Strategy-intended and emergent.pptx
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Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to- prioritize efforts, effectively allocate resources, align shareholders and employees on the organization’s goals, and ensure those goals are backed by data and sound reasoning.
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- 2. Strategy • In business, the terms corporate strategy, organizational strategy, and strategic planning refer to the specific initiatives a company undertakes to work toward and achieve its strategic goals. No matter your business's size, understanding the underlying strategy that guides it is an integral part of being an effective leader and manager.
- 3. Strategy • Corporate strategy often varies from business to business and depends on several factors. • While there are numerous frameworks you can use to interpret your organization’s strategy, one effective way of doing so is through the lens of emergent versus deliberate strategy.
- 4. Strategic Planning • Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. • It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. • The term strategic planning is essentially synonymous with strategic management.
- 5. Strategic Planning • Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to- • prioritize efforts, • effectively allocate resources, • align shareholders and employees on the organization’s goals, and • ensure those goals are backed by data and sound reasoning.
- 6. Emergent and Deliberate Strategies Intended Strategy Realized Strategy Deliberate Strategy Unrealized Strategy Emergent Strategy From “Strategy Formation in an Adhocracy” by Henry Mintzberg and Alexandra McHugh, Administrative Science Quarterly, Vol. 30, No. 2, June 1985. Reprinted by permission of Administrative Science Quarterly.
- 7. Few Instances: • A few years ago, a consultant posed a question to thousands of executives: “Is your industry facing overcapacity and fierce price competition?” All but one said “YES.” • The only “no” came from the manager of a unique operation—the Panama Canal! And even there, they are building a second one connecting the Atlantic to Pacific oceans scheduled to open in 2015. This manager was fortunate to be in charge of a venture whose services are desperately needed by shipping companies and that offers the only simple route linking the Atlantic and Pacific Oceans. • The canal’s current success will be challenged with this second goes into operation. With the current increase in globalization, the additional boat transportation make both canals appear to be guaranteed to have many customers for as long as anyone can see into the future.
- 8. • When an organization’s environment is stable and predictable, strategic planning can provide enough of a strategy for the organization to gain and maintain success. • The executives leading the organization can simply create a plan and execute it, and they can be confident that their plan will not be undermined by changes over time. But as the consultant’s experience shows, only a few executives—such as the manager of the Panama Canal— enjoy a stable and predictable situation. • Because change affects the strategies of almost all organizations, understanding the concepts of intended, emergent, and realized strategies is important. Also relevant are deliberate and non-realized strategies. • The relationships among these five concepts are presented as below:
- 9. Strategic Planning and Learning: Intended, Emergent, and Realized Strategies • Strategic planning, usually in the form of a business plan, is a key aspect of creating a new venture. Many well-known firms, however, owe their success more to their ability to adapt than their original plan. • Most firms begin by pursuing their plans (also known as intended strategy), but unexpected opportunities that arise over time can lead firms in much different directions than could have ever been anticipated (emergent strategy). • Ultimately, the intended and emergent strategies each contribute to a firm’s realized strategy. In the cases below, the original intended strategy can barely be detected within today’s strategy.
- 10. Strategic Planning and Learning: Intended, Emergent, and Realized Strategies Intended Strategy Emergent Strategy Realized Strategy Dave McConnell aspired to be a writer. When his books weren’t selling, he decided to give out perfume as a gimmick. The perfume McConnell gave out with his books were popular, inspiring the foundation of the California Perfume Company. The company changed its name to Avon in 1939, and it’s direct marketing system remained popular for decades. Avon is now available online and in retail outlets worldwide. When father and son team Scott and Don Rasmussen were fired from New England Whalers, they envisioned a cable television network that focused on sports events in the state of Connecticut. As the network became successful, ESPN branched out beyond the local softball games and demolition derbies that were first broadcasted. ESPN is now billed as the worldwide leader in sports, owning several ESPN affiliates as well as production of ESPN magazine, ESPN radio, and broadcasting for ABC.
- 11. Intended Strategies An Intended Strategy is the strategy that an organization hopes to execute. Intended strategies are usually described in detail within an organization’s strategic plan. When a strategic plan is created for a new venture, it is called a business plan. As an undergraduate student at Yale in 1965, Frederick Smith had to complete a business plan for a proposed company as a class project. His plan described a delivery system that would gain efficiency by routing packages through a central hub and then pass them to their destinations. A few years later, Smith started Federal Express (FedEx), a company whose strategy closely followed the plan laid out in his class project.
- 12. Intended Strategies Today, Frederick Smith’s personal wealth has surpassed $2 billion, and FedEx ranks eighth among the World’s Most Admired Companies according to Fortune magazine. Certainly, Smith’s intended strategy has worked out far better than even he could have dreamed (Donahoe, 2011).
- 13. Emergent Strategies • It is an unplanned strategy that arises in response to unexpected opportunities and challenges. Sometimes emergent strategies result in disasters. • In the mid-1980s, FedEx deviated from its intended strategy’s focus on package delivery to capitalize on an emerging technology: facsimile (fax) machines. • The firm developed a service called ZapMail that involved documents being sent electronically via fax machines between FedEx offices and then being delivered to customers’ offices.
- 14. Emergent Strategies • FedEx executives hoped that ZapMail would be a success because it reduced the delivery time of a document from overnight to just a couple of hours. Unfortunately, however, the ZapMail system had many technical problems that frustrated customers. • Even worse, FedEx failed to anticipate that many businesses would simply purchase their own fax machines. ZapMail was shut down before long, and FedEx lost hundreds of millions of dollars following its failed emergent strategy. • In retrospect, FedEx had made a costly mistake by venturing outside of the domain that was central to its intended strategy: package delivery (Funding Universe).
- 15. Realized Strategies • A Realized Strategy is the strategy that an organization actually follows. Realized strategies are a product of a firm’s intended strategy (i.e., what the firm planned to do), the firm’s (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges). • In the case of FedEx, the intended strategy devised by its founder many years ago—fast package delivery via a centralized hub—remains a primary driver of the firm’s realized strategy. • For Southern Bloomers Manufacturing Company, realized strategy has been shaped greatly by both its intended and emergent strategies, which centre on Men’s innerwear and gun-cleaning patches.
- 16. Non-Realized Strategies In other cases, firms’ original intended strategies are long forgotten. A Non-realized Strategies refers to the abandoned parts of the intended strategy. When aspiring author David McConnell was struggling to sell his books, he decided to offer complimentary perfume as a sales gimmick. McConnell’s books never did escape the stench of failure, but his perfumes soon took on the sweet smell of success. The California Perfume Company was formed to market the perfumes; this firm evolved into the personal care products juggernaut known today as Avon. For McConnell, his dream to be a successful writer was a non-realized strategy, but through Avon, a successful realized strategy was driven almost entirely by opportunistically capitalizing on change through emergent strategy.
- 17. Figure : The Social Network demonstrates how founder Mark Zuckerberg’s intended strategy gave way to an emergent strategy via the creation of Facebook
- 18. Deliberate vs Emergent Strategy Deliberate strategy is an approach to strategic planning that emphasizes on achieving an intended business objective. Emergent strategy is the process of identifying unforeseen outcomes from the execution of strategy and then learning to incorporate those unexpected outcomes into future corporate plans. Inception of the Concept The concept deliberate strategy was introduced by Michael Porter. Henry Mintzberg introduced the framework for emergent strategy as an alternative approach to deliberate strategy. Approach to Management Deliberate strategy implements a top down approach to management Emergent strategy implements a bottom up approach to management. Flexibility Deliberate strategy takes a rigid approach to management, thus is largely considered to be less flexible. Emergent strategy is favoured by many business practitioners due to its high flexibility. What is the difference between Deliberate and Emergent Strategy?
- 20. •Functional-Level Strategy Manufacturing Marketing Materials Management Research and Development Human Resources
- 21. • Business-Level Strategy Cost Leadership Differentiation Market Niche Focus
- 22. • Corporate-Level Strategy • Vertical Integration • Diversification • Strategic Alliances • Acquisitions • New Ventures • Business Portfolio Restructuring
- 23. • Global Strategies • Multidomestic • International • Global • Transnational
- 24. THANK YOU
Editor's Notes
- While the business plan lays out how the business is run from day to day, the strategic plan focuses on how you will achieve specific initiatives to develop your business. The difference between strategic plan vs. business plan The biggest difference between a strategic plan vs. a business plan is its purpose. Existing companies use the strategic plan to grow their business, while entrepreneurs use business plans to start a company. There is also a different timeframe for each plan. Generally, a strategic plan is conducted over several years while a business plan, with all the right components, can operate in less than a year. The strategic plan and business plan also offer different uses and benefits as well. Benefits of using a strategic plan One of the primary benefits of a strategic plan is that it helps a company to increase its profitability, allowing for greater flexibility in how it can allocate funds for components like buying newer technologies and hiring more talented professionals. It also benefits organizations by helping them increase their customer base and improving the notoriety of their brand to a wider audience. The business plan benefits entrepreneurs and startups because it helps them to compile all their ideas into a unified system where everyone has a role to fulfill in order to see the company succeed. A successful business plan can also help these new companies to establish a business system that is sustainable and profitable for many years.
- deliberate strategy is one that arises from conscious, thoughtful, and organized action on the part of a business and its leadership. It’s typically generated from a rigorous analysis of data, including metrics such as: Market growth Segment size Customer needs Competitor strengths and weaknesses Technological trajectories
- Emergent strategies can also lead to tremendous success. Southern Bloomer Manufacturing Company was founded to make underwear for use in prisons and mental hospitals. Many managers of such institutions believe that the underwear made for retail markets by companies such as Calvin Klein and Hanes is simply not suitable for the people under their care. Instead, underwear issued to prisoners needs to be sturdy and durable to withstand the rigors of prison activities and laundering. To meet these needs, Southern Bloomers began selling underwear made of heavy cotton fabric. An unexpected opportunity led Southern Bloomer to go beyond its intended strategy of serving institutional needs for durable underwear. Just a few years after opening, Southern Bloomer’s performance was excellent. It was servicing the needs of about 125 facilities, but unfortunately, this was creating a vast amount of scrap fabric. An attempt to use the scrap as stuffing for pillows had failed, so the scrap was being sent to landfills. This was not only wasteful but also costly. One day, cofounder Don Sonner visited a gun shop with his son. Sonner had no interest in guns, but he quickly spotted a potential use for his scrap fabric during this visit. The patches that the gun shop sold to clean the inside of gun barrels were of poor quality. According to Sonner, when he “saw one of those flimsy woven patches they sold that unraveled when you touched them, I said, ‘Man, that’s what I can do’” with the scrap fabric. Unlike other gun-cleaning patches, the patches that Southern Bloomer sold did not give off threads or lint, two by-products that hurt guns’ accuracy and reliability. The patches quickly became popular with the military, police departments, and individual gun enthusiasts. Before long, Southern Bloomer was selling thousands of pounds of patches per month. A casual trip to a gun store unexpectedly gave rise to a lucrative emergent strategy (Wells, 2002).
- Emergent strategies can also lead to tremendous success. Southern Bloomer Manufacturing Company was founded to make underwear for use in prisons and mental hospitals. Many managers of such institutions believe that the underwear made for retail markets by companies such as Calvin Klein and Hanes is simply not suitable for the people under their care. Instead, underwear issued to prisoners needs to be sturdy and durable to withstand the rigors of prison activities and laundering. To meet these needs, Southern Bloomers began selling underwear made of heavy cotton fabric. An unexpected opportunity led Southern Bloomer to go beyond its intended strategy of serving institutional needs for durable underwear. Just a few years after opening, Southern Bloomer’s performance was excellent. It was servicing the needs of about 125 facilities, but unfortunately, this was creating a vast amount of scrap fabric. An attempt to use the scrap as stuffing for pillows had failed, so the scrap was being sent to landfills. This was not only wasteful but also costly. One day, cofounder Don Sonner visited a gun shop with his son. Sonner had no interest in guns, but he quickly spotted a potential use for his scrap fabric during this visit. The patches that the gun shop sold to clean the inside of gun barrels were of poor quality. According to Sonner, when he “saw one of those flimsy woven patches they sold that unraveled when you touched them, I said, ‘Man, that’s what I can do’” with the scrap fabric. Unlike other gun-cleaning patches, the patches that Southern Bloomer sold did not give off threads or lint, two by-products that hurt guns’ accuracy and reliability. The patches quickly became popular with the military, police departments, and individual gun enthusiasts. Before long, Southern Bloomer was selling thousands of pounds of patches per month. A casual trip to a gun store unexpectedly gave rise to a lucrative emergent strategy (Wells, 2002).
- Strategy at the Movies: The Social Network Did Harvard University student Mark Zuckerberg set out to build a billion-dollar company with more than 600 million active users? Not hardly. As shown in 2010’s The Social Network, Zuckerberg’s original concept in 2003 had a dark nature. After being dumped by his girlfriend, a bitter Zuckerberg created a website called “FaceMash” where the attractiveness of young women could be voted on. This evolved first into an online social network called Thefacebook that was for Harvard students only. When the network became surprisingly popular, it then morphed into Facebook, a website open to everyone. Facebook is so pervasive today that it has changed the way we speak, such as the word friend being used as a verb. Ironically, Facebook’s emphasis on connecting with existing and new friends is about as different as it could be from Zuckerberg’s original mean-spirited concept. Certainly, Zuckerberg’s emergent and realized strategies turned out to be far nobler than the intended strategy that began his adventure in entrepreneurship.
- Strategy at the Movies: The Social Network Did Harvard University student Mark Zuckerberg set out to build a billion-dollar company with more than 600 million active users? Not hardly. As shown in 2010’s The Social Network, Zuckerberg’s original concept in 2003 had a dark nature. After being dumped by his girlfriend, a bitter Zuckerberg created a website called “FaceMash” where the attractiveness of young women could be voted on. This evolved first into an online social network called Thefacebook that was for Harvard students only. When the network became surprisingly popular, it then morphed into Facebook, a website open to everyone. Facebook is so pervasive today that it has changed the way we speak, such as the word friend being used as a verb. Ironically, Facebook’s emphasis on connecting with existing and new friends is about as different as it could be from Zuckerberg’s original mean-spirited concept. Certainly, Zuckerberg’s emergent and realized strategies turned out to be far nobler than the intended strategy that began his adventure in entrepreneurship.
- Business-level strategy The Business-level strategy is what most people are familiar with and is about the question “How do we compete?”, “How do we gain (a sustainable) competitive advantage over rivals?”. In order to answer these questions it is important to first have a good understanding of a business and its external environment. At this level, we can use internal analysis frameworks like the Value Chain Analysis and the VRIO Model and external analysis frameworks like Porter’s Five Forces and PESTEL Analysis. When good strategic analysis has been done, top management can move on to strategy formulation by using frameworks as the Value Disciplines, Blue Ocean Strategy and Porter’s Generic Strategies. In the end, the business-level strategy is aimed at gaining a competitive advantage by offering true value for customers while being a unique and hard-to-imitate player within the competitive landscape. Functional-level strategy Functional-level strategy is concerned with the question “How do we support the business-level strategy within functional departments, such as Marketing, HR, Production and R&D?”. These strategies are often aimed at improving the effectiveness of a company’s operations within departments. Within these department, workers often refer to their ‘Marketing Strategy’, ‘Human Resource Strategy’ or ‘R&D Strategy’. The goal is to align these strategies as much as possible with the greater business strategy. If the business strategy is for example aimed at offering products to students and young adults, the marketing department should target these people as accurately as possible through their marketing campaigns by choosing the right (social) media channels. Technically, these decisions are very operational in nature and are therefore NOT part of strategy. As a consequence, it is better to call them tactics instead of strategies. Corporate-level strategy At the corporate level strategy however, management must not only consider how to gain a competitive advantage in each of the line of businesses the firm is operating in, but also which businesses they should be in in the first place. It is about selecting an optimal set of businesses and determining how they should be integrated into a corporate whole: a portfolio. Typically, major investment and divestment decisions are made at this level by top management. Mergers and Acquisitions (M&A) is also an important part of corporate strategy. This level of strategy is only necessary when the company operates in two or more business areas through different business units with different business-level strategies that need to be aligned to form an internally consistent corporate-level strategy. That is why corporate strategy is often not seen in small-medium enterprises (SME’s), but in multinational enterprises (MNE’s) or conglomerates. Example Samsung Let’s use Samsung as an example. Samsung is a conglomerate consisting of multiple strategic business units (SBU’s) with a diverse set of products. Samsung sells smartphones, cameras, TVs, microwaves, refrigerators, laundry machines, and even chemicals and insurances. Each product or strategic business unit needs a business strategy in order to compete successfully within its own industry. However, at the corporate level Samsung has to decide on more fundamental questions like: “Are we going to pursue the camera business in the first place?” or “Is it perhaps better to invest more into the smartphone business or should we focus on the television screen business instead?”. The BCG Matrix or the GE McKinsey Matrix are both portfolio analysis frameworks and can be used as a tool to figure this out.