Lecture 15 - The strategy development process

Question 1

Who identified the 3 broad types of strategic decision making that occur in an organisation

Answer 1

Eisenhart, 1992

Question 2

Eisenhart, 1992

Answer 2

3 broad types of decision making that occur in organisations

Question 3

What are the 3 broad types of decision making that occur, according to Eisenhart (1992)?

Answer 3

Rational/bounded model - most deliberate, have intention

Politics & power - some fluidity in terms of how strategy may be influenced by powerful individuals

Garbage can model - most emergent, no intention whatsoever, by chance, strategy born out of people going about their everyday operations

Question 4

Advances in behavioural economics have revealed:

Answer 4

Not all agents are rational

Question 5

What is coalition formation?

Answer 5

Coerce strategies to try and steer the organisation in the direct you want it to go (born out of game politics)

Question 6

Define ‘strategy process’

Answer 6

the pattern of decisions made in managing organisational activities and processes with the aim of achieving competitive advantage.

Question 7

What are the two schools of thought in strategy process?

Answer 7

Deliberate (Rational) -Porter

Emergent (Behavioural) -Mintsberg

Question 8

Deliberate strategy development is purposely formulated and planned by managers as a result of:

Answer 8

Strategic leadership

Strategic planning

External imposition

Question 9

What are the 4 aspects of strategic leadership?

Answer 9

Command

Vision

Decision making

Symbolic

Question 10

Strategic leadership as command:

Answer 10

the case of the entrepreneur, controls of all aspects of the business

Question 11

Strategic leadership as vision:

Answer 11

creating a clear view of strategic direction and gaining commitment from employees

Question 12

Strategic leadership as decision making:

Answer 12

leaders weigh evidence, interpret data, make decisions and secure buy-in

Question 13

Strategic leadership as symbolic:

Answer 13

leaders as the face, voice and soul of the organisation

Question 14

What is strategic planning?

Answer 14

Strategies that emerge through formalised planning systems

Formalised structured processes supported by a range of tools to develop strategy (rational school of thought)

Typically supported by dedicated planning team

Helps organisation learn by going out and conducting an external study

Question 15

Name some problems with planning systems

Answer 15

Confusing strategy with planning

Detachment from reality

Paralysis by analysis

• So obsessed with doing environmental analysis – don’t get anything done
• Detachment from reality

Lack of ownership/ high complexity

• People only contribute towards part of it
• Don’t have idea of bigger picture

Dampening of innovation
- Rigid control squeezes out any potential for creativity

Question 16

What is external imposition?

Answer 16

Imposition of strategy by powerful stakeholders

• still deliberate
• intentionality

Question 17

Give some examples of external imposition

Answer 17

Government privatisation

New regulation / legislation

Local operating division implementing Group strategy

Major events

• Natural disasters
• Scandals

Question 18

Define ‘emergent strategy development’

Answer 18

Strategies that emerge on the basis of a series of decisions, a pattern in which becomes clear over time (Johnson et al., 2014; p.410)

Question 19

(Johnson et al., 2014; p.410)

Answer 19

Strategies that emerge on the basis of a series of decisions, a pattern in which becomes clear over time

EMERGENT STRATEGY

Question 20

Name the 4 types of emergent strategy

Answer 20

Logical incrementalism (most deliberate)

Political processes

Prior decisions

Organisational systems (least deliberate)

Question 21

What is logical incrementalism?

Answer 21

Strategics that emerge from ‘organisational subsystems’ (such as SBUs, cross-functional teas) activities and are initiated from the bottom up

Question 22

3 stages of logical incrementalism

Answer 22

Subsystems focus on specific sets of strategic issues: acquisition, divestitures, re-organisation, NPD

Subsystems produce strategy in planned, disciplined way, but then are blended incrementally and opportunistically to create a cohesive pattern – the company’s strategy

Subsystems are managed and linked through ‘logical incrementalism’
Purposeful, effective, proactive approach to integrating analytical and behavioural aspects of strategy formulation

Question 23

What is Quinn (1980)’s definition of logical incrementalism?

Answer 23

The development of strategy by deliberate incremental experimentation and learning “from partial commitments rather than through global formulations of total strategy”

Question 24

Typically, logical incrementalism is based around: (3)

Answer 24

Environmental uncertainty: precipitating events

Focus on development of general goals rather than specific goals

Experimentation

Question 25

Define political processes

Answer 25

Strategies are the outcome of bargaining and power politics that go on between executives, departments, and major stakeholders - Reflecting different views of the best strategy and executives’ position within the company - The divisional warring tribes view: tribes with differing planning systems

Question 26

4 characteristics of political processes

Answer 26

Views organisations as political systems in which actors and departments leverage power as a control mechanism – strongly linked with the RBV. Resources are a key political bargaining chip Coalitions, co-optation, and strategic use of information in battle for power/leverage over others Reflects differences in individuals and departments and their backgrounds/ agendas

Question 27

Define prior decisions

Answer 27

Strategy is the result of the previous history of strategy formulation within the organisation Decisions are informed or constrained by previous decisions e.g. the decision to make a significant investment in a new product, significant successes, significant failures

Question 28

Path dependency

Answer 28

Organisations are not necessarily free to choose strategic direction they want Historically conditioned because of what they’ve done before – past dictates where you can go in the future Particularly powerful if based on earlier successful strategies Particularly dangerous in sectors experiencing discontinuous innovation E.g. lawyer becoming a surgeon E.g. massive investment in an acquisition, cannot easily sell, made decision, must follow it through, cannot change goalposts

Question 29

Organisational culture (strategy process)

Answer 29

Strategy as the result of taken for granted values, assumption, routines and behaviours Limiting options to be considered Defining how options are assessed

Question 30

Define organisational systems strategy process

Answer 30

A non-deliberate ‘bottom-up’ process of strategy setting Strategy as the result of managers at relatively low levels in companies making sense of and dealing with problems and opportunities by applying established ways of doing things Strategies develop from the allocation of resources at the micro-level (e.g. INTEL)

Question 31

Organisational systems approach is based on idea that:

Answer 31

Organisational systems and structures are a basis for employees making sense of issues Organisational systems and structures provide a basis of solutions to strategic issues

Question 32

Typical local systems and structures of organisational process may be:

Answer 32

Based on functions e.g. Finance, marketing, operations Based on organisational units e.g. Business unit System, structures, priorities, local language, problems and solutions

Question 33

What are the key tensions/managerial implications of strategy processes?

Answer 33

The need for exploitation (of existing assets and capabilities) The need for exploration (or new opportunities, markets and products)

Question 34

The need for organisational ambidexterity is a significant management challenge. What does it mean/involve?

Answer 34

Structural ambidexterity: separate divisions and business units Maintaining diversity in decision making The importance of leadership Tight and loose systems

Question 35

How does it all happen in reality?

Answer 35

Mixed methods and approaches are likely to characterise the majority of strategy development processes Intended and emergent process and contexts are likely to interact in any single case Practitioners have to deal with the entirety of the strategy process

Question 36

Purely deliberate strategy occurs when

Answer 36

a strategy is influenced wholly as intended

Question 37

Purely emergent strategy occurs

Answer 37

without any formal intention or planning