How to Reconcile the Strategy Dilemma? There Is No Conflict between Strategic Planning and Emergent Strategy Making, When Strategy Is Conceived as a Dynamic Formation Process. Both Strategy Approaches Are Important in the Increasingly Turbulent Business Environment, and Organisations That Integrate the Two Outperform Their Peers
Andersen, Torben Juul, European Business Forum
The fact that we continue to ask ourselves whether strategy matters points to a somewhat bifocal mindset in the strategic management field. We continue to emphasise rational strategic analysis in business education, executive training, and corporate consulting, because it is a practical tool for one-shot diagnostics, and it is do able in a classroom setting. Yet, we are not convinced about the universal value of the recipe. So, at the same time we allude to the importance of unplanned emergent actions, although the analysis of emergent strategy making and the underlying learning processes remains rather anecdotal. In truth, there has been limited research conducted to uncover how ex ante planning and emergent decision making processes interact. Rather, we seem to focus continuously on the two strategy-making processes in either-or terms, and that is unfortunate. Instead, we should devote more energy to understand how to integrate the two strategy approaches, because that is the matter of the fact (see figures 1 and 2).
Strategy as an either-or choice
The choice of strategy-making approach has been muddled by contradicting rationales that at times have left professional advice almost up in the air. Some would convincingly argue for the importance of planning activities as a way to create new strategic direction (e.g. Ansoff, 1988; Lorange and Vancil, 1995), while others would argue with equal vigour that unplanned emergent strategy making is more effective while pointing to detrimental effects of strategic planning (e.g. Mintzberg, 1994; Bartlett and Ghoshal, 1998). As noted in the Winter 2001/2002 edition of EBF by Andrew Campbell, there have been occasional and heated debates between proponents of strategic planning and advocates of an emergent organisational learning approach to strategy making. Nonetheless, there is a growing realisation that strategy is influenced in various ways, and that the diversity of approaches may be beneficial (Hart, 1992; Hart and Banbury, 1994). But, the two sides of the planning-emergence spectrum are still perceived as dichotomous strategy approaches located at opposite ends of the strategy-making scale, which underscores the bifocal strategy view.
Some argue that the choice of strategy approach should depend on the characteristics of the environment in which the organisation operates. This presents executives with an either-or choice based on conditions in their specific industry. According to this view, strategic planning would be appropriate in relatively stable and predictable industries, where scale economies can be achieved through standardisation and formalised processes. Strategic planning should have the inverse effect in turbulent and rapidly changing industries, as elaborate planning of strategic moves becomes a straightjacket for new responsive actions (e.g. Mintzberg, 1978, 1994). In turn, and adaptive-learning approach that encourages lower-level managers to take actions in response to observed industry developments arguably allows the organisation to adapt more effectively to environmental change. So, is that the end of the story? No, it is not, because we are dealing with a false dichotomy. We are not really faced with an either-or choice. Both strategy approaches can coexist and reinforce each other.
[FIGURE 1 OMITTED]
What is strategy really?
To appreciate the coexistence of different strategy approaches, it is worth reconsidering what strategy really is. Our interpretation of the often highly complex strategy-making process is important. Should we perceive it as a rigorous analytical process instigated by the top management team to determine where and how the company should position itself in a competitive market context? Is it a thinking process involving managers across different functional areas in strategic discussions? Or, is strategy the product of haphazard actions taken by middle managers within the organisation that eventually turn out to be of significant strategic importance? …