Strategy
as Iterated
Processes of Resource Allocation
Tomo Noda
Josephf L. Bower
OM 석사 2학기 이연주
A
Introduction
genda
Research Objective
Methodology
Strategy Making as Iterated Processes
of Resource Allocation
Toward a Formal Process Theory
of Strategy Making in Large,
Complex Firms.
Discussions
1. Introduction
•
Strategy is a course of action consciously deliberated (Chandler, 1962;
Andrews, 1971; etc)
•
Inherent organizational complexities and unpredictable environment
How is strategy actually formed?
•
Findings from empirical studies : strategy is emergent from lower levels of
organizations
•
Strategy process perspectives: strategy is ‘a pattern in a stream of decisions
and action’ (Mintzberg & McHugh, 1985)
1. Introduction
1. Bower-Burgelman(B-B) Process Model
Burgelman, Robert A. "A process model of internal corporate venturing in the
diversified major firm." Administrative Science Quarterly (1983): 223-244.
1. Introduction
1. Bower-Burgelman(B-B) Process Model
Burgelman, Robert A. "A process model of internal corporate venturing in the
diversified major firm." Administrative Science Quarterly (1983): 223-244.
1. Introduction
2. intraorganizational ecological perspective
•
•
Bottom-up resource allocation process
Intraorganizational competition among bottom-up initiatives to survive
by getting scarce corporate resources & top managers’ attention in the
corporate context
Variation
Selection
Strategic initiatives are
identified and examined in
the definition process
impetus process by
corporate context as
‘internal selection
environment’
Reinforcement or
modification of corporate
context
Strategic initiatives outside
scope of current strategy
Defining strategic context
for new initiatives
Changes in organizational
learning, competence, etc.
to lead top management to
recognize that a major
change in strategy is
necessary and feasible
Strategic initiatives seeking
resources for projects that
correspond to internal
selection pressures
Initiative selected through
administrative
mechanisms and cultural
influencing
Integrated in ex ante vision
Autonomous
Induced
Retention
Burgelman, Robert A. "Intraorganizational ecology of strategy making and organizational
adaptation: Theory and field research." Organization science 2.3 (1991): 239-262.
2. Research Objective
Research Questions
1. Why is it that firms, facing similar opportunities, respond differently and
come up with different strategic commitments to the business?
2. How and why do managerial activities at multiple levels of organization,
which add up to such different emergent concepts of corporate strategy,
differ among these firms?
Research Objective
1. To fill the gap by comparing multiple firms
2. To extend the B-B model to a comparative analysis of a single business
across multiple firms
3. Methodology
•2 of the 7 regional holding companies(RHCs) by the breakup of AT&T
 Significant similarities
•Initial local cellular markets were similar: market size, drive intensity, income
level
 Similar business opportunity (even among 7 RHCs)
3. Methodology
• Largest of the seven RHCs in
domestic wireless revenues and
international wireless operations
measured by the number of POPs
• Nation’s second largest paging
operator
• Global/mobile strategy:
active in a wide range of
wireless communication
businesses
• Smallest in domestic wireless
revenues of the seven companies
• Fairly active international cellular
operations, but more committed
to broadband and multimedia
businesses
• No strategic emphasis on its
wireless communications
businesses
3. Methodology
Research Methods
•
Retrospective field studies
•
Interviews
•
Guided by the B-B process model of strategy making in a multilevel, multibusiness organization
 Iterated B-B process model: to capture multiple, sequential
projects
 Propositions regarding a formal process of strategy making in
large, complex firms
4. Strategy making
4. Strategy making: 1st period(Getting started)
4. Strategy making: 2nd Period(Unexpected growth)
4. Strategy making: 3rd Period(Full Bloom)
5. Toward a theory of strategy making
1.The role of corporate context in strategy making
•
P1a: Top managers exercise a critical influence on the strategic
initiatives of lower-level managers by setting up the context in
which these managers make decisions and take actions
•
P1b: Both strategic and structural contexts influence bottom-up
initiatives in the definition process, and shape resource allocation
in the impetus process in a way that virtually defines a course of
business development and subsequent emergence of a corporate
strategy for the new business
•
P1c: A firm’s structural context is relatively stable over time, and its
persistent impact on the subsequent business development process
constrains the discretion of top managers who may want to
change the firm’s course of actions in response to the development
of technology and the market for a new business
 Q. Application to the types of strategy by Mintzberg(1985)?
5. Toward a theory of strategy making
2. Escalation (de-escalation) of a firm’s strategic
commitment
•
P2: In the case of a new business development that involves a high
degree of uncertainty, the iterations of the resource allocation
process generate a pattern of escalation or de-escalation of a
firm’s strategic commitment based on early results from
operations that confirm or disconfirm the premises of the first
investment and the credibility of the champions
5. Toward a theory of strategy making
3. The determination of strategic context
•
P3: In the case of successful business development, continuous,
incremental learning of top managers during business development,
and the resulting fine tuning of strategic context shift resource
allocation and precede the articulation or change in official
statements of the corporate strategy for the new business
 Incremental view of strategy making
 Deliberate strategy vs. Emergent strategy
(Mintzberg,1985)
6. Discussion
1.
저자들은 이 모델이 multi-level management가 있는 대기업에 적용된다는
boundary condition을 제시한다. 그렇다면 작은 기업에서는 이 프로세스가 어
떻게 달라질까?
- 작은 기업의 business manager들도 top manager의 의도와 독립적으로 기능
할 수 있을까?
2.
기술의 발전 속도나 산업의 성장속도가 다른 산업에서도 이 framework가 그대
로 적용될 수 있을까?
3.
‘Strategy making as iterated process of resource allocation’이 Mintzberg(1985)
의 ‘emergent strategy’에 대해 시사하는 바는 무엇일까?