Key Concepts – Strategy
Strategy can be defined in many different ways. Different definitions depend on what managerial purposes it fulfills in an organisation. The meaning of strategy has evolved over the years and early explanations of strategy were concerned with its role on organisational boundaries. Ansoff (1965), cited in Dikmen & Birgonul (2003), defines strategy as a firm’s choices of products as well as markets. Similarily, Grinyer (1972), citied in Dikmen & Birgonul (2003), defines strategy in terms of the degree of diversification and geographic expansion. These definitions are concerned with the scope of an organisation and matching it to its surroundings. Porter (1980) defines strategy in terms of competitive advantage and implies that this can be achieved through strategy. This reflects the importance of both core competencies and competitive forces acting on the organisation to formulate strategies. Finally, the definition employed by this paper is according to Mintzberg (1987), who defines strategy as a plan, ploy, pattern, perspective, or position according to various managerial intentions.
Different managerial intentions specify what type of strategy will be most effective in implementation. These include strategies from both the planned and emergent viewpoint. At the extremes are pure planned and pure emergent strategies. A purely planned strategy indicates that management articulated their precise intentions, so that the desired outcomes are clearly understood before action takes place. In contrast, a pure emergent strategy can only occur with consistency in action over time and the absence of intention (Shiner, 2001). A key to managing strategy is the ability to detect emerging patterns and helping them take shape and their subsequent implementation. The planning activities of the organisation need to be able to preconceive strategies but also understand that these can emerge from activities elsewhere. Through research completed by Mintzberg & Waters (1985), it is highly unlikely that either pure emergent or pure planned strategies will be found in an organisational setting. These authors conclude that there would only be a tendency in one direction or the other.
Planned Strategy
Planned strategy involves a centre authority, which formulates their intentions as precisely as possible and then strive for its implementation. To do this, the organisation needs to articulate its intentions in the form of a plan and then elaborate on this strategic plan in as much detail as possible. This is prepared by using measures such as schedules, budgets and forecasts. Planned strategy involves making formation assumptions and then following a strict strategy process approach, with strategic decision making taking place in a number of steps. Ansoff (1965) cited in Harris, Forbes & Fletcher (2000) illustrates that strategic decision making takes place in four principle steps. These are the perceptions of the decision need or opportunity, formulation of alternative courses of action, evaluation of the alternatives in relation to their respective contributions and the choice of one or more alternatives. This process illustrates how ‘planned’ planned strategy is.
Planned strategy is useful in organisations because it breaks down the process into manageable units. The process of setting objectives and goals allows the management to plan and motivate for the future and this also stimulates employee discussion and debates. Furthermore, the control system enables organisations to periodically review progress and understand how closely their internal performance adheres to their strategic goals and intentions (Osborn, 1998). For planned strategy to be implemented successfully, numerous factors need to be considered. The market and organisation environment needs to be predictable so that strategies can be implemented in a steady and rational way. Planned strategy is useful for controllable elements where the processed are incremental and linear. However, in practical terms, this may not be possible in turbulent, dynamic environments. This is one limitation of the planned approach to strategy formation.
When an environment is complex and somewhat uncontrollable or unpredictable, a variety of sub-units in the organisation need to able to respond, especially if there is rapid change (Brown & Eisenhardt, 1998). In these situations, patterns in the organisation cannot be planned in one central place (Mintzberg & Waters, 1985). Today, organisations are faced with numerous fluctuations in the economy and major technological change. As such, development time frames are becoming shorter and shorter and organisations need to constantly update their production processes. Therefore, the planned strategy may become obsolete over the planning period, due to the changes in the external environment.
Brown & Eisenhardt (1998) believe that planned strategies fail because they overemphasise the degree to which it is possible to predict which industries, competitors, positions and competences will be viable for what length of time. Furthermore, planned strategies underemphasise the importance and challenge of creating and executing the chosen strategy. Furthermore, planned strategy assumes that a common agreement can be found by all the parties involved in the planning process and it appears to ignore organisational conflicts and politics, or at least assumes they can be easily identified and changed (Burnes, 1996).
Theorists have argued that planning is a system on control. This school of thought considers that planned strategy does not relate to a system of thinking, rather as a method of control. It can be seen that planned strategies are implemented in the organisation in a top-down hierarchy structure (Bourlakis & Bourlakis, 2001). On the other hand, traditionalist illustrate that organisations that do implement their strategies in a vertical, top-down process, retain functional stability within their business units and have the potential to improve and expand.
Planned strategies are found in organisations that simply extrapolate established patterns in environments that they assume will stay stable. In a previous study by Mintzberg & Waters (1982) cited in Mintzberg & Waters (1985), It was found that strategies appear not to be conceived in planning processes so much as elaborated from existing visions or copied from industry standards and, therefore, do not constitute a thinking or learning process. According to Mintzberg (1988) planned strategy distorts the process of ‘crafting strategy’ and thereby, misguides the organisations that embrace it unreservedly. Planned and formal strategies can process more hard data and information than in semi-structured planning. However the pitfall to these strategies is that they can never ‘internalise’, ‘comprehend’ or ‘synthesise’ information (Mintzberg, 1994, p. 111). In other words, planned strategy is not learning and evolving. It consists of a rational sequence with a known outcome.
Emergent Strategy
The approaches to strategic management are undergoing considerable change. There has been a remarkable shift from planned strategies to more flexible contingent approaches, which can emerge from chance events, as well as from cognitive, cultural and political processes. The emergent strategy rejects the planned approach to strategy. It sees strategies as a one-off exercise and more as a continuous process of change and advancement. Emergent strategies seek to align and re-align the organisation in unpredictable and rapidly changing environments. Furthermore, the reality in organisations is that management does not follow along predictive and linear assumptions. Hamel and Prahalad, cited in Davies & Ellison (1998, p. 463) state that ‘the predictive horizon is becoming shorter and shorter. So plans do little more than project the present toward incrementally’. It is important to understand the interacting non-linear influences that actions are affected by in order to formulate effective strategies (Macbeth, 2002). Emergent strategies are most likely to be found in organisations characterised as ‘adhocracies’ or project structures (Shiner, 2001). Changing and complex environments with unique products, incorporating the use of multidisciplinary teams and project work, typify these.
Emergent strategies have many advantages in today’s organisational settings. First, it stresses the developing and unpredictable nature of change. It views change as a process that unfolds through the interplay of multiple variables (context, political processes and consultation) within an organisation (Burnes, 1996). Therefore, market structure and demands provide the environment that creates much of the need for emergent strategies. Turbulent, competitive and unpredictable markets, together with innovative products, increase the need for emergent strategies. However, emergent strategies tend to lack the coherence of methods and techniques accumulated by the planned approach to strategy. Emergent strategies also lack the presence of competitive advantage based on core competence. This is due to the strategies constantly changing, with no one major idea. Therefore, organisations cannot exploit or develop particular core competences.
Emerging organisational strategies make use of a feedback response mechanism. Therefore, responses from competitors, employees, cross functional groups and internal/external environment all have an impact on the impending strategy formation. However, when organisations implement planned strategies, they often sever the vital feedback link between cross-function and dependent groups. This is means that useful information may not be responded to and as such, potential strategies and processes are unrealised. One example that depicts the development of an emergent strategy in an organisation is Honda Motor Company’s entry into the United States motorcycle industry in 1959. This illustrates how the planned strategy of entering the market with high powered 250cc and 350cc bikes failed, whereas the strategy of selling 50cc machines emerged (Marsden, 1998). This emerged strategy was so successful that in 1964, nearly one out of every two motorcycles sold was a Honda (Marsden, 1998).
Emergent strategies represent ideas that have surfaced from organisations interactions with its customers, markets and competitors and may suggest approaches that were not considered during formal planning (Osborn, 1998). Emergent strategies arise from the daily activities of the organisation and, in many cases, represent bottom-up structure. Furthermore, organisations which are employing emergent strategies, resolve their issues horizontally and across functional teams, reiterating their lack of formal control systems and heightened awareness of learning and thinking processes. Emergent strategies give the organisation the chance to self-organise and realise its potential in more advanced strategies, activities and complexities (Fitzgerald, 2002). A focus on emergent strategies changes the traditional relationship between planning and control. Effective control systems can play a central role in identifying problems and matching them with specific strategic solutions, even if both elements surfaced from apparently random fashion within different parts of the networked organisation (Osborn, 1998).
Emerging organisational designs are more organised more explicitly around processes than controlled, traditional, and hierarchical structures. Emergent strategy sees that strategy is an open-ending and continuous process. It can be viewed as a process of learning and not just a strategy of changing organisational structures and practices (Burnes, 1996). Purely planned strategy precludes learning once the strategy is formulated and beginning to be implemented. Emergent strategy advances and encourages thinking and learning (Mintzberg, 1988).
Semi-Controlled Strategy
According to Mintzberg (1988) there is no such thing as a purely planned or a purely emergent strategy. No organisation can fully give up the right to control or structure and no organisation can fully predict the future in advance. Thus, planned and emergent form the end points of the continuum along which the strategies that are ‘crafted’ in the real world may be found. Semi-formal structures enable management to build a shared and explicit understanding of emergent issues by exploiting naturally occurring structures within management processes. Semi-formal structures offer an opportunity to design systems that evolve at speeds close to that of managerial decisions. These systems may support process redesign at speeds which match the strategy redefinition encouraged by interactive controls. Emergent structures are those that use semi-formal information to support strategies identified by interactive controls and have important implications for organisational adaptation, structures and performance.
Managerial planning in an organisation is undertaken for many reasons. The concept of strategic planning is explored in this paper, where it can be determined that strategy formation falls within two distinctive areas – that of planned and emergent strategy. These two approaches both possess varying advantages and disadvantages when applied to an organisational environment and these have been specifically discussed in this paper. Theorists of planned strategy consider it as a method of thinking rather than of control, whereas emergent academics view planning in terms of its formal, controlled structure. This divide has been particularly examined and analysed in this paper. It can be observed that although purely planned strategy precludes learning, purely emergent strategy precludes control. Furthermore, it can be concluded that neither purely planned nor purely emergent strategies are viable options in organisational settings. What transpires in reality is a tendency towards one extreme or the other. Therefore, the concept of semi-controlled structures has been proposed as a compromise between the two. These models enable organisations to be flexible in today’s changing global environment so that they can respond quickly to changing variables, yet remain stable so that they can grow based on their core competencies and strengths.
