The Strategy Concept I: Five Ps For Strategy

by Filippos
Author: Mintzberg
Year: 1987
Objectives:
This lecture introduces the course and seeks to provide a general understanding of the nature of strategy (Mintzberg, 1987, Grant,
1997), the theoretical and practical history of firm strategy (Teece et al., 1997), of the behavioral assumptions underlying strategy
analysis (Grant, 1997; Mintzberg, 1987), and the increasingly important link between strategy and social responsibility (Porter and
Kramer, 2006). The predominant theoretical lenses applied in this course (especially Industrial Organization theory, resource-based
theory and transaction cost theory) are shortly presented in a comparative perspective (Teece et al., 1997). We assume that
everybody in the class is familiar with the basic elements in Porter's strategy perspective. If not, you should make yourself familiar with:
M. Porter (1985): Competitive Advantage, The Free Press, New York (chapter 1 and 2), and
Porter, M. (1991): Towards a Dynamic Theory of Strategy, Strategic Management Journal, Vol. 12 (21 s.).

Literature:
Grant - The Concept of Strategy, Chapter 1 - BINDER
Teece, Pisano and Shuen - Dynamic Capabilities and Strategic Management,
Mintzberg - The Strategy Concept I: Five Ps For Strategy,
Porter and Kramer - Strategy & Society. The Link between Competitive Advantage and Corporate Social Responsibility

Mintzberg:
The Strategy Concept I: Five Ps for Strategy
The 5 Ps: Plan Ploy Pattern Position Perspective
- By explicating and using five definitions, we may be able to remove some of the confusion, and thereby enrich our ability to
understand and manage the processes by which strategies form The field of strategic management cannot afford to rely on a single definition of strategy. The word has been used implicitly in different
ways even if it has traditionally been defined formally in only one. This article presents five definitions of strategy and considers some
of their interrelationships.

Strategy as Plan:
Strategy as a plan is the most common definition of strategy. It implies that strategies are made in advance and that they are
developed consciously and purposefully. That definition can be related to military definitions, game theory, management and the
dictionary.

Strategy as Ploy:
Strategy can also be a ploy for example used to threat, send signals into the market, to bargain or to outwit an opponent or
competitor. Porter has covered some of hose ploys and devoted chapters in his books to: market signals, competitive moves and
defensive strategies.

Strategy as Pattern:
Defining strategy as a plan is not enough. Strategy needs to be realized and made into a pattern. Strategy is consistency in behavior,
whether or not intended. People form strategies with their actions. Consistency or pattern in a stream of actions creates a strategy.
Points out the relationship between:
Intended strategy, Deliberate Strategy, Emergent Strategy, Unrealized Strategy and Realized Strategy.

So many things can actually happen and change from the stage where a strategy is formalized and until the point the strategy is
realized.
But what do we form strategies about?
According to the author it can basically be about anything. Most commonly referred to usage of resources but also products and
processes, customers and citizens, social responsibilities and self-interest.

Strategy as Position:
Strategy can also be a means of locating the organization in the competitive environment. In that way the strategy becomes a link or a
mediating force between the organization and the environment.
Strategy as a position does not address the competitive environment. It can be a head-on competition of two players or it can be an nplayer market. The position can also be about avoiding or keeping the competition away (Blue ocean).
The strategy could also be pursued to promote cooperation between organizations, even would-be competitors. These collaborations
range from informal arrangements to joint ventures and mergers.

Strategy as Perspective:
Strategy viewed as an ingrained way of perceiving the world, a common and shared company perspective. Strategy in this respect is
to the organization what personality is to the individual. That could be the character of the organization.
The definition suggests that strategy is a concept. Every strategy is invented and exists only in the minds of interested parties that
pursue them. A collective mind Individuals united by common thinking and/or behavior. A major issue is therefore how to read the
collective mind and understand how intentions diffuse through the system.

Interrelating the Ps:

There are many different interrelations between the 5 Ps. Strategy viewed as both position and perspective can be compatible with
strategy as plan and/or pattern.
Describes different views of strategy and different clarifications briefly:
Most interesting is Majone.
Policy core: Basic principles, Commitments, and Norms.
Protective belt: Plans, Programs, and Decisions.
Companies should ask themselves what strategic changes influence what definition and what P?
- Example: The move into breakfast menu for McDonalds was a change in position but not in perspective.
- It all depends on how we define strategy and what part of the definition is most important to our company.

The need for Eclecticism in Definition:

The different definitions do not compete, no one is more important or relates more to strategy than the next one. They are
complementary, each adds important elements to our understanding of strategy and encourages us to address fundamental
questions.

Plan: Strategy deals with how leaders try to establish direction for organizations, to set them on predetermined course of action. But
do people always say what they mean or mean what they say? We must get into the mind of the strategist to find out what is really
intended.
Ploy: Takes us into direct competition. Where threats and other maneuvers are employed to gain advantage. But strategy is rooted in
stability, plans and patterns and not change.
Pattern: Focuses on action. Strategy is nothing if we do not take behavior into account. Deals with consistency in behavior. Realized
strategy most important.
Position: The context and the competitive environment of the organization and the actions of the people forming the organization.
Intentions diffuse through a group of people and become norms and values, patterns of behavior become ingrained in the group.
The Organizational mind.