analytical whereas middle managers see it as a cultural and political process.
• Managers in public sector organisations see strategy as externally imposed since they are answerable to government bodies.
• People in family businesses see the influence of powerful individuals, who may be the owners of the businesses.
Strategy development processes will differ according to context:
• Organisational characteristics differ – in terms of size, form and complexity.
• The nature of the environment differs – it may be stable or dynamic; simple or complex.
• Life cycle effects – development processes will evolve and change over the life cycle.
• Environment is straightforward and not undergoing significant change.
• The organisation is not complex e.g. single product firms in basic industries, some public services.
• Historical analysis is useful.
• Strategic planning from the centre is possible.
• Past experience is also useful BUT there is a threat if conditions become more dynamic.
• Managers need to consider the environment of the future with increasing uncertainty.
• Use of structured ways of making sense of the future, such as scenario planning.
• Encouraging active sensing of changes by people lower down in the organisation.
• Logical incrementalism and organisational learning are more relevant.
• The environment is difficult to comprehend e.g. multinational firm/major public service.
• Use of structural solutions e.g. sub-divide the organisation.
• There is a need to devolve strategy thinking and influence within the organisation.
• Use of the development of a portfolio of real options; corporate venturing and intrapreneurship.
• It is important to distinguish between deliberate strategy
– the desired strategic direction deliberately planned by managers
– and emergent strategy, which may develop in a less deliberate way from the behaviours and activities inherent within an organisation.
• Most often the process of strategy development is described in terms of a deliberately formulated intended strategy as a result of planning systems carried out objectively and dispassionately. There are advantages and disadvantages of formal strategic planning systems.
• Deliberate strategy may also come about on the basis of central command, the vision of strategic leaders or the imposition of strategies by external stakeholders.
Strategies may emerge from within organisations. This may be explained in terms of:
• How organisations may proactively try to cope through processes of logical incrementalism and organisational learning.
• The outcome of the bargaining associated with political activity resulting in a negotiated strategy.
• Strategies developing because organisational structures and systems favour some strategy projects over others and strategies often develop on the basis of continuity or organisational culture.
In managing strategy development processes, managers face challenges including:
• Recognising that different processes of strategy development may be needed in different contexts.
• Managing the processes that may give rise to emergent strategy as well as deliberate strategy.
• What are the implications for managing strategy development in modern organisations?
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