There are two problems in looking at what the authors claim are totally new ways of thinking about strategy. First, many of the claims to novelty and uniqueness only exist because the authors want them to, and what they really describe is the other side of an popular coin, and their work can be linked to much that has gone before. The second is that some of the theories are based on the analysis of what a few successful companies actually do, which is not always what they should be doing.
We can see another example of this.Quinn, who was hailed by some as having made a breakthrough in understanding how strategic decisions were really made, based his theory of logical incrementalism on a study of nine companies, seven American, one Swedish, and one British. One of his successful companies was Xerox Corporation, who contributed to his theory that the right way to make strategy was through a process of logical incrementalism, where the organisation felt its way forward rather than going through a lot of formalised analysis.
The another pair of ‘new’ thinkers. Hamel and Prahalad also used Xerox in the development of their ideas, but this time as an example of a company that had failed strategically. They state: During the 1970s and 1980s Xerox surrendered a substantial amount of market share to Japanese competitors such as Canon and Sharp. Recognising that it was on a slippery slide to oblivion, Xerox benchmarked its competitors and fundamentally reengineered its processes. By the early 1990s Xerox had become a text book example of how to reduce costs, improve quality, and satisfy customers.
The most effective strategies of major enterprises tend to emerge step by step from an iterative process in which the organisation probes the future, experiments, and learns from a series of partial (incremental) commitments rather than through global formulations of total strategies .The other main proponent of this line of thinking is Mintzberg. In Mintzberg and Waters47 a distinction is made between intended, deliberate, emergent and realised strategy. Deliberate strategy is based on precise intentions from rational analysis and examination of the situation: it is the portion of intended strategywhich is actually realised, that is, implemented.
Emergent strategy comes from patterns and ideas which are realised ‘despite, or in the absence of’ intentions. A consensus arises naturally as many different people in the organisation convergeon the same theme or pattern, so that it becomes pervasive in the organisation ‘without the need for any central direction or control’:In other words, the convergence is not driven by any intentions of a central management, nor even by prior intentions widely shared among the other actors. It just evolves as the result of a host of individual actions. Hamel and Prahalad have two main building blocks in their approach: the idea of strategic intent and core competencies.
The ideas are accessible in their most comprehensive form in Hamel and Prahalad (1994)10 and in the original form in Prahalad and Hamel (1989)50 and (1990).51 Strategic intent is the animating dream which will propel the organisation, which provides a sense of destiny, direction and discovery. I have tried very hard but can see no difference in this concept from that of vision which has already been mentioned. However, the authors do a useful service in pushing the idea into a position of greater prominence in management practice. In Hamel and Prahalad (1996) they deplore the fact that generations of US and British managers have been turned into cost cutters, downsizers, and reengineers, and have lost the capability to think strategically. Although process reengineering dominates the top management agenda in many companies, we’ve argued that to create the future, a company must also be capable of ‘reengineering’ its industry.
The logic is simple: to extend leadership a company must eventually reinvent leadership, to reinvent leadership it must ultimately reinvent its industry, and to reinvent its industry it must ultimately regenerate its strategy. For us, top management’s primary task is reinventing industries and regenerating strategy, not reengineering processes. Not much in common here with the emergent strategy school of thought! The second building block is core competencies, which they define: ‘A core competence is a bundle of skills and technologies that enables a company to provide a particular benefit to customers’.
It all rests on the contention that: ‘Core competencies are the gateways to future opportunities. Leadership in core competence represents a potentiality that is released when imaginative new ways of exploiting that core competence are envisioned’ . Architecture is the capacity of organisations to develop relationships with other firms in the value chain, including customers, employees, and through networks. This provides the organisation with the capacity to develop and use organisational knowledge and to respond flexibly to changing circumstances. So strategic architecture has something to do with the learning organisation.
Reputation is the second powerful source of competence, but its importance varies between markets. It can also be costly and difficult to create, but is very easy to lose.Innovation does not always deliver sustainable advantage, in that many innovations are easily copied. Kay believes that firms that are successful in innovation are often able to do so because of the strengths they have developed in their architecture, which enable them to generate a continuous flow of innovations, or move more rapidly than others to get an innovation to market.
A contingency approach to strategic management :
The contingency approach to management is based on the idea that there is no one best way to manage and that to be effective, planning, organizing, leading, and controlling must be tailored to the particular circumstances faced by an organization. Managers have always asked questions such as "What is the right thing to do? Should we have a mechanistic or an organic structure? A functional or divisional structure? Wide or narrow spans of management? Tall or flat organizational structures? Simple or complex control and coordination mechanisms? Should we be centralized or decentralized? Should we use task or people oriented leadership styles? What motivational approaches and incentive programs should we use?" The contingency approach to management (also called the situational approach) assumes that there is no universal answer to such questions because organizations, people, and situations vary and change over time. Thus, the right thing to do depends on a complex variety of critical environmental and internal contingencies.
Classical management theorists such as Henri Fayol and Frederick Taylor identified and emphasized management principles that they believed would make companies more successful. However, the classicists came under fire in the 1950s and 1960s from management thinkers who believed that their approach was inflexible and did not consider environmental contingencies. Although the criticisms were largely invalid (both Fayol and Taylor, for example, recognized that situational factors were relevant), they spawned what has come to be called the contingency school of management.
Research conducted in the 1960s and 1970s focused on situational factors that affected the appropriate structure of organizations and the appropriate leadership styles for different situations. Although the contingency perspective purports to apply to all aspects of management, and not just organizing and leading, there has been little development of contingency approaches outside organization theory and leadership theory. The following sections provide brief overviews of the contingency perspective as relevant to organization theory and leadership.