CH 4 Strategic MGT Perspectives v5

Slide 4.
CHAPTER 4
STRATEGIC
MANAGEMENT
PERSPECTIVES
Jashapara, Knowledge Management: An Integrated Approach, 2nd Edition, © Pearson Education Limited 2011
Slide 4.2
LEARNING OBJECTIVES
➢ To explain the differences between the industrial
organization tradition and the institutionalist
perspective in strategic thinking;
➢ To understand the contribution of the resource-
based view and the knowledge-based view of the
firm to strategic management;
➢ To discuss the development of IS strategy and its
influence on KM strategies;
➢ To apply different KM strategies appropriately to
different contexts.
Slide 4.3
What are the Overall Aims of an Org?

▪ Commercial Org :
To make profits, increase turnover, increase market
share, be highly regarded?
 To Maximize the Shareholders’ wealth
▪ Not-for-profit Org:
Meet the needs of service group within resource
constraints?
Slide 4.4
“The important features of invisible assets - they

are unattainable with money alone, are
time-consuming to develop, are capable of
multiple simultaneous use, and yield
multiple, simultaneous benefits - make it
crucial to develop strategies for accumulating
them.”
Itami & Roehl (1987)
Slide 4.5
Knowledge Management Perspectives
Slide 4.6
INTRODUCTION
▪ Actions from KM practices  Competitive Advantage.
▪ Need some form of KM strategy to achieve Org goals.
▪ What is the nature of a KM strategy and how does it
change over time?
▪ What likely configurations of technology and human
aspects to make such strategies effective?
▪ How may KM strategies relate to a firm’s business
strategy?
Slide 4.7
OVERVIEW
▪ Diverse range of viewpoints & schools of thought on the
nature of strategy and competitive change!
▪ Need to examine its theoretical & economic foundations.
▪ Three dominant schools of strategic thought;
1) Industrial Organization tradition (I/O),
2) Excellence & Turnaround literature,
3) Institutionalist perspective.
▪ In the last decade, scholars have explored
1) Resource-Based View (RBV)
2) Knowledge-Based View (KBV) of the firm.
Slide 4.8
APPROACHES to STRATEGY?
Mintzberg first wrote about the 5 Ps of Strategy in 1987.
Each of the 5 Ps is a different approach to strategy. They are:
1. A Plan? “To control” ~ Intended → Deliberate strategy

2. A Pattern of consistency in behaviour over time? This
is referred to as an ‘emergent strategy’ and is likely to have
arisen through the firm’s learning over time
3. A Position – for a product/service in a market?
4. A Perspective – a leader’s vision?
5. A Ploy to outwit (beat) an opponent / competitor?
Slide 4.9
Deliberate and Emergent Strategies
Figure 4.1 Strategy as a plan and pattern (adapted from Mintzberg & Waters 1985)
▪ It is likely that executives will respond to changing

circumstances (dynamic environment) with a mixture of these
two notions, see above
Slide 4.10
Deliberate and Emergent Strategies
Slide 4.11
Intended, Deliberate, Emergent and Realized Strategies

▪ Intentions that are fully realised can be called deliberate
strategies
▪ None realized intentions are unrealized strategies
▪ Actions taken, one by one, which converged over time
to some sort of consistency or pattern can be called
emergent strategies – the pattern is realised by not
expressly intended
From Realized Type of strategy
Intentions (plan) Fully Deliberate
Intentions (plan) No Unrealized
Converged Actions to
Yes Emergent
consistency/pattern
Slide 4.12
Perspectives in Strategic Thinking
▪ The Industrial Organization (I/O) approach.

▪ The Excellence and turnaround view.
▪ The Institutionalist perspective.
▪ Resource-Based View (RBV) of the firm.
Slide 4.13
The Industrial Organization (I/O) View

▪ The Industrial Organization (I/O) approach to
competitive advantage advocates that external
(industry) factors are more important than
internal factors in a firm for achieving competitive
advantage
▪ The performance of a firm is determined by the
industry structure and its market structures
▪ The market is concerned with:
• The supply and demand of goods and services
• The elasticity or inelasticity of the demand curve
▪ Basic microeconomic theory!
Slide 4.14
Microeconomic Theory
Slide 4.15
▪ Firm performance is
Economies of scale
based more on
industry properties
Barriers to market entry
Product differentiation
The economy
Level of competitiveness
Slide 4.16
▪ The notion of
Economies of scale
differentiation has its
roots in economics
which recognizes the Barriers to market entry
unique capabilities
of a firm, s/a its know- Product differentiation
how & reputation, and
tries to exploit the
The economy
firm’s uniqueness
through its strategies
Level of competitiveness
Slide 4.17
Criticisms of I/O
▪ Only 10% of formulated strategies get implemented.
▪ Separating thought from action by isolating the

formulation and implementation processes.
▪ It assums that firms and individuals have perfect

knowledge of market changes. Reality there may be
considerable ignorance leading to questioning of the
rationalist principles of the microeconomic tradition!
▪ No real conception of competition as a process over time

(stable competition!!).
▪ Environments assumed to be predominantly stable.
Slide 4.18
The Excellence and Turnaround View

▪ 1980s- Japanese beating US competition in terms of design
features, price, reliability, speed to market and quality;
threats to the US  An enormous need to respond? 
…..
▪ Emergence of extensive literature in excellence and
turnaround. This made a considerable impact on
management strategy, based on a wide range of managerial
remedies and recipes of successful companies.
▪ This literature continues to play a role in strategic
development, particularly where managers require ideas for
quick-fix solutions. For example,
● Don’t miss your moment – the importance of timing in strategic
initiatives ● Connect change initiatives to your core business ● Don’t
mistake incremental improvements for strategic transformation ● Be
realistic about your limits and the pace of change.
Slide 4.19
The Excellence and Turnaround View

The Criticisms of this school of thought:
▪ The overemphasis on the firm and internal
processes rather than on competitive changes in the
external environment.
▪ There is also often a lack of empirical
(experimental) evidence to support the remedies
prescribed.
▪ The remedies offer little objective evidence of
reliability, validity, practicability and integrating with a
firm’s existing knowledge base.
Slide 4.20
The Institutionalist Perspective

▪ Suggests that competitive forces are inherently
unstable and in a continual process of ‘creative
destruction’. i.e., contrary to the I/O form of analysis
▪ Institutional economics places greater emphasis on
agents (individuals) and suggests that their economic
relations are determined through their experience &
learning over time (→ patterns) rather than through
some form of rational maximization behavior.
▪ Economic activity is dynamic and is formed by social
institutions that interact with agents.
▪ Competition is viewed as dynamic, impermanent
and a continual process informed by people’s day-to-
day learning.
Slide 4.21
The Institutionalist Perspective

▪ Many strategic planners have tried to rationalize it
through the process of scenario planning.
▪ This attempts to create several reasonable scenarios

and considers effective management responses to
them.
▪ Strategy from an institutionalist perspective is seen as a

process over time and considered synonymous with
strategic change.
▪ A contrast between the industrial (I/O) school tradition

and the institutionalist perspective in terms of their
approach to thought and action is shown in Figure 4.2.
Slide 4.22
Industrial Vs. Institutionalist Schools
Planning
Action
experience
& learning
Action
Figure 4.2 Strategic thought and action: I/O tradition and the
institutionalist perspective
Slide 4.23
Mintzberg Major Strategic Framework

▪ Mintzberg (1991) has provided a major strategic
framework from an institutionalist perspective that
examines the dynamics of competitive forces in an
Org.
▪ This framework doesn’t provide a design for org’s but
rather an understanding of the interaction between
competitive forces; Fig. 4.3.
▪ The underlying assumption of this model is that there is
the potential for one or more of seven forces to
dominate an Org at any given time:
Slide 4.24

▪ Mintzberg has provided a major strategic framework from
an institutionalist perspective that examines to understand
the dynamics (interplay) of competitive forces in an
Org.
-The internal
catalytic forces
comprise forces of
cooperation (pulling
together of ideology
s/a beliefs, values);
resist change and
competition (pulling
apart of politics)
Figure 4.3 Dynamic forces in organizations (adapted from Mintzberg 1991)
Slide 4.25

Force Type Concerned with Relate to
1 Direction Strategic vision Startup or turnaround
situations
2 Efficiency Standardization and Bureaucratic org’s,
formalization; e.g., cost economics of scale-based
leadership firms
3 Proficiency Tasks requiring high Professional organizations,
levels of knowledge and e.g., law firms, auditing,
skills consulting, ..
4 Concentration Concentrating efforts on Large diversified firms
serving certain markets
5 Innovation Discovering new things Innovative org (a.k.a.
for the customer; e.g., adhocracy) comprising
differentiation skilled experts or
multidisciplinary projects.
Slide 4.26
Resource-Based View (RBV) of the Firm

▪ Resources create sustainable competitive advantage
▪ The difference between the actual price of a product or
service and its competitive price is known as an
‘economic rent’; payments to assets that exceed their
competitive price.
▪ RBV proponents contend that org performance will
primarily be determined by internal resources;
grouped into three all-encompassing categories: human,
physical and organizational resources
▪ Competitive resources are valuable; rare, inimitable
(not easily replicated) and not substitutable
▪ Competitive resources include top mgt skills, org culture,
IS/IT, strategic planning, trust and HRM
Slide 4.27
Resource-Based View (RBV) of the Firm
Internal resources categories:

1. Physical resources include all plant & equipment,
location, technology, raw materials, machines (tangibles);
2. Human resources include all employees, training,
Intangibles
experience, intelligence, knowledge, skills, abilities;

3. Organizational resources include firm structure,
planning processes, information systems, patents,
trademarks, copyrights, databases, and so on.
Slide 4.28
Criticisms of RBV
▪ How do you know which resources contribute to

competitive advantage in dynamically changing contexts
and environments?
▪ How do you gain/obtain these resources?

▪ How can firms compete if they deny the importance of
market conditions?
Slide 4.29
You can miss the strength of competitors by looking only

at their end-products, in the same way you miss the
strength of a tree if you look only at its leaves.’
Slide 4.30
INFORMATION SYSTEMS STRATEGY
▪ IT: purely about technology; H/W & S/W.
▪ IS: concerned with the effective interaction between

technology and social phenomena (people).
▪ It is possible for some IS to have no technology (where

info is exchanged verbally between people), whereas other
IS may be totally reliant on technology.
▪ The importance of the IS, is how they can aid effective

action and decision making (i.e., DSS)
Slide 4.31
Slide 4.32

▪ IT is not a strategy on its own and the purchase of
h/w & s/w without recourse to org issues and
activities is unlikely to lead to competitive
advantage.
▪ Applications1 must address key business problems
in an effective manner and considering the
competence of the existing workforce.
▪ The decade (2000’s) has seen the dominance of e-
commerce – conducting business electronically using
internet technologies.
1 Software designed to meet certain business processes or activities;

e.g., ERP, MRP, MPS, CRM …
Slide 4.33
Information Systems Strategy Matrix
Slide 4.34
EVOLUTION of IS STRATEGY
▪ 1960s – IS/IT strategy focused on ‘data processing (DP)’
s/a EPOS nowadays, to automate tasks! No change to
processes or corporate strategy!
▪ 1970–1980s – move towards MIS to evaluate business
processes, led to large databases! Aim: to provide middle
and senior managers with info for monitoring and
controlling business processes and DSS.
▪ No integration between different parts of the firm.
▪ The contributions of DP and MIS: IS/IT has increased
the efficiency of info-based activities; ROI likely to be
around 5–10%; in terms of managerial effectiveness,
good mgr’s get even better, bad mgr’s get worse!
▪ IS/IT can speed up the mess if used inappropriately.
Slide 4.35
▪ 1990s – move to Strategic Information Systems (SIS) to make
Org competitive (in procurement, workflow, CRM, decision making
systems, etc.)
▪ SIS is business driven in terms of competitors, suppliers and
customers and links directly to the firm’s corporate strategy.
▪ The four main types (purpose-driven) of SIS:
1) Sharing info thru technology-based systems with customers and
suppliers. e.g., CRM, SCM.
2) Integration: Effective integration of info linked to a firm’s value-
adding processes, e.g., ERP, CRM.
3) Develop and market new products / services based on info, e.g.,
online banking, e-commerce, OS, Apps.
4) Support: Provide executive mgt with info (internal & ext.) to
support development & implementation of strategy, e.g., DSS.
Slide 4.36
Sharing, Integration, new products and DSS of SIS
Slide 4.37
▪ Recently moved towards IS capability.
▪ The desire is to embed IS capability into all the
various practices and processes within the org; i.e.,
more internally focused.
▪ IS capability takes on a resource-based theory of the
firm + the notions of dynamic capabilities + double-loop
learning. → A swing in the direction of exploration &
looking at things differently.
▪ As Hamel (2000) asserts about the key factor affecting
the competitiveness of e-commerce: ‘The real story of
Silicon Valley is not ‘e’ but ‘i’, not electronic commerce but
innovation & imagination ... It is the power of ‘i’ rather
than ‘e’ that separates the winners from the losers in the 21st
century economy.’
Slide 4.38
Knowledge Based View (KBV)

▪ KM strategy is an approach that describes how an
org will manage its info and knowledge better for its
benefit and its stakeholders.
▪ Knowledge (Explicit & tacit) is the key resource for
competitive advantage
▪ Knowledge held in IS as well as in people’s heads and
communities
▪ Knowledge sharing is important. Noting the difficulty of
sharing tacit knowledge which may be primary to
competitive advantage
▪ Primary task of Mgt is to integrate knowledge
between people into product / services.
▪ A good KM strategy is closely aligned with the org's
overall strategy and objectives.
Slide 4.39
KM STRATEGY
▪ As industrialized economies have moved from natural
resources to intellectual assets, the most important
asset/resources is knowledge → competitive advantage.
▪ In terms of economic theory, we are looking for
strategies that will produce rents (or super profits).
▪ How to develop KM strategies to effectively utilize this
valuable resource?
▪ Also, how do we protect the valuable knowledge from
expropriation & imitation? (IPR)
▪ The KM strategy literature is relatively young, and the
forms of strategy proposed (adopted) can be
characterized as a dialectic (conflict) between the
forces of efficiency and innovation (Fig. 4.4).
Slide 4.40
DIALECTICS OF KM STRATEGIES
A crisis or
discontinuity
will trigger the
firm to move
from one force,
say, efficiency
→ innovation.
Figure 4.4 The dialectic of KM strategies

Slide 4.41
KM STRATEGY
▪ Firms are never static and are moving in one or
another direction towards efficiency or innovation
given a certain set of market conditions.
▪ In the 1990s, KM strategy becomes aligned with the
overall business strategy.
▪ It is likely that a crisis or discontinuity will trigger the
firm to move from one force, say, efficiency to
innovation.
▪ Discontinuities may arise from sudden deregulation
of markets, economic downturns or aggressive
competitor behavior resulting in drastic loss of market
share.
▪ Crisis?
Slide 4.42
HISTTORY of IS STRATEGY
Slide 4.43
FORMS of KM STRATEGY
▪ Among management consultants, the most common
forms of KM strategies are (Figure 4.5):
1) Codification strategies (Exploitation).
2) Personalization strategies (Exploration).
▪ Codification strategies are heavily based on technology
and use large databases to codify and store knowledge.
The rationale of a codification strategy is to achieve
‘scale in knowledge reuse’ (Exploitation).
▪ Key pieces of knowledge used to create ‘knowledge
objects’ to store valuable knowledge s/a key industry info,
market segmentation analysis, presentations, interview guides,
programming documents.
▪ This knowledge is stored in repository so that others in
the firm can use the same material for their assignments.
Slide 4.44
Exploitation Strategies Exploration strategies
Figure 4.5 Codification and personalization strategies
Slide 4.45
▪ A KM strategy needs to contribute to a firm’s bottom-line
performance.
▪ KM strategies need to be developed in coordination and
partnership with both IS/IT & HR departments. Also, with
finance department as the benefits of a KM strategy will affect
the firm’s financial performance and its IC.
▪ The relationship between KM strategy and performance is
Figure 4.6.
Fig 4.6 KM strategy and performance

Slide 4.46
Knowledge Strategy
Drew (1999)
▪ Portfolio model of strategic thinking around

dimensions of knowledge content & awareness:
1. What we know we know
2. What we know we don’t know
3. What we don’t know we know
4. What we don’t know we don’t know (uncertainty)
Slide 4.47
Knowledge Strategy Drew (1999)

A Knowledge Portfolio Matrix©
1. What We Know We Know * 2. What We Know We Don't Know

(?)
Emphasis: knowledge sharing, Emphasis: knowledge seeking and
Knowledge Awareness
access & inventory. creation.
Tools: e.g., benchmarking, Tools: e.g., R&D, market research,

communities of practice. competitive intelligence.
3. What We Don't Know We 4. What We Don't Know We Don't

Know (!) Know ()
Emphasis: uncovering hidden or Emphasis: discovering key risks,
tacit knowledge. exposures & opportunities.
Tools: e.g., knowledge maps, Tools: e.g., creative tension, audits,

audits, training, networks. dilemmas, complexity science, scenarios
planning.
Knowledge Content
Slide 4.48
SUMMARY
This chapter has elaborated five areas that need to be
considered when developing a KM strategy:
1. Realized strategies may emerge from the way a firm
develops through experience & learning (pattern) rather
than only as an outcome of an intended (deliberate) plan
or strategy. Many intended strategies may be unrealized.
2. A clear understanding of strategy needs awareness of
the different schools of thought and their underlying
assumptions. The dominant schools of thought in the
KM literature are the I/O tradition, the excellence and
turnaround literature, and the institutionalist
perspective.
Slide 4.49
SUMMARY
3. The Resource-Based and Knowledge-Based View of the
firm place greater emphasis on the firm’s resources
(tangible and intangible assets) to achieve competitive
advantage.
4. IS and IT strategies have developed/evolved from
operational data-processing approaches to MIS and
strategic IS. More recently, IS/IT strategies have adopted
a Resource-Based View of the firm and suggest that IS
capabilities are the primary source of competitive
advantage.
Slide 4.50
SUMMARY
5. KM strategies occur as a dialectic (conflict) between

codification (exploitation) strategies and personalization
(exploration) strategies. Firms that follow both
strategies simultaneously are likely to fail. The dialectic
or change between strategies is likely to occur
following a crisis or discontinuity.
Slide 4.51

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Slide 4.

What are the Overall Aims of an Org?

“The important features of invisible assets - they

Knowledge Management Perspectives

1. A Plan? “To control” ~ Intended → Deliberate strategy

Deliberate and Emergent Strategies

▪ It is likely that executives will respond to changing

Deliberate and Emergent Strategies

Intended, Deliberate, Emergent and Realized Strategies

Intentions (plan) Fully Deliberate

Intentions (plan) No Unrealized

Perspectives in Strategic Thinking

▪ The Industrial Organization (I/O) approach.

The Industrial Organization (I/O) View

The Industrial Organization (I/O) View

The Industrial Organization (I/O) View

▪ Separating thought from action by isolating the

▪ It assums that firms and individuals have perfect

▪ No real conception of competition as a process over time

▪ Environments assumed to be predominantly stable.

The Excellence and Turnaround View

The Excellence and Turnaround View

The Institutionalist Perspective

The Institutionalist Perspective

▪ This attempts to create several reasonable scenarios

▪ Strategy from an institutionalist perspective is seen as a

▪ A contrast between the industrial (I/O) school tradition

Industrial Vs. Institutionalist Schools

Mintzberg Major Strategic Framework

Mintzberg Major Strategic Framework

Figure 4.3 Dynamic forces in organizations (adapted from Mintzberg 1991)

Mintzberg Major Strategic Framework

Resource-Based View (RBV) of the Firm

Resource-Based View (RBV) of the Firm

Internal resources categories:

experience, intelligence, knowledge, skills, abilities;

▪ How do you know which resources contribute to

▪ How do you gain/obtain these resources?

You can miss the strength of competitors by looking only

INFORMATION SYSTEMS STRATEGY

▪ IT: purely about technology; H/W & S/W.

▪ IS: concerned with the effective interaction between

▪ It is possible for some IS to have no technology (where

▪ The importance of the IS, is how they can aid effective

INFORMATION SYSTEMS STRATEGY

INFORMATION SYSTEMS STRATEGY

1 Software designed to meet certain business processes or activities;

INFORMATION SYSTEMS STRATEGY

Information Systems Strategy Matrix

INFORMATION SYSTEMS STRATEGY

Sharing, Integration, new products and DSS of SIS

Knowledge Based View (KBV)

Figure 4.4 The dialectic of KM strategies

Exploitation Strategies Exploration strategies

Figure 4.5 Codification and personalization strategies

Fig 4.6 KM strategy and performance

▪ Portfolio model of strategic thinking around

Knowledge Strategy Drew (1999)

1. What We Know We Know * 2. What We Know We Don't Know

access & inventory. creation.

Tools: e.g., benchmarking, Tools: e.g., R&D, market research,

3. What We Don't Know We 4. What We Don't Know We Don't

Tools: e.g., knowledge maps, Tools: e.g., creative tension, audits,