STRATEGIC THINKING AND PLANNING FOR BUSINESS STRATEGIC PLANNING
STRATEGIC THINKING AND PLANNING FOR BUSINESS STRATEGIC PLANNING
INTRODUCTION APPROACHES TO STRATEGY: RATIONAL / GENERIC (logic vs creativity) INCREMENTAL EMERGENT / PLANNED
RATIONAL APPROACH PERSPECTIVE: Advanced form of analytical reasoning, requiring consistent and rigorous use of logic Strategic problem solving: analyse the problem, data gathering, SWOT, alternative strategies, screening, selection and implementation
REQUIREMENTS OF STRATEGIST Well developed analytical skills Able to process large amounts of data Critical ability Logical thought processes Rational rather than emotional Not reliant upon routine, habit or pure intuition Scientific training
GENERATIVE APPROACH PERSPECTIVE: Logical reasoning is more a hindrance than a help Rationality Strategic effects creativity problems are ‘wicked’ rather than ‘tame’
REQUIREMENTS OF STRATEGIST Able to break out of current paradigm, dominant logic, cognitive map, established wisdom Lateral thinking Revolutionary disposition Able to challenge creatively the ‘tyranny of the given’ Artistic training
ELEMENTS OF THE THOUGHT PROCESS IDENTIFYING What DIAGNOSING What is the nature of the problem? REALISING What is the problem? action should be taken? CONCEIVING How should the problem be addressed?
THE NATURE OF REASONING RATIONAL GENERATIVE IDENTIFYING Recognising Sense-making DIAGNOSING Analysing Reflecting CONCEIVING Formulating Envisioning REALISING Implementing acting
SUMMARY RATIONAL GENERATIVE Emphasis on Logic Creativity Cognitive style Analytical Intuitive Reasoning follows Formal, fixed rules Informal, variable rules Nature of reasoning Computational Imaginative Direction of reasoning Vertical Lateral
EXERCISE 1 Read through the case study on Branson’s Virgin and in groups list the actions that support a generative approach and that support a rational approach Present your findings to the rest of the group
PLANNED & INCREMENTAL Planning perspective – “strategy must be implicitly formulated before implementation” Incremental perspective – “most new strategies emerge over time. Organisations must facilitate this messy, fragmented, piecemeal process”
PLANNED Only planned actions are strategy. Unintended actions cannot be called strategy but “muddling through” Motto – “think before you act” Implementation requires careful allocation of responsibilities, resources and accountabilities Process is distinct steps: conscious and structured
ADVANTAGES Gives the organisation a sense of direction Allows organisational programming: structure, tasks, responsibilities, budgets and targets Helps achieve optimisation: allocation of scarce resources, comparison of strategic options Co-ordination of action
ADVANTAGES CONT’D Allows formulisation and differentiation of strategy tasks: division of labour Encourages long term thinking and commitment: directs attention to the future – or does it? E. g. Sept 11 th.
DISADVANTAGES Strategy is concerned with innovation not routine tasks Strategists should behave as inventors not planners Strategy formation is innovative not orderly: subversive, challenging the accepted norms, confronting cognitive maps, questioning culture, challenging political power
DIFFICULTIES Inaccuracy of forecasts lead to: Need for contingency planning Need to repeat planning cycle annually – should be externally auditing all the time
INCREMENTAL Strategies emerge over time from proactive assessment of viable courses of action, and re -active response to circumstances Formation is by finding out by doing: sensemaking, reflecting, learning, envisioning, experimenting, organisational change Formation is messy, fragmented, piecemeal, unstructured
DISADVANTAGES Incrementalism does not work where radical new approaches are needed, and it has a builtin conservative bias. Forward planning does have a role. Incrementalism ignores the influence of corporate culture, which filters out unacceptable choices. In might only apply to a stable environment
PLANNING vs INCREMENTAL PLANNING INCREMENTAL Tame problems Wicked problems Generic solutions Unique solutions Definition of problem Sense making Analysis Learning Total solution Tackle sub problems Formulate then implement Action-reactionreconsideration
EXERCISE 2 In groups of two discuss a ‘new build’ of a college and identify issues which could arise and select which type of strategy implementation (planned/incremental) they would fall into. Justify your choices with the information you have gained in the session Feedback to the rest of the group
EMERGENT DEF: “Emergent strategies do not arise out of conscious strategic planning, but from a number of ad hoc choices, perhaps made lower down the hierarchy. They may not initially be recognised as being of strategic importance. Emergent strategies develop out of patterns of behaviour, in contrast to planned strategies or senior management decisions which are imposed from above”.
DRIVING FORCES Proactive: technological and organisational innovation – ‘creative destruction’ Reactive: reaction to crisis – sudden environmental change or strategic drift leads to misalignment with the environment: ‘under pressure things become fluid’
CRAFTING EMERGENT STRATEGIES Direction: the emergent strategy may be inappropriate for the long-term direction of the organisation and may have to be corrected Resources: it may have future implications for resource use elsewhere: in most organisations, different parts of the business compete for resources Managers might wish to build on the strategy by actively devoting more resources to it
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