Book 6: Putting process into strategy
_(Originally published on_ _OUBS Blog_ _)_
_The book starts with Agenti’s (1980) corporate planning process. This goes through five stages, from target setting, gap analysis, strategic appraisal, strategy formulation to strategy implementation. There is a good figure on page 6–6 for this one. In essence it says that analysis should preceed choice and choice should preceed implementation.
In reality, Johnson and Scholes (1993) argue that choice, analysis and implementation are overlapping process of the entire process and only in a deliberate strategy do they follow one after the other.
Time is a crucial competitive advantage when moving from part to part of the process, to be able to learn. Value chain analysis can help in speeding up the process.
To speed things up you either need to complete each process faster or do them next to each other at the same time. There is a list of Eccles’ factors for strategic change on page 6–11
_ _strategic decisions_ _
As of Simon (1977) at the heart of strategic management lies the concept of making decisions to reach corporate objectives. This leads to the decision making process in which you need to first recognize that a decision needs to be made, search for information, evaluate that information, decide and then to a post decision evaluation. There are a number of ways to come to a decisions though.
\- Nesting: breaking it down into smaller decisions
\- Snowballing: minor decisions develop into a strategy
\- Recurrence: you take the same decision, or look to take it, several times over
Impediments and delays (as of Hickson et al.) come from:
\- sequencing: other issues believed to be more important
\- co-ordinating: waiting for resources
\- timing
\- searching: waiting for information
\- problem solving
\- supplying: waiting for availability of resources
\- recycling: reconsidering earlier decisions
\- internal resistance
\- external resistance
Not all decisions are alike. Constricted decisions involve many sources of expertise but no additional information is looked for.
Sporadic decisions are characterised by delays and impediments and flued decisions involve variable information, negotiation, senior management involvement and need less time.
__Patterns of strategic decisions_ _
Mintzberg and Water (1985) define strategy as “a pattern in a stream of actions”.
Politics, MacMillan (1978) defines them as processes where actors try to influence to reach their goals, is part of strategy formulation. You should:
\- analyse the power and influence of each stakeholder group
\- determine allies and opponents
\- negotiate with allies
\- formulate offensive and defensive strategies for opponents
Power can be used to restructure situations, influence and modify the perceptions of others. Power and influence together determine political ability.
Morgen (1986) identified the following power bases:
\- formal authority
\- control of scarce resources
\- organisational structures and procedures
\- control of decision process
\- control of knowledge and information
\- boundary management
\- ability to manage uncertainty
\- control of technology
\- alliances and information networks
\- countervailing power
\- symbolism and the management of meaning
\- gender power
To find allies and opponents you can use the actor/issue matrix, which puts the issues in relation to the actors. You can also use a relationship matrix to find out who will support whom. Force field analysis is another important point, which shows you forces for and against change.
A tactician will try to find reasons and sourclles of opposition trying to reduce them.
Political strategy formulation goes through the following steps:
\- set objectives you can reach against opposition
\- select allies
\- use political capability as bargaining base
\- do not accept an agreement with an allie that achieves less than acting alone
\- select a compination of allies
\- match your and your allies strenght and weakneses against those of your opponents
When preparing for negoations, MacMillan (1978) suggest to:
\- collect relevant facts beforehand
\- classify them in relation to issues likely to arrise
\- clarify and prioritise objectives
\- choose sequence
\- choose strategy for negotiation
Three factors must be kept in mind:
\- timing
\- information
\- options available
Strategies are often developed in incremental processes, as it needs to adapt to outside and internal changes. The strategiest needs to be able to look outside even though there will be a lot of negotiation and bargaining inside of the company.
There are three ways that a strategy can develop. Through:
1 leadership, participative or authoritarian, using
\- involvement and participation
\- education and communication
\- support and facilitation
\- negotiation
\- manipulateing
\- co-opt
\- coerce
The style needs to fit the circumstance and it has a great influence on the culture of the organisation.
2 culture
Myths and stories communicate a collective experience. Managers develop similar menthal models, which leads to resistance with models not consistent with their own.
3 Enforced choice
This is illustrated in Mintzberg’s imposed strategy
The strategy development process has been put into an integrated model by Bailey and Johnson (1995), which includes six dimensions of strategy development: Planning, Political, Incrementalism, Command, Cultural, Enforced choice. In each company there are different degrees of the different dimensions.
__Strategic Thinking_ _
Weick and Roberts (1993) argue that strategic thinking is not only about the right mental model and cognitive style, but also about a feeling for actions and mental models of others.
__Organisational Learning_ _
Organisations that are learning more successfully build a greater pool of capabilities. Walsh and Ungson (1991) found six sources of information that can be learning from:
\- culture, with heroes, symbols, … can be guiding
\- transformations can be copied
\- structures (specialist knowledge)
\- ecology, physical floor layout holds information about status for example
\- external archives
\- individuals
Watching individuals actions are likely one of the most important points of learning in an organisation.
Management writing is an external source but it needs to be tailored to the own organisation.
Single-loop learning means changing your mental models incrementally. Double-loop learning is about re-evaluating our mental models and radical change. We kind of evaluate our way of evaluating too.
Learning organisations try to promote learning at all levels of the organisation. Schein (1992) believes that the learning culture needs:
\- belief that the strategic environment can be influenced
\- encouragement to solve problems proactively
\- everyone can be questioned
\- there is no best way
\- look into the future
\- open communication
\- diversity with communication
\- acceptance of complexity_