STRATEGY SAFARI

A GUIDED TOUR THROUGH THE WILDS OF STRATEGIC MANAGEMENT

HENRY MINTZBERG
BRUCE AHLSTRAND
JOSEPH LAMPEL

Chapter 2: The Design School Strategy Formation as a Process of

Conception

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"Es
tab
lis
h
fit"
is
the
mo
tto
of
the
des
ign
sch

The

design school represents, without

question, the most influential view of the
strategy-formation process.
At its simplest, the design school proposes
a model of strategy making that seeks to
attain a match, or fit, between internal
capabilities and external possibilities. In
the words of this school's best-known
proponents, Economic strategy will be
seen as the match between qualifications
and opportunity that positions a firm in its
environment
(Christensen,
Andrews,
Bower, Hamermesh, and Porter in the
Harvard policy textbook, 1982:164).
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Ori
gin
s
of
2.
th
e
De
sig
n
3.
Sc
ho
ol
1.

Real impetus for the design school came from the

General Management group at the Harvard
Business School, beginning especially with the
publication of its basic textbook, Business Policy:
Text and Cases, which first appeared in 1965 (by
Learned, Christensen, Andrews, and Guth).
Philip Selznick's Leadership in Administration of
1957: in particular, introduced the notion of
"distinctive competence" (1957:42-56), discussed
the need to bring together the organization's
"internal state" with its "external expectations" (6774), and argued for building "policy into the
organization's social structure" (1957:91-107),
which later came to be called "implementation.
Alfred D. Chandler's Strategy and Structure of
1962: Chandler, in turn, established this school's
notion of business strategy and its relationship to
structure.

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The Basic Design School Model

On

external appraisal:
Andrews concluded his
discussion with questions such as "What is the
underlying structure of the industry in which the
firm participates?" and "How might foreseeable
change in the social, political, and macroeconomic
context impact the industry or the firm?" (179-180).
On internal appraisal, Andrews touched on a variety
of points, such as the difficulty "for organizations as
well as for individuals to know themselves" (183)
and the idea that "individual and unsupported
flashes of strength are not as dependable as the
gradually accumulated product-and-market-related
fruits of experience" (185).
Managerial valuesthe beliefs and preferences of
those who formally lead the organization.
Social responsibilitiesspecifically the ethics of the
society in which the organization functions, at least
as these are perceived by its managers.
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Vali-e-Asr University of Rafsanjan, Gholamreza Khoshsima, Jan 2011

Richard Rumelt (1997), has provided the best

framework for making this evaluation, in terms of a
series of tests:

Consistency:

The strategy must not present

mutually inconsistent goals and policies.
Consonance: The strategy must represent an
adaptive response to the external environment
and to the critical changes occurring within it.
Advantage: The strategy must provide for the
creation and/or maintenance of a competitive
advantage in the selected area of activity.
Feasibility: The strategy must neither overtax
available resources nor create unsolvable
subproblems.

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ENVIRONMENTAL VARIABLES
CHECKLIST

1. Societal Changes:
Changing customer preferencesImpacting product demand or design
Population trendsImpacting distribution, product demand or design
2. Governmental Changes
New legislationImpacting product costs
New enforcement prioritiesImpacting investments, products, demand
3. Economic Changes
Interest ratesImpacting expansion, debt costs
Exchange RatesImpacting domestic and overseas demand, profits
Real personal income changesImpacting demand
4. Competitive Changes
Adoption of new technologiesImpacting cost position, product quality
New CompetitorsImpacting prices, market share, contribution margin
Price changesimpacting market share, contribution margin
New ProductsImpacting demand, advertising expenditures
5. Supplier Changes
Changes in input costsImpacting prices, demand, contribution margin
Supply ChangesImpacting production processes, investment requirements
Changes in number of suppliersImpacting costs, availability
6. Market Changes
New uses of productsImpacting demand, capacity utilization
New marketsImpacting distribution channels, demand, capacity utilization
Product obsolescenceImpacting prices, demand, capacity utilization
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STRENGTHS AND WEAKNESSES

CHECKLIST

1. Marketing
Coordination of effort
Product quality
5. Operations
Number of product lines
Control of raw materials
Product differentiation
Production capacity
Market share
Pricing policies
Production cost
Distribution channels
structure
Promotional programs
Facilities and equipment
Customer service
Inventory control
Marketing research
Advertising
Quality control
Sales force
Energy efficiency
2. Research and
6. Finance
Development
Financial leverage
Product R&D capabilities
Process R&D capabilities
Operating leverage
Pilot plant capabilities
Balance sheet ratios
3. Management
Stockholder relations
Information System
Speed and responsiveness
Tax situation
Quality of current information
7. Human Resources
Expandability
Employee capabilities
User-oriented system
Personnel systems
4. Management Team
Skills
Employee turnover
Value congruence
Employee morale
Team spirit
Employee development
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University of Rafsanjan, Gholamreza Khoshsima, Jan 2011
Experience

Premises of the Design School

1. Strategy formation should be a deliberate

process of conscious thought (94, 543).
2.
Responsibility
for
that
control
and
consciousness must rest with the chief executive
officer: that person is the strategist (3, 19, 545).
3. The model of strategy formation must be kept
simple and informal.
4. Strategies should be one of a kind: the best
ones result from a process of individualized
design (187).
5. The design process is complete when strategies
appear fully formulated as perspective.
6. These strategies should be explicit, so they
have to be kept simple (105-106).
7. Finally, only after these unique, full-blown,
explicit, and simple strategies are fully formulated
can they then be implemented.
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Critique of the Design School

A strategy that locates an organization

in a niche can narrow its own
perspective. This seems to have
happened to the design school itself
with regard to strategy formation.
The premises of the model deny
certain important aspects of strategy
formation,
including
incremental
development and emergent strategy,
the influence of existing structure on
strategy, and the full participation of
actors other than the chief executive.
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10

Critique of the Design School

Assessment of Strengths and

Weaknesses: Bypassing Learning
This school's promotion of thought
independent of action and strategy
formation.
The point we wish to emphasize is:
how could the firm have known this
ahead of time? The discovery of "what
business are we in" could not be
undertaken merely on paper; it had to
benefit from the results of testing and
experience.
And
the
conclusion
suggested from such experiences is
that strengths often turn out to be far
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11

Cri
tiq
ue
of
the
De
sig
n
Sc
ho
ol

Structure Follows Strategy as the

Left Foot Follows the Right:
Chandler (1962): structure should follow
strategy and be determined by it.
We conclude, therefore, that structure
follows strategy the way the left foot
follows the right foot in walking. In effect,
the development of strategy and the
design of structure both support the
organization, as well as each other. Each
always precedes the other, and follows it,
except when the two move together, as
the organization jumps to a new position.
Strategy formation is an integrated
system,
not an arbitrary sequence.
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12

Cri
tiq
ue
of
the
De
sig
n
Sc
ho
ol

Making Strategy Explicit: Promoting

Inflexibility
To so articulate strategy, a strategist must
know for sure where he or she wishes to go,
with few serious doubts. But organizations
have to cope with conditions of uncertainty
too. How can a company come "to grips with
a changing environment" when its "strategy
is [already] known" (Andrews, 1981a:24)?
Our point is that organizations must function,
not only with strategy, but also during
periods of the formation of strategy, which
can endure for long periods. During periods
of uncertainty, the danger is not the lack of
explicit strategy but the opposite
premature
closure.
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13

Cri
tiq
ue
of
the
De
sig
n
Sc
ho
ol

Moreover, even when uncertainty is low, the

dangers of articulating strategies must still be
recognized. Explicit strategies are blinders
designed to focus direction and so to block out
peripheral vision. They can thus impede
strategic change when it does become
necessary. Put differently, while strategists may
be sure for now, they can never be sure forever.
The more clearly articulated the strategy, the
more deeply imbedded it becomes in the habits
of the organization as well as in the mind of its
strategists.
To summarize, certainly strategies must often
be made explicit, for purposes of investigation,
coordination, and support. The questions are:
when? and how? and when not? These are
questions
assumed away in the design school.
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14

Cri
tiq
ue
of
the
De
sig
n
Sc
ho
ol

Separation of Formulation from

Implementation:
Detaching
Thinking from Acting
The
formulation-implementation
dichotomy is central to the design
schoolwhether taken as a tight model
or a loose framework.
In an unstable or complex environment,
this distinction has to be collapsed, in
one of two ways. Either the "formulator"
has to be the "implementor," or else the
"implementors" have to "formulate." In
other words, thinking and action have to
proceed in tandem, closely associated.
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15

The
Desi
gn
Scho
ol:
Cont
exts
and
Contr
ibuti
ons

Our critique has been intended to

dismiss not the design school but its
assumption of universality, that it
somehow represents the "one best
way" to make strategy.
In particular, we reject the model
where strategy formation has to
emphasize learning, especially on
a collective basis, under conditions
of uncertainty and complexity.
We also reject the model where it tends
to
be
applied
with
superficial
understanding of the operations in
question.
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16

1. One brain can, in principle, handle all of

the information relevant for strategy
formation.
Here the situation must be relatively simple, involving a
base of knowledge that can be comprehended in one brain.
Four 2. That brain is able to have full, detailed,
Condi
knowledge of the situation in
tions intimate
for
question.
Desig This potential for centralizing knowledge must be backed up
n
Schoo by sufficient access to, and experience of, the
organization and its situation, so that one strategist can
l
understand in a deep sense what is going on. We might add
that he or she can only know the organization by truly
being in the organization. In fact, the design school
model requires a strategist who has developed a rich,
intimate knowledge base over a substantial period of time.
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17

Four Conditions for Design School

3. The relevant knowledge must be

established before a new intended strategy
has to be implementedin other words, the
situation has to remain relatively stable or at
least predictable.
The strategist must know what needs to be known to conceive
an intended strategic perspective that will have relevance well
beyond the period of implementation. So we can conclude,
rather, that when the world so cooperates, the design school
model may work.

4. The organization in question must be

prepared to cope with a centrally articulated
strategy.
Other people in the organization must be willing to defer to a
central strategist. They must also have the time, the energy,
and the resources to implement a centrally determined
strategy. And, of course, there has to be the will to do that
implementation.
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