Chapter 7 - Strategy formation Flashcards
In all the chapters on strategy, what can we take away as a common important thing?
This is about processes. Strategy formation, change and innovation does not refer to activities that are either done or not done. there is a circular process.
elaborate on the definition of strategy
very broad because it is not easy to find a definition that suit everyting:
Strategy is a course of action for achieving an organization’s purpose.
Can we say anything about the definition of strategy?
It is defined as “strategy is a course of action for achieving an organization’s purpose”.
We can differ between two views:
1) Intended course of action
2) Reliazed course of action
Intended strategy is an intended pattern of actions, while realized strategy is the pattern of decisions that actually is done in practice.
We refer to the creation of intended strategy as “strategy formulation”.
Then, when the strategy inevitably change, the realized strategy is called “strategy formation”. Emphasizing the shift from intention to realization.
What is this chapter about?
Tackling to issue of finding a way to realizing a strategic pattern of actions.
The author makes it clear that the original formulation is not enough. The original plan is nice, but the real issue is how to realize it.
we say that strategy formation can include both strategy formulation AND action, but there is additional emphasis on the action-part, because this is what ultimately end up being interesting.
elaborate on the issue
The issue is about how an organization should go about to realize their strategy. We consider some abtract issue/problem that the organization has identified. They will go through the problem-solving cycle of identificaiton, diagonising, conveicing and realizing. There are various activities in all of these that ensure a thourough process.
Then the ultimate question that this chapter try to explain is: Saying we have done the cycle, then what? Or, how should the cycle be focused?
A keyword is uncertainty. We might want to plan everything out: All the steps, actions, roles, objectives. However, due to uncertainty, this can be very difficult.
We say that there are demands for multiple ways to do formation.
1) There is a demand for deliberate planning. This is rooted in setting a direction, purpose, motivation, having a sense of urgency, which will all drive the organizaiton towards some place.
2) Uncertainty makes it beneficial to wait, learn as we go along, explore options, and do things incrementally. Especially opportunism. if we have planned everything already, and some sudden opportunity emerge, will we be able to grab it?
The deliberate planning perspective has a number of great advantages, for instance optimization abilitieis, clear division of labor and formalized tasks. Difficulties are associated with the fact that uncertainty makes it difficult to account for every possible scenario.
The incrementalism perpsective doesnt hate planning, but is more about the fact that for doing new things, planning is not suitable. You need creativity, exploration, and time to learn. We need to build incrementally to achieve the understanding we require.
elaborate on the main strategy formation activities
Based on the strategic problem solving framework from chapter 2:
- Identifying (a problem, or something)
- Diagnoizing
- Conceiving
- Realizing
The goal is to ultimately achieve a successful pattern of actions. Keep this in mind.
Elaborate on strategic issue identification activities
First step in the main strategy formation activities framework.
Corresponds to “identifying a problem”.
Now, if we perceive strategy as an answer to a problem or issue, managers must obviously have some kind of idea of what the problem is. This step of identifying refer to all activities contributing to a better understanding of what should be viewed as problematic - what constitutes an important opportunity or threat that must be attended to if the organization’s purpose is to be met.
Mission setting and agenda setting are important activities in order to figure out what the problems are.
IMPORTANT: Identification step is all about understanding what the corporation consider to be threats and opportunities etc.
elaborate on strategic issue diagnosis activities
Given a problem or issue, we need to understand it. What is the root of the problem. Causaility. Complexity.
Which variables are included? Which ones are known/unknown?
We divide diagnosis into 2 activities:
1) External assessment
2) Internal assessment
In short, external assessment is about understanding the dynamics and workings of industry whole.
Internal is about the organization’s workings.
There is a key focus on the dynamic tendency of things. A snapshot is not sufficient, we need to know the direction things are moving.
elaborate on strategy conception activities
Conceiving is about all activities that contribute to determining which course of action should be pursued. we place great emphasis on the following types of activities:
1) Option generation
2) Option selection
elaborate on strategy realization activities
All actions and adjustments made by the organization. if there is a clear pattern here, we refer to it as realized strategy.
Important activities are actions, and performance control.
In what order should the strategy problem/issue of strategy formation be handled?
There is a circular pattern, but with the ability to jump back and worth. this highlight the constant struggle between figuring out shit again etc.
what is the core issue about in this chapter?
The tension between planning things out in advance, vs figuring things out as they go along.
We see this struggle in the strategy formation framework. There is a circular pattern to indicate an order in which the activities would be perforemd if the environment was completely deterministic, but since it is not, there is the multi-option to jump back and forth.
We want to intenatially design the future, while also needing to gradually explore the future, learn and adapt to it, as it change.
All of this lead to the paradox of “deliberateness and emergence”.
Elaborate on the demand for deliberate strategizing
A deliberate plan can be viewed as a mean towards an end.
There are great advantages to having a plan, some of them are:
1) Direction. With objectives and plans, an organization knows what to do. Without it, they are just drifting. People in the org should know based on the objectives what the preferred action is to create effective behaviour.
2) Commitment. A plan is a choice, and once this choice is made, we allocate our strength to it.
3) Coordination.
4) Optimization
There are others as well. In general, it is obvious why there is a demand for deliberate planning. it is almost self explanatory.
Elaborate on the demand for strategy emergence
There are great points here:
1) Opportunism. By having the capacity to grab opportunities as they emerge with the uncertain environment, the firm can leverage great benefits. Commonly referred to as “playing the field”.
2) Flexibility. Sort of the same thing, but is more about the actual resources that need to be available, while opportunism is more about the mindset.
3) Learning. Try out shit, learn from it, and go from there.
4) Entrprenourship. Let different people in the organization try their ideas, and there will be more passion there.
what is incrementalism?
Incrementalism is the process of taking small intentional steps over time without having that clear big idea in mind. So basically, we do not have a master plan, but rather we have many ideas of things. By doing it in small steps, we let things play out in an emergent way.
