Professional Documents
Culture Documents
Introduction
After more than twenty years as dedicated researchers in the eld of strategy, the authors are wondering if the academic eld of strategy really does exist. Excellent and exhaustive reviews by many distinguished academics (e.g., Pettigrew et al., 2002 and various authors in the European Management Review Vol. 1, No. 1, Spring 2004, European Management Journal) take note of the extreme diversity of the research but shy away from providing a convincing framework to clarify what the eld is all about.
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issues of central interest to top management. . . to help top management to deal with these issues effectively, protably, and morally. He went so far as to say that anything that can be made orderly and systematic should be left to the functional areas and considered out of the eld of strategy. The question of whether there is an academic eld of strategy is important. In this paper we argue that there is a eld of strategy, but it is still underdeveloped despite an incredible surge of research in the last twenty years. We believe that most strategy research does not really address the dening issues. As a result there are serious methodological deciencies. First, and following on from the basic problem of the denition of strategy, there is no common understanding of the set of theoretical propositions in the eld. Authors tend to construct their own propositions without consistency from one study to the next or one author to the next. Second, the understanding of the scope of the eld, its phenomena, and its research methods are borrowed crudely from the more established social sciences. To make our argument, we go rst through a historical discussion of the elds knowledge development, describing the approaches that have dominated research, teaching, and practice. We observe that there has been a drift to the traditional social sciences because of the complexity of strategic issues. This has increased confusion among practitioners and academics alike. We argue further that the real challenge is to devise a new approach to theory-building that brings the eld of strategy closer to reality. To suggest the nature of such an approach, we go back to the issues that have dominated debates among early general management scholars.
wondered what was expected of them in such a simple and general case. Midway was, however, peculiar because of Kramers expressed concern about dening the business and any decisions being consistent with such a denition. The students were then exposed to additional information about Midways management. Progressing to the B case brought new challenges, with the opportunity to acquire a competitor. Should Midway do this? The C case highlighted the different perspectives of the four functional departments. The students discovered that each department had its own mission, operating methods, and operational problems. More important, each functional manager had his own managerial and personal philosophy. The D case was a meeting showing how difcult it was for these managers to work together. Finally the El and E2 cases presented the President, the individual responsible for coordinating a whole that now seemed much more complex than it had seemed at rst, facing decisions that could make or break Midway Foods. Most teachers of strategic management have conducted discussions of the Midway type to expose students to the complexity of top management issues. It is not so much the operations or the marketing or the nances or human resources or power, motivation, leadership, or many other issues, but the combination of all these that make the top management job so intractable, sometimes confusing and always complex. An academic eld of strategy should be capable of providing guidance (which we describe using the metaphor walking sticks for strategy) to the bewildered and shaky students and practitioners facing similar and, more realistically, much more complex issues than those described in Midway Foods. Some guidance has been provided by different concepts of strategy advanced over the last fty years or so.
Concepts of Strategy The conceptualization of strategy has taken two broad routes. The rst can be called the Holistic approach, an all-embracing concept but one that stays close to reality. The emphasis was on general theories to better understand: (i) the challenges of managing the organization as a whole and (ii) the nature of top management roles and behaviours (see for example Barnard, 1938 and Selznick, 1957). The second route, more contemporary, can be called the Analytic approach. It has followed traditional scientic methods and approaches characterised by the deconstruction of strategic problems and a focus on identifying specic relationships that are part of broader strategic phenomena (see Thompson, 1967). With a good understanding of the analytical components of stratEuropean Management Journal Vol. 23, No. 5, pp. 507519, October 2005
egy it is then claimed that strategic behaviour can be predicted. However, this claim has not been substantiated. Historically, the rst Holistic approach dominated the eld until the end of the 1970s, while the second Analytic approach has emerged out of Thompsons synthesis (1967) and his guiding efforts within the pages of the inuential journal Administrative Science Quarterly (ASQ) to encourage the development of an administrative science. The Analytic approach has also been the dominant focus of the Strategic Management Journal (SMJ) since its launch in 1980 (see Furrer et al., 2005).
The basic hypothesis of the holistic approach is very like the more modern systems view of the world (Checkland, 1981). Its central idea is that collective action cannot be understood if it is broken down into parts to be studied separately. As reality is complex, it is more appropriate to study it in its totality. This means not only studying all the parts together but also their inter-relationships, even if the result is an incomplete and imperfect understanding. Theory developed in this way was therefore utilitarian, always temporary, but an essential help for those willing to face complexity. Roethlisberger (1977) described how Hendersons conceptual scheme of a social system, inspired a whole generation of scholars and practitioners. Henderson (1935) in following the practices of research in medicine drew on the principles of Hippocrates. According to him, interactions between persons were the essence of collective human action. They involved mutual adaptation and skill and also strong sentiments. To understand such complex phenomena, both theory and practice were necessary. . . and the method of Hippocrates was the only method that succeeded widely and generally:
The rst element of that method is hard, persistent, intelligent, responsible, unremitting labour in the sick room, not in the library. . . The second element of that method is accurate observation of things and events, selection guided by judgment born of familiarity and experience, of the salient and the recurrent phenomena, and their classication and methodical exploitation. The third element of that method is the judicious construction of a theory not a philosophical theory, nor a grand effort of the imagination, nor a quasi-religious dogma, but a modest pedestrian affair or perhaps I had better say, a useful walking stick to help on the way and the use thereof. All this may be summed in a word: The physician must have rst, intimate, habitual, intuitive familiarity with things; secondly, systematic knowledge of things; and thirdly, an effective way of thinking about things. (p. 67)
The Holistic Approach The holistic approach can be traced back to the 1930s and 1940s when there were heated debates around the Scientic Management viewpoint of Frederick Taylor and the Human Relations movement (Roethlisberger, 1977). The simple, but precise and surprisingly effective, formulae of Taylorism contained their own limitations in businesses that were becoming increasingly complicated. Mayos famous interpretations of the Hawthorne results (1933) showed that simplicity had its limitations and that the complex and changing nature of humans involved in collective endeavours required correspondingly complex theories. The term collective action became used to refer to these people-related aspects of organisational life. Mayos suggestions generated an unprecedented wave of multidisciplinary debates. Professor W.J. Hendersons Harvard University faculty seminar on practical sociology, in the 1930s, forced everyone to consider collective action in its entirety. As a trained physician, Henderson was able to inculcate some cross-fertilisation between research practices in the well-dened eld of medicine and in the illdened eld of organizations, as well as introducing broader theory. Barnards The Functions of the Executive (1938) became a classic of this approach. Barnards formidable attempt at reconciling scientic management and human relations re-conceptualized the problem of collective action. It proposed a new, almost revolutionary, vision together with a research framework that was more clinical than analytic. He suggested that the dominance of Taylors views had led to looking at the problem of collective action upside-down. He put it back on its feet by proposing his theory of cooperation that redened the relationship between authority and human behaviour within collective action and proposed ways to manage it. His work is still very inuential. Barnard was the rst of a long tradition of scholars (Simon, 1945; Selznick, 1957; Crozier, 1963) who have emphasized the study of the organization as a whole.
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The characteristics of Hendersons scheme are thus: 1. The need for a conceptual scheme for the purpose of investigation; 2. The conceptual scheme is a matter of convenience and utility, not truth or falsity, nor a theory; 3. It is a way of thinking to be practised, not just talked about; 4. It is to be practised in relation to real-world phenomena; 5. It is to be used as long as it is useful; and 6. One should be ready to let go when a more useful way of thinking takes over. The manager, in this view, is in a situation that is similar to that of Hippocratess physicians. But his situation may at times be even more confusing. Students working on Midway, for example, realize very quickly that they need an instrument to make sense of the multiple challenges involved in managing a
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whole organization. That is how the concept of strategy was introduced. It became the walking stick that helped a generation of students and managers nd their way. The concept of strategy, as a walking stick, dominated our thinking for several decades. It has survived scientically-minded criticisms because of its usefulness as a powerful problem-solving theory of decision (Bower, 1970). Nevertheless, scholars felt unhappy with such a primitive instrument that was not amenable to analytical research. The search for a new, more science-based walking stick was in the works.
complex variables that in reality lie at the heart of behaviour of organizations. A major landmark in the development of the eld of strategy was the foundation of the Strategic Management Society and its journal, the Strategic Management Journal. In their attempt to provide some structure to the eld, Schendel and Hofer (1979) and their associates in the Strategic Management Society founding meeting actually added to the fragmentation process by proposing a vision of strategy as an assemblage of theories and methodologies. This fragmentation was reinforced in another seminal strategy research conference which took place in California in 1990: the Fundamental Issues in Strategy Conference. Rumelt, Schendel and Teece (1991) start off their book of this conference with a provocative statement: What will most benet strategic management, we suggest, is not a unifying paradigm (our emphasis), but the articulation of fundamental issues underlying the eld and a refocusing of research to confront them (p. 1). Ever since Thompson, and aided by the formation of the Strategic Management Society, the amount of knowledge generated from research conducted in this analytical vein has been considerable. However, as results have accumulated, so also have inconsistencies and contradictions. These have been topics for extensive and frequent debates, both methodology and content-based, reected in many of the SMJ special issues. It has become more and more difcult to come up with any form of synthesis (unifying paradigm) within any of the sub-elds of strategy. A synthesis of the whole eld seems out of the question. As Schendel (a Founder of the Strategic Management Society and current long-time Editor of SMJ) states in an introduction to the SMJ Summer 1994 special edition on The Search for New Paradigms: The Guest Editors report much disagreement about models, methods, assumptions, issues and challenges, and little agreement. . .The state of strategy during the 1990s, can aptly be described as the best of times and the worst of times (p. 2). Two academics very concerned to link research with management practice (Prahalad and Hamel, 1994) have also stated: We believe this turmoil in the eld, in research and practice, is a reason for optimism. . . Many of the assumptions that were embedded in traditional strategy models may be incomplete and/or outdated as we approach the competitive milieu. We will argue that the need for strategic thinking and behaviour among managers has never been more urgent. To generate the kind of strategic thinking called for by these authors, research has to play a unique and important role, providing rich descriptions, syntheses, possible cause and effect relationships and more importantly tools for inquiry. Yet many scholars who favour holistic, integrative perspectives often involving qualitative research methods, must be increasingly uncomfortable and at a disadvantage when submitting a manuscript to a strategy journal with
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a positivist research tradition. Those who publish most frequently today in strategy are also well-recognized contributors to discipline-based elds such as psychology, sociology, economics and political science. This again begs the question of what is strategy. It feels like a vast array of diverse and uncoordinated detailed observations that are scientically respectable, yet incoherent in practice. The old idea of a walking stick, this time to make sense of all this seemingly incoherent knowledge, suddenly seems very attractive and urgently needed.
(1) Chandlers (1962) study of American rm growth and the development of the divisional structure reinforced by Mintzberg (1978), and Rumelt (1974, 1982); (2) Bowers study of the resource allocation process in large diversied rms, followed by many others of which Burgelman (1983) is a good example; (3) Miles and Snows (1978) study of organizational strategic adaptation; and nally, (4) Contributions relating to the Montreal school of congurations (Miller 1996). Despite closely reecting the realities of the co-alignment that Thompson talked about, these studies have been relegated to the background or reinterpreted as frameworks for content-based quantitative research. A more realistic sense of the kind of research that has taken place is evident in the Strategic Management Journals index of topics for the 1990s. It shows more than a thousand different topics addressed by only a little less than a thousand authors. Such a variety suggests a Tower of Babel populated by strategy researchers. A closer look shows that the eld is spread all over the traditional disciplines and functional areas. Of all the articles examined in this ten year period, about 60% can be related to specic disciplines. Economics alone represents the bulk of all these articles. Indeed, Furrer et al. (2005) in their review of SMJ research from 19802002, have to use very broad categories to be able to group the topics of the articles published. Many academics (we mentioned Schendel, 1994 and Prahalad & Hamel, 1994), believe that this is acceptable and even a stimulus to research and creative practice. If that is the case, 25 years after the creation of the Strategic Management Society, we have no indication of any positive effects on the practice of strategic management. Prahalad and Hamel (1994) recognized that Even well-known consulting rms, such as McKinsey and Boston Consulting Group (BCG), who built their reputations on strategy consulting, started to de-emphasize their strategy focus. . . Academic disillusionment with the value of strategy literature and schools of thought, while not as widespread, followed quickly (p. 5). Imagine a practitioner, concerned about managing a whole organization, confronted with these strategic management research results. What would the ndings mean? There are almost no syntheses of research that lead to common frameworks or practical guidance, nor are there reviews that summarise and accumulate ndings from different studies researching the same topic. Occasionally there are furious debates on the nature of particular ideas or on the nature of strategy itself without any clear resolution. When it comes to teaching, academics struggle to provide a common, practical meaning to all these
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Thompson recognized that the complex questions with which management practitioners and researchers alike have to wrestle have neither the level of elegance nor the structure to which the purist might aspire. Yet the researcher cannot be content with individual case analyses; these are always situation-specic and rarely amenable to generalizations. Thompson did not ignore the strategy problem. Indeed, the last chapter of his seminal 1967 book provides a striking expression of the nature of strategic management. In particular he emphasizes the need for integration (co-alignment):
The basic function of administration appears to be co-alignment, not merely of people (in coalitions) but of institutionalized action of technology and task environment into a viable domain, and of organizational design and structure appropriate to it. Administration, when it works well, keeps the organization at the nexus of the several necessary streams of action. Paradoxically, the administrative process must reduce uncertainty but at the same time search for exibility.
After Thompson, quantitative research, which generally focused on interactions between limited numbers of variables and was therefore held to be more precise, dominated the eld. But there have also been some holistic conceptual developments. These can be clustered into four groups of research:
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ndings. An examination of the textbooks used in MBA programs shows an incredible diversity. Besides the classic Harvard Business Schools text and cases, a few others are still concerned about providing a synthesis (e.g., McGee, Thomas & Wilson, 2005; Johnson, Scholes and Whittington, 2004; Hafsi et al., 2000). However, most others are specialized (e.g., Grant, 2005), if interesting, views on strategic management, some of which have been popularized by well-known gurus like Gary Hamel and C. K. Prahalad, Tom Peters, Michael Porter and Peter Senge. We are back to the situation of students trying to make sense of Midway. The problems are easy to state, yet difcult to deal with. The actual behaviour of business organizations is largely situation-specic and is therefore the result of combinations of circumstances that cannot be comprehended and predicted by the existing science. The paradox is that we need to accept the differentiating logic of unique circumstances without losing sight of the whole. This is an old problem for which the old concept of strategy was much better suited than todays technically sophisticated research methods. In our opinion, the tragedy of the eld is precisely that academics are no more able than practitioners to live with the paradox of reality: we can all understand the individual case but cannot understand the whole. The nuances of individual cases make strategic management what it is, but the search for clear-cut and generalisable answers is destroying the essence of strategy. The search for generalisable knowledge has led to research methods that probe for deep understanding of the behaviour of those elements of reality that can be isolated or modelled. Nevertheless, we know that this process of segregating and separating the various factors is not even a defensible second best approach to research. It might even be said to be a rst worst because it pushes reality so far away. Since little of strategy is understood from research, one might expect more attention to skills or practical (clinical) knowledge. Yet, academics clearly favour analytical knowledge, even if often irrelevant.
specialized analytical research of the conventional disciplines. What would then be the difference between the strategy researcher and his colleague of the conventional disciplines? Strategy would become a discipline like others in which strategic behaviours can be reduced to microcosms of cause and effect whose joint effect is simply cumulative. By contrast, strategy in practice is about the behaviour of the whole, and within which there is complex interaction between the parts. The specialised contributions of the sort that we have discussed are best considered as contributions to the related disciplinary eld. Convergence with other disciplines may be about preventing strategy researchers from avoiding the rigorous scrutiny of their research methods by researchers in other disciplines. However, if strategy is about the behaviour of the whole, and built upon the complex interaction of its parts, then it should be simple common sense to observe that analytical reduction methods completely miss the point. They neglect the complex interaction of the whole which tre is the raison de of strategic management. Neither can the academic eld of strategy be reduced to the strategic approach of the practitioner. Practitioners are entitled to believe that academics are probably less qualied than they to articulate such an approach, since they do not practice it, nor know well enough the reality to which it is applied. The search for knowledge in strategic management should therefore follow a different path. A meaningful approach should reconcile the ndings of research with practical concerns. However, the meaning and relevance of academic disciplinary research for the improvement of management practice are not obvious. First, disciplinary research results do not apply directly, except in combination with other ndings. Second, applying them requires some familiarity with the phenomena concerned. As we said earlier, this is very similar to what happens in medicine. The medical researcher is faced with the same difculty. In medicine, it is accepted that the researcher can belong to a discipline, while the practitioner, with the help of his association, is in charge of translating knowledge from research to improve his practice. And even there, in actual practice, the physician is often confused when faced with the multiplicity and sometimes-contradictory ndings of research. For example, are some specic foods or drugs good or bad for health, for whom, and in what circumstances? These are daily questions to which clear answers are often not available. We believe that, in strategic management, the variety of relevant phenomena is even greater, because the researcher is not only concerned about the individuals health, but also about the collective action of many individuals. Compared to medicine, we are still in the position of beginners. We cannot even begin to lose our credibility with managers, since we have none, even though, as gurus, sorcerers or
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So: Where is the Field of Strategy? Having been deeply critical of the approach of academics to strategy, we are back to our rst question: what is the academic eld of strategy? Is it deep research on a limited number of variables and their effects? Is it the reporting of the experiences and experiments by practitioners (sometimes carefully crafted and reported in detail), systematic examination and classication of these experiences, together with the search for patterns or decision heuristics? It is a matter of considerable regret that academics and practitioners will almost always choose opposing answers. First, lets say what the eld is not. On the basis of simple commonsense, it cannot be reduced to the
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prophets, we may still impress the naive, as witchdoctors impressed primitive tribes. The objective of research in strategy does however exist. It has two elements: 1. Discovering, through the practice of managers, unusual regularities and patterns, specifying them and submitting them to analysis and debate. This systematic effort is scientic, because it helps describe and thus discover the varied nature of the phenomena to which managers are exposed. It can also help conduct an orderly discussion of the reasons that explain results. 2. Experimentation and modelling in an attempt to predict the behaviour of organizations. This is both practical and scientic. It obviously deals with practical phenomena. In addition it requires methods of research that use both heuristics (i.e. the ability to discover through experience) and experimental research methods for assessing and quantifying regularities. In both of these elements, it is possible to call on the ndings of the disciplines in an organized search for meaning. The nature of this work is to be compared to what has been done for some of the natural sciences, for improved understanding of complexity and the development of scientic approaches to deal with it (Waldrop, 1992). It is indeed a relevant example for us, because strategic management phenomena, deal with unclear, nonlinear cause-effect relationships. As a consequence, the combination of research results that come to bear on reality can be neither direct nor linear, but creative in the scientic sense of the word. Similarly, the methodological nature of the strategic management researcher contribution is fundamental. In strategy, we are not dealing with a traditional science but with a science of complexity. Thus, confronted with small samples replete with rich data, informed with a multiplicity of partial disciplinary research results, the strategy researcher has to invent an approach that links together this array of partial and limited research results; then test the output for rationality and validity; then build the needed heuristics that link the data and the new knowledge base; and constantly adjust both to reach convincing results. Researchers in strategy, therefore, must be formidable intellectuals. They must have both the encyclopaedic knowledge needed to comprehend the results of the normal science, and the familiarity and intimacy with real phenomena that together stimulate creativity in the search for explanations and heuristics. The practitioner of management also has to reach convincing explanations and has to develop and use (personal) heuristics. But there are differences: (1) the practitioner does not have to justify intellectually his decisions, but (2) must answer to
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stakeholders for the consequences of his decisions. However, researcher and practitioner have a common problem both muddle along in the dark. To respond to the challenge, both practitioners and researchers need a walking stick, a common walking stick. For the practitioners of strategy the objective is to guide decisions and their implementation, while for the researcher in strategy the objective is to develop the approach to nd the general patterns behind these decisions and their implementation, and to generate heuristics that provide the link from patterns (theories) to practice in specic situations, that is to inform and guide practice.
1. Intellectual aspects intended to provide understanding, tools and mechanisms by which coordination and convergence of collective action is ensured; 2. Practical aspects designed to achieve that intended convergence. The intellectual aspects underlying strategy provide meaning and feed the intuition of both scholars and
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practitioners, but strategy is mostly a practice. It is in dealing with reality that strategy is both shaped and used. The intellectual aspects provide also the facts that should guide the systematic build up of convergence. The intellectual aspects are a synthesis of accumulated knowledge. A study of the literature that has inspired strategy (see Hafsi et al., 2000 for details) suggests ve different segments:
management of the internal communitys integrity, of its willingness to contribute and to pursue all avenues leading to the organizations survival and prosperity (Barnard, 1938). Another aspect of the community is brought up when one thinks of the organization as a coalition (Cyert and March, 1963). The various groups and individuals of the organization have differing goals and interests. Strategy helps build the coalitions that will allow the pursuit of common goals. Again, the literature is full of descriptions of how the groups and individuals build or fail to build the frameworks that could lead the organisation to success. The resource dependency theory (Pfeffer and Salancik, 1978), and the stakeholder theory (Freeman, 2004), highlight the political give and take that leads to stable and powerful organizations. But power and inuence are unequally distributed. They are related to stakes controlled by the actors (Crozier, 1963). Sex, ethnic support, education, professional skills, capital, control over important zones of uncertainty for the organization, outside recognition, structure, etc., all contribute to setting the stage for the development of the strategic consensus that provide direction to the organization and facilitates the coordination of its activities. And as shown by Fligstein (1987) in the case of the 100 largest US companies, the consensus changes with time. Finally, community is also expressed through the organizational cultures. A homogeneous culture has been described as being the source of success in implementing strategy (see for example Peters and Waterman, 1983; Hampden-Turner, 1992), but also a source of problems when the environment is changing fast (Nadler and Tushman, 1986 among many). Subcultures express a communitys degree of diversity. They are often critical in strategy-making as they have to be taken into account for both formulating and executing a vision (Jorgensen, 1989). Success stories of Japanese companies (Hafsi, 1989) and of American ones (Collins, 2001) as well have often been suggestive of the powerful role of a communitarian behaviour. The Wachlike, Lipton, Rosen and Katz law rm described by Starbuck (1993) exemplies the importance of a community in driving success. The internal community is therefore at the heart of the organizations effectiveness and efciency. Strategy cannot be conceived properly without leaving in its statements ample space for the expression of its members collective identity.
Strategy as a Leaders Statement Ever since Barnard (1938) and Selznick (1957), top managers are seen as playing a critical role in an organizations behaviour. Akio Morita and Masaru Ibuka of Sony, Edgar Hoover of the FBI, William Ruckelshaus of the EPA, or Jack Welch of GE exemplify leaders decisive roles. The literature is replete with theories and examples which all show how strategy is often an expression of the leaders will, beliefs and values (see in particular Collins, 2001). The Harvardien School of Strategy has built the whole idea of strategy from the top managers perspectives (Andrews, 1987). Bower, as we mentioned earlier has made it clearer, emphasizing the need for judgement at the top and equating those judgemental issues with strategy. The more academic literature has shown that leaders obsessions (Noel, 1989), their values and beliefs (Selznick, 1957), in general their inner life (Kets de Vries and Miller, 1984; Kets de Vries, 1980; Lapierre, 1994; Zaleznik, 1989), their demographic characteristics such as age, training, experience, social origins (Hambrick and Mason, 1984), their intellectual journeys and their quest for rationality (Frederickson and laquinto, 1989), their emotion, their level of cognitive complexity or maturity (Greiner and Bhambri, 1989), their attitudes towards change, the stability of their career (Miller, 1990) and their sex, all have a decisive and empirically tested inuence. Therefore, understanding an organizations strategy starts with a better understanding of who the leaders are.
Strategy as a Communitys Statement But strategy is not just the expression of a leader. It is also the expression of a community. The level of cooperation is related to how much strategy expresses a communitys norms, values and beliefs. In his description of Hondas strategy in the motorcycle industry, Pascale (1990) has shown how much trial and error is involved in strategy formation. Trials and errors cannot lead to fruitful results unless organization members are willing to collaborate, unless the strategy is in fact their creation. Cooperation is intimately related to how much individual organization members share the vision, the underlying values and beliefs, and how much they are involved in the strategy making process. Thus strategy is the
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Strategy as a Guiding Track Strategy is also a beacon, a guide when things get murkier, when the road ahead is hard to assess. In his study of the history of Bishop University at Lennoxville, Canada, W. Taylor (1983) has shown that
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over a 50 year period, the decisions made followed the same pattern. Whether this is seen as isomorphism over time or strong culture (DiMaggio and Powell, 1983), the strategy provides often a lasting set of rules and norms by which reality is translated and dealt with. Such a perspective emphasizes the consistency or coherence in decision-making, and is at the very heart of the idea of strategy (Andrews, 1987). The descriptions that have been provided of GEs history (Aguilar, 1988) show how much strategy has been mostly a guide for business decisions, in particular, the more recent Welch era has brought to the fore several simplied expressions of strategy that all emphasize the need to guide the organization in a coherent way. For example, Welch has described strategy as follows: To be number 1 or number 2 in all our business, be better than the best, while remaining in three areas of activities: traditional, high technology and services. These were meant to be the references against which each organization member could judge the consistency and value to the organization of his/her activities. The idea of guiding track leads to strong congurations. Miller (1996) has shown that the guiding patterns can be so strong as to lead to oversimplication and sometimes the demise of the organization. The guiding track is not always a systematic construction. It can emerge as a result of the members initiatives and as a result of historical incidents and accidents (Greenwood and Hinings, 1988).
why one can talk about a functional strategy, which is an attempt to actualize at its level the stated corporate values. As an example, nancial strategy could aim at providing a high level of nancial exibility, while HRM may be concerned about hiring, and contributing to maintain the willingness to cooperate of key personnel, thus contributing to operational exibility.
Strategy as a Relationship to the Environment Finally, the environment is a critical factor for survival. It generates most of the uncertainty for the organization (Thompson, 1967). To deal with such an uncertainty, one needs to understand and conceptualize the threat and the opportunities that are constantly presented to the organization. The environment is sometimes seen as a hard fact, unavoidable. This is for example the case when a new regulation changes the competitive game, or when a competitor comes up with a crippling innovation. In such a case, strategy is mostly an ability to adapt. At least ve theoretical lines of research have provided meaning to this deterministic view of environment. The rst emphasizes competitive natural selection as in an ecological niche (Hannan and Freeman, 1984). Organizations are selected in or out depending on their ability to respond to the environmental requirements. Adaptation is seen as the name of the game, but organizations have limited control over the selection process. The population ecology of organization is one of the most deterministic of all environment-based organizational theories. Less deterministic, but still emphasizing the environments dominance is the contingency theory of organizations (Lawrence and Lorsch, 1967; Thompson, 1967), Environmental uncertainty is dealt with through structural and strategic adjustments and continual co-alignment. The relationship between environment, strategy and structure has been widely documented and empirically veried (see Venkatraman and Prescott, 1990). A deterministic is the Carnegie perspective. Simons (1945) and later Cyert and Marchs (1963) view of the environment and most importantly of the organizations ability to respond to its demands is related to the ability to adapt the organizational routines or premises. The rigidities and inghtings, among coalition members, that take place in most organizations, prevent them from adapting. The only way to make adjustments is through continual adjustment of organizational routines. Agency and strategic choice (Hrebeniak and Joyce, 1985) are reduced to the ability to make changes to the norms and routines that affect the organizations behaviour. Industrial organization and in particular Porter (1980) provide a no less deterministic theory of environmental inuence on the organization. But Porters
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Strategy as the Building of Competitive Advantage Strategy is of course often seen as a quest for competitive advantage. The early version of the concept of strategy (Learned et al., 1965) as well as the more recent Resource-based view of the rm (Wernerfelt, 1984), all suggest the need to match resources to environmental opportunities. How organizations do that is at the heart of strategic management. Resources which provide competitive advantage happen to be soft and hard to imitate. This is never easy to assess. Managers build uniqueness without a clear sense of what may lead to success. They take risks and in so doing their intuition is at least as important as their analytical skills. Building unique resources involves an attention to intermediate processes and both to their resource composition and to their response to market demands (Ray et al., 2004). A competitive advantage is built on a clear understanding of the rms functional characteristics, and of their inter-relationships. This leads to the value chain conguration (Porter, 1985), which is most appropriate to market value creation and capture. This suggests that a competitive advantage requires integrating activities both at the level of the business and at the level of business functions. The business level is concerned about positioning among competitors, and the functional level is concerned about productivity and organizational effectiveness. Thats
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work has actually increased the ability to affect the competitive environment by providing a framework that enhances the understanding of its dynamics. Understanding the environment leaves managers free to create ways, strategies, to deal with it. Finally, the resource dependency theory (Pfeffer and Salancik, 1978) offers a view of the environment centered on those environment forces or stakeholders that provide the rm with resources. Understanding the motivations, power positions and relative or mutual dependences of the organization on these forces may help devise a strategy to enhance the organizations power, and its ability to survive. But the environment is also in the eye of the beholder (Weick, 1979). It is enacted by managers through the lters that come from their cognitive make up or from the cultural-cognitive inuences that come to bear on them. This may explain isomorphism in strategy-making (DiMaggio and Powell, 1983). These factors explain why the same environment may be seen as a source of opportunity by some managers and a source of threats by others. Clearly, in such a perspective, strategy-making leads us back to the leader and his/her own make up. These intellectual aspects are of course intimately related to the practical aspects of individual and collective actions and their effect on how the organization functions. They are not action, but the premises upon which all action come to rest. For example, when many are to act together, there is a need for practical ways to keep the action orderly, through goals, structure and systems (planning, performance measurement and control, rewards and punishments, training, resource allocation, management information and communication). Structure and systems give organisational life to decision processes that are unique to each situation. Managing these processes is a critical function of executives. It is through the combination of management mechanisms that strategy is revealed and given life. Ultimately, action is a series of decisions. How are decisions made? What motivates them? How are decisions integrated in specic situations? How are managerial mechanisms used to encourage or orient decisions? These are some of the questions that come out of the study of decision and planning models as integrating tools. Finally, strategy, in practice, can be seen as a revelation of the widest possible set of inuences on action (academics would use words such as voluntary, systematic, rational, objective, but also emotional, sentimental, affective, intuitive). To represent strategy as a model or theory of action, one has not only to recognise and include all these aspects and associate them in such a way as to recognize how they combine to generate action, but also do this in a sufciently economical manner so as to be able to
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Management processes
Decision making
Relationship to environment
A leaders statement
recognise patterns among strategies in action. Overall, strategy can be seen as a creative but coherent practice, informed by all the intellectual aspects mentioned earlier. The representation of strategy proposed here is shown in Figure 1. The intellectual dimensions of strategy are represented as layers of reality, related to life through the mechanisms that lead to decision and action (i.e. practice), which in turn feedback to affect the intellectual dimensions. This construction is drawn from a synthesis of the literature. It is similar to what dominated the eld until the new strategic management emerged out of the strategic management movement (which we see as linked to the foundation of the Strategic Management Society). This model is a walking stick for the researcher. It can and has been used by students, by academics and by practitioners, especially when they are in the process of experimenting and searching for meaning. Also the model can be easily related to the disciplines that contribute to strategic management research. All this makes it a useful guide both for researchers to make sense of incoming research and for practitioners to use. This model is just an example of a useful walking stick. Managers and academics alike may have many walking sticks, so it is not the only one available. Bower (1970) for large diversied rms, or Miles and Snow (1978) for less complex situations have outlined models that have been an inspiration and provided a way to structure many investigations.
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Similarly, Mintzbergs work (1978) and the conguration school contributions, although focused mostly on strategy content, have provided a map to deal with the strategy-structure conguration. Many others qualify in this search for strategy as a walking stick, and our call is to give them greater space and legitimacy.
take. The most powerful models should emphasize strategy process leaving the specialized research to deal with content. The eld of strategy has no future except to become close to reality. Its methods should be those that incorporate complexity. Therefore, they will often be qualitative, and when possible experimental, to better represent reality and its dynamics. Despite the fact that practice and theory are not well connected and that strategic management has so far failed to produce the volume of useful results expected by management, perhaps one day these strategy research methods will be powerful enough to provide managers with truly useful walking sticks.
Acknowledgements The authors are extremely grateful to John McGee, Professor of Strategic Management at Warwick Business School, who signicantly improved the readability of the text.
Note
1. Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving these goals, and denes the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and noneconomic contributions it intends to make to its shareholders, employees, customers, and communities.
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TAIEB HAFSI, HEC Montreal, 3000 Way of the Coast-Holy-Catherine, Montreal, Quebec H3T A7, Canada. E-mail: Taieb.Hafsi@hec.ca Taeb Hafsi holds the Walter J. Somers Chair of International Management at HEC Montreal, and is Co-ordinator of the Strategos Research Group. His research interests include corporate strategy, organization, governance and management by the State.
HOWARD THOMAS, Warwick Business School. University of Warwick, Gibbets Hill Road, Coventry CV4 7AL, UK. Email: Howard.Thomas@ wbs.ac.uk Howard Thomas is Professor of Strategic Management and Dean of Warwick Business School with past senior appointments at the University of Illinois at Urbana Champaign, Australian Graduate School of Management, and London Business School. A prolic author, his research includes competitive strategy, risk analysis, strategic change, international management and decision theory.
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