Whittington for exam
Question: What is strategy?
There is not much agreement about strategy in other textbooks. Rather than taking ‘strategic
management’ for granted, this book starts from the basic question ‘what is strategy anyway?’.
Four basic conceptions of strategy are introduced which all have different implications for
how to go about ‘doing strategy’.
Each perspective has its own view of strategy and how it matters for managerial practice. The
Classical approach gives the textbook answers.
- Classicists broadly see strategy as a rational process of long-term planning, vital to
securing the future.
- Evolutionists usually regard the future as too volatile and unpredictable to plan for,
and warn that the best strategy is to concentrate on maximizing changes of survival
today.
- Processualists too doubt the value of rational long-term planning, seeing strategy best
as an emergent process of learning and adaptation.
- Systemic theorists take a relativist position, arguing that the forms and goals of
strategy-making depend particularly on social context, and that strategy should
therefore be undertaken with sociological sensitivity.
These are four starkly different perspectives (p. 119), but it is the Systemic sensibility that
helps us finally to choose. For the Systemic strategist, effectiveness depends upon
understanding context and playing by local rules. Classical, evolutionary, processual, they can
all take place in some conditions. There is no one best way. The key is to match strategy to
market, organizational, and social environments. They all work best in different contexts (p.
120).
Strategic management: A set of conceptual frameworks and tools intended to help managers
to make decisions on the long run positioning of firms, resulting in an adequate level of
performance of the organization (sheet). A way to deal with environment in such a way to
create a unique position in order to perform better. Strategic choices have to be made to
position the organization in the market.
Question: What are the 2 basic perspectives?
Evolutionism – The environment (market or institutional context) determines consequences
for organizations. Theory on the development of markets.
Classical strategy approach – The manager in the organization can – topdown – formulate a
strategic plan (similar to strategies of generals) and implement that strategy. Theory on the
results of rational planning.
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Question: What are the 4 approaches?
Outcomes
Profit-maximizing
Classical
Evolutionary
Processes
Deliberate
Emergent
Systemic
Processual
Plural
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Classicists broadly see strategy as a rational process of long-term planning, vital to
securing the future.
Evolutionists usually regard the future as too volatile and unpredictable to plan for,
and warn that the best strategy is to concentrate on maximizing changes of survival
today.
Processualists too doubt the value of rational long-term planning, seeing strategy best
as an emergent process of learning and adaptation.
Systemic theorists take a relativist position, arguing that the forms and goals of
strategy-making depend particularly on social context, and that strategy should
therefore be undertaken with sociological sensitivity.
For the Classical school, planning can adapt to and anticipate market change. Strategy is a
rational process of deliberate calculation and analysis, designed to maximize long-term
advantage (profit-maximalization!). This is done by objective decisions at one remove from
the of the business battlefield itself.
For the Evolutionists, markets are too tough and too unpredictable for heavy investments in
strategic plans. They expect markets to secure profit-maximalization. They caution strategists
to keep their costs low (efficiency) and their options open. Competitive processes ruthlessly
select out the fittest for survival; the others are powerless to change themselves quickly
enough to ward off extinction. Successful strategies only emerge as the process of natural
selection delivers its judgement. Companies should fit their environment.
The Processualists too challenge the detached approach of the Classicists, but they are less
pessimistic about the fate of businesses that do not somehow optimise environmental fit.
Effective strategies emerge more from a pragmatic process of bodging, learning and
compromise than from a rational series of grand leaps forward. Involvement in the everyday
operations and basic strengths of the organization is important.
Finally, from the Systemic perspective strategy does matter. They are less pessimistic about
people’s capacity to conceive and carry out rational plans of actions. But the objectives and
practices of strategy depend on the particular social systems in which strategy-making takes
place. They argue that strategies must be ‘sociologically efficient’, appropriate to particular
social contexts. From a Systemic perspective, there is no one best way of strategy: just play
by the local rules.
Look at the sheets!
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Question: In which approach would you put L&K?
Teacher said: Systemic & Processual. Lecture 6-12, see notes/sheets
Systemic approach: a sociological theory on the environment. Strategies are developed in
complex networks and are culturally defined.
Laumann & Knoke do a network analysis in their book. According to Laumann & Knoke the
environment (public domain) comprises various relationships between actors and events.
These relationships result in a social structure at the system-level. So relationships are socially
embedded.
Systemic because the outcomes of a policy domain depend on the (sociological)
characteristics of that domain. The rationales underlying strategy are peculiar to particular
sociological contexts. People are rooted deeply in densely interwoven social systems.
Processual because strategies are not long-term but just emerge while doing. ‘go with the
flow’. Organizational members bargain between each other to arrive at a set of joint goals
more or less acceptable to them all. Strategy is thus the product of political compromise, not
profit-maximalization calculation (p. 22). The need for change will only be imperfectly
recognized.
Question about strategic choice, leadership, change, network and the 4 approaches
Strategic leadership
Visionary leadership: mostly classical, some systemic. Power comes from leaders’ capacity to
inspire and motivate their followers in a way no mere ‘manager’ can do. Visionary leadership
is the mechanism for change, providing ideals to shape strategy and the energy to make it
happen.
Business elites: mostly systemic. The dominance of any individual professional group may
bias the strategies of whole economies (self-interest).
Conclusions: Leadership is about more than just fitting strategy to the market environment; it
is about fitting yourself to the social environment. Leadership is not equally available to all,
but the privilege of particular elite groups in society.
4. Strategic choice
Investment decisions: Classical  financially driven approach. Processualists  don’t
believe in financial techniques, strategic decision-making criteria need not be reduced to a
single financial variable. Decisions are not taken, they happen, so relaxed approach is ok.
Garbage can view. Decisions become routines. But decisions are also about mobilizing
support and creating commitment, and allocating responsibility. Systemic  Decisions are
part of rituals, to show conformity to local cultural expectations. They vary by time and
culture. Financial method is typically American.
Corporate planning: Classical  They developed other techniques to help rational decisionmaking like SWOT analysis, because of limitations of financial technique. Processualists 
classical eagerness to demonstrate direct performance benefits to planning slightly misses the
point. Constantly adapting instead of inflexible plans; ‘strategy as stretch’: broad strategic
intents. 3 classical fallacies p. 68. Planning has control, social, and symbolic functions.
Systemic  point out that not all societies value the form of rational corporate planning
equally.
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Conclusions: Classical  strategic choice is about rational profit-oriented decisions.
Processual  Strategies are best crafted in a continuous middle-up-down incremental
process. Don’t overinvest in planning and stay close to action. Systemic  use the techniques
for the sake of credibility. We plan to keep up appearances.
5. Growth strategies
How and why do firms grow in the way they do? Classicists see initiative, Evolutionists
efficiency, Processualists emergence, and Systemicists imperialism.
Innovation: Classicists  new product generation must be closely directed. Processual 
doubt the capacity to absorb technical advances and ability of managers to control the process.
Plus some innovation cannot be foreseen; emergent.
Diversification: Classical & Evolutionary  efficient use of resources. Systemic 
suspicions of managerial self-interest. And not all economies are diversified.
Internationalization: Evolutionary  efficiency. Classical  game theory, emphasize the
elaborate defence of oligopolistic privilege. Systemic  strategists should never assume that
their international competitors are like themselves.
Conclusions: read!
6. Managing strategy
Strategy and structure: Structure should fit/follow strategy, but there is often a lag between
them. Processual  organizational adjustment is always slow. But they go further, suggesting
that structure does not always follow strategy. On the contrary: structure enables and
constrains particular strategies. Evolutionary  laggards should have been selected out by the
markets. And the pressure of natural selection provides insufficient incentive to change.
Systemic  organizations not always go for shareholders’ profit but managements’ interest.
Networks between firms (can exchange knowledge effectively) make redundant the old model
of vertically integrated companies. Culture and history may determine organizational forms as
much as the abstract logics of efficiency and markets.
Summary: Classical and Evolutionary advice that structure must follow strategy, which is too
simplistic. Systemic advice is to be sensitive to the context. Processual message is not to
expect that the relationship necessarily follows strategy.
Strategic change: Processual  Capacity to handle strategic change is now a source of
competitive advantage. But truly sustainable advantage comes from the internal ability to
adapt and learn. BUT history shows that managers are unable to adapt to new circumstances.
Evolutionary  are not that negative. Agency perspective: the threat of market failure
(market pressure) is generally enough to motivate change and keep managers disciplined.
Processual  Rather than terrorising managers in the manner of evolutionary, they prefer
more gently processes of coaching. People should first recognize the need for change, but that
is very subjective and views can be biased. The solution for this bias is corporate learning. It
is important to learn faster than the competitors. Learning only might lead to underestimating
opponents. Change is also a matter of unlearning routines. Miller: episodic revolutions are
better than incremental learning. Systemic  the pace and patterns of organizational change
vary according to national context. Classical  by making annual strategy views, changes are
not necessary. It if ain’t broke, don’t fix it.
Conclusions: The message of the Classical and Evolutionary schools is clear: change
organizational structures to match changes in organizational strategies. But for Processualists
that relationship is not that simple. It may sometimes be best to delay change. Don’t change
the whole organization, just deal with the local inefficiencies. Achieving strategic change is
likely to be a patient process of coaching and manoeuvre. Evolutionists stress the importance
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of change to survive in the market. There is no time to waste. If managers will not change,
change the managers.
7. Does it matter?
Managerial consequences: The differences between the four basic approaches to strategy do
matter. They provide radically opposed recommendations for managers.
Classical confidence in analysis, order, and control is undermined by Processual scepticism
about human cognition, rationality, and flexibility. The incrementalist learning of the
Processualists is challenged in turn by the impatient markets of the Evolutionists. But even
Evolotionary markets can be bucked if, as Systemic analysts of social systems allege, the state
is persuaded to intervene.
Strategy-making starts with the question: which theory of human activity and environment fits
most closely with your own view of the world? (p. 118-119)
These are four starkly different perspectives, but it is the Systemic sensibility that helps us
finally to choose. For the Systemic strategist, effectiveness depends upon understanding
context and playing by local rules. Classical, Evolutionary, Processual, they can all take place
in some conditions. There is no one best way. The key is to match strategy to market,
organizational, and social environments. They all work best in different contexts (p. 120).
Classical  most relevant in mature, stable, and relatively predictable environments. + capital
intensive, monopolistic market.
Evolutionary  new industries where many small firms compete in absence of market power.
Processual  This fits protected bureaucracies, public sector, which often have both the size
and complexity of objectives to make of strategy a series of creeping but necessary
compromises.
Systemic  Non-Anglo-Saxon, family and state firms.
National policy consequences: Evolutionary and Processual accounts are sceptical of big
government interventions, warning policy-makers to stand back and not to spoil emergent
economic successes. Classical and Systemic approaches are more confident in deliberate
action, but the Classical instinct is to make existing systems work better, the Systemic is
towards quite radical social and institutional change.
Processual reliance on the local and emergent implies a cautious and highly sensitive
approach to economic development. The role of government is to support existing processes
on the ground and not to get in the way.
Systemic thinks this may be too fatalistic. The conditions for new clusters can be created
deliberately by firms and governments working together.
Prescriptions for national economic policy:
Classical  rely on better thinking and planning
Processual  nurture developments from the bottom-up
Evolutionary  stand back, hoping only to turn the winnowing processes of competitive
markets to general advantage.
Systemic  sees business strategy and economic performance as tightly linked to the social
contexts in which they are embedded. Economic change means social and political changes as
well. They believe in social engineering.
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Chapter 3
For today’s business elite, ”Leadership qualities” matter. Management is about providing the
order and procedures necessary to cope with the everyday complexity of big business.
Leadership, by contrast, is about coping with change.
The Visionary leadership is the mechanism for such change, providing the ideals to shape
strategy and the energy to make it happen. Leaders can give employees their sense of purpose
and transform their work into play. But it emphases individualism, neglects teams and
process, and exaggerates the power of single individual.
From the Systemic perspective,
- the very concept of “leadership” is inherently culture-bound. The fascination with
business leaders is not the same elsewhere in the world. It is not something easily to be
translated across cultures.
- Leadership’s allure can change according to historical context. Fascination with leaders
tends to follow economic crises and ends with political crises.
- The leadership is highly sexualized. The concept is a masculine one-defined in terms of
men and understood in ways that exclude women.
In a word, leadership may be a vital and empowering force in contemporary organizations,
but it remains a cultural, historical and gender-specific phenomenon.
Systemic focuses on the social characteristics of managerial elites, and the social interests
they represent. From the Systemic perspective
- Entry into the business elite is not won simply by individual merit but also by social
conformity. Strategies are influenced by the interests of dominant groups rather than being
determined simply by the calculus of profit.
- Internal political processes can lead to the domination of a firm’s tip management by
representatives of particular functional groups. For example. Firms dominated by
production and accounting professionals tend to the cautious, inward-looking ‘defenders’
in their strategic orientations.
- The dominance of top management positions by a particular professional group can
profoundly bias corporate strategy. Once a profession gains advantage, the process tends
to be self-reinforcing.
In conclusion, the systemic argument is that business leadership is not simply a matter of
heroic high –performance individuals, but involves the collective advance of self-interested
social groups- managers in general or particular professions.
There are two accesses to the business top.
- Through pattern of shareholdings in a particular society.( As an inheritor or founder)
- Through narrow educational channels. From the Systemic perspective, the early
education is critical to career success. Regardless of managerial merit and experience,
the chances of reaching tip management are determined long before ever entering the
business world
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