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STRATEGIC MANAGEMENT IN ACTION

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Contents PATCH 1: What influences strategy development in Google? .............................................................. 3

Introduction ......................................................................................................................................... 3

Key types of strategies of organisations ............................................................................................. 3

Different processes that contribute to the development of key strategies in Google .......................... 4

Key challenges faced by Google in strategy development ................................................................. 5

PATCH 2: Who is responsible for the organisational failures surrounding Hurricane Katrina? ............ 7

Introduction ......................................................................................................................................... 7

Core elements of a successful organisation ........................................................................................ 7

FEMA’s old organisational structure .................................................................................................. 8

FEMA’s new organizational structure under DHS ............................................................................. 9

Recommendations ............................................................................................................................. 10

PATCH 3: Managing change at Faslane ............................................................................................... 11

Introduction ....................................................................................................................................... 11

Describing the change style of John Howie and Craig Lokhart ........................................................ 12

Strength and weaknesses of the change program .............................................................................. 14

References ............................................................................................................................................. 14

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PATCH 1: What influences strategy development in Google?

Introduction

Google Inc is a foremost US based multinational technology corporation which emphasis on

internet based products and services like search engine, software’s, internet advertising

methods and cloud computing. Founded by Sergey Brin and Larry Page in 1998, Google has

now become one of the most successful companies with a vision to systemise the global data

and make in globally accessible and useful, states Carmona (2012). Due to its tremendous

success in the industry, Google has highly seized the attention of researchers, scholars and

other firms to expose their method for success. At the heart of Google’s big successful

business is a popular unstructured style of operating and their successful organisational

strategy (Innosight LLC, 2011).

Key types of strategies of organisations

Organisational strategy is the total operations organisation intents to carry out in order to

obtain long term objectives. According to Tran and Tian (2013), implementing a strategy

evolves the comparison of organisations current condition to its targeted condition to

determine differences and then mentioning what is needed for the changes to take place. In

the strategy process, Mintzberg and Waters (1985) five strategies are one of the popular

theories which are well-suited for large IT/SME/Swedish firms. This model provides a clear

picture on how different strategies perform and has been cited by dozens of researchers in

various situations (Portaleoni et al., 2013).

Figure 1: Mintzberg strategy model

Source: Ketchen and Short (2015)

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Emergent strategy: This strategy can be observed as reaction to unexpected chances and

issues and are normally implemented from within trading units and not at organisations

headquarters.

Intended strategy: This is implemented by top management as the result of entire

organisations intention to execute (Ketchen and Short, 2015).

Deliberate strategy: This strategy can be observed as the divisions of intended strategy that

the company continues to follow overtime.

Realized strategy: This is the strategy that a firm actually pursue as a result of firms

intended strategy.

Unrealized strategy: When indented strategies are not realised it is known as unrealized

strategy as events generated in unexpected ways (Grant, 2012).

From the above analysis, it can be inferred that understanding the key strategies ‘intended

and emergent’ is significant as they highly influence strategic change in a firm.

Different processes that contribute to the development of key strategies in Google

Intended strategies are normally explained in depth within company’s strategic plans as it is

the strategy that the company want to execute (Ketchen and Short, 2015). As undergraduate

students of IT-powerhouse at Stanford University in USA during 1998, Sergey Brin and

Larry Page had to take a coursework to enhance search engine results through internet.

Schmidt and Rosenberg (2014) points out that the proposed project was excellent and they

were able to successfully complete their course. After leaving University, they introduced

their own search engine platform, which was closely related to the coursework they carried

out in University. Moreover, Carmona (2012) notes the proposed search engine product

achieved users and followers rapidly, sized financial support and helped Brin and Page to

introduce their Initial Public Offering (IPO) in US stock exchange during 2004, which made

Google a public firm. Today, combined wealth of Brin and Page has surpassed $68.9 billion,

making Google as the world’s most valuable corporate with present market cap of $455

billion. Google ranks 2nd among the world’s most admired organisations as per Fortune

Magazine (Robehmed, 2015). Certainly, Page and Brin’s indented strategy has performed far

better than even they could have ever dreamed.

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An emergent strategy is an unintentional strategy that occurs in reaction to unexpected

possibilities and challenges. In certain cases, emergent strategy result incredible success or

disaster (Innosight LLC, 2011). The emergent strategy development process in Google is a

combination of logical incrementalism and strategic leadership. The strategy has been created

by initiating a two tier governance structure, where the Board of Directors (BOD) including

founders Page and Brin are separated from the shareholders. Moreover, as noted by Johnson,

Whittington and Scholes (2011) this strategy augments managerial freedom to them to

operate Google in their own way.

The emergent strategy development in Google is also influenced by its rigid recruitment

process. Applicants need to have Doctorate/Masters from a top University and has to go

through a sequence of interviews and tests. These processes are developed in extremely

scientific way as Google assess everything. Google actually hire against psychometric profile

and hence maintain a small number of employees, easier to handle (Chermack, Bodwell and

Glick, 2010).

There are many projects developed in partially-finished (beta) format and executed as per

end-user’s input/interest. While this strategy seems to be careless incrementalist behaviour to

strategy development, it also reflects Google has emphasized on other parts of business also.

Hence, many projects in Google are rigid and formulaic. For example, they have maximum 6

member teams, time-limit is short and each organisational aspect is measured and organised

(Techcrunch, 2010).

Key challenges faced by Google in strategy development

The intended and emergent strategies are not equally exclusive and do not arise in isolation in

firms (Grant, 2012). One of the key challenges faced by Google while managing strategy is

related to its failure in signing a deal with China during 2010 that permitted Chinese

authorities to censor some of its contents from public. As result gmail system was breached

and Google lost number of customers. This made Google to ensure they signed the agreement

with Chinese government. This deal assured some information hidden from Chinese

population and Google recommenced to successes after making the deal (Techcrunch, 2010).

Google’s strategic development has also come at costs in many cases. For example, in 2007

Google failed to patent its domain name in Germany (Essers, 2012). Many project failures

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within the company compelled to indulge in acquisition. Google followed strategy to buy

products/services if they are unable to innovate. In this way Google bought YouTube in 2001

for $1.65 billion due to the inefficiency of Google Video (Jin, 2015).

While the present strategic approaches have number of weaknesses, it permits Google for an

inherent risk management support. It assures that failures are just small parts of the corporate

and permits Google to maintain its flexibility. The in-depth learning and knowledge platform

developed by emergent strategy permitted Google to use its resources efficiently. This helps

in increasing earnings per share and profit. Even though impacted by many things, the

success of their strategy is explored in share price. Early public offering of Google was $85

and now is trading at $598.67 (Google, 2011).

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PATCH 2: Who is responsible for the organisational failures surrounding Hurricane

Katrina?

Introduction

Hurricane Katrina was one of the 5 disastrous hurricanes and costliest disaster in the history

of USA which happened in 2005. The storm majorly affected New Orleans city and the areas

surrounding it and claimed 1836 fatalities, 25000 people trapped and starving for days. Even

though 6 months passed after Hurricane attack, majority of citizens had not been able to

come-back to the city. Benoit (2011) finds the reason behind this is not only related to

damages caused by hurricane but the suffering was greatly augmented by the organisational

failures in US officialdom. Editors (2014) observe the main US government institution

responsible for organisational failures surrounding the responses to Katrina was the Federal

Emergency Management Agency (FEMA). Hence, it has become significant to understand

the core elements essential to become a successful organisation which could help a firm to

respond to knowledge management and barriers to change efficiently.

Core elements of a successful organisation

According to Grant (2012), firm’s operating in both private or public industry requires a

model that can identify and seize the opportunities in the varying times. In order to

understand the key elements of efficient organisations, Bridgespan’s Organisational Wheel is

very effective (Kramer and Matthews, 2012). As per the model, truly efficient firm’s reveals

their strength in 5 major interdependent areas and pay attention to 10 key characteristics

across these five areas, which are briefly mentioned in the below diagram;

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Figure 1: Bridgespan Organisation Wheel

Source: Kramer and Matthews (2012)

Culture: Culture helps firms to satisfy their strategic objectives to get impact.

Leadership: Change happens in firms until leadership dedicates to a new mission for

changes and culture their own attitude as suitable (Johnson, Whittington and Scholes,

2011).

Decision making or structure: The process of decision making is to hold up culture

and not to damage it. Structure is constructed in line with strategy and culture.

People: Assure the correct individuals are on the platform and avoid impediments if

essential.

Work process and systems: Fix systems and functions to make desired objectives

(Kramer and Matthews, 2012).

Core aspects into a logical and underpinning cycle enable the firm to react to the barriers of

knowledge and change management efficiently, mentions Grant (2012). Hence, the core

elements of FEMA under the old structure and new structure are critically evaluated in order

to understand how the reconstruction impacted the core elements which ultimately

contributed to its poor response to Katrina.

FEMA’s old organisational structure

FEMA was founded in 1979 by President Jimmy Carter and has engrossed civil defence

programs along with providing high priority to disaster assistance activities. Grant (2012)

observed the major stakeholders included citizens, media, universities, non-profit agencies,

corporations etc.

Initially FEMA followed a ‘flat structure’ which offered flexibility to make quick response to

emergency conditions. In 1993, James Lee Witt was appointed as the director of FEMA by

President Bill Clinton and in 1996 the agency was elevated to Cabinet ranking (Editors,

2014). For rationalizing the mitigation and disaster management, Witt started restructuring

the agency. Through Witt’s high effort, government permitted FEMA’s resources to be hold-

back from civil defence to natural-disaster management. Whitehead and Rose (2009) mention

that since 1993, FEMA was represented straight inside Presidents cabinet, which made the

agency highly efficient.

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FEMA’s new organizational structure under DHS

The Department of Homeland Security (DHS) was formed to investigate the environment

surroundings of 9/11 terrorist attack in 2001. The agency was new and its organisational

structure was weak. After nine days of 9/11 attack, President Bush appointed Tom Ridge as

new Secretary to develop and lead a new DHS. To create a new DHS, 22 departments were

gathered together in 2002; amongst the most important was FEMA (DHS, 2009).

Merger within the DHS downgraded FEMA to a simple internal partition, with no straight

cabinet representation. The fact that FEMA can report to president was what made it

efficient. Larson, Nethery and Cassels (2008) reports the structure of FEMA changed from

flat to hierarchical. Eventually, this in turn impacted the work-processes and system at

FEMA.

Under the new organisation, less priority was provided to natural disasters. Tom Ridges

provided high priority to immigration and terrorism and avoided natural disaster which is also

danger for people, adversely affecting FEMA’s cohesive leadership team. In DHS priority

disaster list published in 2004, terrorist attacks were at the top and hence most of the financial

resources allotted into terrorism-defence activities and the money for natural disaster

management were least (Editors, 2014).

Under the new structure, key people in FEMA were replaced. Tom ridge was replaced by

Michael Chertoff, who redesigned different FEMA responsibilities to other areas. As per The

New York Times (2014) report the fund for FEMA to protect the city was cut by 44% during

2000-2005, and the fund was reallocated to terrorist attacks. Due to this, FEMA missed $80

million from its $550 million functioning budget and struggled to obtain money to manage

hurricane disaster.

When hurricane happened, Michael Chertoff informed the president about immigration

problems but did not brief about hurricane due to its low priority (Larson, Nethery and

Cassels, 2008). When Katrina took place, over 60,000 citizens were trapped in New Orleans

and FEMA planned for few facilities like food, water and ice. But due to inefficient

communication, only few or half of suppliers had reached and there were no transport to

move.

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FEMA appointed one officer to New Orleans. Inefficient communication also played a major

role in organisational-failure. The FEMA officer who was in charge was informed broken

levees on the initial day. When the message was forwarded through the chain of command,

DHS in Washington demanded approval from 2nd

source not considering that there was only

one official in charge (Benoit, 2011). Katrina was as much a human made disaster as natural

disaster.

Recommendations

FEMA needs to change its policy that gives high priority to terrorism and immigration. For

making this applicable, FEMA needs to operate as an independent body and change its

current management style. As the top-management in DHS (Michael Chertoff and Tom

Ridge), who lead FEMA, played key role in organisational failure, changing the management

structure would help FEMA to make its own decisions and to have an effective

communication. Working as an independent department would enable the agency to directly

gain resources without any external department influence. Moreover, it is suggested FEMA to

adopt efficient strategy to organize enough to sensitize the people through warning or passing

information about the dangers of disasters soon as possible.

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PATCH 3: Managing change at Faslane

Introduction

Her Majesty’s Naval Base, Clyde (Faslane), is one of the 3 functioning bases in UK for the

navy. During 2002, Faslane experienced a changeover from direct control of Ministry of

Defence (MOD) to a private firm called Babcock International. For smoothing the transition

process, it became essential for Babcock to perform change management. As Babcock lacked

effective leadership, supervisors John Howie and Craig Lokhart adapted various change

styles to reconstruct Faslane’s operations (Babcock International, 2011). Hence, it has

become significant to analyse the types of strategic change being pursued at Faslane.

In this report, the evaluation is performed using Change Kaleidoscope model to explain the

leadership style and strategic change at Faslane. The Change Kaleidoscope model will

analyse the strategic change from the initiation of the change process. According to Nixon

(2009) the Change Kaleidoscope is a diagnostic model. It can be effective in a platform

sensitive change activity that one can argue is the case in Faslane.

Figure 1: Change Kaleidoscope Model

Source: Nixon (2009)

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The contextual aspects of change in Faslane include;

Time: Change is required relatively in a rapid way.

Power: The employees have reduced autonomy but the change in leadership is permitting

staffs to reveal their viewpoints and motivating transparency.

Scope: The change will impact entire Faslane due to hierarchical structure is compressed

(Hall, 2009).

Preservation: The distinct set of employees generates poll of talent and innovative thoughts

for change.

Diversity: Faslane has 7 layers, and the change will impact certain group of employees.

Capability: The management team will be reduced. This may result in limited managerial

ability or the new structure will enhance efficiency (Saporito and Winum, 2012).

Capacity: Employees from Babcock and gaining knowledge from other larger firms which

experienced same kind of change.

Readiness: The new management believed change was compulsory and employees who

opposed were likely to be less motivated (Johnson, Whittington and Scholes, 2011).

Hence, it can be inferred that the change process at Faslane was strategic and cultural. The

detailed analysis of Faslane’s change process is discussed below;

Describing the change style of John Howie and Craig Lokhart

Howie and Lokhart change style evolve the adaptation of consultation from individuals

within organisations who had practised changes just like in Faslane. Howie concentrated

majorly on changing the management structure to utilise capital more efficiently tracking

each change via stern documentation. The objective was to change individual’s attitudes

regularly for identifying accurately how to implement the principle change (Hall, 2009).

The initial change type was observed as reorientation which is the redefinition of

management structure. Faslane had a structure with above 7 layers which was complex as the

needed functions did not require every management. Hence, in 2006 the structure was limited

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to 4 layers (Grant, 2012). Understanding effective management in other organisations was the

next change. Faslane would assure that the small changes are managed quickly as it is easy.

However, this delivered £14 million reserves against the expected £3 million and the team

members were limited by half (Saporito and Winum, 2012).

As employees in Babock had previous experience in adapting change, John Howie appointed

the employees of Babock to Faslane in order to acquire their services in the new change

paradigm. Moreover, these employees lacked experience in operating a naval base and hence

the requirement for experienced employees in the sector increased (Hall, 2009). Employees

transferred from Ministry Of Defence (MOD) were provided with management change. This

indeed enables the firm to grow and achieve the target of saving 76 million British Pounds

(Johnson, Whittington and Scholes, 2011).

In 2006, John Howie was succeeded by Craig Lokhart who was a team member that had tied

up with Howie during 2002. Lokhart had bigger responsibilities as Howie had left the firm

with £100 million savings against planned target of £76 million. Moreover, the organisational

savings were reduced by 20%. The future target of £280 million after 10 years was not away

from the present savings status (Babcock International, 2011).

It can be inferred that, Lokhart would need to implement a strategy that assure success in this

attainment. Lokhart would also need to integrate the strategies of his ancestors and assure that

he will be fixed in the preliminary supremacy (Hall, 2009). Hence, Lokhart did not integrate

any other employee like Howie had done, but adopted the ones willingly accessible in

Faslane. Lokhart wanted to improve the services that Faslane provided and thus the

requirement to retain the employees. Change in Faslane leadership did not focussed on

employee cut-offs but to their retention (Grant, 2012).

Lokhart wanted the employees to be unified and perform towards a common target. Hence,

the organisational meetings will be conducted on the organisational objectives. In these

meetings, employees were permitted to participate in decision making process. Over 3000

employees were present in the meetings, each employee responding in the viewpoints

provided by management. The employees would defy the management on transformational

change that had happened in Faslane, reports Johnson, Whittington and Scholes (2011).

These meetings would take one day off from all other works of the firm. When employees

asked questions to management, Lokhart saw the requirement to respond the employees

honestly. Moreover, this brings out openness inside Faslane.

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Strength and weaknesses of the change program

The proposed change programme was extremely efficient as thousands of vacancies were

expected to be emerged as Faslane was going to be the head office for the whole submarine

fleet of UK. But despite of the effectiveness in change programme, the changes were not

accepted effectively by workers of the organisation. In case of Howie’s type of change, he

came up with various changes in Faslane. There were several strengths in the change type

which includes change in management structure. Howie’s change type reduced management

team by half and assured that the expenses were cut on the salaries. The rapid dealing with

small level changes assured that the savings of the firm increase up to £14 million (Babcock

International, 2011).

Several weakness were also present in Howie’s change program including the ineffective

decision to brought back employees from Babcock expecting high adaptability of change

from them. However, new comers were unaware about how the new organisation (Faslane)

operates which created confusion and stress inside them (Saporito and Winum, 2012).

However, Lohart adopted an honest communication strategy to motivate and improve

employee performance. Though it is a major vision of Faslane, it may be considered as a

weakness when most of the employees become upset whenever they hear a bad news or bad

attitude from the management.

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