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Strategy safari: The complete guide through the wilds of strategic management

Book cover

by Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel, Prentice Hall, 1998.

A copy of this book can be ordered online via the Ashridge e-bookshop.

Abstract

Mintzberg and his colleagues review ten approaches to strategy - the design, planning and positioning schools of strategy purport to describe how strategy ought to be formulated. The remaining schools describe the reality. All have a place, but intended strategies tend not to be realised fully in practice. Rather they emerge as action takes place.

(Reviewed by Edgar Wille in February 2004)

(These book reviews offer a commentary on some aspects of the contribution the authors are making to management thinking. Neither Ashridge nor the reviewers necessarily agree with the authors’ views and the authors of the books are not responsible for any errors that may have crept in.

We aim to give enough information to enable readers to decide whether a book fits their particular concerns and, if so, to buy it. There is no substitute for reading the whole book and our reviews are no replacement for this. They can give only a broad indication of the value of a book and inevitably miss much of its richness and depth of argument. Nevertheless, we aim to open a window on to some of the benefits awaiting readers of management literature.)

The scope of the book

The authors of this book are on safari in a jungle called "approaches to strategy". It considers ten perspectives or schools of managing strategy each of which focuses on a different aspect of the strategy formation process.

The book begins with the fable about six blind men defining an elephant. Depending on what part of the beast they touched, individually they decided it was a wall, a spear, a tree, a snake, a fan or a rope. Loud disputes followed, but "though each was partly in the right, all were in the wrong". This is a warning from the start not to treat each "school" in isolation from the rest.

The design, planning and positioning schools are prescriptive, in the sense that they purport to describe how strategies ought to be formulated. The remaining six are illustrations which describe how strategies do, in fact, get made.

Intended strategies rarely get fully realised in practice. Usually it's somewhere in between. Perfect foresight is not possible, so whatever the preferred strategy, there has to be some adaptation en route. Deliberate strategies are modified by emerging factors. A whole strategy grows as action proceeds. This emergent strategy is a key theme in this book.

The ten schools are categories used by the authors. Categories have no necessary existence in their own right; they are simply buckets into which people pour ideas or things which to some extent belong together, distinct from others. Or they are labels which are affixed to areas with common factors. There is therefore an element of artificiality in selecting ten labels for the schools and this is recognised in the introductory chapter of the book. The ten schools don’t actually exist, but to treat them as if they did helps us to think about various approaches, so that comparison and contrast are easier, as are applications to our own situation.

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The design school

This school seeks to secure a fit between the external possibilities and internal capabilities of an organisation. Its strategy rests very considerably on SWOT analyses - strengths and weaknesses internally; threats and opportunities externally. The external situation is described on the basis of the familiar PEST analysis: political, economic, social and technological factors. Alternative strategies are then evaluated on the basis of consistency, response to the external environment, competitive advantage in the selected area and practical feasibility.

Seven basic premises underlie the work of the design school:

  1. Strategy formation should be a deliberate process of conscious thought; action must flow from reason.
  2. The work is centralised in the Chief Executive. Major decisions are left to top management which imposes them on the organisation and monitors progress by elaborate planning, budget and control systems. Those in subordinate roles are not part of the strategy formation process.
  3. As it is to be comprehended by one mind, the model of strategy formation must be kept simple and informal, to assist clear judgment.
  4. Distinctive competences, tailored to specific situations, should be developed on the basis of strategy.
  5. The strategy appears as a grand overall concept of the business, as a perspective, at a point in time, fully formulated and ready for implementation.
  6. Strategies should be explicit (and therefore bring simplicity to complex situations).
  7. Only when full blown, unique, explicit, simple strategies are fully formulated can they then be implemented.

Throughout thinking is kept separate from doing. Thought precedes action and is not, as strategy, part of the action. This separation of the thinkers from the doers, leaves little scope for emergent strategy.

The value of listing strengths and weaknesses, apart from specific contexts, is doubted by the authors. Every strategic change involves a step into the unknown and you cannot be sure that an established strength will remain so in a new situation. Strengths often turn out to be weaker in practice and weaknesses broader.

Chandler’s view that "structure follows strategy", implicit in this school, is also queried. There is always a past structure which has to be reckoned with. You can’t just wipe the slate clean.

Making an explicit strategy known to everyone, so that it can be followed, is important to the design school, but our authors believe that this may pre-empt necessary adaptation in the course of implementation. Peripheral vision can be valuable, but it gets excluded by the blinkers of excessive focus in advance of beginning action.

The separation of thinking from acting is encouraged by the case study method of business education. Students are drilled in selecting and ordering of data, to produce strategy ready for others to implement. This second hand education produces managers ill prepared to learn and grow as they gain experience. They sit in their offices surrounded by paper, absorb information that has become distorted on the way up, and formulate, so that others can implement. The disconnected thinking of a top manager or senior consultant can impede real world acting. Let them get out of the office and meet customers, or go into the factory and see how things really are.

It is this disconnection that causes the authors to doubt the theme of Ted Levitt in "Marketing Myopia", where he said that the railways were really in the business of transportation and should have been thinking about moving into air travel. But with what competences, how connected with their current skills?

It is admitted that there are times of crisis when thought has to precede action, but most situations, including major environmental ones, require strategy to develop as thought and action respond to each other. Thinking and action need to proceed in tandem.

Nevertheless the design school is recognised to be of value, when the one brain of the leader can hold all the essential information, having full knowledge of the issue and where the situation is reasonably stable. And the will must be there to accept the centrally conceived strategy and implement it.

It is suggested that the design school best applies at the junction of a major overhaul with entering a more stable period, or in a new organisation which needs a sense of direction to compete with its more established rivals. The concept of fit between external opportunity and internal capability makes a contribution to many of the other schools of thought.

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The planning school

The word "formality" is the key to this school. The basic idea is to take a SWOT analysis, divide it into neatly delineated steps, articulate each of these with lots of checklists and techniques, give special attention to the setting of objectives on the front end, and the elaboration of budgets, and operating plans at the back end. Add plenty of diagrams to show the flow.

Objectives are the quantification of the goals of the organisation. They do not include the values of the enterprise, as these are difficult to quantify.

While there are "laundry lists" for internal factors, the external environment is closely predicted and prepared for. Every conceivable factor is covered and a number of possible scenarios explored in detail, so that if one of them is appropriate, then an immediate switch to a course of action can be made. It’s all been preplanned. Scenario planning has had success, for example in Shell, but it needs a large number of possibilities to be considered and is a great drain on time. It does, however, help a shared understanding of the world in which operation is taking place.

Alternative strategies are compared on the basis of detailed analyses, relating to return on investment calculation, competitive strategy valuation, risk analysis and shareholder value considerations. All these are essentially financial analyses. Value creation is concerned with market-to-book value of the firm and the cost of equity capital. It is assumed that firms make money principally by managing money.

The operational stage is also set out in extreme detail, so that it can be tightly controlled, just when there is need for openness to adaptation as circumstances vary. All strategies have to be broken down into sub strategies to enable implementation to take place and there is a hierarchy of plans, corporate, business and functional. All has to be scheduled with a timetable for everything. Number crunching is essential in this highly formal school, which is almost mechanically programmed.

Jack Welch commented that "the books got thicker, the printing got more sophisticated, the covers got harder and the drawings got better...". He got rid of the system in GE in 1980.

The chief executive is in theory in charge of strategy in the planning school, but in fact is very much in the hands of the planners who determine what shall be counted and calculated and how the results shall be interpreted.

The methods of the planning school tend towards inflexibility and are not popular with the managers who have to spend so much time filling in forms and then justifying actuals against plan.

Planning staff run the strategy formation process, tending to cut out other managers, who become disinterested. The process dominates life in the organisation because of the amount of information gathering involved. The non involvement of the executors of the strategies guarantees minimal results. Planning tends to focus on exciting issues like mergers, to the detriment of core business development. The processes tend to lead to acceptance of the first feasible strategy, rather than a real choice among alternatives. Planning tends to concentrate on the external environment and pay scant attention to internal cultural and organisational issues. Companies tend to rely on single point forecasting; they put all their eggs in one basket, so that a slight variation from expectations can throw the whole into disarray.

Another problem with long planning processes is that ideally the world should be placed on hold while the work is undertaken. Particularly it would be helpful if competitors would wait for the date the plans are completed, before taking steps which would invalidate them.

The authors point out that the planning school relies very much on hard data, whereas much information is obtained from the soft area: the messy world of random noise, gossip, inference, impression, looks on a customer’s face, tones of voice, moods in the factory. All this has to be reduced to firm data, hardened and aggregated in a way which loses essential nuances, especially of a non economic or non quantitative type, which facilitate decision making. "It is fine to see forests, so long as nothing is going on among the trees." Requirement for a plethora of data by a certain date loses much value, the time for data to harden into useability is often skipped and the really important information often arrives too late to be taken into account. The process of quantification often loses the power of original data, yet it is accepted as rational, unbiased and as Holy Writ. The authors add "hard data may inform the intellect, but it is largely soft data that builds wisdom."

The authors consider that effective strategists are not people who remove themselves from daily detail, but who immerse themselves in it, and abstract the strategic messages from it. Thus acting is connected to doing."We think in order to act, to be sure, but we also act in order to think. We try things, and the ones that work gradually converge into patterns that become strategies." This approach is not the normal thrust of the planning school.

Strategic planning is seen as a substitute for intuition, not as a support to it. Innovation does not lend itself to institutionalisation. Flesh and blood human beings are better at it. They can internalise, comprehend and synthesise information, but efforts to force such a loose process into a tight sequence can kill it. Thinking and action have to go beyond categorising information in boxes. People have to think and act outside the box.

Some grudging role is found for planners toward the end of the chapter. They can act as analysts, by providing data inputs at the front end, particularly the ones managers are prone to overlook.

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The positioning school

This school has emphasised the importance of the actual content of the strategies, not just the processes. Building on the work of the first two schools, this one adds substance. The role of Michael Porter in developing it is given considerable recognition, beginning with his book in 1980: Competitive Strategy. It rapidly became the dominant school in the field.

The planning and design schools put no limit on the number of strategies possible in any given situation. In contrast, the positioning school argues that only a few key strategies - as positions in the economic marketplace - are desirable in any given industry; ones that can be defended against existing and future competitors. From this follow higher profits and a reservoir of resources, with which to expand. The basic generic strategies are product differentiation and focused market scope.

The approach is deliberate and conscious, but focuses on the selection of general strategic positions, rather than on the specification of coordinated sets of plans, as in the planning school. Market structures drive deliberate strategies that drive organisational structure.

The chapter harnesses tools well known to any MBA student or anyone attending executive courses. There is the Boston Consulting Group’s (BCG) Growth -Share model, where a company is successful if it has a portfolio of products with different growth rates and different market shares. The plotting of these two factors gives us: "Question Marks", who may become "Stars" ( which require investment to develop); "Cash Cows" (maximising returns from high market share even though further growth has slowed); and "Dogs" (who are on the way out and should be got rid of). Some of each, except dogs, provides a basis for a balanced portfolio.

The BCG also emphasises the experience curve with the cost advantage of scale. Market leadership becomes an obsession. PIMS (Profit Impact of Market Strategies) identifies a few strategy variables, such as investment intensity, market position and product quality and uses them to estimate return on investment, market share and profits. The authors question whether high market share necessarily brings profit; or high profit brings market share. Serving customers well may bring both. "Market share is a reward, not a strategy." Also busy, thrusting firms may be unable to define which markets they are operating in, so that market share can be meaningless.

Nevertheless Porter came up with his famous Five Forces model which looks at an industry environment and engages in a competitive analysis of the players. The idea is simple. The factors are the comparative strength of buyers and suppliers; the ease with which the industry can be newly entered; the possibility of substitutes; the fierceness of rivalry. Strategy stems from appropriate responses to these factors in a chosen industry market.

On generic choices Porter maintains that if you try to compete on cost leadership as well as on product differentiation or focused variations of the same two factors, you get stuck in the middle and are successful in neither. This is nowadays much disputed. Why not both?

Another item in the Porter toolbox is the concept of the value chain. A company’s primary activities are gathering resources, using them, shipping out the resultant products, marketing and selling, and service. These are supported by the firm’s infrastructure and as appropriate by human resource management, technology development and procurement. How this value chain is managed, so that it adds value to the whole, is crucial.

The dynamics of business development are also considered by this school, such as position in product or company life cycle.

This school is also faulted for separating thought from action. Analysts work on the comparisons required to identify where the company should be seeking to be in the market. The outcome of this is handed up to the senior management and after their approval down to the implementers.

The comment is made that the tools of this positioning school are directed towards traditional big business, where market power in strongest and competition least effective, and political manipulation most pronounced.

The approach is oriented to the economic and especially the quantifiable, as opposed to the political and the social, or even the non quantifiable economic. It is also dependent upon vast quantities of data. Thorough study is recommended by this school, yet to get the benefits requires quick action. There is also a bias towards study of external conditions at the expense of internal capabilities. Insufficient recognition is given to the fact that business units in the same industry may vary widely in their performance, even after they have used all the BCG, PIMS and Porter analyses.

Gary Hamel is quoted as saying: "Opportunities for innovation don’t emerge from sterile analysis and number crunching - they emerge from novel experiences that can create opportunities for novel insights." Honda broke into the American market, when the BCG model would have pronounced it a dog. Their success came from learning surprising things while on the job, certainly not by analysis. The same is true of 3M's "Post-its" being a ubiquitous example.

The authors welcome Porter’s railing against the benchmarking, herding and imitating, so common in today’s corporations. They also point out that no company comes to these positioning models de novo and they do not start with a clean sheet on which to write totally new things. The school is also weak in not sufficiently encouraging strategists to get out into the tangible world of products and customers.

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The entrepreneurial school

This is the first of what our authors call the descriptive schools in distinction from the prescriptive ones, which tell us what we ought to do.

The entrepreneurial school encourages the softer, more personalised and idiosyncratic elements. It focuses strategy formation on the single leader, stressing innate mental states and processes - intuition, judgment, wisdom, experience. Strategy is viewed as perspective, sense of direction, vision. But it is very much the construct of the leader.

The central concept is VISION, a mental representation of strategy, created in the head of the leader. "The vision serves as both an inspiration and a sense of what needs to be done - a guiding idea if you like." It tends to be an image, rather than a fully articulated plan. It is flexible, to be adapted according to the leader’s experience. This school is deliberate in broad sense of direction, emergent, in that broad lines can be adapted en route. Vision is something you see in your mind’s eye. 42% return on investment would not count as vision, which beckons with the spiritual and emotional power of good drama.

This school reflects the way in which capitalism developed, dealing with uncharted situations, creating and destroying structures. It regards strategic thinking as seeing from every angle, from above, from below, from behind, from beside, to beyond, and then seeing it through.

Entrepreneurs don’t necessarily invent or accumulate goods. They employ existing means of production differently; they create new combinations. An entrepreneur can be the founder of a business, the manager of a self owned business, or the innovative leader of an organisation owned by others. A need for achievement drives them all.

An administrator asks: "What resources do I have?, What opportunity is appropriate? How can I minimise the impact of others on my ability to perform?" The entrepreneur tends to ask: "Where is the opportunity? How do I capitalise on it? What resources do I need? How do I gain control over them? What structure is best?" The latter questions are more of the "go for it" type. The entrepreneur is constantly attuned to changes in the environment that may offer a favourable chance, while the administrator wants to preserve resources and reacts defensively to possible threats to deplete them.

New opportunities dominate the entrepreneur, rather than just solving problems. This school is characterised by dramatic leaps forward in the face of uncertainty; growth is the overriding goal. Examples are given of entrepreneurs who grew to big things from small beginnings, but who knew thoroughly the business they grew, and passed on their knowledge. Entrepreneurial leaders are obsessional, malleable, not dominated by rules and procedures and tend to operate most in niche areas, away from the full blast of major competition.

The weakness of the school is that it depends very much on the leader and if he or she goes, the next leader may not be able to sustain what has been started. The leader can be too enmeshed in detail or too much in the clouds with the vision to give attention to the practicalities.

The suggestion of Collins and Porras in Built to Last to build visionary organisations is noted. Better to be a clockbuilder, than one who just intuitively always knows the time. The clock goes on when the time knower has gone. There can also be the temptation to substitute charisma for substance.

Start up and turnaround can be ideal situations for the entrepreneurial leader. And in many small businesses there is ample opportunity for the entrepreneurial school to be seen in successful operation.

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The cognitive school

I found it difficult to get my mind round what was distinctive about this "school". The authors recognise that it is not so much a tight school of thought as a loose collection of research, which seems to be growing into a school. The cognitive school is less deterministic than the positioning school and more personalised than the planning school .Objectively it sees the mind as taking a kind of motion picture of the world. Subjectively it is more of an interpretation and re-creation of the world.

This school does not subscribe to the view that the more information we have the better our decisions. In fact much information is redundant and provides little additional value. Bias enters extensively into the selection of information, due to one’s own background and experience, to underestimating uncertainty or just to plain wishful thinking.

In this approach there is a tendency to see things because they are believed. Doing can influence what is seen. This is not all bad or biased; it is a move in the direction of the emergent or learning strategy approaches. The Myers Briggs categorisation of personality type is relevant to understanding how people perceive things and think about them, and indeed you can find personality types which fit more comfortably with one school than another.

Cognition seeks to make information mentally manageable and therefore can drive out significant nuances. It also draws considerably on memory, whether individual or organisational, and the prescriptive schools might feel that memory is no substitute for their more formalised and analytical approaches.

The cognitive school has diversities within it, but all are based on the existence of mental structures or frames with which to structure knowledge, both prior to action or as it comes to hand during the action process. This means that explicit agreement does not precede all action. It may just stem from the frame in which discussion takes place, with no formal decision.

The school is based on cognitive psychology and how the mind maps the structures of knowledge. Mental maps are useful for getting the action going, even if the map is imperfect, like the mountaineers who were saved on the Alps by using a map which turned out subsequently to have been a map of the Pyrenees. Encouragement was given and action stimulated.

Mental maps which draw upon memory of experience, without living in the past, can express relationships, such as between supply, demand, price and timing. Mental mapping draws on factors deeply rooted in the subconscious - visual perception, parallel processing, synthesis, intuition.

Much crucial knowledge may be "tacit", where we know more than we can tell. Much of the iceberg lies below the surface. Intuition and judgment, according to Herbert Simon, can be "analyses frozen into habit, enabling instant response". On the other hand Edwin Land, inventor of Polaroid cameras, spoke of competencies which come welling up. You are handling so many variables barely consciously that you can’t afford to be interrupted. The source of such insights is mysterious, but their presence is not. They often lead to the synthesis of vast arrays of soft information into new perspectives.

The constructionist or interpretative view of cognition considers that what is inside the human mind is not a reproduction of the external world, but, rather, the mind imposes some interpretation upon the environment - it constructs the world. This may also happen in groups of minds working together, negatively as in "groupthink" or positively as in the growth of cellular phones.

This view throws doubt on the way in which SWOT and PEST analyses are often treated as representations of reality instead of as interpretations. The environment is not just there waiting to be discovered; it is also seen through the spectacles of perception or as the labelling of particular experience. Threats and opportunities, for example, are not objective realities, but possibilities perceived in the mind by forging a relation between internal and external factors, which change what is being seen.

The constructionists say that companies should not just adapt to their environments; if everyone does this the opportunities vanish. They should look to themselves for explanations of their situations in relation to the environment. They should ask: What is important to us? Who are we? What do we do?. And they must be ready to unlearn.

It is the first of the five schools so far covered, that recognises that there is an interesting environment out there, which can enable them to construct their world in their collective heads and then enact it - make it happen.

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The learning school

The sixth school is based on the view that strategists learn over time. Individually and collectively, they learn about situations, as well as about their organisations’ capability for dealing with them. Charles Lindholm (1959) was an early protagonist of this school with a provocative article: The science of muddling through.

It sees formulation and implementation of strategy as not rigorously separated, and many elements not consciously formulated at all. The design, planning and positioning schools are seen as not corresponding to what actually happens in organisations, where thinking is not in fact disassociated from action.

"Strategies (can) be traced back to a variety of little actions and decisions made by all sorts of different people, sometimes accidentally or serendipitously, with no thought of their strategic consequences." "Policy making is typically a never-ending process of successive steps in which continual nibbling is a substitute for a good bite" (Lindholm 1968)

James Brian Quinn blended the prescription of the design school with the learning approach, in what he called "logical incrementalism", where the expression of diverse viewpoints is deliberately encouraged and challenging of ideas is encouraged; there is inbuilt flexibility and change is continuous; strategy aims to "capture the initiative, to deal with unknowable events, to redeploy and concentrate resources as new opportunities and thrusts emerge".

Internal entrepreneurs, largely among front line workers and middle managers, are encouraged by the concept called "intrapreneurship", with internal champions arising to ensure emerging ideas are taken seriously, and that appropriate resources can be made available.

Emergent strategy emphasises learning - coming to understand through the taking of actions what the managerial intentions should have been in the first place. The control of the deliberate schools gives way to adaptation to meet new understandings. Real learning takes place at the interface of thought and action, as actors reflect on what they have done - much along the lines of the Kolb learning cycle (experience - reflected on - conceptualised - tested in new conditions - and so on).

Patterns emerge and sometimes initially unwanted weeds become cultivated plants. "Reality emerges from a constant interpreting and updating of our past experience." This school depends on the interplay between thought and action, and not their separation; learning through mistakes is included. The Honda story is seen as a good example of the learning school, their American marketing success emerging almost out of accidental and incidental peripheral activities. It was riding around on small motor cycles to get from one place to the next, that aroused interest which grew from the small to the large motor cycle and ultimately to automobiles.

With more deliberate strategies the idea of a market in America would have been rejected, though more conventional strategists suggest that trying out probable non-starters is something for which hard pressed managers lack the time and the money.

The reply to this view is that it might be true of purely random experiments, but not to exposing oneself to the chance to be surprised by the marketplace and so to learn. Anyway how can nonstarters be identified in advance? One author claims that the conventional approaches offered by hordes of consultants was really "a disaster of academic business thinking which finally crucified a British Industry (the motor cycle industry) which was respected throughout the world".

In the learning school "the role of leadership becomes not to preconceive deliberate strategies, but to manage the process of strategic learning, whereby novel strategies can emerge". Strategies appear first as patterns out of the past, only later, perhaps, as plans for the future, and ultimately, as perspectives to guide overall behaviour.

This chapter concludes with a review of recent approaches to organisational learning, all concerned with the creation of a climate where collective learning will take place and lead to innovative activity across a whole organisation.

The concept of double loop learning is taken from Chris Argyris. Single loop learning asks how can we put something right; double loop asks why it is wrong and tackles that root problem, (the difference between a thermostat which keeps temperature at say 68 degrees and an imaginary one which asks why 68? then finds the most economic temperature and resets accordingly).

Recently knowledge creation has become a key concern, where people throughout the organisation are acquiring knowledge, much of it tacit. The aim is to find ways of making this explicit, and sharing it across the organisation in usable form, which then enables people to make it part of their own internalised tacit knowledge.

Then there is the wide literature on the learning organisation. This recognises that throughout the enterprise people (even junior ones) may have learnt key things which more senior and knowledgeable managers may have missed. It is a major part of the latters’ strategic activity to gather what others have learnt by doing and apply it for the benefit of the organisation. This depends on an open communications style, the antithesis of the old bureaucratic organisation.

Then there is the Hamel and Prahalad emphasis on a company’s success being based on its core competences, deeply rooted capabilities which lie behind the products and services which mark out an organisation. Strategy is about reconfiguring and reapplying what it does best and then diversifying into new markets. A business can then be looked at as a portfolio of resources and capabilities which can be combined in various ways, not as collections of products or as business divisions. From this arises a strategic intent, which defines the general direction of the business, highlights emerging market opportunities and provides a rallying cry for employees.

Learning companies tend to be rule breakers who change the basis of competition in their industries. IKEA, Body Shop, Dell and Swatch are mentioned. One could add Easy Jet, Ryanair, Wal*Mart, and McDonalds as well as Amazon and eBay. Such companies are less concerned to define what industry they are in, as required in the positioning school. They redefine industries by what they do.

The authors recognise that it is possible for the learning school to go to extremes and become anarchic. An enterprise may become a bewildering collection of people hurtling in all directions, without any clear purpose. This is a caricature of the learning organisation. The existence of a clear strategic intent should not be decried. Strategies do not emerge only in the heat of battle. There may be crisis situations when there is not time to wait for patient learning (or for complex planning come to that). A thousand flowers blooming may lack coherence, but coherence that doesn’t recognise that "the times they are a changing" may be in no better position. One should not change everything all the time, but learn what to change when, to balance change with continuity.

It is also true that people have to get on with their regular jobs efficiently. There is a time to learn and a time to exploit previous learning. Learning can also be expensive in time and resources and must avoid bouncing about all over the place, never settling to concentrate on achieving something definite. Of course that is where leadership comes in, to encourage and guide, without drying up the fountain of enterprise.

The learning process can be messy, but if a company recognises something good when it emerges, it may become a winner, while highly scheduled approaches get left behind. But everything is situational.

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The power school

This school, which does not always admit its existence, is one which overtly uses the process of influence, emphasising power and politics to negotiate strategies favourable to particular interests. Power is exercised beyond the sphere of the purely economic. Power plays can be within the organisation, often for personal advantage, or in the wider environment, using conflict or cooperation for the self interest of the organisation.

For good or ill, power and politics are always at work in any organisation and whether they are a principal tool or not, no organisation will succeed which does not sensibly maintain awareness of them.

We need not describe them uniformly in pejorative terms. Wherever there is any form of ambiguity - environmental uncertainty, competing goals, different perceptions, resource scarcity - politics arise and there will be bargaining and compromise among conflicting individuals, groups and coalitions.

All talk of strategy schools comes to nothing if an organisation is a seething mass of actors, all with hidden agendas, pursuing their own personal interests. The job of the CEO then becomes the strategic one of somehow bringing some harmony and agreement out of strife and disorder. This is particularly difficult when the disunity is cloaked under an appearance of shared interests.

A useful list of power games within an organisation is offered in one of the boxes in the book. They include finding sponsors, insurgency and counter insurgency, whistle blowing, alliance building, empire building, flaunting or feigning expertise, lording authority, line versus staff and rival camps. The list gives examples familiar in one’s experience, and makes one wonder how enterprises of any school ever manage to have any strategy.

Is the power school a "school". Perhaps it is the way things are, to some extent, in all schools, who have to take them into account in seeking a coherent strategy. No one should think they can ignore political games, but neither should they perceive power and politics as the essence of strategy.

Because this book is a serious attempt to set out alternative ways of strategy formulation and implementation, perhaps it is good that this school is highlighted. If it leads to Darwinian survival of the fittest, this can be beneficial for some firms. But also politics, engaged in constructively, can ensure that all perspectives are debated, preventing only one point of view being considered.

Politics may be irritating, but another box suggests ways of using politics to get strategies accepted. It is worth noting that a successful outcome is more important than imposing a method of achieving it. Learn to accept something which is not optimal, but satisfactory and accepted, rather than hotly opposed. Concentrate on the higher issue matters; don’t try to win everything.

Then there are also proposals on how general management can develop coalitions and how to oppose other coalitions. It can seem to belong to an unpleasant world, far removed from the serious attempts of the other schools to achieve success for the business.

Reality has to be faced, and Porter, even in developing the positioning school, has a number of asides in the power and politics area, such as about jockeying for position and manoeuvring situations. His piece on strategic manoeuvring represents the less acceptable face of capitalism. His language is of brute force approaches, threatening competitors, retaliation.

Understanding stakeholders is a necessary part of strategic thinking and can be regarded as political, though it surely is essential to being in business. Mergers and acquisitions are in their very nature political, but business considerations should prevail? Shareholder value can be a very political issue. Some leaders have seen it as so central and so political that they have ended up in prison.

The word "power" as meaning influence and "politics" as getting agreement and sensible compromise are surely active parts of the work of any strategic school. To seek "coopetition", rather than cut throat competition, is surely a worthy political or business goal. But even then it is difficult to see why the authors have included the power school as one of their ten. Their reasons are:

  1. Strategy formation is shaped by power and politics, whether as a process inside the organisation or as the behaviour of the organisation 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 rather than perspectives.
  3. Micro power sees strategy 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 organisation as promoting its own welfare by controlling or cooperating with other organisations, through the use of strategic manoeuvering as well as collective strategies in various kinds of networks and alliances.

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The cultural school

Culture is the way an organisation does things, from profound values to superficial matters of dress. In many ways it may even be subconscious, but it has a major influence on strategy formation. Again I wonder whether it is a strategy school on its own, but rather an existential axiom for all, as follows:

  1. Strategy formation is a process of social interaction, based on the beliefs and understandings shared by the members of an organisation.
  2. An individual acquires these beliefs through a process of acculturation, or socialisation, which is largely tacit and non verbal, though sometimes reinforced by more formal indoctrination.
  3. The members of an organisation can, therefore, only partially describe the beliefs that underpin their culture, while the origins and explanations may remain obscure.
  4. As a result strategy takes, above all, the form of perspective, 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 organisation 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 organisations’s overall strategic perspective.

Culture affects strategy formation rather than determines it. It affects how the environment is viewed. It influences what is considered acceptable behaviour in the competitive world. It filters information used in the strategy formation process. It tends to resist change and affects how strategy is developed and particularly how it is presented. It can restrict vision and prevent innovation and experimentation. It may create difficulties in merger and acquisition strategies, because two cultures may be drastically different.

Culture is a key factor in mobilising resources and capabilities to make a particular strategy feasible. Capabilities rooted in the culture are easier to call upon than capabilities which have to be developed by a learning process. The intangible elements in strategy are affected by considerations of culture.

On the positive side culture may be fundamental to providing that something which makes for a successful strategy. Another company lacking that element may not be able to bring the strategy to birth. Some cultures are key features in making it difficult or impossible for other organisations to imitate them. Branding and company wide belief in a brand can be a powerful influence.

The authors tend to recognise that this school and others cannot be seen as discrete bundles of strategic workings. They close this chapter by saying that they "prefer to have the various chapters of this book seen, not just as a portfolio of possible approaches to managing strategy, but also as different dimensions of a single process".

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The environmental school

This chapter offers another dimension for managing the strategy process, whatever strategic approach predominates.

Those who could be said to belong to this "school" see the environment as the prime factor to which they must react. It sees the ability of managers to make strategic choices as limited by the forces and demands of the external world. The environment takes command and even CEOs are subordinated to it.

  1. The environment, presenting itself to the organisation as a set of general forces, is the central actor in the strategy making process.
  2. The organisation 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 the proper adaptation by the organisation.
  4. Organisations end up clustering together in distinct ecological type niches, positions where they remain until resources become scarce or conditions too hostile. Then they die.

For this "school" there is no one best way. Everything depends on the situation out there. It is contingent. Even though this perspective may be taken too far, yet all the "schools" must have room for this insight, though some will seek to change the demands of the environment itself by innovation. How is it that two organisations can operate in a similar environmental situation, yet one succeeds and the other fails? The authors deny that any organisation faces an environment which is indelibly munificent, hostile, complex or dynamic. There will be periodic pockets of these things in one market or another. But fine grained probes will find opportunity.

Perhaps some organisations think they are pawns in some larger order, thus abdicating from strategy formation, particularly in the mature and declining stage of a company life cycle. Of course, the company may wake up and do something to arrest decline..

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The configuration school

This chapter is about a "school" which is not a school, because it embraces all the others. It offers a way to integrate the messages of the other schools.

  1. Most of the time, an organisation has a stable configuration of its characteristics. It adopts a form of structure, matching a context in which it takes particular actions which give rise to particular strategies.
  2. These periods of stability are interrupted occasionally by a 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 such as organisational life cycles.
  4. The key to strategic management, therefore, is to sustain stability, or at least adaptable strategic change most of the time, but periodically to recognise the need for transformation, and be able to manage that disruptive process without destroying the organisation.
  5. Thus the process of strategy making can be one of conceptual designing or formal planning, systematic analysing or leadership visioning, cooperative learning or competitive politicking, focusing on individual cognition, collective socialisation, or simple response to the forces of the environment; but each must be found at its own time and in its own context. In other words the various schools of strategic formation each represent particular configurations.
  6. The resulting strategies take the form of plans or patterns, or else ploys, but each for its own time, matched to its own situation.

Organisations in reality put together certain attributes from these strategic "schools" in ways which complement each other, so that one would be unlikely to speak of a planning or positioning organisation, even if those schools of strategic thinking prevailed in them.

The mingling of several strategic perspectives at different times and in different situations led Mintzberg to write two earlier books, categorising organisations in terms of their structures and their power relationships.These elaborated organisations were characterised as entrepreneurial, machine, professional, adhocracy, diversified, political and missionary. This earlier writing contributed to the thinking of Strategy Safari.

Examples are given of the various stages referred to in points 1 to 6 above; development, stability, adaptation, struggle, revolution, underlining that different strategies are called for at different times in a company’s life. And it isn’t revolution all the time. "Punctuated equilibrium" is one phrase used to describe this see saw of organisational life. (The authors us the word "transformation" for "revolution". It could be argued that even incremental development can still be "transformation").

The combining of strategic schools of thought is illustrated by the fact that the cognitive school tells us how strategists think, the entrepreneurial school how they leap, and the cultural school how they land. The configuration school suggests the sequence.

Various ways of categorising organisations are related by the authors to the strategic configurations. For example Miles and Snow classified corporate behaviours in four broad categories. The defender is concerned with stability in a limited market and is there to keep out competitors. The prospector actively seeks out new product and market opportunities, the key being to maintain flexibility. The analyser is the balanced maximiser of profit opportunity while minimising risk. The reactor reacts to the environment with resultant instability. Each of these uses several of the strategic approaches.

Change is a continual factor in all these strategic discussions. The authors are of the view that change cannot be managed: "It can be ignored, resisted, responded to, capitalised upon and created. But it can’t be managed and made to march to some orderly step by step process". One could consider what the various strategic schools would say to that.

The book spends some space reviewing the issue of change and the need to balance change with continuity. Discussion is offered as to whether managers should just create the conditions for change and then let it happen. Or should they try to build a scheduled plan to figure out where and when to intervene? Should they just grab something and change it, as Tom Peters suggests? Should they find ways to integrate the best of the new with the most useful of the old? Should they look to a bottom up approach to change or should it be top down?

In their critique of the configuration school this chapter recognises that many of the popular categorisations of organisational life are over simplifications. Organisations come in many shades of grey and not just black and white. Ideal types provide a vocabulary for discussion and this has value. Nevertheless each configuration has problems particularly on the change issue. Quantum change in organisations is less frequent by far to some commentators than steady incremental change. Others see revolution impending or arriving everywhere.

The treatment of this school is somewhat inconclusive, like the school, if it exists. It is said at the end of the chapter to bring order to the messy world of strategy formation. "Selecting the right degree of configuration is a complex balancing act. Managers must avoid the blandness or chaos of too little configuration, while skirting the obsessionality of too much. Excellent wines have complexity and nuance, blending together different tastes into a harmonious balance." (Miller 1996)

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Concluding chapter

In the very last chapter there are six pages of charts to summarise the whole book. They really make sense only if you have read the book, but then they are a good aide memoire.

The last page tells us: "Strategy formation is judgmental designing, intuitive visioning and emergent learning; it is about transformation as well as perpetuation; it must involve individual cognition and social interaction, cooperation as well as conflict; it has to include analysing before and programming after as well as negotiating during; and all of this must be in response to what can be a demanding environment. Just try to leave any of this out and see what happens." This is a warning against being seduced by the school which favours continuous revolution.

We have been shown all these schools and their unique approaches, only to be told that we need them all - in the appropriate time, context and combination. There is still benefit in looking at them separately, before trying to put elements of them together as situations demand. The authors probably think that emergent strategy will ultimately choose the combination for us.

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