Understanding strategic development


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Understanding strategic development

  1. 1. UnderstandingStrategic Development
  2. 2. Strategic Planning• On the face of it, planning is most obviously explained through the design lens; it can certainly take the form and appearance of a logical system of objective setting, analysis and evaluation leading to clearly articulated intentions from the top management in an organization. However, the research by Rob Grant makes it clear that strategic planning is likely to perform the roles of communicating, controlling and communicating strategy rather than formulating the strategy itself. The other lenses also help explain the roles planning may play in organizations.
  3. 3. • The experience lens suggests strategy actually develops on the basis of more informal sensing of the environment on the basis of people’s experience or through the cultural systems of the organization. Here planning is not seen as directing the development of strategy so much as drawing together the threads of a strategy which emerges on the basis of that experience. So the strategy comes to look as though it has been planned. In so doing the exercise of planning may help make sense of such emerging strategy, may provide a more coherent form to it, or indeed may help challenge some of the assumptions or biases on which it is based. So even if the role of planning is seen through this lens, it can be argued it performs and important role.
  4. 4. • The ideas lens also emphasizes the emergence of strategy from within the organization rather than from the top; so again planning may be seen here as making sense of that emergent strategy. Planning systems can also be seen as one of the mechanisms by which ideas that emerge from within an organization are selected and retained. Such ideas have to compete for their survival, or prove their worth against other ideas.
  5. 5. Definitions• INTENDED STRATEGY is an expression of desired strategic direction deliberately formulated or planned by managers.• EMERGENT STRATEGY comes about through everyday routines, activities and processes in organizations• REALIZED STRATEGY: the strategy actually being followed by an organization in practice
  6. 6. Strategy Development Routes Emergent Strategy Intended Strategy Realized Strategy Unrealized Strategy
  7. 7. A Strategic Planning Cycle Planningguidelines, Forecasts, scenarios, assumptions, Draft business plans Discussion with corporate Revised business plans Strategy targets and directives Annual Capital and Operating Budgets Corporate plan Approval by Board Performance appraisal Annual Performance targets
  8. 8. ADVANTAGESIdentifies risksForces managers to thinkForces decision makingFormal targets enable controlEnforces organizational coherence and coordinationDISADVANTAGESNot proven to bring advantageMay become over formal and reduce initiativeAssumes internal politics do not existAssumes managers know everythingDivorces planning from doingCannot cope with shocks and discontinuities
  9. 9. Key Points• It is important to distinguish between intended strategy – the desired strategic direction deliberately planned by managers – and emergent strategy which may develop in a less deliberate way from the behaviors and activities inherent within an organization.
  10. 10. Key Points• Most often the process of strategy development is described in terms of intended strategy as a result of management design through planning systems carried out by top management objectively and dispassionately. There are benefits and dis-benefits of formal strategic planning systems. However, there is evidence to show that such formal systems are not an adequate explanation of what occurs in practice. There is a need for other explanations of strategy development.
  11. 11. Key Points• Intended strategy may also come about on the basis of strategy workshops, project groups, the intervention of strategy consultants and the imposition of strategies by external stakeholders
  12. 12. Key Points• Strategies may emerge from within organizations. This may be explained in terms of: How organizations may proactively cope through processes of logical incrementalism The resource allocation routines currently employed in the organization which may favor certain strategy development projects over others The taken for granted elements of organizational culture favoring certain strategies The outcome of the bargaining associated with political activity resulting in a negotiated strategy
  13. 13. Strategic Development in environmental contextsEnvironmentalConditions Simple Complex Static Historical Analysis Decentralizati Forecasting on of organizations Experience Scenario and learning planning Dynamic