Organizational Strategy, Structure, and Process

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Raymond E. Miles; Charles C. Snow; Alan D. Meyer; Henry J. Coleman, Jr.

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 Organizational Strategy, Structure,
and Process1
RAYMOND E. MILES
University of California, Berkeley
CHARLES C. SNOW
The Pennsylvania State University
ALAN D. MEYER
University of Wisconsin, Milwaukee
HENRY J. COLEMAN, JR.
University of California; Berkeley

Organizational adaptation is a topic that has received only lim ited and
fragm ented theoretical treatment. A ny attempt to examine organiza­
tional adaptation is difficult, since the process is highly com plex and
changeable. The pro po sed theoretical framework deals with alterna­
tive ways in which organizations defin e their product-m arket domains
(strategy) and construct mechanisms (structures and processes) to
pursue these strategies. The fram ework is based on interpretation o f
existing literature and continuing studies in four industries (college
textbook publishing, electronics, fo o d processing, and health care).

R aym on d E. M ile s (P h.D . — S tan ford U niversity) is Professor
of Business A d m in istra tio n an d A ssociate D ire cto r of the In ­
stitute of Industrial R ela tio n s at the U n iversity of C a lifo rn ia ,
B e rk eley.
C h a rle s C . Snow (P h.D . — U n iversity of C a lifo rn ia , Berkeley)
is Associate Professor of O rg a n iz a tio n a l B ehavio r at T h e P e n n ­
sylvania State U n iversity.
R e c e i v e d 6/ 7/7 7; R e v i s e d 8/19/77; A c c e p t e d 9/15/77;
R e v ise d 11/15/77.
Alan D . M e y e r (Ph.D . — U n iversity of C a lifo rn ia , B erkeley) is
Assistant Professor of Business A d m in istratio n at the U n iv e r­
sity of W isco n sin , M ilw a u k e e .
H en ry J. C o le m a n , Jr., is a Ph.D . C a n d id a te at the U n iversity ot
C a lifo rn ia , B erkeley.
’ T h e au tho rs w ish to ex p ress th eir a p p reciatio n to D ouglas
D a rra n , R o b ert Pitts, and M ax R ich a rd s for their h elpfu l c o m ­
m ents on an earlier version of this p aper.

546
Academy of Managem ent Review - July 1978
An organization is both an articulated pur­
pose and an established mechanism for achiev­
ing it. Most organizations engage in an ongoing
process of evaluating their purposes—question­
ing, verifying, and redefining the manner of in­
teraction with their environments. Effective or­
ganizations carve out and maintain a viable mar­
ket for their goods or services. Ineffective organ­
izations fail this market — alignment task. Organ­
izations also constantly modify and refine the
mechanism by which they achieve their pur­
poses— rearranging their structure of roles and
relationships and their managerial processes.
Efficient organizations establish mechanisms
that com plement their market strategy, but in­
efficient organizations struggle with these struc­
tural and process mechanisms.
For most organizations, the dynamic proc­
ess of adjusting to environmental change and
uncertainty— o f maintaining an effective align­
ment with the environm ent while managing in­
ternal in terd epen den cies—is enormously com ­
plex, encompassing myriad decisions and be­
haviors at several organization levels. But the
complexity of the adjustment process can be
penetrated: by searching for patterns in the be­
havior of organizations, one can describe and
even predict the process of organizational adap­
tation. This article presents a theoretical fram e­
work that managers and students of manage­
ment can use to analyze an organization as an
integrated and dynamic whole—a model that
takes into account the interrelationships among
strategy, structure, and process. (For a complete
discussion of the theoretical framework and re­
search studies, see (15)). Specifically, the fram e­
work has two major elements: (a) a general
model of the process of adaptation which spe­
cifies the major decisions needed by the organi­
zation to maintain an effective alignment with
its environm ent, and (b) an organizational typol­
ogy which portrays different patterns of adaptive
behavior used by organizations within a given in­
dustry or other grouping. But as several theorists
have pointed out, organizations are limited in
their choices of adaptive behavior to those which
547
top management believes will allow the effec­
tive direction and control of human resources
(4, 5, 6). Thus the theoretical framework to pre­
vailing theories of management is also related.
An increased understanding of the adaptive
process, of how organizations move through it,
and of the managerial requirements of different
adjustment patterns can facilitate the difficult
process of achieving an effective organization-
environment equilibrium .
In the following sections, a typical example
of organizational adaptation drawn from one of
our empirical research studies is first presented.
Second, a model of the adaptive process that
arose from this research is described and dis­
cussed. In the third section, four alternative
forms of adaptation exhibited by the organiza­
tions in our studies are described. Finally, the re­
lationship between the organizational forms and
currently available theories of management is
discussed.
An Example of Organizational Adaptation
As an example of the problems associated
with the adaptive process, consider the experi­
ence of a subsidiary of one of the companies in
our studies.
Porter Pump and Valve (PPV) is a semi-auto-
nom ous division o f a m edium -sized equ ip­
m ent-manufacturing firm, which is in turn part
o f a large, highly diversified conglom erate. PPV
manufactures a line o f heavy-duty pum ps and
com ponents for fluid-m ovem ent systems. The
com pany does most o f its own castings, makes
many o f its own parts, and maintains a com plete
stock o f replacem ent parts. PPV also does spe-
cial-order foundry work for other firms as its
production schedule allows.
Until recently, Porter Pump and Valve had
defin ed its business as providing quality products
and service to a lim ited set o f reliable customers.
PPV's general manager, a first-rate engineer who
spent much o f his time in the machine shop and
foundry, perso nified the company's image o f
548
quality and cost efficiency. In the mid-seventies
corporate management becam e concern ed
about both the speed and direction o f PPV's
growth. The management and staff at corporate
headquarters began considering two new p ro d ­
uct and market opportunities, both in the ener­
gy field. Fluid-m ovem ent systems required for
nuclear pow er generation pro vid ed one o f these
opportunities, and the developm ent o f novel
techniques for petroleum exploration, well re­
covery, and fluid delivery provided the second.
PPV had supplied som e com ponents to these
markets in the past, but it was now clear that o p ­
portunities for the sale o f entire systems or large-
scale subsystems were grow ing rapidly.
PPV's initial moves toward these new o p ­
portunities w ere tentative. The general mana­
ger discovered that contract sales required ex­
tensive planning, field-contact work, and careful
negotiations—activities not within his primary
area o f interest or experience. Finally, in an ef­
fort to foster m ore rapid m ovem ent into these
new markets, executives in the parent organiza­
tion transferred the general manager to a head-
office position and m oved into the top spot at
PPV a manager with an extensive background in
both sales and engineering and who was adept
at large-scale contract negotiations.
Within a year o f the changeover in general
managers, PPV landed several lucrative contracts,
and m ore appeared to be in the offing. The new
business created by these contracts, how ever,
placed heavy coordination demands on com ­
pany management, and while the organization's
technology (production and distribution system)
has not been drastically revised over the past
two years, w orkflow processes and the opera­
tional responsibilities o f several managers have
changed markedly. Materials control and sched­
uling, routine tasks in the past, are now com plex
activities, and managers o f these operations
m eet regularly with the executive planning
com m ittee. M o reo ver, a rudim entary matrix
structure has em erged in which various line
managers undertake specific project responsi­
bilities in addition to their regular duties. Key
Organizational Strategy, Structure, and Process
personn el additions have been made to the
marketing department and m ore are planned,
with particular emphasis on individuals who are
capable o f perform ing field planning and super­
vising and who can quickly bring new fluid sys­
tems to full operation. Budgets o f som e o f the
o ld er departments are being cut back, and these
funds are being diverted to the new areas o f ac­
tivity.
As illustrated, Porter Pump and Value expe­
rienced changes in its products and markets, in
the technological processes needed to make
new products and serve new markets, and in the
administrative structure and processes required
to plan, coordinate, and control the company's
new operations. None of the usual perspectives
which might be used to analyze such organiza­
tional changes — for example, economics, in­
dustrial engineering, marketing, or policy — ap­
pears to address all of the problems experienced
by Porter Pump and Valve. Therefore, how can
the adaptive process which occurred at PPV be
described in its entirety?
The Adaptive Cycle
We have developed a general model of the
adaptive process which we call the adaptive cy­
cle. Consistent with the strategic-choice ap­
proach to the study of organizations, the model
parallels and expands ideas formulated by theo­
rists such as Chandler (9), Child (10), Cyert and
March (11), Drucker (12, 13), Thompson (18),
and Weick (19, 20). Essentially, proponents of the
strategic-choice perspective argue thar organi­
zational behavior is only partially preordained by
environmental conditions and that the choices
which top managers make are the critical deter­
minants of organizational structure and process.
Although these choices are numerous and com­
plex, they can be viewed as three broad "prob­
lem s" of organizational adaptation: the entre­
preneurial problem , the engineering problem ,
and the administrative problem . In mature or­
ganizations, management must solve each of
Academy of Management Review - July 1978
these problems simultaneously, but for explan­
atory purposes, these adaptive problems can be
discussed as if they occurred sequentially.
The Entrepreneurial Problem
The adaptive cycle, though evident in all or­
ganizations, is perhaps most visible in new or rap­
idly growing organizations (and in organizations
which recently have survived a major crisis). In
a new organization, an entrepreneurial insight,
perhaps only vaguely defined at first, must be de­
veloped into a concrete definition o f an organi­
zational dom ain: a specific good or service and
a target m arket o r market segm ent. In an on­
going organization, the entrepreneurial prob­
lem has an added dimension. Because the or­
ganization has already obtained a set of "so lu ­
tions" to its engineering and administrative
problems, its next attempt at an entrepreneurial
"th ru st" may be difficult. In the example of
Porter Pump and Valve, the company's attempt
to modify its products and markets was con­
strained by its present production process and
by the fact that the general manager and his staff
did not possess the needed marketing orienta­
tion.
In either a new or ongoing organization,
the solution to the entrepreneurial problem is
marked by management's acceptance of a par­
ticular product-market domain, and this ac­
ceptance becomes evident when management
decides to commit resources to achieve objec­
tives relative to the domain. In many organiza­
tions, external and internal commitment to the
entrepreneurial solution is sought through the
developm ent and projection of an organization­
al "im ag e" which defines both the organization's
market and its orientation toward it (e.g., an
emphasis on size, efficiency, or innovation).
Although we are suggesting that the engi­
neering phase begins at this point, the need for
further entrepreneurial activities clearly does not
disappear. The entrepreneurial function remains
a top-management responsibility, although as
Bower (7) has described, the identification of a
new opportunity and the initial impetus for
549
movement toward it may originate at lower
managerial levels.
The Engineering Problem
The engineering problem involves the crea­
tion of a system which operationalizes manage­
m ent's solution to the entrepreneurial p ro b ­
lem . Such a system requires management to se­
lect an appropriate technology (input-transfor-
mation-output process) for producing and dis­
tributing chosen products or services and to
form new inform ation, communication, and
control linkages (or modify existing linkages) to
ensure proper operation of the technology.
As solutions to these problems are reached,
initial implementation of the administrative sys­
tem takes place. There is no assurance that the
configuration of the organization, as it begins to
emerge during this phase, will remain the same
when the engineering problem finally has been
solved. The actual form of the organization's
structure will be determined during the admin­
istrative phase as management solidifies rela­
tions with the environm ent and establishes proc­
esses for coordinating and controlling internal
operations. Referring again to Porter Pump and
Valve, the company's redefinition of its domain
required concomitant changes in its technology
— from a pure mass-production technology to
more of a unit or small-batch technology (21).
The Administrative Problem
The administrative problem, as described
by most theories of management, is primarily
that of reducing uncertainty within the organiza­
tional system, or, in terms of the present mod­
el, of rationalizing and stabilizing those activities
which successfully solved problems faced by the
organization during the entrepreneurial and en­
gineering phases. Solving the administrative
problem involves more than simply rationalizing
the system already developed (uncertainty re­
duction); if also involves formulating and im ple­
menting those processes which will enable the
organization to continue to evolve (innovation).
550
This conception of the administrative problem,
as a pivotal factor in the cycle of adaptation, de­
serves further elaboration.
Rationalization and Articulation — In the
ideal organization, management would be
equally adept at performing two somewhat con­
flicting functions: it would be able to create an
administrative system (structure and processes)
that could smoothly direct and monitor the or­
ganization's current activities without, at the
same time, allowing the system to become so
ingrained that future innovation activities are
jeopardized. Such a perspective requires the
administrative system to be viewed as both a
lagging and leading variable in the process of
adaptation. As a lagging variable, it must ration­
alize, through the development of appropriate
structures and processes, strategic decisions
made at previous points in the adjustment proc­
ess. As a leading variable, the administrative sys­
tem must facilitate the organization's future
capacity to adapt by articulating and reinforcing
the paths along which innovative activity can
proceed. At Porter Pump and Valve, manage­
ment modified its planning, coordination, and
control processes substantially in order to pur­
sue the company's newly chosen areas of busi­
ness (the "lagging" aspect of administration). At
the same time, key personnel were added to the
marketing department; their duties included
product development, market research, and
technical consulting. These activities were de­
signed to keep PPV at the forefront of new prod­
uct and market opportunities (the "leading" as­
pect of administration).
The Strategic Typology
If one accepts the adaptive cycle as valid, the
question becomes: How do organizations move
through the cycle? That is, using the language of
our model, what strategies do organizations em­
ploy in solving their entrepreneurial, engineer­
ing, and administrative problems? O ur research
and interpretation of the literature show that
there are essentially three strategic types of or­
Organizational Strategy , Structure , and Process
ganizations: Defenders, Analyzers, and Pros­
pectors. Each type has its own unique strategy
for relating to its chosen market(s), and each has
a particular configuration of technology, struc­
ture, and process that is consistent with its mar­
ket strategy. A fourth type of organization en­
countered in our studies is called the Reactor.
The Reactor is a form of strategic "fa ilu re " in that
inconsistencies exist among its strategy, technol­
ogy, structure, and process.
Although similar typologies of various as­
pects of organizational behavior are available
(1, 2, 3 ,15,16, 17), our formulation specifies rela­
tionships among strategy, technology, structure,
and process to the point where entire organiza­
tions can be viewed as integrated wholes in dy­
namic interaction with their environments. Any
typology is unlikely to encompass every form of
organizational behavior — the world of organi­
zations is much too changeable and complex to
permit such a claim. Nevertheless, every organ­
ization that we have observed appears, when
compared to other organizations in its industry,
to fit predominantly into one of the four cate­
gories, and its behavior is generally predictable
given its typological classification. The "p u re"
form of each of these organization types is de­
scribed below.
Defenders
The Defender (i.e., its top management)
deliberately enacts and maintains an environ­
ment for which a stable form of organization is
appropriate. Stability is chiefly achieved by the
Defender's definition of, and solution to, its en­
trepreneurial problem. Defenders define their
entrepreneurial problem as how to seal o ff a
portion o f the total market in o rder to create a
stable domain, and they do so by producing only
a limited set of products directed at a narrow
segment of the total potential market. Within
this limited domain, the Defender strives ag­
gressively to prevent competitors from entering
its "tu rf". Such behaviors include standard eco­
nomic actions like competitive pricing or high-
quality products, but Defenders also tend to ig­
Academy of M anagem ent Review - July 1978
nore developments and trends outside of their
domains, choosing instead to grow through mar­
ket penetration and perhaps some limited prod­
uct developm ent. O ver tim e, a true Defender is
able to carve out and maintain a small niche
within the industry which is difficult for com pe­
titors to penetrate.
Having chosen a narrow product-market do­
main, the Defender invests a great deal of re­
sources in solving its engineering problem : how
to p ro d u ce and distribute goods or services as
efficien tly as po ssible. Typically, the Defender
does so by developing a single core technology
that is highly cost-efficient. Technological effi­
ciency is central to the Defender's success since
its domain has been deliberately created to ab­
sorb outputs on a predictable, continuous basis.
Some Defenders extend technological efficiency
to its limits through a process of vertical integra­
tion — incorporating each stage of production
from raw materials supply to distribution of final
output into the same organizational system.
Finally, the Defender's solution to its ad­
ministrative problem is closely aligned with its
solutions to the entrepreneurial and engineering
problems. The Defender's administrative prob­
lem — how to achieve strict control o f the o r­
ganization in ord er to ensure efficien cy — is
solved through a combination of structural and
process mechanisms that can be generally de­
scribed as "m echanistic" (8). These mechanisms
include a top-management group heavily dom i­
nated by production and cost-control specialists,
little or no scanning of the environment for new
areas of opportunity, intensive planning oriented
toward cost and other efficiency issues, function­
al structures characterized by extensive division
of labor, centralized control, communications
through formal hierarchical channels, and so on.
Such an administrative system is ideally suited
for generating and maintaining efficiency, and
the key characteristic of stability is as apparent
here as in the solution to the other two adaptive
problems.
Pursued vigorously, the Defender strategy
can be viable in most industries, although stable
551
industries lend themselves to this type of organ­
ization more than turbulent industries (e.g., the
relative lack of technological change in the food-
processing industry generally favors the Defend­
er strategy compared with the situation in the
electronics industry). This particular form of or­
ganization is not without its potential risks. The
Defender's prim ary risk is that of ineffectiveness
— being unable to respond to a major shift in its
market environment. The Defender relies on the
continued viability of its single, narrow domain,
and it receives a return on its large technological
investment only if the major problems facing the
organization continue to be of an engineering
nature. If the Defender's market shifts dramatic­
ally, this type of organization has little capacity
for locating and exploiting new areas of opportu­
nity. In short, the Defender is perfectly capable
of responding to today's world. To the extent
that tomorrow's world is similar to today's, the
Defender is ideally suited for its environment.
Table 1 summarizes the Defender's salient char­
acteristics and the major strengths and weak­
nesses inherent in this pattern of adaptation.
Prospectors
In many ways, Prospectors respond to their
chosen environments in a manner that is almost
the opposite of the Defender. In one sense, the
Prospector is exactly like the Defender: there is
a high degree of consistency among its solutions
to the three problems of adaptation.
Generally speaking, the Prospector enacts
an environment that is more dynamic than those
of other types of organizations within the same
industry. U nlike the Defender, whose success
comes primarily from efficiently serving a stable
domain, the Prospector's prime capability is that
of finding and exploiting new product and mar­
ket opportunities. For a Prospector, maintaining
a reputation as an innovator in product and mar­
ket development may be as important as, per­
haps even more important, than high profitabil­
ity. In fact, because of the inevitable "failure
rate" associated with sustained product and mar­
ket innovation, Prospectors may find it difficult
552
TABLE 1. Characteristics of the Defender
E n tre p re n e u ria l P rob lem
P ro b le m :
H ow to "seal off' a p ortio n of the
total m arket to crea te a stable set of
p ro d u cts and cu sto m e rs.
Solu tio ns:
1. N arro w and stable d o m a in .
2. A ggressive m a in te n a n ce of d o m ain
(e.g., co m p etitive p ricin g and e x ­
ce lle n t cu sto m e r se rvice).
3. T e n d e n cy to ig n o re d e v e lo p m e n ts
o u tsid e of d o m ain .
4. C a u tio u s and in cre m e n ta l grow th
p rim arily th ro u g h m arket
p en etratio n .
5. Som e p ro d u ct d e v e lo p m e n t but
clo sely related to cu rre n t g o od s or
services.
Costs a n d Be nefits:
It is difficu lt for co m p e tito rs to d is­
lodge the o rg a n izatio n from its sm all
n ich e in the in d u stry, but a m ajor shift
in the m arket co u ld threaten survival.
S o u rce : R aym on d E. M ile s and C h a rle s C . Snow , Organ izat ional Strategy, Structu re, an d Process (N ew Y o rk : M c G ra w -H ill, 1978)
Tab le 3-1.
consistently to attain the profit levels of the more
efficient Defender.
Defining its entrepreneurial problem as how
to locate and develop p roduct and market o p ­
portunities, the Prospector's domain is usually
broad and in a continuous state of development.
Organizational Strategy, Structure , and Process
En g in ee rin g P rob lem A d m in istrative P rob lem
P ro b le m : P ro b le m :
H ow to p ro d u ce and d istrib u te goods H ow to m aintain strict co n tro l of the
or services as efficie n tly as possible. org anization in o rd e r to e n su re effi­
cie n cy .
S olu tions: So lu tion s:
1. C o st-e fficie n t tech n o lo g y. 1. Finan cial and p ro d u ctio n exp erts
2. Single co re te ch n o lo g y . most p o w erfu l m em b ers of the
3. T e n d e n cy tow ard vertical d o m in an t co a litio n ; lim ited e n v i­
integratio n. ro n m en tal scan n in g .
4. C o n tin u o u s im p ro ve m en ts in 2. T e n u re of d o m in an t co alitio n is
tech n o lo g y to m aintain efficie n cy. lengthy; p ro m o tio n s from w ithin .
3. P lanning is in ten sive, cost o rien ted ,
and co m p le te d b efo re action is
taken.
4. T e n d e n c y tow ard fu n ctio n a l stru c­
ture w ith ex ten sive division of
labor and high d e g re e of fo rm ali­
zation.
5. C e n tra liz e d co n tro l and long-
loo p ed vertical in fo rm atio n sys­
tems.
6. S im p le c o o rd in a tio n m ech an ism s
and co n flict reso lved thro u g h
h ie ra rch ica l ch a n n e ls.
7. O rg a n iz a tio n a l p e rfo rm a n ce
m easured against p re vio u s years;
rew ard system favors p ro d u ctio n
and fin an ce .
Costs a n d Benefits: Costs an d Be nefits:
T e ch n o lo g ic a l e fficie n c y is central A d m in istrative system is ideally
to o rg an izatio n al p e rfo rm a n c e , but suited to m aintain stability and e ffic ie n ­
heavy in vestm ent in this area req u ires cy but it is not w ell suited to locating
tech n o lo g ica l p ro b le m s to rem ain and resp o n d in g to n ew p ro d u ct or
fam iliar and p re d ic ta b le for lengthy m arket o p p o rtu n itie s.
p eriod s of tim e.
The systematic addition of new products or mar­
kets, frequently combined with retrenchment
in other parts of the domain, gives the Prospec­
tor's products and markets an aura of fluidity un­
characteristic of the Defender. To locate new
areas of opportunity, the Prospector must de­
Academy of Management Review - July 1978
velop and maintain the capacity to survey a wide
range of environmental conditions, trends, and
events. This type of organization invests heavily
in individuals and groups who scan the environ­
ment for potential opportunities. Because these
scanning activities are not limited to the organi­
zation's current domain, Prospectors are fre­
quently the creators of change in their respective
industries. Change is one of the major tools used
by the Prospector to gain an edge over com peti­
tors, so Prospector managers typically perceive
more environmental change and uncertainty
than managers of the Defender (or the other
two organization types).
To serve its changing domain properly, the
Prospector requires a good deal of flexibility in
its technology and administrative system. Unlike
the Defender, the Prospector's choice of prod­
ucts and markets is not limited to those which
fall within the range of the organization's pres­
ent technological capability. The Prospector's
technology is contingent upon both the organ­
ization's current and future product m ix: entre­
preneurial activities always have primacy, and
appropriate technologies are not selected or de­
veloped until late in the process of product de­
velopm ent. Therefore, the Prospector's overall
engineering problem is how to avoid long-term
com m itm ents to a single type o f technological
process, and the organization usually does so by
creating m ultiple, prototypical technologies
which have a low degree of routinization and
m echanization.
Finally, the Prospector's administrative
problem flows from its changing domain and
flexible technologies: how to facilitate rather
than control organizational operations. That is,
the Prospector's administrative system must be
able to deploy and coordinate resources among
numerous decentralized units and projects rath­
er than to plan and control the operations of the
entire organization centrally. To accomplish
overall facilitation and coordination, the Pros­
pector's structure-process mechanisms must be
"o rg an ic" (8). These mechanisms include a top-
management group dominated by marketing
553
and research and development experts, plan­
ning that is broad rather than intensive and ori­
ented toward results not methods, product or
project structures characterized by a low degree
of form alization, decentralized control, lateral
as well as vertical communications, and so on.
In contrast to the Defender, the Prospector's
descriptive catchword throughout its adminis­
trative as well as entrepreneurial and engineer­
ing solutions is "flexib ility".
Of course, the Prospector strategy also has
it costs. Although the Prospector's continuous
exploration of change helps to protect it from a
changing environm ent, this type of organization
runs the prim ary risk of low profitability and
overextension o f resources. W hile the Prospec­
tor's technological flexibility permits a rapid re­
sponse to a changing domain, complete effi­
ciency cannot be obtained because of the pres­
ence of m ultiple technologies. Finally, the Pros­
pector's administrative system is well suited to
maintain flexibility, but it may, at least tempo­
rarily, underutilize or even misutilize physical,
financial, and human resources. In short, the
Prospector is effective — it can respond to the
demands of tomorrow's world. To the extent
that the world of tomorrow is similar to that of
today, the Prospector cannot maximize profita­
bility because of its inherent inefficiency. Table
2 summarizes the Prospector's salient character­
istics and the major strengths and weaknesses
associated with this pattern of adaptation.
Analyzers
Based on our research, the Defender and
the Prospector seem to reside at opposite ends
of a continuum of adjustment strategies. Be­
tween these two extremes, a third type of organ­
ization is called the Analyzer. The Analyzer is a
unique combination of the Prospector and De­
fender types and represents a viable alternative
to these other strategies. A true Analyzer is an
organization that attempts to m inim ize risk
w hile maximizing the opportunity for profit —
that is, an experienced Analyzer combines the
strengths of both the Prospector and the De-
554
TABLE 2. Characteristics of the Prospector
E n tre p re n e u ria l P rob lem
Problem :
H ow to locate and exp lo it n ew
p ro d u ct and m arket o p p o rtu n itie s.
So lu tion s:
1. Broad and co n tin u o u sly
d e v e lo p in g d o m a in .
2. M o n ito rs w id e range of e n v iro n ­
m ental co n d itio n s and events.
3. C re a te s ch a n g e in the industry.
4. G ro w th throu gh p ro d u ct and
m arket d e v e lo p m e n t.
5. G ro w th may o c c u r in spurts.
Co sts an d Be nefits:
Prod uct and m arket in n o vatio n
protect the o rg a n izatio n from a
ch an g in g e n v iro n m e n t, but the o r ­
gan ization runs the risk of low p ro fita­
bility and o v e re x te n sio n of its re so u rces.
S o u rce : R aym o n d E. M ile s and C h a rle s C . Snow , O rga nizat io nal Strategy, St ru ct u re , an d Proce ss (N ew Y o rk : M c G ra w -H ill, 1978),
T a b le 4-1.
Organizational Strategy, Structure, and Process
En g in ee rin g P rob lem
Problem :
H ow to avoid lo n g -term co m m it­
m ents to a sin gle te ch n o lo g ica l
p rocess.
So luti on s:
1. Flex ib le , p ro to typ ical
tech n o lo g ies.
2. M u ltip le te ch n o lo g ie s.
3. Low d e g re e of rou tin izatio n
and m e c h a n iza tio n ; tech n o lo g y
e m b e d d e d in p eo p le.
Co sts a n d Be nefits:
T e ch n o lo g ic a l flexibility perm its a
rapid resp o n se to a ch an g in g d o m ain ,
but the o rg an izatio n can n o t d e v e lo p
m axim um efficie n cy in its p ro d u ctio n
and d istrib u tio n system b ecau se of
m u ltip le te ch n o lo g ie s.
A d m in istrative P rob lem
P ro b le m :
H ow to facilitate and co o rd in a te
n u m e ro u s and d iv erse o p eratio n s.
S olu tion s:
1. M a rk etin g and rese a rch and d e v e l­
o p m e n t exp erts most p o w erfu l
m e m b e rs of the d o m in an t c o a li­
tion.
2. D o m in a n t co alitio n is large, d iv erse,
and tran sitory; may in c lu d e an
in n e r circle .
3. T e n u re of d o m in a n t co a litio n not
alw ays len g th y; key m an agers may
b e h ired from o u tsid e as w ell as
p ro m o ted from w ithin .
4. P lann in g is c o m p re h e n siv e , p ro b ­
lem o rie n te d , and can n o t be
fin alized b efo re action is taken.
5. T e n d e n c y tow ard p ro d u ct stru ctu re
w ith low div isio n of labor and low
d e g re e of fo rm alizatio n .
6. D e c e n tra liz e d co n tro l and short-
lo o p ed h o rizo n tal in fo rm atio n
system s.
7. C o m p le x c o o rd in a tio n m e c h a n ­
isms and co n flic t reso lved throu gh
integrators.
8. O rg a n iz a tio n a l p e rfo rm a n c e
m easu red against im p ortan t c o m ­
p etito rs; rew ard system favors
m arketin g and rese arch and d e v e l­
o p m e n t.
C osts a n d Benefits:
A d m in istrative system is ideally
suited to m aintain flexibility and e ffe c ­
tiveness but may u n d e ru tilize and
m isu tilize re so u rces.
Academy of M anagement Review - July 1978
fender into a single system. This strategy is diffi­
cult to pursue, particularly in industries charac­
terized by rapid market and technological
change, and thus the word that best describes
the Analyzer's adaptive approach is "b alance".
The Analyzer defines its entrepreneurial
problem in terms similar to both the Prospector
and the Defender: how to locate and exploit
new product and market opportunities while
sim ultaneously maintaining a firm core o f tradi­
tional pro d u cts and custom ers. The Analyzer's
solution to the entrepreneurial problem is also a
blend of the solutions preferred by the Prospec­
tor and the Defender: the Analyzer moves to­
ward new products or new markets but only af­
ter their viability has been demonstrated. This
periodic transformation of the Analyzer's do­
main is accomplished through imitation — only
the most successful product or market innova­
tions developed by prom inent Prospectors are
adopted. At the same tim e, the majority of the
Analyzer's revenue is generated by a fairly stable
set of products and customer or client groups —
a Defender characteristic. Thus, the successful
Analyzer must be able to respond quickly when
following the lead of key Prospectors while at
the same time maintaining operating efficiency
in its stable product and market areas. To the ex­
tent that it is successful, the Analyzer can grow
through market penetration as well as product
and market development.
The duality evident in the Analyzer's domain
is reflected in its engineering problem and solu­
tion. This type of organization must learn how to
achieve and p ro tect an equilibrium betw een
conflicting dem ands fo r technological flexibility
and for technological stability. This equilibrium
is accomplished by partitioning production ac­
tivities to form a dual technological core. The
stable com ponent of the Analyzer's technology
bears a strong resemblance to the Defender's
technology. It is functionally organized and ex­
hibits high levels of standardization, routiniza-
tion, and m echanization in an attempt to ap­
proach cost efficiency. The Analyzer's flexible
technological com ponent resembles the Pros­
555
pector's technological orientation. In manufac­
turing organizations, it frequently includes a
large group of applications engineers (or their
equivalent) who are rotated among teams
charged with the task of rapidly adapting new
product designs to fit the Analyzer's existing sta­
ble technology.
The Analyzer's dual technological core thus
reflects the engineering solutions of both the
Prospector and the Defender, with the stable and
flexible components integrated primarily by an
influential applied research group. To the extent
that this group is able to develop solutions that
match the organization's existing technological
capabilities with the new products desired by
product managers, the Analyzer can enlarge its
product line without incurring the Prospector's
extensive research and development expenses.
The Analyzer's administrative problem, as
w elt as its entrepreneurial and engineering prob­
lems, contains both Defender and Prospector
characteristics. Generally speaking, the admin­
istrative problem of the Analyzer is how to d if­
ferentiate the organization's structure and p ro c­
esses to accom m odate both stable and dynamic
areas o f operation. The Analyzer typically solves
this problem with some version of a matrix or­
ganization structure. Heads of key functional
units, most notably engineering and produc­
tion, unite with product managers (usually
housed in the marketing department) to form a
balanced dominant coalition similar to both the
Defender and the Prospector. The product man­
ager's influence is usually greater than the func­
tional manager's since his or her task is to identi­
fy promising product-market innovations and to
supervise their movement through applied en­
gineering and into production in a smooth and
timely manner. The presence of engineering and
production in the dominant coalition is to rep­
resent the more stable domain and technology
which are the foundations of the Analyzer's
overall operations. The Analyzer's matrix struc­
ture is supported by intensive planning between
the functional divisions of marketing and pro­
duction, broad-gauge planning between the ap-
556
TABLE 3. Characteristics of the Analyzer
E n trep ren eu ria l P rob lem
P ro b le m :
H ow to locate and exp loit n ew
p ro d u ct and m arket o p p o rtu n itie s
w h ile sim u ltan eo u sly m a in tain ing
a firm base of trad itio nal p ro d u cts
and cu stom ers.
S o lu tio ns:
1. H ybrid d o m ain that is both
stable and ch ang ing .
2. S u rv e illa n ce m ech a n ism s m ostly
lim ited to m arke tin g ; so m e
research and d e v e lo p m e n t.
3. Steady grow th thro u g h m arket
p en etration and p ro d u ct-m a rk et
d e v e lo p m e n t.
Co sts a n d Benef its:
Low in vestm ent in rese a rch and
d e v e lo p m e n t, c o m b in e d w ith im ita­
tion of d e m o n strab ly su ccessfu l
p ro d u cts, m in im ize s risk, but d o m ain
must be op tim ally b alan ced at all
tim es b etw e en stability and flexibility.
S o u rce : R aym on d E. M ile s and C h a rle s C . Sn o w , O rgan izat ional Strategy, S tru ctu re , an d Process (N ew Y o rk : M c G ra w -H ill, 1978),
T a b le 5-1.
plied research group and the product managers
for the development of new products, central-
Organizational Strategy , Structure, and Process
En g in ee rin g P rob lem
P ro b le m :
H ow to be e fficie n t in stable p ortio ns
of the d o m ain and flex ib le in ch ang ing
p ortions.
S o lu tio ns:
1. D ual te ch n o lo g ica l c o re (stable
and flex ib le co m p o n e n t).
2. Large and in flu en tial a p p lied
e n g in e e rin g gro up .
3. M o d e ra te d e g re e of tech n ica l
rationality.
Costs an d Benefit s:
D ual te ch n o lo g ica l c o re is ab le to
serve a hyb rid stab le-chang in g
do m ain , but the te ch n o lo g y can n ever
be co m p le te ly effective or efficient.
ized control mechanisms in the functional divi-
sions and decentralized control techniques in
A d m in istrative Prob lem
Pro b le m :
H ow to d ifferen tia te the o rg a n iz a ­
tion's stru ctu re and p ro ce sses to a c ­
co m m o d ate both stable and d yn a m ic
areas of o p era tio n .
Solu tio ns:
1. M ark etin g and e n g in e e rin g most
in flu en tial m em b ers of d o m in an t
co alitio n , fo llo w e d clo sely by
p ro d u ctio n .
2. In tensive p lan n in g b etw e en m ar­
keting and p ro d u ctio n co n ce rn in g
stable p ortio n of d o m a in ; c o m ­
p re h e n siv e p lan n in g am ong
m arketin g, e n g in e e rin g , and p ro d ­
uct m anagers c o n c e rn in g new
p ro du cts and m arkets.
3. " L o o se " matrix stru ctu re co m b in ­
ing both fu n ctio n a l d ivisio n s and
p ro d u ct gro up s.
4. M o d e ra te ly ce n tra lize d co n tro l
system w ith vertical and h o rizo n tal
feed b a ck loops.
5. Extrem ely co m p lex and ex p en sive
co o rd in atio n m ech an ism s; som e
co n flict reso lu tio n thro u g h p ro d u ct
m anagers, so m e th ro u g h norm al
h ie ra rch ica l ch a n n e ls.
6. P erfo rm an ce appraisal based on
both effectiv en ess and e fficie n cy
m easures, most rew ard s to m ar­
keting and e n g in e e rin g .
Costs a n d Benefits:
A d m in istrative system is ideally suited
to b alan ce stability and flexibility, but
if this b alan ce is lost, it m ay be difficu lt
to restore eq u ilib riu m .
Academy of M anagement Review - July 1978
the product groups, and so on. In sum, the key
characteristic of the Analyzer's administrative
system is the proper differentiation of the organ­
ization's structure and processes to achieve a
balance between the stable and dynamic areas
of operation.
As is true for both the Defender and Pros­
pector, the Analyzer strategy is not without its
costs. The duality in the Analyzer's domain
forces the organization to establish a dual tech­
nological core, and it requires management to
operate fundamentally different planning, con­
trol, and reward systems simultaneously. Thus,
the Analyzer's twin characteristics of stability and
flexibility limit the organization's ability to move
fully in either direction were the domain to shift
dramatically. Consequently, the Analyzer's p ri­
mary risks are both in efficiency and in effective­
ness if it does not maintain the necessary balance
throughout its strategy-structure relationship.
Table 3 summarizes the Analyzer's salient char­
acteristics and the major strengths and w eak­
nesses inherent in this pattern of adaptation.
Reactors
The Defender, the Prospector, and the Ana­
lyzer can all be proactive with respect to their en­
vironm ents, though each is proactive in a differ­
ent way. At the extremes, Defenders continually
attempt to develop greater efficiency in existing
operations while Prospectors explore environ­
mental change in search of new opportunities.
O ver time, these action modes stabilize to form
a pattern of response to environmental condi­
tions that is both consistent and stable.
A fourth type of organization, the Reactor,
exhibits a pattern of adjustment to its environ­
ment that is both inconsistent and unstable; this
type lacks a set of response mechanisms which it
can consistently put into effect when faced with
a changing environment. As a consequence, Re­
actors exist in a state of almost perpetual insta­
bility. The Reactor's "adaptive" cycle usually
consists of responding inappropriately to envi­
ronmental change and uncertainty, performing
poorly as a result, and then being reluctant to act
557
aggressively in the future. Thus, the Reactor is a
"residu al" strategy, arising when one of the oth­
er three strategies is im properly pursued.
Although there are undoubtedly many rea­
sons why organizations become Reactors, we
have identified three. First, top management
may not have clearly articulated the organiza­
tion's strategy. For example, one company was
headed by a "one-m an" Prospector of immense
personal skills. A first-rate architect, he led his
firm through a rapid and successful growth pe­
riod during which the company moved from the
design and construction of suburban shopping
centers, through the construction and manage­
ment of apartment complexes, and into consult­
ing with municipal agencies concerning urban
planning problems. W ithin ten years of its incep­
tion, the company was a loose but effective col­
lection of semi-autonomous units held together
by this particular individual. When this individ­
ual was suddenly killed in a plane crash, the com ­
pany was thrown into a strategic void. Because
each separate unit of the company was success­
ful, each was able to argue strongly for more
emphasis on its particular domain and opera­
tions. Consequently, the new chief executive of­
ficer, caught between a number of conflicting
but legitimate demands for resources, was un­
able to develop a unified, cohesive statement of
the organization's strategy; thus, consistent and
aggressive behavior was precluded.
A second and perhaps more common cause
of organizational instability is that management
does not fully shape the organization's structure
and processes to fit a chosen strategy. Unless all
of the dom ain, technological, and administra­
tive decisions required to have an operational
strategy are properly aligned, strategy is a mere
statement, not an effective guide to behavior.
O ne publishing company wished, in effect, to
become an Analyzer — management had arti­
culated a direction for the organization which in­
volved operating in both stable and changing
domains within the college textbook publishing
industry. Although the organization was com­
prised of several key Defender and Prospector
558
characteristics such as functional structures and
decentralized control mechanisms, these struc-
ture-process features were not appropriately
linked to the company's different domains. In
one area where the firm wished to "prospect",
for example, the designated unit had a function­
al structure and shared a large, almost mass-pro-
duction technology with several other units,
thereby making it difficult for the organization
to respond to market opportunities quickly.
Thus, this particular organization exhibited a
weak link between its strategy and its structure-
process characteristics.
The third cause of instability — and perhaps
ultimate failure — is a tendency fo r manage­
ment to maintain the organization's current
strategy-structure relationship despite o ver­
whelm ing changes in environm ental conditions.
Another organization in our studies, a food-
processing company, had initially been an indus­
try pioneer in both the processing and market­
ing of dried fruits and nuts. Gradually, the com­
pany settled into a Defender strategy and took
vigorous steps to bolster this strategy, including
limiting the domain to a narrow line of prod­
ucts, integrating backward into growing and har­
vesting, and assigning a controller to each of the
company's major functional divisions as a means
of keeping costs down. Within recent years, the
company's market has become saturated, and
profit margins have shrunk on most of the firm's
products. In spite of its declining market, the or­
ganization has consistently clung to a Defender
strategy and structure, even to the point of cre­
ating ad hoc cross-divisional committees whose
sole purpose was to find ways of increasing effi­
ciency further. At the moment, management
recognizes that the organization is in trouble,
but it is reluctant to make the drastic modifica­
tions required to attain a strategy and structure
better suited to the changing market conditions.
Unless an organization exists in a "p ro ­
tected" environment such as a monopolistic or
highly-regulated industry, it cannot continue to
behave as a Reactor indefinitely. Sooner or later,
it must move toward one of the consistent and
Organizational Strategy, Structure , and Process
stable strategies of Defender, Analyzer, or Pros­
pector.
Management Theory Linkages to
Organizational Strategy and Structure
Organizations are limited in their choices of
adaptive behavior to those which top manage­
ment believes will allow the effective direction
and control of human resources. Therefore, top
executives' theories of management are an im­
portant factor in analyzing an organization's
ability to adapt to its environment. Although our
research is only in its prelim inary stage, we have
found some patterns in the relationship between
management theory and organizational strategy
and structure.
A theory of management has three basic
components: (a) a set of assumptions about hu­
man attitudes and behaviors, (b) managerial pol­
icies and actions consistent with these assump­
tions, and (c) expectations about employee per­
formance if these policies and actions are im­
plemented (see Table 4). Theories of manage­
ment are discussed in more detail in Miles (14).
During the latter part of the 19th Century
and the early decades of the 20th, mainstream
management theory, as voiced by managers and
by management scholars, conformed to what
has been termed the Traditional model. Essen­
tially, the Traditional model maintained that the
capability for effective decision making was nar­
rowly distributed in organizations, and this ap­
proach thus legitimized unilateral control of or­
ganizational systems by top management. Ac­
cording to this model, a select group of owner-
managers was able to direct large numbers of
employees by carefully standardizing and rou-
tinizing their work and by placing the planning
function solely in the hands of top managers.
Under this type of management system, em­
ployees could be expected to perform up to
some minimum standard, but few would be
likely to exhibit truly outstanding performance.
Beginning in the twenties, the Traditional
model gradually began to give way to the Hu-
Academy of M anagem ent Review - July 1978 559

TABLE 4. Theories of Management

Tra d itio n a l M o d e l H u m an R ela tio n s M o d e l H u m a n R e so u rc e s M o d e l

Ass u m p t io n s A s s u m p t io n s A s s u m p t io n s

1. W o rk is in h e re n tly distasteful to 1. P e o p le w ant to feel useful and 1. W o rk is not in h e re n tly distasteful.

most p e o p le .
2. W hat w o rk e rs d o is less im p ortan t
than w hat th ey earn for do in g it.
3. Few w ant or can h a n d le w o rk
w h ich re q u ire s creativity, se lf-d ire c-
tion , or se lf-co n tro l.
im p ortan t. P eo p le w ant to co n trib u te to
2. P e o p le d e sire to b elo n g and to m ean in g fu l goals w h ich they have
b e re c o g n iz e d as in d ivid u als. h e lp e d estab lish.
3. T h e se n e e d s are m o re im p ortant 2. M o st p e o p le can e x e rcise far m o re
than m o n e y in m otivating p e o p le crea tive , re sp o n sib le Self-direction
to w o rk . and se lf-co n tro l than their p resen t
job s d e m an d .

Policies Policies Policies

1. T h e m an ag er's basic task is to
clo se ly su p e rv ise and co n tro l his
(her) su b o rd in a te s.
2. H e (she) m ust b re ak tasks d o w n
into sim p le, rep etitiv e, easily
le a rn e d o p era tio n s.
3. H e (she) m ust estab lish d e ta ile d w ork
ro u tin es an d p ro c e d u re s and
e n fo rc e th ese firm ly but fairly.
1. T h e m an ag er's b asic task is to m ake
e a ch w o rk e r feel useful and
im p ortan t.
2. H e (she) sh o u ld k e e p his (her) su b ­
o rd in a te s in fo rm e d and listen to
th eir o b je c tio n s to his (her) plans.
3. T h e m an ag er sh o u ld allow his (her)
su b o rd in a te s to e x e rc ise so m e self-
d ire c tio n an d se lf-co n tro l on
ro u tin e m atters.
1. T h e m an ager's b asic task is to
m ak e use of his (her) " u n ta p p e d "
h u m an reso u rces.
2. H e (she) must create an e n v iro n ­
m en t in w h ich all m em b ers may
co n trib u te to the limits of their
ability.
3. H e (she) must e n co u ra g e full
p articip atio n on im p ortan t m at­
ters, co n tin u a lly b ro ad e n in g su b ­
o rd in a te self-d irectio n and co n tro l

Expe ctations Exp ect ati on s Expe ctations

1. P eo p le can to lera te w o rk if the pay
is d e c e n t and th e boss is fair.
2. If tasks are sim p le en o u g h and
p e o p le are clo se ly co n tro lle d ,
they w ill p ro d u c e up to stand ard.
1. S h arin g in fo rm atio n w ith su b o r­
d in ates an d in vo lvin g them in
ro u tin e d e cisio n s will satisfy their
basic n e e d s to b elo n g and to feel
im p ortan t.
2. Satisfying th ese n eed s w ill im p ro v e
m o ra le an d re d u c e resistan ce to
form al a u th o rity — su b o rd in ate s
w ill w illin g ly co o p e ra te and p ro ­
duce.
1. Exp and ing su b o rd in a te in flu e n ce ,
se lf-d ire c tio n , and self-co n tro l w ill
lead to d irect im p ro ve m en ts in
o rg a n izatio n al p erfo rm an ce.
2. W o rk satisfaction may im p ro ve as
a " b y -p ro d u c t" of su b o rd in ate s
m aking full use of their re so u rces.

3 S o u rc e : R a y m o n d E. M ile s, Th e o ri e s o f M a n a g e m e n t (N ew Y o rk : M c G ra w -H ill, 1975), Fig u re 3-1.

man Relations model. This model accepted the this approach urged managers to employ de­
traditional notion that superior decision-making vices to enhance organization members' feel­
com petence was narrowly distributed among ings of involvem ent and importance in order to
the employee population but emphasized the improve organizational performance. Sugges­
universality of social needs for belonging and tion systems, employee counseling, and even
recognition. This model argued that impersonal company unions had common parentage in this
treatment was the source of subordinate resist­ philosophy. The Depression and World War II
ance to managerial directives, and adherents of both acted to delay the development and spread
560
of the Human Relations model, and it was not
until the late forties and early fifties that it be­
came the prime message put forth by managers
and management scholars.
Beginning in the mid-fifties, a third phase
in the evolution of management theory began
with the emergence of the Human Resources
model which argued that the capacity for effec­
tive decision making in the pursuit of organiza­
tional objectives was widely dispersed and that
most organization members represented un­
tapped resources which, if properly managed,
could considerably enhance organizational per­
formance. The Human Resources approach
viewed management's role not as that of a con­
troller (however benevolent) but as that of a fa­
cilitator — removing the constraints that block
organization members' search for ways to con­
tribute meaningfully in their work roles. In re­
cent years, some writers have questioned the ex­
tent to which the Human Resources model is
applicable, arguing for a more "contingent" the­
ory emphasizing variations in member capacity
and motivation to contribute and the technol­
ogical constraints associated with broadened
self-direction and self-control. The Human Re­
sources model probably still represents the lead­
ing edge of management theory, perhaps await­
ing the formulation of a successor model.
Linking the Strategic Typology to
Management Theory
Are there identifiable linkages between an
organization's strategic type and the manage­
ment theory of its dominant coalition? For ex­
ample, do top executives in Defenders profess
Traditional beliefs about management and those
in Prospectors a Human Resources philosophy?
The answer to this question is, in our opinion, a
bit more complex than simply "yes" or "n o ".
One of our studies investigated aspects of
the relationship between organizational strate-
gy-structure and management theory. Although
the results are only tentative at this point, rela­
tively clear patterns emerged. In general, Tradi­
tional and Human Relations managerial beliefs
Organizational Strategy, Structure, and Process
are more likely to be found in Defender and Re­
actor organizations, while Human Resources be­
liefs are more often associated with Analyzer
and Prospector organizations. But this relation­
ship appears to be constrained in one direction;
it seems highly unlikely that a Traditional or Hu­
man Relations manager can function effectively
as the head of a Prospector organization. The
prescriptions of the Traditional model simply do
not support the degree of decentralized decision
making required to create and manage diversi­
fied organizations. It is quite possible for a Hu­
man Resources manager to lead a Defender or­
ganization. O f course, the organization's plan­
ning and control processes under such leader­
ship would be less centralized than if the organ­
ization were managed according to the Tradi­
tional model. Using the Human Resources phi­
losophy, heads of functional divisions might
either participate in the planning and budgeting
process, or they might simply be delegated con­
siderable autonomy in operating their cost cen­
ters.(In Defender organizations operated accord­
ing to the Human Resources philosophy, hu­
man capabilities are aimed primarily at cost ef­
ficiency rather than product development.)
The fit between management theory and
the strategy, structure, and process characteris­
tics of Analyzers is perhaps more complex than
with any of the other types. Analyzers, as previ­
ously described, tend to remain cost efficient in
the production of a limited line of goods or serv­
ices while attempting to move as rapidly as pos­
sible into promising new areas opened up by
Prospectors. Note that the organization struc­
ture of the Analyzer does not demand exten­
sive, permanent delegation of decision-making
authority to division managers. Most of the Ana­
lyzer's products or services can be produced in
functionally structured divisions similar to those
in Defender organizations. New products or
services may be developed in separate divisions
or departments created for that purpose and
then integrated as quickly as possible into the
permanent technology and structure. It seems
likely to us, although our evidence is inconclu­
Academy of M anagement Review - July 1978
sive, that various members of the dominant
coalition in Analyzer organizations hold moder­
ate but different managerial philosophies, that
certain key executives believe it is their role to
pay fairly close attention to detail while others
appear to be more willing to delegate, for short
periods, moderate amounts of autonomy nec­
essary to bring new products or services on line
rapidly. If these varying managerial philosophies
are "m ism atched" within the Analyzer's operat­
ing units — if, for example, Traditional managers
are placed in charge of innovative subunits —
then it is unlikely that a successful Analyzer strat­
egy can be pursued.
Holding together a dominant coalition with
mixed views concerning strategy and structure is
not an easy task. It is difficult, for example, for
managers engaged in new product or service de­
velopment to function within planning, control,
and reward systems established for more stable
operations, so the Analyzer must be successfully
differentiated into its stable and changing areas
and managed accordingly. Note that experi­
mentation in the Analyzer is usually quite lim­
ited. The exploration and risk associated with
major product or service breakthroughs are not
present (as would be the case in a Prospector),
and thus interdependencies within the system
may be kept at a manageable level. Such would
not be the case if Analyzers attempted to be
both cost-efficient producers of stable products
or services and active in a major way in new
product and market development. Numerous
organizations are today being led or forced into
such a mixed strategy (multinational companies,
certain forms of conglomerates, many organi­
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O ur research represents an initial attempt:
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