Understanding Strategy Development: Slide 11.1

Chapter 11
Understanding Strategy
Development
Slide 11.1
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Understanding Strategy Development – Outline (1)
• Intended versus emergent strategy
development
• Intended processes of strategy development
– Strategic planning systems
– Strategy workshops and project groups
– Strategy consultants
– Externally imposed strategy
• Emergent processes of strategy development
– Logical incrementalism
– Resource allocation routines
Slide 11.2
Understanding Strategy Development – Outline (2)
• Emergent processes of strategy development

– Cultural processes
– Organisational politics
• Multiple forms and different contexts for
strategy development
• Issues managers face in strategy
development
Slide 11.3
Strategy Development Processes
Exhibit 11.1 Slide 11.4

Strategy Development Routes

Strategy Development Routes (1)
• Intended strategy
– Expression of desired strategic direction
deliberately formulated or planned by managers
• Unrealised strategy
– Frequently strategies do not come about in
practice
• Plans are unworkable
• Environment changes
• Influential stakeholders do not agree with plan
Slide 11.6
Strategy Development Routes (2)
• Realised strategy
– The strategy actually being followed by an
organisation in practice
• Emergent strategy
– Comes about through everyday routines,
activities and processes
Slide 11.7
Strategic Direction from Prior Decisions

Strategy Development
• Intended strategy development
– Strategic planning systems
– Strategy workshops and project groups
– The role of strategy consultants
– Externally imposed strategy
• Emergent strategy development
– Cultural processes
– Organisational politics
Slide 11.9
Strategic Planning Systems (1)
• Systematised, step by step, chronological
procedures involving different parts of the
organisation
– Structured means of analysis and thinking about
complex strategic problems
– Questioning and challenging received wisdom
– Longer-term view of strategy
– Means of coordination
• Facilitates conversion of strategy into
organisational action:
– Communication of intended strategy from the
centre
Slide 11.10
Strategic Planning Systems (2)
• Facilitates conversion of strategy into
organisational action:
– Agreed objectives or strategic milestones to
measure progress
– Coordination of resources to implement strategy
• Psychological role
– Involvement of people creates ownership
– Sense of security
Slide 11.11
A Strategic Planning Cycle
Source: From R. Grant, Strategic Planning in a Turbulent Environment, Strategic Management Journal, vol. 24, p. 499, 2003.

Problems with Strategic Planning Systems (1)
• Misunderstanding the purpose:
– Danger that strategy thought of as the plan
– Confusion between budgetary and strategic
planning processes
– Obsession with search for a right strategy
– Documentation gives false appearance of
proactive approach
• Problems in design:
– Line managers may give up responsibility to
consultants which becomes an intellectual
exercise
Slide 11.13
Problems with Strategic Planning Systems (2)
• Problems in design:
– Doesn’t focus on the whole issue, just look out
their own
– Can be over-detailed because of extensive
analysis
– System is highly formalised and rigid, so it can
hold back innovative ideas
• Failure to gain ownership
– Lack of broad involvement: the ideas and
strategies are kept unshared, senior level
doesn’t share it with the concerned people
Slide 11.14
Strategy Workshops and Project Groups
• To reconsider or generate the intended
strategy of the organisation
• To challenge the assumptions of the current
strategy
• To plan strategy implementation
• To examine blockages to strategic change
• To undertake strategic analysis
• To monitor the progress of strategy
• To generate new ideas and solutions
Slide 11.15
Strategy Consultants
• Reasons for using consultants
– To get an external objective view of issues
– To cut through internal disagreements
• Consultants’ roles
– Analysing, prioritising and generating options
– Knowledge carrier
– Promoting strategic decisions
– Implementing strategic change: project
planning, coaching and training
Slide 11.16
Externally Imposed Strategy
• By powerful external stakeholders
– Government regulation/deregulation
– Organizations have to fulfil international
requirements for JVs/alliances
– In UK public sector, direct interventionist
approach began in the early 2000s.
Slide 11.17
Logical Incrementalism
The
Thedevelopment
developmentof of strategy
strategyby byexperimentation
experimentationandand
learning
learningfrom
from partial
partialcommitments
commitmentsrather
rather than
thanthrough
through
global
globalformulations
formulationsof oftotal
totalstrategies
strategies
(Quinn
(Quinn1980)
1980)
• Managers have a generalised view rather than

specific view where they want to be in future and
move towards it.
• Cannot ‘know’ uncertainty, but sensitive to signals
via constant scanning
• Develop strong, flexible core business and
experiment with ‘side bet’ ventures
• Top managers utilise mix of formal/informal social
and political processes to pull together emerging
pattern of strategies
Slide 11.18
Resource Allocation Routines
• Strategies emerge through formalised
routines and systems of the organisation
– The Bower-Burgelman explanation
– Day to day decision making about resource
allocation across businesses
– Managers’ proposals competing for funds
– Decisions may be made at a lower level than
conventionally thought to be ‘strategic’
– Cumulative effects of such decisions guide the
strategy
Slide 11.19
Cultural Processes
• Incremental strategy development can be
explained as the outcome of the influence of
organisation culture
• The paradigm and ‘the way we do things
around here’ mean that managers try to
minimise ambiguity/uncertainty by defining
situation as something familiar
• Self-reinforcing pattern
• Over time may result in strategic drift
Slide 11.20
The Dynamics of Paradigm Change
Source: Adapted from p. Grinyeh and J.-C. Spender, Turnaround: Managerial recipes for strategic success, Associated
Business Press, 1979, p. 203.

Organisational Politics (1)
Political
Politicalview
viewofof strategy
strategydevelopment
developmentisisthat
thatstrategies
strategies
develop
developas asthe
theoutcome
outcomeof of processes
processesof ofbargaining
bargainingandand
negotiation
negotiationamong
amongpowerful
powerfulinternal
internalor
or external
externalinterest
interest
groups
groups(or (orstakeholders)
stakeholders)
• Negative influence
– Obstructs analysis and rational thinking
– Emphasis or de-emphasis of data can be source
of power
– Powerful individuals may influence identification
of key issues and strategies selected
– Results in emergent or incremental patterns of
strategy development
Slide 11.22
Organisational Politics (2)
• Positive influence
– Political conflict and tensions may produce new
ideas
– Champions will support new ideas
Slide 11.23
Multiple Processes of Strategy Development (1)
• No one right way to develop strategy
• Processes of strategy development may
differ over time and in different contexts
• Perceptions of how strategy develops will
differ
– Senior executives see it as intended, rational,
analytical and planned
– Middle managers see it as the result of cultural
and political processes
– Managers in government organisations see it as
imposed
Slide 11.24
Multiple Processes of Strategy Development (2)
• No one process describes strategy
development
– Multiple processes at work
Slide 11.25
Some configurations of strategy development processes

Planning Incrementalism (Logical Incrementalism)
Characteristics Standardised planning procedures
Systematic data collection and analyses
Constant environmental scanning
Ongoing adjustment of strategy
Tentative commitment to strategy
Step-by-step, small-scale change
Rather than Intrusive external environment
Dominant individuals
Political processes
Power groups
Typical contexts Manufacturing and service sector organisations
Stable or growing markets
Mature markets
Benign environments
Exh 11.6 split into 3 Slide 11.27
Incremental Cultural Political Configuration
Characteristics Bargaining, negotiation and compromise amongst
conflicting interests of groups
Groups with control over critical resources more likely
to influence strategy
Standardised ‘ways of doing things’
Routines and procedures embedded in organisational
history
Gradual adjustments to strategy
Rather than Deliberate, intentional process
Well-defined procedures
Analytical evaluation and planning
Deliberate managerial intent
Typical contexts Professional service firms (e.g. consultancy/law)
Unstable, turbulent environment
New and growing markets
Imposed Political Configuration
Characteristics Strategy is imposed by external forces (e.g. legislation,
parent organisation)
Freedom of choice severely restricted
Political activity likely within organisation and between
external agencies
Rather than Strategy determined within the organisation
Planning systems impact on strategy development
Influence on strategic direction mainly by managers
within the organisation
Typical contexts Public sector organisations, larger manufacturing and

financial service subsidiaries
Threatening, declining, unstable and hostile
environments

Challenges for Strategy Development
• Strategic drift
– Incremental strategic change influenced by
• organisational culture
• individual and collective experience
• political processes
• prior decisions
– Risk of getting out of line with faster changes in
environment
– Need to encourage challenge and change of
core assumptions
• Learning organisation
Slide 11.30
The Learning Organisation (1)
The
Thelearning
learningorganisation
organisationisiscapable
capableof
ofcontinual
continualregeneration
regeneration
from
fromthe
thevariety
varietyof
ofknowledge,
knowledge,experience
experienceand
andskills
skillsof
of
individuals
individualswithin
withinaaculture
culturewhich
whichencourages
encouragesmutual
mutualquestioning
questioning
and
andchallenge
challengearound
aroundaashared
sharedpurpose
purposeororvision
vision
• Collective knowledge of individuals exceeds
organisational knowledge
• Formal structures stifle organisational
knowledge and creativity
• Need to unlock individual knowledge and
encourage knowledge sharing
– Importance of social networks
Slide 11.31
The Learning Organisation (2)
• Learning organisation is inherently capable
of change
• Context for organisational learning
– Pluralistic organisation
– Experimentation as the norm
Slide 11.32
Managers’ perceptions of strategy
development processes

Strategy Development in Environmental
Contexts

Managing Strategy Development Processes
• Organisation needs different processes for
different purposes
• What is the right emphasis at a given time?
• What is the role of top management?
• What are the strategy development roles at
different organisational levels?
• Do the different managerial levels
acknowledge and value different roles?
Slide 11.35
Key Points (1)
• Intended versus emergent strategy
• Intended strategy derives from:
– Planning systems carried out by top
management
– Strategy workshops/project groups
– Strategy consultants
– Imposition by external stakeholders
• Strategies may also emerge from
organisations as a result of:
– Organisational culture
– Political activity Slide 11.36
Key Points (2)
• Challenge of strategic drift
– Need to challenge taken for granted
assumptions
• Multiple processes of strategy development
required
– To create a learning organisation
– To cope with dynamic and complex
environments
Slide 11.37

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Chapter 11

• Emergent processes of strategy development

Exhibit 11.1 Slide 11.4

Exhibit 11.2 Slide 11.5

Exhibit 11.3 Slide 11.8

Exhibit 11.4 Slide 11.12

• Managers have a generalised view rather than

Exhibit 11.5 Slide 11.21

Exhibit 11.6 Slide 11.26

Typical contexts Public sector organisations, larger manufacturing and

Exh 11.6 split into 3 Slide 11.29

Exhibit 11.7 Slide 11.33

Exhibit 11.8 Slide 11.34

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