4 - A More Creative View of Strategy
Many of the attitudes and misconceptions discussed in the previous chapter arise from a misunderstanding of strategy and creativity. The authors plan to use the present chapter to tackle that subject more directly, basing their discussion on three facets:
- The content of strategy (what it is about)
- The process of strategy (how it is formed)
- The goals of strategy (what it seeks to achieve)
In doing so, they will consider the true nature of strategy and of creativity, as well as the ways in which the two are mutually supportive.
Strategy's Content
Henry Mintzberg defined five "P"s of strategy:
- Plans. Strategy is based on consciously, intentionally, and methodically seeking to influence actions.
- Patterns. Strategy is based on the repetition of actions and the expectation that there is regularity, such that things will go as expected and consistent actions will produce consistent results
- Positions. The unique capabilities of an organization make certain actions more effective than others and the unique aspirations make certain actions more desirable than others
- Ploys. In a competitive environment, strategy must also consider the actions of other players and how they might affect the outcomes of the firm's actions. It must sometimes be secretive or deceptive in order to prevent external interference.
- Perspectives. Each firm has a unique way of "looking at the world," and considers business opportunities accordingly - this influences the goals a firm will set for itself and the means by which it will seek to achieve those goals.
Admittedly, these are broad characterizations, as Mintzberg considers strategy as a theoretical concept, rather than the specific strategy of a specific firm.
The Process of Strategizing
A business is likened to the Jainist parable of the blind men and the elephant: in a company, each manager is well acquainted with his part but unable to perceive the whole (or more aptly, he may perceive the whole but is concerned only with his part). In that way, strategy is an attempt to get each of them to understand and act in a way that supports the organization as a whole.
There is no single way of going about strategy, but the author's describe a number of "schools" of methodology:
- Design School - Assess the opportunities and threats in the environment against the strengths and weaknesses of the firm to identify a course of action
- Planning School - Consider the processes of the organization as a whole and then decompose them into distinct steps and tasks
- Positioning School - Consider the behavior of buyers and sellers in the marketplace in determining a plan that provides the greatest reward with the least resistance
- Environmental School - Consider the environment of the firm, specifically the industry as a whole, and determine where the firm fits within it
- Cognitive School - Considers the mental processes of the strategist as the basis on which strategic decisions are made
- Learning School - Sees strategy as a trial-and-error process that leads the firm to discover the most effective and efficient course of action
- Cultural School - Sees the firm as an element of culture, and considers how it performs functions of value to society
- Consensus School - A ground-up approach that allows the managers of each business unit to define their objectives, and then negotiate to a common strategy
- Power School - Strategy is based on the conflict between different factions of stakeholders who compete based on bargaining, persuasion, confrontation, and other political means
- Entrepreneurial School - Dispenses with concrete plans in favor of looser notions such as the values or visions of senior management
- Process School - Sees the role of senior managers as referees and coordinators who facilitate the development of strategy at lower levels of the organization.
- Configuration School - Considers the firm as being composed of "clusters of resources" that have differing characteristics and behaviors, seeking to achieve an optimal configuration of these various parts.
These various schools of methodology can be assessed according to the effectiveness with which they address the five "P"s previously mentioned, Some schools are more adept at some than others.
The Objectives of Strategy
From the industrial era through the mid-twentieth century, the environment was presumed to be largely static, hence strategy was focused on making specific plans to achieve desired outcomes. In the modern environment of rapid and unpredictable change, strategy's objectives have shifted to provide greater flexibility: the goal of strategy is to build an organization that is flexible enough to change itself in response to environmental changes.
While this is generally accepted as a necessity, it does have significant disadvantages. Primarily, strategy has become diffused: decisions that are strategic in nature seem to happen at random and in various parts of the organization without central control, which leads to neglecting some important areas and having constant internal strife. Second, it has led organizations to be more reactive than proactive - decisions are made to achieve short-term results without a long-term plan or vision to guide them.
The authors suggest that teleology may be helpful in addressing this. It is a theory that looks to the ultimate goal in order to define the means to achieve it. For example, it is not sufficient to design a knife based on what is known about other knives, or on some empirical concept of what a knife is supposed to be. Instead, we must understand the end to which the knife will be used in order to design the knife itself. A knife that is designed to spread butter must be different in its nature than one that is designed to cut leather. In the same way, any strategic plan must be guided by the principle that actions are taken to achieve outcomes, and the nature of the outcomes desired shape those of the actions to be planned.
This is in sharp contrast to the approach to strategy that focuses on the actions themselves, often to the detriment of outcomes. Many firms are choked by bureaucracy, with processes and rules that focus on the way that tasks are executed, to a degree that it has completely eclipsed the importance of the reason that the tasks are being performed at all. A process focus has the benefit of creating efficiencies, though at times efficiency in one sense is offset by a loss of efficiency in another (saving money on equipment requires a greater cost in labor) or by a lack of effectiveness (doing each task in the most efficient manner does not mean the outcome will be effective).