Wednesday, March 12: Agenda

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Wednesday, March 12 Agenda

• Ken Behrendt, President,
• Eagle Creek Software Services
• crafting strategy, logical incrementalism -
  R5.1, R6.3
• organizational structure basic components and
  configurations, new forms, strategic alliances
  - R8.1, R10.1, R10.2
• Exam 1 feedback

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Mintzberg (R5.1) - Crafting Strategy
Images of craft . . . . The role/relevance
of craft in organizational strategies . .
. ? Differences between crafting strategy
and Harvard strategy formulation?
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crafting strategy . . .

• First we think, then we act --
• why do differently?
• Why craft, rather than formulate?
• Because we need to mold process and
• outcome to the dynamic and unique conditions in
  which we are operating in order to achieve the
  best results.

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To craft, we need to

• use both analysis (deductive) and synthesis
  (inductive).
• realize that strategies are both plans
• for the future and patterns of the past.
• effectively manage stability as well as change,
  patterns as well as plans, current reality as
  well as a future ideal.
• more intimately link thought and action.

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A dilemma . . .

• Deliberate strategy tends to preclude learning,
• but
• emergent strategy tends to preclude control.

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Management pointers . . .

• Strategic planning is more about the past than
  the future (Mintzberg ever green plans).
• Learn to detect and respond to (environmental)
  discontinuities while managing stability.
• An intimate knowledge of the business context is
  required.
• Reconcile need for change with need for
  continuity (recall punctuated equilibrium).

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Strategies grow like weeds in a garden . . .

• Strategies develop in many
• (and strange) places!
• Effective strategies craft thought and action,
  control and learning, stability and change . .
• Effective strategies are
• DELIBERATELY EMERGENT!

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Quinn Voyer (R6.3)Logical Incrementalism

• What is
• LOGICAL INCREMENTALISM?
• So what? Who cares? Why bother?

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Quinn and Voyers rationale . .

• Formal planning systems must deal with
• - multiple goal structures,
• - internal politics (coalitions, tradeoffs),
• - bounded rationality,
• - soft data,
• - satisficing,
• - continually changing circumstances.
• Total posture planning doesnt work.

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Additional complications to detailed formal
planning

• Value chain realities
• Sunk costs
• Historical, embedded competencies
• Embedded values

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• STRATEGY
• FORMULATION
• proceeds incrementally,
• in concert with
• STRATEGY
• IMPLEMENTATION

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Conclusions of study of strategic change
processes (N10)

• The subsystem view of strategy development is
  useful.
• The role of precipitating events and
  incremental responses are important.
• Total posture planning is rare and ineffective.

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• Analytical planning approach to strategy
• organizational process approach to strategy
• logical incrementalism.

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Useful prescription for managing incrementally?

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Pragmatic advice from Quinn and Voyer

• Be respectful of precipitating events.
• Take comfort factors into account.
• Remember that strategy failure is logical and
  expected.
• Managers should lead the formal information
  systems

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advice, continued . . .

• Avoid managerial directives at early stages of
  strategy formation.
• Utilize symbols and symbolic actions.
• Create planned delays and pockets of
  commitments.
• Manage the tension between crystallizing
  viewpoints and keeping options open.

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yet more advice . . .

• Formalize commitment to a strategy at a later
  rather than an earlier stage in its development.
• Dont be afraid of tactical shifts and
  partial solutions.
• Broaden political support for initiatives.
• Stimulate legitimate opposition.

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advice, concluded. . .

• Use trial balloons and systematic waiting.
• Concentrate on a few key thrusts.
• Continue to mutate the consensus.
• Realize that strategy formation is not a linear
  process it has no discrete beginning and no
  conclusive end.

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Quinn and Voyer - Main point of article

• We need to reconcile the
• formal strategic planning approach (analytical
  prescriptive deductive)
• with the organizational process approach
  (emergent descriptive inductive)
• for effective strategy making.

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Mintzberg (R8.1) - The Structuring of
Organizations
Organizational configurations naturally
occurring structures, resulting from clusters of
organization-related components that tend to
occur together. Strategic implication
organizational variables (external as well
as internal) are interdependent and thus, must be
appropriately combined.
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Elements of configuration

• 6 Basic organizational parts
• 6 Coordinating mechanisms
• 4 Essential parameters of design
• 4 Situational factors
• strongly influential variables

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• Environment
• ?
• Strategy
• ?
• Configuration
• ?
• (Key part of organization)
• ?
• (Prime coordination mechanism)

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6 Basic Organizational Parts

• 1. Strategic apex
• 2. Technostructure
• 3. Support staff
• 4. Middle line
• 5. Operating core
• 6. Culture/ideology

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6 Coordinating Mechanisms

• 1. Mutual adjustment
• 2. Direct supervision
• 3. Standardization of work
• 4. Standardization of outputs
• 5. Standardization of skills
• 6. Standardization of norms

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4 Essential Parameters of Design

• 1. Design of individual positions
• - job specialization (horizontal vertical)
• - behavior formalization
• - training
• - indoctrination
• 2. Design of superstructure
• - unit grouping (functional, divisional)
• - unit size

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4 Essential Parameters of Design (continued)

• 3. Design of linkages
• - planning and control systems
• - liaison devices
• 4. Design of decision-making system
• - centralization vs.
• - decentralization (horizontal vertical)

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4 Situational Factors

• 1. Age and size
• - age ? ? formalization
• - size ? ? formalization, ? specialization
• 2. Technical system
• - mass production ? ? specialization,
• ? formalization
• - complexity ? ? professional support,
• ?autonomy, ? liaison devices

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4 Situation Factors(continued)

• 3. Environment
• - rapid ? ? organic structures
• - complexity/diversity ? ?decentralization
• - hostility, crisis ? ? centralization
• 4. Power
• - external power ? ? centralization,
• ? formalization
• - conflict ? ? organizational politics

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7 Configurations (see pg. 221)

• 1. Entrepreneurial
• 2. Machine
• 3. Diversified
• 4. Professional
• 5. Innovative
• 6. Missionary
• 7. Political

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New organizational forms?

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Reasons for new organizational forms

• The problem is that companies are
  organizationally incapable of carrying out the
  sophisticated strategies they have developed.
• Strategic thinking has far outdistanced
  organizational capabilities.
• (Barlett and Ghoshal)

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Distinguishing characteristics of network forms

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R10.1 Collaborating to Compete

• (Global) business success increasingly requires
  inter-firm collaboration.
• There are many types of/reasons for collaboration.

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(Local) examples of inter-firm collaboration?

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Strategic Alliances

• Motives for . . .

• Types of . . .

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R 10.2 - Objectives of (international)
alliances (see pg. 263)

• Learning
• Leaning
• Leveraging
• Linking
• Leaping
• Locking off

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Strategic Alliances - Problems?

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Prescription for successful strategic alliances
(R10.1)

• ? . . .

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Suggestions drawn from Chapter 10

• careful partner choice
• strength in each partner
• win-win negotiation approach
• clear yet evolving goals/roles
• periodic planned evaluation
• built-in conflict resolution mechanisms

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More suggestions from Chapter 10

• planned sequencing exit strategies
• tolerance of diversity
• importance of trust
• use as a strategic learning tool

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? Exam 1 ?Q1 regarding Wrapp V1(Q1 regarding
vertical integration V2)

• D (A) 8. A (D) 15. B (C)
• C (D) 9. C (C) 16. A (A)
• A (A) 10. D (D) 17. B (B)
• E (D) 11. D (E) 18. C (D)
• C (D) 12. B (B) 19. D (C)
• C (B) 13. D (C) 20. D (C)
• B (B) 14. D (D) 21. C (C)