Understanding Strategic Development

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.

• 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.

• 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.

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

Strategy Development Routes

Emergent Strategy

Realized Strategy

Unrealized Strategy

Intended Strategy

A Strategic Planning CyclePlanning guidelines, Forecasts, scenarios,

assumptions,Strategy targets and

directives

Draft business plans Discussion with corporate Revised business plans

Corporate planAnnual Capital and Operating Budgets

Approval by Board

Annual Performance targetsPerformance appraisal

ADVANTAGESIdentifies risksForces managers to thinkForces decision makingFormal targets enable controlEnforces organizational coherence and coordination

DISADVANTAGESNot proven to bring advantageMay become over formal and reduce initiativeAssumes internal politics do not existAssumes managers know everythingDivorces planning from doingCannot cope with shocks and discontinuities

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.

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.

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

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

Strategic Development in environmental contexts

Historical Analysis

Forecasting

Scenario planning

Experience and learning

Decentralization of

organizations

Environmental Conditions Simple Complex

Static

Dynamic