Strategy in Organizational Success, Its Different Definitions - Coursework Example

“There is surprisingly little agreement on what strategy really is”. Critically analyse this statement with reference to the many different definitions of strategy Table of Contents History of the word “Strategy” 2 Criticality of strategy in organizational success 2 Various definitions of Strategy 3 Michael Porter’s definition of strategy 3 Michel Robert’s definition of strategy 4 Henry Mintzberg’s definition of strategy 5 Kenneth R. Andrews’ definition of strategy 6 Basil Liddell Hart’s definition of strategy 7 Hitt, Ireland & Hoskissons’ definition of strategy 7 Strategy formation process 8 Over specialization of strategy: 9 History of the word “Strategy” The word “Strategy” is derived from the Greek word Strategia, meaning “General” in Greek language and is defined in a dictionary as the “a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result”. (Strategy Definition, n.d.) However, the corporate interpretation of the strategy is complicated one and has numerous variations. Criticality of strategy in organizational success It is believed that the key to success of a business organization is perfect planning and through execution with zero deviation. However, it is easy to academically define the key to success but terribly difficult to identify the roadmap that will lead to organizational success. With a small organization and flat organizational structure, it is easy to drive the team with a single, synchronized aim. In case of a small team, the planner and the doer is often the same person or are in close contact. Being a small team, almost all team members are able to generate a bird’s eye view of the scenario and understand the roadmap to that goal. This direct communication channel helps the team achieve a status where decision making is fast, and execution is faster. This helps a start up reduce or eliminate wastage of managerial resource as well as other physical/monetary resource. However, this apparently simple process becomes complicated when the organization increases in size, new layers are added and there is a clear demarcation between the different parts of the organization. With increased team size, there are sub teams responsible for specific functions of the organization and these sub-team limited access or incentive to retrieve information about different functions of the organizations. When these organizations reach mammoth proportions with over tens of thousands of employees, there s a possibility where each employee, though working at full potential, strives to achieve different and possibly conflicting goals thereby seriously hampering the growth of a company. At this stage, the concept of a clearly enumerated strategy is critical to the survival as well as success of the organisation. (Oliver R.W., 2005) Various definitions of Strategy Michael Porter’s definition of strategy One of the most well known proponents of corporate strategy is Michael Porter. He defines strategy as “a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.” In other words, strategy defines the uniqueness of the services/products offered by an organisation, and also helps managers chart the road map to achieve that goal. According to Porter, strategy is all about identifying unique positioning, and delivering unique value to the customer through a range of activities that are distinct from those adopted by the competition. He also strongly stresses that the concept of strategy is highly misunderstood by managers, and hence managers often tend to view organizational statements like mission/vision statements/management practices and value statements as the strategy of the firm. He also argues that strategy is that set of activities that defines the long term advantage that a business organisation has over its competitors. In other words, strategy defines “unique” offering of a company that its competitors may not be able to internalize. (Porter M., 1986) Porter also commented that “Strategy' is a word that gets used in so many ways with so many meanings that it can end up being meaningless”. (Michael Porter Asks, and Answers: Why Do Good Managers Set Bad Strategies? November 2006) Michel Robert’s definition of strategy Michel Robert, another prominent proponent of strategy, states that strategic management is basically about identifying solutions about for distinct question areas Products and services Market Segments Customers Geographical areas- According to Michel Robert, deciding what products and services to be offered, the market segments that are to be targeted, the geographical regions to operate in and the consumers that are to be served are to be answered based on a sole “driving force”. Michel Robert also argues that there may be several driving forces, but only one among these driving forces may used as the core of a strategy. The 10 driving forces cited by Robert are service or product offered, customer segment catered to, marketing/sales/delivery method, logistics and distribution network, the structure of the market. access to precious natural raw materials, profitability, economies of scale/growth rate, research and development/technology and manufacturing knowhow. Michel Robert also states that the concept of “strategy” is often confused by managers as operational planning. He states that strategic as well as operational planning and thinking are keys to organizational success. While strategic thinking and planning is about ideating and then detailing the goals of the business organisation, operational thinking and planning is about brainstorming and finally identifying the correct set of actions that will help managers achieve organsational rules. (Robert M., 1993) Henry Mintzberg’s definition of strategy Henry Mintzberg, the author of the book “The Rise and the Fall of Strategic Planning” notes that the word strategy is used in a subjective manner by users and corporate managers. He also analyzes that among all the interpretations, the following for interpretations are the most prominent ones. 1. Perspective: The term “strategy” is interpreted as the guiding principle and strategy helps the organisaition sets direction for itself and the team members. The strategy of the organization is synonymous with the vision of the organisation. 2. Roadmap: Strategy is also viewed as the roadmap, or the plan that will the organisation achieve its intended goals. Having a clear strategy, according to this perspective, helps managers clearly understand the plan of activities that have to be executed to achieve organizational goals. 3. Identifying markets: A lot of managers use the term strategy to define the marketing activity or market positioning of the services/products offered by the company. So, strategy will be the art and science of identifying which product/service to offer aimed at what kind of customers in which geographical location and what price. 4. Set of activities that defines the USP of the company: The term strategy is also defined as the pattern of activities enacted by the organisation over time that has helped the organisation survive, and eventually, grow. For example, a company that has been marketing premium products and targeting the price insensitive customers will be termed as following a “high end strategy”. Kenneth R. Andrews’ definition of strategy Kenneth R. Andrews, considered by many to be the father of modern corporate strategy, defined corporate strategy as “ The pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities. (pp.18-19)." This is perhaps one of the most comprehensive definitions of strategy, and covers different aspects of the organisation like ideation, identifying markets, positioning of the product and operational plans. Basil Liddell Hart’s definition of strategy Basil Liddell Hart was a theorist and a military historian and offered one of the most admired definition and interpretation of military strategies. Despite the fact that his definition of strategy was based on military, the interpretation of the term strategy is equally pertinent in this fast paced corporate environment. He defined (war) strategy as "the art of distributing and applying military means to fulfill the ends of policy”. Extrapolated to the business environment, Basil’s definition of strategy involves allocation of resources and execution of plans that will help a business organisation achieve its corporate goals. (B. H. Liddell Hart, 1967) Hitt, Ireland & Hoskissons’ definition of strategy Authors Hitt, Ireland and Hoskisson defined “Strategy” an integrated and coordinated set of actions and commitments designed to exploit core competencies and gain a competitive advantage”. Very similar to all other strategy definitions, authors Hitt, Ireland and Hoskinddon interpret strategy as the set of activities that help and organisation leverages its strengths and reaches its goals. (Thomson, 2007) Strategy formation process Henry Mintzberg also states that there are 10 distinct schools of thoughts that define the strategy formation process. These 10 schools of thoughts are: The Design School: This was school of thought was predominant during 1970s, and believed that strategy is as much art as it is a scientific, numbers driven process. The Planning School: As the name suggests, this school of thought believed strategy was all about breaking the bigger goal into smaller quantifiable problem definitions, planning out solutions to these smaller problems and integrating these solution sets to create the broad organizational strategy. The Positioning school: This was the predominant school of thought on strategy during the 1980s, and believed that formulating strategy was all about identifying special customer needs, and positioning products/services that catered to these consumer requirements in a unique way. The Entrepreneurial school: This school believed that strategy is much more of an art, and involves intuition and ideating on part of the business leader. Cognitive school: This school of thought stresses on the process of “creative interpretation” of past patterns to identify future roadmaps. Learning School: The learning school of strategy formulation believes that strategy is omnipresent among team members in an organisation, and involves constant learning and improvement. This school also believes that strategy formulation and strategy implementation are not two distinct processes, but are closely knit together. There are 4 other, somewhat marginal schools of thought that discuss the process strategy formation. These schools are the Power, Environmental, Configuration and Cultural schools of strategy formation. (Mintzberg H., and Lampel J., 1999) Over specialization of strategy: A majority school of thoughts argue that strategy is all about identifying “special positioning” of the company, its services and products. However, there have been instances where successful companies have overdone the specialization component, and have failed to evolve their strategies over time. So, there has been yet another school of thought that advocates that companies should be flexible enough and not get stuck to any particular strategy. (Miller D., January 1992) References B. H. Liddell Hart, (1967), Strategy, Basic Books, retrieved March 16, 2009. Michael Porter Asks, and Answers: Why Do Good Managers Set Bad Strategies? (November 2006), Wharton, retrieved March 16, 2009, from Miller D., (Jan 1992), The Generic Strategic Trap, The journal of business strategy, retrieved March 16, 2009. Mintzberg H. and Lampel J., (1999), Reflecting on Strategy Process, Sloan management review, Spring, retrieved March 16, 2009. Oliver R.W., (2005), The Evolution of Business Strategy, American Sentinel University, retrieved March 16, 2009, from Porter M., (1986), Competitive Strategy, Harvard Business School Press, retrieved March 16, 2009. Robert M., (1993), Strategy: Pure and Simple, Published: McGraw-Hill, retrieved March 16, 2009. Strategy Definition, (No Date), retrieved March 16, 2009, from Thomson, (2007), Hitt, Ireland & Hoskisson: Strategic Management , 7/e, retrieved March 16, 2009. Read More