Question One (25 marks). The Answer from Reading 1, Readings for Block 5 & 6.

Hrebiniak (2006) argues that the problem with poor performance typically is not with
planning , but with doing . Making strategy work is more difficult than strategy making.

A. Discuss the obstacles which effect the execution or implementation. (15 marks)

Students are expected to discuss what Hrebiniak (2006) identifies as the main obstacles to
effective execution or implementation, and briefly describes what managers must do to
overcome the impediments and achieve strategic success.

Managers are trained to plan, not execute

One basic problem is that managers know more strategy formulation than implementation ,
they’ve been trained to plan , not execute plans .and acquire functional expertise , but not how to
coordinate across the disparate function- then the successful execution of strategy become less
likely and more problematic .Execution cannot be taught , and implementation involves doing
and on—the – job experience , even so managers can be taught the key step , action , or variable
that lead to execution success. They can benefit from a model of implementation that lays out
process , the steps or decision involved and a logical approach to making strategy work ,
such a model can inform and guide subsequent implementation actions

Let the grunt handle execution

Another problem is that some top-management believe strategy implementation is below them
something best left to lower- level employees. The heading of this section comes from an actual
quote , from a high- level managers who believed that it was top-management’s role to plan and
think strategically, and the role of lower-level “grunts” to simply carry out the top level’s
demands requirements . If things go awry and strategic plans are not successful, the problem is
placed squarely at the feet of the doers, who somehow couldn’t implement a perfectly sound
and viable plan. The truth is that implementation demands Ownership at all levels of
management . from C-level managers on down, people must commit to and own the processes
and action central to effective execution.

Planning and execution are independent

Strategy formulation and implementation are separate, distinguishable parts of strategic

management process, each can be differentiated and discussed separately, conceptually and
practically. “Logically implementation follows formulation’. But formulation and
implementation are also independent, part and parcel of an overall process of planning –
executing adapting . planning affects execution , The execution of strategy , in turn affects
changes to strategy and planning over time , this relationship between planning and doing
suggest two critical points .

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 a. Successful strategic outcomes are best achieved when those responsible for
implementation are also part of planning or formulation process.

b. Strategic success demands a “simultaneous” view of planning and doing. Managers

must be thinking about execution even as they are formulation plans.(Formulation and
executing are parts of an integrated strategic management approach).

Implementation is a process that takes longer than formulation

The execution of strategy usually takes longer time than the formulation of strategy , whereas
planning may take weeks or month, the implementation of strategy is usually played out over a
much longer period of time. The longer time frame can make it harder for managers to focus on
and control the execution process, ( competition don’t behave the way they’re supposed to ,
costumer needs change).it cannot be easily determined because of noise or uncontrolled events.
Long time needs must be translated into short- time objective . Controls must be set up to
provide feedback and keep management abreast of external shocks and changes . the process of
execution must be dynamic and adaptive, responding to and compensation for unanticipated
events

Execution involves more people than strategy formulation

To being played over longer period of time , strategy implementation always involves more
people than strategy formulation . This presents additional problem . Communication down the
organization or across different functions become a challenge. Linking strategic objectives with
the day to day objectives and concern of personnel at different organizational levels and
locations becomes a legitimate, but challenging task, the larger number of people involved , the
greater is the challenge to effective strategy execution.

B. Hrebiniak (2006) presented a dynamic model to discuss the key decisions and
actions necessary to overcoming the obstacles and implementing strategy
successfully. Explain. (10 marks)

For Hrebiniak (2006), implementation efforts require guidelines. Thus, the first step in
confronting the formidable implementation obstacles discussed above is to develop guidelines to
lead and support the implementation process. Hrebiniak (2006) had crafted an approach or model
to guide the implementation process (Fig. 1, page 13). This model has two features: (i) it shows
that there is a logical flow of execution decision or action , (ii) incorporates feedback loops.
Students are then expected to briefly discuss the elements of the model.
a. Corporate strategy : which is concerned with the entire organization and focus
,accordingly , on such areas as portfolio management , diversification , and resources
allocations across the business or operating units that make up the total enterprise.
b. Corporate structure: corporate strategy drives the choice of corporate structure,
alternatively , the choice of structure is vital to implementation of corporate strategy .

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Some corporate acquisitions become relatively independent, decentralized units
competing in different industries. Yet there usually are activities or function that cut
across different business that allow for centralization, reduced duplication of resources,
and the scale economies so often sought by corporate strategies.
c. Need for integration: the integration component of corporate structure refer to the
methods used to achieve coordination across the units comprising organizational structure
(low cost, decentralization, scale economies )
d. Business strategy : business create strategies of their own, and this represent the next
element of the model . at the business level strategy is focused on product , services and
how to compete in a given industry .
Business strategy is important because it helps achieve competitive advantage and
profitability for the business unit and , ultimately , the entire organization . but business
strategy is also important to execution of corporate strategy .
Business strategy also makes demands that must be met to execute successfully .
The business must create the functional skills , capabilities , and competences that make
sound implementation possible
e. Integrating strategy and short term objectives: Business strategy must be translated
into short-term operation objectives or metrics in order to execute the strategy . to
achieve strategy objectives , an organization must develop , short-term , measurable
objectives that relate logically to and are consistent with, business strategy and how the
organization plans to compete.
Short term is okay if it’s tied to long term , strategic thinking , the following figure shows
this translation process and a few examples of measurable long and short term metrics
that can be used to integrate strategy and operating objectives .
f. Business structure: organizational designs or structures , different business in the same
company can face very different competitive situation and thus have a need for different
structure.
Business structure should reflect and driven primarily by, the nature of business strategy
in order to implement that strategy successfully.
Structure define the major function or operating units that make up the business (it is one
of coordinating or integration).
g. Incentives and control: some method of obtaining individual and organization goal
congruence is required . prior decision and actions can be negated by a lack of
commitment among individuals charged with execution.
Feedback on performance is also needed so the organization can evaluate whether the
right things indeed being accomplished in the strategy execution process. On the other
hand , control provide feedback about whether desire performance outcome are being
attained .control allows for revision of incentive and other execution-related factors if
desire goals are not being met.

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Question Two (25 marks). The answer for this question could be found in Reading 3,
Readings for Block 5 & 6.

According to Mintzberg (1979), organizational design should logically configure into

internally consistent groupings. Like most phenomena – atoms, ants and stars –
characteristics of organizations appear to fall into natural clusters, or configurations.

A. Discuss the six basic parts of the organization that were introduced by Mintzberg’s
framework. (9 marks)

The six basic parts of the organization

1. The operating core is where the basic work of producing the organization’s products and
services gets done, where the workers assemble automobiles and the surgeons remove
appendices.

2. The strategic apex is the home of top management, where the organization is managed
from a general perspective.

3. The middle line comprises all those managers who stand in direct line relationships
between the strategic apex and the operating core.

4. The technostructure includes the staff analysts who design the systems by which work
processes and outputs of others in the organization are formally designed and controlled.

5. The support staff comprises all those specialists who provide support to the organization
outside of its operating workflow – in the typical manufacturing firm, everything from
the cafeteria staff and the mailroom to the public relations department and the legal
counsel.

6. The ideology forms the sixth part, a kind of halo of beliefs and traditions that surrounds
the whole organization.

Students may refer to Figure 1, page 36. But an explanation is important.

B. Briefly discuss the six basic coordinating mechanisms. (8 marks)

Students are required to outline the six basic coordinating mechanics

1. Mutual adjustment achieves co-ordination of work by the simple process of informal

communication. The people who do the work interact with one another to co-ordinate,

Mutual adjustment is obviously used in the simplest of organizations – it is the

most obvious way to co-ordinate.

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 But, paradoxically, it is also used in the most complex, because it is the only
means that can be relied upon under extremely difficult circumstances, such as
trying to figure out how to put a man on the moon for the first time.

2. Direct supervision in which one person co-ordinates by giving orders to others, tends to
come into play after a certain number of people must work together. Thus, fifteen people
in a war canoe cannot co-ordinate by mutual adjustment; they need a leader

3. Standardization of work processes, the procedures to be followed. It is typically the job of

the analyst to so program the works of different people in order to co-ordinate it tightly.
4. Standardization of outputs means the specification not of what is to be done but of its
results. A division manager is told to achieve a sales growth of 10%, such standards
generally emanate from the analyst.
5. Standardization of skills. Here, it is the worker rather than the work or the outputs that is
standardized. He or she is taught a body of knowledge and a set of skills which are
subsequently applied to the work. Such standardization typically takes place outside the
organization – for example a professional school or a university. Co-ordination is then
achieved by virtue of various operators’ having learned what to expect of each other.
6. Standardization of norms means that the workers share a common set of beliefs and can
achieve co-ordination based on it.

C. Define the 6 types of decentralization. (8 marks)

1. Type I, decentralization: Each manager tightly controls those below him such that all the
power eventually rises to the top of the hierarchy, where it rests in the hands of the chief
executive at the strategic apex. What we call centralization.
2. Type II, limited horizontal decentralization : When the organization relies on the
standardization of work processes for co-ordination, the unskilled operators and lower level
line managers lose power to the managers higher up in the hierarchy and also to some extent
to the analysts who design the systems of behaviour formalization that control others.
3. Type III, limited vertical decentralization : We have also seen that a reliance on
standardization of output goes with the delegation of power over many decisions to the
managers of market-based units.
4. Type IV, extreme form of horizontal decentralization : Standardization of skills (based on
extensive training) is relied upon for co-ordination. As a result, the professionals can work
rather autonomously in large units, relatively free of the control of line managers.
5. Type V, selective horizontal and vertical decentralization : In the second kind of professional
work, the experts work in small units and coordinate by mutual adjustment.
6. Type VI, plain decentralization: decentralization dictated by a reliance on the standardization
of norms for co-ordination. As noted earlier, when an organization socializes and
indoctrinates its members to believe in its strong ideology. The result can be the purest form
of decentralization, the most democratic form of structure. Everyone shares power more or
less equally.

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Question Three (25 marks). The answer for this question is based on Reading 6 of
“Readings for Blocks 5 and 6” and on Block5.

Scenarios were first developed and used as business planning tools as long ago as the 1960s
and 1970s. Since then they have been adopted and permanently embedded in planning
cycles and procedures. It was noted that the definition of scenarios varied widely as well as
the way that scenarios were used.

A. What is scenario planning? (5 marks) Discuss Scenario thinking and scenario

planning. (7 marks)

Students are required to define the scenario planning and explain Scenario thinking and scenario
planning as studied in reading 6 block5 pages 104-108. Student can include in his answer the
following:

Scenario planning: Known as ‘future-now’ thinking, aiming through the use of detailed analysis
plus imagination, to be able to write a report in the present as if it was being written at some date
in the future. Two styles are available:

Intuitive style: scenarios were not forecasts or predictions about the future, The idea was to
construct credible pictures of a point in the future that could be used to test the robustness of
longer-term strategies. ‘The end result is not an accurate picture of tomorrow, but better
decisions about the future’. Peter Schwartz defined scenarios as: ‘alternative, plausible stories of
how the world may develop’. He emphasised that the outcome was not an accurate forecast of
future events, but a deep understanding of the forces that might push the future along different
paths. By building alternative scenarios – different pictures of the future – and challenging
strategies for robustness in these different possibilities, managers would have a superior context
for developing long-term strategies and for developing shorter-term contingency plans.

Formal style: This approach to scenario planning emphasised the use of computers, models and
processes grounded in analytical rigour.

Scenario thinking and scenario planning:

Research revealed a range of reasons why organisations embraced scenario planning, stretching
from exploration to decision support. At the exploration end, the key objective for organisations
in engaging in a scenario process is the potential to learn. When used for this purpose, the
process itself becomes very important, at least as important as the scenario outcomes and the
implications for future strategies.

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Adding probabilities to support decision-making: The opposite view is that building scenarios is
not the primary purpose, rather it is applying the outcomes to strategy making that is important.
When this is the purpose of engaging with a scenario exercise, it is common to find probabilities
attached to the various scenario outcomes

Reasons to actively avoid adding probabilities : Purists from the ‘scenarios as learning’ school
argue strongly against adding probabilities to scenarios. The underpinning philosophy they
adhere to is to allow the mind to open and ‘think the unthinkable. Proponents of this use of
scenarios argue that strategies should be tested for their robustness in all the alternative futures
that scenario thinking generates. It is not about choosing which one is more probable

B. Discuss the Level of analysis and why scenario techniques are not used? (13 marks)

Students are required to discuss the Level of analysis and why scenario techniques are not used
as studied in reading 6 block5 pages 108-116. Student can include in his answer the following:

The Level of analysis:

Scenarios have been developed for countries, for regions, for issues (the future of crime, the
future of women) and for institutions. Among those examples developed for organisations, there
can be many levels of analysis, from global, external, environmental to focused, internal issues.
The length of the time period considered tends to correlate with the scale and scope of the
exercise.

Global, complex, long-term scenarios : The World Business Council’s scenarios have a fifty-year
time horizon and were produced in order to: ‘explore sustainability at this juncture in human
history and to raise fundamental questions of how humanity defines itself and how each one of
us comes to terms with the challenges of the 21st century’.

Focused, narrow scenarios: Porter’s classic textbook Competitive Advantage (1985) provided a
theoretical example of how to use scenario techniques to formulate a competitive strategy.
Whilst he advocated broad thinking about the external environment, he focused on his industry
structure model as a framework within which to construct different competitive scenarios.

Scenarios are adaptable and flexible in use: Scenarios at different levels of analysis are often
complementary. A first exploratory, broad exercise which looks globally can be supplemented
with decision support scenarios focused on investigating a specific issue, industry, business or
topic.

Porter extols the virtues of this approach: ‘In some industries scenarios are best constructed by
starting inside the industry and looking outward for additional sources of uncertainty. In other
industries, it is more appropriate to begin with macroscenarios and then narrow the focus to the
industry

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Why scenario techniques are not used?

Cost: There are different methodologies to adopt, which to the infrequent user appear confusing.
Added to this, there is the commonly held view that a scenario process will be expensive in terms
of employing large amounts of resources in the organisation. Whilst it is clearly important to
consider the potential investment and commit to the resources required before engaging in a
scenario exercise, the costs need not always be high. One size does not fit all, scenario processes
are flexible and can be cut to fit the size of the business issue being addressed.

Confidence and uncertainty: While it is a common experience that plans go unrealised or need to
be changed because of changing external events, confidence in forecasting persists often with the
belief that with better models and tools it will even improve over time. Because it is difficult for
managers to accept that uncertainty and risk cannot be planned out of the future, they display a
preference (a greater acceptance and understanding) for scenario approaches that include adding
probabilities. Evolutionary psychology theory asserts that accepting uncertainty, recognising it as
inevitable and living with it, goes against the grain of human nature. Therefore, the natural
instinct of human beings to be overconfident makes adopting the exploration style of scenario
thinking difficult to accept.

Organisational culture and diversity: building the team to participate in a scenario exercise
appears to be more crucial to the outcome than is the case using other planning tools. By its very
nature, it will deliver better results if the people gathering and interpreting information for model
building or crafting into stories are not limited by a narrow view or single way of thinking.
Therefore, organisations that try hard to maintain and respect diversity of views among their
managers will find using scenario techniques easier as well as being more likely to deliver
quality outcomes. Context, culture and capability are, therefore, very important in determining
the outcome of a scenario exercise. Existing organisational culture is a particularly powerful
influence.

Question Four (25 marks). The answer for this question is based on Reading 25 of “Block 3
– Strategy Toolkit”

According to Eisenhardt (1999), many executives realize that to prosper in the coming
decade, they need to turn to the fundamental issue of strategy.

A. Define strategy and identify how effective decision makers create strategy. (10 marks)

Students need to provide, in one way or another, the following definition provided by Eisenhardt
(1999): strategy as strategic decision making, the ability to make fast, widely supported, and
high-quality strategic decisions on a frequent basis is the cornerstone of effective strategy.

Additionally, they need to identify that for effective decision makers to create strategy, they need
to:
 Build collective intuition that enhances the ability of a top management team to see threats
and opportunities sooner and more accurately.

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 Stimulate quick conflict to improve the quality of strategic thinking without sacrificing
significant time.
 Maintain a disciplined pace that drives the decision process to a timely conclusion.
 Defuse political behavior that creates unproductive conflict and wastes.

B. From the four actions that need to be taken by effective decision makers to create
strategy, choose three and discuss them. (15 marks)

Students need to choose three out of the following. Decision makers can create strategy by:

Building collective intuition that enhances the ability of a top management team to see threats
and opportunities sooner and more accurately. Effective strategic decision makers use as much as
or more information than ineffective executives, and they are far more likely to hold regularly
scheduled, “don’t miss” meetings. They rely on extensive, real-time information about internal
and external operations, which they discuss in intensive meetings. From extensive, real-time
information, these executives build a collective intuition that allows them to move quickly and
accurately as opportunities arise. Sharing information at “must attend” meetings is an essential
part of building collective intuition. In contrast, less successful top-management teams rarely
meet with their colleagues in a group. Meetings are infrequent or skipped because of travel
commitments. These executives typically make fewer and larger strategic choices. When they do
turn their attention to important decisions, they rely on market analyses and future trend
projections that are distinctive to the particular decision. The result is groups of strangers who
have difficulty engaging with one another productively. While they may each be knowledgeable
in their own areas of responsibility, they do not develop collective intuition.

OR

Stimulating quick conflict to improve the quality of strategic thinking without sacrificing
significant time. In high-velocity markets, many executives are tempted to avoid conflict. They
assume that conflict will bog down the decision-making process in endless debate and
degenerate into personal attacks. Reality is different. In dynamic markets, conflict is a natural
feature of high stakes decision making; conflict stimulates innovative thinking, creates a fuller
understanding of options, and improves decision effectiveness. Without conflict, decision makers
commonly miss opportunities to question assumptions and overlook key elements of the
decision. One way that executives accelerate conflict is by assembling executive teams that are
diverse in age, gender, functional background, and corporate experience. Another way that
effective strategic decision makers accelerate conflict is by using “frame-breaking” tactics that
create alternatives to obvious points of view. One technique is scenario planning. Perhaps the
most powerful way to accelerate conflict is by creating multiple alternatives. The idea is to
develop alternatives as quickly as possible so that the team can work with an array of
possibilities simultaneously.

OR

Maintaining a disciplined pace that drives the decision process to a timely conclusion. Less
effective strategic decision makers face a dilemma. On the one hand, they believe that every

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strategic decision is unique. Each requires its own analytical approach, and each unfolds in its
own way. On the other hand, these same decision makers believe that they must decide as
quickly as possible. Yet making quick choices conflicts with making one-of-a-kind choices.
Effective strategic decision makers avoid this dilemma by focusing on maintaining decision
pace, not pushing decision speed. One way that these decision makers maintain decision pace is
by following the natural rhythm of strategic choice. They use rules of thumb for how long a
major decision should take. Surprisingly, that metric is a fairly constant two to four months. In
addition, executives maintain pace by prototyping decisions as they analyze them. Instead of
merely analyzing options in the abstract, they test them. Prototyping (a) encourages managers to
take concrete actions that remove some of the unpredictability that can trigger procrastination,
(b) keeps managers focused on the goal of executing a choice and even begins the
implementation process. Effective strategic decision makers skillfully cut off debate, typically
using a two-step method called “consensus with qualification”. First, managers conduct the
decision process itself with the goal of consensus in mind. If they reach consensus, the choice is
made. If consensus does not emerge, they break the deadlock using a decision rule, such as
voting. Consensus with qualification maintains the pace by taking a realistic view of conflict as
valuable and inevitable. Consensus with qualification lets decision makers drive decision pace by
providing an effective way to reach closure without consensus.

OR

Defusing political behavior that creates unproductive conflict and wastes. Effective strategic
decision makers see political activity as wasting valuable time. Their perspective is collaborative,
not competitive, setting limits on politics and, more generally, interpersonal conflict. One way in
which effective executives defuse politics is by creating common goals. These goals do not
imply homogeneous thinking. Rather, they suggest that managers have a shared vision of where
they want to be or who their external competitors are. Goals that stress collective success or
common enemies give managers a sense of shared fate. They see themselves as players on the
same team, not as competitors. A more direct way to defuse politics is through a balanced power
structure in which each key decision maker has a clear area of responsibility, but in which the
leader is the most powerful decision maker. A balanced power structure gives managers a sense
of security that dispels the assumption that they need to engage in politicking. Humor defuses
politics. Effective strategic decision makers often relieve tension by making business fun. Humor
puts people into a positive mood. Research has shown that people whose frame of mind is
positive have more accurate perceptions of each other’s arguments and are more optimistic,
creative in their problem solving, forgiving, and collaborative. Less effective strategic decision
makers, usually have an inward, competitive focus. As a result, they lack the sense of teamwork
that characterizes more effective teams. The power structure is typically dysfunctional.

Question Five (25 marks). The answer for this question can be found in Reading 7,
Readings for Blocks 5 & 6)

Treating organizations as complex adaptive systems provides useful insight into the nature
of strategic work.

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A. what is “complex adaptive system”? (10 marks)

Students are expected to refer to Peter Allen (2001) definition: A complex system is any system
that has within itself a capacity to respond to its environment in more than one way. This
essentially means that it is not a mechanical system, with a single trajectory, but has some
internal possibilities of choice or response that it can bring into play.

Students are also expected to refer to Pascale (1999) argument that for an entity to qualify as a
complex adaptive system, it must meet four tests. First, it must be comprised of many agents
acting in parallel. It is not hierarchically controlled. Second, it continuously shuffles these
building blocks and generates multiple levels of organization and structure. Third, it is subject to
the second law of thermodynamics, exhibiting entropy and winding down over time unless
replenished with energy. In this sense, complex adaptive systems are vulnerable to death. Fourth,
a distinguishing characteristic, all complex adaptive systems exhibit a capacity for pattern
recognition and employ this to anticipate the future and learn to recognize the anticipation of
seasonal change.

B. Discuss, as per Pascale, three out of the four bedrock principles. Support your
discussion with examples. (15 marks)

Students need to identify the four bedrock principles: (1) Stable equilibrium equals death (2)
Self-organization and emergent complexity (3) The edge of chaos (4) Disturbing a living system.
They need to choose three principles to discuss in detail and provide example from the material.

(1) Stable equilibrium equals death. (5 marks)

 Equilibrium is a precursor to death for complex adaptive systems. For example, once an
organization becomes too stable it risks disaster by getting out of step with its changing
environment.
 Pascale notes that ‘bounded instability’ is more favorable to evolution than either stable
equilibrium or ‘explosive instability’. When organizations are too stable they lose their
ability to be responsive and adapt.
 Remember that one of the characteristics of complex adaptive systems is that they are subject
to entropy (i.e., loss of energy and ultimate decline). Without the injection of new energy of
some kind (for example, a programme of strategic change to increase their competitiveness)
they slow down and die.
 Example: Disturbing equilibrium at Shell: In 1996, Miller found Shell at the end of a two-
year attempted transformation programme that had not worked. The ‘business as usual’
attitude and impenetrable culture were both warnings of complacency, in spite of the intense
competition the downstream business faced. The country-by-country structure allowed
country heads to prevent change from above. These are good examples of an organization
facing dangerous equilibrium. Miller’s solution was to cut through the organization’s layers

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 and barriers, put senior management in direct contact with the people at the grassroots level,
foster strategic initiatives, create a new sense of urgency, and overwhelm the old order

(2) Self-organization and emergence (5 marks)

 Complex adaptive systems are comprised of many agents creating many interactions at
multiple levels. These interactions follow rules like the ‘simple rules’ of control. Multiple
interactions following such rules are capable of generating complex emergent behavior at the
global level.
 Complex adaptive systems have the capacity to organize themselves, and generate more
complexity.
 Think of a flock of starlings rising, swarming in the evening sky in complicated but coherent
formations, before settling again.
 Similarly, autonomous members of an organization can behave in patterned ways from which
interesting results can emerge.
 Example: Self-organization and emergence at Shell: Shell needed a vehicle to give the
company an energy transfusion and remind employees that they could play at a far more
competitive level. Thus, Miller’s idea of the fishbowl. Miller’s decision to get directly
involved with customer-facing managers around the group, to shift the focus of activity to the
front lines, sounds like a practical way of tapping the capacity of self-organization, and
Pascale mentions that the first wave of initiatives spawned others (a good example of self-
organisation leading to emerging complexity).

(3) The edge of chaos (5 marks)

 Complex adaptive systems tend to move towards the edge of chaos. It is important to
recognize that complexity has boundaries (what Pascale calls ‘bounded instability’).
 In order to innovate, for example, organizations need to have enough, but not too much,
instability – and they need to avoid the stagnation of equilibrium.
 The edge of chaos is a systems state, on a continuum of possible states ranging from
completely random to highly mechanistic and stable
 As a system moves towards chaos, its elements become ever more highly interconnected.
 The edge of chaos is a space in which new order emerges – so it is of particular interest to
anyone studying essential strategic processes such as innovation.
 At the mechanistic end of the continuum, a system is highly stable, ordered and resistant to
change. At the random end of the continuum, there is no apparent order at all.
 Complex systems can and do periodically tip into chaos.
 The key to keeping a complex system like an organization productively sub-chaotic is to
maintain an appropriate tension between flexibility and control, whereas traditional strategic
thinking emphasizes control only
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 o Example: Shaping the edge of chaos at Shell: Shell moved to the edge of chaos with a
multi pronged design that intensified stress on all members of the Shell system. When
the lowest levels of an organization were being trained, coached, and evaluated by
those at the very top, it both inspired – and stressed – everyone in the system. Second
Pressure to succeed and long hours achieved the cultural “unfreezing” effects.
Participants were resocialized into a more direct, informal, and less hierarchical way
of working.

(4) Disturbing a Living System:

 We need to accept that our effective control over an organization, or an industry, or any other
complex adaptive system, is limited.
 Instead of the Newtonian chains of cause and effect on which traditional strategy ideas are
based, complexity holds the view that cause and effect is actually a lot less direct and
predictable than we like to think.
 So, apparently trivial things can have strategic effects and what might appear to be important
things can have little or no effect: simply because of the complexity of the systems in which
they occur.
 Example: Disturbing a Complex System at Shell:In today’s fast-changing environment,
Shell’s Steve Miller dismisses the company’s old traditional approach as mechanistic. “Top-
down strategies don’t win ballgames,” he states. “Experimentation, rapid learning, and
seizing the momentum of success is the better approach. Miller’s words testify to his
reconciliation with the weak cause-and-effect linkages that exist in a living system. When
strategic work is accomplished through a “design for emergence,” it never assumes that a
particular input will produce a particular output

Question Six (25 marks). Reading 4 of Readings for Blocks 5 and 6

Regnér (2003) states that The specifics of managerial activities and actors seem particularly
vaguely defined regarding the development of entirely new strategies, in strategy creation,
where traditional planning and analysis practices and top management might play a less
significant role.

A. What gap does Regnér indicate in the strategy process research and how does he
compare it to existing literature? (12 marks)

Regnér creates a research space by pointing out that writers on the strategy process (e.g., Henry
Mintzberg, some of whose work on strategy process you read in Blocks 1 and 2) have treated the
topic at a general level but said little about the micro level, i.e., the day-to-day activities that, put
together, constitute the praxis of strategy. He describes this area as a ‘ residue’ left behind, so to

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speak, by existing research. This is the gap in the literature that his work is intended to fill.

Regnér differentiates what he has to say in his paper from existing work on the strategy process
by pointing to the fact that his research concentrates specifi cally on strategy creation and
development involving new markets and new products. He cites Joseph Schumpeter (1934) – a
classic reference – in connection with this, but you will be familiar with this classifi cation of
strategic options from your work on Ansoff in Block 3. Regnér also emphasises that his research
looks at a wider range of actors than has been covered before (top management and middle or
junior managers) and a wider category of activities. In particular he is concerned with how
managers fi nd out about new strategy and make sense of it as he explores ‘ links between
activity, understanding and strategy outcomes’ .

B. Give 5 examples of strategy activities at what Regnér calls the periphery what he
calls the centre, indicating which category each activity falls under. (13 marks)

Examples of strategy activities at the periphery included:

 knowledge assimilation – fi nding out strategically relevant information through

externally directed contact with consultants, customers, competitors and conference
attendance; using direct experience rather than relying on reports
 working with partners from other industries
 trial and error
 exploration and experimentation.
Regnér characterises these activities as ‘ inductive’ – in other words, they involve
developing understanding from experience. The middle managers at the periphery
adopted fresh perspectives on what was going on, and on developing the right strategy to
match it, as opposed to the more hidebound approach of the senior managers.

Strategy activities at the centre included the following:

 knowledge assimilation from internal sources – concentrating on the existing

organisation and industry to fi nd out about strategies
 working within established models of technology and markets to exploit what
they have rather than exploring in search of new opportunities
 seeing things in terms of prior experience
 having a more fi xed view of strategy than the periphery.

Regnér characterises the senior managers’ activities as ‘ deductive’ . In other words, they had an
established view of the world and were at pains to make things fi t this ‘ hypothesis’ , as it were.

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For example, Couplet’ s senior managers did not feel that the technological innovations being
worked on by SRA (Couplet’ s subsidiary) were really appropriate for their industry. They
deduced (wrongly as it turned out) that the oil and chemical industries were the natural route to
market for non-mechanical couplings.

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