The Strategy Process Schools of Thought

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The Strategy Process Schools of Thought
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Strategy as managerial intent ve

• transparent
• provides structure
• process can compel operational managers to take a
  longer term view of strategy than they might do
  otherwise .
• can be used as a means of control and linked to
  performance management
• can be used as a means of communication and
  co-ordination
• can help create ownership for the strategy
• create a sense of security and logic for the
  organisation

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Strategy as managerial intent -ve

• Impossible to collect comprehensive data in
  practice
• Neat cyclical model does not work in practice
  all sorts of things emerge, unexpected feedback
  loops. Big strategic planning processes simply
  too cumbersome
• separating of thinking from doing is a fallacy or
  damaging the chickenless head. Much strategy
  emerges from the activity of middle managers.
• Rarely describes reality.
• Analysis is never and can never be wholly
  objective always political/value-driven
  elements involved.
• Top-down planning undermines local commitment to
  goals and participation in setting those goals
• The optimal strategy is a myth intended
  strategies have no intrinsic value they take on
  value only as committed people infuse them with
  energy.
• Planning is inherently conservative reinforces
  only one way of thinking about the organisation.
• Perhaps the clearest theme in the planning
  literature is its obsession with control
  (Mintzberg)

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Strategy as organisational process ve

• describes what actually happens
• empowers people at all levels and recognise their
  contribution to strategy development
• emphasises collective learning
• avoid the cost for costly and elaborate corporate
  planning systems.
• avoid the fallacies of pre-determinism,
  detachment and formalization.
• Power games can be positive natural selection
• Politics can promote a pluralistic approach to
  policy making
• Greater emphasis on contingent nature of
  strategic behaviour

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Strategy as organisational process -ve

• risk of no strategy people just muddle along
  and this is legitimised by theory
• Risk of irrational incrementalism lost of
  disjointed initiatives.
• Risk of strategic drift
• Risk of learning being elevated to an end in
  itself.
• Politics can be divisive and costly
• Environmental theories fatalistic

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• How does this theory apply to the NHS?
• Can you think of some planning instruments (plans
  or processes) in the NHS?
• The NHS Plan
• Local Development Plan
• Business Case Guidance
• Trust Business Planning Processes
• Anything else
• What school of thought about the strategy process
  do these suggest?
• Why?

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The NHS Plan Positioning
despite its many achievements, the NHS has
failed to keep pace with changes in our society.
Too often patients have to wait too long. There
are unacceptable variations in standards across
the country. What patients receive depends too
much on where they live and the NHS has yet to
fulfil the aspiration to provide a truly national
service. Constraints on funding mean that staff
often work under great pressure and lack the time
and resources they need to offer the best
possible service.
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The NHS Plan Positioning
To tackle these problems, the government has
decided to make an historic commitment to
increase the funding of the NHS over the next
four years. The Prime Ministers announcement in
March 2000 of large, sustained investment in
the NHS provides the funding that doctors,
nurses, dentists, therapists, managers and other
staff have called for over the years. But
investment has to be accompanied by reform.
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The NHS Plan Quantified, Timed Targets
7,000 extra NHS beds by 2004 7,500 more hospital
consultants by 2005 (30) 20,000 more nurses by
2005 (7) Maximum wait for inpatient treatment
2005 - 6 months Maximum wait for outpatient
appointment 2005 - 3 months Maximum 4 hour wait
in AE 100 new hospitals by 2010 20 Diagnostic
and Treatment Centres by 2004 All elective
appointments booked by 2005
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The Planning System permanent revolution

• 1997 to 2000 Health Imrovement Plan (HImP) -
  then Health Improvement and Modernisation Plan
  (HIMP)
• 2000 to 2002 Local Modernisation Review (LMR)
• 2002 onwards Local Development Plan (LDP)

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Strategic Health Authority LDP
PCT C LDP
PCT B LDP
PCT A LDP
PCT D LDP
Trust 1 Plan
Trust 2 Plan
Trust 3 Plan
Trust 4 Plan
Local Delivery Plans Architecture (simplified)
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When a bedpan is dropped on a hospital floor,
its noise should resound in the Palace of
Westminster Nye Bevan, 1948
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The mission of sustaining systemic control must
continually be reaffirmed and reconstituted in
the face of events which threaten its
credibility Power The Audit Society. Rituals
of Verification 1997
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Johnson Scholes Exploring Corporate Strategy
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Collier et al The Process of Strategy
Development in the Public Sector 6,280 managers
completing strategy development questionnaire
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External/Environmental Analysis
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The macro-environment
Layers of the business environment (from Johnson
Scholes)
Industry/Sector
Strategic Groups
The Organisation
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UK Public Services
Layers of the business environment (from Johnson
Scholes)
Health Care
NHS Mental Health Trusts
XYZ MH Trust
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The PEST/PESTEL Framework Political Economic Soc
io-cultural Technological Environmental Legal
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• Stages in constructing a scenario analysis
• Identify drivers of change
• Build clusters of, or patterns from drivers
• Produce long-list of scenarios
• Test for internal consistency
• Reduce scenarios to 2-3
• Write up scenarios
• Use to identify branching points and possible
  responses

After Mercer
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(No Transcript)
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National Bed Inquiry Acute Bed Numbers by
Scenario
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From Securing our Future Health (Wanless Report)
April 2002
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From Securing our Future Health (Wanless Report)
April 2002
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Porter Competitive Strategy 1980
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Porters Model of Extended Rivalry in an Industry

• An industry is a group pf firms producing
  products that are close substitutes for each
  other.
• An economists definition of a substitute is
  products which provide the same amount of utility
  (satisfaction) to the consumer. Usually defined
  in terms of cross-price effects if the price of
  A rising leads to an increase in demand for B,
  then B is a substitute for A.

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Barriers to market entry and exit

• Capital cost
• Diseconomies of scale
• Access to distribution or sales channels
• Regulatory hurdles or other government policy.
• Cost disadvantages not related to scale, e.g.
  high cost local labour market.
• In the case of health care, politics can provide
  a powerful barrier to market exit.

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Buyers and Sellers

• Buyers will be more powerful when
• few buyers and lots of suppliers
• Products are relatively undifferentiated and easy
  for buyers to compare one against another.
• Cost of switching supplier is low or involves
  little risk
• The buyer is able to threaten self-supply if the
  supplier is unable to offer satisfactory prices.

• Suppliers will be more powerful when
• Concentration of suppliers, fragmented purchasers
• Switching costs or risk of switching to another
  supplier high
• Strong brand
• Products highly differentiated or asymmetry of
  information
• Suppliers can threaten to integrate forward into
  sales.

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• The point of strategy for a firm is to defend
  itself against or influence these forces in its
  favour to its best advantage. It is important to
  distinguish between structural forces and short
  term factors (e.g. disruption in a material
  supply) which only require a tactical response.

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Generic Competitive Strategies

• Overall cost leadership provide long-term lower
  cost structure than competitors linked to the
  concept of the experience curve
• Differerentiation offering a product or service
  that is perceived industrywide as unique
• Focus provide service or products to a market
  segment more effectively than competitors

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• An organisational field is a community of
  organisations that share a common meaning system
  and whose participants interact more frequently
  with one another than with those outside the
  field

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Techniques for external analysis

• PESTEL
• Drivers of change analysis
• Scenario Analysis
• Use of scenarios in strategic analysis
• 5 forces analysis