Strategy dynamics

The dynamic model of strategy is a way of understanding how strategic actions occur. It recognizes that strategic planning is dynamic, that is, strategy involves a complex pattern of actions and reactions. It is partially planned and partially unplanned.

Contents

1 The Static Model of Strategy 2 The Dynamic Model of Strategy 3 Criticisms of Dynamic Strategy Models 4 See Also: 5 References

The Static Model of Strategy

According to many introductory strategy textbooks, strategic thinking can be divided into two segments : strategy formulation and strategy implementation. Strategy formulation is done first, followed by implementation.

1. Strategy formulation involves:
   • Doing a situation analysis: both internal and external; both micro-environmental and macro-environmental.
   • Concurrent with this assessment, objectives are set. This involves crafting vision statements (long term), mission statements (medium term), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
   • These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to obtain these goals.
   • This three-step strategy formation process is sometimes referred to as determining where you are now, determining where you want to go, and then determining how to get there.
2. The next phase, according to this linear model is the implementation of the strategy. This involves:
   • Allocation of sufficient resources (financial, personnel, time, computer system support)
   • Establishing a chain of command or some alternative structure (such as cross-functional teams)
   • Assigning responsibility of specific tasks or processes to specific individuals or groups
   • It also involves managing the process. This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary.
   • When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes.

The Dynamic Model of Strategy

Several theorists have recognized a problem with this static model: it is not how it is done in real life. Strategy is actually a dynamic and interactive process. Some of the earliest challenges to the planned strategy approach came from Linblom in the 1960s and Quinn in the 1980s.

Charles Linblom (1959) claimed that strategy is a fragmented process of serial and incremental decisions. He viewed strategy as an informal process of mutual adjustment with little apparent coordination.

James Brian Quinn (1980) developed an approach that he called "logical incrementalism". He claimed that strategic management involves guiding actions and events towards a conscious strategy in a step-by-step process. Managers nurture and promote strategies that are themselves changing. In regards to the nature of strategic management he says: "Constantly integrating the simultaneous incremental processof strategy formulation and implementation is the central art of effective strategic management." (page 145). Whereas Linblom saw strategy as a disjointed process without conscious direction, Quinn saw the process as fluid but controlable.

Joseph Bower (1970) and Robert Burgelman (1980) took this one step further. Not only are strategic decisions made incrementally rather than as part of a grand unified vision, but according to them, this multitude of small decisions are made by numerous people in all sections and levels of the organization.

Henry Mintzberg (1978) made a distinction between deliberate strategy and emergent strategy. Emergent strategy originates not in the mind of the strategist, but in the interaction of the organization with its environment. He claims that emergent strategies tend to exhibit a type of convergence in which ideas and actions from multiple sources integrate into a pattern. This is a form of organizational learning, in fact, on this view, organizational learning is one of the core functions of any business enterprise (See Peter Senge's The Fifth Discipline (1990).)

Constantinos Markides (1999) describes strategy formation and implementation as an on-going, never-ending, integrated process requiring continuous reassessment and reformation.

A particularly insightful model of strategy dynamics comes from J. Moncrieff (1999). He recognized that strategy is partially deliberate and partially unplanned. The unplanned element comes from two sources : “emergent strategies” result from the emergence of opportunities and threats in the environment and “Strategies in action” are ad hoc actions by many people from all parts of the organization. These multitudes of small actions are typically not intentional, not teleological, not formal, and not even recognized as strategic. They are emergent from within the organization, in much the same way as “emergent strategies” are emergent from the environment.

In this model, strategy is both planned and emergent, dynamic, and interactive. Five general processes interact. They are strategic intention, the organizations response to emergent environmental issues, the dynamics of the actions of individuals within the organization, the alignment of action with strategic intent, and strategic learning.

The alignment of action with strategic intent (the top line in the diagram), is the blending of strategic intent, emergent strategies, and strategies in action, to produce strategic outcomes. The continuous monitoring of these strategic outcomes produces strategic learning (the bottom line in the diagram). This learning is comprised of feedback into internal processes, the environment, and strategic intentions. Thus the complete system amounts to a triad of continuously self regulating feedback loops. Actually, quasi self regulating is a more appropriate term since the feedback loops can be ignored by the organization. The system is self-adjusting only to the extent that the organization is prepared to learn from the strategic outcomes it creates. This requires effective leadership and an agile, questioning, corporate culture. In this model, the distinction between strategy formation and strategy implementation disappears.

Criticisms of Dynamic Strategy Models

Some detractors claim that these models are too complex to teach. No one will understand the model until they see it in action. Accordingly, the two part linear categorization scheme is probably more valuable in textbooks and lectures.

Also, there are some implementation decisions that do not fit a dynamic model. They include specific project implementations. In these cases implementation is exclusively tactical and often routinized. Strategic intent and dynamic interactions influence the decision only indirectly.

See Also:

• management
• strategic planning
• marketing strategies
• strategic management

References

• Bower, J. (1970). Managing the resource allocation process : A study of planning and investment, Graduate school of business (papers), Harvard University, Boston, 1970.
• Burgelman, R. (1980). Managing Innovating systems: A study in the process of internal corporate venturing, Graduate school of business (PhD dissertation), Columbia University, 1980.
• Linblom, C. (1959). The science of muddling through, Public Administration Review, Vol. 19, No. 2, 1959, pp 79-81.
• Markides, C. (1999). A dynamic view of strategy. Sloan Management Review, vol 40, spring 1999, pp 55-63.
• Markides, C. (1997). Strategic innovation. Sloan Management Review, vol 38, spring 1997, pp 31-42.
• Moncrieff, J. (1999). Is strategy making a difference? Long Range Planning Review, vol 32, no 2, pp 273-276.
• Mintzberg, H. (1978). Patterns in Strategy Formation, Management Science, Vol 24, No 9, 1978, pp 934-948.
• Quinn, B. (1980). Strategies for Change: Logical Incrementalism, Irwin, Homewood Ill, 1980.