Strategy development processes
Intended or emergent?
Searching for ideas
Managing multiple processes
Strategy Making : Design or
Process?
Strategy as Design
Strategy as Process
Planning and
rational choice
Many participants / groups
responding to multitude of
external and internal forces
Intended Strategy
Realized Strategy
Emergent Strategy
Intended strategy, or designed
An intended strategy is deliberately
formulated or planned by managers.
This may be the result of deliberate rational
analysis, or of strategic planning.
The role of rational analysis
 Helps to evaluate alternative strategies and select the
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most appropriate for the given context
Helps to define direction and goals, and select proper
course of action, and assign resources to implement
the proposed strategy
Improves decision making down the organization by
promoting a common understanding of issues and
sharing common assumptions
Strategy analysis can enhance exploration of ideas,
innovation and learning.
Beware of the limits of analysis ...
 Complexity can be overwhelming, change can
be unpredictable
 the results of analysis can be wrong
 Investment to more analysis may cost a lot
 analytic units, numerous staff, time
 or executives turned into analysts
 ...paralysis through analysis...
 It may be isolated from actual decision making
 ivory tower thinking
Example: AT&T and IMB initially got
their forecasts wrong...
 Their vision: convergence of telecom and
software
 AT&T: bought a computer company
 IMB: bought a telecom company
 Initial vision: shattered by
 the rise of microcomputers
 the advent of the Internet
Strategic Planning Systems
Epitome of rationality....
or bureaucracy?
Strategic Planning Systems: what are they?
 Systematised, step by step, chronological
procedures involving different parts of the
organisation
 Expression of collective rationality or part of
“rationality” ritual?
 Their design and use depends on context
 In large firms tend to be formalized
 In small firms they are less developed.
Strategic Planning Systems: components
 Plans, long & medium term
 Strategic plans, business plans
 Corporate resource plans (e.g. HR, IS…)
 Annual Plan and Budgets
 Monitoring system
 Reporting on progress (outcomes vs targets)
 Related processes
 Top down, bottom up
The role of strategic planning
 Formulating strategy: a means by which managers
can understand strategic issues and formulate strategy
 Learning: a means of questioning and
challenging the taken-for-granted
 Co-ordinating business-level & functional strategies
within an overall corporate strategy, share assumptions
 Communicating intended strategy and providing
agreed objectives or strategic milestones – a means for
implementation.
Benefits of planning
There are additional psychological benefits:
 can provide opportunities for involvement,
 leading to a sense of ownership,
 provides a sense of security to managers and
 re-assures managers that the strategy is
‘logical’.
Dangers associated with planning
 Confusing strategy with the plan
 Detachment from reality
 Paralysis by analysis – staff, not line activity
 Failure to gain ownership - narrow involvement
 Dampening of innovation - cumbersome process,
can stifle ideas .
Analysis & Design is not the only way in
strategy development
 The actual strategy making in practice is often
less analytic, more unstructured and diffused
 Often an outcome of negotiation, compromise and
bargaining among multiple participants (political
view)
 The outcomes of rational analysis and design may
have limited effect on the final choice of strategy,
or may be bypassed by actual processes
 Or simply, rational analyses may be an input in the
diffused deliberation processes
Emergent strategy
Pattern in a series of decisions
……not a ‘grand plan’.
The wider system in and out matters
 It can produce successful strategies
 Realizations cannot be totally guided by business
plans and management intentions
 Chance may matter, alertness to emerging ideas
also
 Emergent processes can be used, or even be
managed to an extent
 Strategy is both planned and also just happens
Emergent strategies ...
 Ideas /outcomes may come from various
sources, in and out
 Outcome of social and political processes in and
around organizations
 Outcome of networking, of “open innovation”
processes
 May upset management’s intentions
 May be outside the existing model, or the
dominant logic
Managing emergent processes:
“Logical incrementalism”
 Logical incrementalism is the development of
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strategy by experimentation and learning – from
partial commitments rather than through
formulations of total strategies.
It involves:
Search for ideas
Experimentation
Co-ordinating emergent strategies – drawing together an
emerging pattern of strategy from subsystems
External or internal search?
 “Closed” innovation – the traditional approach to
innovation relying on the organisation’s own internal
resources – its own laboratories and marketing
departments.
 Usually it is secretive, anxious to protect intellectual
property and avoid competitors free-riding on ideas
 “Open” innovation involves the deliberate import
and export of knowledge by an organisation in order
to accelerate and enhance its innovation.
 Exchanging ideas openly is seen as likely to produce better

products more quickly
E.g. Procter & Gamble move from closed to open..
Strategy: planned or emerging?
Planned / Intended
Realized strategy differs from
Planned by 70 – 90 %
Outcome
«Πρός γάρ τό τελευταίον εκβάν έκαστον των πρίν υπαρξάντων κρίνεται»
(Δημοσθένης)
Multiple Strategy development
processes
Intended and emergent
Challenges for managing strategy
development process
 Multiple strategy development processes – most
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organisations will develop strategy involving
several approaches.
There is no one right way to develop strategy but
the context can be important.
Organisational context matters – Strategy
development processes will differ according to
context - environmental conditions and capabilities.
Create conditions for better strategy to
happen
 Integrate diffused processes with deliberate
strategic planning
 Integrate multiple inputs / perceptions from many
sources in and out
 Balance influences, broaden or streamline representation
in the strategy making processes
 Address competitive edges, challenge taken for granted
assumptions
 Create the conditions for strategies to emerge.
Strategy ideas for the new era
 We need a portfolio of ideas, not just one
from the top
 Encourage ideas to surface, select ideas, provide
incentives to come out
 Networking, developing relations
 Develop radar capabilities,
 “Surfing on the wave of change”
 Understanding the potential of open
innovation
Perceptions of strategy development
 Strategy will be seen differently by different people:
 Senior executives usually see strategy in terms of
intended, rational, analytic planned processes
 Middle managers may see strategy as the result of
vertical and lateral influences and political processes
 Extending the strategic role of leadership
 To managing the system & processes of strategy creation
 To exploit mid level management capability
The role of middle managers
… as strategic partners
How Honda entered the USA market
 Formal strategy in the 1960s:
 Sell bigger and more luxurious motorcycles
 To beat Harley-Davington
Hesitated to push the small 50cc Supercubs

 Soon larger bikes started to break
 Honda used the small 50cc bikes to ride around on errands
 Clients from sport goods stores spotted the small bikes
 Honda responded
 Sold small bikes to retail stores
 Not to traditional dealers!
How Intel started: Epoch I
 Memory devices
 Intel begun as a supplier of memory devices (DRAMs)
 1971: an engineer invented the microprocessor
 Processors were peripheral
 All through the 70s the lion’s share of sales was on
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DRAMs
Resources were heavily invested in DRAMs
Processor sales grew gradually in emergent applications
How Intel entered the microprocessors:
Epoch II
 Market conditions changed
 In the early 80s Japanese DRAM makers attacked the
USA market
 DRAM profit margins dropped significantly
By 1984 Intel was on a crisis

 Move towards microprocessors
 Some people cultivated the idea
 Explicit change of strategy: a deliberate move towards
microprocessors.
Mid level managers as strategic partners
 Middle level managers can exercise important
influence
 Decisions of middle managers often shape strategies
 They know better the resources & capabilities (RBV)
 They can develop cross functional coordination, cutting
across “silos”
 Need to involve mid levels in strategy creation
 Not only in execution of top level strategy
 To create environment conductive to strategy creation
 Design participative processes
What mid level managers can do
Translate / communicate
strategy down
Select / screen new
ideas
Strategy
execution
& creation
Create environment for
strategies to emerge, built
skills, relations
Facilitate, encourage
initiative
Wide participation in strategy: Values
Jam at IBM
 IBM integrates its staff in strategy making
 Global debate on strategic issues, theme based
 Grassroots discussion of ideas
 Reinvention of values in 2002 by Palmisano
(CEO)
 50000 employees took part in an intranet
discussion of company values
 22 million pages were analyzed with language
software
 Structured improvisation, such as Jam in the
jazz music
Seek ideas: Let all flowers blossom…
But select ideas for implementation
Who to involve in strategy making
Low
e.g.new
unrelated
activity
Selective participation
Wide participation
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 Activate employees, open
Select experts, managers and
externals who know
 Mainly in strategy formulation
Familiarity
with strategic Narrow participation
 Managers and staff directly
option
High
e.g.new
related
activity
involved
 Selected employees, from
operations involved in
implementation
Low
participation
 Continuous discussion,
workshops…
 Include selected externals (experts,
consultants, other)
Selective participation

Those to be involved in
implementation operations
 Project teams
 Implementation consultants
Implementation requirements /
difficulty
High
Summary: challenges in managing strategy
development processes
 Top and middle management have to be alert to:
 Recognising that different processes of strategy
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development may be needed at different times and in
different contexts
Recognising the systems and processes that give rise to
emergent strategy
Managing multiple processes of strategy development
Establish processes for selecting and evaluating
emergent in addition to planned strategies
Assigning a proper role to middle managers in strategic
planning
Manage external influences in strategy
 Strategies may be imposed by powerful external
stakeholders:
Government can determine strategy in public sector
organisations (e.g. police, utilities).
Multinational companies may have elements of
strategy imposed (e.g. forming local alliances).
Business units may have their strategy imposed by
head office (e.g. part of a global strategy).
 Top management has a role to manage these
influences to an extent.
A personal lesson for you: Extend your role
in strategy making
 “Seek involvement” in ongoing moves
 Align with change initiators
 Combat inertia, take calculable risk
 Exercise leadership
 Take initiative, search for new ideas
 Sell your ideas
 “Issue selling”
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Package your idea in strategic frame
Seek opinions, find info, use experts
Use formal and informal channels
Mobilize support, form coalitions
Avoid common myths
 “Top management makes strategy, the people down the
hierarchy implement it”.
 Strategy ideas are also generated by people down the
organization in the course of implementation
 Implementation feeds back to strategy with new ideas and
knowledge about what works in practice
 There are limits to top management knowledge and capability
 “Strategy is produced by analytical units and staff
experts in a strategic room next to the CEO”
 Isolates strategy making from executive hierarchy and the
implementing organization
 Often irrelevant (ivory tower thinking)
 Plans, analyses and studies produced by central units are one of
the inputs in strategy making