Lectures Organization and Environment
Lecture 2 – Design school & Planning school
- What is strategy? How can it be defined?
o Strategy sets direction. It can help us understand where a company is moving towards. It
can also create blindness. If there is an investment in a certain plan/direction, it can
make the company less inclined to change direction.
o Strategy defines the organization. This can cause positive or negative reactions from the
outside world.
o Strategy focuses effort. It makes people buy into the idea/leadership style a organization
is pursuing.
- The 5 P’s regarding strategy:
o Plan: A consciously intend course of action to deal with a situation
o Ploy: A maneuver to outwit an opponent (not about having a unique strategy, but a
strategy that sets you apart from your opponent/competitor)
o Pattern: A pattern of actions that emerge, unintended over time
o Position: The way a firm relates to its competitive environment
o Perspective: Way that managers in a firm see themselves and the world around them.
Classification of the schools:
- Prescriptivism: Concerned with how strategies should be formulated rather than with how they
necessarily do form. Sees strategy formation as:
o A process of informal design, essentially one of conception
o A more detached and systematic process of formal planning
o Less concerned with the process of strategy formation than with the actual content of
strategies, focusing on the selection of strategic positions in the economic marketplace
- Descriptivism: Not concerned with ideal behavior, but describing how strategies do actually, get
made. Sees strategy formation as:
o Cognitive psychology to enter the strategist’s mind
o Emergent in small steps, as an organization adapts, or ‘’learns’’
o A process of internal/external negotiation
o Collective and cooperative
o Reactive, with the initiative with the external context
o Entrepreneurial school also groups as a descriptive school
- Configurative: Adapt to the situation, combine. Sees strategy formation as a combination of
‘’the best of both worlds’’
There are four basic approaches to strategy formation:
- Deliberate plans are unique to the
prescriptive view of strategy. It’s a top-
down process
- The more emergent plans can still be top-
down
,Design school:
Characteristics and premises:
- Strategy formation as a deliberate process of conscious thought
- Strategy to attain match, or fit, between internal capabilities and external possibilities
- Responsibility for strategy rests with the CEO
- The process of strategy formation must be kept simple and informal
- Strategies should be unique
- Strategies should be clear, simple, and specific
- Separation of formulation from implementation (the CEO doesn’t bother with implementation,
(s)he comes up with a strategy that HAS to be implemented)
- A strategy has first to be fully formulated and can then be implemented
According to prescriptive approach, design school thinking can be simple, as long as it is unique, the CEO
decides, and the organization adapts
Strategy framing:
- Strategy as a plan. Grand thinking, grand strategy, and a unique strategy. Strategy doesn’t just
emerge from the firm, it comes from the CEO and maybe a small team of advisors.
Ideal course of strategy formation:
1. Analysis
2. Creation
3. Evaluation and choice
4. Implementation (not too important in this model)
Structure follows strategy: ‘’Until we know the new/revised strategy, we cannot begin to respecify the
appropriate structure’’ (Andrews 1980)
- Strategy as the determination of long-term goals and objectives, the adoption of courses of
action and allocation of resources to achieve goals
- Structure as the design of the organization through which strategy is administered
- Changes in an organization’s strategy lead to new administrative problems which require a new
or refashioned structure for the successful implementation of the new strategy
Tools
- A tool used within the design school is the SWOT analysis. Since the design school focusses on
the internal and external weaknesses/strengths of the organization, just like the SWOT analysis
- Competition is also important within design school. However, it is not about ‘’outsmarting’’ the
competition.
- However, incorporating all the changes in the external environment, is difficult in this school
since the design school beliefs in structure follows strategy.
Critique
- The design school doesn’t care too much on the how, when, where, as long as they have a
unique strategy. Not much cared about the implementation
- Structure may be somewhat malleable, but it cannot be altered at will just because a leader has
conceived a new strategy
- Structure follows strategy (?) -> wiping the slate clean after every strategy change? An
organization can’t just adapt under all conditions/time periods
- Learning is ignored by only analytically assessing environment
- Making strategy hierarchical, centralized, and explicit is prompting inflexibility
- Separation of formulation form implementation is detaching thinking from acting
Assumptions
- The CEO has complete information and is absolutely informed
- The CEO has the capacity to process all information
, - The environment can always be understood
- Situations and environment are predictable
- All information is documented and available
- Strategy is centrally formulated
Contributions
- Vocabulary and tools (SWOT) came from this school
- Grand strategy
- Basic notion: fit between external opportunities and internal capabilities
- Started to promote the relevance of strategies in organizations and strategy as a field of research
Planning school
A definition of planning: planning is formalized procedure to produce articulated results by using an
integrated system of decisions.
In reality this means that as a counter response to the design school, more detailing is needed in many
cases. You want to know where you are heading in a few years, and what happens with investments.
The planning school has a commonality with military strategy. It started in the military too:
- Similarity: both business and military organization must adapt to change and constantly improve
- Difference: business strategy assumes competition, whereas military strategy assumes conflict
Characteristics and premises:
- Strategy is based on rational and systematic science
- Rules of thumb are replaced by insights into regularities
- Strategy forming is a conscious, formal and controlled process
- Strategy must be composed into discrete steps
- Strategy forming is supported by checklists and analytical techniques
- Rational and systematic approach -> influence of Taylorism
- It assumes the future is pretty stable and can be anticipated
- Organizations are like machines -> machine metaphor (Taylorism)
- Organization have a clear-cut system of values, competencies, and reward system
- These are stable and easy to recognize
- Responsibilities are split up
- Planning and implementation are two separate steps
Strategy as a formal process
- Long-range planning: necessary to drive managerial decision making when speed of change
exceeds a firm’s ability to respond
The ideal course of planning
1. Set objectives (at best: quantitative ones)
2. Analyze the situation
3. Create scenarios and evaluate different potential strategies
4. Operationalize
5. Schedule
The planning school holds the danger of thinking you’re into control, but when it comes to it, it seems
you’re not in control
- Going from planning to execution, while doing this, there is a clear divide:
o Responsibility for overall process rests with the CEO
o Responsibility for its execution rests with staff planners in practice
o Strategies appear from this process full blown, to be made explicit so that they can then
be implemented through detailed attention to objectives, budgets, programs, and
operating plans of various kinds
, Problems and limitations
- The fallacy of predetermination
- The fallacy of detachment
o Manage by remote control (Jellinek)
- The fallacy of formalization
o Strategic planning not as aid, as support for natural managerial processes (including
intuition), but as strategy making replacing intuition
- The grand fallacy of strategic planning
o Analysis cannot substitute for synthesis
o Planning, rather than providing new strategies, could not proceed without their prior
existence
- Lack of efficiency
- Lack of commitment
- Lack of flexibility
- Lacking sense of reality
- Planning the unplannable
Comparison of the design and planning school
Design school:
Strategy formation as a process of conception
- Approach: clear and unique strategies are
formulated in a deliberate process
- This process takes the internal and external
environment into account
- Simplification may distort reality
Planning school:
Strategy as a rigorous set of steps taken, from analysis of
the situation to the execution
- Strategy as a machine
- Predictions from an ivory tower (refers to
strategists, looking down from their ‘’tower’’ to
the work floor where the strategy is
implemented. They’re disconnected from their
organization. They only make strategy, don’t help with implementation)
Lecture 3 – Positioning school & Entrepreneurial school
Positioning school
The positioning school beliefs that strategy is a ploy; outwitting on strategic maneuver.
It is about strategy formation as an analytical process. This is not fundamentally different from the
design and planning schools, however:
- The positioning school argues that only certain strategies (or positions in market place) are
disarable in any given industry -> strategies that can be defended against competitors. It is nog
necesarrily about having a unique strategy, just a strategy that works
Premises
- Similar to the planning and design schools, the positioning school perceivers strategy making as a
controlled, conscious process that produces deliberate strategies
- However, more focus on calculation or close selection of generic strategies
- It’s an analytical process bases on calculation
Lecture 2 – Design school & Planning school
- What is strategy? How can it be defined?
o Strategy sets direction. It can help us understand where a company is moving towards. It
can also create blindness. If there is an investment in a certain plan/direction, it can
make the company less inclined to change direction.
o Strategy defines the organization. This can cause positive or negative reactions from the
outside world.
o Strategy focuses effort. It makes people buy into the idea/leadership style a organization
is pursuing.
- The 5 P’s regarding strategy:
o Plan: A consciously intend course of action to deal with a situation
o Ploy: A maneuver to outwit an opponent (not about having a unique strategy, but a
strategy that sets you apart from your opponent/competitor)
o Pattern: A pattern of actions that emerge, unintended over time
o Position: The way a firm relates to its competitive environment
o Perspective: Way that managers in a firm see themselves and the world around them.
Classification of the schools:
- Prescriptivism: Concerned with how strategies should be formulated rather than with how they
necessarily do form. Sees strategy formation as:
o A process of informal design, essentially one of conception
o A more detached and systematic process of formal planning
o Less concerned with the process of strategy formation than with the actual content of
strategies, focusing on the selection of strategic positions in the economic marketplace
- Descriptivism: Not concerned with ideal behavior, but describing how strategies do actually, get
made. Sees strategy formation as:
o Cognitive psychology to enter the strategist’s mind
o Emergent in small steps, as an organization adapts, or ‘’learns’’
o A process of internal/external negotiation
o Collective and cooperative
o Reactive, with the initiative with the external context
o Entrepreneurial school also groups as a descriptive school
- Configurative: Adapt to the situation, combine. Sees strategy formation as a combination of
‘’the best of both worlds’’
There are four basic approaches to strategy formation:
- Deliberate plans are unique to the
prescriptive view of strategy. It’s a top-
down process
- The more emergent plans can still be top-
down
,Design school:
Characteristics and premises:
- Strategy formation as a deliberate process of conscious thought
- Strategy to attain match, or fit, between internal capabilities and external possibilities
- Responsibility for strategy rests with the CEO
- The process of strategy formation must be kept simple and informal
- Strategies should be unique
- Strategies should be clear, simple, and specific
- Separation of formulation from implementation (the CEO doesn’t bother with implementation,
(s)he comes up with a strategy that HAS to be implemented)
- A strategy has first to be fully formulated and can then be implemented
According to prescriptive approach, design school thinking can be simple, as long as it is unique, the CEO
decides, and the organization adapts
Strategy framing:
- Strategy as a plan. Grand thinking, grand strategy, and a unique strategy. Strategy doesn’t just
emerge from the firm, it comes from the CEO and maybe a small team of advisors.
Ideal course of strategy formation:
1. Analysis
2. Creation
3. Evaluation and choice
4. Implementation (not too important in this model)
Structure follows strategy: ‘’Until we know the new/revised strategy, we cannot begin to respecify the
appropriate structure’’ (Andrews 1980)
- Strategy as the determination of long-term goals and objectives, the adoption of courses of
action and allocation of resources to achieve goals
- Structure as the design of the organization through which strategy is administered
- Changes in an organization’s strategy lead to new administrative problems which require a new
or refashioned structure for the successful implementation of the new strategy
Tools
- A tool used within the design school is the SWOT analysis. Since the design school focusses on
the internal and external weaknesses/strengths of the organization, just like the SWOT analysis
- Competition is also important within design school. However, it is not about ‘’outsmarting’’ the
competition.
- However, incorporating all the changes in the external environment, is difficult in this school
since the design school beliefs in structure follows strategy.
Critique
- The design school doesn’t care too much on the how, when, where, as long as they have a
unique strategy. Not much cared about the implementation
- Structure may be somewhat malleable, but it cannot be altered at will just because a leader has
conceived a new strategy
- Structure follows strategy (?) -> wiping the slate clean after every strategy change? An
organization can’t just adapt under all conditions/time periods
- Learning is ignored by only analytically assessing environment
- Making strategy hierarchical, centralized, and explicit is prompting inflexibility
- Separation of formulation form implementation is detaching thinking from acting
Assumptions
- The CEO has complete information and is absolutely informed
- The CEO has the capacity to process all information
, - The environment can always be understood
- Situations and environment are predictable
- All information is documented and available
- Strategy is centrally formulated
Contributions
- Vocabulary and tools (SWOT) came from this school
- Grand strategy
- Basic notion: fit between external opportunities and internal capabilities
- Started to promote the relevance of strategies in organizations and strategy as a field of research
Planning school
A definition of planning: planning is formalized procedure to produce articulated results by using an
integrated system of decisions.
In reality this means that as a counter response to the design school, more detailing is needed in many
cases. You want to know where you are heading in a few years, and what happens with investments.
The planning school has a commonality with military strategy. It started in the military too:
- Similarity: both business and military organization must adapt to change and constantly improve
- Difference: business strategy assumes competition, whereas military strategy assumes conflict
Characteristics and premises:
- Strategy is based on rational and systematic science
- Rules of thumb are replaced by insights into regularities
- Strategy forming is a conscious, formal and controlled process
- Strategy must be composed into discrete steps
- Strategy forming is supported by checklists and analytical techniques
- Rational and systematic approach -> influence of Taylorism
- It assumes the future is pretty stable and can be anticipated
- Organizations are like machines -> machine metaphor (Taylorism)
- Organization have a clear-cut system of values, competencies, and reward system
- These are stable and easy to recognize
- Responsibilities are split up
- Planning and implementation are two separate steps
Strategy as a formal process
- Long-range planning: necessary to drive managerial decision making when speed of change
exceeds a firm’s ability to respond
The ideal course of planning
1. Set objectives (at best: quantitative ones)
2. Analyze the situation
3. Create scenarios and evaluate different potential strategies
4. Operationalize
5. Schedule
The planning school holds the danger of thinking you’re into control, but when it comes to it, it seems
you’re not in control
- Going from planning to execution, while doing this, there is a clear divide:
o Responsibility for overall process rests with the CEO
o Responsibility for its execution rests with staff planners in practice
o Strategies appear from this process full blown, to be made explicit so that they can then
be implemented through detailed attention to objectives, budgets, programs, and
operating plans of various kinds
, Problems and limitations
- The fallacy of predetermination
- The fallacy of detachment
o Manage by remote control (Jellinek)
- The fallacy of formalization
o Strategic planning not as aid, as support for natural managerial processes (including
intuition), but as strategy making replacing intuition
- The grand fallacy of strategic planning
o Analysis cannot substitute for synthesis
o Planning, rather than providing new strategies, could not proceed without their prior
existence
- Lack of efficiency
- Lack of commitment
- Lack of flexibility
- Lacking sense of reality
- Planning the unplannable
Comparison of the design and planning school
Design school:
Strategy formation as a process of conception
- Approach: clear and unique strategies are
formulated in a deliberate process
- This process takes the internal and external
environment into account
- Simplification may distort reality
Planning school:
Strategy as a rigorous set of steps taken, from analysis of
the situation to the execution
- Strategy as a machine
- Predictions from an ivory tower (refers to
strategists, looking down from their ‘’tower’’ to
the work floor where the strategy is
implemented. They’re disconnected from their
organization. They only make strategy, don’t help with implementation)
Lecture 3 – Positioning school & Entrepreneurial school
Positioning school
The positioning school beliefs that strategy is a ploy; outwitting on strategic maneuver.
It is about strategy formation as an analytical process. This is not fundamentally different from the
design and planning schools, however:
- The positioning school argues that only certain strategies (or positions in market place) are
disarable in any given industry -> strategies that can be defended against competitors. It is nog
necesarrily about having a unique strategy, just a strategy that works
Premises
- Similar to the planning and design schools, the positioning school perceivers strategy making as a
controlled, conscious process that produces deliberate strategies
- However, more focus on calculation or close selection of generic strategies
- It’s an analytical process bases on calculation
