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    Strategy Continuum Assignment Help

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    Strategy Continuum Assignment Help


    Strategy Continuum Assignment Help

    Abstract

    This theoretical paper views Henry Mintzberg’s ‘Strategy Safari’ as representing a strategy continuum along which different styles/modes of strategy making and implementing are spread, with Prescriptive/Planning style of strategizing at one end and the Descriptive/Learning mode of strategizing at the other end. The paper attempts to highlight some of the reasons behind the traditional ‘hype’ created for the Prescriptive/Planning mode, its impact on the teaching behavior of the teachers of strategic management and, the underlying philosophical and theoretical assumptions behind the two extreme end of the strategy continuum. Based on these underpinnings, the paper presents some propositions and calls for launching research efforts to test and verify these propositions. The paper proposes to include the strategy continuum view for the teaching of Strategic Management courses at graduate and under-graduate levels in the business schools.

    Key Words: Strategy, Prescriptive Schools of Strategy, Descriptive Schools of Strategy, Strategic Management, Strategy-Continuum

    The first chapter of Henry Mintzberg et al. (1998) work, Strategy Safari: A Guided Tour through the Wilds of Strategic Management, starts with the ancient Sufi tale ‘The blind men and the elephant’, and the writers, after quoting the poem by John Godfrey Saxe (1816 – 1887), write:

    “We (the strategy makers) are the blind people and strategy formation is our elephant. Since no one has had the vision to see the entire beast, everyone has grabbed hold of some part or the other and ‘railed on in utter ignorance’ about the rest. We certainly do not get an elephant by adding its parts. An elephant is more than that. Yet to comprehend the whole we also need to understand the parts” (Mintzberg et al., 1998, p. 3).

    They then present ten distinct points of view as they emerge from their study of the large body of literature of the strategic management field. They group these ten distinct points – as ten distinct ‘schools’ of strategic management, which they divide in three groupings: prescriptive (three schools); concerned with how strategies should be formulated, descriptive (six schools); concerned less with prescribing ideal strategies but with describing how strategies get made and, finally a combination of the first two groups, namely, the configuration school, which seeks to integrate the strategy-making process, their contents, organizational structures and their related contexts.

    A brief description of the two sets of strategy schools, based on their premises as presented by Mintzberg et al., is given below:

    Preamble of Mintzberg’s Strategy Schools’ Premises

    Prescriptive Schools

    Strategy maker(s) have acquired/learned formally the act of strategy making; they are the only strategy maker(s) in the organization, strategy is made without the help of any non conscious intuition; while making strategy, focus is more on the process of strategy making rather than the contents of the strategy; strategies are implemented only after they are fully formed; the strategies are clear and can be articulated easily to other members of the organization; the strategy is put to action only after it’s fully formed; formal planning techniques like preparing detailed checklists, plans and programs are used while making strategy; chief executive makes the strategy and the employees implement it; the fully formed strategies are then implemented according to the goals, budgets and, programs outlined in the them; the strategies may not be unique but selected from a limited number of broad market positions; strategy making depends too much on calculations and analysis; formal analysis of the market plays a major role in making strategy; the market analysis yields fully formed strategies which are then implemented.

    Descriptive Schools

    Strategy formation and implementation occur simultaneously; there are many strategists in the organization, there’s no single person or group entrusted with this responsibility; while making and implementing strategy simultaneously, the organization learns from the actions of implementation and, strategy is kept flexible to accommodate changes as they are required; the role of leadership is to manage the collective organizational learning as it happens during the process of strategy making and implementation; strategies are continuation of the past patterns but become plans for future as the organization learns collectively and jointly; strategy formation is shaped by internal or external power and politics; the strategies do not appear as fully formed but are emergent and ploys are also used in developing strategies; strategy is made through persuasion, confrontation and internal political games; the organization uses different network and alliances in making collective strategies; strategies are based on the common beliefs and shared understanding of the organizational members; organizations with strong cultures use shared beliefs and values in making strategies, the organizational members learn these shared beliefs and values overtime;

    Strategizing is rooted in the collective intentions of the employees; the organization can also depend on its environment for crafting strategy as the organization’s main strategic intent is to react to changes in environment; the role of leaders is basically to read the environment and adjust the strategy accordingly; organization clusters with other similar organizations to fight the forces of environment. Strategy exists in the mind of the strategist as a form of long-term vision for the organization; strategy making is a process rooted in the past experiences and intuitive thinking of the maker rather than formal planning and analysis; the leader promotes the vision to organizational members and ensure that the organization does not stray too far away from this vision; the strategy is clear in the mind of the maker as intentions, which can be changed as the strategy is implemented; the organization has a simple structure responsive to the directives of the strategy maker; the strategy takes advantage from pockets of market position rather than taking the entire forces of competition head-on; strategy formation takes place in the mind of the strategist as a thought process; strategy is not a fixed position but more like a perspective based on the mental maps and perceptions of the strategy makers; strategy is, therefore, a result of perceptions and interpretation of the seen world; strategy is difficult to attain and, once attained, is difficult to change.

    This paper views this grouping as a ‘strategy continuum’, as shown in the below figure

    1, with prescriptive schools at one end and the descriptive schools at the other end of this continuum.

    The strategy continuum

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    If strategy making is seen as a continuum, then an organization, under some set of conditions can tilt towards that end of prescriptive school model (the other end being the learning/emergent model) and, in Mintzberg’s view prescriptive school type approach can be taken by organizations ‘coming out of a period of changing circumstances and into one of operating stability’ (Mintzberg, 1990) and ‘the structural context most suitable for this end of strategy continuum is what ‘we call machine bureaucracy’ (Mintzberg, 1979, chapter 18). Key Conclusions of Mintzberg’s 1990 paper are: (1) The Design School at The Harvard Business School, in 60s, enunciated a set of prescriptive concept for strategy formulation; (2) The design principles shared by the design school were, and still are, generally invalid except in a narrow specific context and that (3) in unpredictable environments it is impossible to formulate an explicit strategy before the trial and experience process has run its course; and that it is not necessary to make strategy explicit in predictable environments.

    The critique leveled by Mintzberg on the prescriptive schools is counter-critiqued by Igor Ansoff on the basis of methodological weakness and contradiction to factual evidence (Ansoff, 1991), but it seems that Ansoff is nursing a bruised ego when he says, “Thus, if I am to accept Henry’s verdict, I have spent 40 years contributing solutions which are not useful in the practice of strategic management. Therefore, it should not be surprising that I rise in defense of at least one prescriptive school (the one to which I belong) in an effort to set the record straight and thus salvage a lifetime of work which has received a modicum of acceptance by practicing managers.” He cites examples where Mintzberg’s trail and experience or emergent/descriptive approach to strategizing would be difficult, for example, studies of ‘mergers and acquisitions’ which need a planned approach to diversification (Ansoff et al., 1971). This critique sounds logical but again highlights the point of Mintzberg that prescriptive and planning modes of strategizing are only suitable for large, diversified businesses engaged in the activities of merger and acquisitions. But what about small to medium size companies which do not engage in diversification through mergers or which do not have scores of planners and analysts to support the strategy makers or top management? Ansoff’s attack on Mintzberg’s main conviction that strategy formulation is impossible unless the environment is ‘stable and predictable’, does not appeal to logic and one is forced to think that how can an explicit strategy be made in the first place, if the future is uncertain and environment is turbulent, unless and until, as Mintzberg suggests, some form of trial and error is undertaken while strategizing. Similarly, Ansoff’s critique on the learning model which he terms as existential learning model is uncalled for, just on the basis of its antiquity. In the same paper, Ansoff concedes: “Thus, empirical research described above shows that Mintzberg’s Prescriptive Model is a valid prescription for organizations which seek to optimize their performance in environments in which strategic changes are incremental and the speed of the change is slower than the speed of the organizational response”. This is exactly what Mintzberg has to say when he says that prescriptive strategies can, perhaps, work in stable environments surrounding large organizations.

    Ansoff ‘s understanding of cognition seem to be limited to the rational model of learning, whereas Mintzberg’s cognitive school takes this limited view further and uses concepts from cognitive psychology as the underpinning of the school:

    “Strategies are largely self-taught and the duality, whereby experience of strategists shape what they know which in turn shapes what they do, plays a central role in this school and give rise to two rather different wings of the school: an objective wing, where mind’s eye is seen as a camera which scans the world and takes the picture of the world; the other subjective wing postulates that strategy is some kind of interpretation of the world and, whereas the objective wing seeks to understand cognition as some kind of re-creation of the world, the subjective wing believes that cognition creates the world” (Mintzberg et al., 1998, p. 150-151). Mintzberg labels the cognition school as a ‘bridge’ between the more objective or prescriptive and the more subjective schools of strategy making, which is quite consistent with the stance of this paper which views strategy making as a ‘strategy continuum’, with prescriptive schools at the one end and the descriptive schools at the other.

    The Rational/Scientific as opposed to Learning/Emergent model of Strategic Management

    Ansoff ‘is certainly an eminent spokesman for the role of so-called ‘rationality’ in strategic management’ (Mintzberg, 1991), according to which, strategy makers can plan and predict the future, in elaborate details in the form of an explicit strategy, formulated by top managers and implemented by employees lower down the hierarchy. This split in thought and action, whereby strategies are made in the corporate board rooms and implemented on the factory floors, is aptly exposed by Pascale’s account of the Honda strategy which was developed ‘on-site’ rather than any ‘brilliantly rational strategy imputed to these (Honda) executives by BCG consultants who apparently never bothered to ask’. According to the rationalist strategists, Honda should not have entered the global automobile business, because, according to their detailed analysis, the global markets were saturated, efficient competition was already present, Honda had no experience in automobiles and they had no distribution system in place. Considering all of these ‘hard facts’, Honda was advised not to enter the US auto market. But when Honda managers, who slept on the floors of their rented apartments in Los Angles, let the small 50cc bike move on the roads driven by them, sales rose so dramatically that the rest of the story is perhaps, the story of biggest corporate success in the history of business (Pascale, 1984).

    Michael Porter, another proponent of prescriptive modes of strategizing, shows a clear tilt towards large and diversified businesses, on which most of his research has focused. His famous model of different levels of strategy; corporate, competitive, functional and operational levels; all point that the companies under discussion are large with relatively stable environments around them. In one of his famous paper his declaration that, “a diversified company has two levels of strategy: business unit (or competitive) strategy and corporate (or companywide) strategy” (Porter, 1987), is based on a study of the “diversification record of 33 large, prestigious US companies over the 1950-1986 period”, and these large and prestigious organization include household names such as: Du Pont, Exxon, General Electric, Allied Corp., IBM, Johnson & Johnson, Mobil, Procter & Gamble, Rockwell, Sara Lee, 3M, Westinghouse and, Xerox.

    In another paper Porter discusses how the Japanese were able to win till 1980s, because of their operational effectiveness (OE means performing similar activities better than rivals perform them, in contrast, strategic positioning means performing different activities from rival’s or performing similar activities in different ways) and he notes that once the gap in this effectiveness narrowed, ‘Japanese companies are increasingly caught in a trap of their own making’ and to avoid this ‘Japanese companies will have to learn strategy’. He then points out that to do so they have to overcome some strong cultural barriers including a ‘notoriously consensus’ orientation (Only God and Porter know why this orientation is notorious?) and that ‘Japanese also have a deeply ingrained service tradition that predisposes them to go to great lengths to satisfy any need a customer expresses. Companies that compete in that way (through which they put every customer on top of any planning or analysis technique) end up blurring their distinct positioning, becoming all things to all customers’ (Porter, 1996).

    Further Support for the Strategy Continuum

    Bourgeois & Brodwin (1983) describe five ways in which companies implement strategies: (1) The commander approach; CEO as the main strategy formulator, little thought given to implementation, closely resembling the design school of prescriptive strategy making; (2) The organizational change approach; more or less the same as the first approach; (3) The collaborative approach; CEO does not develop strategy in a vacuum but involves his senior managers during the planning process and all key players back the final plan; (4) The cultural approach; people are involved at middle and sometimes lower levels & (5) The crescive approach; CEO addresses strategy planning and implementation simultaneously, he, through his statements and actions guides his managers into coming forward as champions of sound strategies, strategies move upward from the doers, strategy becomes the sum of all the individual proposals that surface throughout the year. This crescive approach closely mirrors the model of Internal Corporate Venturing (ICV) of the learning school (Mintzberg et al., 1998, p. 187) of the descriptive strategy making.

    Karl Weick goes one step further and calls for substitute for strategy in the form of need for action rather than planning: ‘Managers keep forgetting that it is what they do, not what they plan that explains their success. They keep on giving credit to the wrong thing – namely, the plan – and having made this error; they then spend more time planning and less time acting.’ (Weick, 2001, p. 346), he further notes: ‘Because strategy is often a retrospective summary that lags behind action, and because the apparent coherence and rationality of strategy are often influenced by hindsight bias, strategic conclusions can be misleading summaries of what we can do right now and what we need to do in the future…..Strategic planning is today’s pretext under which people act and generate meanings and so is the idea of organizational culture. Each one is beneficial as long as it encourages action. It is the action that is responsible for meaning, even though planning and symbols mistakenly get the credit’ (p. 354).

    Grassroots/Descriptive/Learning Model of Strategizing, under which

    1. strategies grow initially like weeds in the garden, they are not cultivated like tomatoes in a hothouse

    2. these strategies can take root in all kinds of places, virtually anywhere people have the capacity to learn and the resources to support that capacity

    3. such strategies become organizational when they become collective and pervade the behavior at large

    4. the process of proliferation (of strategies) may be conscious but need not be; likewise they may be managed but need not be

    Hothouse/Prescriptive/Rational Model of Strategizing, which postulates that

    1. there is only one strategist, and that person is CEO supported by planners and analysts

    2. the CEO formulates the strategy through a conscious, controlled process of thought

    3. these strategies come out of this process fully formed, these are then implemented (Mintzberg et al., 1998, p. 196-197)

    Teaching and Research issues of Strategic Management

    Another important theme which Mintzberg et al., (1998) highlight in their book is the teaching behavior and course structure of the strategic management courses taught to business students in the business school. Henry’s critique of the Harvard Business School’s case-method is based not on the underpinning learning model, but on the practical problems which it creates for students and later for business managers, who start taking for granted that facts and data will always be available in real life as it was available in 20 to 30 page case which they prepared in their comfortable study area. In real life facts and data needs to be collected through an extremely painstaking and difficult process, for which the students and, subsequently the managers, are not prepared and trained.

    Philosophical Underpinnings of the Strategic Continuum

    The Vienna Circle, a group formed by a philosopher Moritz Schlink (1882-1936) from the University of Vienna, referred to the philosophy of Bertrand Russell and Wittengenstein as logical positivism, and held that philosophy is not a theory but an activity whose business is the logical clarification of thought (Moore & Bruder, 2001, p. 180). Their ‘verifiability criterion of meaning’ or principle of verifiability (Blaug, 1975), demanded empirical verification of every statement, or otherwise, whatever is said, is not meaningful. This strict commitment to empiricism in philosophy has had two major repercussions on the field: suppression of metaphysics and reducing philosophy to an empirical and logical activity separated from the mainstream science, which kept on developing at its own pace, leaving the ‘chopped off’ philosophy with the inability to craft new philosophies for new sciences (Hawking, 1996, p. 233).

    It is important to note that any scientific endeavor is underpinned by philosophical assumptions about ontology and epistemology and a number of philosophers have noted how three different understandings of science are created by different ontological and epistemological combinations of assumptions. Positivism, the dominant philosophical stance in a great deal of organization theory (OT), assumes an objectivistic epistemology and realist ontology, while critical theorists and postmodernists share a stance of subjectivist epistemology but in their ontological positions, postmodernists favor a subjectivist ontology as compared to critical theorists preference for a realist ontology (McAuley, Duberley & Johnson, 2007, p. 28-39). Of the two broad postmodern social science orientations; skeptical and affirmative, (Rosenau, 1992, p. 12) the former rejects all what the modernity project has achieved, while the later takes a more moderate stance and adopts a middle-of-the-road approach in this tension between the modernists/rationalists and the postmoderns.

    The strategy

    continuum

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    Theoretical Underpinnings

    A 1987 study asserts that there is a relationship between strategy-making (process) as typified by Mintzberg and strategy (content) as typified by Miles and Snow, and this relationship affects organizational performance. Strategy/strategy-making fit types are (1) defender type/planning mode of strategy making, (2) prospector type and entrepreneurial mode of strategy making (3) analyzer type to the planning and entrepreneurial modes of strategy making and (4) reactor type and to the adaptive (environmental) mode of strategy-making. The first link, defender/planning was not supported by the study but the rest were (Segev, 1987). To understand these links further, a brief description of the Miles and Snow’s strategy typology and Porter’s generic strategies is given below.

    Prospector type: main features include that this type of strategy is learning oriented, flexible, fluid, works well in decentralized structures and a strong capability of research is present in the organization. Linked with Porter’s Differentiation strategy which has a learning orientation, strong horizontal coordination, strong capability in research, rewards creativity, risk-taking and innovation.

    Defender type: Efficiency orientation, centralized authority and tight cost controls, close supervision and little employee empowerment. Porter’s Low-cost leadership strategy is also efficiency oriented with strong central authority, tight cost controls, standard operating procedures, close supervision, routine tasks and limited employee empowerment

    Analyzer type balances efficiency and learning and the Reactor type has no clear organizational approach and design characteristics may shift abruptly depending on current needs

    The strategy continuum

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    Propositions

    Contingency theories of management/OT, that posit ‘one best way’ for each of various circumstances and, the economic theories of industrial organizations both contribute to a mechanistic view of the strategic management. OT is replete with deterministic contingency theories in which the role of human choice is relegated to a place quite secondary to the imperatives of environmental turbulence (Burns & Stalker, 1961; Lawrence and Lorsch, 1967); technological processes (Perrow, 1967; Woodward, 1965); size and ownership (Blau, 1970; Pondy, 1969); information processing requirements (Galbraith, 1973); or natural selection processes (Aldrich, 1975) . Others also include organization’s goals and strategy and its culture as the contextual dimensions of organizational design. The structural and contextual dimensions are interdependent, for example, large organization size, a routine technology, and a stable environment all tend to create an organization that has greater formalization, specialization, and centralization (Daft, 2001, p. 20).

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    Strategic Management and the Research Issue

    Literatures testifies some the current issues of strategic management research: “The reliance on single-item measures to the exclusion of multi-item scales virtually ensure that research is conducted with unreliable measures that attenuate results. More importantly, there is a clear question of validity. Does organizational size truly represent core rigidity, ability to initiate competitive action, or something altogether different? ….(similarly) the use of archival data has several disadvantages.” The problem becomes especially acute when one considers the new emerging schools of strategic management like, “the knowledge-based view of the firm, with its typology of exploration and exploitation knowledge strategies…an acceptable multi-indicator measures of these constructs has not been generally accepted in the literature” (Miller et al., 2007).

    Conclusions

    The following set of conclusions is drawn based on the discussion presented in this paper:

    1. Strategy formation is not a fixed and linear process but a flexible and dynamic one, contingent upon circumstances including; overall design, size, stage of life cycle, surrounding environment and, top management’s mind set.

    2. The strategic management literature has more or less ignored the strategic management process as it happens in smaller organizations with turbulence in their environments

    3. Mirroring this trend of literature, the teaching practices of strategic management are also biased towards prescriptive methods and large organizations and students are not given skills and tools to craft strategies for small to medium organizations.

    4. The research practices in the field of strategic management are similarly biased towards larger corporations and there is a paucity of reliable and valid measuring instruments, research methodologies and researchers trained to study the phenomena in small to medium sized organizations.

    5. This paper calls for treating strategic management field as representing a strategy continuum by addressing the above mentioned points through the combined efforts of academics, managers, researchers, consultants and teachers of the field.

    References

    Aldrich, H.E. (1975). Organizations and environments, Englewood Cliffs, N.J.: Prentice-Hall.

    Ambrose, L. M.; Schminke, M. (2003). Organization Structure as a Moderator of the Relationship Between Procedural Justice, Interactional Justice, Perceived Organizational Support and Supervisory Trust, Journal of Applied Psychology, Vol. 88, p. 295 – 305.

    Ansoff, H.I, Brandenburg R.J., Portner, F.E. & Radosevich, H.R. (1971). Acquisition: Behavior of U.S. Manufacturing Firms 1946-65, Vanderbilt University Press, Nashvile, TN Ansoff, H.I. (1991). Critique of Mintzberg’s ‘the Design School: Reconsidering the Basic Premises of Strategic Management’, Strategic Management Journal, Vol. 12 (6), p. 449-461.

    Baker, M.J. (2000). Marketing Strategy and Management, 3rd edition, Macmillan Press Ltd.

    Blau, P.M. (1970). A formal theory of differentiation in organizations, American Sociological Review, 35, p. 201-218.

    Blaug, M. (1975). Kuhn Versus Lakatos, or Paradigms Versus Research Programs in the History of Economics, History of Political Economy, Vol. 7(4), p. 399-419.

    Bourgeois, L.J., III. (1984). Strategic Management and Determinism, The Academy of Management Review, Vol. 9 (4), p. 586-596.

    Bourgeois, L.J. & Brodwin, D. (1983). Putting Your Strategy into Action, Strategic Management Planning, March/May 1983 issue.

    Bronn, C.; & Bronn, S. P. (2005). Reputation and Organizational Efficiency: A Data Envelopment Analysis Study, Corporate Reputation review, Vol. 8, p. 45 – 58.

    Burns, T. & Stalker, G. (1961). The management of innovation, London: Tavistock. Chowdhury, D. S. (2005). The Dominant Perspective, Institutional Ownership, And Corporate Efficiency: An Empirical Investigation, IJCM, Vol. 15, p. 255 – 271.

    Daft, R.L. (2001). Organization Theory and Design, 7th edition, South-Western: Thomson Learning.

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