Enduring scholarly interest in the process of strategy-making stems from an abiding assumption that some ways of strategizing are more efficacious than others, and thus lead to higher firm performance in the long run; higher than luck alone would bring. Expressions of interest in and endorsements of the strategy process are abundant in the academic literature. As Pettigrew (1992) points out, Hofer and Schendel's pioneering definition of strategic management is processual in character emphasizing the development and utilization of strategy. Rumelt, Schendel, and Teece (1994) list the policy process question – how does policy process matter? – as a fundamental question of the strategic management field. Porter (1996) expresses preoccupation with the leadership and organizational challenges of managing the process. And, Hamel (1988) exhorts the field to devote as much attention to the conduct of strategy, i.e., the task of strategy making, as they have to its content. For senior managers and leaders, the question of how to make effective strategies stands usually at the top of their agenda. Not surprisingly then, the quest to uncover stable principles of good strategy making has attracted much support and interest over the years.
The purpose of this paper is to provide a solution that helps reduce confusion about choice and usage of tools for strategy-making.
The purpose of this paper is to provide a solution that helps reduce confusion about choice and usage of tools for strategy-making.
The approach is to present a classroom-tested system that integrates new methods for applying a parsimonious set of six widely used tools, within one, comprehensive, yet succinct, procedure for strategy-making.
Findings, based on years of development and use of the procedure as the basis for teaching MBA capstone courses in strategy, reveal that it facilitates rapid mastery of the underlying theory and practical application of the essential tools of strategy-making.
Practical implications include decreased tendencies for ad hoc or disjointed use of random sets of tools for strategy-making and increased capabilities to connect strategy-making and strategy-executing in an iterative process, as previous iterations of strategies that were executed by organizations are used to determine new strategies.
Characteristics of the procedure which are original include: merging outside-in and inside-out perspectives on strategy-making in one, succinct procedure; providing an approach with general applicability to diverse types of organizations; providing a systematic process for identifying and rating environmental characteristics, using shared, theory-based scales, applied to fully-cited, real-world data, thereby reducing reliance on unsubstantiated opinion, providing full traceability, and facilitating knowledge transfer across users and time; and linking strategy analysis to formulation. The procedure described in this article has value for professors, students, managers, consultants, and the broad spectrum of people throughout organizations who are engaged in strategy-making.
The purpose of this paper is to propose an alternative perspective on Zhong-Yong that is different from the notion of “Yin-Yang balancing” and apply it to understand the…
The purpose of this paper is to propose an alternative perspective on Zhong-Yong that is different from the notion of “Yin-Yang balancing” and apply it to understand the issue of balancing the top-down and bottom-up processes in strategy making.
The authors adopt a “West meets East” mindset and approach to develop an alternative perspective on Zhong-Yong, and then apply this perspective to understand the issue of balancing the top-down and bottom-up processes in strategy making. There are three steps in the process of developing the alternative perspective. First, the authors argue that the essence of “Yin-Yang balancing” is a ratio-based solution to paradoxical balancing, which is in fact equivalent to Aristotle’s doctrine of the mean and compatible with some western management scholars’ approaches to solving paradox. Second, the authors identify a different generic solution to paradoxical balancing implicit in the western management literature. Third, the authors find in the original text of Zhong-Yong equivalent ideas to the identified different generic solution and then propose an alternative perspective on Zhong-Yong that is fundamentally different from the notion of “Yin-Yang balancing.”
Applied to the issue of balancing the top-down and bottom-up processes in strategy making, the new perspective on Zhong-Yong provides us with the following prescriptive insights from the life-wisdom of eastern philosophy: first, top management (e.g. Shun as the sage-king) must listen to various views and opinions also from employees and low-level managers at the bottom of the organization to be better informed about complex issues. Second, top management must analyze the diverse elements of the various views and opinions they collect and synthesize by taking the good from the bad to find smarter solutions and make decisions with better outcomes. Third, abiding by a set of (more or less) cohesive values help top managers be open and receptive to information and insights from low-level organizational members and enhancing unbiased information.
This paper is mainly a theoretical perspective. Empirical work is needed to test the prescriptions offered in this paper.
Practitioners may learn new perspectives from ancient Chinese philosophies on how to balance.
This paper applies a new perspective on Zhong-Yong to an important paradox in strategic management.
The dual importance of centrally induced strategic intent and the ability to engage in autonomous strategic initiatives has been demonstrated in both qualitative and…
The dual importance of centrally induced strategic intent and the ability to engage in autonomous strategic initiatives has been demonstrated in both qualitative and quantitative empirical studies over the past decades. However, the particular mechanisms required to facilitate the interaction between these strategy-making approaches and achieve better corporate performance are less clear. The authors argue that the commonly conceived but rarely examined role of the strategic control process is essential to the implied adaptive performance dynamic. Although the strategic control typically is conceived as the diagnostic monitoring of outcomes, the authors contend that an interactive control (IC) mechanism is conducive to superior performance outcomes. To examine this, the authors use the extant strategy literature to generate the basic hypothesized relationships and conduct an empirical study based on a large corporate sample to uncover the intricate strategy-making model. The analyses show that adherence to ICs is an essential mediator for the positive combined effects of strategic planning and autonomous strategy-making processes.
Cooperative relationships between actors located in the same geographical area that are economically independent and culturally distinct are the heart of functioning…
Cooperative relationships between actors located in the same geographical area that are economically independent and culturally distinct are the heart of functioning innovation clusters. This can slow down the creation of common innovation projects, particularly in French innovation clusters where cooperation is influenced by the governmental financing devoted to this system. This research focuses on knowledge brokering activities implemented in this inter-organizational context, showing how they cross knowledge boundaries, structure cooperative dynamics and participate in common strategy-making. The mobilization of the strategy as practice theory allows for an in-depth analysis, shedding light on various practices, resources and practitioners related to the brokering activities taking place within an innovation cluster in Paris. Findings show a widespread development of brokering activities that emerges from cluster governance unit to its networks according to a reflexive relationship progressive structured over time.
This research is based on a longitudinal exploratory analysis of the Parisian cluster Advancity. To capture its organizational dynamics, two databases of the cluster (focused on innovation projects and integration of members), 24 power point files presented to negotiate strategy and 13 interviews with managers and members of the cluster were used. The whole data was triangulated and generated categories of data that can be compared with the concepts of the literature on innovation clusters (governance), brokering activities (knowledge access, learning, networking and implementation) and strategy-making (recursive process and adaptation of the strategy).
The analysis shows the effects of each type of brokering activities on strategy-making across knowledge and organizational boundaries. The practices of implementation activity initially absent from the cluster become, in its mature phase, one of the central activities. Moreover, all the brokering activities are initially handled by the managers of the cluster and progressively are extended to their members, then becoming a widespread activity within the internal networks. The maturation of these practices goes together with the maturation of its own cluster. The practice of experimentation particularly affects brokering activities and produces learning and networking effects within the cluster.
From a managerial point of view, considering the organization of the clusters as a constellation of communities of practice (Wenger, 1998) emphasizes that the knowledge brokerage activities can be extended and delayed within each community that makes up the organization. A top-down approach could therefore suffocate the network. It would be interesting to develop this research approach in future work and complete this research by reinforcing microscopic analysis enabled, for example, by tracking a small number of innovation projects during their lifecycle.
The empirical foundation proposed in this research strengthens the scientific nature of the theory of the activity that is itself integrated in the perspective of the practice (Seidl et al., 2006). The multilevel approach and wealth of the mobilized and analysed empirical data allowed making more visible how a social activity builds itself, develops and creates aperture effects on the strategy driven by innovation at the intersection of different boundaries.
The results of this research provide a theoretical contribution in that they allow to revisit the classification of the activities of a knowledge broker (Hargadon 1998, 2005) in a new organizational context representative of the knowledge-based innovation (Amin and Cohendet, 2004). They are also contributing to the current emerging from the knowledge-based view of clusters (Bahlmann and Huysman, 2008; Arikan, 2009) by mobilizing the theory of the practice (Whittington, 2006; Jarzabkowski, 2005). This perspective helps to discern a particular form of strategy-making within the clusters.
This chapter contends that the international business (IB) and strategic management (SM) fields have many commonalities that should be considered in a turbulent globalized…
This chapter contends that the international business (IB) and strategic management (SM) fields have many commonalities that should be considered in a turbulent globalized business context. IB studies refer to the need for local integration and local adaptation whereas empirics in SM pinpoint the complementary effects of central planning and decentralized decision-making. We present and synthesize these rather field specific perspectives and try to synthesize insights from both fields in an adaptive strategy-making model including the effects of autonomous subsidiary initiatives and intended mandates from corporate headquarters. The model considers local subsidiary actions of both operational and strategic nature and we argue that it may be futile to distinguish between these effects as incremental operational responses can cumulate into more substantial changes over time with dimensions of strategic adaptation. The model provides a foundation for further considerations about how to combine central intent and direction with decentralization and autonomous initiatives in the multinational corporation.
This paper examines the emergent and deliberate views in strategy making through, what we develop as, a sequence of thinking and acting. Combining the features of thinking…
This paper examines the emergent and deliberate views in strategy making through, what we develop as, a sequence of thinking and acting. Combining the features of thinking and acting may enhance the organization's ability to achieve change, an ability that remains untapped unless it is accompanied by a change in mental models. Both action thinking emergent issues as well as thinking–acting deliberate issues may constitute triggering events, when contrasted with a previously agreed frame of reference. We develop a framework to show how thinking co-evolves with action in a succession of strategic activities, and within an agreed upon frame of reference. Our aim is to shed light on the circumstances under which deliberate or emergent modes take place throughout the strategy-making process. We claim that changes in strategic activities are determined by attention-triggering events, driven by both thinking and acting.
The combined roles of strategic planning and decentralized strategy-making remain an essential issue in strategy research and its resolution has implications for…
The combined roles of strategic planning and decentralized strategy-making remain an essential issue in strategy research and its resolution has implications for management practice. To this end the current study considers the added effects of adopted leadership style and use of interactive controls and thereby uncovers new interesting insights about the combined strategy-making process. The authors use structural equation analyses to investigate these more fine-grained relationships based on an updated cross-sectional dataset from among the largest companies in Denmark. The analyses find that a participative leadership style drives the application of interactive controls, which in turn has a positive interaction effect on the relationship between strategic planning and corporate performance. A participative leadership style also exerts positive influence on autonomous strategic actions, which in turn has a negative direct relationship to performance, but a positive interaction effect on performance together with use of interactive controls. The authors discuss the theoretical foundation for these intricate relationships and consider opportunities to extract further research insights.
Strategy, competitive analysis, remittance industry.
Undergraduate and postgraduate business and management.
This case study examines the money transfer and foreign exchange industry in the Middle East context particularly United Arab Emirates. It focuses on the strategy making process. Possible business level strategies different firms can employ will be a consideration in the process of strategy making. Also, the stakeholder perspectives in the strategy making process are also dealt with. The characteristic required for cost leadership, differentiation, and focus needs to be matched with the context to arrive at an optimal strategy. The importance of arriving at a strategy to avoid being stuck in the middle during a period of financial crisis is one of the key areas of discussion.
Expected learning outcomes
This case can be used to teach: the stakeholder perspective, business level strategy, cost leadership, differentiation, remittance industry, foreign exchange business, and strategy process.
A teaching note is available on request.