Culture and Strategy

Question 1

What is path dependency in strategy and its impact?

Answer 1

Definition: Early events and decisions set lasting policy paths influencing future choices.

Impact:
- Strategy built on successful past capabilities.
- Selective use of relevant historical elements for future strategies.
- Evolution of management style from founder(s)’ early practices.

Question 2

What are the methods of historical analysis?

Answer 2

Chronological Analysis: Examines events in their chronological order.

Cyclical Influences: Identifies recurring patterns in historical events.

Key Events and Decisions: Focuses on pivotal moments that shape outcomes.

Historical Narratives: Constructs coherent stories of past events based on evidence.

Question 3

What is strategic drift?

Answer 3

Definition: Strategies develop incrementally based on historical and cultural influences.

Issue: Strategies may become outdated and fail to adapt to a changing environment.

Reasons for tendency towards Strategic Drift:

• Steady as you go: Reluctance to move away from historically successful strategies.
• Building on the familiar: Preference for the known amidst uncertainty.
• Core rigidities: Difficulty in changing deeply embedded capabilities.
• Relationships become shackles: Reluctance to disrupt established relationships.
• Lagged performance effects: Initial financial stability may mask the need for change.

Question 4

What are the phases of strategic change?

Answer 4

Phase 1: Incremental Strategic Change

Description: Gradual adaptation to align with environmental changes.
Characteristic: Builds on past successful strategies with minor adjustments.

Phase 2: Strategic Drift

Description: Strategies fail to keep pace with environmental changes.
Result: Lack of adaptation despite changing circumstances.

Phase 3: Period of Flux

Description: Organization experiences internal turmoil and declining performance.
Signs: Strategic changes lacking clear direction, management conflicts, and customer alienation.

Phase 4: Transformational Change or Death

Outcome: As performance deteriorates:
- Organization may face bankruptcy or receivership.
- Could be acquired and radically changed.
- Implements rapid and fundamental changes for survival.