The Major Contributions of the Strategic Schools of Thought - Essay Example

Strategic Management Introduction Strategic management has become an influential concept in business. With globalization being adopted as a strategy by most enterprises as well as increasing expansion of enterprises into different cultures and regions, it has become imperative for these enterprises to replace a single marketing strategy with that of a comprehensive model. Mintzberg, Ahlstrand and Lampel (2009) had developed ten key ‘schools of thought’ for planning and implementing strategies in organizations. While conducting extensive surveys on strategies, Mintzberg focused on behaviour thoughts, rather than academic policies. The major contributions of the strategic schools of thought are the effective results derived from assumptions and approach regarding the process, context and content of strategy formulation. The ten strategic schools of thought have been extensively studied by researchers. Although various scholars have appreciated this strategy for its effectiveness in areas such as multifunctional strategy formulation, other scholars have complained that the strategy lacks coherence and consistency. Scholars have also identified numerous similarities and differences among various schools of thought, indicating their uniqueness and different strategic orientation. The strategic schools of thoughts have been further classified as prescriptive and descriptive. First four thought schools are prescriptive while the remaining is termed as descriptive. Controlling the outcomes is the major focus of prescriptive school of thought while descriptive strategies focus on dynamics which are in general uncontrollable. The descriptive strategies have emerged from an operational environment while the prescriptive strategies focus on implementing deliberate designs in order to change the operational processes. While the approach of design school is to that of unique and clear formulation of strategies, planning model approach involves rigorous steps from analysis to strategy execution. Similarly, in positioning school of thought business is seen in an industry context and position of the organization with respect to the industry is evaluated. This is in contrast with the entrepreneurial school of thought according to which, leader or founder is responsible for the organization’s vision. It relies on judgment, intuition, experience, insight and wisdom. Also, the entrepreneurial school shares some similarities with learning school of thought, both of whom focus on step by step planning of the strategies. Here focus is on clear vision or planning as well as constant adaption during the process of strategy formulation (Sadler, 2003). The above schools of thought are used in a variety of strategy making tools such as Swot, environmental analysis, Ashridge model, organisational behaviour, restructuring strategies, stakeholder’s mapping, appreciative enquiry, cultural dimensions, power distance theory, game theory and competitive advantage theory to name a few. However, these strategic tools and techniques have various limitations and as a result, the best way to create an effective strategy is by using a mixed approach where various strategic tools can be implemented for strategy formulation. Another concept which has become popular among scholars in this field is Strategic Lenses. Many researchers believe this concept has emerged from the design schools of thoughts itself. According to this model, strategic development can be analysed using four different views. These are design, experience, ideas and discourse lenses. While design strategy is a logical process where economic constraints and forces are measured carefully though evaluative techniques; experience strategic lens focuses on future organisational strategies based on past strategies as well as on experience of managers and other strategic leaders. Thus, the above two strategic lenses are fundamentally different in terms of conception and objective. In a similar manner, various similarities can be found between idea lens and discourse lens. While idea lens is influenced by internal and external culture surrounding the organisation (Nahapiet and Ghoshal, 1998), discourse lens focuses on choices made based on changing trends and patterns in external as well as internal business environment. Thus, it can be said that there is a high interconnection among schools of thoughts as well as strategic lenses. Similarities and differences Mintzberg’s school of thoughts are divided to two broad categories, namely prescriptive and descriptive schools. Prescriptive schools are focused on strategy formulation and comprise Design, Planning and Positioning schools. Descriptive schools, on the contrary, describe the practical application of strategies. They include Cognitive, Entrepreneurial, Power, Learning, Environmental and Cultural schools. The last group is the Configurational school. The above categories clearly indicate similarities among aspects and characteristics of various schools of thoughts. Even though prescriptive and descriptive schools of thoughts as well as strategic lenses are distinguished set of approaches towards strategy, there are underlying similarities connecting them. For instance, almost all strategic approaches concentrate on sustainability of the firm. Also, both strategic approaches are associated with strategies lenses in terms of experience, ideas and design. A further detailed analysis is given below. An evaluation of the strategic lenses as well as Mintzberg’s schools of thought reveals various conclusions and implications. An exhaustive study of strategic lenses shows that most of its concepts have been fundamentally originating from the 10 schools. For instance, the design school of thought is a prescriptive thought process based on conceptual approaches as well as on internal strengths and weaknesses. The same idea has been discussed further in the design strategy, where focus is more on rationality and legitimacy, rather than innovation. Other similar explanations are given below. Perspective models, such as, design, planning and positioning, are majorly concept based and employ theoretical approaches. Organizations following these concepts carry out strategic analysis using tools such as, Swot, value chain, competition and five forces. Following that, strategy formulation takes place. It can also be said that this strategy is based on architecture, rather than intuition, perspectives or suggestions. Though it is useful in an ideal or stable environment, the design model is more or less ineffective within industries dominated by intense competition. This is similar to the strategic design approach given in the lenses theory (Johnson, Scholes and Whittington, 2012). In the design approach, strategy is formulated by concentrating upon organizational constraints and forces. For example, if a passenger flight brand plans to add new planes in its portfolio, it will have to analyze internal constraints such as, budgeting and current revenues as well as external forces such as, gap in the supply and demand of flights and popularity of the flight company (Johnson, Scholes and Whittington, 2012). Strategy as an organizational experience is directly related to cognitive, learning and entrepreneurial models of thought. Here strategy is formulated primarily based on experience of leaders and managers. Quite similar are the entrepreneurial and learning models, which are heavily based on individual’s understanding, knowledge and experience. The entrepreneurial school of thought is also similar to idea strategy from the strategy lenses. For instance, business entrepreneurship rose to prominence in the latter half of 19th century with evolution of small and medium enterprises (Rarick, Olin and Winter, 2007). This popularity of entrepreneurship and self established leaders had induced new ideas and concepts among individuals, which subsequently transformed into a business. Similarly, employees and managers in big organizations are increasingly shifting from formal strategy and planning process towards innovation. Business environment is ever changing with evolution of different business, diversity among individuals and groups as well as variations in ideas and experiences (Nahapiet and Ghoshal, 1998). In a similar manner, strategy as ideas from the strategy lens can be related to the cultural school of thought. Cultural school is a collective process, where strategy is formulated with cooperation from employees and other members of the organisation. Here emphasis is given on beliefs, and values of people working within the organisation. According to the strategy lens, while formulating strategy though ideas, importance is given to variety as well as diversity. In this approach, cooperation and interaction is encouraged within organisations (Mintzberg, Ahlstrand and Lampel, 2009). Discourse strategy as a part of the strategic lens approach is one of the most followed management approach in organisations. Managers are spending most of their time in communicating, gathering information and follow up of decisions as well as persuading others. Discourse approach has always been present within an organisation; however, in an unorganised and crude form. Effective implementation of discourse as strategy can be a distinctive advantage as well as can become competency for individuals. Discourse has been frequently linked with control and power. Organisations have adopted specific ways for communicating and have started developing their own strategic discourses. In course of time, these discourses often become an organisation’s culture, which is difficult to change or question, tough to recognise and influences behaviour. Discourse becomes similar to power model, in terms of self-reinforcing, self-producing as well as attracting followers towards its own environment (Johnson, Scholes and Whittington, 2012). In order to study the differences, Mintzberg’s school of thoughts are further categorised according to their strategy focus. While design, planning and positioning models focus on development in an ideal environment; entrepreneurial and cognitive strategies are more individualistic in nature. Furthermore, learning, power and cultural schools of thought assign more importance to the external environment. At last, configurational thought process is carried out through a mixed approach, where the major objective is transformation of the organisation. Comparing the two strategic models, various differences have been identified. For example, the design school is majorly based on architectural content and strategies (Chen and Lee, 2009). Few fundamental differences are present among the ten schools of thoughts. In most models under the prescriptive approach, important decisions are made by the higher management and subordinates have little or no role in decision making. Dictatorship and organisational hierarchy is also strictly maintained. Contradictory to this, the descriptive approach relies more on values and suggestions of the ground staff and all those employees who interact with consumers on a daily basis. In prescriptive strategic management, managers majorly focus on formulation process and establish appropriate steps for the strategy. Nevertheless, descriptive schools of thought rely more on the content and outcome of the strategy, rather than the process. The two schools of thought are completely opposite in terms of planning process. Organisations following perspective approach plan their strategies in advance and do not consider any changes during implementation (Mintzberg, Ahlstrand and Lampel, 2009). Whereas, descriptive approaches accept unpredictability in the decision making process and plan their strategies on the basis of spontaneous situations. Planning and implementation are constantly modified and updated as per changing conditions. Finally, outcomes of the two approaches are contrasting. The objective of organisations following prescriptive approaches might include performance enhancement and increase in overall productivity and growth. However, descriptive managers aim to improve their functions. Besides that, their objective is also to survive and thrive through experiential learning (Bosworth, 2005). Analysts have also found significant differences between strategic lens and schools of thought in terms of conceptualisation and process of implementation. For instance, strategy as experience is very different while compared with the power school. The power thought school relies on strategy developed through negotiation among various stakeholders as well as power-holders within an organisation. This approach is used when competition is high as well as in situations where external stakeholders such as, customers, cast a significant influence on organisational decisions. For instance, when an organisation opts for brand or product expansion in a new country, it cannot ignore the purchase behaviour and brand perception of local consumers (Bosworth, 2005). As a result, initial or core strategies are altered and modified in order to suit consumers in the new country. However, the experience lens strategy is based on the perception and experiential knowledge of managers, business owners as well as consumers. In case of formulation of strategy as experience, business managers come across various bias and cognitive conflicts (Hastie, 2001). Nevertheless, these conflicts are again used as information and employed in making further strategies. Thus, it becomes a cyclic process, where experience is used for constant evolution and modification of plans and strategies. While power school of thought is applied in business practices such as, negotiation and bargaining, strategic lenses are more often used for strategic decision making purposes (Bosworth, 2005). Synthesis Incremental process or emergent strategies are undertaken in uncertain scenarios. Emergent strategies do not originate in the strategist’s mind; rather, they occur during interaction of the organisation and its environment. In case of emergent or incremental strategies, actions and ideas from various sources tend to converge and integrate into certain patterns (Tampoe, 1994). These patterns further become culture, core functions or fundamental planning process of that organisation. So, organisational learning as well as experience can be considered as an emergent process. In a strategy experience, it is assumed that necessary information for an exhaustive analysis cannot be assumed. Also, limitations in terms of time and costs prohibit successful analysis. Since environment and organisations are constantly changing, making long-term plans is not viable. Apart from the above, managers are also forced by psychological limitations such as, inability to analyse the future by taking every external and internal perspective into consideration. Hence, it can be said that strategy as experience reflects the emergent strategy. Unforeseeable or unexpected changes as well as uncertainties are difficult to predict or plan. As a result, they need a more reactive approach, given that they are associated with risk. Both design school of thought as well as strategy as design talk about risks. However, the major challenge for design school while making resolutions for uncertainty is identifying every associated scenario as well as distinctive competencies for ensuring a strategy, which is best fit in the current situation (Johnson, Scholes and Whittington, 2012). Similarly, strategy as design is greatly based on conceptual theories, which are of little help while facing situations of uncertainty. A suitable approach during uncertain business conditions is that of the environmental school. Since it is a reactive process, it does not rely on any conceptual theory. Rather, external environment is considered as the major decisive factor as any change in these conditions will have a definite impact on internal decision making process. Many organizations have gained situational leadership by pursuing this approach. For example, the fashion industry experiences continuous change. Brands like, Versace, Nike, Gucci, Zara and Kohl’s, are always excelling because of their quick reaction towards the environment. Similarly, design strategy can be regarded as obsolete in uncertain business. Here future predictions are made by taking past experience in consideration, which might be deviant from the current environment. For instance, strategies that were successful 15 or 20 years ago might not prove to be so in the current business environment (Johnson, Scholes and Whittington, 2012). Conclusion While every strategy attempts to analyze different insights and approaches, it is best for organizations to not rely on one particular strategy. For instance, while strategic lenses might not be fully productive when applied as single strategy, they can prove beneficial when different perspectives are used. Strategy as experience builds on sociology, cultural anthropology and cognition. Similarly, strategy as idea focuses on both complexity and evolutionary theories. As a result, when theories associated with strategic lenses are applied in a comprehensive manner, an effective plan is developed. Another issue that is critical while considering lenses as strategy is usefulness of the conventional and traditional wisdom environment (Johnson, Scholes and Whittington, 2012). Though conventional theories provide helpful ideas for conceptual development, planning and implementation processes are majorly dependent on strategies focusing on external environment and culture as a spontaneous learning process. While schools of thought offer a categorized approach to strategic models, strategic lenses are more application and implication oriented. For instance, the discourse strategy stresses on transforming the traditional language discourse in a competitive and advantageous strategy (Volberda and Elfring, 2001). Therefore, it can also be concluded that while schools of thought are useful in strategy conceptualization strategy lenses have been found to be more useful in implementation process, thereby proving their more usefulness and applicability in the 21st century. However, in order to produce effective results focus should be directed at strengths and opportunities associated with both concepts. Reference List Bosworth, L.B., 2005. Determinants of Enterprise Performance. Manchester: Manchester University Press. Chen, H.H. and Lee, P.Y., 2009. The driving drivers of dynamic competitive capabilities: A new perspective on competition. European Business Review, 21, pp. 78-91. 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