Week 11: Strategy Implementation & Strategic Innovation Flashcards
Implementing strategy, 3 issues associated with the strategy process are:
- trickling down and trickling up of information
. - detection and correct interpretation of information and weak signals
. - infusing organizational agility and winning inertia (esp imp in SI)
Strategy content
Strategy content : concerns the content (or nature) of different strategies (therefore also of strategic innovation) and their probability of success. The focus is on the consequences of choosing different strategic options on strategic outcomes, of which the most important one is performance (long-term survival or growth in case of strategic innovation)
Some questions associated with strategy content:
* Does related diversification have a positive impact on company performance? Is the
positive impact stronger than unrelated diversification?
* What are the risks associated with internationalizing through greenfield foreign direct investments in psychically distant countries?
* What are the risks that conducting strategic innovation (e.g., entering new, nascent markets, or changing business model) produces in the short term?
Strategy process: concerns how strategy is formulated, developed and implemented in companies. The focus is on the interactions and decisions that are behind the behaviors of the company by a number of actors, such as top managers, middle managers, board directors, consultants, and so on.
The emphasis is not on the performance, but on the “patterns in a stream of decisions” (Mintzberg) made by strategists (literally “those who do strategy”) in a company.
Some questions associated with the strategy process:
* How do innovation prototypes get accepted by top managers in a divisional structure
company?
* What is the role of middle managers in influencing top managers’ decisions to engage in strategic innovation?
* How do top managers make decisions? How does the use of Powerpoint in decision- making processes influence how decision are taken in the company?
Strategy process vs content
Deliberate strategy (Mintzberg) and emergent strategy
Deliberate strategy: involves intentional formulation or planning by the directors of the company, who trickle down the company overarching aspirations to lower hierarchical
levels.
.
Such intentionality may take different forms:
- It could be the command or the (entrepreneurial) vision of a strategic leader, for
example a CEO or the founder of a firm.
.
- It could be through a process of strategic planning involving many managers.
.
- It might be experienced as the external imposition of strategy formulated elsewhere.
POTENTIAL PITFALLS OF PLANNING
- Planning is not strategy: strategy is also much more.
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- Planning might be distant from what market reality actually is
.
- The production of huge amount of data and information can overload the attentional capacity of managers, hampering the quality and the speed of strategic decision making
.
- Planning might be very complex, which in turn reduces the agility of the company and
the ability to respond quickly to emerging technological or market trends.
.
- High formalization and rigidity of planning constrain the capacity of the company to
develop and commercialize innovation, especially strategic innovations.
Emergent strategy (Mintzberg)
Deliberate, emergent and realized strategy
3 main roles of top managers as strategic leaders
Strategic innovation usually requires deep levels of organizational change, that has to be managed in order for it to be effective.
Top managers play three main roles in promoting and leading organizational change:
* Envisioning the future strategy and communicating it effectively
.
* Aligning the organization towards the strategy:
in terms of organizational design and political support and buy-in
.
* Embodying change
The role of middle managers as strategic leaders
While middle managers are often seen as mere “Implementers” and “monitorers” of objectives that are formulated by the top management. Their roles in leading strategic innovation can be more important:
- Championing of strategic issues (issue-selling): Middle managers are often the closest to market or technological shifts that might signal the need for strategic change. They are also well- placed to be able to identify likely blockages to change. Accordingly, middle managers must gain the attention of senior management for strategic issues that are less visible to the top of the organization, and win senior managers’ commitment to appropriate strategic actions. In other words, middle managers must often ‘sell’ strategic issues to top management, getting their buy-in.
. - Strategy sense-makers: Top management may set a strategic direction, but how it is explained and made sense of in specific contexts (e.g. a region of a multinational or a functional department) may effectively be left to middle managers. If misinterpretation of that intended strategy is to be avoided, it is therefore vital that middle managers understand and feel an ownership of it.
. - Adapters to unforeseen events: Middle managers are uniquely qualified to reinterpret and adjust strategy because they have day-to-day responsibility for implementation. Thus, every issue that puts constraints on strategy realization is usually borne by the middle managers first, and their role is to tactically respond to these issue to move the strategy forward.
. - Local leaders: Middle managers symbolize and embody change, just like top management, but do so at a local level. This can be particularly important in decentralized organizations, such as chains of retail stores or multinational corporations. They are the trait d’union between the official corporate culture and the multiple local cultures that are present in each branch or subsidiary.
Strategic innovation and the relationship between top and middle management
In strategic innovation, middle management can be leveraged to be an active strategic decision maker, and not simply those who execute the orders coming from the top.
- Middle managers as initiative evaluators: they function as a “socio-technical” bridge,
functioning both ways, between technological demands (usually coming from the R&D department) and market demands (coming from Production, Sales and Marketing
departments), addressing the potential and the feasibility of the innovative project - Middle managers as initiative sellers: they function as a “socio-attentional” bridge
between the lower levels and the top managers. Middle managers can take up innovative initiative and “sell” them to the top management
The ambidextrous organization
Ambidextrous organizations are those organizations that combine the pursuit of exploitation activities (incremental innovation, focus on core market, …) with the pursuit of exploration activities (developing breakthrough innovations, exploration of distant markets, …).
Ambidexterity entails structural separation between organisational units devoted to:
* Exploitation of current technologies and businesses
* Exploration of new, disruptive technological trajectories and businesses each having its
own processes, structures and cultures
Emergent Strategy
Emergent strategy is the outcome of a series of decisions, which forms a pattern that becomes clear over time.The strategy of the company is not entirely planned ex ante, but it emerges as a developing ‘pattern in a stream of decisions’ where top managers draw together emerging themes of strategy from various decisions and directions.
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The extent to which a strategy can be called “emergent” can be interpreted through this lenses:
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* Logical incrementalism: strategy is developed by partial commitments (similar to the real option reasoning), often in order to respond to radical market uncertainty or to
leverage emergent strategic pathways
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* Political processes: strategy is the ultimate outcome of political bargaining processes between interest groups within the company and outside the company, which often focuses on the internal allocation of capital and resources
Strategy process
Strategy process: concerns how strategy is formulated, developed and implemented in companies. The focus is on the interactions and decisions that are behind the behaviors of the company by a number of actors, such as top managers, middle managers, board directors, consultants, and so on.
The emphasis is not on the performance, but on the “patterns in a stream of decisions” (Mintzberg) made by strategists (literally “those who do strategy”) in a company.
Some questions associated with the strategy process:
* How do innovation prototypes get accepted by top managers in a divisional structure
company?
.
* What is the role of middle managers in influencing top managers’ decisions to engage in strategic innovation?
.
* How do top managers make decisions? How does the use of Powerpoint in decision- making processes influence how decision are taken in the company?
Issues in organizing for strategic innovation:
- Design and carefully manage the “strategy process”
. - Find the right balance between “deliberate” and “emergent” strategy
. - Recognize and involve top and middle managers in the “strategy process” properly
. - Align the organization to the requirements of the strategic innovation (this can be done through ambidextrous organizations)
Strategy process vs strategy content
Strategy process: concerns how strategy is formulated, developed and implemented in companies.
The focus is on the interactions and decisions that are behind the behaviors of the company by a number of actors, such as top managers, middle managers, board directors, consultants, and so on.
.
The emphasis is not on the performance, but on the “patterns in a stream of decisions” (Mintzberg) made by strategists (literally “those who do strategy”) in a company.
Strategy content : concerns the content (or nature) of different strategies (therefore also of strategic innovation) and their probability of success.
The focus is on the consequences of choosing different strategic options on strategic outcomes, of which the most important one is performance (long-term survival or growth in case of strategic innovation)
