Lesson 2: Strategy Development Processes

Question 1

What is a lens/perspective

Answer 1

A theoretical perspective is a special way of looking at and perceiving reaility.

The four lenses are based on different scientific positions:

1) Design lens = analytical and structural theory
2) Experience = Hermeneutic and pluralistic view
3) Idea lens = evolutionary, compley and chaos theories
4) The discourse lesn = language theory and critical theory

Some organisations can better be understood through one lens than another lens.

An organisation cannot have a certain lens, only observers and researchers can have a lens. People normally act goal oriented.

Question 2

Why apply different lenses?

Answer 2

An industry, firm, customers, managers, account are not exact entities = no clear access to markets, you can’t see capital markets.

But by looking at the world through different lenses we better understand it and we create a deeper understanding.

Thereby we will be aware of more opportunities and risks: how much or how less is part of a company, is a company a ‘going concern’ or not and is it an attractive investment. How good (trustworthy) is the management?

Question 3

What is the design lens?

Answer 3

Focus on the formal strategy planning process.

Look at the formal organisational structure.

Look at the formal decision making

Focus on optimisation of the organisation.

Strategy is very much a topdown process.

We distinguish between analyses and implementation.

Make most sense in simple and static environments.

Question 4

What is the experience lens?

Answer 4

Focus on the non formal part of the organisation.

Focus at pattern of actions over time.

Look at experience, routines and values.

Look at the political negotiations between actors.

Uncover the taken for granted perceptions within the firm.

Produce explanations on organisational behaviour.

Focus on complexity in and around the organisation.

Question 5

What is the idea/variation lens

Answer 5

Focus on change: ability to innovate of the company, diversity for new ideas, group work.

Focus on variation and differentiation

Focus on the context and on how that facilitates innovation.

Look at mechanisms of transmission, variation and selection.

Look at norms, innovations and markets.

Look at indirect management through simple rules.

Question 6

What is the discourse lens?

Answer 6

How is the language of strategy applied in organisations

What power, identitity and legitimacy does the strategy language create?

Who talks in strategic terms and how they talk?

What values are connected to the strategy language?

What does the strategey language make visible and what does it hide?

Of special importance in complex and innovative context.

Question 7

Are the lenses complementary?

Answer 7

They must be applied on at a time because they are based on different assumptions concerning people and structures.

If all four lenses are applied in a sequential way then they will add up a more detailed picture of reality.

Organisations cannot be a lens but managers, consultants and researchers can take a specific perspective on reality.

Question 8

What is intended strategy development?

Answer 8

Strategic leadership, vision and command.

Strategic planning

Exgternally imposed strategies.

Question 9

What is strategy development as strategic leadership?

Answer 9

A person can be seen as a strategic leader because:
He owns the company
He created the company
He turned the company arond in a difficult time
He has a very strong network

Strategic leadership can take place through: 
Command (dictated) by one person
A vision
Decision-making (a process)
Symbolic actions

Question 10

What is strategic planning?

Answer 10

Often in bigger organisations.

Strategy development as planning:
Follow the hierarchical order of the organisation.

Goals analysis, calculations, choice, implementations, control and revision.

Question 11

What are the benefits of strategic planning?

Answer 11

A structured way of thinking and analysing

Can sometimes challenge the taken-for-granted assumptions.

Can create ownership (motivation)

Involve and communicate the strategy

A control tool

A tool of coordination

Question 12

What are drawbacks of strategic planning?

Answer 12

Icebergs in the water = unclear how market evolves.

Neglect the political and cultural barriers.

Presume stability and predictability

Risk of only be an intellectual exercise.

People do not understand the entirety of the problems.

Can be too detailed and too inflexible.

Can neglect new posibilities

Question 13

What are emposed strategies

Answer 13

By mergers and acquisitions (by owners) = given from a top company.

Market conditions: competitors, suppliers, customers.

Law makers: both public and private sector.

Question 14

What are the development processes of emergent strategy

Answer 14

Most deliberate:

1) Logical incrementalism
2) Political processes
3) Prior Decisions
4) The product of organsational systems

Question 15

What is logical incrementalism?

Answer 15

Each arrow represents an experiment, start from a point of departure. Then if a project doesn’t develop in direction you want, retransfer.

In the end, you get a broad target range of activities.

Eg. Pharmaceutical company trying different ways to solve diabetes.

Strategy development through a series of experiments, evaluations and learning = action oriented.

Strategy is formulated very broad in the beginning and strategy is implemented gradually. The company develops in small steps. These processes take place when an organisation is located in complex and dynamic environments.

Takes place when managers disagree about the goals.

In spite of the evolutionary character of the process the managers still influence the processes.

Question 16

What is strategy development as a political process?

Answer 16

Strategy is a product of negotiation and bargain among stakeholders.

Each stakeholder group tries to realise their own goals.

The stakeholder influence on the strategy is determined by the amount of power they hold.

Power is related to mobilisation and control of scared resources = information and money.

Negatiations take places as a continuous adaptive process.

Negotiation can be positive because it facilitates creativity and argumentation.

On the other hand it can be a blocking process which drains the organisation for time and money.

Question 17

What is strategic direction from prior decisions?

Answer 17

Continuity is likely to be a feature of strategy because of:
Emergent strategy as managed continually, each strategic move is informed by the rational of the previous move.

Path-dependent strategy development, strategic decisions can be a result of historical pre-conditions.

Organisational culture and strategy development - strategy is the outcome of the taken-for-granted assumptions, routines and behaviours inr organsations.

Question 18

What is strategy development as a cultural processes?

Answer 18

Strategy is a product of the basic assumptions adn the taken-for-granted believes.

Strategy develop as a pattern of actions which reflects these taken-for-granted assumptions.

Strategy developing is a shared negotiated picture of reality based on the company and its employees’ history, perceptions and values, experience and actions.

Over time organsations develop routines and special perceptions about itself and its environment.

Strategy development as a cultural proc”ess can over time lead to strategic drift.

Question 19

What is strategy as the product of organsational systems?

Answer 19

Multiple strategy development processes:
Most organisations will develop strategy involving several approaches.

There’s no right way to develop strategy.

Organsational ambidexterity: exploiting existing capabilities while exploring new capabilities.

Question 20

What is strategy development as resource allocation rules

Answer 20

The strategy is a result of resource allocation routines.

Top management sets the rules and routines for the allocation of resources which determines the strategy.

Middle managers put forward projects which compete on resources.

The projects which fit with the rules, goals and values of the organisation best get the resources.

Business cases, budgets, goals, earnings, balance scorecard and benchmarking, mission and vision determines the strategy.

Question 21

Will strategy development processes differ according to the context?

Answer 21

Organisational characteristics differ, in size, technology and diversity.

The nature of the environment differs, it may be stable or dynamic, simple or complex.

Life cycle effects: development processes will evolve and change over the life cycle.

Question 22

What are centralised management processes with intended strategies?

Answer 22

Command and strong leadership vision

Standardisation, planning and adoption

Formalisation, planning and decision-making

Big manufacturing and service organisations

Corporate centres in divisional organisations

Simple and stable environment (mature markets)

Question 23

What are decentralised management processes: emergent strategies

Answer 23

Strategy develops through negotiations and actions.

The formal strategy formulation process is symbolic.

Complex and dynamic environment

Professional organsations

New markets and growing industries

Question 24

What are external enforced processes?

Answer 24

Strategy is decided outside the organsation

Own freedom of action is limited

Often subsidiaries of corporate centres or public institutions

Powerful stakeholders in the environment

The environment is unstable, hostile and markets are eroding

Question 25

What are the challenges of strategy development?

Answer 25

Avoid strategic dirft by creating a learning organsation.

Create a learning organsation which has some of the following characteristics: 
Continuous experiments and learning
Room for different opinions
Room for conflicts and debates
Room for dialogue
Holds slack resource
Works within an overall vision

Question 26

What are the behavioural theories’ criticism of neoclassical theory?

Answer 26

Within behavioural theory we do not think that firms maximize their goals;

Research done by Hall & Hitch (1938) show that firms apply mark-up prices.

Within behavioural theory we focus on the process instead of the outcome of decision-making

Within neoclassical theory the firm is reduced to and treated as a black-box

Question 27

How does Herbert Simon view the organsation?

Answer 27

Organsations are seen as systems (coalitions) of agents with their own preferences.

A stakeholder perspective: contribution and rewards

Stakeholders only stay in the coalition as long as they do not find coalitions with a better balance between contribution and rewards.

Organsations survive as stakeholders find them attractive.

Different types of contracts with employees (open contract)

Employees accepts the authority of owners/managers

Organisations therefore become hierarchies.

Question 28

How do people according to Herbert Simon make decisions?

Answer 28

Human beings do not optimise, they satisfy.

Human beings have a minimum level that the decision have to satisfy.

They continue to search for alternatives until they are satisfied. They search for alternatives close to what they already know.

Human beings have a limited capacity to handle information and a limit decision-making capacity.

Because searching for alternatives and making decisions take time and energy people economise the resources used in this area.

The administrative man model: C1 is not satisfactory, C2 is satisfactory but not necessary the optimal choice.

Question 29

How do Cyert and March view organsations and decision-making?

Answer 29

Organsations are seen as loose as loose coupled systems of stakeholders entering changing coalitions.

More a conflict view than a consensus view. Organsations are adaptive political coalitions.

They can adapt to environmental changes, learn and influence the environment.

Organsations create standard operational procedures (SOP) around problematic issues.

Standard operational procedures are standardised solutions to organisational problems and they have the form of procedures, routines and tacit knowledge.

Question 30

How do March & Olsen look at organsations and decision-making?

Answer 30

Organisations modify its behavior according to its experience.

Organisations make decisions on genuine uncertainty which means that it does not know either the alternatives or the consequences.

Organsations’ goals are vage and the goal-means relation is vague and the interpretation of organsational results are vague.

Organisations learning is difficult and doubtful.

The late behaviouralism build on a fucntional and evoltuional view.

The development of the ‘garbage-can’ decision-making model in which solutions are determined by time, access and energy rather than problems.

Question 31

What is behavioural theory as a research program?

Answer 31

Make use of empirical inductive research methods.

Human beings have a limited capacity to handle information and therefore they act bounded rational.

Focus on long-term and compley problems and especcially the decisions making process, which mean different types of decisions making situations: area of research

Often based on case study methods of decision processes within companies

Draw on functional and evolutionary theory.

Question 32

What is the contribution of behavioral theories to the field of strategic management?

Answer 32

Provide us with knowledge concerning how internal decision-making within organsations take place.

Whn we refer to strategy development processes as emergent, logical incrementalism or as political we draw on behavioural theory.

Stakeholder model has its roots within the behavioural theory.

Managing chances also draw strongly on insight from the behavioural research program