A CRITIQUE OF PRESCRIPTIVE VIEWS IN STRATEGIC MANAGEMENT Bangani Ngeleza

JUNE 2012

TABLE OF CONTENTS

1. 2.

RATIONALE FOR SELECTING THE THEME..................................................1 IN SEARCH OF A NEW LENSES: - A REVIEW OF EFFORTS TO FIND A NEW PARADIGM ................................................................................................2 3. THE CONCEPTUAL BASIS FOR THE CRITIQUE.......................................8 4. CRITIQUE OF REVIEWED ARTICLES.......................................................10 4.1 Principle 1: Strategy formation should be a controlled, conscious process of thought .............................................................................................................10 4.2 Principle 2: Responsibility for control of strategy must rest with the chief executive officer (or senior management) .......................................................20 4.3 Principle 3: The model of strategy formation must be kept simple.............24 4.4 Principle 4: Strategies should be unique: the best ones result from a process of creative design .................................................................................................27 4.5 Principle 5: Strategies emerge from the design process fully formulated ...29 4.6 Principle 6: These strategies should be explicit and, if possible, articulated, which also favours their being kept simple......................................................31 4.7 Principle 7: Only after unique, full blown, explicit, and simple strategies are fully formulated can they then be implemented ..............................................32 5. INSIGHTS FROM THE REVIEW......................................................................37

1.

RATIONALEFORSELECTINGTHETHEME

The prescriptive school of strategic management treats strategy formulation as a process of conceptual design, formal planning and analytical positioning (Mintzberg, 1990). This school of thought has been cited as having made significant contributions to the theory and practice of strategic management over a number of decades. This notwithstanding, a number of authors have started to query the dominance of prescription in strategic management and have called for a paradigm shift towards more descriptive and organic perspective that account for complexities that organisations have to contend with. Amongst those authors who perceive a need for a shift towards an organic perspective, is Farjoun (2001). This author states that prompted by the limitations of the mechanistic (prescriptive) perspective, and inspired by the advent of new ideas in the social and natural sciences, strategic managements second broad progression saw the emergence and spread of organic developments. This search for a paradigm shift sees other authors favouring a more eclectic approach that seeks to develop a model for strategic management that accommodates all the major contributions to the field. This urge to break new ground and engineer a paradigmatic shift is evident amongst many of the articles that have been reviewed. The motivation behind selecting to critique prescriptive views in reviewed articles on strategic management is in order to demonstrate that attempts at finding a new paradigm notwithstanding, prescriptive views still retain a strong influence. Through this critique, the author hopes to show the significant gap that still remains to be bridged in the search for a paradigmatic breakthrough in strategic management. The paper demonstrates that strategic management is still fraught with conventional wisdom presented as innovation. According to

Ginter & White (2004), lessons learnt through the development of normative and/or descriptive process models have yet to be integrated into a broad theoretical framework. The survival of prescriptive views in spite of evidence that a new way is required for organisations to survive is attributed by Ackoff (2003) to the fact that business managers tend to search for panaceas and simple solutions that are prescribed by management gurus. According to this author, the consequence of this is that 50% of the corporations in the Fortune 500 of 25 years ago no longer exist. This author further states that out of 23 new corporations created in America each year, only one survives the first year. Micklethwait & Woolridge (1996) cited in Miller & Vaughan (2001) state that the proliferation of management theories and prescriptions is driven by two basic human instincts-greed and fear. This article is structured as follows: section 2 presents an overview of reviewed articles attempts at finding a new strategic management paradigm. This is followed in section 3 by a presentation of a conceptual basis that is used to conduct the critique. In section 4, the reviewed articles are critiqued. This paper ends with a presentation of insights in section 5.

2.

INSEARCHOFANEWLENSE:AREVIEWOFEFFORTSTO FINDANEWPARADIGM

A number of reviewed articles attempt a break with the prescriptive view to strategic management by suggesting the development of models and/or frameworks that seek to move beyond this view. Ansoff (1980) presents a model for strategic issues management which represents a shift from strategic management approaches that focus on periodic planning and response that typifies the prescriptive school. Rather, in his article, this author suggests a system which responds to signals in real time.

In another paper, this author further extends his views by developing a model that seeks to capture what he regards as the emerging paradigm of strategic management (Ansoff, 1987). His model for a new paradigm borrows from a number of disciplines including politics, sociology, psychology and cognitive logic. The model also focuses on interactions between strategic and operational behaviour, and seeks to integrate the activities of sensing, deciding and executing in strategy making. Other authors attempt to ameliorate some of the perceived failures of the prescriptive approach, which have seen organisations failing in spite of well devised plans. Amongst these are Goold & Quin (1990) who borrow from agency theory to suggest improving the effectiveness of planning processes through strategic control systems. In their paper, these authors acknowledge the importance of balancing between rigidity and looseness. Their view borrows from economics and is somewhat akin to the unifying views of the organic school of strategic management, including complexity theories. In their work, Caldert & Ricart (2003) seek an innovative approach to the field of corporate strategy by drawing on the theoretical tradition of behavioural evolutionism as enriched by complexity theory. They particularly focus on the application of the work of Kauffman (1993) in the field of biology, to organisation theory. These authors define a complex system as a system (whole) comprising of numerous interacting entities (parts) each of which is behaving in its local context according to some rule(s) or force(s). in responding to their own particular contexts, these individual parts can, despite acting in parallel without explicit interpart coordination or communication, cause the system as a whole to display emergent patterns, orderly phenomena and properties, at the global or collective level (Caldert & Ricard, 2003: 97) Other authors that explore complexity theory to strategic management include Grobman (2005). This author states that complexity theory is revolutionising the way scientists look at the world, and has ontological implications as well. According to this author, complexity theory provides a framework for 3

theorising about how there got to be an organisation and an environment in the first place so that general systems theory could be applied. The author cites Cohen (1999) as stating that complexity theory is attracting much attention because of dramatic changes occurring in the structure and scope of business, government and non-profit organisations. In an environment that seems to be changing, organisations want to be more adaptable and better able to learn from experience in order to reconfigure themselves in the face of new demands Grobman (2005) regards the dominant paradigm for strategic management that is driven by general systems theory as being reductionist in its suggesting that a system can be analysed by understanding each of its parts, and that there was a general linear relationship between inputs and outputs. The author cites Anderson (1999) as stating that complex systems on the other hand demonstrate nonlinearity because each component interacts with others via a web of feedback loops A composite approach that differs from general systems theory is adopted by Spanos & Lioukas (2001). In their study, they seek to unify the industry organisation viewpoint of strategy on the one hand and the resource based view on the other. Their study is an attempt at building a theory and model based on a composite approach between strategy, industry and firm asset effects. They found that both firm specific and industry effects are important in explaining firm performance, operationalised as market share and profitability. Synthetic thinking is also propounded by Ackoff (2003). In an interview with the Strategy and Leadership Journal, this author identified one of the characteristics of a new paradigm for strategic management as synthetic thinking. According to this author, synthetic thinking provides a better understanding of complex systems than analytical thinking does. Synthetic thinking is a way of thinking about and designing a system that derives the properties and behaviour of its parts from the functions required of the whole. The whole has properties that none of its parts have (Allio, 2003: 21).

Ginter & White (1982) contribute to the building of a new strategic management theory through developing a theory of learning that acknowledges the reciprocal influence of the environment on the one hand and organisational behaviour on the other. This represents an early attempt at recognising the role of complexity in strategic management. The Social Learning Theory of Strategic Management theory (SLTSM) introduces an organic understanding and extends the general systems thinking, by including feedback loops to the conduct of strategy. The purpose of Ginter & Whites paper is to present a theory that will permit existing strategy concepts to be synthesised in an integrated framework. It is an attempt at integrating a variety of theoretical schemas, including systems theory, contingency theory, operational and managerial role definitions. These authors state that these schema have provided limited, if-then prescriptive models for strategic management. The SLTSM is premised on the view that behaviour results from the interaction of persons and situations, rather than from either factor alone. They cite Davis and Luthans who state that social learning posits that the person and the environment do not function as independent units but instead determine each other in a reciprocal manner. Rumelt, Schendel & Teece (1991) contribute to the search for new frameworks by drawing on economic thinking to explain enduring company success. Their effort at presenting a synthesis between strategic management and economic thinking results in an adoption of a resource based view and its focus on factor market influences on firm performance. In addition to invoking agency theory, these authors consider the contributions of other economic influences on strategic management including game theory, transaction cost economics and evolutionary economics. Other authors that use the resource-based view to develop a unifying research programme are Mahoney & Pandian (1992). Their integrated research programme draws from economics, diversification strategy explanations and industrial organisation. Their economics perspective draws from agency theory, property rights, transaction costs, evolutionary economics 5

and game theory. In this article, these authors introduce an evolutionary viewpoint to strategic management and define strategy formulation as consisting of the constant search for ways in which the firms unique resources can be redeployed in changing circumstances. Prahalad & Hamel (1994) emphasise the need for learning and for managers to change their dominant logic if firms are to survive the radical environmental changes that characterise the current business environment. In their push for the re-examination of traditional strategy paradigm, they emphasise the need for managers to be able to anticipate the future, in a vain similar to that of Clancy (1990). In order to assist managers, these authors present checklists that present environmental factors that need to be anticipated. They point out that old ways of doing strategy no longer work and that there is a need for new lenses, including the use of game theory, chaos theory, war and diplomacy. The role of chaos theories in strategy processes is acknowledged by Hamel (1998), who states that writings on the process of strategy making have tended to focus on the content of strategy and have overlooked the conduct of strategy. Industry structure analysis is one example of this limited focus. In addressing the over emphasis of strategic thought, primarily prescriptive views, on the content of strategy, Venkatraman & Cannilus (1984) present evidence of recent studies that have integrated the content and the process conceptualisation of the concept of fit in strategy. They demonstrate that it is possible to apply the concept of fit by looking at it from both an interorganisational (external) and strategic choice (internal) perspectives. They also seek to move the application of the concept of fit beyond the traditional bi-variate interactions (strategy and culture, strategy and management style, strategy and structure etc) towards an understanding of fit as characterised by a larger array of elements. To this end, these authors apply the Mckinsey 7s model to show organisational congruence.

Munive-Hernandez, Dewhurst, Pritchard, & Barber (2004) develop a comprehensive model for defining a corporate strategy, constructing a strategy document and strategy implementation by applying a combination of methodologies and tools. This model seeks to make a break with the predominant focus on strategy content. In the same vain, Caldert & Ricart (2003), developed a dynamic framework of corporate strategy based on three interlinked sets of processes, viz. senior management cognition, which they refer to as framing the fitness landscape, corporate search strategy or strategic behaviour and architectural design. Farjoun (2001) also develops an organic model1 which takes account of the complex interactions and self influences amongst key strategic management constructs of firm organisation, firm environment, firm strategy and firm performance. This presents a holistic view of strategy that replaces the conventional distinction between content and process. The concept of strategy emergence, which represents another significant break with prescriptive views, is propounded by Nichols (2000). This view acknowledges that strategy evolves over time as intentions accommodate reality. This author acknowledges the definition of strategy as plan, pattern, position and perspective. The same views on strategy are expressed by Mintzberg (1987) who holds the view that multiple definitions can help practitioners and researchers alike to manoeuvre through the field of strategic management. Farjouns O-E-S-P model also extends the concept of strategy by recognising the existence of emergent strategies which may not be a result of deliberate planning. Attempts at breaking with the past are also evident in writings by authors from other management disciplines. Writing from a marketing perspective, Clancy (1990) makes a forecast of ten developments which will separate winners from losers in advertising in 2020. Amongst these is the importance for the
1

The O-E-S-P model, conceptualizes of the interaction between the constructs as evolving or random and best captured by the notion of continuous co-alignment

marketer to anticipate competitive defences and then develop and test offensive strategies designed to overwhelm the competitor, more along the lines of game theory.

3.

THECONCEPTUALBASISFORTHECRITIQUE

Mintzbergs (1990) discussion of the design school serves as the bases for analysing the articles. As already stated, the critique seeks to demonstrate that in spite of attempts by a number of writers to develop new approaches and/or paradigms for strategic management the prescriptive perspective still wields a lot of influence, even amongst some of those authors that purport to seek new paradigms. Mintzberg (1990) identifies ten schools of thought in strategic management. Three of these he identifies as prescriptive in orientation. These treat strategy formation as a process of conceptual design, of formal planning and of analytical positioning, with the latter including research on the content of competitive strategies. Six other schools are identified by this author as dealing with the strategy process in a descriptive way. These include the entrepreneurial school, the cognitive school, the learning school, the environmental school and the configurational school. Although his article is addressed to the design school, this schools basic framework underlies almost all prescription in this field and, accordingly, has enormous impact on how strategy and the strategy making process are conceived in practice as well as in education and research, (Mintzberg, 1990: 171). The following basic prescriptive principles are discussed by Mintzberg (1990) and are used as a basis for demonstrating the level of inertia in strategy research, writing and practice as reflected in the articles reviewed in the next section of this paper. The principles are:

1. Strategy formation should be a controlled, conscious process of thought, i.e. action follows once strategies have been fully formulated and strategy is associated with intentionality and deliberateness. 2. Responsibility for that control and consciousness must rest with the chief executive officer. That person is THE strategist, i.e. to this school, ultimately there is only one strategist, and that is the manager who sits at the apex of the organisational hierarchy. Mintzberg (1990) cites Heye (1985) who states that this is a command and control mentality that allocates all major decisions to top management, which imposes them on the organisation and monitors them through elaborate planning, budgeting and control systems. This also relegates environment to a minor role of input to strategy formation but not an intrinsic part of the process, to be accounted for and then navigated through but not interacted with (Mintzberg, 1990) 3. The model of strategy formation must be kept simple: The idea that one way to ensure that strategy can be controlled in one mind is to keep the process simple. 4. Strategies should be unique; the best ones result from a process of creative design: This means that it is the specific situation that matters. Strategies have to be tailored to the individual case (Mintzberg, 1990). He further cites Andrews (1965) that in each company the way in which distinctive competence, organisational resources, and organisational values are combined is or should be unique. 5. Strategies emerge from the design process fully formulated: there is no room offered to incrementalist (evolutionary) views or emergent strategies. There is a view for instance that strategy as perspective appears at a point in time, fully formulated, ready to be implemented. This relates to the view that the process reduces to choice. The implication is that the strategist is able to line up alternative strategies to be evaluated so that one can be definitively chosen. 9

6. These strategies should be explicit and, if possible, articulated, which also favours their being kept simple: This view holds that strategies should be explicit to those who make them and that they should be articulated so that others in the organisation can understand them. The strategy must be specific enough to require some action and exclude others. This means that strategies have to be kept rather simple in order to facilitate this articulation. 7. Only after unique, full-blown, explicit, and simple strategies are fully formulated can they then be implemented: This means that there is a sharp distinction between the formulation of strategies on the one hand and their implementation on the other. According to Mintzberg (1990), this is consistent with classical notions or rationality diagnosis, prescription, then action, representing the separation between thinking and acting. The author further makes the point that the focus of this school is on implementation not achievement, the assumption being that given proper implementation, achievement is a foregone conclusion. This according to Mintzberg (1990) is associated with the premise that structure must follow strategy.

4. CRITIQUEOFREVIEWEDARTICLES
This section presents a critique of the reviewed articles using the seven principles of Mintzberg (1990). The focus of the section is to demonstrate the extent to which many of the reviewed articles have been influenced by the prescriptive views that are based on these seven principles.

4.1

Principle1:Strategyformationshouldbeacontrolled,conscious processofthought

Many of the articles that have been reviewed adhere to the principle that strategy formation should be a controlled and conscious process, with little or 10

no space for strategy emergence. The underlying viewpoint is that action follows only once strategies have been fully formulated and that strategy is associated with intentionality and deliberateness. This view of deliberateness, driven as it is partly by the assumption that it is possible to predict the future, is evident in Ansoff s (1990) assertion that one of the factors that have made it desirable to separate what he refers to as strategic issues analysis from annual strategic planning is that organisations may not need the cumbersome paraphernalia of annual planning in cases where the basic strategic thrusts are clear and relatively stable and whose environment is stable. The strategic issues management procedure developed by Ansoff assumes that it is possible to accurately predict trends both inside and outside the enterprise. This extends to the prediction of when exactly the time of impact of an issue will occur so that organisations can time their responses to occur before this time. The assumption is also that it is possible to know for sure what the impact of the issues will be on the enterprise. In his article, Clancy (1990) also uses information about the state of advertising in 1990 to predict what advertising will be like in 2020. This author discusses 10 developments which will radically transform advertising. According to this author, the doors of Eldorardo, the golden city will be open to firms that successfully managed these developments. This forecast was based on the assumption that historical trends observable in 1990 will continue unchanged. Ansoffs presentation of the steps for Strategic Issues Management (SIM), reflect strong rationality in another way. According to this author, steps for conducting SIM include an analysis of environmental trends, internal trends and performance trends, followed by an assessment of threats, opportunities, strengths and weaknesses which then allow for the determination of the impact and/or urgency of an issue. Extensive starting lists of the respective trends are also presented. This shows the weight that this author places on 11

the role of rationality and conscious thought processes in strategic management. In his support of the Gresham Law of planning, which states that if left uncontrolled, the operational activity suppresses the strategic activity, Ansoff (1980) further betrays a preoccupation with the implementation of strategies as relying on a conscious process of control. In keeping with the view that strategy is a rational process of thought, Ansoffs paradigm further links the scientific optics used by firms in conducting strategy to environmental factors in a deterministic way, which in turn calls for the rational analysis of the environment. Strategic management as this conscious process of thought that is informed by environmental determinism and rationality is also upheld by Goold & Quinn (1990). These authors cite Simon (1987) as viewing the senior manager as scanning the business situation and, from an assessment of all relevant factors, arriving at a judgement of an appropriate response. This rationality visualises a contemplative senior manager who is able to know what all the relevant factors to consider in strategy making are. This person (the senior manager) is also able to choose properly, from strategic choices that avail themselves from their reflections. Through this rational contemplative exercise, the scope of strategic management is reduced to individual judgement. Rumelt et al. (1991) also see firms as having choices to make if they are to survive. According to these authors, those which are strategic include selection of goals, the choice of products and services to offer, the design and configuration of policies determining how the firm positions itself to compete in product markets, the choice of an appropriate level of scope and diversity, and the design of organisational structure, administrative systems and policies used to define and coordinate work. Further, these authors see strategy as not necessarily a single decision or primal action, but as a collection of related, reinforcing, resource-allocation decisions and implementing actions. 12

There can be no place for the role of chance and emergence in this design process. Rumelt et al. (1991) further explain the role of economics in strategic management and continue to place emphasis on rational decision-making. These authors present a rationality that is required by making use of a sophisticated view of equilibrium. The Nash equilibrium is where each actor does the best he or she can with what they individually know and control, especially when coupled with uncertainty, asymmetric information and unequal resource endowments, permitting a broad range of intriguing outcomes or looked at another way, different picks on the competitive landscape (Ghemawat, Collis, Pisano & Rivkin, 1999). The troublesome nature of uncertainty is thus adequately dealt with by a sophisticated process that sees independently acting actors making conscious choices based on information in their possession. This game theoretic rationality and its attendant assumptions that all players are rational is also evident in the papers by Camere as well as Saloner, reviewed in Rumelt (1991). Strategic management is concerned with co-ordination and resource allocation inside the firm (Rumelt, et al.; 1991). This is opposed to the industrial organisation view that posits the primacy of industry in determining firm performance. Both these perspectives are influenced by economics, with the former focussing on factor markets and the latter on product markets for explanation. Both are rational standpoints for explaining strategic management based on different deterministic perspectives. The influence of economic rationality on the resource-based view that is propounded by Mahoney & Pandian (1992) is clearly demonstrable in their article. The article draws linkages between the Resource Based View and the different branches of micro-economics including transaction cost, agency theory, evolutionary economics and property rights. These authors also show the complementary nature of RBV to the industrial organisation paradigm of S-C-P, i.e. the Bain (1968) and Porter (1985) framework. They do this by showing that the product market and the resource market are two sides of the 13

same coin, i.e. to produce a particular product mix, you need a particular resource mix and vice versa. Strategy is a rational process of thought (Mahoney & Pandian, 1992). They explain lasting profits as flowing from different sources of rents, i.e. owning a valuable resource including land; monopoly rent including government protection; entrepreneurial rent including Schumpeterian rent and firm specific resources. A firm consciously selects its strategy to generate rents based upon its resource capabilities. These authors cite Andrews (1971) as stating that organisations with the strategic capability to focus and coordinate human effort and the ability to evaluate effectively the resource position of the firm in terms of strengths and weaknesses have a strong basis for competitive advantage. In referring to the contributions of Resource Based View (RBV) to a large stream of research on diversification strategy, Mahoney & Pandian (1992) further display their reliance on deterministic explanations. According to these authors, this includes, that the resource based approach considers limitations of diversified growth (i.e. growth through diversification is limited by resource endowments). Secondly, the RBV considers important motivations for diversification, i.e. when not all units perform at the same speed & capacity, thus creating motivations for diversification to use extra capacity, particularly Human Resources capacity. Thirdly it provides the theoretical perspective for predicting the direction of diversification. Fourthly it provides a theoretical rationale for predicting superior performance of certain categories of related diversification, i.e. companies grow in the direction set by their capabilities and these capabilities slowly expand and change. A resource-based determinism also emerges in a statement that says if a firm possesses valuable, rare, costly to imitate, and non-substitutable economies of scale, learning curve economies, access to low-cost factors of production, and technological resources, it seems clear that the firm should pursue a cost leadership strategy (Barney, 2001: 53). This quote suggests that in the case of the cited combinations of factors, the choice is clear, and it 14

is to pursue a low cost strategy. The overall tone in Barneys article is that a firms strategy is determined by its resources, with no mention of reciprocal influence, emergence or the role of chance. Barney (2001) further applies the framework of Strategy-Structure-

Performance (S-S-P) to explain how firm resources can become of value. This author acknowledges the important contributions of Structure-ConductPerformance (S-C-P) in that the firms resources value is determined by industry structure as it is by firm strategy of S-S-P. The author further states that in all high quality resource based work, researchers must begin by addressing the value of resources with theoretical tools that specify the market conditions under which different resources will and will not be valuable. Prahalad & Hamel (1994) on the other hand explain the changes in the fortunes of some of the best-managed firms during the period 1984 to 1994 in terms of what they refer to as the changing competitive milieu. All the forces they refer to are external industry (environmental) factors, a view that support the rational determinism of S-C-P form or the positioning school. The factors they cite for instance are global competition, deregulation, structural changes, excess capacity, mergers and acquisitions, environmental concerns, less protectionism, changing customer expectations, technological discontinuities and emergence of trading blocks. In a softening of the unidirectional determinism that characterises environmental determinism, these authors state that given all these changes, industry structure, increasingly, must be seen as a valuable to be managed by firms and not accepted as a given. In developing a dynamic force field model for strategic management, Paquin & Koplyay (2007) use the design school to represent fundamental fit between the firm and its environment. They achieve this using a two dimensional graph that relates market potential with resource mobilisation. This view adopts an equilibrium viewpoint in that there is an optimal regression line between the two variables of market potential and resource mobilisation, with a multiplicity of possible peaks along this line. These authors state that the force field 15

resulting from the interplay between an industrys critical success factors should apply to any organisation operating in that same industry, which suggests an industry organisation and Porters positioning rationality. These authors further state that the strategic force field model may also be useful in suggesting the adoption of various families of strategies. The choice of an offensive, neutral or defensive strategy is accordingly, not done arbitrarily but according to the strategic position an organisation occupies on its strategic landscape. This pre-occupation with rational choice in strategic management is also reflected in Bourgeois (1984) who contends that top management or dominant coalitions always retain a certain amount of discretion to choose courses of action that serve to co-align the organisations resources with its environmental opportunities, and to serve the values and preferences of management. Muniv-Hernadez et al. (2004) agree, and cite MacDonald (1996) who states that the purpose of strategic management is also to match internal activities to environmental change, and match resources to those activities. The process is thus characterised by rational choice and design. In their article, Rumelt et al. (1991) also regret the loss of prescription in the new economics that has come to influence strategy. These authors state that the limitation of the new economics is that it explains rather than predicts. They lambast micro-economics for delivering a large number of tightly reasoned sub-models, but no strong guidance as to which will be important in a particular situation. What they refer to as the collage problem in fact betrays their discomfort with complexity and uncertainty. They further state that it is up to strategy to bring in the application of microeconomic models, i.e. strategic management should develop measures, tools and methods to help specific situations. Amongst the tools and methods to help specific situations are those suggested by Goold & Campbell (1987) for strategic control. These authors present a typology of headquarters style to prescribe the types of controls that 16

must be used by diversified firms, viz. financial controls for services businesses and mature industries; strategic control for mature but complex industries that require substantial investment and entrepreneurially oriented strategic planning for industries that combine complexity and technological advancement. Corporate strategies are thus a function of rational choice that is deterministically imposed upon corporate level managers following a process of contemplating industry factors. Rational views have also permeated writings on change management. The article by Adcroft, Willis & Hurst (2008) develops a rational model for explaining organisational change. These authors state that the process is logical and represents common sense as much as excellent or innovative management. The model has three elements that are linearly represented, viz. revolutionary event, revolutionary programme and revolutionary outcome. The importance of change control measures is evidenced by the linearity of this model, which suggests that for change to succeed, it must be managed to conform to its linear prescriptions. This view of change as a rational process that should be controlled is also held by Offstein & Gnyawali (2006). These authors posit that the key humanistic perspective to firm competitive behaviour is that firm actions are controlled, dictated and influenced by strategic human actors that operate within the boundaries of a firm. The assumption underlying this view is representational and based on the view of a rational economic man who is able to use knowledge to make rational choices (Jarzabowski & Wilson, 2006). The rationalistic perspectives that have been presented in the foregoing paragraphs ignore the writings and observations of a number of researchers and authors that contradict the presumed validity and utility of unfettered rational choice, control and determinism in strategic management. For instance, Bakir & Bakir (2006) state that the very concept of purposeful strategy has been seriously undermined by the recognition that unintended 17

organisational strategies often emerge out of social interactions and adaptations outside their boundaries. These authors contend that studies that predate the current mainstream strategy literature demonstrate that strategy processes, particularly in complex environments, are persistently non-rational, resembling what has come to be known as muddling through and organisational anarchy. This view is supported by Grobman (1995) who cites Simon (1997) and Lindblom (1959) as pointing out the complexity of decisionmaking in organisations, and the limitations of rational decision-making and general management principles. The folly of prediction is also demonstrated in an article by McKenna (1991). In this article, the author relates a publicised lawsuit that Beecham, an international consumer products company, filed against Yankelovich Clancy Shulman, a US market research subsidiary of Saatchi & Saatchi. Yankelovich forecast that Beechams product, Delicare, a cold water detergent, would win between 45.4% and 52.3% of the US market if Beecham backed it with $18 million worth of advertising. The author state that according to Beecham, Delicares highest market share was 25%. Its general market share was between 15% and 20%. The author concludes that forecasts by their very nature, must be unreliable, particularly with technology, competitors, customers, and markets all shifting ground so often, so rapidly and so radically. Forecasting is based on assumptions that it is possible to predict the future and that cause and effect relationships are simple and linear. It is also based on the assumption that todays observations are a good basis for knowing what will happen in the future. The reality of organisational life has on a number of occasions been found to defy this logic, as the case of Beecham shows. In a manner that seem to contradict his focus on predicting the state of advertising in 2020, Clancy (1990) also makes an example of a failed advertising campaign for a new product which predicted market share of 3.6% following the campaign based on a $70 million budget and an assumption of 18

competitive response in terms of advertising and promotion increasing by 80%. In this example, the real level of competitor response was 630%, completely dwarfing the $70 million budget of this companys campaign and effectively blowing this product out of the water. The best market share rating that the product could achieve was 1%. It is interesting that, in spite of this observation, Clancy still finds it prudent to make predictions about the future of advertising. In addressing issues of change, Burnes (2004) states that achieving effective change in organisations requires simple order generating rules. According to this author, this is because organisations are complex systems, which are radically unpredictable and where even small changes can have massive and unanticipated effects, top-down change cannot deliver the continuous innovation which organisations need in order to survive and prosper. The organic model for strategic management of Farjoun (2002) suggests that strategy formulation broadly deals with the sensing, evaluating and planning of external and internal change rather than more narrowly with making choices. This author states that strategy realisation deals with the realisation of change, planned or emergent. As already demonstrated, the role of emergence is ignored by a number of writers on strategic management. The pitfalls of emphasising rational choice in strategy are further demonstrated by Hulbert & Pitt (1996). In their article, they write that the false dichotomy that has been established between, differentiation and cost leadership leads to a waste of resources. According to these authors, Taco Bell, a US fast food chain, has successfully positioned itself against hamburger giants such as Burger King and MacDonalds by offering an alternative form of fast food in a different setting, while at the same time lowering its cost structure in such a way that it is able to provide inexpensive yet wholesome food. This exposes the limiting and the myopic nature of choices presented by Porters generic strategies.

19

In research notes and commentaries regarding the philosophy of strategy, Powell (2002) critiques the assertion that it is possible to know with certainty that some perceptible entity called a competitive advantage has a demonstrable cause-effect relation with the performance of a unique firm. The author states that one cannot use the language of know and certainty when the relation is true by definition, the constructs are intangible and the alternative hypothesis have not been seriously tested. The author states that truths in strategy are neither certain nor final, and our wishing cannot make them so, (Powell, 2002: 879).

4.2

Principle2:Responsibilityforcontrolofstrategymustrestwith thechiefexecutiveofficer(orseniormanagement)

According to this principle, ultimately there is only one strategist, (or at most a small team) and that is the manager who sits at the apex of the organisational hierarchy. Mintzberg (1990) cites Heye (1985) who states that this is a command and control mentality that allocates all major decisions to top management, which imposes them on the organisation and monitors them through elaborate planning, budgeting and control systems. In this view, the environment is also relegated to a minor role of input to strategy formation but not an intrinsic part of the process. It is something to be accounted for and then navigated through but not interacted with, (Mintzberg, 1990). In his article, Ansoff (1980), allocates the responsibility for prioritising strategic issues and for developing response strategies to general management, who should also retain the responsibility for strategic control over such issues. Strategic control of issues refers to continual re-evaluation of the significance of issues and redefinition of both priorities and the direction of projects. According to this view, all of this is the sole responsibility of the people sitting at the top of the organisational hierarchy. The preoccupation with the primacy of the role of senior management is continued in Ansoff (1987) where the new paradigm for strategic management

20

that the author presents places particular emphasis on the role of senior management. The scientific optics that this author uses to describe various forms of strategy making all relate to management behaviour, with no role contemplated for lower levels of the hierarchy. In his top down view of organisations, the author identifies factors in both the internal and external environments that determine management strategic behaviour and serve as the basis for management prescription. Rumelt et al. (1991) also reserve the role of strategic management to senior management, defining strategic management as including those subjects, which are of primary concern to senior management. Prahalad & Bettis (1986) in Mahoney & Pandian (1992) also see a rich connection among the firms resources, distinctive competencies and the mental models or dominant logic of the managerial team as driving diversification processes. Mahoney and Pandian, (1992) state that the services and rents that resources will yield depend upon the dominant logic of the top management team. The centrality of the role of the Chief Executive or senior manager is also reflected in the Social `Learning Theory of Strategic Management (SLTSM) that is proffered by Ginter & White (1982). According to these authors, the SLTSM posits that strategic behaviour is a result of an interaction of top management cognitive processes and environmental influences. Strategic behaviour in turn shapes the environment and conditions top management future cognitions. In their discussion of a humanistic perspective to firm competitive behaviour Offstein & Gnyawali (2006) also limit their assessment of contributions of human capital (individual knowledge and skills) and social capital (intraorganisational relationships and knowledge growing from interactions of individuals) to the CEO, the top management team and the Board of Directors. These articles confirm the assertion by Balogun (2007) that most research on strategy and strategic change continues to focus more on upper echelons, 21

with middle managers being regarded as linking pins or a conduit, connecting senior managers with the rest of the organisation and relaying senior manager orders in an unquestioning fashion. This betrays the influences of mechanistic prescriptions on these authors. Once strategies have been selected by the CEO or senior management, the article by Goold & Quinn (1990), advices that the route to ensuring that individuals at different levels (lower level managers and staff) are motivated to implement them is through personal incentives and sanctions. According to these authors, the responsibility for identifying deviations from agreed objectives, pressing for new plans or changing responsible management in cases of failure to implement strategy rests with senior management. Effectively making strategic management a mechanistic design and control process that relies on senior management. This top down view of strategic management has invariably resulted in a number of prescriptions regarding how the process should be controlled within organisations. Lorange (1988) regards the setting of strategic and operational budgets as a way of preventing managers lower down the hierarchy sacrificing strategic considerations to achieve short-run performance targets. The need for exercising caution with control is emphasised by Salter (1973) in Goold & Quinn (1990). According to this author, annual bonuses usually emphasize the short term, so a manager wants to look good at the end of the year. To prevent his concentration on his own immediate rewards, top management should evaluate the long-run implications of subordinates actions and reward them at least in part on that basis. The article by Goold & Quinn (1990) presents a list of prescriptions regarding how to effectively set measurable goals that facilitate performance, and incentivise, including that they should be specific, stretching, top-down and allow for feedback, incentives and sanctions. Top down managerial prescriptions extend to how to set strategic goals, including looking long-term, competitively setting goals and incorporating financial and non-financial goals.

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These prescriptions regarding controls are extended by Ouchi (1979) in Goold & Quinn (1990) in a contingency theory of control, where this author makes the type of control to be selected contingent upon the ability to predict the outcome on the one hand and on the ability to measure outputs precisely and objectively on the other. Types of controls include clan control, results control, and action control. Goold & Quinn (1990) also develop their own prescriptive framework for choosing control systems contingent on environmental turbulence and the ability to specify and measure precise strategic objectives. The article by Sheehan (2006) argues that diagnostic controls (performance metrics), boundary controls (measures used to control behaviour), belief controls (measures to appeal to employees emotions) and interactive controls (measures to keep track of changes in the competitive environment) are the four levers needed to align what the firm desires to achieve (strategy) and what is actually done by its employees. In an apparent critique of this top down perspective of strategy, Ackoff (2003) states that one of the problems with corporations is that they are hierarchies rather than lower-archies, with authority flowing from the top rather than from the bottom. The view of top down strategic control overlooks the understanding of strategic management as navigational translation (Bakir & Bakir, 2006). According to this view, managers can see that strategy is a set of complex processes impacted by a fluid and interlocking set of intervening conditions that are beyond managerial control and that may change the dimensional location of the properties of the strategy categories thus generating unintended outcomes. Shell is a good example of how strategy success can be impacted by lower level staff. In writing about transformation efforts at this global company during the 90s, Pascale (1999) observes that the process worked because senior management realised that the people at the coalface (i.e. at country operations and at company owned service stations) know what is going on. 23

They see the competitive threats and the companys inadequate response every day. Once they are given the context, they can do a better job of spotting opportunities and stepping up to decisions. Further, in an opinion piece published in the Harvard Business Review (undated), Mintzberg cites Hamels account about how Lou Gerstner added $40 billion to IBMs shareholder value. According to the author, a programme manager with an idea joined up with an open minded staff manager and together they assembled a team that drove IBM into e-business. All that Lou Gerstner did was support the initiative. Strategy thus emerged from the bottom, a consideration that many of the articles that have been reviewed fail to acknowledge.

4.3

Principle3:Themodelofstrategyformationmustbekeptsimple

The idea that one way to ensure that strategies can be controlled in one mind is to keep the process simple is evident in some of the articles that have been reviewed. In his writing about the strategic issues management as a new system for strategic management, Ansoff (1980) emphasises the need for simplicity. Articles on strategic issues management have explored the strategic issue problem and newly important phenomenon of weak signals. There is now a need to translate these explorations into straightforward, practical how to do it processes, (Ansoff, 1980: 150). The need for simplifications in fact forms the essence of this article. In simplifying the process of prioritising issues in strategic issues management, Ansoff makes us of a matrix that presumably facilitates decision making by ranking the urgency of issues in terms of low, significant and pressing. Impact assessment is also simplified in terms of whether it is low, significant or major.

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In a 1987 article, Ansoff proceeds to simplify his new paradigm by presenting it in the form of a cube, with three dimensions, viz. the problem of strategy, the process of strategy and the scientific optics. The author refers to the paradigmatic cube as the minimal set of dimensions necessary to explain the observable variants of strategic behaviour. The meta-model that Ansoff (1987) presents identifies key forces which determine the flow of interaction patterns, in a simplified unidirectional flow of influence. The direction of influence between the environment and firm behaviour, i.e. driving forces and perception of need is also unidirectional from the environment to firm behaviour (structure-conduct-performance) Bourgeois (1984) summarises the problems accurately when stating that one of the characteristics of organisational literature is reductionism, the tendency to focus on one independent variable (e.g. turbulent environment) as it causes managers to manipulate one dependent variable (e.g. structure). This author further states that in addition, the theories are generally derived from static cross-sectional correlation studies, which present problems of causal inference. According to this author these types of analysis assume that the systems being studied are in equiibria. This tendency to simplify is also queried in the article by Grobman (2005). This author states that the dominant paradigm for decades was reductionist, suggesting that a system can be analysed by understanding each of its parts, and that there was a general linear relationship between inputs and outputs. This author cites Anderson (1999) who states that complexity demonstrates nonlinearity because each component interacts with others via a web of feedback loops. In an interview with the Strategy and Leadership journal, and in response to a question regarding why it is easy for management gurus who purvey platitudes, and simplifications2 to dupe managers, Ackoff (2003) states that it
2

My emphasis

25

is because most managers do not have the knowledge and understanding required to deal with complexity, they attempt to reduce complex situations to simple ones. Drucker cited in Ackoff (2003), when responding to a question about what he thought about the solutions suggested by Peters and Waterman in their 1990 best selling book The Search for Excellence, said I wish it were that simple. Meaning that problems do not have simple-minded solutions. Many of the reviewed articles also ignore the findings of Bakir & Bakir (2006) that use grounded theory to study strategic management in organisations. These authors found that in their understanding of translation in strategy, managers were coping with fluidity and complexity. They quote the chair of the Strategic Board of one of the companies they studied as stating that nobody can see clear direction; nobody has an idea whats going to happen. In their simplification of the strategy process, a number of the articles that have been reviewed generally fit the description by Starns & Odom (2006) who state that many approaches to knowledge management are like the proverbial blind men and the elephant. They focus on a part of the enterprise, identify an issue or problem, and try fixing that without considering all the other aspects and systems relationships. These authors state that there is a huge body of lessons learnt confirming that organisations that use this reductionist technique never quite reach their desired objective. Other authors that have observed the limitations of simplifications include Caldart & Ricard (2004) who state that there is a tendency to impute coherence and purposive rationality to events when the opposite is true. The authors state that this assumption is consistent with the normative traditions of the management literature that offer low-dimensional typologies such as the BCG or GE matrixes and generic strategies to help structure the choice of firm strategy. According to these authors, these analytical representations of the fitness landscape that reduce the dimensionality and, in turn, the cognitive complexity of the space, provide a strong guide to action. However, they cite Levinthal & Warglien (1999) as stating that to the extent that the 26

representation captures the essential structure of the real fitness landscape, it will be a mistaken guide. To counter these limitations, Ackoff (2003) calls for the adoption of a new management paradigm of synthetic thinking, which is a way of thinking about and designing a system that derives the properties and behaviour of its parts from the functions required of the whole. This is different from analytical thinking which tends to simplify. The whole has properties that none of the parts has. Analytical thinking can only yield knowledge about how a system works but not about why it works the way it does. Most simplifications tend to answer the how question and do not address the why questions which requires synthetic thinking. Ackoff states that organisations, unlike mechanisms, have purposes of their own. The mechanistic, top down and simplistic views presented in some of the reviewed articles is therefore an inadequate guide to organisations.

4.4

Principle4:Strategiesshouldbeunique:thebestonesresult fromaprocessofcreativedesign

According to this principle, it is the specific situation that matters and strategies have to be tailored to the individual case (Mintzberg, 1990). This author further cites Andrews (1965) who states that in each company, the way in which distinctive competence, organisational resources, and organisational values are combined is or should be unique. In their article, Rumelt at al. (1991) also portray this view. According to these authors, an example of an equilibrium assumption of use in strategic management is that of no rules for riches, that there can be no general rules for generating wealth. This means that if there are no general rules for riches, then a strategy based on generally available information and unspecialised resources should be rejected. Opportunities worth undertaking must be rooted in the particulars of the situation. According to these authors therefore, theory alone is insufficient absent intimate, unique knowledge of technical conditions

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and the ability to position assets and skills to create favourable competition positions. Rumelt at al. (1991) further provide an economics contribution to the definition of strengths, which illustrates the view that strategies need to be unique. These authors state that economics reasoning has helped to understand that what we may mean to ask by strengths is what firm specific non-imitable resources or sustainable market positions are presently under-utilised? The emphasis on uniqueness is also contained in the article by Mahoney & Pandian (1992). These authors posit that the firms unique capabilities in terms of technical know-how and managerial ability are important sources of heterogeinity that may result in sustained competitive advantage. Effectively therefore, sustained competitive advantage is only possible under conditions of uniqueness. These authors further state that an examination of isolating mechanism (or resources that cannot be easily imitated or substituted) shows that absent of government intervention, isolating mechanisms exist because of asset specificity and bounded rationality or put another way, isolating mechanisms are the result of the rich connections between uniqueness and causal ambiguity. Penrose (1959) cited in Mahoney & Pandian (1992) also emphasise uniqueness by stating that it is the heterogeneity of the productive services available or potentially available from its resources that gives each firm its unique character. This author further states that the firm may achieve rents not because it has better resources, but rather the firms distinctive competence involves making better use of its resources, e.g. human resources. Prescriptions of uniqueness and creative design are also evident in an article by Ackoff (2003). In responding to a question posed by the Strategy and Leadership Journal about how managers can develop effective strategies for the attainment of their vision, this author responded that it requires design, and designs that lead require creativity. This author proceeds to provide a 28

how-to prescription for creativity, i.e. it requires that first one identifies the assumptions that they make which prevent them from seeing the alternatives to the ones that they currently see. Secondly, managers should deny these constraining assumptions and thirdly, they should explore the consequences of these denials. The result is supposed to be unique and creative solutions emerging out of this process of design. Muniv-Hernandez et al. (2004) cite Slack, Chambers, Harland & Harrison, (1998) and McDonald (1996) as defining strategy as positioning a business to maximise the value of the capabilities that distinguish it from its competitors. This focus on creative and unique designs loses site of the possibility for the emergence of unplanned and unintended strategies that are a function of pure luck and chance

4.5

Principle5:Strategiesemergefromthedesignprocessfully formulated

A number of reviewed articles leave no room for incrementalist (evolutionary) views or emergent strategies. There is a view for instance that strategy as perspective or position appears at a point in time, fully formulated, ready to be implemented. This relates also to the view that the process reduces to choice. The implication being that the strategist is able to line up alternative strategies to be evaluated so that one can be definitively chosen. The emphasis on strategic controls which is propounded by Goold & Quinn (1990) and a number of other authors is in line with this view that a strategy emerges fully formulated from the design process, the next step being to put in place control measures to ensure its effective implementation. Lorange (1988) in Goold & Quinn (1990) argues that to ensure sufficient attention to strategic issues, there should be separate strategic and operational budgets. The strategic budget setting would be a final step in a

29

process that begins with setting strategic objectives, this being followed by strategic programming and milestone setting. Thus the strategy has emerged from the process fully formulated which makes it possible to set milestone. Accordingly, Camiluss & Grant (1980) in Goold & Quinn (1990) are of the view that once developed, a strategy must be followed by the development of an action plan that includes a detailed description of actions to be taken, deadlines and results to be achieved plus the identities of managers responsible for monitoring implementation. In their article, Rumelt at al. (1991) state that it is the basic proposition of the strategy field that these choices have critical influence on the success or failure of the enterprise, and that they must be integrated. It is the integration (or reinforcing pattern) among these choices that make the set a strategy. Therefore the starting point should be the lining up of fully formed strategies so that choices can be made. The view that strategies must emerge fully formed overlooks the views of Nelson (1991) cited in Rumelt et al. (1991) to the effect that firms do not apprehend complete sets of alternatives, but grope forward with but limited understanding of their own capabilities and the opportunities they face. This being the reality facing organisations, the premise that to succeed, firms always need to ensure that all strategies emerge fully formulated from the design process seems far from reality. The article by Quelch & Kenny (2000) demonstrates the power of experimentation and testing in strategic management. These authors discuss how a consumer products company called Snacko turned around its fortunes by reviewing and changing its production activities and product line. When this company decided to introduce its new strategy of focussing its production to its core products in its line, the company used one of its sales regions to undertake a four-month test to determine the impact of refocusing core products versus continuing line extensions. In addition to confirming the validity of their strategy, these authors report that test results also revealed 30

other insights that were used to further refine the strategy. It is clear from this example that effective strategies are those whose design continues to be influenced by implementation results. Farjoun (2002) concludes that the different mechanistic perspectives approach strategic management in a consistent and mutually reinforcing manner, which include; a view of strategy as a position or posture, which implies that strategic choice is mostly a selection among static configurations. When organisations have to function during periods of unpredictability, before a strategy is articulated, the danger is premature closure. Articulated strategies can be blinders, impeding strategic change.

4.6

Principle6:Thesestrategiesshouldbeexplicitand,ifpossible, articulated,whichalsofavourstheirbeingkeptsimple

This view holds that strategies should be explicit to those who make them and that they should be articulated so that others in the organisation can understand them. The strategy must be specific enough to require some action and exclude others. This means that strategies have to be kept rather simple in order to facilitate this articulation. In their article, Goold & Quinn (1990) cite Barnard (1938) as stating that there are three important reasons for establishing a control system, first, a fundamental task for any large organisation is to coordinate the efforts of all those who work within it, and in particular to reach agreement between managers at different levels in the corporate hierarchy on the plans and strategies that will guide decisions and actions. Accordingly, agreement on the objectives to be sought by all parts of the organisation is a necessary condition (explicitness and simplicity). These authors further state that as far as possible, the objectives should be precise and measurable, otherwise there is a danger that plans will lack substance and specificity.

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In the same vain, Goold & Quinn (1990) cite Hrebiniak & Joyce (1984) who state that to achieve long-term aims, it is necessary to develop operating objectives that purposely translate strategy into manageable short-term pieces for implementation.

4.7

Principle7:Onlyafterunique,fullblown,explicit,andsimple strategiesarefullyformulatedcantheythenbeimplemented

According to Mintzberg (1990), this view is consistent with classical notions or rationality diagnosis, prescription, then action, representing the separation between thinking and acting. The manner in which Ansoff (1980) describes what he refers to as strategic issues betrays his bias towards giving primacy to the thinking before acting dichotomy. According to this author, strategic issues may be a welcome opportunity to be grasped, an internal strength which can be exploited, an unwelcome external treat or internal weakness which can imperil continuous success. The contemplative formulation process using the SWOT technique is thus regarded as an indispensable precursor to implementation and never a parallel or antecedent process. Ansoff also makes the point that it is not necessary to revise strategy annually because a strategy is a long term thrust which takes several years to implement. So once a strategy is fully formulated, there must be full commitment to its implementation without the need for regular revision. Strategic issues management is also based on a model of assigning responsibility for resolving issues to workers. Ansoff (1980) makes the point that the success of SIM depends on making the projects (or worker teams) resolvers, and not planners, of issues. This again betrays the separation of thinkers (senior management) from doers (workers) in understanding strategic management.

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According to Goold & Quinn (1990), the manner in which senior management can ensure that individuals at different levels (lower level managers) are motivated to implement the strategy is through personal incentives and sanctions. In a way, this acknowledges and accepts the separation between formulation and implementation. The separation between formulation (thinking) and acting (execution) is further re-emphasised by Prahalad & Hamel (1994) in their review of some of the critique on strategy. At one stage, these authors state that at the extreme some critics of strategy seemed to forget that irrespective of how efficient the body (organisation) got, it still needed a brain (strategic direction). Classical writer, Urwick (1944) cited in Miller & Vaughan (2001) saw planning as an intellectual exercise, a discipline to do things in an orderly fashion, thinking before taking action and relying on facts. Barney (2001) also deals with strategy implementation as a separate activity from formulation. This author presents two approaches to addressing strategy implementation issues in the context of resource based view. The first approach is where the ability to implement strategies is itself a resource that can be a source of sustained strategic advantage. The second approach suggests that implementation depends on resources that are not themselves sources of sustained advantage, but rather, are strategic complements to the other valuable, rare, costly to imitate, and non-substitutable resources controlled by a firm. The formulation vs. implementation dichotomy is also clear when the author defines resources as the tangible and intangible assets a firm uses to choose and implement its strategies (Barney, 2001: 54) The article by Goold & Quinn (1990) cites Roush & Ball (1980) who state that a strategy that cannot be evaluated in terms of whether or not it is being achieved is simply not a viable or even useful strategy. The establishment of control objectives is therefore an essential final step in the planning process (Lorange, 1980). Of course control objectives can only be developed once a strategy has been formulated fully.

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Camillus & Grant (1980) in Goold & Quinn (1990) have another advice. They argue that strategic implementation is best dealt with by deliberately integrating the strategic programming and operational activities into a single operational planning process which would include a statement of quantitative goals (both financial and non-financial) and a description of action to be implemented. Ackoff (2003) in spite if his positive stance on systems or synthetic thinking, falls back into the formulation vs. execution divide with a prescription for strategy formulation. He states that strategy formulation must first start with understanding what is happening inside and outside the organisation, then by developing a vision of what the organisation could be within the emerging culture and environment. Next by preparing a strategy for reaching or moving closer to that vision. Sheenan (2006) argues that brilliant strategies fail due to poor execution. The author argues that diagnostic controls, boundary controls, belief controls and interactive controls are the four levers needed to align what the firm desires to achieve (strategy) and what is actually done by its employees. The Social Learning Theory of Strategic Management (SLTSM) presented in the article by Ginter & White (1986) and as enriched by the StimulusOrganism-Behaviour-Consequence (SOBC) model of Luthans & Davis (1975) makes a clear separation between strategic planning and strategic implementation as part of the behaviour of organisations. In the same vain, Muniv-Hernandez et al. (2004) state that as all businesses are in competition, they must first formulate a competitive strategy. In developing a process model for strategic management, these authors note from reviewing literature that the main stages of the strategy process are; the establishment of main strategic objectives and performance targets; formulating the strategy; implementing the strategy and; establishing strategic control and evaluation.

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In their article, Paquin & Koplyay (2007) posit that no matter what relative importance is given to various theories of strategy, the process of strategic planning encompasses essentially the same phases: environmental scanning, followed by strategy formulation, strategy implementation, strategy evaluation and strategy control. Farjoun (2002) cites Chandler (1962) who states that, in a standard design model, the strategic management process generally consists of two main subprocesses: strategy formulation and strategy implementation. The strategy formulation sub-process is concerned with analysis and the choice of strategy at the corporate, business and functional levels. Strategy implementation comprises a series of primarily administrative activities and includes the design of organisational structure and processes and According to Selznick (1957) the absorption of policy into the organisations social structure. In the article by Jarzabowski & Wilson (2006), they state that from a representational epistemology, there is a Cartesian relationship between thought and action, in which thought precedes action. Knowledge is thus designed to assist this linear process in a prescriptive fashion. This is to say that action is driven by reliable prior knowledge (Tsoukas & Knudsen, 2002) in Jarzabowski & Wilson (2006) To try and fix the problem of mis-alignment between formulation and implementation, Ansoff (1990) introduces strategic issues management. This author regards SIM as allowing for dealing with deviations from strategic thrusts which may occur as a result of new opportunities/threats/strengths/weaknesses. By assuming linear causality Ansoffs SIM is an inadequate answer to the question posed by Goold & Quinn (1990) regarding how strategic controls can be devised that are compatible with uncertainty in the business environment, and with the need for flexibility and creativity in strategy. In recognition of the difficulties of separating implementation from formulation, Goold & Quinn (1990) observe that recent literature advocates the 35

establishment of strategic controls to monitor strategic progress and ensure implementation of strategic plans, but admit that in practice this does not always work. They state that control systems provide the basis for decisions to correct deviations from planned objectives. This largely assumes that the formulated strategy is correct, the problem lies with how it is implemented, hence the corrective action. Goold & Quinn (1990) also mention that the research that has been carried out suggests that, despite the arguments in favour of the concept of strategic control system, in practice few companies have yet made much progress with the development and use of formal or explicit control systems of the sort that they describe. They state that the conclusion can either be that there is a lag between theory and practice or that the benefits of strategic control systems have been greatly overstated in previous literature. The inadequacy of the Cartesian separation is also clearly represented in the article by Balogun (2007). This author writes about restructuring at a British utility company. The author concludes that the restructuring process at this company dismally failed because on completion of the consultant/senior manager design team, they had just closed the room up, leaving no team in place to take the design forward and oversee implementation, in a classical implementation following formulation premise. This created problems for the company. The author cautions that designing a structure and then just passing it over to members of that structure to manage the change ignores the realities of implementation, which involve considerable energy and effort to complete the detail of the design. The advice is to provide continuity through design and implementation. Good planning is generally participative, involving not only line management but also those who will be responsible for implementing plans (Hulbert & Pitt, 1996) An important and distinctive property of living systems is the tenuous connection between cause and effect. The best-laid plans are often perverted through self-interest, misinterpretation, or lack of necessary skills to reach the

36

intended goal, resulting in frustration by managers who fail to understand how their well designed strategies can fail so dismally (Pascale, 1999). A further weakness of the thought and action divide is that it assumes that data can be aggregated up the chain without losing much or distortions. Thus allowing senior managers to develop good plans using information (reports etc) from actors lower down the hierarchy who must be kept out of the creative process.

5.

INSIGHTSFROMTHEREVIEW

The forgoing review has highlighted some insights that practitioners in the field of strategic management need to be aware of and be sensitive to. Amongst the key insights is the fact of the pervasiveness of prescriptive views in strategic management, even amongst those authors and researchers that purport to be promoting the adoption of new paradigms. The extent to which the prescriptive mechanistic paradigm continues to dominate writings in strategic management is perhaps indicative of its historical contribution and utility. The schools of planning, design and positioning thus still enjoy a wide following in the field. Some of the reviewed articles assist in demonstrating the follies of an overreliance on a perspective that is often not reflective of the realities of organisational practice. This over-reliance has seen other lenses for looking at the problem of strategic management being completely overlooked or down played. The field of strategic management seems to be failing to effectively embrace alternative paradigmatic lenses or a multi-paradigmatic approach. This failure reflects inadequate levels of awareness of and/or openness to theoretical alternatives amongst students, researchers and managers. This in turn is limiting discourse and/or inquiry across paradigms.

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Further, the level of understanding of organisational plurality and paradox is constrained. Lewis & Keleman (2002) cited in Bakir & Bakir (2006) state that multi-paradigm researchers apply an accommodating ideology, valuing paradigm perspectives for their potential to inform each other toward more encompassing theories. The adoption of divergent views to strategic management has a potential of assisting managers to better deal with complexities and uncertainties that face them in their work. Instead, managers continue to struggle to make sense of, and implement, unrealistic text-book tools on strategy, most of which assume that strategy is a rational and prescriptive process. Grounded theory research used by Bakir & Bakir (2006) for instance offers a concept of strategy that utilises, rather than discards, divergent and competing paradigms of strategy. This represents a departure from the rational schools and their critiques from the behavioural schools, depending on the context of strategising, into a more comprehensive framework that unpacks the complexity of strategy, pinning down its elusiveness. A key insight is therefore that there is no need to discard prescriptive views, but that they should be used in combination with other perspectives in order to make writings in the field to closely mirror reality and be of improved utility and descriptive value. For instance, Muniv-Hernandez et al. (2004) manages to present a model that integrates deliberate and emergent strategies. This model shows that a strategy, which is eventually realised or implemented, is a combination of deliberate and emergent strategy, where the deliberate component is only a part of the original intended strategy. Accordingly, this author states that although planned, rational methods are not the whole story, they have an important part to play in creating competitive advantage. The limitations of prescriptive views are not limited to the field of strategic management. Writing and research in marketing is also affected by this overreliance on prescriptive views. This is in spite of an observation by authors 38

such as McKenna (1991) who observes that it has been shown that the old approach, based on the prescriptive planning school, which entails getting an idea, conducting traditional market research, developing a product, testing the market and finally going to market is slow, unresponsive and turf ridden. There is a compelling need to break with some of the major limiting assumptions of the prescriptive schools. Practitioners, including researchers in strategic management need to accept that many of these assumptions limit the ability of the field of to make a meaningful contribution to organisational performance. For instance, the over-reliance in strategic management on processes such as forecasting and trend analysis needs to be tempered by an acknowledgement that by their very nature, forecasts must be unreliable, particularly with technology, competitors, and markets all shifting ground so often, so rapidly, and so radically. There is a need to acknowledge the unpredictable, and often reciprocal nature of the relationship that exists between strategy, structure, conduct and performance. Prescriptive views of unidirectional linearity that have seen organisations adopting myopic strategies, which are not in sync with the fluidity of organisational contexts can only perpetuate mediocrity and underperformance. Another aspect of organisational behaviour that needs to be discarded is the belief that strategy formulation and implementation is a top down process. This view continues to see CEOs and/or senior managers going on regular contemplative retreats to conjure up often unrealistic strategies. The exclusion of the people that are at the customer interface in this process needs to be reevaluated if organisations are to achieve better results. The Cartesian principle that has resulted in the separation of thinking from doing, with the former always preceding the latter has not helped organisations to perform at their best. This way of doing things, where 39

strategy formulation is separated from and precedes strategy implementation does not seem to be suited to a world that is characterised by complexity and unpredictability. It is evident that many researchers and authors in the field of strategic management believe that lower level employees, must be restricted to implementing strategies that have emerged from the top of the hierarchy fully formulated. Not only is room not made for employees to participate in the thinking process, but neither is there space for them to continue the design process using result of lessons from implementation. By its denial of change and emergence, this process not only limits the performance of organisations, but it also alienates workers, which is probably responsible for low levels of morale that is often observed in a number of organisations. It seems that managers follow the platitudes of prescription because of a strong urge to eliminate randomness and chance. Prescriptions provide a false sense of security and control. Rather than dismissing randomness and chance, there is a need to develop approaches that acknowledge them and use them to the benefit of organisation. The impact of simplifications of the strategic management process that are provided by existing tools, models and frameworks also needs some examination. These models, including Porters five forces, the value chain, the growth-share matrix of the Boston Consulting Group, the SWOT analysis, the experience curve etc need not be regarded as dogma. There needs to be an acceptance that they are tools that can be used to support strategic management, and not dogmas to be applied and believed uncritically. For instance, in deciding strategy, it may not always be possible to know for sure upfront that a particular competence will be a strength. It is easier to do this with hindsight, but does not excuse the confusion of such hindsight with foresight, as tends to happen in strategic management writings. The over-reliance on the prescriptive perspective has resulted in too much focus being placed on the content of strategy. For example, many of the tools 40

and frameworks that are in vogue in strategic management address the issue of what an organisations strategy should consist of. This has seen very little attention being given to the process of strategy. Given the rather complex and unpredictable nature of organisations competitive context and the importance of human dynamics within organisations, it is apparent that a perspective that focuses attention on both the content and process of strategy is required. Finally, strategic management practice may benefit substantially from research programmes that focus on internal organisational environments that support the development and emergence of winning strategies. Such a focus should be applied in order to understand better the conditions that support the development of better plans, designs and positions on the one hand. On the other hand, it should assist organisations with insights on how strategies that can enable them to cope with complex, unpredictable, chaotic and random situations can be allowed to emerge.

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