Strategic Planning versus Strategic Incrementalism - Essay Example

? Strategic Planning versus Strategic Incrementalism Contents Part 3 Article 3 Article 2 3 Article 3 4 Article 4 5 Article 5 6 Part 2 7 Strategy planning and incremental approaches to the strategy formulation 7 Identify and analyse the circumstances under which the planning approach to the creation of strategy in organisations may be more appropriate and effective than the incremental approach? 10 To what extent is it possible and desirable for the planning and incremental approaches to be integrated within individual organisations? 13 Reference 15 Bibliography 17 Part 1 Article 1 In the article “Of Strategies, Deliberate and Emergent” by Henry Mintzberg and James A. Waters has helped to distinguish between the two form of strategies which are said to be two ends of continuum in the real world strategies. The article points out the importance of strategy and how organisation forms strategies; the origin of the strategies has been investigated by exploring the relationship between intentions and plan and finally what actually organisation did. The article has distinguished deliberate strategies from the emergent strategies and plays a central them in the article. The paper helps to understand the complexity involved in the process of strategy formation by elaborating and refining the concepts of both the strategies. The article has helped to answer the part 2 of the assignment as it has explained the planned strategy through which effectives of the planned strategy approach can be assumed and further use to answer the relevant queries. Apart from the planned strategy and pure deliberate and emergent strategies, the article has also explained the other types of strategy which organisation might use and they are entrepreneurial strategy, ideological strategy, the umbrella strategy, the process strategy, the unconnected strategist, consensus strategy and imposed strategies. Article 2 The second article talks about the “Pitfall of Strategic Planning” which was stated by Henry Mintzberg and addressed the planning strategy to be obsessed with control both decision and strategies for the present and future, for the managers and workers and for the customers and marketers. The article has contributed in analysing the major pitfalls of planned strategic approach in a way supporting the Incrementalism strategic approach. In the article other forms of way in creating strategy have also been discussed, one visionary and the other form being learning. But all the three processes should work for organisation to be effective. The article stated that the planed strategic approach is highly implementable especially when the conditions or the external environment are stable. The statement supports the query as to the type of environment in which the strategic planned approach works at its best so that organisation can evaluate all the external conditions before formulating strategies in a planner and systematic manner. Thus it can be said that pitfall in planning takes place when manger do not support planning and environmental factors are not conducive in the formation of effective strategy and vice versa. Therefore pitfall of strategic planning is an article stating that not always planned strategic leads to success. Article 3 The article, “Strategic Change: logical Incrementalism” talks about the incrementalism approach in strategic formulation and believes that strategies should be incorporated after evaluating the current environment. The article has contributed to support the incremental approach and to compare and also contrast the incremental approach from the planned strategy formulation. It has been learnt that most of the effective strategies emerge from so called “strategic subsystem” each of which tends to attacks specific issue in much disciplined way. Various organisations have adopted the incremental strategic approach such as IBM, Xerox, General Motors and others. Thus this has also contributed in the third question of second part in proving example of real companies adopting incremental strategic approach. Thus the aim of the article is to show that “logical incrementalism” is just not “muddling” but instead a purposeful, conscious, proactive as well as good management. Organisation adopting the incrementalism approach tends to be successful and is able to cope up with the uncertainties of the external environment. If the strategy is managed properly it would help executives to bind all the contribution of systematic analysis, theories of powers as well as concepts related to organisational behaviour. The article has discussed the rationale behind so called “logical incrementalism” in the process of strategy formulation for organisation. Article 4 The article “Crafting strategy” by Henry Mintzberg helps to bring one back to the basics with senses rather than analysing with the help of tacit knowledge and decide when to stay and break away and is compared with strategy. By analysing the situation it helps to define the challenges and evaluate all the possible consequences of available solutions but the best of strategies are inductive in nature than deductive. The article talks about deliberate and the emergent strategies and everything seems to be written or said about deliberate process where first organisations thinks and then action takes place. The article has contributing to the fact that strategy which tends to be realised can emerge in corresponding response to an evolving situation and can also be brought out deliberately. The strategic makers are compared to craftsman and try to say that craftsman works and thinks at the same time as compared to organisation which tends to separate the work of mind and hand. It is further said that both the strategies walk hand in hand and both the strategies are equally important but learning should come with control contributing to the fact that both deliberate and emergent strategy are highly important and contributes towards the sustainability of the organisations. Article 5 The article “Rethinking incrementalism” by Gerry Johnson has contributed greatly in setting views about the incrementalism strategy and that big organisation also tends to adopt the incrementalism strategy. It suggests that if the strategies are to be effectively managed there must exits constructive tension between what needs to be changed and what needs to be preserved. It also say that the reason for organisations likely to adopt strategies which are divergent from the previous strategies because it tends to have a more heterogeneous ideology in terms of images and symbols. The articles thus discusses the various notion of incremental strategic management and also argues to the fact that such approaches in formulating strategies tends to raise important issue which are of concern to the management of strategic changes in a respective organisation. The article has very well contributed in defining the incrementalism strategic approach and in comparing the two strategies in terms of their approach and formulating perspectives on Strategic Planning versus Strategic Incrementalism. Part 2 De Wit and Meyer (2010) identify a number of pairs of "diametrically opposed perspectives", ways in which strategy can be viewed, understood or, indeed, approached by managers. One of these pairs of perspectives is Strategic Planning versus Strategic Incrementalism Strategy planning and incremental approaches to the strategy formulation Strategic planning aims to look towards the consequences of chain of the cause and effect over a period of time of intended or actual decisions which a manger makes. Strategic planning also tends to look at the alternative course of actions which might serve purpose in the future and when choices are made among the given alternatives they tend to become basis for the current marketing decisions. Thus it can be said that strategic planning is a systematic identification for opportunities and also towards threats which might prevail in the near future and combining with other relevant data the company will be able to make a better decisions making it easier to explore the opportunities and avoid threats (Steiner, 1997, p. 13). It must be noted that unlike strategic planning all the strategies are not always created or developed in a systematic and in a deliberate manner and further implemented in a step by step process. Instead they tends to occur, change as well as develop with time and this process is termed as strategic incrementalism where incremental changes takes place as managers learns from experience and thereby make adjustments (Schermerhorn, 2009). Both strategic planning and incremental strategies in case of strategy formulation tends to differ in the way the strategies are formulated and developed. One of the most important question arise for the mangers are how the strategies should be formed, should the mangers formulate and implemented strategic plans or move incrementally. Table 1 below indicates the differences between strategic planning and strategic incrementalism perspective. Figure 1: Strategic planning versus Incrementalism (Source: Wit & Meyer, p. 128) According to Lorange and Chakravarthy formal planning do not necessarily leads to effective formulation of strategy if the strategy planned does not linked with other organisational system. The strategic planning approach should have the ability to interact with the monitoring process, control the learning process, staffing system and the incentives system. In case of incremental strategic approach, as per Mintzberg and Quinn strategic incrementalism is a positive approach in regards to strategic formulation as the mangers associated can choose intentionally the required unintended strategies. Quinn has referred to proactive strain of so called incremental behaviour as “logical incrementalism” which states that the approach tends to be much more reasonable as well as well considered in comparison to the strategic planning approach (Wit & Meyer, 2010, p. 128). The logical incrementalism tends to be much more fluid and evolving as compared to the formal strategies but however it can also be said that the process do not involve a clear intentions and priorities. But both the strategies together present a paradigm which emphasises the rationality of decision makers and how the strategy makers cope with complexity and uncertainty while staying committed towards the strategic objectives. As per Quinn, incremental approach allows combining of rational as well as systematic analysis with respect to organisational behaviour. The idea of Mintzberg has highly complimented the idea of Quinn where both of them have agreed in the strategic process (Ortega, 2004, p. 1). Another set of similarity between strategic planning and strategic incrementalism is that in both the approach it is believed that strategizing requires the manger to put focus about the future and hence takes into consideration the approach of scenario development. In case of strategic planning approach, scenario development is an excellent refinement and in case of strategic incrementalism scenario development is one of useful way in order to assist the mental experimentation (Wit & Meyer, 2010, p. 128). As compared to Quinn strategic incrementalism, strategic planning tends to have some of the severe pitfalls. The most popular pitfall of strategic planning is commitment. Planning is however assumed to be one of the best ways in the formulation and implementation of strategy. In a more specific way the issue is not just about how committed the management is towards planning but also the planning made is committed towards the management, whether the commitment engenders in the process of strategy making (Mintzberg, 1994, p. 160). In addition to the above pitfall, planned or deliberate strategy faces two significant issues is that all the strategies which the top team tends to attempt but does not takes place in practice. The product may encounter low sales due to changing customers taste and preference, uncertainty along with other external factors. And secondly strategies which gets implemented do not takes place through the planning process. Also sometimes the strategy which are the organisation adopts in due course time are actually not the strategies which the organisation wants to do but instead are forced to implement as shown in Figure 2 (Haberberg & Rieple, 2007, p. 50). Figure 2: Strategy Development Processes Identify and analyse the circumstances under which the planning approach to the creation of strategy in organisations may be more appropriate and effective than the incremental approach? Strategic planning approach argues to the fact that strategies need to be deliberately planned and thus executed. Anything that is not planned and patter of action which was not planned cannot be termed as strategy. But the mangers cannot relay simple on good fortune instead put enough time and effort in the formation of plan by making effective use of all the available information and weighting all the strategic alternatives available to the managers. The motto of planned strategic approach is to “think before you act” and once the strategies are adopted action taken are usually swift, efficient as well as controlled. The whole purpose of strategizing is to provide direction so that the organisations do not drift away from the objective. Another major advantage of the planned strategic approach in the formulation of strategy is that the approach allows differentiation and also formalization of the strategic tasks because of its nature of being highly structured leading to well formalization. Strategic planning also encourages long term commitment and thinking and tends to direct attention for the future. Strategy planning approach is not just limited to big and large organisation; SME also goes for strategic planning. It has been seen that organisation such as Samsung, Johnson & Johnson have undertaken the strategic approach and has been able to effectively implemented the set plan and achieve the desired objectives. The above statement can be well supported with the following example, Public health care organisation tends to operate in dynamic environment which is said to be unpredictable and turbulent and thus becomes extremely necessary for these types of organisation to develop and implement plans in order to take advantage of the changing environment and therefore they go for strategic planning approach. Strategic planning which is mostly used in private sector can also benefit and applied in the healthcare sectors (Kinsella, n.d). The Small and Medium enterprise also tends to adopt the strategic approach a formulating the strategies accordingly. Strategic planning aims to set long term goals for the organisation along with implementing and developing the plans in order to achieve the desired goal and can also be said that strategic approach in practical sense is all about achieving a competitive advantage. Strategic learning has helped most of the SMEs to perform better and is likely to achieve a higher sales growth, return on the assets, higher profits and higher growth in employees. In addition SME that are engaged in strategic planning are also likely to e more innovative with newly products, new process along with management technologies to be able to achieve international growth. Most importantly SMEs which follows strategic planning approach are less likely to experience failure in the long run. While it is extremely true that most of the SME performance are driven by strategic planning supporting the fact that the SMEs are on balanced and has greater advantage towards planning as compared to not planning approach. But despite of the opportunities and advantage provided by the planned strategic approach it has been noticed that strategic planning seems to be rare for most of the SMEs. The SMEs tends to move towards short term issues rather than concentrating in long term strategic issue and the decision are based on reactive basis rather than proactive. Therefore the reason for some of the SMEs adopting the planned strategic approach in comparison to other SMEs which do not has not been well understood (Wang, Walker & Redmond, n.d). But the fact cannot be ruled out that strategic planning are essential and important for managers in different types of organisation be it small, large, public or private in order to survive in a stable or dynamic and also in simple or complex environment. Mintzberg argues to the fact that the process of creating strategy is highly complex which demands sophisticated cognitive as well as social skills. Mintzberg tends to dissect what he has termed to be “fundamental fallacies of strategic planning” which means that since strategic planning tends to control and predict the future, the forecasting techniques are limited and also inaccurate; also strategic planning requires use of quantitative data in effective formulation of planned strategy. But it does not let him conclude that strategic planning is of no use rather strategic planning does have a various roles to perform in all the types of organisation and help groups to operationalize and evaluate the strategies (Mintzberg, 2011). To what extent is it possible and desirable for the planning and incremental approaches to be integrated within individual organisations? By comparing the intended strategy with realised strategy which has allowed distinguishing the deliberate strategies which are realise as intended from the emergent strategies. The two strategic approaches are crucial for organisations and plays a central them in the implementation of the strategy. There are organisations which have undergone strategic planned approach and there is also organisation which believes in incremental approach. The paper aims to explain through help of real time organisation which has carried on the incremental approach successful and also the planned approach and has succeeded in the competitive market. One such company which has adopted the strategic incremental approach and has been able to capture market share is ‘Honda.’ According to a report of Boston Consulting Group (BCG), Honda’s success in the US market highly depended on the mode of approach adopted by the company. Honda success in the US market was due to result of some of happy accidents. The manger of Honda had tried to sell off the lager bikes which were not suitable for the road conditions in America. Thus it led the company to shift to smaller vehicles and this happened mainly because there was no other option left for Honda expects moving from big vehicles to smaller ones and also because the retailers in US had already expressed interest to the Japanese manger as it was spotted with bikes which were comfortable to travel around. Henry Mintzberg through this case of Honda has supported his idea with regards to emergent strategy. As per Mintzberg the success of Honda came about because the company have adapted the conditions as and when they encountered rather than planning the strategies beforehand. However it was argued by Andrew Mair who was an academic in America that Honda always wanted to market the smaller motorcycles and the capacity to manufacture were highly planned from before. He also suggested that the real basis of Honda success was not because of avoidance of planning but the inability of the company to handle the issues (Haberberg & Rieple, 2007. p. 52). Another example of strategy incrementalism can be well explained with the help of the brand ‘Yoshinoya.’ Yoshinoya is a fast food joint which serves food in Japanese style and has about 1000 outlets in Japan and about 276 across overseas mostly in the USA. The food joint is only amid size global player but with good financial performance. The president of Yoshinoya, Shuji Abe, is planning to expand and grow the number of outlets to 1340 in Jan and more than 560 overseas restaurants by 2012. But Abe have emphasised on the fact the growth should be realised and believes to open “one store at a time” and not based on pre set strategies. The slogan of Yoshinoya shows the reflection of their dedication to grow organically and unexpected threats are also dealt in a strategic manner. Thus the strategic incrementalism approach has worked well with the expansion strategy of the fast food joint. Yoshinoya had gained its first foothold in 1979 in US market and gradually expanded it number of outlets in California. Therefore the company reshaped its formula in order to fit the US market and has changed the strategy accordingly. Thus this was an example of how effectively Yoshinoya had adopted the incremental approach and has succeeded in its expansion strategy (Wit & Meyer, 2010, p. 126). Example of Planned Strategy Approach Johnson and Johnson is a perfect example of organisation adopted the planned strategy approach. The company believes in setting long term goals instead of modifying or establishing on the current needs. With its planned strategic approach the company remained fundamentally strong and have introduced new and needed health care products into the market. The strategies are set by the management team with the advice of BOD and have implemented at over 250 companies located in about 60 countries globally (Johnson & Johnson, 2012). Another such example of planned strategy approach is that of Samsung Electronics. The company had focused and systematically planned it strategy focusing on entering the DRAM chip industry. The then chairman of Samsung Group investigated all the opportunities and the prevailing threats in Japan and observed the enormous opportunity in semiconductors and was convinced of the fact that in order to become market leader Samsung needs to be innovative and not just being a follower of the then market leaders Sony and Matsushita. Thus a long strategic plan was planned to develop advanced product and finally it became “black belt master” in product as well as process innovation. Further as per the long term strategic plan Samsung had hired South Korean engineer and sent them to US to work together on the business project of DRAM. For the next ten years Samsung had managed to follow the planned strategy and became the industry leader. With its planned strategic approach Samsung in 2008 experienced a worldwide sale and helped in making the long term investment, sustainability, commitment and has created essential synergies (Wit & Meyer, 2010, p. 67). Reference Haberberg, A., & Rieple, A., 2007. Strategic Management: Theory and Application. Oxford University Press. Johnson & Johnson, 2012. Strategic Planning Process. [Online]. Available at: < http://www.investor.jnj.com/governance/strategic-planning.cfm > [Accessed 20 Nov. 12]. Kinsella, A., No Date. Strategic Planning. [Online]. Available at: < http://www.cwru.edu/med/epidbio/mphp439/Strategic_Planning.htm> [Accessed 20 Nov. 12]. Mintzberg, H., 1994. Rise and Fall of Strategic Planning. USA: Simon and Schuster. Mintzberg, H., 2011. The Rise and Fall of Strategic Planning. [Online]. Available at: < http://www.hepg.org/her/abstract/310> [Accessed 20 Nov. 12]. Ortega, A., 2004. The INDITEX case. [Pdf]. 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Of Strategies, Deliberate and Emergent. Strategic Management Journal, 6, p. 257-272. Mintzberg, H., 1993. The Pitfalls of Strategic Planning. [Pdf]. Available at: < http://teaching.fec.anu.edu.au/mgmt7030/Mintzberg%20-%20Planningh%20Pitfalls.pdf> [Accessed 20 Nov. 12]. Mintzberg, H., 1998. Crafting Strategy. [Online]. Available at: < http://hbr.org/1987/07/crafting-strategy/ar/1> [Accessed 20 Nov. 12]. Quinn, J. B., 1978. Stratgeic Change: Logical Incrementalism, Sloan Management Review, 20 (1), p.7. Read More