critique paper(rev3)
TRANSCRIPT
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A CRITIQUE OF PRESCRIPTIVE VIEWS INSTRATEGIC MANAGEMENT
Bangani Ngeleza
JUNE 2012
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TABLE OF CONTENTS
1. RATIONALE FOR SELECTING THE THEME..................................................1
2. IN SEARCH OF A NEW LENSES: - A REVIEW OF EFFORTS TO FIND ANEW PARADIGM................................................................................................2
3. THE CONCEPTUAL BASIS FOR THE CRITIQUE.......................................8
4. CRITIQUE OF REVIEWED ARTICLES.......................................................104.1 Principle 1: Strategy formation should be a controlled, conscious process of
thought .............................................................................................................104.2 Principle 2: Responsibility for control of strategy must rest with the chief
executive officer (or senior management) .......................................................20
4.3 Principle 3: The model of strategy formation must be kept simple.............24
4.4 Principle 4: Strategies should be unique: the best ones result from a process of
creative design .................................................................................................27
4.5 Principle 5: Strategies emerge from the design process fully formulated ...294.6 Principle 6: These strategies should be explicit and, if possible, articulated,
which also favours their being kept simple......................................................314.7 Principle 7: Only after unique, full blown, explicit, and simple strategies are
fully formulated can they then be implemented ..............................................32
5. INSIGHTS FROM THE REVIEW......................................................................37
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1. RATIONALEFORSELECTINGTHETHEME
The prescriptive school of strategic management treats strategy formulation
as a process of conceptual design, formal planning and analytical positioning
(Mintzberg, 1990). This school of thought has been cited as having made
significant contributions to the theory and practice of strategic management
over a number of decades. This notwithstanding, a number of authors have
started to query the dominance of prescription in strategic management and
have called for a paradigm shift towards more descriptive and organic
perspective that account for complexities that organisations have to contend
with.
Amongst those authors who perceive a need for a shift towards an organic
perspective, is Farjoun (2001). This author states that prompted by the
limitations of the mechanistic (prescriptive) perspective, and inspired by the
advent of new ideas in the social and natural sciences, strategic
managements second broad progression saw the emergence and spread oforganic developments.
This search for a paradigm shift sees other authors favouring a more eclectic
approach that seeks to develop a model for strategic management that
accommodates all the major contributions to the field. This urge to break new
ground and engineer a paradigmatic shift is evident amongst many of the
articles that have been reviewed.
The motivation behind selecting to critique prescriptive views in reviewed
articles on strategic management is in order to demonstrate that attempts at
finding a new paradigm notwithstanding, prescriptive views still retain a strong
influence. Through this critique, the author hopes to show the significant gap
that still remains to be bridged in the search for a paradigmatic breakthrough
in strategic management. The paper demonstrates that strategic management
is still fraught with conventional wisdom presented as innovation. According to
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Ginter & White (2004), lessons learnt through the development of normative
and/or descriptive process models have yet to be integrated into a broad
theoretical framework.
The survival of prescriptive views in spite of evidence that a new way is
required for organisations to survive is attributed by Ackoff (2003) to the fact
that business managers tend to search for panaceas and simple solutions that
are prescribed by management gurus. According to this author, the
consequence of this is that 50% of the corporations in the Fortune 500 of 25
years ago no longer exist. This author further states that out of 23 new
corporations created in America each year, only one survives the first year.
Micklethwait & Woolridge (1996) cited in Miller & Vaughan (2001) state that
the proliferation of management theories and prescriptions is driven by two
basic human instincts-greed and fear.
This article is structured as follows: section 2 presents an overview of
reviewed articles attempts at finding a new strategic management paradigm.
This is followed in section 3 by a presentation of a conceptual basis that is
used to conduct the critique. In section 4, the reviewed articles are critiqued.
This paper ends with a presentation of insights in section 5.
2. INSEARCHOFANEWLENSE:AREVIEWOFEFFORTSTO
FINDANEWPARADIGM
A number of reviewed articles attempt a break with the prescriptive view to
strategic management by suggesting the development of models and/or
frameworks that seek to move beyond this view. Ansoff (1980) presents a
model for strategic issues management which represents a shift from strategic
management approaches that focus on periodic planning and response that
typifies the prescriptive school. Rather, in his article, this author suggests a
system which responds to signals in real time.
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In another paper, this author further extends his views by developing a model
that seeks to capture what he regards as the emerging paradigm of strategic
management (Ansoff, 1987). His model for a new paradigm borrows from a
number of disciplines including politics, sociology, psychology and cognitive
logic. The model also focuses on interactions between strategic and
operational behaviour, and seeks to integrate the activities of sensing,
deciding and executing in strategy making.
Other authors attempt to ameliorate some of the perceived failures of the
prescriptive approach, which have seen organisations failing in spite of well
devised plans. Amongst these are Goold & Quin (1990) who borrow from
agency theory to suggest improving the effectiveness of planning processes
through strategic control systems. In their paper, these authors acknowledge
the importance of balancing between rigidity and looseness. Their view
borrows from economics and is somewhat akin to the unifying views of the
organic school of strategic management, including complexity theories.
In their work, Caldert & Ricart (2003) seek an innovative approach to the field
of corporate strategy by drawing on the theoretical tradition of behavioural
evolutionism as enriched by complexity theory. They particularly focus on the
application of the work of Kauffman (1993) in the field of biology, to
organisation theory. These authors define a complex system as a system
(whole) comprising of numerous interacting entities (parts) each of which is
behaving in its local context according to some rule(s) or force(s). in
responding to their own particular contexts, these individual parts can, despite
acting in parallel without explicit interpart coordination or communication,
cause the system as a whole to display emergent patterns, orderly
phenomena and properties, at the global or collective level (Caldert & Ricard,
2003: 97)
Other authors that explore complexity theory to strategic management include
Grobman (2005). This author states that complexity theory is revolutionising
the way scientists look at the world, and has ontological implications as well.According to this author, complexity theory provides a framework for
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theorising about how there got to be an organisation and an environment in
the first place so that general systems theory could be applied. The author
cites Cohen (1999) as stating that complexity theory is attracting much
attention because of dramatic changes occurring in the structure and scope of
business, government and non-profit organisations. In an environment that
seems to be changing, organisations want to be more adaptable and better
able to learn from experience in order to reconfigure themselves in the face of
new demands
Grobman (2005) regards the dominant paradigm for strategic management
that is driven by general systems theory as being reductionist in its suggesting
that a system can be analysed by understanding each of its parts, and that
there was a general linear relationship between inputs and outputs. The
author cites Anderson (1999) as stating that complex systems on the other
hand demonstrate nonlinearity because each component interacts with others
via a web of feedback loops
A composite approach that differs from general systems theory is adopted by
Spanos & Lioukas (2001). In their study, they seek to unify the industry
organisation viewpoint of strategy on the one hand and the resource based
view on the other. Their study is an attempt at building a theory and model
based on a composite approach between strategy, industry and firm asset
effects. They found that both firm specific and industry effects are important in
explaining firm performance, operationalised as market share and profitability.
Synthetic thinking is also propounded by Ackoff (2003). In an interview with
the Strategy and Leadership Journal, this author identified one of the
characteristics of a new paradigm for strategic management as synthetic
thinking. According to this author, synthetic thinking provides a better
understanding of complex systems than analytical thinking does. Synthetic
thinking is a way of thinking about and designing a system that derives the
properties and behaviour of its parts from the functions required of the whole.
The whole has properties that none of its parts have (Allio, 2003: 21).
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Ginter & White (1982) contribute to the building of a new strategic
management theory through developing a theory of learning that
acknowledges the reciprocal influence of the environment on the one hand
and organisational behaviour on the other. This represents an early attempt at
recognising the role of complexity in strategic management. The Social
Learning Theory of Strategic Management theory (SLTSM) introduces an
organic understanding and extends the general systems thinking, by including
feedback loops to the conduct of strategy.
The purpose of Ginter & Whites paper is to present a theory that will permit
existing strategy concepts to be synthesised in an integrated framework. It is
an attempt at integrating a variety of theoretical schemas, including systems
theory, contingency theory, operational and managerial role definitions. These
authors state that these schema have provided limited, if-then prescriptive
models for strategic management. The SLTSM is premised on the view that
behaviour results from the interaction of persons and situations, rather than
from either factor alone. They cite Davis and Luthans who state that social
learning posits that the person and the environment do not function as
independent units but instead determine each other in a reciprocal manner.
Rumelt, Schendel & Teece (1991) contribute to the search for new
frameworks by drawing on economic thinking to explain enduring company
success. Their effort at presenting a synthesis between strategic management
and economic thinking results in an adoption of a resource based view and its
focus on factor market influences on firm performance. In addition to invoking
agency theory, these authors consider the contributions of other economic
influences on strategic management including game theory, transaction cost
economics and evolutionary economics.
Other authors that use the resource-based view to develop a unifying
research programme are Mahoney & Pandian (1992). Their integrated
research programme draws from economics, diversification strategy
explanations and industrial organisation. Their economics perspective drawsfrom agency theory, property rights, transaction costs, evolutionary economics
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and game theory. In this article, these authors introduce an evolutionary
viewpoint to strategic management and define strategy formulation as
consisting of the constant search for ways in which the firms unique
resources can be redeployed in changing circumstances.
Prahalad & Hamel (1994) emphasise the need for learning and for managers
to change their dominant logic if firms are to survive the radical environmental
changes that characterise the current business environment. In their push for
the re-examination of traditional strategy paradigm, they emphasise the need
for managers to be able to anticipate the future, in a vain similar to that of
Clancy (1990). In order to assist managers, these authors present checklists
that present environmental factors that need to be anticipated. They point out
that old ways of doing strategy no longer work and that there is a need for
new lenses, including the use of game theory, chaos theory, war and
diplomacy.
The role of chaos theories in strategy processes is acknowledged by Hamel
(1998), who states that writings on the process of strategy making have
tended to focus on the content of strategy and have overlooked the conduct of
strategy. Industry structure analysis is one example of this limited focus.
In addressing the over emphasis of strategic thought, primarily prescriptive
views, on the content of strategy, Venkatraman & Cannilus (1984) present
evidence of recent studies that have integrated the content and the process
conceptualisation of the concept of fit in strategy. They demonstrate that it is
possible to apply the concept of fit by looking at it from both an inter-
organisational (external) and strategic choice (internal) perspectives. They
also seek to move the application of the concept of fit beyond the traditional
bi-variate interactions (strategy and culture, strategy and management style,
strategy and structure etc) towards an understanding of fit as characterised by
a larger array of elements. To this end, these authors apply the Mckinsey 7s
model to show organisational congruence.
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Munive-Hernandez, Dewhurst, Pritchard, & Barber (2004) develop a
comprehensive model for defining a corporate strategy, constructing a
strategy document and strategy implementation by applying a combination of
methodologies and tools. This model seeks to make a break with the
predominant focus on strategy content.
In the same vain, Caldert & Ricart (2003), developed a dynamic framework of
corporate strategy based on three interlinked sets of processes, viz. senior
management cognition, which they refer to as framing the fitness landscape,
corporate search strategy or strategic behaviour and architectural design.
Farjoun (2001) also develops an organic model1 which takes account of the
complex interactions and self influences amongst key strategic management
constructs of firm organisation, firm environment, firm strategy and firm
performance. This presents a holistic view of strategy that replaces the
conventional distinction between content and process.
The concept of strategy emergence, which represents another significant
break with prescriptive views, is propounded by Nichols (2000). This view
acknowledges that strategy evolves over time as intentions accommodate
reality. This author acknowledges the definition of strategy as plan, pattern,
position and perspective. The same views on strategy are expressed by
Mintzberg (1987) who holds the view that multiple definitions can help
practitioners and researchers alike to manoeuvre through the field of strategic
management. Farjouns O-E-S-P model also extends the concept of strategy
by recognising the existence of emergent strategies which may not be a result
of deliberate planning.
Attempts at breaking with the past are also evident in writings by authors from
other management disciplines. Writing from a marketing perspective, Clancy
(1990) makes a forecast of ten developments which will separate winners
from losers in advertising in 2020. Amongst these is the importance for the
1The O-E-S-P model, conceptualizes of the interaction between the constructs as evolving or random
and best captured by the notion of continuous co-alignment
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marketer to anticipate competitive defences and then develop and test
offensive strategies designed to overwhelm the competitor, more along the
lines of game theory.
3. THECONCEPTUALBASISFORTHECRITIQUE
Mintzbergs (1990) discussion of the design school serves as the bases for
analysing the articles. As already stated, the critique seeks to demonstrate
that in spite of attempts by a number of writers to develop new approaches
and/or paradigms for strategic management the prescriptive perspective still
wields a lot of influence, even amongst some of those authors that purport to
seek new paradigms.
Mintzberg (1990) identifies ten schools of thought in strategic management.
Three of these he identifies as prescriptive in orientation. These treat strategy
formation as a process of conceptual design, of formal planning and of
analytical positioning, with the latter including research on the content of
competitive strategies. Six other schools are identified by this author asdealing with the strategy process in a descriptive way. These include the
entrepreneurial school, the cognitive school, the learning school, the
environmental school and the configurational school.
Although his article is addressed to the design school, this schools basic
framework underlies almost all prescription in this field and, accordingly, has
enormous impact on how strategy and the strategy making process areconceived in practice as well as in education and research, (Mintzberg, 1990:
171).
The following basic prescriptive principles are discussed by Mintzberg (1990)
and are used as a basis for demonstrating the level of inertia in strategy
research, writing and practice as reflected in the articles reviewed in the next
section of this paper. The principles are:
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1. Strategy formation should be a controlled, conscious process of
thought, i.e. action follows once strategies have been fully formulated
and strategy is associated with intentionality and deliberateness.
2. Responsibility for that control and consciousness must rest with the
chief executive officer. That person is THE strategist, i.e. to this school,
ultimately there is only one strategist, and that is the manager who sits
at the apex of the organisational hierarchy. Mintzberg (1990) cites
Heye (1985) who states that this is a command and control mentality
that allocates all major decisions to top management, which imposes
them on the organisation and monitors them through elaborate
planning, budgeting and control systems. This also relegates
environment to a minor role of input to strategy formation but not an
intrinsic part of the process, to be accounted for and then navigated
through but not interacted with (Mintzberg, 1990)
3. The model of strategy formation must be kept simple: The idea that
one way to ensure that strategy can be controlled in one mind is to
keep the process simple.
4. Strategies should be unique; the best ones result from a process of
creative design: This means that it is the specific situation that matters.
Strategies have to be tailored to the individual case (Mintzberg, 1990).
He further cites Andrews (1965) that in each company the way in which
distinctive competence, organisational resources, and organisational
values are combined is or should be unique.
5. Strategies emerge from the design process fully formulated: there is no
room offered to incrementalist (evolutionary) views or emergent
strategies. There is a view for instance that strategy as perspective
appears at a point in time, fully formulated, ready to be implemented.
This relates to the view that the process reduces to choice. The
implication is that the strategist is able to line up alternative strategiesto be evaluated so that one can be definitively chosen.
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6. These strategies should be explicit and, if possible, articulated, which
also favours their being kept simple: This view holds that strategies
should be explicit to those who make them and that they should be
articulated so that others in the organisation can understand them. The
strategy must be specific enough to require some action and exclude
others. This means that strategies have to be kept rather simple in
order to facilitate this articulation.
7. Only after unique, full-blown, explicit, and simple strategies are fully
formulated can they then be implemented: This means that there is a
sharp distinction between the formulation of strategies on the one hand
and their implementation on the other. According to Mintzberg (1990),
this is consistent with classical notions or rationality diagnosis,
prescription, then action, representing the separation between thinking
and acting. The author further makes the point that the focus of this
school is on implementation not achievement, the assumption being
that given proper implementation, achievement is a foregone
conclusion. This according to Mintzberg (1990) is associated with the
premise that structure must follow strategy.
4. CRITIQUEOFREVIEWEDARTICLES
This section presents a critique of the reviewed articles using the seven
principles of Mintzberg (1990). The focus of the section is to demonstrate theextent to which many of the reviewed articles have been influenced by the
prescriptive views that are based on these seven principles.
4.1 Principle1:Strategyformationshouldbeacontrolled,conscious
processofthought
Many of the articles that have been reviewed adhere to the principle thatstrategy formation should be a controlled and conscious process, with little or
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no space for strategy emergence. The underlying viewpoint is that action
follows only once strategies have been fully formulated and that strategy is
associated with intentionality and deliberateness.
This view of deliberateness, driven as it is partly by the assumption that it is
possible to predict the future, is evident in Ansoff s (1990) assertion that one
of the factors that have made it desirable to separate what he refers to as
strategic issues analysis from annual strategic planning is that organisations
may not need the cumbersome paraphernalia of annual planning in cases
where the basic strategic thrusts are clear and relatively stable and whose
environment is stable.
The strategic issues management procedure developed by Ansoff assumes
that it is possible to accurately predict trends both inside and outside the
enterprise. This extends to the prediction of when exactly the time of impact of
an issue will occur so that organisations can time their responses to occur
before this time. The assumption is also that it is possible to know for sure
what the impact of the issues will be on the enterprise.
In his article, Clancy (1990) also uses information about the state of
advertising in 1990 to predict what advertising will be like in 2020. This author
discusses 10 developments which will radically transform advertising.
According to this author, the doors of Eldorardo, the golden city will be open
to firms that successfully managed these developments. This forecast was
based on the assumption that historical trends observable in 1990 will
continue unchanged.
Ansoffs presentation of the steps for Strategic Issues Management (SIM),
reflect strong rationality in another way. According to this author, steps for
conducting SIM include an analysis of environmental trends, internal trends
and performance trends, followed by an assessment of threats, opportunities,
strengths and weaknesses which then allow for the determination of the
impact and/or urgency of an issue. Extensive starting lists of the respectivetrends are also presented. This shows the weight that this author places on
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the role of rationality and conscious thought processes in strategic
management.
In his support of the Gresham Law of planning, which states that if left
uncontrolled, the operational activity suppresses the strategic activity, Ansoff
(1980) further betrays a preoccupation with the implementation of strategies
as relying on a conscious process of control.
In keeping with the view that strategy is a rational process of thought, Ansoffs
paradigm further links the scientific optics used by firms in conducting strategy
to environmental factors in a deterministic way, which in turn calls for the
rational analysis of the environment.
Strategic management as this conscious process of thought that is informed
by environmental determinism and rationality is also upheld by Goold & Quinn
(1990). These authors cite Simon (1987) as viewing the senior manager as
scanning the business situation and, from an assessment of all relevant
factors, arriving at a judgement of an appropriate response. This rationality
visualises a contemplative senior manager who is able to know what all the
relevant factors to consider in strategy making are. This person (the senior
manager) is also able to choose properly, from strategic choices that avail
themselves from their reflections. Through this rational contemplative
exercise, the scope of strategic management is reduced to individual
judgement.
Rumelt et al. (1991) also see firms as having choices to make if they are to
survive. According to these authors, those which are strategic include
selection of goals, the choice of products and services to offer, the design and
configuration of policies determining how the firm positions itself to compete in
product markets, the choice of an appropriate level of scope and diversity,
and the design of organisational structure, administrative systems and policies
used to define and coordinate work. Further, these authors see strategy as
not necessarily a single decision or primal action, but as a collection ofrelated, reinforcing, resource-allocation decisions and implementing actions.
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There can be no place for the role of chance and emergence in this design
process.
Rumelt et al. (1991) further explain the role of economics in strategic
management and continue to place emphasis on rational decision-making.
These authors present a rationality that is required by making use of a
sophisticated view of equilibrium. The Nash equilibrium is where each actor
does the best he or she can with what they individually know and control,
especially when coupled with uncertainty, asymmetric information and
unequal resource endowments, permitting a broad range of intriguing
outcomes or looked at another way, different picks on the competitive
landscape (Ghemawat, Collis, Pisano & Rivkin, 1999). The troublesome
nature of uncertainty is thus adequately dealt with by a sophisticated process
that sees independently acting actors making conscious choices based on
information in their possession. This game theoretic rationality and its
attendant assumptions that all players are rational is also evident in the
papers by Camere as well as Saloner, reviewed in Rumelt (1991).
Strategic management is concerned with co-ordination and resource
allocation inside the firm (Rumelt, et al.; 1991). This is opposed to the
industrial organisation view that posits the primacy of industry in determining
firm performance. Both these perspectives are influenced by economics, with
the former focussing on factor markets and the latter on product markets for
explanation. Both are rational standpoints for explaining strategic
management based on different deterministic perspectives.
The influence of economic rationality on the resource-based view that is
propounded by Mahoney & Pandian (1992) is clearly demonstrable in their
article. The article draws linkages between the Resource Based View and the
different branches of micro-economics including transaction cost, agency
theory, evolutionary economics and property rights. These authors also show
the complementary nature of RBV to the industrial organisation paradigm of
S-C-P, i.e. the Bain (1968) and Porter (1985) framework. They do this byshowing that the product market and the resource market are two sides of the
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same coin, i.e. to produce a particular product mix, you need a particular
resource mix and vice versa.
Strategy is a rational process of thought (Mahoney & Pandian, 1992). They
explain lasting profits as flowing from different sources of rents, i.e. owning a
valuable resource including land; monopoly rent including government
protection; entrepreneurial rent including Schumpeterian rent and firm specific
resources. A firm consciously selects its strategy to generate rents based
upon its resource capabilities. These authors cite Andrews (1971) as stating
that organisations with the strategic capability to focus and coordinate human
effort and the ability to evaluate effectively the resource position of the firm in
terms of strengths and weaknesses have a strong basis for competitive
advantage.
In referring to the contributions of Resource Based View (RBV) to a large
stream of research on diversification strategy, Mahoney & Pandian (1992)
further display their reliance on deterministic explanations. According to these
authors, this includes, that the resource based approach considers limitations
of diversified growth (i.e. growth through diversification is limited by resource
endowments). Secondly, the RBV considers important motivations for
diversification, i.e. when not all units perform at the same speed & capacity,
thus creating motivations for diversification to use extra capacity, particularly
Human Resources capacity. Thirdly it provides the theoretical perspective for
predicting the direction of diversification. Fourthly it provides a theoretical
rationale for predicting superior performance of certain categories of related
diversification, i.e. companies grow in the direction set by their capabilities
and these capabilities slowly expand and change.
A resource-based determinism also emerges in a statement that says if a
firm possesses valuable, rare, costly to imitate, and non-substitutable
economies of scale, learning curve economies, access to low-cost factors of
production, and technological resources, it seems clear that the firm should
pursue a cost leadership strategy (Barney, 2001: 53). This quote suggeststhat in the case of the cited combinations of factors, the choice is clear, and it
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is to pursue a low cost strategy. The overall tone in Barneys article is that a
firms strategy is determined by its resources, with no mention of reciprocal
influence, emergence or the role of chance.
Barney (2001) further applies the framework of Strategy-Structure-
Performance (S-S-P) to explain how firm resources can become of value. This
author acknowledges the important contributions of Structure-Conduct-
Performance (S-C-P) in that the firms resources value is determined by
industry structure as it is by firm strategy of S-S-P. The author further states
that in all high quality resource based work, researchers must begin by
addressing the value of resources with theoretical tools that specify the
market conditions under which different resources will and will not be
valuable.
Prahalad & Hamel (1994) on the other hand explain the changes in the
fortunes of some of the best-managed firms during the period 1984 to 1994 in
terms of what they refer to as the changing competitive milieu. All the forces
they refer to are external industry (environmental) factors, a view that support
the rational determinism of S-C-P form or the positioning school. The factors
they cite for instance are global competition, deregulation, structural changes,
excess capacity, mergers and acquisitions, environmental concerns, less
protectionism, changing customer expectations, technological discontinuities
and emergence of trading blocks. In a softening of the unidirectional
determinism that characterises environmental determinism, these authors
state that given all these changes, industry structure, increasingly, must be
seen as a valuable to be managed by firms and not accepted as a given.
In developing a dynamic force field model for strategic management, Paquin
& Koplyay (2007) use the design school to represent fundamental fit between
the firm and its environment. They achieve this using a two dimensional graph
that relates market potential with resource mobilisation. This view adopts an
equilibrium viewpoint in that there is an optimal regression line between the
two variables of market potential and resource mobilisation, with a multiplicityof possible peaks along this line. These authors state that the force field
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resulting from the interplay between an industrys critical success factors
should apply to any organisation operating in that same industry, which
suggests an industry organisation and Porters positioning rationality.
These authors further state that the strategic force field model may also be
useful in suggesting the adoption of various families of strategies. The choice
of an offensive, neutral or defensive strategy is accordingly, not done
arbitrarily but according to the strategic position an organisation occupies on
its strategic landscape.
This pre-occupation with rational choice in strategic management is also
reflected in Bourgeois (1984) who contends that top management or dominant
coalitions always retain a certain amount of discretion to choose courses of
action that serve to co-align the organisations resources with its
environmental opportunities, and to serve the values and preferences of
management. Muniv-Hernadez et al. (2004) agree, and cite MacDonald
(1996) who states that the purpose of strategic management is also to match
internal activities to environmental change, and match resources to those
activities. The process is thus characterised by rational choice and design.
In their article, Rumelt et al. (1991) also regret the loss of prescription in the
new economics that has come to influence strategy. These authors state that
the limitation of the new economics is that it explains rather than predicts.
They lambast micro-economics for delivering a large number of tightly
reasoned sub-models, but no strong guidance as to which will be important in
a particular situation. What they refer to as the collage problem in fact
betrays their discomfort with complexity and uncertainty. They further state
that it is up to strategy to bring in the application of microeconomic models,
i.e. strategic management should develop measures, tools and methods to
help specific situations.
Amongst the tools and methods to help specific situations are those
suggested by Goold & Campbell (1987) for strategic control. These authorspresent a typology of headquarters style to prescribe the types of controls that
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must be used by diversified firms, viz. financial controls for services
businesses and mature industries; strategic control for mature but complex
industries that require substantial investment and entrepreneurially oriented
strategic planning for industries that combine complexity and technological
advancement. Corporate strategies are thus a function of rational choice that
is deterministically imposed upon corporate level managers following a
process of contemplating industry factors.
Rational views have also permeated writings on change management. The
article by Adcroft, Willis & Hurst (2008) develops a rational model for
explaining organisational change. These authors state that the process is
logical and represents common sense as much as excellent or innovative
management. The model has three elements that are linearly represented,
viz. revolutionary event, revolutionary programme and revolutionary outcome.
The importance of change control measures is evidenced by the linearity of
this model, which suggests that for change to succeed, it must be managed to
conform to its linear prescriptions.
This view of change as a rational process that should be controlled is also
held by Offstein & Gnyawali (2006). These authors posit that the key
humanistic perspective to firm competitive behaviour is that firm actions are
controlled, dictated and influenced by strategic human actors that operate
within the boundaries of a firm. The assumption underlying this view is
representational and based on the view of a rational economic man who is
able to use knowledge to make rational choices (Jarzabowski & Wilson,
2006).
The rationalistic perspectives that have been presented in the foregoing
paragraphs ignore the writings and observations of a number of researchers
and authors that contradict the presumed validity and utility of unfettered
rational choice, control and determinism in strategic management.
For instance, Bakir & Bakir (2006) state that the very concept of purposefulstrategy has been seriously undermined by the recognition that unintended
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organisational strategies often emerge out of social interactions and
adaptations outside their boundaries. These authors contend that studies that
predate the current mainstream strategy literature demonstrate that strategy
processes, particularly in complex environments, are persistently non-rational,
resembling what has come to be known as muddling through and
organisational anarchy. This view is supported by Grobman (1995) who cites
Simon (1997) and Lindblom (1959) as pointing out the complexity of decision-
making in organisations, and the limitations of rational decision-making and
general management principles.
The folly of prediction is also demonstrated in an article by McKenna (1991).
In this article, the author relates a publicised lawsuit that Beecham, an
international consumer products company, filed against Yankelovich Clancy
Shulman, a US market research subsidiary of Saatchi & Saatchi. Yankelovich
forecast that Beechams product, Delicare, a cold water detergent, would win
between 45.4% and 52.3% of the US market if Beecham backed it with $18
million worth of advertising. The author state that according to Beecham,
Delicares highest market share was 25%. Its general market share was
between 15% and 20%. The author concludes that forecasts by their very
nature, must be unreliable, particularly with technology, competitors,
customers, and markets all shifting ground so often, so rapidly and so
radically.
Forecasting is based on assumptions that it is possible to predict the future
and that cause and effect relationships are simple and linear. It is also based
on the assumption that todays observations are a good basis for knowing
what will happen in the future. The reality of organisational life has on a
number of occasions been found to defy this logic, as the case of Beecham
shows.
In a manner that seem to contradict his focus on predicting the state of
advertising in 2020, Clancy (1990) also makes an example of a failed
advertising campaign for a new product which predicted market share of 3.6%following the campaign based on a $70 million budget and an assumption of
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competitive response in terms of advertising and promotion increasing by
80%. In this example, the real level of competitor response was 630%,
completely dwarfing the $70 million budget of this companys campaign and
effectively blowing this product out of the water. The best market share rating
that the product could achieve was 1%. It is interesting that, in spite of this
observation, Clancy still finds it prudent to make predictions about the future
of advertising.
In addressing issues of change, Burnes (2004) states that achieving effective
change in organisations requires simple order generating rules. According to
this author, this is because organisations are complex systems, which are
radically unpredictable and where even small changes can have massive and
unanticipated effects, top-down change cannot deliver the continuous
innovation which organisations need in order to survive and prosper.
The organic model for strategic management of Farjoun (2002) suggests that
strategy formulation broadly deals with the sensing, evaluating and planning
of external and internal change rather than more narrowly with making
choices. This author states that strategy realisation deals with the realisation
of change, planned or emergent. As already demonstrated, the role of
emergence is ignored by a number of writers on strategic management.
The pitfalls of emphasising rational choice in strategy are further
demonstrated by Hulbert & Pitt (1996). In their article, they write that the false
dichotomy that has been established between, differentiation and cost
leadership leads to a waste of resources. According to these authors, Taco
Bell, a US fast food chain, has successfully positioned itself against
hamburger giants such as Burger King and MacDonalds by offering an
alternative form of fast food in a different setting, while at the same time
lowering its cost structure in such a way that it is able to provide inexpensive
yet wholesome food. This exposes the limiting and the myopic nature of
choices presented by Porters generic strategies.
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In research notes and commentaries regarding the philosophy of strategy,
Powell (2002) critiques the assertion that it is possible to know with certainty
that some perceptible entity called a competitive advantage has a
demonstrable cause-effect relation with the performance of a unique firm. The
author states that one cannot use the language of know and certainty when
the relation is true by definition, the constructs are intangible and the
alternative hypothesis have not been seriously tested. The author states that
truths in strategy are neither certain nor final, and our wishing cannot make
them so, (Powell, 2002: 879).
4.2 Principle2:Responsibilityforcontrolofstrategymustrestwiththechiefexecutiveofficer(orseniormanagement)
According to this principle, ultimately there is only one strategist, (or at most a
small team) and that is the manager who sits at the apex of the organisational
hierarchy. Mintzberg (1990) cites Heye (1985) who states that this is a
command and control mentality that allocates all major decisions to top
management, which imposes them on the organisation and monitors them
through elaborate planning, budgeting and control systems. In this view, the
environment is also relegated to a minor role of input to strategy formation but
not an intrinsic part of the process. It is something to be accounted for and
then navigated through but not interacted with, (Mintzberg, 1990).
In his article, Ansoff (1980), allocates the responsibility for prioritising strategic
issues and for developing response strategies to general management, who
should also retain the responsibility for strategic control over such issues.
Strategic control of issues refers to continual re-evaluation of the significance
of issues and redefinition of both priorities and the direction of projects.
According to this view, all of this is the sole responsibility of the people sitting
at the top of the organisational hierarchy.
The preoccupation with the primacy of the role of senior management is
continued in Ansoff (1987) where the new paradigm for strategic management
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that the author presents places particular emphasis on the role of senior
management. The scientific optics that this author uses to describe various
forms of strategy making all relate to management behaviour, with no role
contemplated for lower levels of the hierarchy. In his top down view of
organisations, the author identifies factors in both the internal and external
environments that determine management strategic behaviour and serve as
the basis for management prescription.
Rumelt et al. (1991) also reserve the role of strategic management to senior
management, defining strategic management as including those subjects,
which are of primary concern to senior management. Prahalad & Bettis (1986)
in Mahoney & Pandian (1992) also see a rich connection among the firms
resources, distinctive competencies and the mental models or dominant logic
of the managerial team as driving diversification processes. Mahoney and
Pandian, (1992) state that the services and rents that resources will yield
depend upon the dominant logic of the top management team.
The centrality of the role of the Chief Executive or senior manager is also
reflected in the Social `Learning Theory of Strategic Management (SLTSM)
that is proffered by Ginter & White (1982). According to these authors, the
SLTSM posits that strategic behaviour is a result of an interaction of top
management cognitive processes and environmental influences. Strategic
behaviour in turn shapes the environment and conditions top management
future cognitions.
In their discussion of a humanistic perspective to firm competitive behaviour
Offstein & Gnyawali (2006) also limit their assessment of contributions of
human capital (individual knowledge and skills) and social capital (intra-
organisational relationships and knowledge growing from interactions of
individuals) to the CEO, the top management team and the Board of
Directors.
These articles confirm the assertion by Balogun (2007) that most research onstrategy and strategic change continues to focus more on upper echelons,
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with middle managers being regarded as linking pins or a conduit, connecting
senior managers with the rest of the organisation and relaying senior manager
orders in an unquestioning fashion. This betrays the influences of mechanistic
prescriptions on these authors.
Once strategies have been selected by the CEO or senior management, the
article by Goold & Quinn (1990), advices that the route to ensuring that
individuals at different levels (lower level managers and staff) are motivated to
implement them is through personal incentives and sanctions. According to
these authors, the responsibility for identifying deviations from agreed
objectives, pressing for new plans or changing responsible management in
cases of failure to implement strategy rests with senior management.
Effectively making strategic management a mechanistic design and control
process that relies on senior management.
This top down view of strategic management has invariably resulted in a
number of prescriptions regarding how the process should be controlled within
organisations. Lorange (1988) regards the setting of strategic and operational
budgets as a way of preventing managers lower down the hierarchy
sacrificing strategic considerations to achieve short-run performance targets.
The need for exercising caution with control is emphasised by Salter (1973) in
Goold & Quinn (1990). According to this author, annual bonuses usually
emphasize the short term, so a manager wants to look good at the end of the
year. To prevent his concentration on his own immediate rewards, top
management should evaluate the long-run implications of subordinates
actions and reward them at least in part on that basis.
The article by Goold & Quinn (1990) presents a list of prescriptions regarding
how to effectively set measurable goals that facilitate performance, and
incentivise, including that they should be specific, stretching, top-down and
allow for feedback, incentives and sanctions. Top down managerial
prescriptions extend to how to set strategic goals, including looking long-term,
competitively setting goals and incorporating financial and non-financial goals.
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These prescriptions regarding controls are extended by Ouchi (1979) in Goold
& Quinn (1990) in a contingency theory of control, where this author makes
the type of control to be selected contingent upon the ability to predict the
outcome on the one hand and on the ability to measure outputs precisely and
objectively on the other. Types of controls include clan control, results control,
and action control. Goold & Quinn (1990) also develop their own prescriptive
framework for choosing control systems contingent on environmental
turbulence and the ability to specify and measure precise strategic objectives.
The article by Sheehan (2006) argues that diagnostic controls (performance
metrics), boundary controls (measures used to control behaviour), belief
controls (measures to appeal to employees emotions) and interactive controls
(measures to keep track of changes in the competitive environment) are the
four levers needed to align what the firm desires to achieve (strategy) and
what is actually done by its employees.
In an apparent critique of this top down perspective of strategy, Ackoff (2003)
states that one of the problems with corporations is that they are hierarchies
rather than lower-archies, with authority flowing from the top rather than from
the bottom.
The view of top down strategic control overlooks the understanding of
strategic management as navigational translation (Bakir & Bakir, 2006).
According to this view, managers can see that strategy is a set of complex
processes impacted by a fluid and interlocking set of intervening conditions
that are beyond managerial control and that may change the dimensional
location of the properties of the strategy categories thus generating
unintended outcomes.
Shell is a good example of how strategy success can be impacted by lower
level staff. In writing about transformation efforts at this global company during
the 90s, Pascale (1999) observes that the process worked because senior
management realised that the people at the coalface (i.e. at countryoperations and at company owned service stations) know what is going on.
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They see the competitive threats and the companys inadequate response
every day. Once they are given the context, they can do a better job of
spotting opportunities and stepping up to decisions.
Further, in an opinion piece published in the Harvard Business Review
(undated), Mintzberg cites Hamels account about how Lou Gerstner added
$40 billion to IBMs shareholder value. According to the author, a programme
manager with an idea joined up with an open minded staff manager and
together they assembled a team that drove IBM into e-business. All that Lou
Gerstner did was support the initiative. Strategy thus emerged from the
bottom, a consideration that many of the articles that have been reviewed fail
to acknowledge.
4.3 Principle3:Themodelofstrategyformationmustbekeptsimple
The idea that one way to ensure that strategies can be controlled in one mind
is to keep the process simple is evident in some of the articles that have been
reviewed.
In his writing about the strategic issues management as a new system for
strategic management, Ansoff (1980) emphasises the need for simplicity.
Articles on strategic issues management have explored the strategic issue
problem and newly important phenomenon of weak signals. There is now a
need to translate these explorations into straightforward, practical how to do
it processes, (Ansoff, 1980: 150). The need for simplifications in fact forms
the essence of this article.
In simplifying the process of prioritising issues in strategic issues
management, Ansoff makes us of a matrix that presumably facilitates decision
making by ranking the urgency of issues in terms of low, significant and
pressing. Impact assessment is also simplified in terms of whether it is low,
significant or major.
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In a 1987 article, Ansoff proceeds to simplify his new paradigm by presenting
it in the form of a cube, with three dimensions, viz. the problem of strategy,
the process of strategy and the scientific optics. The author refers to the
paradigmatic cube as the minimal set of dimensions necessary to explain the
observable variants of strategic behaviour.
The meta-model that Ansoff (1987) presents identifies key forces which
determine the flow of interaction patterns, in a simplified unidirectional flow of
influence. The direction of influence between the environment and firm
behaviour, i.e. driving forces and perception of need is also unidirectional from
the environment to firm behaviour (structure-conduct-performance)
Bourgeois (1984) summarises the problems accurately when stating that one
of the characteristics of organisational literature is reductionism, the tendency
to focus on one independent variable (e.g. turbulent environment) as it causes
managers to manipulate one dependent variable (e.g. structure). This author
further states that in addition, the theories are generally derived from static
cross-sectional correlation studies, which present problems of causal
inference. According to this author these types of analysis assume that the
systems being studied are in equiibria.
This tendency to simplify is also queried in the article by Grobman (2005).
This author states that the dominant paradigm for decades was reductionist,
suggesting that a system can be analysed by understanding each of its parts,
and that there was a general linear relationship between inputs and outputs.
This author cites Anderson (1999) who states that complexity demonstrates
nonlinearity because each component interacts with others via a web of
feedback loops.
In an interview with the Strategy and Leadership journal, and in response to a
question regarding why it is easy for management gurus who purvey
platitudes, and simplifications2 to dupe managers, Ackoff (2003) states that it
2My emphasis
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is because most managers do not have the knowledge and understanding
required to deal with complexity, they attempt to reduce complex situations to
simple ones. Druckercited in Ackoff (2003), when responding to a question
about what he thought about the solutions suggested by Peters and
Waterman in their 1990 best selling book The Search for Excellence, said I
wish it were that simple. Meaning that problems do not have simple-minded
solutions.
Many of the reviewed articles also ignore the findings of Bakir & Bakir (2006)
that use grounded theory to study strategic management in organisations.
These authors found that in their understanding of translation in strategy,
managers were coping with fluidity and complexity. They quote the chair of
the Strategic Board of one of the companies they studied as stating that
nobody can see clear direction; nobody has an idea whats going to happen.
In their simplification of the strategy process, a number of the articles that
have been reviewed generally fit the description by Starns & Odom (2006)
who state that many approaches to knowledge management are like the
proverbial blind men and the elephant. They focus on a part of the enterprise,
identify an issue or problem, and try fixing that without considering all the
other aspects and systems relationships. These authors state that there is a
huge body of lessons learnt confirming that organisations that use this
reductionist technique never quite reach their desired objective.
Other authors that have observed the limitations of simplifications include
Caldart & Ricard (2004) who state that there is a tendency to impute
coherence and purposive rationality to events when the opposite is true. The
authors state that this assumption is consistent with the normative traditions of
the management literature that offer low-dimensional typologies such as the
BCG or GE matrixes and generic strategies to help structure the choice of firm
strategy. According to these authors, these analytical representations of the
fitness landscape that reduce the dimensionality and, in turn, the cognitive
complexity of the space, provide a strong guide to action. However, they citeLevinthal & Warglien (1999) as stating that to the extent that the
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representation captures the essential structure of the real fitness landscape, it
will be a mistaken guide.
To counter these limitations, Ackoff (2003) calls for the adoption of a new
management paradigm of synthetic thinking, which is a way of thinking about
and designing a system that derives the properties and behaviour of its parts
from the functions required of the whole. This is different from analytical
thinking which tends to simplify. The whole has properties that none of the
parts has. Analytical thinking can only yield knowledge about how a system
works but not about why it works the way it does. Most simplifications tend to
answer the how question and do not address the why questions which
requires synthetic thinking. Ackoff states that organisations, unlike
mechanisms, have purposes of their own. The mechanistic, top down and
simplistic views presented in some of the reviewed articles is therefore an
inadequate guide to organisations.
4.4 Principle4:Strategiesshouldbeunique:thebestonesresult
fromaprocessofcreativedesign
According to this principle, it is the specific situation that matters and
strategies have to be tailored to the individual case (Mintzberg, 1990). This
author furthercites Andrews (1965) who states that in each company, the way
in which distinctive competence, organisational resources, and organisational
values are combined is or should be unique.
In their article, Rumelt at al. (1991) also portray this view. According to these
authors, an example of an equilibrium assumption of use in strategic
management is that of no rules for riches, that there can be no general rules
for generating wealth. This means that if there are no general rules for riches,
then a strategy based on generally available information and unspecialised
resources should be rejected. Opportunities worth undertaking must be rooted
in the particulars of the situation. According to these authors therefore, theory
alone is insufficient absent intimate, unique knowledge of technical conditions
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and the ability to position assets and skills to create favourable competition
positions.
Rumelt at al. (1991) further provide an economics contribution to the definition
of strengths, which illustrates the view that strategies need to be unique.
These authors state that economics reasoning has helped to understand that
what we may mean to ask by strengths is what firm specific non-imitable
resources or sustainable market positions are presently under-utilised?
The emphasis on uniqueness is also contained in the article by Mahoney &
Pandian (1992). These authors posit that the firms unique capabilities in
terms of technical know-how and managerial ability are important sources of
heterogeinity that may result in sustained competitive advantage. Effectively
therefore, sustained competitive advantage is only possible under conditions
of uniqueness. These authors further state that an examination of isolating
mechanism (or resources that cannot be easily imitated or substituted) shows
that absent of government intervention, isolating mechanisms exist because
of asset specificity and bounded rationality or put another way, isolating
mechanisms are the result of the rich connections between uniqueness and
causal ambiguity.
Penrose (1959) cited in Mahoney & Pandian (1992) also emphasise
uniqueness by stating that it is the heterogeneity of the productive services
available or potentially available from its resources that gives each firm its
unique character. This author further states that the firm may achieve rents
not because it has better resources, but rather the firms distinctive
competence involves making better use of its resources, e.g. human
resources.
Prescriptions of uniqueness and creative design are also evident in an article
by Ackoff (2003). In responding to a question posed by the Strategy and
Leadership Journal about how managers can develop effective strategies for
the attainment of their vision, this author responded that it requires design,and designs that lead require creativity. This author proceeds to provide a
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how-to prescription for creativity, i.e. it requires that first one identifies the
assumptions that they make which prevent them from seeing the alternatives
to the ones that they currently see. Secondly, managers should deny these
constraining assumptions and thirdly, they should explore the consequences
of these denials. The result is supposed to be unique and creative solutions
emerging out of this process of design.
Muniv-Hernandez et al. (2004) cite Slack, Chambers, Harland & Harrison,
(1998) and McDonald (1996) as defining strategy as positioning a business to
maximise the value of the capabilities that distinguish it from its competitors.
This focus on creative and unique designs loses site of the possibility for the
emergence of unplanned and unintended strategies that are a function of pure
luck and chance
4.5 Principle5:Strategiesemergefromthedesignprocessfully
formulated
A number of reviewed articles leave no room for incrementalist (evolutionary)
views or emergent strategies. There is a view for instance that strategy as
perspective or position appears at a point in time, fully formulated, ready to be
implemented. This relates also to the view that the process reduces to choice.
The implication being that the strategist is able to line up alternative strategies
to be evaluated so that one can be definitively chosen.
The emphasis on strategic controls which is propounded by Goold & Quinn
(1990) and a number of other authors is in line with this view that a strategy
emerges fully formulated from the design process, the next step being to put
in place control measures to ensure its effective implementation.
Lorange (1988) in Goold & Quinn (1990) argues that to ensure sufficient
attention to strategic issues, there should be separate strategic and
operational budgets. The strategic budget setting would be a final step in a
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process that begins with setting strategic objectives, this being followed by
strategic programming and milestone setting. Thus the strategy has emerged
from the process fully formulated which makes it possible to set milestone.
Accordingly, Camiluss & Grant (1980) in Goold & Quinn (1990) are of the view
that once developed, a strategy must be followed by the development of an
action plan that includes a detailed description of actions to be taken,
deadlines and results to be achieved plus the identities of managers
responsible for monitoring implementation.
In their article, Rumelt at al. (1991) state that it is the basic proposition of the
strategy field that these choices have critical influence on the success or
failure of the enterprise, and that they must be integrated. It is the integration
(or reinforcing pattern) among these choices that make the set a strategy.
Therefore the starting point should be the lining up of fully formed strategies
so that choices can be made.
The view that strategies must emerge fully formed overlooks the views of
Nelson (1991) cited in Rumelt et al. (1991) to the effect that firms do not
apprehend complete sets of alternatives, but grope forward with but limited
understanding of their own capabilities and the opportunities they face. This
being the reality facing organisations, the premise that to succeed, firms
always need to ensure that all strategies emerge fully formulated from the
design process seems far from reality.
The article by Quelch & Kenny (2000) demonstrates the power of
experimentation and testing in strategic management. These authors discuss
how a consumer products company called Snacko turned around its fortunes
by reviewing and changing its production activities and product line. When this
company decided to introduce its new strategy of focussing its production to
its core products in its line, the company used one of its sales regions to
undertake a four-month test to determine the impact of refocusing core
products versus continuing line extensions. In addition to confirming thevalidity of their strategy, these authors report that test results also revealed
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other insights that were used to further refine the strategy. It is clear from this
example that effective strategies are those whose design continues to be
influenced by implementation results.
Farjoun (2002) concludes that the different mechanistic perspectives
approach strategic management in a consistent and mutually reinforcing
manner, which include; a view of strategy as a position or posture, which
implies that strategic choice is mostly a selection among static configurations.
When organisations have to function during periods of unpredictability, before
a strategy is articulated, the danger is premature closure. Articulated
strategies can be blinders, impeding strategic change.
4.6 Principle6:Thesestrategiesshouldbeexplicitand,ifpossible,
articulated,whichalsofavourstheirbeingkeptsimple
This view holds that strategies should be explicit to those who make them and
that they should be articulated so that others in the organisation can
understand them. The strategy must be specific enough to require some
action and exclude others. This means that strategies have to be kept rather
simple in order to facilitate this articulation.
In their article, Goold & Quinn (1990) cite Barnard (1938) as stating that there
are three important reasons for establishing a control system, first, a
fundamental task for any large organisation is to coordinate the efforts of all
those who work within it, and in particular to reach agreement between
managers at different levels in the corporate hierarchy on the plans and
strategies that will guide decisions and actions. Accordingly, agreement on
the objectives to be sought by all parts of the organisation is a necessary
condition (explicitness and simplicity). These authors further state that as far
as possible, the objectives should be precise and measurable, otherwise
there is a danger that plans will lack substance and specificity.
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In the same vain, Goold & Quinn (1990) cite Hrebiniak & Joyce (1984) who
state that to achieve long-term aims, it is necessary to develop operating
objectives that purposely translate strategy into manageable short-term
pieces for implementation.
4.7 Principle7:Onlyafterunique,fullblown,explicit,andsimple
strategiesarefullyformulatedcantheythenbeimplemented
According to Mintzberg (1990), this view is consistent with classical notions or
rationality diagnosis, prescription, then action, representing the separation
between thinking and acting.
The manner in which Ansoff (1980) describes what he refers to as strategic
issues betrays his bias towards giving primacy to the thinking before acting
dichotomy. According to this author, strategic issues may be a welcome
opportunity to be grasped, an internal strength which can be exploited, an
unwelcome external treat or internal weakness which can imperil continuous
success. The contemplative formulation process using the SWOT technique is
thus regarded as an indispensable precursor to implementation and never a
parallel or antecedent process.
Ansoff also makes the point that it is not necessary to revise strategy annually
because a strategy is a long term thrust which takes several years to
implement. So once a strategy is fully formulated, there must be full
commitment to its implementation without the need for regular revision.
Strategic issues management is also based on a model of assigning
responsibility for resolving issues to workers. Ansoff (1980) makes the point
that the success of SIM depends on making the projects (or worker teams)
resolvers, and not planners, of issues. This again betrays the separation of
thinkers (senior management) from doers (workers) in understanding strategic
management.
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According to Goold & Quinn (1990), the manner in which senior management
can ensure that individuals at different levels (lower level managers) are
motivated to implement the strategy is through personal incentives and
sanctions. In a way, this acknowledges and accepts the separation between
formulation and implementation.
The separation between formulation (thinking) and acting (execution) is
further re-emphasised by Prahalad & Hamel (1994) in their review of some of
the critique on strategy. At one stage, these authors state that at the extreme
some critics of strategy seemed to forget that irrespective of how efficient the
body (organisation) got, it still needed a brain (strategic direction). Classical
writer, Urwick (1944) cited in Miller & Vaughan (2001) saw planning as an
intellectual exercise, a discipline to do things in an orderly fashion, thinking
before taking action and relying on facts.
Barney (2001) also deals with strategy implementation as a separate activity
from formulation. This author presents two approaches to addressing strategy
implementation issues in the context of resource based view. The first
approach is where the ability to implement strategies is itself a resource that
can be a source of sustained strategic advantage. The second approach
suggests that implementation depends on resources that are not themselves
sources of sustained advantage, but rather, are strategic complements to the
other valuable, rare, costly to imitate, and non-substitutable resources
controlled by a firm. The formulation vs. implementation dichotomy is also
clear when the author defines resources as the tangible and intangible
assets a firm uses to choose and implementits strategies (Barney, 2001: 54)
The article by Goold & Quinn (1990) cites Roush & Ball (1980) who state that
a strategy that cannot be evaluated in terms of whether or not it is being
achieved is simply not a viable or even useful strategy. The establishment of
control objectives is therefore an essential final step in the planning process
(Lorange, 1980). Of course control objectives can only be developed once a
strategy has been formulated fully.
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Camillus & Grant (1980) in Goold & Quinn (1990) have another advice. They
argue that strategic implementation is best dealt with by deliberately
integrating the strategic programming and operational activities into a single
operational planning process which would include a statement of quantitative
goals (both financial and non-financial) and a description of action to be
implemented.
Ackoff (2003) in spite if his positive stance on systems or synthetic thinking,
falls back into the formulation vs. execution divide with a prescription for
strategy formulation. He states that strategy formulation must first start with
understanding what is happening inside and outside the organisation, then by
developing a vision of what the organisation could be within the emerging
culture and environment. Next by preparing a strategy for reaching or moving
closer to that vision.
Sheenan (2006) argues that brilliant strategies fail due to poor execution. The
author argues that diagnostic controls, boundary controls, belief controls and
interactive controls are the four levers needed to align what the firm desires to
achieve (strategy) and what is actually done by its employees.
The Social Learning Theory of Strategic Management (SLTSM) presented in
the article by Ginter & White (1986) and as enriched by the Stimulus-
Organism-Behaviour-Consequence (SOBC) model of Luthans & Davis (1975)
makes a clear separation between strategic planning and strategic
implementation as part of the behaviour of organisations.
In the same vain, Muniv-Hernandez et al. (2004) state that as all businesses
are in competition, they must first formulate a competitive strategy. In
developing a process model for strategic management, these authors note
from reviewing literature that the main stages of the strategy process are; the
establishment of main strategic objectives and performance targets;
formulating the strategy; implementing the strategy and; establishing strategic
control and evaluation.
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In their article, Paquin & Koplyay (2007) posit that no matter what relative
importance is given to various theories of strategy, the process of strategic
planning encompasses essentially the same phases: environmental scanning,
followed by strategy formulation, strategy implementation, strategy evaluation
and strategy control.
Farjoun (2002) cites Chandler (1962) who states that, in a standard design
model, the strategic management process generally consists of two main sub-
processes: strategy formulation and strategy implementation. The strategy
formulation sub-process is concerned with analysis and the choice of strategy
at the corporate, business and functional levels. Strategy implementation
comprises a series of primarily administrative activities and includes the
design of organisational structure and processes and According to Selznick
(1957) the absorption of policy into the organisations social structure.
In the article by Jarzabowski & Wilson (2006), they state that from a
representational epistemology, there is a Cartesian relationship between
thought and action, in which thought precedes action. Knowledge is thus
designed to assist this linear process in a prescriptive fashion. This is to say
that action is driven by reliable prior knowledge (Tsoukas & Knudsen, 2002) in
Jarzabowski & Wilson (2006)
To try and fix the problem of mis-alignment between formulation and
implementation, Ansoff (1990) introduces strategic issues management. This
author regards SIM as allowing for dealing with deviations from strategic
thrusts which may occur as a result of new
opportunities/threats/strengths/weaknesses. By assuming linear causality
Ansoffs SIM is an inadequate answer to the question posed by Goold &
Quinn (1990) regarding how strategic controls can be devised that are
compatible with uncertainty in the business environment, and with the need
for flexibility and creativity in strategy.
In recognition of the difficulties of separating implementation from formulation,Goold & Quinn (1990) observe that recent literature advocates the
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establishment of strategic controls to monitor strategic progress and ensure
implementation of strategic plans, but admit that in practice this does not
always work. They state that control systems provide the basis for decisions
to correct deviations from planned objectives. This largely assumes that the
formulated strategy is correct, the problem lies with how it is implemented,
hence the corrective action.
Goold & Quinn (1990) also mention that the research that has been carried
out suggests that, despite the arguments in favour of the concept of strategic
control system, in practice few companies have yet made much progress with
the development and use of formal or explicit control systems of the sort that
they describe. They state that the conclusion can either be that there is a lag
between theory and practice or that the benefits of strategic control systems
have been greatly overstated in previous literature.
The inadequacy of the Cartesian separation is also clearly represented in the
article by Balogun (2007). This author writes about restructuring at a British
utility company. The author concludes that the restructuring process at this
company dismally failed because on completion of the consultant/senior
manager design team, they had just closed the room up, leaving no team in
place to take the design forward and oversee implementation, in a classical
implementation following formulation premise. This created problems for the
company. The author cautions that designing a structure and then just
passing it over to members of that structure to manage the change ignores
the realities of implementation, which involve considerable energy and effort
to complete the detail of the design. The advice is to provide continuity
through design and implementation. Good planning is generally participative,
involving not only line management but also those who will be responsible for
implementing plans (Hulbert & Pitt, 1996)
An important and distinctive property of living systems is the tenuous
connection between cause and effect. The best-laid plans are often perverted
through self-interest, misinterpretation, or lack of necessary skills to reach the
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intended goal, resulting in frustration by managers who fail to understand how
their well designed strategies can fail so dismally (Pascale, 1999).
A further weakness of the thought and action divide is that it assumes that
data can be aggregated up the chain without losing much or distortions. Thus
allowing senior managers to develop good plans using information (reports
etc) from actors lower down the hierarchy who must be kept out of the
creative process.
5. INSIGHTSFROMTHEREVIEW
The forgoing review has highlighted some insights that practitioners in the
field of strategic management need to be aware of and be sensitive to.
Amongst the key insights is the fact of the pervasiveness of prescriptive views
in strategic management, even amongst those authors and researchers that
purport to be promoting the adoption of new paradigms. The extent to which
the prescriptive mechanistic paradigm continues to dominate writings instrategic management is perhaps indicative of its historical contribution and
utility. The schools of planning, design and positioning thus still enjoy a wide
following in the field.
Some of the reviewed articles assist in demonstrating the follies of an over-
reliance on a perspective that is often not reflective of the realities of
organisational practice. This over-reliance has seen other lenses for looking atthe problem of strategic management being completely overlooked or down
played.
The field of strategic management seems to be failing to effectively embrace
alternative paradigmatic lenses or a multi-paradigmatic approach. This failure
reflects inadequate levels of awareness of and/or openness to theoretical
alternatives amongst students, researchers and managers. This in turn is
limiting discourse and/or inquiry across paradigms.
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Further, the level of understanding of organisational plurality and paradox is
constrained. Lewis & Keleman (2002) citedin Bakir & Bakir (2006) state that
multi-paradigm researchers apply an accommodating ideology, valuing
paradigm perspectives for their potential to inform each other toward more
encompassing theories.
The adoption of divergent views to strategic management has a potential of
assisting managers to better deal with complexities and uncertainties that face
them in their work. Instead, managers continue to struggle to make sense of,
and implement, unrealistic text-book tools on strategy, most of which assume
that strategy is a rational and prescriptive process.
Grounded theory research used by Bakir & Bakir (2006) for instance offers a
concept of strategy that utilises, rather than discards, divergent and
competing paradigms of strategy. This represents a departure from the
rational schools and their critiques from the behavioural schools, depending
on the context of strategising, into a more comprehensive framework that
unpacks the complexity of strategy, pinning down its elusiveness.
A key insight is therefore that there is no need to discard prescriptive views,
but that they should be used in combination with other perspectives in order to
make writings in the field to closely mirror reality and be of improved utility and
descriptive value. For instance, Muniv-Hernandez et al. (2004) manages to
present a model that integrates deliberate and emergent strategies. This
model shows that a strategy, which is eventually realised or implemented, is a
combination of deliberate and emergent strategy, where the deliberate
component is only a part of the original intended strategy. Accordingly, this
author states that although planned, rational methods are not the whole story,
they have an important part to play in creating competitive advantage.
The limitations of prescriptive views are not limited to the field of strategic
management. Writing and research in marketing is also affected by this over-reliance on prescriptive views. This is in spite of an observation by authors
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such as McKenna (1991) who observes that it has been shown that the old
approach, based on the prescriptive planning school, which entails getting an
idea, conducting traditional market research, developing a product, testing the
market and finally going to market is slow, unresponsive and turf ridden.
There is a compelling need to break with some of the major limiting
assumptions of the prescriptive schools. Practitioners, including researchers
in strategic management need to accept that many of these assumptions limit
the ability of the field of to make a meaningful contribution to organisational
performance.
For instance, the over-reliance in strategic management on processes such
as forecasting and trend analysis needs to be tempered by an
acknowledgement that