Thinking Strategically About Strategy

Prepared By :- Nitish Raj

IIPM; New Delhi

Mentor: Kamlesh Kumar, Ph.D.

Professor Of Business Strategy

College Of Business

University Of Michigan-Dearborn (USA)

104/10/2023

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What is strategy?

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Strategy as a plan:

An intended course of action developed consciously and purposefully

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But defining strategy as a plan is NOT sufficient!

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For a strategy to be truly deliberate- that is, for a plan to have been intended exactly as realized would seem to be a tall order.

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Just watch for yourself what Reed Hastings, the CEO of Netflix has to say about this:

http://money.cnn.com/video/fortune/2009/11/20/f

banetflixceohastings.cnnmoney/

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Let us then examine the concept of strategy from a different approach:

Strategy as a pattern in stream of actions over time.

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The strategies followed my most successful organizations contain elements:

that were originally intended, as well as

unintended elements that emerged over time.

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Here is an what an expert who has extensively researched this issue has to say:

http://money.cnn.com/video/technology/2009/10/12/ttkomisarcostcopaypal.fortune/

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Intended Strategy

Unrealized Strategy

Deliberate Strategy

Realized Strategy

Emergent Strategy

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It is, therefore, important to understand that organizational success does not depend on blind devotion to implementing intended strategies.

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Rather, it requires skillfully adjusting intentions, plans and policies as events continue to unfold.

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Intended Strategy:A strategy a firm

thought it was going to pursue

Realized Strategy:

The strategy a firm is actually

pursuing

Deliberate Strategy:

An intended strategy a firm

actually implements

Unrealized Strategy:

An intended strategy a firm

does not actually implement.

Emergent Strategy:A strategy that emerges

over time or that has been radically reshaped

once implemented.

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Intended Strategies are based on strategic intentions – outcomes of formal planning and goal setting.

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When an organization can formulate intentions and move to their realization, this is deliberate strategy.

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A convergent series of actions taken by the organization towards achieving the strategic intentions is a realized strategy.

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Those strategic intentions that the organization is not able to act upon are the unrealized strategy.

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When the organization takes consistent actions that were not part of its formal intentions, those are emergent strategies.

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Thus, the finalized strategy of successful organizations is often a combination of deliberate and emergent strategies.

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Next, let us take a look at the conventional model of managing strategically.

The conventional view of managing an organization strategically involves analysis, which is followed by optimal decisions, and their subsequent meticulous implementation.

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AnalysisExternal Environment

Internal Environment

Opportunities , Threats

Strengths, Weaknesses

Formulation

Mission

Policies

Consumers to be servedCapabilities to be developed

Goals, guidelines for major activities

Implementation Organization structure, systems, culture, etc.

Evaluation (Cycle to earlier steps)

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This linear, sequential approach has four elements:

A set of conditions external to the organization to which it must respond

Establishing major goals and objectivesPerforming situation analysisPlans about how to achieve its goals and get

the best possible “fit” with the environment

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In this approach to strategic management:Analysis must always come before any action

by the organization.The goal setting, situation analysis, and

planning must always occur before any action, usually referred to as strategy formulation.

Action, referred to as strategy implementation, is usually done by people rather than analysts, planner or upper level managers.

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But such an approach neither describes the strategic management process, as it is followed by organizations, in reality, accurately; nor does it prescribe the ideal practice.

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For one, the business environment is far from predictable( for most organizations), thus limiting the ability for analysis.

Further, decisions are seldom based on optimal rationality alone, given the political processes that occur in organizations.

In addition, in reality, formulation and implementation are intertwined as complex interactive processes.

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Organizational Learning: A Different Approach To Managing Strategically

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This approach to managing an organization strategically requires an ongoing process of continually rethinking and adjusting the plans and activities.

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It assumes that:In practice, most formal plans offer only

general guidelinesStrategic management cannot be viewed

simplistically as just the formal process of coming up with the plan and then seeking that it is implemented

Leaders can make incremental adjustments to the formal plans with the hope of moving the organization towards its goals, by way of numerous small steps of progress rather than a few major strides.

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In following this approach most successful leaders are willing to concede that they lack the ability to foresee the future and the power to enforce adherence to the plans.

But that does not mean that they are willing to allow their organizations to drift aimlessly.

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Leaders manage incrementally, but they also manage with a purpose.

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Leaders of such organization have a vision of what they want the organization to be in years to come, but they try to move towards this position in an evolutionary way.

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Often times this is done by building a strong but flexible core business and then continually experimenting with “side bet ventures” to see what else works.

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Just see for yourself how one of the most successful organizations of recent times-Google is following a similar approach:

http://money.cnn.com/video/technology/2010/07/26/tmgooglenogrowth.fortune/

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The unknowable aspects of the future, as such do not stop leaders from trying to understand what will and will not work in moving them toward what a vision of what the organization should become.

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When new trends are observed, they carry out small-scale experiments(side bet ventures) to see how the organization as a whole might adapt to them.

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But they also realize that they cannot hope to spot all important emerging trends and try all new ideas, and therefore, encourage similar experimentation throughout the organization.

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The role of leadership becomes building an organization in which all members continuously search out ideas for improving the status quo, conduct experiments to see which of these ideas are more fruitful, and then spread what has been learned from these experiments throughout the organization.

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The conclusion from the discussion is that:

While the formal strategic planning approach has given rise to a broad range of planning techniques and methods, it is naïve to rely solely on it, because of the complexity and unpredictability facing most organizations, and the resultant difficulty in enforcing a strict adherence to a plan.

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Thus Strategic Planning, by definition, is a future-oriented activity, but the efforts should not be on foreseeing the future and building perfect plans accordingly,

rather

the efforts should be on trying to understand what will move the organization toward a vision of what the organization should become.

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Thank You