The Difference between Rational Strategies and Creative Strategy - Coursework Example

Critical Evaluation of the Tension between Rational or Deliberate Strategies and Creative or Emergent Strategy This article explores the difference between the two types of strategies. It discusses in brief the strategic management process and then why strategies are formulated; the difference in the two types of processes and the advantages and drawbacks of each are discussed. It critically discusses the deliberate and emergent strategies and then goes on to explain which one is to be used. Lastly, it concludes that both goes hand in hand and might be suited to specific environmental situations and managers responsible themselves. Organizations exist to survive, prosper; in an ever changing dynamic world managers need to make decisions now to guide organization’s future direction. Prosperity is linked not only with profitability but also the long term growth. It’s like steering a ship in the ocean with the danger that pirates may take over, or it might become the victim of the deadly waves. The ship here refers to the company itself and the challenged here include the competitors, the environment etc. Thus, there is a strong need for the managers to make a strategy that works as an action plan to achieve the aimed objectives. The objectives may be both financial such as higher revenues, lower costs, high profits or non-financial just to be the top in the industry, largest market share, or to be place the product in the top minds of the customers. Thus, the need arises to have a blue print that tells how to go about it? Companies need to diverse, differentiate, integrate backward or forwards, and manage business portfolio balanced. And hence they need to plan – develop a vision, set the mission, develop long term plans and further break them into objectives to achieve the desired goal. But it is important that the strategy is to be consistent with the organizational goals and policies, it should be flexible enough to respond to the faster changing environment in which it is operating, and it should add value to the organization and become a source of advantage over its competitors, and lastly, it should be feasible and practical enough to get through. Strategic management can be defined as the art and science of formulating, implementing, ad evaluating cross-functional decisions that enable an organization to achieve its objectives (David F.R., Strategic Management). The process of strategic management involves three stages, viz. formulation of a strategy, implementing a strategy and lastly, evaluating the strategy. Since, organizations have limited resources thus they need to choose from amongst the alternatives available. Setting a strategy starts with developing a strategic vision so as to provide long term direction, and provide a purpose to the organization. The strategic vision is then converted into specific performance objectives for the company to achieve. And then forming strategies to achieve the desired outcomes that have been developed in the form of objectives. This all was the planning portion of the process; no strategy is useful until it is implemented and executed effectively and efficiently. In the end, evaluation stage begins which requires comparing actual i.e. the reality with the planned. Strategy process is a progression by which strategy comes about i.e. how it is developed. Generally believed or agreed upon there are two types of strategy processes- deliberate or rational and creative or emergent as they are more commonly called. The Mintzberg & Waters (1985) model suggests that there are five types of strategies emergent strategy, intended strategy, deliberate strategy, realized strategy and unrealized strategy. Figure: Deliberate and Emergent strategies; Source: Mintzberg and Waters (1985) Emergent strategies can be seen as responses to unexpected opportunities and problems and are usually developed from the locations at which business-level strategies are usually implemented, i.e. within business units and not at corporate headquarters. The pure definition of emergence requires the absence of intentions. (Mcgee, Thomas & Wilson 2005 p 11) Realized strategy is a blend of intentions and emergence which can be interpreted by reference to the strength of pressure from the external environment—a kind of environmental determinism. (Mcgee, Thomas & Wilson 2005 p 11) Intended strategy is strategy as conceived of by the top management team. Even here, rationality is limited and the intended strategy is the result of a process of negotiation, bargaining, and compromise, involving many individuals and groups within the organization. (http://www.blackwellpublishing.com/grant/pdfs/CSA5eC01.pdf ) Mintzberg and Waters mentioned that realized strategy – the actual strategy that is implemented – is only partly related to that which was intended (Mintzberg suggests only 10–30 percent of intended strategy is realized). The primary determinant of realized strategy is what Mintzberg terms emergent strategy – the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances. Here, our focus is on deliberate and emergent strategies. Emergent strategies are pattern of implicitly stated actions that develop in an organization as the time passes especially when organizations don’t have developed policies and procedures for the strategy making process or more so called as the formally structured method of developing the strategy. It might be believed that this happens because of the lack of management interest in the development of organization’s vision, mission and goals; but the case is not so. Emergent strategies normally provide flexibility to the organization as no stringent step by step procedure is to be adopted. Here, organizations follow what they practice. Emergent strategies are also known as creative strategies as they are non-intentional. The credit of these emergent strategies goes to the experience of the line managers, engineers, the top management, their intuition and the acumen to see the far away side of the picture. As opposed to emergent strategy, rational and deliberate strategy making process is characterized by a sequential procedure that begins with identifying organizational objectives and assessing the external environment and internally the organizational capabilities with respect to both strengths and weaknesses, in simple words, it all starts with conducting the SWOT analysis; which is then followed by making specific choices and then developing a plan of action. This type of strategy making process is iterative in organizational strategic management process. Deliberate of rational strategy making is considered as a top-down approach of decision making where top level of management sets the vision, mission, goals and objectives and imposes it on the lower levels. In this approach it’s the planning that is more important than the plan itself; it requires rigorous job of planning and thinking before you act. But, it surely does not suggest that it is not receptive to any of the emerging and changing trends or challenges, developments in the environment. Some of the advantages of the deliberate strategy process is that foremost, it provides direction to the organization- organizations need to be steered in a certain direction; without directions and plan employees would go at a loose end, wandering, not knowing what to do. Hence, deliberate strategies aim at providing directions as a road map to move forward. Secondly, when organizations plan they commit their resources and fixed investments somewhere. One of the benefits that is seen to be most important in taking the people forward is that it lets organization to act as a whole and make decisive moves. Since commitment is an important aspect of this type of decision making thus it allows optimal use and allocation of resources to the most successful and the profitable business units. Lastly, this approach is looked as it is most efficient and guarantees no mistakes since planning involves looking over each and every aspect of the decision under hand. Emergent strategy process as earlier mentioned is continuous and constant process of learning, experimenting through owns experiences and also the risk taking approach. It does not justify that this approach is random and ad-hoc and managers haven’t done anything upfront to be prepared of the circumstances. As opposed to rational, we cannot say that it is completely an irrational approach. But simply, it relies more on managers’ own intuition which they develop through their previous practices. When using this approach organizations rely less on documenting the results and the conclusions derived from the process and the approach is more qualitative in respect of evaluating the results which are generally broad. And the means of the process develop over time as interaction, in terms of threat and opportunity from the environment comes up. Emergent strategies formulation has its own benefits. Firstly, it focuses on opportunism i.e. it lets managers react freely to any of the window of opportunity that they might see open in the environment; they do not get hindered or stopped by the bureaucratic process of following the rules of the game, by which they might end up loosing the opportunity as the window shuts on their faces or is grabbed by someone more quicker and faster. Next, it provides flexibility to the managers by letting them keep their options open and not committing their resources including capital, investment, employees, raw material etc to a certain area. Today, as we move forward and management in theory progresses, we see the term “learning organization” emerge, which requires people in the organizations to be learning all of the time. One of the benefit of emergent strategy is that lets the culture of the organization to enable people to learn from their won experiences. To create, entrepreneurial it is necessary for the organization to let people have their say, take risks and not follow the rules to succeed; hence promoting intrapreneurship throughout; thus to make environment conducive to this culture emergent strategy process is to be adopted. Since emergent strategy is not the pure top-down approach where top level management’s decision become binding on the lower management; instead it involves people from all functions be it marketing, finance, line managers from production units etc. hence it has its support from the all levels of management- top, middle and low and more often does not face any resistance when the strategies change and are implemented or if they do, then it is relatively less since the management has to convince less people and many of them already think that they are part of the process. Above, we have differentiated between the two types of strategies, i.e. rational or deliberate strategy and creative or emergent strategy and looked at the benefits of each. Strategy process generally requires both creativity and discipline but the question arises are they both required? Which is more important? Or just one suits a particular situation? Can managers be planned decision makers and avoid using their past experiences and intuitions or can they just rely on they previous knowledge and ignore the use of determined objectives and sail wherever, the wind takes the organization. As normally seen organizations purely do not operate on any of the two extremes, they adopt a process that is generally in between the two. There are levels to which organizations use a combination of the two …. Probably it also depends on the type of environment in which the organization is operating, i.e. with respect to the stability in the environment. When environments are stable or the organizations have the ability to predict the changes in the environment with greater accuracy then the totally planned i.e. the deliberate strategies are effective. For this extreme, organizations need to have all the resources available need to tackle the environment. And the benefit accrues from this type of strategy process is that managers are fully committed to the strategy and fulfillment of strategic objectives. As we move, a little away from this extreme organizations start to tolerate a little more of the emergent strategy making process. In organizations that have newly begun to promote entrepreneurial culture they have some inclination towards this sort of the process. This may happen because there might be one person whose intuition may come up with an idea and then others react by making planned moves to work on it. Here, vision is set by one person probably the leader which is then carried forward by the followers. As we move forward on the spectrum we might see that vision development can be collective effort of more than one people who would like to see the bar of the growth in the organization raised. This type of strategy is deliberate effort of the individuals involved. Another type of strategy making process may be focused by leaders on the outcome of the process rather than the means. Hence, it becomes the combination of both deliberate and emergent. Here, leaders may control the process of the strategy making but not the content. For, environments that are generally unstable, the strategy is totally emergent; where the situation imposes a condition that organizations have to face upfront no matter they were prepared to accept it or not. It is not pre-emptive but survival of the fittest is the biggest objective. And only those organizations flourish that face it boldly. Moving forward, as we conclude the discussion it cannot be said which strategy process should the organization adopt rather, it depends on the circumstances and the degree to which the environment is certain or uncertain. In my view, sometimes invention by chance and then incremental improvements in the process leads to taking deliberate steps. As often said, practice makes you perfect. But a time may come when situation might be totally new then innovative and the broad policies as opposed to rigid rules may come into play. Good decisions are not always rational or deliberate. The increasing complex environments of business are faced with decision making faster and faster. Then comes the time to stand up and act. But things that are not planned and deliberate also lead to chaos and destructive outcomes. So, it is necessary to strike a balance between the use of both extreme strategy process and find a middle ground. Although the two approaches discussed throughout have opposite characteristics or ways to achieve the objective. But still it highlights the importance of the strategic planning and management in the organization. It allows organizations to achieve the competitive advantage and sustain long term growth. It allows managers to match its resources and activities organization to the environment. Strategic planning assists to stretch the organization’s competencies to create opportunities. Head or tail? The process of strategic planning and management is argumentative about how it should be carried out. The greater the uncertainty in the environment, the crafting of strategy should be made more flexible and receptive to the environment. Uncertain environment requires strategy making to be flexible but this flexibility comes with discipline and organization. Contingent plans and scenario analysis should be done to make imperative strategies. Lastly, winner will be one who can trace the environment closely and exploit all the resources to strengthen its position in the market, gain customer loyalty and fight aggressively for the market share. To conclude, we can say that it also depends on the managers’ individual style of working and decision making; managers may be used to make programmed decisions and hence will not tolerate any emergent strategy making process. But those who are by far far-sighted and accept to operate in situations that are uncertain and have guts to accept risk believe in emergent strategies. But, here I think no strategy process works alone and should go hand in hand. References David F.R., 2002. Strategic Management Concepts & Cases. 9th ed. New Jersey: Pearson Education, Inc. Thompson A.A., Strickland A.J., 2003. Strategic Management Concepts and Cases. 13th ed. New Delhi: Tata Mcgraw-Hill Publishing Company Limited Richard L. Corporate Strategy. 4th ed. 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