Topic 3: The first School of

Thought: “Design School”.

Semester 2, 2021

Week 3: Lecture 3
 Lecture Outline
Introduction
Origins of the Design School
The Basic Design School Model
Premises of the Design School
Critique of the Design School
The Design School: context and contribution
Conclusion
Aims and Objective of the Lecture

Understand the Origins of Design School of

strategy formation.
Identify and understand the Basic Design School
Model.
Discuss and understand the premises of the
Design School of Strategy Formation.
Identify and discuss the fallacies / disadvantages
of the Design School.
 Introduction
Design School views strategy formation as a
process of conception.

Proposes model of strategy making that seeks to

attain a match, or fit, between internal
capabilities & external possibilities.

“Establish Fit” is the bottom motto of the

design school.
 Origin of Design School
Two influential books; Philips Selznick’s
Leadership in Administration (1975) and Alfred
D. Chandler’s Strategy & Structure (1962).
Selznick introduced “distinctive competencies”
a match between “organization’s internal state”
with its “external expectations”.
Chandler established notion of strategy and it’s
relationship to structure.
Basic Design School Model
Illustration of Design School Model
 Design School Model
External Appraisal: Macro-environmental
factors such as political/legal, economical,
socio-cultural, technological, international
relations, demographic & natural factors.

Micro- or task environment such as customers,

shareholders/stakeholders, marketing
intermediaries, other publics, competitors &
industry and business partners.
 Design School Model cont…

Two important questions to be asked during

external appraisal:
- What is the underlying structure of the
industry in which the firm participates?
- How might possible change in the external
environment will impact industry or the firm?
 External appraisal is done to identify threats
and opportunities.
 Design School Model cont…

Internal Appraisal / Internal Firm Audit:

- Internal appraisal is done to identify

organization’s Strengths & Weaknesses.
These include strengths & weaknesses in the
areas of marketing, HR, R&D, accounting,
and etc…
Design School Model cont…
Strengths – Firm’s resources & capabilities that can be
used as basis for developing a competitive advantage.
i.e. an advantage that cannot be easily matched by its
competitors. e.g. strong brand names, good reputation.

Weakness – refers to the valuable spots that a competitor

can have advantage over the firm. Example, weak brand
name, lack of access to best natural resources, lack of
access to key distribution channels.
 Design School Model cont…
Two factors important in strategy making:
1. Managerial values – beliefs and preferences of those
who formally lead the organization.
2. Social Responsibilities – ethics of the society in which
the organization/firm functions.
Once alternative strategies are determined, next step is
to evaluate them and choose the best one. Richard
Rumelt (1997) provided framework for making this
evaluation:
(a) Consistency – strategy must not present inconsistent
goals and policies.
 Design School Model cont…
(b) Consonance: strategy must represent an adaptive
response to the external environment and to the critical
changes occurring within it.

(c) Advantage: strategy must provide for the creation

and/or maintenance of a competitive advantage in the
selected area of activity.

(d) Feasibility: strategy must neither overtax available

resources nor create unsolvable sub-problems.
 7. Premises of the Design School
1. Strategy formation should be a deliberate process of
concise thought (Andrews 1981).
2. Responsibility for the control and consciousness
must rest with the CEO; that person is the strategist
(ibid).
3. The model of strategy formation must be kept
simple and informal.
4. Strategies should be one of a kind; the best ones
results from a process. Design school concentrates
on process by which strategies should be
developed.
 Premise of Design School cont…
5. The design process is complete when strategies appear
fully formulated as perspective. Design school offers
little room for incrementalist views or emergent
strategies.
6. These strategies should be explicit, so they have to be
kept simple.

7. Only after these unique, full-blown, explicit, and

simple strategies are fully formulated can then be
implemented. Design school supports the idea that
“structure must follow strategy”.
 Critique of the Design School
Design School bypass learning. It promotes
strategy formulation as a process of conception
rather than as one of learning.
Design school (in strategy formation) denies
incremental development and emergent strategy.
Influence of existing structure on strategy.

Full participation of actors other than the chief

executive officer (CEO).
 Conclusion

Design school views strategy formation as

a process of conception.

Design school seeks to attain a match or

fit between internal capabilities and
external possibilities.
The End!

Thank You