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Ansoff (1991) described strategic management as a new role for general managers which was very different from the historic approach of management b exception. Discontinuous events rarely bring a response from functional managers, unless guided by general managers who tend to stick too long to the strategic knitting, often in the face of evidence that the market no longer wants it.
"The new general management role required managers to assume a creative and directive role in planning and guiding the firm's adaptation to a discontinuous and turbulent future. It required entrepreneurial creation of new strategies for the firm, design of new organisational capabilities and guidance of the firm's transformation to its new strategic posture. It is this combination of these three firm-changing activities that became known as strategic management (p. 7)."
In the same paper, Ansoff suggests that an alternative name for strategic management might be 'disciplined entrepreneurship'.One of the differences in the strategic management approach compared to its predecessors is a closer blending of the analytical with the behavioural. The seeds of this were sown long before the new term was coined. The consultancy McKinsey made a great contribution with their 7S model, which brought structure, style, people and shared values together with skills, systems and strategy.
In its simplest conception strategy is regarded as a unifying idea which links purpose and action. For de Wit and Meyer (1998), in an intelligent treatment of the subject, strategy is any course of action for achieving an organization's purpose(s). In the words of Alfred Chandler, the first modern business strategy theorist, strategy in the area of business is defined as "the determination of the basic, long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals" (Chandler, 1962: 13). Although still tentative and preliminary as a definition, it is possible to advance a little further and say that strategy is 'a coordinated series of actions which involve the deployment of resources to which one has access for the achievement of a given purpose.'
Strategy is related to planning. Its rise and fall in popularity is linked with the change in attitude to planning.. It is fitting that the total mobilization of resources for two world wars provided a model of how planning might work. Business planning has quite a long history, both as a practical matter and as a subject of teaching, notably in American business schools such as the Harvard Business School. Strategy means something different to every person who uses the concept.
An interesting starting point for defining strategy are four general approaches which can be clearly distinguished (Whittington, 2001). Each of these perspectives differs in the way in which it combines two defining elements:
1. Whether the processes of strategy making are deliberate, explicit and handed down from above or emergent and often implicit, coming from different levels of the enterprise, including the bottom, and involving continuous modification of the content of any strategy.
2. Whether the outcomes reflect the single motivation of profit maximization or a more pluralistic motivation, such as satisfying the various stakeholder groups.
Choice of these elements reflects the different emphases obvious in the literature, and indicates a way of separating particular views about what is important in defining strategy making. These are by no means the only elements which could be used to classify different perspectives, but they are undoubtedly significant ones. The combinations of the two elements define four possible perspectives which might dominate.
This is the traditional view of strategy making. It regards strategy making as comprising deliberate, explicit and rational analysis and emphasizes profit maximization as the only acceptable motivation for any strategy. Classical strategy combines the thinking of the military strategist with some aspects of the economist. Leadership is seen as a key element, since the leader chooses the strategy. The strategy is handed down by the leader, the strategist, to be implemented by the managers. The formulation and implementation of strategy are seen as separate and sequential activities.
This is the view of the typical economist. It adopts a fatalistic stance, putting the emphasis on the emergence of a strategy as the outcome of the competitive discipline of the market, that is, as the outcome of blind forces weeding out the failures and leaving only the successful. The market operates rather like the process of natural selection in biology, removing those who fail to adjust successfully to a changing environment and leaving only that strategy which is best adapted to the changing economic environment.
This is the view of social realist. It moves the observer away from an emphasis on economic rationality and profit maximization, and away from the conception of the market or the organization's leader as infallible. It takes a subtle, more pragmatic view of behaviour and stresses a number of key constraints on the process of strategy making
This is the view of the social relativist. Strategy reflects the nature of the social system - its attitudes, values and behavioural patterns. Strategy is what different societies make it. Such a view emphasizes a deliberate but relativist approach, one which sees strategy as imposed from above but business behaviour as embedded in a network of particular social and political relations. The motivation of a strategy is itself culturally conditioned, reflecting the society in which the strategy is developed. Both institutional and cultural contexts differ from society to society. For example, in the business world there are enormous differences in the accepted role of government or the family firm.
D'Aveni proposes a different strategic approach for firms which operate in conditions of hypercompetition, which is the condition of ever higher levels of uncertainty, turbulence, diversity of competitors and hostility. Competition is nearly always a sequence of discontinuities, with few stable periods, and consequently competitive advantage erodes quickly. Competing firms make many major, rapid and unexpected strategic moves. "Hypercompetition may be viewed, therefore, as just a faster version of traditional competition. But that's like saying that a hurricane is a faster version of a strong wind" (p. 217). D'Aveni provides tools and methods, as well as a philosophy for managing under conditions of hypercompetition, arguing that strategic management is no longer about creating long-term competitive advantage, which is unsustainable, but is about continually changing the patterns of markets, seeking temporary advantages, and maintaining the momentum of change. RÂ¨ uhli explores these ideas and tests them against the electrotechnical industry. D'Aveni examines a particular set of conditions. Coyne and Subramaniam discuss a concept which emerged from an internal forum set up within the McKinsey consultancy. Like the Ansoff concept, it suggests different approaches to strategic thinking which are contingent on the degree of uncertainty about the future. They distinguish four levels. At level 1 it is possible to develop a usable prediction of the future through analysis: at level 2 analysis enables different scenarios to be made, although there is uncertainty over which will happen. By level 3 there is a condition of continuous uncertainty, where the outcome is likely to lie upon a continuum rather than a couple of discrete scenarios. Level 4 is a condition of great ambiguity.
There are several ways in which a planning process can be designed. It is important that each company which introduces planning should do so in a way that meets its own particular needs. The various examples examined here should be seen as starting points and should not be read too dogmatically. It will also already be apparent that part of the difference between planning systems in organisations is not the schematics showing what plans are prepared, or what should go into a plan, but where the analysis and decisions are undertaken. This is where all the ideas and research quoted so far in this chapter are particularly useful. A planning system will be examined in some depth, and this will be followed by illustrations of other approaches which although constructed differently arrive at approximately the same place. One of the justifications given for subjecting a business to a process of strategic management is that it is the only satisfactory way of coming to terms with a changing world. Events in the environment in which the company operates have a direct effect on the success or failure of that company. Strategic management seeks, as one of its aims, to relate the company to its environment, and to identify in advance the threats and opportunities which environmental change brings. At the outset the unique character of each business should be stressed: the effect of change in factors outside the control of the company will vary not only between industries but also between companies in the same industry. What causes the effect to vary are not only the obvious things like the nature of business, countries of operation, and size of organisation: there are also the fundamental differences in the attitudes and abilities of various managements. What one manager views as a threat may be seized as an opportunity by another.
Product Life Cycle
One concept which is of value in many forecasting situations is that of the product life cycle. This suggests that all products pass through a series of growth curves (the first part of which is S-shaped), until they reach a point when they either level out or begin to decline.
Over the last thirty years Xerox Corporation has moved from being a dominant player in its markets in the 1970s to being threatened with extinction in the 1980s, and then back again to being the world's foremost document creation and reproduction company in the 1990s. At the end of the 1980s Xerox began to thoroughly investigate its internal processes, particularly in terms of their effectiveness and efficiency in satisfying the corporate objective of being the world's top-ranked document company in relation to customer satisfaction. Xerox realigned its thinking to recognise the importance of business processes and the deficiencies of its segmented, functionally disjointed way of doing business. The company thus became a pioneer of business process management techniques, with significant improvement in financial results and in its customer satisfaction ratings.
Bernard Fournier, managing director of Rank Xerox Ltd, received the first 'European Quality Award' from King Juan Carlos of Spain in Madrid on 20 October 1992. For Xerox and it affiliates this was the latest accolade in a series stretching over more than a decade.
GENERAL PHASES OF THE TRANSFORMATION
Before leaving Leesburg, these twenty-five leaders defined the Xerox quality policy which has worldwide applicability and is still in effect today. It states: Xerox is a Quality Company. Quality is the basic business principle for Xerox. Quality means providing our external and internal customers with innovative products and services that fully satisfy their requirements. Quality improvement is the job of every Xerox employee. Among the most interesting aspects of this policy is the definition statement.
Xerox has been involved in benchmarking since the late 1970s. In fact, modern benchmarking can be said to have begun with a 1979 Xerox trip to Japan to study manufacturing performance and practice.
Although they had established a good foundation for continuous improvement in most functions, Xerox managers realised that in these early efforts they had failed to achieve the degree of cross-functional team work that would be required to maintain world-class status against ever-increasing competition.
Xerox modified in some respects its approach to training. Tools and techniques were now related to their applicability to specific work processes and market-driven goals. Employees were trained in multifunctional groups and skills were taught on an 'as-needed' basis just in time for application to identified process improvement initiatives. The team approach was modified, it was not abandoned. The challenge was to work cross-functionally as a team. The aim was to take a total multifunctional business process and to demonstrate how to optimally use information technology and best practices to streamline and improve the whole process. Xerox focused on what it called 'high-impact' teams, cross-functional teams responsible for defined basic business processes which have outputs that significantly impact business results.
Research into strategic management and its benefits has become more complex because of all the differences and nuances. Ansoff and his colleagues demonstrated that, the benefit comes when the organisation applies an approach to strategic management which matches the situation they are in, and that the wrong style may be harmful. Even when the hurdle of fitting the approach to the situation has been overcome, strategic management is not likely to be successful if it is applied badly. There are also degrees of success, and not all organisations set a high enough level of expectation from their planning work, and are therefore too easily satisfied. Strategic management has made great strides since it emerged as a topic under its old name of long-range planning. We now have better techniques of strategic analysis, and new concepts of strategy formulation, and we understand more about the behavioural aspects of managing strategically. It is perhaps of interest to try to speculate where the subject might be heading.