Schools of Strategy -which one are you ?
For most businesses the planning process or the Plan and control process is usually the annual budgeting process.
So the process is typically a five step process
- Develop Vision & Mission
- Set Objectives
- Create strategy or game plan
- Implement and execute plan
- Evaluate and correct
However Strategy is the How of those goals
- How to satisfy customers ?
- How to grow the business ?
- How to respond to changing market and industry conditions ?
- How to capitalise on new opportunities ?
- How to manage each function ?
- How to achieve strategic and financial objectives ?
To me Strategy is fundamental to Entrepreneurship and is about
- Risk taking
- Venture oriented
- Spotting market trends
- Determining and selecting from alternatives
- Strategy must be
- Fresh (unique ??)
It determines if you choose to
- Boldly pursue new opportunities
- Out innovating competitors
- Leadership in performance improving techniques
- Willingness to be first mover and take risks
- Responsive and opportunistic to new developments
- Trail blazing
So Do you follow a particular “school” of strategy
Do you follow a particular model in formulating your company’s business strategy ?
At some point in your business cycle you may want to take time to consider where your business is going and use your “slow brain” rather than your intuition and gut instinct to decide where you want to take your business and in understanding the business environment. How does strategy get formulated within your business.
The different schools/ models of strategy (and the write associated with that particular model)
Many different schools of strategy, find favour/apply to different organisations and different times depending on CEO and management theory fashion.
- Design School model Selznick, Chandler
- Planning School model Ansoff
- The Positioning School Porter (Strategy Formation as an Analytical Process)
- The Entrepreneurial School Schumpeter (Strategy Formation as a Visionary Process)
- Visionary Leadership Bennis
- The Cognitive School (Strategy Formation as a Mental Process)
- The Learning School (Strategy Formation as an Emergent Process)
- The Power School (Strategy Formation as a Process of Negotiation)
- The Cultural School (Strategy Formation as a Collective Process)
- The Environmental School (Strategy Formation as a Reactive Process)
- The Configuration School Hurst (Strategy Formation as a Process of Transformation)
Design School, Planning School, The Positioning School, The Entrepreneurial School
- dominated by the active search for new opportunities
- Power is centralized in the hands of the CEO
- Dramatic leaps forward in the face of uncertainty
- Growth is the dominant goal of the entrepreneurial organization
Visionary LeadershipThe “great leader” is someone with a vision. He would come and save the organization. So every organization suddenly had to establish a vision. But how to distinguish a real vision? A true vision you can see with your mind’s eye! “Being the biggest” or “earning 42% ROI” are not a vision! A real vision, according to Warren Bennis, you should never forget. In other words, you don’t have to write it down. A wonderful test for all the banal statements, labelled “the vision”!?
Bennis and Namus stated in their book about leadership about the vision:
- To choose a direction, a leader must first have developed a mental image of a possible and desirable future state of the organization. This image, we call vision, may be as vague as a dream or as precise as a goal or a mission statement. The critical point is that a vision articulates a view of a realistic, credible, attractive future for the organization, a condition that is better in some important ways than what now exists.
- A vision always refers to a future state, a condition that does not presently exist and never existed before. With a vision, the leader provides the all-important bridge from the present to the future of the organization.
- By focusing attention on a vision, the leader operates on the emotional and spiritual resources of the organization, on its values, commitment, and aspirations. The Manager, by contrast, operates on the physical resources of the organization, on its capital, human skills, raw materials, and technology.
- If there is a spark of genius in the leadership function at all, it must lie in this transcending ability, a kind of magic, to assemble – out of the variety of images, signals, forecasts and alternatives – a clearly articulated vision of the future that is at once simple, easy understood, clearly desirable, and energizing.
The Cognitive School
- Strategy formation is a cognitive process that take place in the mind of the strategist
- Strategies thus emerge as perspectives that shape how people deal with inputs from the environment
- These inputs flow through all sorts of distorting filters before they are decoded by the cognitive maps
- As concepts, strategies are difficult to attain in the first place, considerably less than optimal when actually attained, and subsequently difficult to change when no longer variable
The Learning School, The Power School
- Politics thus becomes synonymous with the exploitation of power in other than purely economic ways. This would obviously include clandestine moves to subvert competition, but it also include cooperative arrangements designed for the same effect (such as alliances). Power relations can surround organizations; they can also infuse them.
- Micro Power deals with politics within the organization and
- Macro Power concerns the use of power by the organization
The Cultural School
- Culture is hardly a new idea. Culture was discovered in management by the 1980s, coming from Japan.
- Radical changes in strategy have to be based on fundamental change in culture within the following 4 Phases:
- Strategic drift
- Unfreezing of current belief systems
- Experimentation and re-formulation
- Strategy formation is a process of social interaction, based on the beliefs and understandings shared by the members of an organization
- Culture does not encourage strategic change; at best, they tend to promote shifts in positions
The Environmental School
- The environmental school has its roots in contingency theory, which grew up to oppose the confident assertions of classical management that there is “one best way” to run the organization. To contingency theorists, “it all depends”: on the size of the organization, its technology, the stability of its context, external hostility, and so on.
- The environment, presenting itself to the organization as a set of general forces, is the central actor in the strategy-making process
- The organization must respond to these forces, or else be “selected out”
- Leadership thus becomes a passive element for purposes of reading the environment and ensuring proper adaptation by the organization
- Organizations end up clustering together in distinct ecological-type niches, positions where they remain until resources become scarce or conditions too hostile. Then they die.
The Configuration School
- Ecocycle of company –
- Stage of development
- Stage of stability
- Stage of adaptation
- Stage of struggle
- Stage of revolution
- “Young businesses begin their lives as informal, learning organizations, but if successful, they become formal, performance organizations.”
- Strategy in learning organizations is emergent
- The seeds of failure may be hidden in the fruits of success