Strategy lecture and slides notes
Lecture 1
What is strategy? About the paradoxes and dilemmas that organizations deal with.
Questions like how do you want to position yourself, how to compete with competition,
what is your market, etc.
Two approaches of strategy:
1. Tool-driven: e.g. SWOT, PESTL
2. Problem-driven: key strategy issues are identified and examined from the
perspective of the most appropriate theories.
What is strategy about?
- Strategizing: cognitive processes of individual strategies
- Missioning and visioning: purpose as the impetus for
strategy activities
- Strategy process: the way strategies come about
- Strategy content: combined decisions and choices that
lead a company into the future
- Strategy context: set of circumstances under which the
strategy content and the strategy process are determined
= Strategy process leads organizational purpose to strategy
content, influenced by strategy context.
How do we approach strategy? Strategy tensions as puzzles
(trying to find the optimal solution), dilemmas (two either-or
solutions), trade-offs (one optimal solution line) and paradoxes
(multiple innovative reconciliations).
A paradox has no answer or set of answers > six different ways of dealing with a paradox:
= most important: be aware
- Navigating: focus on one contrary element at a time (e.g. seeking synergies, then
looking for responsiveness)
- Parallel processing: separate the contrary demands in different internal or external
organizational units (e.g. improving existing products, meanwhile developing new
generation of products)
- Balancing: trade off elements of the opposing demands (e.g. following industry rules
vs changing others)
- Juxtaposing: manage opposite demands (e.g. competing and collaborating (Apple vs
Samsung))
- Resolving: develop a new synthesis between competing demands ((e.g. shareholder
vs societal value)
- Embracing: embrace and actively use the tension as a source of creativity and
opportunity (e.g. assigning opposite personalities in management team)
,Three readings
1. Complexity: The nature of real-world problems’, from Chapter 1, R Mason and I
Mitroff, Challenging Strategic Planning Assumptions
= strategic problems are usually wicked: uncertainty, ambiguity, interconnectedness,
opposing views, conflicting interest.
2. Managing strategic contradictions’ Wendy K Smith and Michael L Tushman,
‘Managing Strategic Contradictions’ Organization Science, Vol. 16(5)
= trying to find two finds of a problem, distributing approach, become integrative
thinkers, what are best of both worlds and how can we align them.
3. Cultural constraints in management theories’, Geert Hofstede,from G Hofstede,
‘Cultural Constraints in Management Theories’, Academy of Management Executive,
Vol. 7(1)
= we know the Hofstede
dimensions, but we also
have four major culture
types in organizations: clan,
adhocracy, hierarchy,
market.
Lecture 2
Performance effects of corporate decisions:
- Venture capital = investing in business
- Strategic alliances = alliance between companies with a plan to make project or
services together
- Acquisitions = a company buys another company and owns it then
- Divestitures = selling a part of your company, to create a focus
All tools for feeling your way around the future (what Nokia should have done)
Law of large numbers: the more data points you have the more truth we see in the
numbers, you can better understand how to structure. Downside? You have a helicopter
view, you ignore qualitative, deep insights.
What is a Mission and Vision?
,To get somewhere, you need to know where you are going, and you need a plan on how to
get there. A corporate mission and vision is basically the same, it is about planning where
we are and where we want to go.
The mission: the fundamental principles guiding strategic choices, what the firm does and
why. The vision: a picture of a future state of affairs the firm wishes to achieve.
The mission provides the business principles, and the vision provides the business
ambitions.
How is the mission and vision composed? Four components:
1. Organizational purpose: why does the firm exist? What is the purpose/main
objective they want to pursue?
2. Organizational beliefs: what are driving ideas and assumptions? Assumptions about
the nature of the environment and what the firm need to do to be successful in it.
3. Organizational values: what is of fundamental importance? What they see as
worthwhile activities, ethical behavior and moral responsibilities.
4. Business definitions: where does the firm operate?
Interrelated, overlapping concepts, that help us understand who we are as an
organization.
Why is mission and vision important? It gives you direction, legitimization, and motivation.
Internally:
- Guide management’s thinking on strategic issues
- Help define performance standards
- Inspire employees to work more productively
- Guide employee decision making
- Help establish a framework for ethical behavior
Externally:
- Enlist external support
- Create linkages with customers, suppliers, and alliance partners
- Serve as a public relations tool
Vision and mission > inspirational and general
Strategic intent > inspirational and concrete
Values > bland and general
Quarterly objective > bland and concrete
Does it actually work? It is important for employees to have a purpose, values and mission
statements belong to the top managerial tools.
Who sets the mission and vision?
The firm’s executives are responsible for setting direction, these executives are controlled
by the board. These executives all have their own perspectives, opinions and biases.
So, direction is chosen jointly by their interaction. The activities of the board of directors is
known as corporate governance. Corporate governance is about managing top
management.
, Where does corporate governance come from: the Netherlands, VOC
IPO: initial public offering, company goes public and offers its shares to the public.
Managers provided:
- An overview of investment decisions
- The right to appoint managers
- Time limits for managerial positions
- The right to adjust the managers pay
- Limit the possibility of insider trading
What is the function of corporate governance?
- Forming: shaping and communicating the fundamental principles that will drive the
organization’s activities.
- Performing: to judge strategy initiatives brought forward or to actively participate in
strategy development.
- Conforming: monitor whether the organization is undertaking activities as promised
in a satisfactory way.
How is corporate governance organized? Different models in different countries. Large
variations in terms of structure, membership and tasks.
- Structure:
o Two-tier board: supervisory (headed by chairperson, experts, people from
other countries) board vs. management (run by executives, headed by CEO)
board.
o One-tier board: board of directors (headed by chairperson)
Boards are there to control managers, check if they do what they have to do.
- Membership: board also represented by labor workers? Or by shareholders? Should
be part of a specific party? Why > the organization should conform to society which
is a stakeholder.
- Tasks: how often does the board meet? Do they have formal or informal power to
contradict the CEO?
What is a paradox?
For years, strategy was presented in a straight forward way. However, there are trade-offs
and tensions within the firm. Paradoxes are tensions that co-exist within the firm and
persists over time. They often arise when different stakeholders want different things.
Shell: example of profitability-sustainability paradox. Showing that the firm often has
multiple responsibilities. Economic profitability vs social responsibility.
How does this play into mission and vision? Two sets of interests:
- Shareholders: those who own the firm
- Stakeholders: any identifiable group or individual who can affect the achievement of
an organization’s objective, or who is affected by the achievement of an
organization’s objectives > employees, suppliers, society, customers, shareholders.
Who gets the emphasis?
Lecture 1
What is strategy? About the paradoxes and dilemmas that organizations deal with.
Questions like how do you want to position yourself, how to compete with competition,
what is your market, etc.
Two approaches of strategy:
1. Tool-driven: e.g. SWOT, PESTL
2. Problem-driven: key strategy issues are identified and examined from the
perspective of the most appropriate theories.
What is strategy about?
- Strategizing: cognitive processes of individual strategies
- Missioning and visioning: purpose as the impetus for
strategy activities
- Strategy process: the way strategies come about
- Strategy content: combined decisions and choices that
lead a company into the future
- Strategy context: set of circumstances under which the
strategy content and the strategy process are determined
= Strategy process leads organizational purpose to strategy
content, influenced by strategy context.
How do we approach strategy? Strategy tensions as puzzles
(trying to find the optimal solution), dilemmas (two either-or
solutions), trade-offs (one optimal solution line) and paradoxes
(multiple innovative reconciliations).
A paradox has no answer or set of answers > six different ways of dealing with a paradox:
= most important: be aware
- Navigating: focus on one contrary element at a time (e.g. seeking synergies, then
looking for responsiveness)
- Parallel processing: separate the contrary demands in different internal or external
organizational units (e.g. improving existing products, meanwhile developing new
generation of products)
- Balancing: trade off elements of the opposing demands (e.g. following industry rules
vs changing others)
- Juxtaposing: manage opposite demands (e.g. competing and collaborating (Apple vs
Samsung))
- Resolving: develop a new synthesis between competing demands ((e.g. shareholder
vs societal value)
- Embracing: embrace and actively use the tension as a source of creativity and
opportunity (e.g. assigning opposite personalities in management team)
,Three readings
1. Complexity: The nature of real-world problems’, from Chapter 1, R Mason and I
Mitroff, Challenging Strategic Planning Assumptions
= strategic problems are usually wicked: uncertainty, ambiguity, interconnectedness,
opposing views, conflicting interest.
2. Managing strategic contradictions’ Wendy K Smith and Michael L Tushman,
‘Managing Strategic Contradictions’ Organization Science, Vol. 16(5)
= trying to find two finds of a problem, distributing approach, become integrative
thinkers, what are best of both worlds and how can we align them.
3. Cultural constraints in management theories’, Geert Hofstede,from G Hofstede,
‘Cultural Constraints in Management Theories’, Academy of Management Executive,
Vol. 7(1)
= we know the Hofstede
dimensions, but we also
have four major culture
types in organizations: clan,
adhocracy, hierarchy,
market.
Lecture 2
Performance effects of corporate decisions:
- Venture capital = investing in business
- Strategic alliances = alliance between companies with a plan to make project or
services together
- Acquisitions = a company buys another company and owns it then
- Divestitures = selling a part of your company, to create a focus
All tools for feeling your way around the future (what Nokia should have done)
Law of large numbers: the more data points you have the more truth we see in the
numbers, you can better understand how to structure. Downside? You have a helicopter
view, you ignore qualitative, deep insights.
What is a Mission and Vision?
,To get somewhere, you need to know where you are going, and you need a plan on how to
get there. A corporate mission and vision is basically the same, it is about planning where
we are and where we want to go.
The mission: the fundamental principles guiding strategic choices, what the firm does and
why. The vision: a picture of a future state of affairs the firm wishes to achieve.
The mission provides the business principles, and the vision provides the business
ambitions.
How is the mission and vision composed? Four components:
1. Organizational purpose: why does the firm exist? What is the purpose/main
objective they want to pursue?
2. Organizational beliefs: what are driving ideas and assumptions? Assumptions about
the nature of the environment and what the firm need to do to be successful in it.
3. Organizational values: what is of fundamental importance? What they see as
worthwhile activities, ethical behavior and moral responsibilities.
4. Business definitions: where does the firm operate?
Interrelated, overlapping concepts, that help us understand who we are as an
organization.
Why is mission and vision important? It gives you direction, legitimization, and motivation.
Internally:
- Guide management’s thinking on strategic issues
- Help define performance standards
- Inspire employees to work more productively
- Guide employee decision making
- Help establish a framework for ethical behavior
Externally:
- Enlist external support
- Create linkages with customers, suppliers, and alliance partners
- Serve as a public relations tool
Vision and mission > inspirational and general
Strategic intent > inspirational and concrete
Values > bland and general
Quarterly objective > bland and concrete
Does it actually work? It is important for employees to have a purpose, values and mission
statements belong to the top managerial tools.
Who sets the mission and vision?
The firm’s executives are responsible for setting direction, these executives are controlled
by the board. These executives all have their own perspectives, opinions and biases.
So, direction is chosen jointly by their interaction. The activities of the board of directors is
known as corporate governance. Corporate governance is about managing top
management.
, Where does corporate governance come from: the Netherlands, VOC
IPO: initial public offering, company goes public and offers its shares to the public.
Managers provided:
- An overview of investment decisions
- The right to appoint managers
- Time limits for managerial positions
- The right to adjust the managers pay
- Limit the possibility of insider trading
What is the function of corporate governance?
- Forming: shaping and communicating the fundamental principles that will drive the
organization’s activities.
- Performing: to judge strategy initiatives brought forward or to actively participate in
strategy development.
- Conforming: monitor whether the organization is undertaking activities as promised
in a satisfactory way.
How is corporate governance organized? Different models in different countries. Large
variations in terms of structure, membership and tasks.
- Structure:
o Two-tier board: supervisory (headed by chairperson, experts, people from
other countries) board vs. management (run by executives, headed by CEO)
board.
o One-tier board: board of directors (headed by chairperson)
Boards are there to control managers, check if they do what they have to do.
- Membership: board also represented by labor workers? Or by shareholders? Should
be part of a specific party? Why > the organization should conform to society which
is a stakeholder.
- Tasks: how often does the board meet? Do they have formal or informal power to
contradict the CEO?
What is a paradox?
For years, strategy was presented in a straight forward way. However, there are trade-offs
and tensions within the firm. Paradoxes are tensions that co-exist within the firm and
persists over time. They often arise when different stakeholders want different things.
Shell: example of profitability-sustainability paradox. Showing that the firm often has
multiple responsibilities. Economic profitability vs social responsibility.
How does this play into mission and vision? Two sets of interests:
- Shareholders: those who own the firm
- Stakeholders: any identifiable group or individual who can affect the achievement of
an organization’s objective, or who is affected by the achievement of an
organization’s objectives > employees, suppliers, society, customers, shareholders.
Who gets the emphasis?
