Professional Documents
Culture Documents
Christopher Baird
Abstract
With such a large quantity of disagreement existing within the strategy field, it is
important that individuals do not become overwhelmed by it. This paper provides
the essential opportunity to understand the reasons behind differences over what
strategy is. By assessing Richard Whittington’s four ‘well‐regarded’ schools of
strategy, this paper gains a structured framework that allows us to address the
reasons for disagreement within three main areas of strategy: the outcomes of
strategy, the process of strategy, and the rationality of strategists. We begin to
ascertain that no body of knowledge on strategy is omniscient and sacrosanct.
Certain ‘strategy schools’ suit different situations and environments better than
others and as a result, disagreement becomes an important requisite. Finding the
‘school’ that best suits your organisation earns the greatest reward.
Table of Contents
1. INTRODUCTION 3
UNITARY/PROFIT MAXIMIZING 5
PLURALIST 6
EMERGENT 8
5. CONCLUSION 12
6. BIBLIOGRAPHY 15
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1. Introduction
Outcomes
Profit Max
Processes
Deliberate Emergent
Pluralistic
Let us now progress to discuss our first disparity as seen in Whittington’s model,
the outcomes of strategy.
Profit Maximizing: Whittington perceives that the focal outcome of strategy for
both the Classical and Evolutionary schools is to profit maximize. The Classical
approach describes profitability as the ‘supreme goal of business’ and that
rational planning is the means by which to achieve it (Whittington, 2001). There
is an unequivocal nexus between the Classical school and the renowned
economic expressions of Adam Smith; self‐interest is ‘inherent in the very nature
of our being’ (Smith, 1776). Top management is in control of the organizations
strategy (Sloan, 1963) and consciousness must rest with the CEO (Mintzberg,
1990). For Evolutionists, the outcomes of strategy tell a similar story, albeit
markets, not managers will secure profit maximization (Henderson, 1989).
“Wealth and sons are attractiveness of the life of this world; but the things that
endure, good deeds, are the best in the sight of Allah, as rewards, and best as the
foundation for hopes.” (Quran, 18:46)
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unitary outcomes are too ‘ethnocentric’ and fit poorly with Asian economies that
do not have the same institutional heritage. These economies have never had a
Western‐style legal system where each person is treated as a separate entity,
equal to all others. In China for instance, a network of friends, or kin, is
institutionalized (or ‘socially embedded’) into business and social practice
(Biggart and Hamilton, 1992; Granovetter, 1985).
Furthermore, as society has progressed, new sectors have emerged where profit
maximization is clearly not the dominant outcome for strategy. Consider the
rapid rise of the ‘social entrepreneurship’ phenomenon, a term that only gained
prominence in 1982 (almost 30 years following the early Classicists).
“Social entrepreneurs look for the most effective methods of serving their social
missions. Mission‐related impact becomes the central criterion, not wealth
creation”. Dees (1998: 1)
However, are these formalized, often long‐term plans flexible enough to adapt to
periods of increased macroeconomic instability such as the oil shocks of 1974
and 1979 or more recently, the global financial crisis of 2007? Should strategies
not have the capacity to form and adapt through an emergent process of learning
and adaption? Evolutionists and Processualists argue they should.
Emergent Process: Critics from both the Evolutionary and Processual schools
argue that formalised and deliberate planning in the strategy‐making process is
rigid, sticky, and hard to adapt. Firms can no longer accurately forecast 3‐5 years
into the future (Grant, 2010). To rely on one deliberate strategy is inadequate to
cope with the complexities of a world in which most organisations are subjected
to changes beyond their control (Booth, 1993). Emergent strategies form
through a learning process, most commonly in response to external forces.
(Mintzberg and Waters, 1985) Evolutionists such as Alchian (1950) argue that
the most appropriate strategies ‘emerge’ as part of the competitive process. The
stronger performers survive; the weak are irresistibly squeezed from the
‘ecological niche’.
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should not indulge in the hubris of grand, long term planning, like a craftswoman
the process is one of continuous adaptation (Mintzberg, 1987).
Similar to our belief that changing social needs affect the outcome of strategy, it
seems reasonable to suggest that increased volatility in global markets (Hitt et
al., 1998) has boosted the utility of emerging strategies, and/or, has reduced the
utility of formalised, deliberate planning. Hyper‐competition and volatility
requires a new view of strategy (D’Aveni, 1995). Managers must be prepared and
able to change their thinking and aspirations accordingly,
“If the times and conditions change, he will be ruined because he does not change
his methods of procedure … because he cannot be persuaded to depart from a path,
having always prospered by following it.” (Machiavelli, 1513).
Mintzberg and Waters (1985) believe that certain industries will favour
particular strategies. For example, in a scenario where an airline such as Aer
Lingus was to commit a large quantity of resources buying expensive jet aircraft,
a more formal, deliberate planning structure seems logical. Planning must be
more certain to justify the allocation of substantial resources. Interestingly,
Mintzberg and Waters (1985) argue that some of the most effective strategies
combine the process of deliberation and control (deliberate), with flexibility and
organisational learning (emerging) to form a ‘sweet spot’ (Kipping and Cailluet,
2010). It appears that as strategic processes are applied in working practice,
different industries find certain strategy processes more suitable than others.
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Deliberate
Stability &
Predictability
t
S po
t
ee
Sw
Innovation &
Adaptability
Emergent
Figure 2. The sweet spot in strategic process. (Mintzberg and Waters, 1985)
The Systemic school, which is shown by Thomas (1993) to place the least
‘emphasis on the desirability of rationality’, looks upon economic activity as
something that cannot simply be placed as a detached sphere of impersonal
financial calculation. Granovetter (1985) and Swedberg (1987) found people’s
economic behaviour and rationality to be embedded in a network of social
relations, involving family, religion, the state etc. Strategists cannot operate as
perfectly rational, autonomous individuals; their environment influences them.
They operate to the ‘modus operandi’ of a particular social context (Whittington,
2001). Boundly rational models of Systemic decision‐making must not only take
into account the cognitive limitations of the mind, but also the adaptive
relationship between decision strategies and the ecological, social, and
institutional constraints of the environment (Landa and Wang, 2001).
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Why is there disagreement over the rationality of strategists?
5. Conclusions
Outcomes
Classical Evolutionary
Profit Max
Deliberate Emergent
Systemic Processual
Pluralistic
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6. Bibliography
Burrell, G. (1992) Back to the future, in Reed, M. and Hughes, M. (eds) Rethinking
Organizations, Sage, London
De Wit, B. and Mayer, R. (2004) Strategy: Process, Content and Context, London,
Thomson Business Press.
Eccles, R. and Nohria, N. (1992) Beyond the Hype: rediscovering the essence of
management, Cambridge, Harvard Business School Press.
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Hoskisson, R., Hitt, M., Wan, Y., and Yiu, D. (1999), Theory and Research in
Strategic Management. Journal of Management, 25 (3) p. 417‐456.
Jenkins M., Ambrosini, V., & Collier, N. (2007) Advanced Strategic Management: A
Multi‐Perspective Approach. 1
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Mintzberg, H. (1990) Strategy formation: schools of thought, in Fredrickson, J.
‘Perspectives on Strategic Management.’ New York, Harper Business.
Sloan, A. (1963) My Years with General Motors. London, Sedgewick and Jackson.
Smith, A. (1776) An inquiry into the nature and causes of the wealth of nations.
Chicago, University of Chicago Press.
End
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