(comment: As originally posted on the OUBS Blog)
Definition of Strategy: Strategy is a pattern of activities followed by an organisation in pursuit of its long-term purpose.
Definition of strategic issues: developments inside and outside of a company likely to have an important impact on a company’s ability to meet or determine its purpose and tactics.Strategic choices will involve- Determining the nature, domain and scope of activities- Evaluation of success of activities (what is success for the company? time horizon?)- The acquisition, allocation and commitment of a distinctive set of resources and capabilities- creating and effective match with the challenges of the environment- management the network of relationships with and between its stakeholders
Strategy is distinctive- integrative and cross-functional- concerns the whole organisation interacting with its environment- long horizon- projection and prediction of an uncertain future
Corporate strategy should move to business strategy and on to internal strategy. Strategic fit between the organisation and the environment is said to be important.
Kay (1993): Corporate success is based on an effective match between the external relationships of a firm and its own distinctive capatibilities.
Some say achieving such a fit is impossible and Hannan and Freeman (1988) suggest a long-term evolutionary process. Neo-classical economists believe competition homogenises organisations. In the end, a managers job is itto find a strategy for the optimal use of the firms unique resources.
To be successfuly strategic fit needs to account for:- Dynamism of and interaction with the environment (will people start to have to order holidays sooner to get cheaper prices rather than later due to cheap airfair?)- A match does not mean an averaging process whereby all competitors adopt the same strategies
Bruce Henderson (1989): The difference between you and your competitors is the basis of your advantage.
How Strategy is made
- By Planning and Design
Andrews (1971) recommended:
- a number of sequential, discrete activities
- start with identification of the organisations perspectives
- appraise environment and internal resources
- formulate alternative strategies
- selection stage
Mintzberg added that you can either design from the top or plan a more inclusive process with bottom-up parts. In general, the problem is, that things are rarely as linear as depicted here.
- Strategy as a patern
Strategy might emerge as a clear, coherent pattern of actions:
- deliberate when prior intentions are there
- emergent without a plan
… or somewhere in between which is a lot more likely to be the case.
“There are no substitutes for strategic thinking. Improving quality is meaningless without knowing what kind of quality is relevant in competitive terms. Nurturing corporate culture is useless unless the culture is aligned with a company’s approach to competing.” – Porter 1987
There are two pays to process information:
- First process … then build the strategy
- Build the strategy (thought more a rule of thumb at first) and then look at information. In this case you use your experience.
People use models of past experience to interpret information, something that is very important to remember.
These are derived from managers’ experience, observations and confirmation of expected action outcomes. Normally they come from the collective experience of managers and hence represent shared meanings and assumptions and might even be seen as common sense. The problem is that they can outlive their usefulness. On top of that they work for routine things and existing ways to compete. Long-term strategy and environmental changes need some fresh thinking though.
The content, process and context (inner and outer) of strategies help define the scope of strategic thinking. Questions asked might be: Where are we now? Where do we want to go? How do we get there?
Complexitiy of strategy means that multidimensional thinking skills are needed. Somewhere between holistic and atomistic, current and projective and creative and evaluative.