Implementing strategic change: A completely different and separate function to strategic thinking and formulation?

Essay on Strategic Management


Essay, 2007

14 Pages, Grade: 72/100 credits


Excerpt

In recent years, change for virtually all business organisations accelerated to a never be­fore recorded level (Srinivasan and Balasubramanian, 2003). Accordingly, there has been broad consensus that increasing environmental uncertainty and instability have an impact on strategic change decisions (Shimizu and Hitt, 2004; Bruch et al., 2005). The nature of strategy and its associated issues have been addressed by numerous writers and some of the most renowned management theorists, including Mintzberg (1987), Hamel (1996), Porter (2005), Hamel and Prahalad (2005), and Kaplan and Norton (2006). However, despite a plethora of literature on strategic management issues, the actual implementation of strategic change often shapes up as an arduous process in organisational reality: practice-oriented writers such as Raps (2004) and Farias and Johnson (2000, cited in Bruch et al., 2005) describe discouraging low success rates - only 10 to 30 per cent of all strategic change initiatives are successful, ac­cording to Raps (2004).

Thus, it would seem reasonable to critically evaluate strategic thinking, formulation, and their interrelationship with implementing strategic change in contemporary business organisa­tions. While the term 'strategy' still lacks a common, universally accepted definition (Mintzberg, 1998a, cited in Price and Newson, 2003), de Wit and Meyer (1998, cited in Price and Newson, 2003) distinguish three dimensions of strategy: strategy process, strategy con­tent, and strategy context. Within the limitations of this paper, the emphasis is placed on the process dimension of strategy, a school of thought dealing with managerial involvement in terms of strategic change (Walsh, 2005).

At first glance, hitherto existing literature delivers differentiated results: on the one hand, strategic management is seen as a rather practical subject by O'Shannassy (2003) and Segal- Horn (2004). Citing the work of Rumelt et al. (1993, n. p.), she argues that “strategic man­agement as a field of enquiry is firmly grounded in practice and exists because of the import­ance of its subject ”. Conversely, Parnell (2002) views strategic management as an applied field grounded in theory; yet agreeing on the notion that strategy should indeed aim to influ­ence practice. Finally, Herrmann (2005) points out that theoretically developed concepts and methods were in many cases not straightforwardly adopted by the business world, suggesting the need for higher integration with managerial practices and a closer connection with organ­isational reality. In order to provide a better understanding of the contrasting attitudes within strategic management, it is helpful to further explore its development, underlying assump­tions, and important theoretical frameworks, in particular in terms of their impact on strategic thinking, formulation, and implementing strategic change.

In the 1960s, strategic management was dominated by what has become known as the strategic planning school. It is based on foundations laid by Chandler, Ansoff, and Andrews, and focuses on a rational process of analysis (Segal-Horn, 2004). In the work of Ansoff (1965) and Chandler (1962, both cited in Stiles, 2001), strategy is interpreted as a result of formal planning, initiated by an organisation's top management and undertaken by staff strategists. Bailey et al. (2000, p. 153) summarise this proceeding as

“(...) an intentional process involving a logical, sequential, analytic and deliberate set ofproced­ures. The organization and its environment are systematically analysed. Strategic options are gen­erated and systematically evaluated. Based on this assessment, the option is chosen that is judged to maximize the value of outcomes in relation to organizational goals. The selected option is sub­sequently detailed in the form of precise implementation plans, and systems for monitoring and controlling the strategy are determined.”

This fairly traditional planning view eventually led to a distinction between planning and execution, assuming that strategy is developed by top executives and implemented by those below (ibid.), or, as argued by Chandler (1962, cited in Carr et al., 2004), that strategy is de­termined centrally, but then implemented structurally. Amongst many others, in particular writers with a close connection to operations management such as Hammer (2005) criticise this conventional mindset of strategists seeing their job in establishing strategies and then turning it to operational managers to execute. However even today, practitioners note that managers occasionally consider implementation and execution as strategic afterthoughts (e.g. Frigo, 2003, Raps 2004).

Another rational, analytical approach was undertaken by Porter (1980, cited in Kippenber- ger, 1998), introducing the context of economic forces. In short, Porter emphasises the utilisa­tion of analytical tools (e.g. industry analysis by means of his highly prominent 'Five Forces' model). From the results, it is possible to derive three broad generic strategies: cost leader­ship, differentiation, and focus (ibid.). The concept of an industry life cycle forms the basis and underlying assumption for Porter's industry analysis (ibid.). While Porter's vital contribu­tion and analytical rigour is an indisputable, integral part of strategy teaching, planning, and formulation, Kippenberger (1998) makes a good point: in organisational practice, Porter's techniques are sometimes applied in isolation, or in an over-simplified and mechanistic way. Similarly, Hambrick and Fredrickson (2005) note that, in general, the mere use of tools tends to draw the strategist toward limited, fragmentary conceptions of strategy, thus matching the narrow scope of the tools themselves.

As observed by O'Shannassy (2003), rational and analytic strategic planning models - and their resulting prescriptive approaches - soon demonstrated limited practical use in an uncer­tain environmental context. Hence, Mintzberg and Waters (1978, cited in Herrmann, 2005) fundamentally challenged the planning perspective by stating that strategy emerges, and is therefore not a product of deliberate, static planning exercise. This represents Mintzberg's pro­cess view, with strategy as a 'pattern in a stream of decisions', and involving multiple levels within the organisation (cited in Stiles, 2001). Citing the work of Marshall and McKay (2002), Carr et al. (2004, p.80) explain “emergent strategy is undertaken by an organisation that analyses its environment constantly and implements its strategy simultaneously”. Yet many authors admit that, in practice, any strategy will rarely be purely deliberate or purely emergent. Rather, deliberate and emergent strategies form the poles of a continuum (e. g. Mintzberg, 1987; Stiles, 2001).

As for the impact on strategy implementation, Mintzberg (1987, p. 68) affirms an “intim­ate connection between thought and action ”. He objects to the concept of strategy as an ex­clusively deliberate process and to a distinction between thinking and acting, formulating, and implementing (ibid.). From his point of view, thought need not be independent of (and pre­cede) action, but must in fact develop gradually (ibid.). Hence, Mintzberg (cited in an inter­view with McCarthy, 2000) also opposes to equate strategic thinking with a positivist plan­ning perspective. However, Carr et al. (2004) also criticise Mintzberg for presuming mana­gerial inaction or error, when using the terms 'absence of intentions' or 'emergence despite in­tentions'.

So far, it has been shown that one key debate of strategy formulation covers the apparent discrepancy between deliberateness and emergence. However, its underlying paradox can be found in the ways and basic mindsets of strategic thinking. These result in logical, rational strategies on the one side versus creative, generative, intuitive strategies on the other side (Price and Newson, 2003; Atkinson, 2004). Advocates of the rational thinking perspective would insist that strategic thinking should be a 'scientific' process of logical reasoning rather than the result of emotions or intuition (de Wit and Meyer, 1998, cited in Price and Newson, 2003). Conversely, adherers of the generative perspective argue that unique innovation only evolves by creatively challenging current ways of doing things. From their point of view, stra­tegic thinking is an art rather than a science (ibid.).

It is not surprising that a balanced approach might eventually be a promising strategic op­tion: for example, Brews (2005) advocates creativity and imagination as starting points for successful innovation, as opposed to tightly planned, carefully budgeted business plans. As for implementation on the other hand, he acknowledges the benefit of analytical thinking, concluding that strategy should be designed creatively, but executed rationally. This is in line with Osegowitsch's (2001) proposal of blending analytical skills with managerial creativity and capability. Atkinson (2004) concludes that, again, the truth probably lies somewhere in between the two extremes, contingent on situational factors - a view incidentally shared by numerous authors (e.g. Osegowitsch, 2001; Mockler, 2003; Brews, 2005).

Strategic thinking and formation obviously appear as multidimensional constructs and dis­play a broad variety of facets. The question arises whether key findings of these debates are significantly interrelated with actually implementing strategic change - and if so, in which as­pects. Organisational change in general is perceived as a process that adapts a system to its environment (Pullen, 1993). In a more specific sense, its distinct strategic dimension evolves “as a major modification to the set of resources or routines that an organisation uses to com­pete” (e.g. Boeker, 1997, p. 1762, cited in Bloodgood and Morrow, 2003). Pullen (1993) dis­tinguishes continuous and discontinuous change. Continuous change is a process of gradual adjustment, whereas discontinuous change usually represents a rapid and fundamental shift, often addressing an abrupt environmental event that has no precedent (ibid.). De Wit and Meyer (2005) describe two basic managerial approaches for tackling strategic change imple­mentation, that is through revolutionary and evolutionary change processes. While the two ap­proaches have individual strengths and weaknesses, de Wit and Meyer (2005) further explain that most authors see strategic change as revolutionary and suggest that operational change is better addressed by an evolutionary approach.

No consensus has been reached to which ideal degree organisations should embrace change. While authors such as Brown and Eisenhardt (1998, cited in Lin, 2005) claim that an 'organisation on the edge of chaos' is likely to be most vigorous and adaptive, others advise against change as a constant state and object to pursuing too much change too fast (Leker, 2001; Abrahamson, 2004). Nonetheless, there is little doubt that an existing incremental logic can no longer be sustained in times where external demands cannot be met by mere gradual evolution (Pullen, 1993). Hence, a strategic response might need to stronger address the man­agement of discontinuous change (ibid.), with strategic processes corresponding to the dy­namic conditions that drive them (Walsh, 2005). Here, the author believes that both strategic thinking and formulation on the one hand have an impact on the implementation of strategic change and its success: for instance, an understanding of strategy as analytic planning and de­liberate choice might prove highly inappropriate in addressing discontinuous changes in tur­bulent organisational environments. On the other hand, implementing strategic change also encompasses certain aspects beyond strategic thinking and formulation. Most notably, it is highly important to involve the organisation's people in the change process and to benefit from their ideas (Nutt et al., 2000). Bruch et al. (2005) supplement the key point of creating acceptance for change throughout the organisation; and they further emphasise the human re­sources perspective, which should play a major role in change by appropriately placing and managing human capital. For successful change initiatives, they conclude, an appropriate stra­tegic set-up is needed as well as adequate execution (ibid.).

Implementing strategic change therefore shows some apparent parallels with issues related to strategy execution and implementation. Some authors argue that strategy execution is an unaddressed issue in the contemporary business world (Bossidy and Charan, 2002, cited in Schaap, 2006). One reason might be that putting strategies into action is perceived as the most complicated and time-consuming part of strategic management (Thompson and Strickland, 2003, cited in Schaap, 2006). Nonetheless, much recent work reflects on the issue of imple­mentation in strategic management, a selection of which is presented as follows:

Kaplan and Norton (2005, 2006) have further enhanced sensible concepts for implement­ing strategy in business organisations. They suggest establishing a dedicated centralised stra­tegic unit to bridge the divide between strategy and execution.

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Details

Title
Implementing strategic change: A completely different and separate function to strategic thinking and formulation?
Subtitle
Essay on Strategic Management
College
University of Glamorgan  (Business School)
Course
Strategic Management I
Grade
72/100 credits
Author
Year
2007
Pages
14
Catalog Number
V140782
ISBN (eBook)
9783640513161
File size
436 KB
Language
English
Notes
Tags
Strategy, Strategic Management, strategic thinking, strategy formulation, Strategic Change
Quote paper
M.Sc., Dipl.-Betriebswirt (BA) Jan Geckeler (Author), 2007, Implementing strategic change: A completely different and separate function to strategic thinking and formulation?, Munich, GRIN Verlag, https://www.grin.com/document/140782

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