1. Views of Strategy Development
• Strategy is about the long term direction of
an organization.
• It is typically thought of in terms of major
decisions about the future.
• However it is a mistake to conceive of
organizational strategy as necessarily
developing through one-off major
changes.
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2. →This understanding brings us to focus on
different views of strategy development
→As a strategic thinker how do we perceive
this development?
• The strategic development of
organizations is better described and
understood in terms of:– Continuity
– momentum
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3. • Once an organization has adopted a
particular strategy, it tends to develop from
and within that strategy
− Rather than fundamentally changing
direction
− In other words in strategic development
drastic change is not desirable
• Historical studies of organizations have
shown that there are usually long periods
of relative continuity
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4. – At this point strategy remains unchanged
or changed incrementally
• There are also periods of flux in which
strategies change but in not very clear
direction.
• Transformational change in which there is
fundamental change in strategic direction
does take place but is infrequent.
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5. Patterns of Strategy
Development
Continuity
Incremental
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Flux
Transformational
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6. This pattern of behaviour in strategy development
in organizations has become known as
punctuated equilibrium
•It is the tendency of strategies to develop
incrementally with periodic transformational
Change
–A specific strategic move perhaps a product
launch
– Significant investment decision
– Strategic alliance
– Acquisition
Etc…
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7. Establishes a strategic direction which,
itself guides decisions on the next
strategic move
–This in itself , helps consolidate the
strategic direction, and overtime the
overall strategic approach of the
organization becomes more
established and clear
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8. Strategic evolution and
consolidation
Product Launch
Acquisition
Divestment
Overseas Expansion
Evolving
Strategies evolve and
Strategic
Inform Strategic
decisions, Which in turn
consolidate strategic
direction
Direction
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9. • Gradual change in strategy makes a lot of
sense
– No organization could function effectively
if it were to undergo major revisions of
strategy frequently
– It is unlikely that the environment would
change so rapidly that this would be
necessary.
– Incremental change might therefore be
seen as an adaptive process to a
continually changing environment. What is
referred to as strategic fit.
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10. • Environmental change may not always be
gradual enough for incremental change to
keep pace.
– If such incremental strategic change lags
behind environmental change , the
organization may get out of line with its
environment and, in time, need more
fundamental, or transformational, change.
• The transformational change tends to
occur at times when performance has
declined sufficiently.
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11. →Strategists should be responsive to the
environment than being reactive
– They should be innovative
– See the best opportunities
– Manage the threats
– Monitor the rapid changes and align their
organizations to take advantage of the
available opportunities
– Strategies should be proactive
– Create new markets and transform the
strategic direction
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12. Intended and realized views
• Intended Strategy
– It is an expression of desired strategic
direction deliberately formulated or
planned by managers
– The implementation is also planned In
terms of resource allocation, structure,
policy, procedures etc……
– Strategy in this sense is deliberate,
systematic planned process of
development and implementation
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13. • Realised strategy is the strategy actually
being followed in practice
→Sometimes what is intended is not achieved
and ends up in totally a different strategic
objective being realized.
• Strategy could also be imposed on an
organization
• It could be imposed by an external agency such
as government, world bank, IMF, donors
(development partners) as has occurred in the
deregulation of industries in many countries; or
by a parent company on a subsidiary.
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14. – It could be that environmental
conditions severely limit the choices that
managers can make or the strategies
they can follow.
→For example , the cutting of costs may
be forced by recession or conditions in
a commodity market
– And may mean that there is little
opportunity to follow strategies
substantially different from those of other
businesses in that market.
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15. • If strategy is regarded as the long-term direction
of the organization which develops over time,
then it can also be seen as the outcome of
cultural and Political processes.
– The management of organizations depends a
great deal on the knowledge and experience of
those involved.
– This experience and ways of doing things are
built up over the years.
– In organizations, managers typically reconcile
different views, based on experience, through
negotiation or the exercise of power; and this
occurs within established ways of doing things,
or routines; that make up the culture of the
organization
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16. • Strategy development
routes
5
Strategy
as outcome
(of cultural
and
political processes)
Imposed
Strategy
3
4
1
Intended
Strategy
Realised
Strategy
Planned Implementation
2
Unrealized
Strategy
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17. Rational Analytical or Planning view
• This is a sequence of analytical and
evaluative procedures to formulate and
intended strategy and the means of
implementing.
→Includes
– Setting objectives and goals
– Analysis of the environment and the resources of
the organization
– So as to match environmental opportunities and
threats
– With resource-based strengths and weaknesses
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18. Includes cont…
• The generation of strategic options and
their evaluation.
• And the planning of implementation
through resource allocation processes,
the structuring of the organization
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19. Benefits of this view
• It can provide a structured means of analysis and
thinking about complex strategic problems requiring
managers to question and challenge what they take
for granted
• It can be used as a way of involving people in
strategy development, therefore helping to create
ownership of the strategy.
• Strategic planning may also help to communicate
intended strategy
• It can also be used as a means of control by
regular reviewing performance and progress
against agreed objective or previously agreed
strategic direction
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20. • It can be a useful means of co-ordination,
for example by bringing together the
various SBU strategies within an overall
corporate strategy, or ensuring that
resources within a business are
coordinated to put strategy into effect
• It can encourage a longer –term view of
strategy than might otherwise occur.
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21. Power behavioral view
or
Command view
This is a strategy which develops through the
direction of an individual or group, but not
necessarily through formal planning.
–At the extreme, strategy could be seen as the
product of an autocratic leader who brooks
no argument and sees other managers as
there to implement his or her decisions
–A common example is where a dominant
leader has become personally associated
with strategy development of the organization
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22. – It could also be that the leader turned
round the business in times of difficulty
and as such personifies the success of the
organization.
– Charismatic leaders are also often seen
as central to the strategy of their
organization
– Their personality or reputation may be
seen as a positive force which may be
used to influence strategic direction
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23. The logical incremental
view
•It is the deliberate development of strategy by
learning through doing
•Managers have a view of where they want the
organization to be in years to come and try to move
towards this position in an evolutionary way.
•They do this by attempting to ensure the success
and development of a strong, secure, but flexible
core business.
•Building on the experience gained in that business to
inform decisions about the development of the
business.
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24. Amount of change
• Since change will be gradual , the possibility of creating
and developing a commitment to change throughout the
organization is increased.
• It is a process through which the organization keeps
itself in line with changes in the environment.
Environmental Change
Incremental Strategic Change
Time
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