Module 1

Strategic planning or strategic

management: A shift in paradigm
Objectives
On completion of this module, you should be able to:
• Understand the fundamental military strategy concept and the function of
strategy as applied to business;
• Understand that there are, in fact, many perspectives on the concepts and
forms of strategy;
• Appreciate the paradigms shift from strategies of intent to emergent strategies;
• Understand the assumptions of the school of strategic planning by intent;
• Explain the stable equilibrium view of the world.

Introduction
From a traditional or historical perspective, the term strategy reflects strong
military roots. It is from these origins that the concept of business strategy arose.
There are many varying definitions of business strategy as will become apparent
when you do your readings. Many definitions arise because of the many
perspectives business strategy can be seen from. It is the aim of this module to
introduce you to the different approaches taken to business strategy depending on
ones assumptions or basic beliefs relating to the nature of the environment and the
relationship of the strategist to it. The two main approaches are the traditional
deliberate planning approach of strategy of intent, or alternatively, the emergent
viewpoint of strategic management. The assumptions of these deliberate/strategies
of intent or emergent strategies discussed.
For more than three decades there was agreement on the basic paradigm of
strategy in business. The assumptions included were that the environment was in a
state of equilibrium, an organization was structural and change happened in a
cause and effect way. Several schools of thought existed within this paradigm, but
the basic principles and fundamental intent were essentially the same. In learning
about strategy and strategic management, it is important to understand the
traditional approach, and be able to apply the theories and models where they are
appropriate in analysis. The principles still have some application, but new
concepts of the fundamental nature of strategic management began to emerge

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during the late 1980s. It is also essential to appreciate the shortcomings of the
traditional approach in the light of the assumptions of newer approaches and
paradigms. Hence, this module presents you with the different perspectives
present in the strategic management discipline.

The Function of Business Strategy

Military commanders employ strategy in dealing with their opponents. The
essence of strategy is to match strengths and distinctive competence with terrain
in such a way that one enjoys a competitive advantage over rivals competing on
the same terrain. Competitive strategy for organisations aims at achieving
favourable match between a firm’s distinctive competence and the external
environment in which it competes. However, the nature of this match is more
complex in the business sphere. Industry rivals sometime have the opportunity to
improve their strengths or skills as competition unfolds. The value of their
distinctive competencies that lead to competitive advantage can also decline over
time as a result of environmental change. Because of these possibilities,
competitive strategy involves not just one, but many different imperatives. The
most important of these are to discover new opportunities, avert potential threats,
overcome weakness, sustain existing strength, and apply strength to new fields
(Pitts and Lei, 1996).
The function of strategy is therefore to enable companies to survive and keep
ahead in global competition, to make decisions about how the firm needs to react
to an ever-changing environment and whether there is a need to grow, acquire,
merge, divest or downsize.
Concepts and Forms of Strategy

Intended
strategy
Deliberate
strategy

realised
strategy

Unrealised
strategy
Emergent
strategy

A position
A posture

A perspective
Figure 1.1 Mintzberg

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Mintzberg has also distinguished between eight styles of strategic management

and five types of organisation [Stacey, 1996, p. 187-190].
This adds to the diversity of theories and perspectives discussed in Hubbard
(2000, p. 9). It can be derived form the above discussions that strategy is an
abstract concept. Mintzberg (1987) proposed five definitions of strategy: as plan,
ploy, pattern, position and perspective. He used the pattern definition to suggest
that there are different forms of strategy: intended deliberate, emergent, realised
and unrealised (as shown in Figure. 2.3) adapted from Mintzberg (1987).

The paradigm shift: From strategies of intent to emergent

strategies
Strategy and strategic management can be seen from two different paradigms or
worldviews. The paradigm shift from the conventional wisdom about how things
have always been done and must continue to be done which is the current
paradigm or strategies of intent, to that of emergent strategies introduced in the
latter modules is the foundation of the course.
A paradigm is a general perspective or way of thinking that reflects fundamental
beliefs and assumptions about the nature of organisations (cf. Kuhn, 1970;
Lincoln, 1985 cited in Gioia, 1990). “These are not merely opinions, but
ontological and epistemological ground on which the theorists build their version
of a discipline.” (cf. Kuhn cited in Parker, 1991).A paradigm is a mode of
thinking or theorising and can be seen as a map. It is a frame of reference from
which a manager operates. Switching paradigms, means changing meta-
theoretical assumptions and is difficult to in do practice.
Approaches to conventional strategy applied to business have underlying
assumptions about the nature of organisations. These assumptions have to do with
both how the environment is viewed, and the relationship of the strategist to it.

Definition of strategies of intent

The traditional perception of strategy is expressed in the following three-stage
definition which progresses from a simple, static view to dynamic, to proactive,
and is explained in the table below:
Table 1.1
Stable Equilibrium definitions of static and dynamic strategies
(1) Strategy is the means used to achieve objectives. It integrates choice and
action, analysis and capabilities. It is maintaining a match between the
firm’s capabilities and its environment.
(2) In a dynamic environment, strategy is formulated in response to, or in
anticipation of environmental changes. Capabilities are modified to put
strategy into effect.
(3) Strategy can be used to shape the environment by opportunistically
taking advantage of environmental trends and events.

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This definition is set in what Stacey (1996) calls the ‘stable equilibrium
paradigm’. This idea constitutes a management paradigm in which successful
organisations are seen to be those which are moving closer to a state of stable
equilibrium, distributed only by environmental changes that it was not possible to
predict.
These definitions imply the development of a formally written plan and its
implementation with the perception of two distinct phases, a formulation phase
and an implementation phased. These definitions are therefore from the planned
traditional perspective.
Alternatively, and more broadly:
An organisation’s strategy consists of the actions and business approaches
management employs to achieve the targeted organisational performance
(Thompson & Strickland, 1999, p. 8). According to Hubbard, Pocknee and Taylor
(1996, p. 2), strategy is about ‘those decisions, which have high medium-to long-
term impact on the activities of the business, including the implementation of
those decisions’. You can derive four key aspects of strategy from the above
definitions. Hubbard et al (1996) say that it is about long-term, decision-making,
integration and focus of business functions and most importantly implementation.

The Strategies of Intent: Assumptions

Formulation – Implementation –
Top management’s job Everyone’s job
Difficult Innovation

ENVIRONMENT STRATEGY CAPABILITIES

Economic, Resources,
Technological, Technology,
Political/Legal, Organization
Social

PERFORMANCE

Figure 1.2 The Current Paradigm

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The following two frames of reference by Stacey and Clegg are very useful in
understanding the planned /intent strategic viewpoint:
Table 1.2
Stacey’s Conventional Frame of Assumptions
Strategy
Strategy as the realization of prior intent.
Long term future is predictable to some extent.
Visions and plans are central to strategic
management.
Vision: single shared organisation-wide intention. A
picture of a future state.
Strongly shared cultures.
Cohesive teams of managers operating in a state of
consensus.
Decision making as purely logical, analytical process.
Long term control and development as the
monitoring or progress against plan milestones.
Constraints provided by rules, systems and rational
argument.
Top management drives and controls strategic
direction.
General mental models and prescriptions for many
specific situations.
Adaptive equilibrium with the environment.
Source: Stacey, R (1993 February). Strategy as order emerging from chaos. Long Range Planning,
26(1) 10-17. (adapted)

Table 1.3
Clegg’s Conventional Assumptions for strategies of intent
Planned and Intent

Classical /neoclassical orthodoxy

Rational planning

Strategic planning

Hierarchy

Taylorism/Fordism

Shareholders / Financial performance indicators

Local/National

International
Source: Clarke,T & Clegg, S (1988). Changing paradigms, p. (adapted)

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This model is the stable equilibrium or conventional model and is the model
from which strategic analysis, strategic formulation and strategy
implementation and evaluation is derived. It is a model of prior intent (either
static or dynamic). It is from this conventional wisdom that Modules 2 to 12
are to be understood.
As modern science has been the dominant way of thinking since industrialisation,
sociological and organisation studies have been underscored with positivist
/reductionist assumptions. These dominant views are traditional to the classical
modern Western approach to thinking. The environment is considered static and
stable. Conventional business systems preoccupied with order, stability and
consistency in all time frames result in ideologies, structures and procedures to
control long-term outcomes (Stacey, 1992, p.43).
Strategic choice theory espouses a strategy by intention. It prescribes a procedure
involving the formulation of long-term strategies and then their implementation.
The theory is built on the systemic notion of interaction in which organisations
adapt to their relatively stable environment. Humans are cybernetic entities that
learn through an essentially negative feedback process. The strategist is an
objective observer, who stands outside the organisation and observes it as a pre-
given reality. Analysis is on the macro level of the organisation and
microdiversity is ignored. Conventionally, strategy by prescription or intention
results in the values and intentions of most powerful individuals in the
organisation formulating the strategy (Stacey, 2000, p. 34, p. 398, p. 401).
These static perspectives of strategy include the basis of traditional business
analysis. These, by necessity are review of the past and present rather than a
prescription for the future (Stacey, 2000, p.40; McKenna, 1999, p.392).
Traditionally in conventional business strategy, the first phase comprises of
analysing trends in the industry, and then scrutinizing enterprise business
processes to identify gaps between the firm and best practice leaders. The second
phase requires designing fundamental organisational change. The third phase
culminating in the implementation and execution of the business plan to bring
about the necessary organisational changes. In conventional business design, core
competencies are analysed. Fairly rigid infrastructures and processes are then
created in order to produce these products or services. Design ends with the
delivery of products through relevant channels to customers (Kalakota &
Robinson, 2000, p. 60 and 61). It is essentially a seller driven model and an
activity-centered approach.
Figures 1.3 and 1.4 are diagrammatical interpretations of the traditional planning
school models.

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Figure 1.3 Factors shaping the choice of company strategy

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Figure 1.4 How strategic thinking and strategic analysis lead to good strategic
choices

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A definition of emergent strategies

Strategy can be defined as “The process of identifying, choosing and
implementing activities that will enhance the long-term performance of an
organisation by setting direction and by creating ongoing compatibility between
the interests, skills, and resources of the organisation, and the changing external
environment in which it operates.” (Viljoen cited in McKenna, 1999).
Additionally, “The task of managing is to produce , or allow to emerge, a posture
and position that will yield performance in the long term future that satisfies the
needs of all stakeholders at the time (McKenna, 1999).
“While traditional organisations require management systems that
control people’s behaviour, learning organisations invest in
improving the quality of thinking, the capacity for reflection and team
learning, and the ability to develop shared visions and shared
understandings of complex business issues.” (Senge, 1990, p289).

The emergent school of strategy

Stacey (1996) has suggested that much of the received wisdom on strategic
management is fantasy defence against anxiety. Managers have an essential role
in creating the necessary unstable conditions required for that effective learning
and political interaction from which new strategic directions may or may not
emerge.
The concepts of
• organisations as inherently paradoxical in nature
• chaos
• feedback systems operating far from equilibrium
• self organising theory and
• problems in long-term planning
will be covered in more detail from Module 10 onwards in this course as an
introduction to the less prescriptive forms of strategic management.

Activity
(15 minutes)
List your strengths, weaknesses, opportunities and threats present in your life at
this time. Remember strengths and weaknesses are internal and the remainder
external.

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Reading 1
Wheelen, T.L. & Hunger, J.D. (2000). Strategic management and business policy
(p. 358-360). Upper Saddle River, NJ: Prentice Hall International.
Reading 2
Malloy, D.C., & Lang, D.L. (1993). An Aristotelian approach to case study
analysis. Journal of Business Ethics, 12(7), 511-516.

Journal
As referred to in the Unit Plan, it is optional for students to keep a journal whilst
working through the unit. However, doing this may help a student to understand
and appreciate the contents much better.

Reflect on what you have learnt

Take some time to read back through this module. Look at the key concepts. If
you don’t think you could describe each one to someone else, find the section
where they are introduced and re-read it, until you feel you understand it.
Write down something new that you learnt from this chapter that you think will be
useful.

Write down something that you want to find out more about.

Check that you have not missed any section of this module before proceeding to
the next.

Additional reading resources and references

Hubbard, G., Morkel, A., Devenport, S., & Beamish, P. (2000b). Cases in
strategic management. Frenchs Forrest, NSW: Pearson Education.
Johnson, G., & Scholes, K. (1997). Exploring corporate strategy (4th ed.).
London: Prentice Hall.

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