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Graduate School of Business Seminar Series June, 2006

Dr Tim O’Shannassy

RMIT University

Lecturer

RMIT Ford MBA Program Manager

tim.oshannassy@rmit.edu.au

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Kenichi Ohmae (1982) – McKinsey and Co.

• “…great natural talent…outstanding strategist…an intuitive grasp of the basic elements of strategy…an idiosyncratic mode of thinking in which company, customers, and competition merge in a dynamic interaction out of which a comprehensive set of objectives and plans for action eventually crystallizes…insight is the key to this process…it is creative, partly intuitive, and often disruptive of the status quo, the resulting plans might not even hold water from the analyst’s point of view” (1982, p. 2).

“…strategic thinking…best possible solutions come from a combination of rational analysis, based on the nature of things, and imaginative reintegration of all the different items into a new pattern, using nonlinear brainpower” (1982, pp. 13-14).

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Peters and Waterman (1982) “Pathfinding is essentially an aesthetic, intuitive

process, a design process. There is an infinity of alternatives that can be posed for design problems…From that infinity there are plenty of bad ideas, and here the rational approach is helpful in sorting out the chaff. One is usually left with a large remaining set of good design ideas, however, and no amount of analysis will choose among them, for the final decision is essentially one of taste” (53)

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Contemporary Strategy Practice Traditional view― “top down” strategy formulation― plan passed down to line managers― strategy formulation senior managers, line managers good

soldiers and obey orders Uncertain world― think and act on the run― 21st century manager, better educated, evolution of society,

expects buy in…― formulation and implementation intertwined in a complex

event

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How Strategy Has Adapted

Greater demands on the strategy process greater appreciation of different modes of

strategic behaviour blend thought, analysis and action importance of strategic conversations importance of strategic intent See Hart (1992), Hart and Banbury (1994),

Liedtka (1998), Whittington (2005)

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Mintzberg (2000) & Markides (2000)

“…strategy has to be much more than the CEO…Strategy is the direction of an organization, and it can be very collective…” (Mintzberg, 2000, p. 35)

“…strategy ideas can come from anybody, anywhere, anytime…They can come through trial and error, by simply doing things or through a formal planning process” (Markides, 2000, pp. 359 - 360)

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Markides (2000) “The leader must decide decide the basic

parameters within which people will be free to operate…the leader must develop the values and beliefs that define the organization…The leader must also strive to achieve emotional buy-in for the strategy…Finally the leader must develop the organizational environment - the culture, the structure, the incentives and the people - that will support and promote the chosen strategy” (p. 362).

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Henry Mintzberg (1994)The Rise and Fall of Strategic Planning

Favours right brain over left brain; “soft” skills Strong views “…strategic thinking is an integrated perspective…a

not-too-precisely articulated vision of direction” “…messy processes of informal learning” Vision, learning, planning Involve staff at all levels Hard data???

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Mintzberg (1994)

STRATEGY- MAKING PROCESS

VISION LEARNING

PLANNING

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Stuart Hart (1992)Strategy-Making Process

STRATEGY-MAKING PROCESS

COMMAND

SYMBOLIC

GENERATIVE

TRANSACTIVERATIONAL

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Liedtka (1998)

STRATEGIC THINKING

SYSTEMS PERSPECTIVE

INTENT FOCUSED

HYPOTHESIS-DRIVEN

INTELLIGENT OPPORTUNISM

THINKING IN TIME

Vocabulary?

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Strategic Thinking= Broad “Strategic planning…has evolved into a viable

system of strategic management (or strategic thinking)” (Wilson, 1994, p. 12)

= Narrow “Strategic thinking…is about synthesis. It involves

intuition and creativity. The outcome…is an integrated perspective of the enterprise, a not-too-precisely articulated vision of direction” (Mintzberg, 1994, p. 12)

— Terminology is contentious

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O’Shannassy (2005) Strategic thinking is a particular way of solving strategic

problems and opportunities at the individual and institutional level combining rational and generative thought processes.

Thought and action can be intertwined or linear or something in between (also Eccles, 1993) depending on the strategy context confronting the organization.

The activity can involve both internal and external stakeholders depending on the context.

Pragmatically there is no single formula to strategic thinking for the individual or organization and it is evident from the lessons of the evolution of strategy that practicing managers need some flexibility in problem solving style.

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O’Shannassy (2005) – Strategic Thinking Model

Strategic Thinking

Entrepreneurial Strategic Intent

Thinking in TimeParticipative

Flexible Resource Inputs

 

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IV - O’Shannassy (2005)

Strategic Thinking

Entrepreneurial Strategic Intent

Thinking in TimeParticipative

Flexible Resource Inputs

 

Strategic Planning•Formalization•Documentation•Operationalization•Justification•Sub-strategies•Action plans

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DV– Organization Performance Ruekert et al (1985: 15): “…performance is…a

multidimensional construct” Three dimensional conceptualization of performance

capturing these dimensions of adaptiveness, effectiveness and efficiency:

“Effectiveness involves the degree to which organizational goals are reached, efficiency considers the relationship between organizational outputs and the inputs required to reach those outputs, and adaptiveness reflects the ability of the organization to adapt to changes in its environment”

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Research Question

1. Is there a relationship between the degree of evolution or sophistication of the organization’s strategy process and organization performance?

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Hypotheses for Discussion

H1: The greater the emphasis on strategic planning, the better organization performance

H2: The greater the emphasis on a more evolved, sophisticated strategy process, the better organization performance

H3: Greater emphasis on a more evolved, sophisticated strategy process, the better non-financial organization performance, the better future financial performance

H4: The better organization performance, the greater the emphasis on a more evolved, sophisticated strategy process

Bi-directional relationship Publishing around these hypotheses

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Sample and Method Critical realism Sample – heterogenous, 237 surveys completed Significant proportion of resources dedicated to

strategic management in Australia Preliminary analysis Exploratory factor analysis Factor correlation matrix Reliability analysis Multiple regression

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Results

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Discussion Points

What do the results tell us? How important is analysis, and how

important is experience, instinct and know-how in strategic thinking practice?

What is the role of data in good strategy process?

Who should be involved in strategic thinking activities?

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Some References: Hart, S 1992, ‘An integrative framework for strategy-making processes,’

Academy of Management Review, vol. 17, pp. 327-351. Hart, S. and Banbury, C 1994, ‘How strategy making processes can make a

difference’, Strategic Management Journal, Vol 15, pp. 251-269. Hill, RP and Stephens, DL 2003, ‘The compassionate organization in the 21st

century’, Organizational Dynamics, vol. 32, no. 4, pp. 331-341. Liedtka, JM 1998, ‘Strategic thinking: can it be taught?’ Long Range Planning,

Vol. 31, No. 1, pp. 120-129. Markides, C with Wang, P 2000, ‘Strategy and management: Constantinos

Markides discusses strategic innovation’, European Management Journal, vol. 18, pp. 357-366.

Mintzberg, H with McCarthy, D 2000, ‘View from the top: Henry Mintzberg on strategy and management’, Academy of Management Executive, vol. 14, no. 3, pp. 31-45.

Mintzberg, H, 1994, ‘The fall and rise of strategic planning’, Harvard Business Review, January-February, pp. 107-114.

O’Shannassy, T 2005, The Evolution of the Practice of Strategy in Australia, Unpublished Doctoral Thesis, Monash University, Australia.

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More References O’Shannassy, T 2001, ‘Lessons from the evolution of the strategy

paradigm’, Journal of the Australian and New Zealand Academy of Management, Vol. 7, No. 1, pp. 25-37.

O’Shannassy, T 2002, ‘An investigation of the relationship between manager’s perceptions of environmental uncertainty and strategy process sophistication’, Australia and New Zealand Academy of Management 2002 Conference, La Trobe University, Beechworth, Victoria, December.

O’Shannassy, T 2004, ‘Strategic thinking and strategic planning to optimize organization performance’, Australian and New Zealand Academy of Management 2004 Annual Conference, University of Otago, Otago, New Zealand, December.

Short, JC, Ketchen, DJ and Palmer, TB 2002, ‘The role of sampling in strategic management research on performance: A two study analysis”, Journal of Management, vol. 28, pp. 363-385.

Whittington, R 2004, ‘Strategy after modernism: Recovering practice’, European Management Review, vol. 1, pp. 62-68.