The Perspective and Emergent Approaches to the Strategic Management - Dissertation Example

The Perspective and Emergent Approaches to the Strategic Management – A Critical Exploration Introduction: Strategies can be defined as the multi dimensional concept which is far beyond the traditional concept. It is a set of planned actions and strongly supported by the top management to achieve the organizational objectives. Strategic management is a very vast field and it aims at motivating and stimulating the people to attain the goals of the organization. “However, strategic management is more specific. It aims at leading, driving and helping people, those inside the organization and those outside (also involved in its development), to focus on the organization’s identity and image, to question its worth in a new environment, to fix its longer term growth, while using its present capacity and fostering its “potential” for development.” Pierre Tabatoni, Andris Barblan) In today’s business scenario there is a cut throat competition. Due to globalizations the entire picture of economy has totally changed. The economy has become global and at the same time uncertain. It has been difficult to predict anything about the future in the phase of such uncertainty. “The global economy refers to the increasing integration of fragmented national markets for goods and services into a single global market.” (World Economy, Business Encyclopedia) The global economy has put many challenges before the organizations. To meet those challenges the company has to have its own strategic approach which will be quite appropriate with the organizational culture, overall vision and mission of the organization, and the circumstances under which the business is running. Especially when the business is undergoing through the economic turbulence, what strategic approaches should be adopted by the organizations is very important thing to be considered. The paper focuses upon the two major approaches, first is Prescriptive Approach and second one is Emergent Approach Keywords: strategies, globalization, global economy, organizations, prescriptive approach, emergent approach. In the current global scenario it has been the first priority of any organization not only to survive but also to prosper and compete. During the time of economic turbulence the organization has to define and redefine its strategic needs. “As such, these needs reflect management’s overall plan for survival, growth, adaptability, and profitability.” (Schuler Randall S. 1992) There are major approaches to the strategic management. Among them are prescriptive (Planning Strategy) and Emergent (Increment) approach, Competitive positioning approach, and Resource or competence based approach to the strategy. While discussing the similarities and differences between these two approaches Nigel Evans, David Campbell, and George Stonehouse state, “The prescriptive and emergent approaches are often presented as being diametrically opposed, as are the competitive positioning and competent based approaches.” They further say, “The reality is that the approaches are in many ways complementary as they present different perspectives of the same situation.” (Butterworth, Heinemann Publication, 2003) Among these different approaches in this paper the focus will be given on the prescriptive and emergent approaches of strategic management especially when the financial crises are going on inside or outside the organizations. Before studying which approach will be best suitable for the organization especially to deal with the economic unrest, it is necessary to have the deep study and analysis of both of this approaches. It will help to find out the advantages and disadvantages of both of these approaches. 1. Prescriptive Approach: Prescriptive approach is a very systematic and predetermined process. It is the rational way of strategic management Rational and long term plans are considered to enhance the organizational performance, and to cope with the external environment. The process is taken place in three following steps: To set business objectives To formulate strategies To implement strategies To measure and monitor performance To allocate and judge the resources for specific objectives The approach can be analyzed by using Porter’s five forces model. This approach demands a very systematic planning and this approach is secure basis approach. It means that when the situation in the market or business is normal and not changing significantly, that time this approach is really an ideal option. “”Prescriptive approaches are favoured when the environment is stable and predictable.”(Tony Doherty, Terry Horne, 2002 While opining towards the prescriptive approach many critics argued that “systematic planning makes it possible to organize complex activities and information, unite business objectives, set targets against which performance can be evaluated and generally increases the degree of control that can be exercised over the operation of the business.”(David Campbell, Bill Houston) But many critics are not in favour of the prescriptive approach of strategic management due to its various disadvantages. According to them this approach is less flexible and there can be inconsistencies between the planned strategies and actual circumstances. Also it is not useful in the critical situation when one needs to take on the spot decisions and cope with unexpected crises. Emergent Approach: This type of approach is appreciated by many experts due to its flexibility and capacity of adaptability in the rapid changing environment. The concept is contrast to that of prescriptive approach. Here the managers can think creatively by going beyond the limited periphery of the restricted rules. “An emergent approach has the advantages of increased organizational flexibility. It can form a basis in organizational learning and can provide an internal culture for managers to think and act creatively rather than rather than to act withing the rigid framework of deliberate strategy.”(Nigel Evans, David Campbell, George Stonehouse, Published by Butterworth, Heinemann 2003) The basic theory behind this is that the strategy develops incrementally even if there is no planning. According to Tony Dorothy and Terry Horne “The emergent school of thought highlights the importance of understanding how the change process actually works, as opposed to prescribing how it ought to work.”(Nigel Evans, David Campbell, George Stonehouse, Published by Butterworth, Heinemann 2003) The above figure is taken website: www.global-strategy.net/..../strategicmanagement The experts who advocate this approach opine that this theory is very useful especially in the turbulent environment. This approach is so flexible that the leaders can take creative decision to convert the threats into strategies. “Emergent strategies and strategic thinking encapsulate the vision of where an organization is or should be going, that is, together with a long-term focus upon the environment.” (Harrison J. S. 2003,) “Some other analysts go even further arguing that strategic planning is a complete waste of time since strategy development also includes a political and emotional content and as such expands further than just analysing hard data.” (Simpson 1998). Strategies can be unplanned according to some experts and they always adopt the changing environment. According to Mintzberg strategy evolves through a process of learning, experimenting and adjustments. Emergent strategy is more suitable especially in the uncertain hyper competitive and turbulent environment. Thus emergent approach of strategic management is based on strategy formation rather than strategy formulation The advantages and disadvantages of the Emergent approach: Advantages: It is very easiest and more flexible as compared to prescriptive approach This approach is a challenge for the creative managers to find new opportunities from the changing environment It teaches to become dynamic, innovative leader and to take quick decisions in the unanticipated circumstances. Disadvantages: This is unplanned approach. Hence sometimes it creates confusion among the members of the organization. It is not fix but changing so it is not possible to communicate sudden changes among all the members of the organization so this approach lacks proper communication. High risk is involved in implementing such type of strategy in the organization especially while attending the long term goals. The objectives of emergent approach are not clear. The suitable Strategic Approach in Economic Turbulence: Today’s world is full of uncertainty and it is an economic turbulent time. We are living in the period of globalization. We are experiencing the growing global market and the business has spread all over the world which has resulted into becoming the economy a global one. Everything is uncertain and unpredictable. No one can confidently predict about the future market and future prospects of the business. In such situation the major aim of the leaders of the organization is to concentrate and take efforts to survive as well as grow the organization and to keep the business on right track. The major question in this analysis is that which strategic approach should be more practical and right to implement in economic turbulence. It is the most important task before the members of the organization to survive it. It is a very difficult as well as a challenging task. In such situation it is certainly not logical to spend time in planning because unnecessary time is wasted in the process of planning. The future is unpredictable. In such case quick decision is necessary. Of course thinking about the consequences of the decision is the crucial one but being on a managerial position the concerned person has the vision and prediction about the circumstances going to happen in near future and so whatever decision he or she will take is mostly logical and suitable to cope up the economic condition. Though most experts agree that planning is very important for success, in economic turbulence it is more important to take action rather than doing planning. According to Copeland and Keenan, in the situation of high uncertainty the organizations need to be more and more flexible. They state, “….making irreversible investment decisions in the face of uncertainty is risky. Being able to change a decision as new information becomes available helps to reduce the risk ….. real options ….. provide a theoretically sound tool for valuing management’s strategic scope.” (Copeland and Keenan) Strategic flexibility is seen most effective way to tackle the situation of economic turbulence and this strategic flexibility lies in emergent approach of strategic management. Henry Mintzberg was the strong proponent of the emergent strategies. He strongly opposed the traditional deliberate strategies. Implementation of emergent strategies involves the allocation of resources even though an organization has not explicitly chosen its strategies.” (Ryszard Barnat) Economic turbulence is really a very tough and trial period for any business. The ultimate aim during the period is to do something. Here the spirit of ‘do and die’ is very important. You hardly get any time to design plans, taking actions and implementing strategies, etc. The writer of the article “Fortune 1 Perspective: Emergent Strategy” has mentioned about his conversation in the article which is very apt. He says, “A senior level Japanese business executive said to me in 1996: “…to be successful you must have a hungry spirit , make quick decisions and act fast , and work like a horse….”And I have also seen it characterized as “…success requires equal parts of talent , ideas, hard work, and luck.” The end message is: Success flows from Doing not from planning.” (Fortune 1 Perspective: Emergent Strategy) “The strength of the ABC/Emergent(Dynamic) Strategy Model is the fact that it more accurately reflects the real world than the traditional planning model, which assumes the ability to wait for predefined intervals before revisiting it. The Emergent Strategy Model portrays a dynamic or continuous reformulation of the Intended Strategy to an Emergent Strategy and ultimately to a Realized Strategy.” ---Joseph C. Paparone II, CPA Economic Turbulence and Effective flexible leadership: The effective and flexible leadership is that leadership which is very innovative and which tries to find out the new ideas through the problems that come before because most of the ideas are born through problems and questions. Such type of leadership is called emergent leadership as it advocates the emergent approach of the strategic management. This type of approach in the leaders basically takes efforts on eliminating the office politics. It is the motive and core issues which need to be considered by the leaders in such a critical situation. The characteristics of the ideal emergent leader to fight the financial crises matter a lot. Unlike the traditional leadership which is bound by the bureaucratic hierarchical structures the emergent leadership emerges spontaneously. The person who has the leadership quality can take initiatives to fight against the situation. He can be the unofficial leader who will show the right direction to the other members of the business and thus shows the presence of mind. The emergent leaders have the chaotic approach. It means that should not have “a conservative, risk-avoiding approach to developing strategy, but rather an alert and prudent approach that protects governments and business enterprises from the effects of disruptive forces in times of turbulence, and yet still advances its interests. This is the Chaotics approach.” (John A. Caslione 2009) The leader should be the guide and he should motivate his employees and take efforts to enhance the ability and performance of the employees. Essential things for implementing Emergent Strategies: Here is a very good example of emergent strategy which was adopted by the executives of Honda, “The classic example of emergent strategy is the old Honda story where executives moved to California in the 1960s to sell large motorbikes but when the public noticed the scooters the executives were riding around town on and started asking for them, Honda changed the strategy.” (Mitch McCrimmon 2007) Though emergent strategies are the right answer in the situation of economic turbulence and uncertainty of the market there are some major factors necessary for the successful implementation of the emergent strategies. They are as follows: These strategies are strongly supported by the top management. Without the support of the top management the bottom line managers cannot take any decision. It is necessary that the management should given enough freedom to the other managers to take the decisions and not just rely on top management. A proper trust should be built between the management and the working people. The human force is the biggest asset in any organization. The people involved in the business should show trust to their leaders and they should be dynamic They should be ready to accept any change in the organization. Conclusion: The above discussion suggests that in economic turbulence the emergent approach of strategic management is more useful than the prescriptive approach. Prescriptive approach is somehow close to the red tape system where each and every decision is taken through a very long process which is never affordable for any business in economic turbulence. The prescriptive approach can prove to be ideal in a steady situation. But at the same time it is also very important that the leadership as well as the people working in the organization should be efficient, competent, talented and committed. They should know their responsibility. Then only emergent approach will really work out in the economic turbulence. The company’s CEO must motivate the people to go ahead without waiting. The most important thing is achieving the goal of the organization. So the required thing is that just keep eyes on the organizational objectives and just don’t be in the constrain of rules and policies. A company’s CEO should tell the people in his company: “I want you to DO things!” “Doing is honest philosophy.” “Take act ion, don’t wait.” “Focus on the customer and be innovative.” (Fortune 1 Perspective: Emergent Strategy,) Sources 1. STRATEGIC MANAGEMENT, A TOOL OF LEADERSHIP – CONCEPTS, AND PARADOXES, Pierre Tabatoni, Académie des Sciences morales et politiques, and Andris Barblan, EUA Secretary General 2. World Economy, Business Encyclopedia: Global Economy, http://www.answers.com/topic/world-economy 3. Schuler Randall S. 1992, “Strategic Human Resource Management Linking the people with the Strategic Needs of the Business,” Organizational Dynamics Summer 1992 pg 18, copyright Elsevier Science. 4. Pg 325, “Strategic Management for Travel and Tourism,” by Nigel Evans, David Campbell, George Stonehouse, Published by Butterworth, Heinemann Publication, 2003. 5. Pg 71, Tony Doherty, Terry Horne, 2002, Business Economics, Routledge Publications 6. Pg 295, Business Strategy: An Introduction by David Campbell, Bill Houston) 7. Pg 322, “Strategic Management for Travel and Tourism,” by Nigel Evans, David Campbell, George Stonehouse, Published by Butterworth, Heinemann Publication, 2003. 8. Pg 72, “Strategic Management for Travel and Tourism,” by Nigel Evans, David Campbell, George Stonehouse, Published by Butterworth, Heinemann Publication, 2003.) 9. The figures in the article are taken from the website: www.global-strategy.net/..../strategicmanagement 10. Harrison J. S. 2003, strategic management of resources and relationships, John Wiley & Sons, New York 11. (Simpson D G (1998), “Why most strategic planning is a waste of time and what you can do about it” - Part I & II. Long Range Planning, Vol. 31, No 3 & 4) 12. (THE McKINSEY QUARTERLY 1998 NUMBER 2, Pg 49, “How much is flexibility worth?” by Copeland and Keenan 13. (Ryszard Barnat, LLM., DBA, Ph.D. (Strat. Mgmt) Mintzbergs Model, website: http://www.strategy-implementation.24xls.com/en104) 14. Fortune 1 Perspective: Emergent Strategy, Website: http://www.fortune1.com/emergent_strategy.pdf 15. Joseph C Paparone II, CPA, STRATEGIC PLANNING USING THE EMERGENT STRATEGY MODEL, http://www.mpbcpa.com/library/articles/management_consulting/planning/strategicplan1.pdf 16. Mitch McCrimmon “How Strategic Are you- What does strategic thinking mean in todays chaotic world? http://businessmanagement.suite101.com/article.cfm/how_strategic_are_you 17. John A. Caslione, November/December 2009, CHAOTICS: LEADING, MANAGING AND MARKETING IN THE AGE OF TURBULENCE Read More