stratege 2.pdf

Module Strategic Management
Part 1
The Context and Emergence of Strategic Thinking
MBA / Summer 2023
SRH Berlin School of Management
Prof. Dr. Achim Seisreiner

Agenda
2
(1) Introduction: Keywords & essential concepts
(2) Some fundamental issues
 What is Strategic Management?
 10 schools of strategic thinking
 5 Ps for strategy
(3) Prescriptive schools
 Design School
 Planning School
 Positioning School
(4) Describing schools
 Entrepreneurial School
 Cognitive School
 Learning School
 Power School
 Cultural School
 Environmental School
(6) Integration of all other schools: Configuration School

Further Reading
3
Price: EUR 13,99 (via Amazon.de) Price: EUR 49,89 (via Amazon.de)

Agenda
4
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Leadership, Management & Strategic Management
5
 Continuing debate about the overlap and difference
 Management is commonly seen as planning, organizing and controlling
 Leadership is the process of inspiring others to work hard to accomplish
important tasks
 Management is about ensuring functionality and leadership is about change –
the linking pin is ‘rationality’ as a guiding principle
 (Instrumental) rationality is based on expectations about objectives/targets.
These expectations serve as motives for actors to attain ends, ends which are
‘rationally pursued and calculated’
 We manage things and processes but we lead people. If leadership is showing the
way and helping or inducing others to pursue it, then management is about
making the journey
 So, strategic management is about ‘rationalizing’ the corporate future
successfully

Four functions of management
6

Keywords: theory, practice & paradigm
7
 Why theory?
 It is an account of how things work, coherent in its
terms, and applicable to phenomena that it seeks to
interpret, understand, and explain.
 A theory is based on cause-effect-relations.
 It provides a frame upon which we make sense of our
world, and the things within it.
 What is practice?
 Simply put, it is what managers do.

For practice management theories are crucial!
8
Causes Effects
Means Ends
Theories
Technologies
Causality
Finality

Keywords: theory, practice & paradigm
9
 Paradigm – a dominant frame for viewing the world (e.g.
within a scientific community)
 Anything inconsistent with the dominant paradigm is seen
as irrationality
 Contemporary paradigm shifts occurring due to challenges
for managing:
• Organizational and technological change
• Changing relations in service and production
• Globalization
• Changing conceptions of time and space
• Changing demographics
• Changing values

The three landmarks for sense-giving
10
The core issue for managers:
“What is right? And what is wrong?”
The answer is the landmark for everything …

The Ideals
World of beliefs
Dimension: good vs. bad
 Ethical world
 Morality & norms
 Religion, philosophy, ideologies
HOW IT SHOULD BE

The Ideals
The Facts
World of knowledge World of beliefs
Dimension: true vs. false Dimension: good vs. bad
 Academic world
 Causality; explanations/theories
about reality
 Scientific principles (falsification,
objectivity, reliability, validity)
 Ethical world
HOW IT IS HOW IT SHOULD BE

13
The Ideals
The Facts The Functionals
World of knowledge World of rationality World of beliefs
Dimension: true vs. false Dimension: useful vs. useless Dimension: good vs. bad
 Academic world
 Causality; explanations/theories
about reality
 Scientific principles (falsification,
objectivity, reliability, validity)
 Business world
 Efficiency, effectiveness
 “The end justifies the means!”
 Ethical world
HOW IT IS HOW IT WORKS HOW IT SHOULD BE

Why management & business research?
 Mission of research: looking for explanations
 Necessary, but not sufficient: If you are able to explain a social
phenomenon then you are able to influence (“manipulate” or manage)
it!
 That`s why even hard-noised managers should care about management
theory
 But watch out:
 Social systems are complex by nature because human beings are no
machines (no clear cause-effect-relations)
 Managers and scientists have different mindsets and missions; whilst
practitioners are looking for biased self-affirmation, academics
should be neutral and critical (rigour-relevance-gap)

Why management & business research?
 Assumption: Managers and scientists live in “separated worlds” –
bilateral communication is complicated.
 The academic world (rigour):
 Being neutral, unbiased and critical.
 Using sophisticated methods and complicated concepts.
 “Paradox” of research: Searching for “truth” by falsifying all the
explanations found.
 The managerial world (relevance):
 Being goal-oriented, biased and committed.
 Simplifying methods and using established concepts.
 Looking for self-affirmation by focusing on (pretended) verified
“theories” (e.g., best practices, benchmarks).

Agenda
16
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Fundamental question
What is Strategic Management?
17
 In literature and practice there is little agreement about the meaning of “strategy” and
“strategic management”.
 Strategy is a broad, ambiguous topic.
 Often the terms “strategic” and “strategy” are used devoid of meaning.

Strategy − what is strategy?
Very little agreement: strategy is a broad, ambiguous topic
18
 B. H. Liddell Hart (Strategy, 1967):
“the art of distributing and applying military means to fulfill the ends of policy."
 Kenneth Andrews (The Concept of Corporate Strategy, 1980):
“Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives,
purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the
range of business the company is to pursue, the kind of economic and human organization it is or
intends to be, and the nature of the economic and non-economic contribution it intends to make to its
shareholders, employees, customers, and communities.“
 Michael E. Porter ("What is Strategy?“ Harvard Business Review, Nov-Dec 1996):
a competitive strategy is "about being different." He adds, "It means deliberately choosing a different set
of activities to deliver a unique mix of value."

Strategy − what is strategy?
Example of a typical definition from a modern textbook
19
“Strategy is the direction and scope of an organisation over the long-term: which achieves
advantage of the organisation through its configuration of resources within a challenging
environment, to meet the needs of markets and to fulfill stakeholder expectations”
(Johnson/Scholes: Exploring Corporate Strategy, 2006)
In other words, strategy is about:
 Where is the business trying to get to in the long-term? (direction)
 Which markets should a business compete in and what kind of activities are involved in such markets?
(markets; scope)
 How can the business perform better than competitors in those markets? (advantage)
 What resources (skills, competencies, assets, finance, relationships, facilities) are required in order to be
able to compete? (resources)
 What external, environmental factors affect the businesses` ability to compete? (environment)
 What are the values and expectations of those who have power in an around business? (stakeholders)

What is strategic management?
What is needed: a simple definition for “practical” use!
Let`s try it …
Corporate
Governance
Structures and
Systems
Processes and
Arrangements
Corporate
Policy
Programs
Agendas
Corporate
Culture
Trouble-
Shooting
Performance
and Cooperation
Structures Activities Behavior
Normative Management
Strategic Management
Operative Management
Philosophy of Management
Source: according to Bleicher (1999).
3 Levels
3 Issues
… with the help of the Management Concept of St. Gallen
comprehensive illustration of all
interrelated management topics
holistic model for managerial
analysis
20

Strategic Management is enabling visions by
developing real options
21
Strategic
Management
... should do
... wants to do
... is able to do
... is doing
Normative
Management
Operative
Management
What an organization ...
Source: according to Learned et al. (1965), S. 20f., Seisreiner (1999), S. 78ff.
Balance?
Balance?
Balance?
Stakeholder /
Shareholder
Senior Management /
Employees /...
„Quality“ of Resources /
Technology /...
Actual Standards of
Activities
 Strategic Management is balancing the “corporate visions” with the organizations`
capabilities by systematically avoiding strategic gaps
 Please note: Only the combined effect of managing normative, strategic and
operative gaps will lead to corporate success!

Practical proof
22

Agenda
23
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

“The Strategic Management Beast “
24
Source: Mintzberg et al. (2005), p. 1

“We are the blind people and strategy formulation
is our elephant.”
25
Source: Mintzberg et al. (2005), p. 2f.

10 schools of strategic thinking
26
Design School Strategy formation as a process of conception
1
Planning School Strategy formation as a formal process
2
Positioning School Strategy formation as an analytical process
3
Entrepreneurial School Strategy formation as a visionary process
4
Cognitive School Strategy formation as a mental process
5
Learning School Strategy formation as an emergent process
6
Power School Strategy formation as a process of negotiation
7
Cultural School Strategy formation as a collective process
8
Environmental School Strategy formation as a reactive process
9
Configuration School Strategy formation as a process of transformation
10

Splitting the process:
strategy formation and the 10 schools
27

Agenda
28
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Five Ps for Strategy
Five definitions of strategy according to Mintzberg
29
Source: Mintzberg et al. (2005), p. 9ff.
Strategy is a …
… plan
… pattern
… position
… perspective
… ploy
 Henry Mintzberg (The Rise and Fall of Strategic
Planning, 1994):
(1) Strategy is a plan, a "how," a means of getting from
here to there.
(2) Strategy is a pattern in actions over time; for
example, a company that regularly markets very
expensive products is using a "high end" strategy.
(3)Strategy is position; that is, it reflects decisions to offer
particular products or services in particular markets.
(4) Strategy is perspective, that is, vision and direction.
(5) Strategy is a ploy; that is, a specific “maneuver”
intended to outwit an opponent or competitor

Strategies ahead and behind
30

Strategies deliberate and emergent
31

Strategies above and below
32

Changing position and perspective
33

Agenda
34
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Design School
Strategy formation as a process of conception
35

Design School
Basic design school model
36

Design School
Premises of the design school
37
1. Strategy formation should be a deliberate process of conscious thought
2. Responsibility for that control an consciousness must rest with the chief
executive officer: that person is the strategist
3. The model of strategy formation must be kept simple and informal
4. Strategies should be one of a kind: the best ones result from a process of
individualized design
5. The design process is complete when strategies appear fully formulated as
perspective
6. These strategies should be explicit, so they have to be kept simple
7. Finally, only after these unique, full-blown, explicit, and simple strategies are fully
formulated can they then be implemented

Design School
Four conditions for designing organizations
38
1. One brain can, in principle, handle all the information relevant for strategy
formation
2. That brain is able to have full, detailed, intimate knowledge of the situation in
question
3. The relevant knowledge must be established before a new intended strategy has
to be implemented – in other words, the situation has to remain relatively
stable or at least predictable
4. The organization in question must be prepared to cope with the centrally
articulated strategy

Agenda
39
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Planning School
Strategy formation as a formal process
40

Planning School
Premises of the planning school
41
1. Strategies result from a controlled, conscious process of formal planning,
decomposed into distinct steps, each delineated by checklists and supported by
techniques
2. Responsibility for that overall process rests with the chief executive in principle;
responsibility for its execution rests with staff planners in practice
3. Strategies appear from this process full blow, to be made explicit so that they can
then be implemented through detailed attention to objectives, budgets,
programs, and operating plans of various kinds

Planning School
The Steiner model of strategic planning
42

Planning School
Stanford Research Institute`s proposed “system of plans”
43

Planning School
Scheduling the whole process: Annual planning cycle at GE
44

Planning School
Four planning hierarchies
45
1. Corporate Management
2. Business Management
3. Functional Management
4. Operating Management

Planning School
The fallacies of strategic planning
46
 Fallacy of predetermination:
“Long-range forecasting (two years or longer) is notoriously inaccurate”
 Fallacy of detachment:
thinking (= strategy formulation) and acting (= implementation) are separated; that`s
dangerous: either the formulator must implement or the implementers must formulate!
 Fallacy of formalization:
increasing formalization establishes systems that do not facilitate thinking

Planning School
Forecasting: Whoops!
47

Planning School
The upside of toolism
48

Agenda
49
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Positioning School
Strategy formation as an analytical process
50

Positioning School
Premises of the positioning school
51
1. Strategies are generic, specifically common, identifiable positions in the
marketplace.
2. That marketplace (the context) is economic and competitive.
3. The strategy formation process is therefore one of selection of these generic
positions based on analytical calculation.
4. Analysts play a major role in this process, feeding the results of their calculations
to managers who officially control the choices.
5. Strategies thus come out from this process full blown and are then articulated and
implemented; in effect, market structure drives deliberate positional
strategies that drive organizational structure.

Positioning School
Three “waves” of the positioning school
52
Source: Mintzberg et al. (2005), p. 88-112
1 Origins in the military maxims
2 Search for consulting imperatives
3 Development of empirical propositions
~ 1975
~ 1960
~ 400 B.C.
Sun Tzu
Von Clausewitz
BCG: Growth-Share Matrix /
Exploiting Experience
PIMS
Porter: Model of
competitive analysis
Porter: Generic
Strategies
Porter: Value
Chain

Positioning School
Maxims about maxims
53

Positioning School
BCG Growth-Share Matrix
54

Positioning School
BCG Experience Curve
55

Positioning School
Porter`s Model of Competitive Analysis
56

Porter’s Five Forces
Rivalry Among Competitors: Influences and Outcomes
57
Influences:
 Number of competitors
 Industry growth rate
 Fixed costs, scale issues
 Lack of differentiation
 Low switching costs
 High exit barriers (specialized assets, emotional commitment, restrictions)
Outcomes
 Using price competition and price wars
 Staging advertising battles
 Increasing warranties or services
 Making new product introductions
 Jockeying for strategic position

Threat of New Entrants: Entry Barriers
58
 Economies of scale
 Differentiation/brand loyalty
 Capital requirements
 Switching costs
 Access to distribution channels
 Other cost disadvantages:
 Location
 Raw materials
 Proprietary technology

Bargaining Power of Suppliers and Buyers:
Influences and Outcomes
59
Influences:
 Their size
 Number
 Ability to switch
 Availability of substitutes
 Criticality of product
 Ability to vertically integrate (Suppliers vertically integrate forward; buyers
vertically integrate backward)
Outcomes
 Outcomes are a function of the relative bargaining power and dependencies
of parties
 Bargaining power is evidenced through: Price, Quality, Service

Threat of Substitute Products
60
 Places an upper limit on prices
 Consists of products with a similar function
 Examples:
 Electronic security/security guards
 DSL/Cable modem
 Coffee/tea/cola
 Fax/overnight delivery of documents

Results of Industry Analysis
61
 Unattractive industry:
intense rivalry, low entry barriers, strong suppliers and buyers, strong
product substitutes
 Attractive industry:
little rivalry, high entry barriers, weak buyers and suppliers, weak product
substitutes

Positioning School
Porter`s Generic Strategies
62

Positioning School
Porter`s Value Chain
63

Positioning School
The “Honda question”
64

Positioning School
Critique of the positioning school
65
 Concerns about Focus:
The focus is narrow and oriented to the economic and quantifiable; social and political
aspects do not appear
 Concerns about Context:
The context is narrow, too; there is a bias towards big , established , and mature
business; small firms in fragmented industries are ignored
 Concern about Process:
The message is not “to get out there and learn, but to stay home and calculate”;
“massaging the numbers” is what is expected
 Concerns about Strategies:
Positioning is seen as generic position, not unique position; copycatting and
“benchmarking” are important
“The dirty little secret of the strategy industry is that it doesn`t
have any theory of strategy creation” (Hamel 1997)

Agenda
66
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Entrepreneurial School
Strategy formation as a visionary process
67

“Leadership” as the core concept and as a link
to the design school
68
Design
School
Planning
School
Positioning
School
Entrepreneurial
School
3 Schools of Prescription
 Leader as the
“architect” of strategy
 Focus: conceptual
framework
 No cult around
leadership!
 Strategy formation as
a formal process
 Strategy formation as
an analytical
process
 Strategy formation as a visionary process
 Strategy as perspective
 Focus: leadership; mental states and
processes (intuition, judgment, wisdom,
experience, insight, obsession)
 Organization becomes responsive to the
dictates of an individual

Origins in economics:
Joseph Schumpeter`s “creative destruction”
69
 Entrepreneurship is the engine that keeps capitalism moving forward
 An entrepreneur is not an innovator, but a visionary, creative man of action, a
maker
 “What have [the entrepreneurs] done? They have not accumulated any kind of
goods, they have created no original means of production, but have employed
existing means of production differently, more appropriately, more
advantageously. They have “carried out new combinations.” … And their profit,
the surplus, to which no liability corresponds, is an entrepreneurial profit.”
(Schumpeter 1934, p. 132)
 Entrepreneurship is economic risk-taking and handling of uncertainty

Strategic thinking is more than “seeing ahead”
70

Reflections of an entrepreneur:
Richard Branson, founder of Virgin Group
71

Entrepreneurship and planning
72
 Interviews (1989) with the founders of 100 U.S.-companies:
 41 % had no business plan at all
 26 % had just a rudimentary, back-of-the-envelope type of plan
 5 % worked up financial projections for investors
 28 % wrote up a full-blown plan
 Conclusion: Many entrepreneurs don`t bother with well-formulated plans; their
companies are positioned in rapidly changing industries and niches, where the
ability to roll with the punches is much more important than careful planning

Characteristics of the approach
73
1. In the entrepreneurial mode, strategy making is dominated by the active search
for new opportunities; focus is on searching for opportunities, not on solving
problems
2. In the entrepreneurial organization, power is centralized in the hand of the chief
executive (e.g., founder-entrepreneur); authority is associated exclusively with an
individual; vision replaces formal planning
3. Strategy making in the entrepreneurial mode is characterized by dramatic leaps
forward in the face of uncertainty
4. Growth is the dominant goal of the entrepreneurial organization: “The
tremendous compulsion and obsession is not to make money, but to build an
empire.” (Fortune magazine 1956)

Premises of the entrepreneurial school (1/2)
74
1. Strategy exists in the mind of the leader as perspective, specially a sense of
long-term direction, a vision of the organization`s future.
2. The process of strategy formation is semiconscious at best, rooted in the
experience and intuition of the leader, whether he or she actually conceives the
strategy or adopts it from others and then internalizes it in his or her own behavior.
3. The leader promotes the vision single-mindedly, even obsessionally,
maintaining close personal control of the implementation in order to be able to
reformulate specific aspects as necessary.
4. The strategic vision is thus malleable, and so entrepreneurial strategy tends to
be deliberate and emergent – deliberate in overall vision and emergent in how the
details of the vision unfold.

Premises of the entrepreneurial school (2/2)
75
5. The organization is likewise malleable, a simple structure responsive to the
leader`s directives, whether an actual startup, a company owned by an individual,
or a turnaround in a large established organization many of whose procedures
and power relationships are suspended to allow the visionary leader considerable
latitude for maneuver.
6. Entrepreneurial strategy tends to take the form of niche, one or more pockets
of market position protected from the forces of outright competition.

Agenda
76
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Cognitive School
Strategy formation as a mental process
77

Cognitive School
“Human Cognition”: Explaining the minds of managers!
78
Design
School
Planning
School
Positioning
School
Entrepreneurial
School
4 “objective” schools of strategic thinking
 Strategy is some kind of “objective” motion
picture of the world
5 “subjective” schools of strategic thinking
Learning
School
Power
School
Cultural
School
Environmental
School
Configuration
School
Cognitive
School
 Strategy is some kind of “subjective” interpretation of the world

Cognitive School
The cognitive school has an “objective wing”,
and a more “subjective wing”
79
 The cognitive school is focused on understanding the complex and creative acts that
give rise to strategies
 The “objective wing” of the cognitive school is focused on the re-creation of the
world:
 “Cognition as confusion”: Cognitive biases and mental limitations of the strategists
 “Cognition as information processing”
 “Cognition as mapping”: How the mind maps the structures of knowledge
 The “subjective wing” of the cognitive school is focused on the creation of the world:
 “Cognition as concept attainment”
 “Cognition as construction”: Reality exists in our head

Cognitive School
Cognition as confusion: Biases in decision making
80
Search for
supportive
evidence
Inconsistency
Regression
effects
Availability Anchoring
Illusory
correlations
Selective
perception
Recency
Conservatism
Attribution of
success and
failure
Optimism,
wishful thinking
Underestimating
uncertainty
1 2
9
5 6 7 8
4
3
10 11 12

Cognitive School
An example for inefficiency in decision making:
“Groupthink”
81
Groupthink occurs when a group
makes faulty decisions because
group pressures lead to a
deterioration of “mental
efficiency, reality testing, and
moral judgment” (Irving Janis,
1972, p. 9).

Cognitive School
“Groupthink”: Symptoms of Groupthink
82
 Illusion of invulnerability
 Collective rationalization
 Belief in inherent morality
 Stereotyped views of out-groups
 Direct pressure on dissenters
 Self-censorship
 Illusion of unanimity
 Self-appointed ‘mindguards’

Cognitive School
Symptom of “Groupthink”:
Illusion of invulnerability (1/8)
83
Creates excessive optimism
that encourages taking
extreme risks.

Cognitive School
Collective rationalization (2/8)
84
Members discount warnings
and do not reconsider their
assumptions.

Cognitive School
Belief in inherent morality (3/8)
85
Members believe in the
rightness of their cause
and therefore ignore the
ethical or moral
consequences of their
decisions.

Cognitive School
Stereotyped views of out-groups (4/8)
86
Negative views of “enemy”
make effective responses to
conflict seem unnecessary

Cognitive School
Direct pressure on dissenters (5/8)
87
Members are under pressure
not to express arguments
against any of the group’s
views.

Cognitive School
Self-censorship (6/8)
88
Doubts and deviations from
the perceived group
consensus are not expressed

Cognitive School
Illusion of unanimity (7/8)
89
The majority view
and judgments
are assumed to
be unanimous.

Cognitive School
Self-appointed ‘mindguards’ (8/8)
90
Members protect the group
and the leader from
information that is
problematic or contradictory
to the group’s cohesiveness,
view, and/or decisions

Cognitive School
“Groupthink”: Remedies for Groupthink
91
 The leader should assign the role of critical evaluator to each member
 The leader should avoid stating preferences and expectations at the
outset
 Each member of the group should routinely discuss the groups'
deliberations with a trusted associate and report back to the group on
the associate's reactions
 One or more experts should be invited to each meeting on a staggered
basis and encouraged to challenge views of the members
 At least one member should be given the role of devil's advocate (to
question assumptions and plans)
 The leader should make sure that a sizeable block of time is set aside to
survey warning signals

Cognitive School
Cognition as information processing: Decision making
92

Cognitive School
Example for “Cognition as construction”:
3 competing conceptions of the environment
93
Objective Environment
Perceived Environment
Enacted Environment
 Environment has an external and independent
“objective” existence
 Environmental analysis means “discovery”, or
finding things that are already somewhere
waiting to be found
 Environment is existing “objectively”
 But: Strategists are permanently trapped by
bounded rationality
 The challenge is minimizing the gap between
perceptions and reality
 Separate “objective” environments do not exist
 The world is an ambiguous field of experience
 Strategists create imaginary lines between
events, objects, and situations so that they
become meaningful for the members of an
organizational world
1
2
3

Cognitive School
Premises of the cognitive school
94
1. Strategy formation is a cognitive process that takes place in the minds of the strategist.
2. Strategies thus emerge as perspectives – in the form of concepts, maps, schemas,
and frames – that shape how people deal with inputs from the environment.
3. These inputs (according to the “objective” wing of this school) flow through all sorts of
distorting filters before they are decoded by the cognitive maps, or else (according to
the “subjective” wing) are merely interpretations of a world that exists only in terms of
how it is perceived. The seen world, in other words, can be modeled, it can be framed,
and it can be constructed.
4. 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
viable.

Agenda
95
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Learning School
Strategy formation as an emergent process
96

Learning School
What is “learning”?
97
 The act, process, or experience of gaining knowledge or skill.
 Knowledge or skill gained through schooling or study.
 Psychology: Behavioral modification especially through experience or
conditioning.
 Organizational learning: The process through which organizations seek to
improve organization members’ capacity to understand and manage the
organization and its environments making decisions to continuously raise
organizational effectiveness.
 Behavioral learning: Learning takes place when people representing an
organization or the organization itself changes its (observable) behavior. It
does not imply necessarily that they have understood why they should
change their behavior and have changed their way of thinking (believes,
expectations, values, etc.).

Learning School
Organizational learning
98
 2 Types (March, 1991):
 Exploration: Organization members search for and experiment with
new kinds of organizational activities and procedures.
 Exploitation: Organization members learn ways to improve existing
organizational procedures.
 Model of Argyris/Schön (1978) :
Values, assumptions,
norms, strategies,
which are leading action
actions Identification of
problems (match or
mismatch)
Change of action
Change of values, assumptions, norms and
strategies
Single-loop-learning
Double-loop-learning
Deutero-learning
Theories-in-use
(governing variables)
(consequences)

Learning School
Emergence of the “learning model” in
strategic management
99
1 Disjointed
incrementalism
2 Logical
incrementalism
3 Strategic
venturing
1985
1980
1963
Lindblom
Quinn
Nelson/Winter:
Evolutionary theory
Pinchot
Bower
Burgelman
4 Emergent
strategy
Mintzberg
5 Retrospective
sense making
Weick
6 Learning by
mistakes (at Honda)
Pascale
Cohen et al.

Learning School
Disjoined incrementalism:
The science of muddling through
100
 Often called the “science of muddling through” (Charles Lindblom, 1959):
Successive limited comparison
 Decision makers select alternative courses of action only slightly, or
incrementally different from those used previously. By correcting errors of the
past, and by using a series of incremental decisions, participants reduce risk
and uncertainty, trying to ensure a positive outcome.
 Description of the way most decisions are made:
 A small and limited set of options are considered.
 Options are only marginally different from existing situation.
 Options are considered by comparing actual consequences.
 Try the option and then observe consequences.
 If consequences are fine, then a little more.
 If consequences are negative, then back off and try something different.
 Focus is on outcomes and trial and error.
1

Learning School
The “Garbage-Can Model”(Cohen/March/Olson ,1972) (1/3)
101
 Individuals and organizations sometime need ways of doing things for which
there are no good reasons.
 Not always, not even usually, but occasionally people need to act before they
think.
 The garbage-can model suggest that organizations can be viewed as collections
of choices (= garbage-can) looking for problems, issues and feelings looking
for decision situations in which they might be aired, solutions looking for
issues to which they might be an answer, and decision makers looking for
work.
 Loosely coupled organizations are most likely to use the garbage-can model
because they have:
 1. Problematic preferences – lots of ambiguity
 2. Unclear technology – no cause and effect relations
 3. Fluid participation – members pass through quickly
 The model is useful for understanding what appear to be “irrational “decisions.
1

102
 The model explains why:
 1. Solutions may be posed for problems that don’t exist.
 2. Why choices are made without solving problems.
 3. Why problems persist without being solved.
 4. Why so few problems are solved.
 Some decisions do not begin with a problem and end with a solution; such
decisions are the product of several streams of independent events.
 Four streams:
 Problems are points of dissatisfaction that need attention.
 Solutions are ideas proposed for adoption, but solutions exit independent
of the problems.
 Participants are members who come and go quickly.
 Choice opportunities are occasions when organizations are expected to
make decisions – hire, fire, budget, etc.
 There is a pattern of randomness such that sometimes by chance a solutions
finds a problem – they just connect.
Learning School
The “Garbage-Can Model”(Cohen/March/Olson, 1972) (2/3)

103
 Summary of distinctive features:
 Organizational objectives emerge
spontaneously; they are not set
beforehand.
 Means and ends exist independently;
chance connects them.
 A good decision happens when a
problem matches a solution.
 The decision relies on chance and
happenstance.
 Administrators scan existing
solutions, problems, participants, and
opportunities looking for matches.
Learning School
The “Garbage-Can Model”(Cohen/March/Olson, 1972) (3/3)
1
Problems
Solutions
Choice
opportunities
Participants

Learning School
Presciptions for “logical incrementalism” (Quinn,1982)
104
1. Lead the formal information system!
2. Build organizational awareness!
3. Build credibility change symbols!
4. Legitimize new view points!
5. Pursue tactical shifts and partial solutions!
6. Broaden political support!
7. Overcome opposition!
8. Consciously, structure flexibility!
9. Develop trial balloons and pockets of commitment!
10. Crystallize focus and formalize commitment!
11. Engage in continuous change!
12. Recognize strategy not as a linear process!
2

Learning School
Strategic venturing: Burgelman`s process model
of internal corporate venturing
105
3

Learning School
Emergent strategy:
Mintzberg`s concept of strategy formation
106
4

Learning School
Strategy processes by strategies
107
4

Learning School
Retrospective sense making:
Weick`s Social Psychology of Organizing (1969/1979)
108
 Sense making is „necessary for organizational members to understand and to
share understandings about such features of the Organization as what it is about,
what it does well and poorly, what the problems it faces are, and how it should
resolve Sensemaking as a process in which individuals develop cognitive maps of
their environment.” (Karl E. Weick)
 The goal to organizing is to make sense of equivocal information. When words
or events are equivocal, people do not need more information. What people need
is a filter to screen out interpretations that can turn out to be counterproductive.
 When information is handled by organizers they go through three stages called
enactment, selection, and retention.
 Enactment: “Don't just sit there! Do something! Act, then think!”
 Selection: Retrospective sense making; decide which information should be dealt
with and which information should be ignored.
 Retention: Treat memory as a pest; this allows organizations to avoid groupthink
and to inspire critical thinking.
5

Learning School
Learning by mistake(s) at Honda (1/2)
109
6

Learning School
Learning by mistake(s) at Honda (2/2)
110
6

LearningSchool
Premises of the learning school (1/2)
111
1. The complex and unpredictable nature of the organization`s environment, often
coupled with the diffusion of knowledge bases necessary for strategy, precludes
deliberate control; strategy making must above all take the form of a process of
learning over time, in which, at the limit, formulation and implementation
become indistinguishable.
2. While the leader must learn too, and sometimes can be the main learner, more
commonly it is the collective system that learns: there are many potential
strategists in most organizations.
3. This learning proceeds in emergent fashion, through behavior that stimulates
thinking retrospectively, so that sense can be made of action.

LearningSchool
Premises of the learning school (2/2)
112
4. The role of leadership thus becomes not to preconceive deliberate strategies, but
to manage the process of strategic learning, whereby novel strategies can
emerge.
5. Accordingly, strategies appear first as patterns out of the past, only, perhaps, as
plans for the future, and ultimately, as perspectives to guide overall behavior.

LearningSchool
New directions for strategic learning:
the knowledge spiral (Nonaka/Takeuchi)
113

Learning School
New directions for strategic learning: the dynamics of
organizational capabilities (Prahalad/Hamel)
114
 Prahalad/Hamel (1990/1994): learning depends on capabilities!
 Concept of “core competency”: “A firm achieves strategic fit through the effective
use and efficient accumulation of its invisible assets, such as technological know-
how or customer loyalty”.
 Core competencies are the consequences of the “collective learning of the
organization, especially how to coordinate diverse production skills and integrate
multiple streams of technology”.
 Concept of “strategic intent”: This is an ambition combined with an active
management process that includes: focusing the organization`s attention on the
essence of winning; motivating people; leaving room for individual and team
contributions; sustaining enthusiasm; and using intent to guide resource
allocations.
 Concept of “stretch and leverage”: a “stretch” is a misfit between resources and
aspirations; what is needed is a realistic stretch! But stretch is not enough: firms
need to learn how to leverage a limited resource base (by concentrating,
accumulating, complementing, conserving, and recovering resources!)

Agenda
115
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Power School
Strategy formation as a process of negotiation
116

Power School
Two branches of the school:
Micro power and macro power!
117
 “Power”: describes the exercise of influence beyond the purely economic
 “Micro power”: play of politics inside an organization (specifically within the
processes of strategic management)
 “Political games” in organizations
 “World of organizational politics”: coalitions, enduring differences,
allocation of scarce resources (e.g., budgets), conflicts, bargaining,
negotiation, …
 “Sequential attention to goals” (Cyert/March 1963)
 “Macro power”: concerns the use of power by the organization
 “External Control of Organizations” (Pfeffer/Salancik 1978); Stakeholder
Approach (Freeman 1984)
 Strategic Maneuvering
 Cooperative strategy making: Networks, collective strategy, joint
ventures, alliances

Power School
Example for “Micro power”:
A Behavioral Theory of the Firm (Cyert/March, 1963)
118
 Four research commitments:
1. Focus on a small number of key economic decisions made by the firm
2. Develop process-oriented models of the firm
3. Link models of the firm as closely as possible to empirical observations
4. Develop theory with generality beyond the specific firms studies.
 Organizations are viewed as consisting of a number of coalitions and the role
of management is to achieve a quasi-resolution of conflict and uncertainty
avoidance.
 Problem solving is assumed to be motivated, simple-minded, and biased.
 Attention is the chief bottleneck in organizational activity, and the bottleneck
becomes narrower and narrower as we move to the tops of the organizations.
Therefore, managers give sequential attention to goals.

Power School
Example for “Macro power”:
The Stakeholder approach (1/2)
119
Corporation
Suppliers Customers
Employees
Corporation
Shareholders
Suppliers Customers
Enviromental
groups
Local
communities
Creditors
Government
Suppliers Customers
Employees
Corporation
Shareholders
The stakeholder view of the firm
The managerial
view of the firm
The production view of the firm
1
2
3

Power School
Example for “Macro power”:
Stakeholder approach (2/2)
 “Stake”: an interest or a share in an undertaking (i.e. legal right, moral right,
ownership)
 “Stakeholder”: a group or an individual, that has either a material or immaterial
stake in the corporation (R. Freeman, 1984)
 Classification: generic groups of stakeholders vs. specific groups of stakeholders
 Division: internal vs. external stakeholders; primary vs. secondary stakeholders
 Core questions when applying the stakeholder model:
 Who are our stakeholders?
 What are their stakes?
 What opportunities and challenges are presented to our firm?
 What responsibilities does our firm have to all its stakeholders?
 What strategies or actions should our firm take to best deal with stakeholder
challenges and opportunities?

Power School
Premises of the power school
121
1. Strategy formation is shaped by power and politics, whether as a process inside
the organization or as the behavior of the organization itself in its external
environment.
2. The strategies that may result from such a process tend to be emergent, and
take the form of positions and ploys more than perspectives.
3. Micro power sees strategy making as the interplay, through persuasion,
bargaining, and sometimes direct confrontation, in the form of political games,
among parochial interests and shifting coalitions, with none dominant for any
significant period of time.
4. Macro power sees the organization as promoting its own welfare by controlling or
cooperating with other organizations, through the use of strategic maneuvering
as well as collective strategies in various kinds of networks and alliances.

Agenda
122
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Cultural School
Strategy formation as a collective process
123

Cultural School
Premises of the cultural school (1/2)
124
1. Strategy formation is a process of social interaction, based on the beliefs and
understandings shared by the members of an organization.
2. An individual acquires these beliefs through a process of acculturation, or
socialization, which is largely tacit and nonverbal, although sometimes reinforced
by more formal indoctrination.
3. The members of an organization can, therefore, only describe the beliefs that
underpin their culture, while the origins and explanations may remain obscure.

Cultural School
Premises of the cultural school (2/2)
125
4. As a result, strategy takes the form of perspective above all, more than positions,
rooted in collective intentions (not necessarily explicated) and reflected in the
patterns by which the deeply embedded resources, or capabilities, of the
organizations are protected and used for competitive advantage. Strategy is
therefore best described as deliberate (even if not fully conscious).
5. Culture and especially ideology do not encourage strategic change so much as
the perpetuation of existing strategy; at best, they tend to promote shifts in
position within the organization`s overall strategic perspective.

Cultural School
What is “corporate culture”?
126
 Set of key behaviors, beliefs and
shared understandings that are shared
by members of the organization.
 Defines basic organizational values
and communicates to new members
the correct way to think and act.
 Everyone participates in culture, but
culture generally goes unnoticed.
 It is only when organizations attempt
to implement new strategies or
programs that go against cultural
norms and values that they come
face-to-face with culture.
 Each company has a distinct culture.

Cultural School
Levels and purpose of culture
127
 Culture exists at two levels:
(1) At the surface are visible artifacts and observable behaviors – dress,
actions, symbols, stories, and ceremonies that are shared.
(2) Visible elements reflect deeper values such as underlying assumptions,
beliefs, and thought processes or “true culture.”
 Purpose and critical functions of culture:
(1) Integrate members so they know how to relate to one another (Members
develop a collective identity and relationships to work together effectively;
culture guides day-to-day working relationships and communication).
(2) Help the firm adapt to the external environment

Cultural School
The iceberg: analogy for culture
128

Cultural School
Interpreting culture
129
 To interpret organizational culture requires making inferences based on
observable artifacts.
 Typical observable artifacts are:
(1) Rites and ceremonies: Elaborate planned events conducted for the
benefit of an audience; used to reinforce specific values or create a bond
among people; four types of rites and ceremonies: rites of passage, rites of
enhancement, rites of renewal, rites of integration
(2) Stories: Narratives based on true events that are shared among
organizational employees and told to new employees to inform them about
an organization; stories keep alive the primary values of the organization;
commonly include company heroes or historic legends
(3) Symbols: Physical artifacts use to focus attention on a specific item
(4) Language: Includes slogans and metaphors

Cultural School
Cultural change
130
 Just one strategic change is impossible because any strategic change must be
accompanied by accommodations from other strategic elements inside and
outside the corporation
 General consensus regarding corporate culture:
(1) Organizations should have strong cultures.
(2) A firm’s culture must fit its environment.
(3) Culture must contain values supporting continuous change in order to adjust
to new environmental conditions.
 Critical issue is to identify the appropriate culture for different types of
business-level strategies: A strategy should be congruent with an organizations
most important values, practices and beliefs (culture).
 Three value dimensions are central to the conceptualization and assessment
of organizational effectiveness. Also illustrate tensions and paradoxes.
(1) Control versus flexibility
(2) Internal versus external focus
(3) Means versus ends process

Cultural School
Four models of organizations
131
Flexibility
Control
Internal External
Open Systems Model:
Rational Goal Model:
Human Relations Model:
Internal Process Model:
- Creativity
- Inventiveness
- Growth
- Competiveness
- Task focus
- Goal clarity
- Efficiency
- Performance
- Centralization
- Routinization, formalization
- Stability, continuity, order
- Predictable performance
outcomes
- Teamwork
- Participation
- Supportiveness
Matching Strategy:
- Defender
- Prospector
- Analyzer
Goals: HRM Development, Morale
Cultural Values: (Consensual)
Goals: Growth, Resource Acquisition
Cultural Values: (Developmental)
Matching Strategy:
- Prospector
Goals: Stability and Control
Cultural Values: (Hierarchical)
Matching Strategy:
- Defender
Goals: Efficiency, Productivity
Cultural Values: (Rational)
Matching Strategy:
- Analyzer

Cultural School
Four strategy types to manage strategic change (1/2)
132
(1) Prospector:
 First mover looking for opportunities
 External focus, monitor environment
 Dominant coalition blends management, marketing & R&D
 Flexibility and external focus – Open Systems Model
(2) Defender
 Narrow product-market domain
 Attempt to seal off the market to create a stable set of customers, ignore
developments outside this segment (internal focus)
 Tight controls to ensure efficiency (control)
 Dominant coalition tends to be production and finance experts
 Control and internal focus – Internal Process Model

Cultural School
Four strategy types to manage strategic change (2/2)
133
(3) Analyzer:
 Compromise between defender and prospector
 Simultaneously locate and exploit new markets and opportunities while
maintaining product base and customers.
 Centralized control system to deal with stable and dynamic aspects (control).
 Dominant coalition tends to be marketing, production & R&D (moderate
external orientation).
 Flexibility and external focus – Rational Goal Model
(4) Human Relations Model problem:
 None of the strategy categories fit.
 Adept at implementing strategies. Compatible with and complementary to all
three strategies.

Cultural School
Resource-based theory:
Assets, resources, capabilities, competencies?
134
 An asset is anything the firm owns or controls.
 Loosely, “Asset” is to Accounting as “Resource” is to Management.
 Types of assets:
 Physical: plant equipment, location, access to raw materials
 Human: training, experience, judgment, decision-making skills, intelligence,
relationships, knowledge
 Organizational: Culture, formal reporting structures, control systems, coordinating
systems, informal relationships
 A capability is usually considered a “bundle” of assets or resources to perform a business
process (which is composed of individual activities)
 All firms have capabilities. However, a firm will usually focus on certain capabilities
consistent with its strategy; for example, a firm pursuing a differentiation strategy would
focus on new product development. A firm focusing on a low cost strategy would focus on
improving manufacturing process efficiency.
 The firm’s most important capabilities are called competencies.

Cultural School
Resource-based theory:
Competencies vs. core competencies vs. distinctive competencies
135
 A competency is an internal capability that a company performs better than
other internal capabilities.
 A core competency is a well-performed internal capability that is central,
not peripheral, to a company’s strategy, competitiveness, and profitability.
 A distinctive competence is a competitively valuable capability that a
company performs better than its rivals.

Cultural School
Resource-based theory of the firm: six steps to success
136
(1) Identify the firm’s resources – strengths and weaknesses compared with
competitors
 Resources: inputs into a firm’s production process
(2) Determine the firm’s capabilities – what it can do better than its
competitors
 Capability: capacity of an integrated set of resources to integratively perform a task or
activity
(3) Determine how firm’s resources and capabilities may create competitive
advantage.
 Competitive advantage: Ability of a firm to outperform its rivals
(4) Locate an attractive industry.
 Attractive industry: Location of an industry with opportunities that can be exploited by the
firm’s resources and capabilities
(5) Select strategy that best exploits resources and capabilities relative to
opportunities in environs.
 Strategy Formulation and Implementation: Strategic actions taken to earn above-average
returns
(6) Maintain selected strategy in order to outperform industry rivals.
 Superior Returns: Earning of above-average returns

Cultural School
Resources and capabilities lead to competitive
advantage: four criteria (Barney, 1991)
137
(1) Valuability: allow the firm to exploit opportunities or neutralize threats in its
external environment
(2) Rarity: possessed by few, if any, current and potential competitors
(3) Inimitability (costly to imitate): when other firms either cannot obtain them or
must obtain them at a much higher cost
(4) Non-Substitutability: the firm must be organized appropriately to obtain the full
benefits of the resources in order to realize a competitive advantage
-> Effectiveness competition: Relative Resource-Produced Value
Competitive
Disadvantage
Parity
Position
Competitive
Advantage
Lower Parity Superior

Cultural School
Economic performance
138
Valuable
?
Rare?
Costly to
Imitate?
Exploited by
the
Organization?
Competitive
Implications
Economic
Performance
No -- -- --
Competitive
Disadvantage
Below Normal
Yes No -- --
Competitive
Parity
Normal
Yes Yes No --
Temporary
Competitive
Advantage
Above Normal
Yes Yes Yes Yes
Sustained
Competitive
Advantage
Above Normal

Cultural School
Competitive Position Matrix
139
1
Indeterminate
Position
2
Competitive
Advantage
3
Competitive
Advantage
6
Competitive
Advantage
5
Parity
Position
4
Competitive
Disadvantage
Lower Parity Superior
Relative Resource-Produced Value
Lower
Parity
Higher
9
Indeterminate
Position
8
Competitive
Disadvantage
7
Competitive
Disadvantage
Relative
Resource
Costs

Agenda
140
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Environmental School
Strategy formation as a reactive process
141

Premises of the environmental school
142
1. The environment, presenting itself to the organization as a set of general forces,
is the central actor in the strategy-making process.
2. The organization must respond to these forces, or else be “selected out.”
3. Leadership thus becomes a passive element for purposes of reading the
environment and ensuring proper adaption by the organization.
4. 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 Contingency Approach: the environment
determines the differences in organizations
143
 A research effort to determine which managerial practices and techniques are
appropriate in specific situations. Different situations require different managerial
responses (“it all depends” = situational approach).
 Contingency characteristics:
 Open-system perspective: how subsystems combine to interact with outside
systems.
 Practical research orientation: translating research findings into tools and
situational refinements for more effective management.
 Multivariate approach: many variables collectively account for variations in
performance.
 Lessons from the Contingency Approach
 Approach emphasizes situational appropriateness rather than rigid
adherence to universal principles.
 Approach creates the impression that an organization is captive to its
environment.
 Approach has been criticized for creating the impression that an organization
is a captive of its environment.

The Contingency Approach: dimensions of the
environment that influence organizations
144
 Motto: “There is no one universally applicable set of management principles (rules)
by which to manage organizations.”
 Organizations are individually different, face different situations (contingency
variables), and require different ways of managing.
 Contingency variables (situational factors): variables that moderate the relationship
between two or more other variables and improve the correlation
 Four main groups of contingency variables:
 (1) Stability of the environment: range from stable to dynamic
 (2) Complexity of the environment: range from simple to complex
 (3) Market diversity: range from integrated to diversified
 (4) Hostility of the environment: range from munificent to hostile
Contingency
Variables
x y

The Population Ecology View (Hannan/Freeman ,1977)
145
 Population ecology is the study of dynamic changes within a given set of
organizations. Using the population as their level of analysis, population ecologists
statistically examine the birth and mortality of organizations and organizational forms
within the population over long periods.
 Hannan & Freeman believe that long-term change in the diversity of organizational
forms within a population occurs through selection rather than adaptation. Most
organizations have structural inertia that hinders adaptation when the environment
changes. Those organizations that become incompatible with the environment are
eventually replaced through competition with new organizations better suited to
external demands .
 Analysis in population ecology has three levels:
 explaining birth and death rates within a population
 explaining vital-rate interaction between populations
 examining "communities of populations" sharing similar environments
 Optimized change often depends on the "coupling" between intent (= adaption) and
outcome (= selection). By the way, the authors believe the selection process
(Darwinian view) is stronger than organization's ability to quickly adapt.

Role of organizational change in population change
146
(1) Organizational Adaption (2) Selection / Replacement
Time 1 Time 2 Time 1 Time 2

Elements in the Population Ecology Model of
Organizations
147
Variation Selection Retention
Large number of
variations appear in
the population of
organizations
Some organizations
find a niche and
survive
Surviving
organizations
prosper and become
institutionalized in the
environment

Population Ecology Model: two sets of strategies
148
 Population ecologists have identified two sets of strategies that organizations can
use to gain access to resources and increase their chances of survival:
 r-strategy (= early entry into environment) versus K-strategy (= late entry into
environment) *
 specialist strategy (= operating in one niche) versus generalist strategy (=
operating in several niches)
r–Strategy
K–Strategy
Specialist Strategy
r–Specialist r-Generalist
K–Specialist K-Generalist
Generalist Strategy
* The terms, r and K, are
derived from standard ecological
algebra, where r is the growth
rate of the population (N), and K
is the carrying capacity of its
local environmental setting.

Institutional theory of organizations:
pressures to conform
149
 Institutional theory studies how organizations can grow and survive in a competitive
environment by satisfying stakeholders
 Institutional theory argues that to increase chances of survival, organizations adopt
many of the rules and codes of conduct found in the institutional environment
 The institutional environment is defined as the set of values and norms in an
environment that govern the behavior of organizations.
 Because organizations are conforming to a common institutional environment, the
result is something referred to as organizational isomorphism
 Organizational isomorphism is a term for the similarity among organizations in a
population. Isomorphism leads to stability and legitimacy.
 Institutional theory identifies three processes that explain why organizations become
similar over time:
 Coercive isomorphism: organizations are forced to behave in an involuntary
manner
 Mimetic isomorphism: to adopt another organization's structure by imitating
 Normative isomorphism: a "logic of appropriateness" guides structuring

Strategic responses to institutional processes
150
Giving in fully to
institutional pressures
Only partially acceding
to such pressures
Attempting to preclude the
necessity of conformity
Actively resisting
institutional pressures
Attempting to modify or
alter the pressures

Agenda
151
 Design School
 Planning School
 Learning School
 Power School
 Cultural School

Configuration School
Strategy formation as a process of transformation
152

Premises of the configuration school (1/2)
153
1. Most of the time, an organization can be described in terms of some kind of stable
configuration of its characteristics: for a distinguishable period of time, it adopts a
particular form of structure matched to a particular type of context which causes it to
engage in particular behaviors that give to a particular set of strategies.
2. These periods of stability are interrupted occasionally by some process of
transformation – a quantum leap to another configuration.
3. These successive states of configuration and periods of transformation may order
themselves over time into patterned sequences, for example describing life cycles of
organizations.
4. The key to strategic management, therefore, is to sustain stability or at least adaptable
strategic change most of the time, but periodically to recognize the need for transformation
and be able to manage that disruptive process without destroying the organization.

Premises of the configuration school (2/2)
154
5. Accordingly, the process of strategy making can be one of conceptual designing
or formal planning, systematic analyzing or leadership visioning,
cooperative learning or competitive politicking, focusing on individual
cognition, collective socialization, or simple response to the forces of the
environment; but each must be found at its own time and its own context. In other
words, the schools of thought on strategy formation themselves represent
particular configurations.
6. The resulting strategies take the form of plans or patterns, positions or
perspectives, or else ploy, but again, each for its own time and matched to its
own situation.

Configurations of structure and power (Mintzberg, 1989)
155
 Mintzberg’s Five Basic Elements
(1) Operating Core: Employees who perform
the basic work related to an organization’s
product or service.
(2) Strategic Apex: Top-level executives
responsible for running an entire
organization.
(3) Middle Line: Managers who transfer
information between higher and lower levels
of the organizational hierarchy.
(4) Technostructure: Organizational
specialists responsible for standardizing
various aspects of an organization’s
activities.
(5) Support Staff: Individuals who provide
indirect support services to an organization.

Mintzberg’s structural configurations (1/5)
156
 Simple Structure
 Machine Bureaucracy
 Professional Bureaucracy
 Divisionalized Form
 Adhocracy
An organization characterized as being small and informal, with a
single powerful individual, often the founding entrepreneur, who
is in charge of everything.

157
 Adhocracy
An organizational form in which work is highly specialized,
decision making is concentrated at the top, and the work
environment is not prone to change (e.g., a government office).

158
 Adhocracy
Organizations (e.g., hospitals and universities) in which there are
lots of rules to follow, but employees are highly skilled and free to
make decisions on their own.

159
 Adhocracy
The form used by many large organizations, in which separate
autonomous units are created to deal with entire product lines,
freeing top management to focus on large-scale, strategic
decisions.

160
 Adhocracy
A highly informal, organic organization in which specialists work in
teams, coordinating with each other on various projects (e.g., many
software development companies).

From lifecycle to “ecocycle”
161
 The “ecocycle “-concept is used in biology and depicted as an infinity loop
 Being an infinity cycle, there is no obvious start or end to the cycle

The organizational ecocycle
162

Map of change methods
163

Transformational leadership
164
 Definitions:
“A leadership style focused on effecting revolutionary change in organizations through
a commitment to the organization’s vision” (Sullivan & Decker, 2001)
“Transformational leaders have the ability to clearly articulate a vision of the future…
They are the myth-makers, the storytellers. They capture our imagination with the
vivid descriptions of the wonderful future we will build together” (Trofino, 1992)
 A “three-act drama” (Mintzberg et al., 1998, p. 333):
(1) Awakening
(2) Envisioning
(3) Reachitecturing

Transactional leadership vs. transformational leadership
165
Transactional Leadership
 Leaders are aware of the link between the
effort and reward
 Leadership is responsive and its basic
orientation is dealing with present issues
 Leaders rely on standard forms of
inducement, reward, punishment and
sanction to control followers
 Leaders motivate followers by setting
goals and promising rewards for desired
performance
 Leadership depends on the leader’s power
to reinforce subordinates for their
successful completion of the bargain
Transformational Leadership
 Leaders arouse emotions in their followers which
motivates them to act beyond the framework of
what may be described as exchange relations
 Leadership is proactive and forms new
expectations in followers
 Leaders are distinguished by their capacity to
inspire and provide individualized consideration,
intellectual stimulation and idealized influence to
their followers
 Leaders create learning opportunities for their
followers and stimulate followers to solve problems
 Leaders possess good visioning, rhetorical and
management skills, to develop strong emotional
bonds with followers
 Leaders motivate followers to work for goals that
go beyond self-interest

Process for reengineering mature organizations
166

Summary
Evolution of the ten schools (1/2)
167

Summary
Evolution of the ten schools (2/2)
168

Summary
Two dimensions of strategy formation :
controllability of environment and internal processes
169

Summary
Interrelations between the ten schools
170

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