Strategy Development for Crossan et al - Research Paper Example

Strategy has been simply defined by Crossan et al. as “a concrete expression of how a business intends to compete and win in its marketplace” (2002). Strategy represents the personality of the business, whether it has an aggressive personality, or a passive one. Nevertheless, strategy embodies how a business perceives its future opportunities, and how it plans to act to take advantage of those opportunities. It is therefore important that every business has its own business strategy, as it sets the direction for the business in pursuit of its goals and objectives. Crossan et al (2002) has further described it as an important “definitive tool for building, communicating and maintaining the direction of a business”. Two approaches to strategy have been discussed to elucidate the process of strategy development. As the purpose of the strategy in business is important and cannot be overemphasized, so much more is the process by which strategy is developed and identified. A manager must always deal with the four components of a strategy as identified by Crossan et al. (2002), and these are the goals, product market focus, value propositions, and core activities. How the manager tackles these four components in order to craft a strategy that aims to deliver the company bottom line represents how he approaches strategy development. Accordingly, there are many arguments about how strategy should be developed. Crossan et al (2002) observed two contentious issues surrounding strategy formulation, and these are whether strategy should be approached clinically, as in “a well defined, analytical process”, or experientially, as in “trial and error process” guided by a set of patterns from past experiences. Crossan et al (2002) referred to these approaches as “intended strategy” referring to the former, and “emergent strategy” referring to the latter. Intended strategy, or more commonly referred to as planned strategy, is practiced by organizations who approach strategy formulation in a formal process. There is a formal approach to strategy development, with formal process and formal control resembling military organizations, where discipline, consistency, and predictability of responses to situations are the normal fare of the day. It operates with some sort of precision to everything that it does, guided by rules and policies, and where decisions are centrally made by a select few. One can naturally expect that in organizations engaging in planned approach to strategy, there is no room for spontaneous action and innovation, guided by creativity and out-of-the-box thinking. As has been discussed, Mintzberg (1998, cited by Crossan et al., 2002) has been mentioned to have seen problems in the operationalization of planned strategies. An emergent approach to strategy, on the other hand, is a more dynamic approach to strategy development, as it considers developing conditions facing the business over time. As mentioned during the course discussion, an emergent approach is the opposite of the planned approach. Many have said to have been critical of the emergent approach, mostly academics, while not a few have found practicality in its use, mostly practitioners. An emergent approach has been criticized by academics as being unsystematic. On a closer look, however, one may find in emergent approach a systematic process of “finding ideas in the patterns that have become evident over time”. It is not an activity of haphazard guessing game, but actually a method of predicting what is to come based on past experiences where pattern of behavior is quite visible and predictable. An emergent approach considers “developing conditions” and is therefore more attuned to the needs of the time. Both approaches to strategy have their own merits and applicability when doing business and marketing planning. It is even suggested that a balance between the use of planned and emergent strategy should be reached to get the most benefit from these two approaches. Realistically speaking, a pure planned approach or a pure emergent approach to strategy development is seldom practiced in the business world. It is more of a combination of both, as described by Mintzberg (1998, cited by Crossan et al., 2002). Accordingly, Mintzberg (1998, cited by Crossan et al., 2002) observed that while many organizations have strategies developed from a planned approach, these strategies have not been “realized” for a number of reasons. This is reportedly due to poor strategy formulation that failed to anticipate significant issues, or a good strategy that has been poorly executed. This has put managers in a situation where they are to craft strategies based on the “day-to-day decisions and actions”, thus giving rise to a blended “intended and emergent strategies”. Crossan et al (2002), on the other hand, pointed out that the “reality for the practitioner must be somewhere in between” the conditions defining the spectrum from an extremely pure planned approach to an extremely pure emergent approach. Following any approach exclusively without considering the merit of the other would have to be considered “futile” when a “changing environment” does not warrant purely planned approach, or when one relies purely on an emergent approach to the point of being “mindless” (Crossan et al, 2002). Organizations do not exist in a perfect world. Quite the opposite is true, where organizations live in a world of constant change and challenge. In today’s modern era, changes have been happening more rapidly than ever before. With the advent of the information age and other technological breakthroughs happening at an unimaginable speed, companies must be adaptable and flexible, and be able to respond to a changing environment (and consequently a changing market) in order to survive. Companies must have the agility to rise up to the challenge. They must be able and must be willing to adapt their “management styles to the new way of doing business” rapidly and effectively to cope with the changing demands of the market (Grantham et al., 2007). As corporate agility becomes critical for organizations to survive the future (Grantham et al., 2007), managers have to become sensitive to the changes in the market, and be equally responsive to those changes. In order to survive the competition, companies must have viable strategies that will ensure the attainment of its goals and objectives. A planned approach to crafting those strategies is necessary and a desired action. However, it must be tempered with an ability to change those strategies based on emerging opportunities or threats in the environment. Flexibility is a key to becoming responsive to the constantly and rapidly changing markets brought about by the information age revolution. Consumers are becoming whimsical in their demand for products and services due to availability of information at their fingertips, and such whimsicality creates both opportunities and threats to any company competing in the market. Companies must be able to approach strategy development with a balanced perspective from a planned and emergent views in order to shift away its decision making process from the “old linear, industrial model toward a more collaborative, systemic, and holistic view of the world” to be able to become more responsive to the demands of the time, and therefore ensure its own survival (Grantham et al., 2007). Doz and Kosonen (2008) further added to the voices of those advocating for corporate agility, where one has to learn a new competitive game referred to as “the fast strategy game”. Doz and Konosen pointed out that formulating strategy is no longer enough, as companies now have to be on their feet, constantly alerted to “emerging trends and market shifts” (2008). Doz and Konosen emphasized the need to be able to react to those emerging trends quickly and effectively, thus requiring what they term as “strategic agility” (2008). A planned approach to strategy may look unnecessary now for those advocating strategic agility, but only if such approach or such strategy prevents companies from being able to “transform themselves without losing momentum”, and making companies unable to make the required fast turns to seize the moment (Doz and Kosonen, 2008). A planned approach has its own usefulness by providing stability and predictability, but it must also be flexible enough to accommodate a changing and shifting strategy to respond to an opportunity or a threat presenting itself at the moment. It has been said that, “in this time of continues change”, there has been a better approach to organizations, as presented by the principles of emergent self-organizations (ESO), as compared to a “traditional top-down, centralized approaches to management” (Hendrickson, 2012). Change has now become the name of the game. Businesses competing in today’s market must brace for change as it is the only predictable thing to happen if current trends are to continue. Unpredictable changes will be the underlying theme that each business has to come to terms to, if it has to survive and sustain its operations. Marketing planning processes have to ensure the ability of the firm to “stay ahead of the game” by “being able to respond quickly to unexpected changes in customer demand” (Grantham et al, 2007). How the company gears up for the future can be tackled by either competing on the edge, or by scenario building/ planning, two frameworks that can help in analyzing how one should behave in the unpredictable business conditions beyond the present timeframe. Competing on the edge is a conceptual framework developed by Brown and Eisenhardt (2007, cited by Vanderschmut, 2007) which tells about the market being “completely unstable” and therefore the challenge being presented to business leaders and managers is managing change. It encourages people at the helm to anticipate change to be able to gain insights into what is likely to occur, and be able to plan moves based on those insights. Managing change, and planning for it, however, is to be taken in the context of having a pro-active stance, as opposed to just being reactive to the situation. Managing change on a pro-active stance means leading change. As the future is said to be too unpredictable for planning, companies must have the leading edge by leading change itself. Creating and leading changes will “force” competitors to react to the change that the company has introduced. Being able to see the opportunity first hand and being able to initiate the first move to capture that opportunity brings about the competitive edge for that company. While doing the marketing planning process, marketers are supposed to undertake steps to be able to compete on the edge. First, they have to create a vision of the desired future. This enables the marketer to set his sight on the future, while dealing with the present. Marketers must also transform the established “structural system” into a “chaotic system” that will be responsive to the demands of the future. On a new set of framework people in the organization will now have the ability to make many moves on their own to produce the desired results for the company. Experimentation and calculated short term losses are necessary as part of the randomness process, but things should bounce back where benefits of experience, insights, and sensitivity to opportunities will redound to company success. Schoemaker on the other hand provided a parallel framework on dealing with change in today’s business world (2008 cited in Strategic Framing, 2008). He referred to his framework as scenario planning/ scenario building, and it is all about encouraging people to have a change in their mindset. As applied to marketers, the scenario building concept is about “preparing the mind for a future that don’t exist yet”. As change is inevitable, Schoemaker emphasized that change will be better only for the “prepared mind”. Scenario planning is geared towards anticipation of major disruption or “discontinuities” in business operations, and as such, marketers must be able to quickly respond to such scenarios with “mental models” providing insights as to what the business has to anticipate and to prepare for in the likelihood that such scenarios become a reality. Marketers doing the scenario planning start with the analysis of the present and build the scenario to the future. This starts with identifying the current major trends, and pinpointing “key uncertainties” that lie ahead. Major drivers such as political, economic, social, and technological developments are considered, and medium to long term conditions are lengthily discussed in an attempt to build a future scenario with which the business will have to compete and survive. Key uncertainties will be a major focus to be able to retrofit the business organization in dealing with any disruption or discontinuity if such uncertainties become a major threat to the business in the future. Considering these two frameworks of understanding the future and how changes in the business world should be managed in order to ensure the survival of the business, marketers have to calibrate the use of an approach to strategy development for an effective measure to ensure business survival. The pros and cons of using planned and emergent approaches to strategy development are put into perspective given the two frameworks for understanding the need for appropriate strategies to deal with the future. Marketers will have to strike a balance between an approach ruled by structure and process, and an approach guided only by patterns of valuable experience and intuitive actions on opportunities, to be able to craft a responsive and pro-active business strategy for the company. A planned approach can coordinate the activities to strategy development, while an emergent approach direct those activities into controlled “chaos” where the objective is to be able to pinpoint and understand changes in the market configuration. The rigidness of a purely planned approach brought about by the formality of its structure and process may cause marketers inability to read and react quickly to rapid changes in the market. Too much flexibility and reliance on past experiences in a purely emergent approach may, on the other hand, cause marketers to lose control of its sight on the future and the company vision, and become parochial or territorial in its frame of mind. A planned approach can provide stability, while an emergent approach takes care of the needed vitality. Striking a balance therefore between corporate stability and business vitality ensures the agility and dynamism that any marketing planning process must consider in order for the company to be able to lead, compete, and win in today’s business world. References Doz, Y., Kosonen, M. 2008. Fast strategy: how strategic agility will help you stay ahead of the game. Dorchester: Wharton School Publishing Crossan, M., Fry, J., Killing, J.P. 2002. Strategic analysis and action. 5th Ed. Ontario: Prentice Hall Grantham, C., Ware, J., Williamson, C. 2007. Corporate agility: A revolutionary new model for competing in a flat world. New York: Amacom Hendrickson, J. 2012. The emergent approach to strategy. MARK3009. Business and Marketing Principles. University of South Australia, unpublished. Hendrickson, J. 2012. The planned approach to strategy. MARK3009. Business and Marketing Principles. University of South Australia, unpublished. Manturafs, 2008. Why scenario planning. [Video online] Available at: http://www.youtube.com/watch?feature=endscreen&NR=1&v=YuqN9wWYm5E [Accessed on 9 May 2012]. LondonBusinessSchool. 2008. Competing on the edge of chaos. [Video online] Available at: http://www.youtube.com/watch?v=CcasBQQnBb8&feature=related [Accessed on 9 May 2012]. Strategicframing, 2008. Strategic planning: what a scenario planning session involves. [Video online] Available at: http://www.youtube.com/watch?v=ZPd8ZbZIbR8&feature=related [Accessed on 9 may 2012] Vanderschmut, 2007. Competing on the edge, part I. [Video online] Available at: http://www.youtube.com/watch?v=vAexxyt20LI&feature=relmfu [Accessed on 9 May, 2012]. Vanderschmut, 2007. Competing on the edge, part II. [Video online] Available at: http://www.youtube.com/watch?v=CNj5-phc5Qg&feature=relmfu [Accessed on 9 May, 2012]. Read More