Strategic Renewal Processes in Multi-Unit Firms: Generic Journeys of Change Vincentia D. Abrita- 1106035581Ryan Vamondo - 1106114352

Objective and Focuses • Examine how multiunit firms deal with the tensions of

renewal processes over time using co-evolutionary frameworks.

• Main questions : – When is renewal a selection or an adaptation process?– Are there generic patterns of renewal or is each renewal

journey rather idiosyncratic?– what roles do managers at the corporate and unit level play

in renewal journeys? • The role and different possible behaviors of top management

and frontline managers• Multiunit firms : microlevel of firm co-evolution

???

Actually, what is co-evolution ??

• interaction between two major groups of organisms with a close and evident ecological relationship, such as plants and herbivores. (Butterflies And Plants: A Study In Coevolution, Ehrlich & Raven, 1964)

Organizational Ecology(Selection, Variation,

Retention of Evolution)

Organizational Ecology(Selection, Variation,

Retention of Evolution)

Strategic Management(Firm-Level Adaptation)Strategic Management(Firm-Level Adaptation)

Managerial Intentionality

Managerial Intentionality

Institutional EffectsInstitutional Effects

EnvironmentEnvironment

Co-Evolution Co-Evolution

Bridging the adaptation-selection

Bridging the adaptation-selection

Reintegrate both

perspectivesReintegrate both

perspectives

The Map of Chakravarthy 10

Tensions

• Exploration vs Exploitation• Adaptation vs Selection

• Change vs Preservation

Tensions

• Exploration vs Exploitation• Adaptation vs Selection

• Change vs Preservation

Renewal ProcessRenewal Process

Perspective of Micro-co-evolutionaryPerspective of Micro-co-evolutionary

3 Generic Journeys3 Generic Journeys

4 engines of renewal 4 engines of renewal

Naive Selection Naive Selection

Managed Selection Managed Selection

Hierarchical Renewal Hierarchical Renewal

Holistic Renewal Holistic Renewal Co-evolutionCo-evolution

Micro Co-evolutionMicro Co-evolution

Perspective of Micro-Evolutionary

Selection Adaptation

Theory Area of Interest Theory Area of Interest

Population Ecology Procedural and structural baggage

Dynamic Capability Theory Latent abilities to renew core competencies

Institutional Theory Industry norms and shared logic

Behavioral Theory Slack and strategic intent

Evolutionary Theory Proliferation of routines Learning Theory Alignment based on learning , unlearning, relearning

RBV Exploitation of core competencies

Strategic choice theory Dynamic process subject to managerial actions

Discount the ability of organization to self consciously renew themselves

Discount the ability of organization to self consciously renew themselves Managerial intentionalityManagerial intentionality

The Generic Journeys (A)

• All units alike• Constant state of exploration-exploitation• Balance achievement : stability of the units. • Buying units which are balanced and sell units which are not

The Generic Journeys (B)

• Portfolios of units which will be changing and tending to exploitation

• The portfolio of units range along the explore-exploit continuum and together represent a balanced state.

• Balance achievement : mixing the portfolio at each point of time for equilibrium

The Generic Journeys (C)

• Reversement process of the evolutionary trajectory • Balance achievement : retrospective aggregation • Only survives if the extreme do not become to great,

resulting in breakdown

The Engine of Renewal Framework

The environmental conditions Intra-Unit Learning and Sharing

How’s the knowledge management works

Co-Evolutionary Path How’s the renewal journey

works

Top Management :The role and behavior of top

management and complementary roles by

different management levels

Selection :Based on the Top-Management behavior

(Proactive/Reactive) and choices of manner (Static/Dynamic)

Variation : What are the sources of variation ?

It is based on the concept of knowledge deployments.

Is it the incentive offer ? Top management’s deliberate fashion ? Outside knowledge ?

Engines of Renewal

Journey

Naive Selection

Slow-Moving Mature Environments Intra-Unit Learning and Sharing = N/A

Co-Evolutionary Path = Denial of Co-evolution and No pluralistic management

roles

Top Management: takes a reactive stance towards the industry Interpret and amplify market forces and market signals No intentional synergies creation

Selection Based on profitability and stability of explore-

exploit

Variation • competitive forces for survival

• narrow incentive based on the close relation to core competence

•Takes place inside and outside

Trading Units to Survive

Managed SelectionFast-moving, unpredictable environments

SelectionA portfolio ranged over the spectrum of

explore-exploit: Top management has a capability to adjust. Selection occurs among competing units.

Intra-Unit Learning and SharingEncouraged by top management:

There is considerable potential for learning across the units of the firm. Top management sets the context and provides the challenge for encouraging sharing.

Co-Evolutionary PathFacilitative micro co-

evolution: take a more balanced view of the possibilities open to management

VariationTop management creates strategic context

for variety generators: variety generators are needed to facilitate venture creation that parallels or anticipates the selection out of older more mature activities. Top management now focuses on initiatives within proposed by front line managers

Managerial BehaviorTop Management → passive takes a reactive stance towards its ability to shift the industry forces trying to be prepared for the changes that may come about.Frontline managers → active

Balanced Renewal

Journey

Hierarchical RenewalModerately paced

environments

SelectionSelected portfolio based on fitness to the

top management vision: the criteria for a sale or a purchase are based on the capability of stimulating and provoking other units into changing direction.

Intra-Unit Learning and SharingFacilitated by top management:

The top management team takes a very directive approach. They facilitate the processes by setting up special units to facilitate knowledge movement.

Co-Evolutionary PathDirected macro to micro co-

evolution: Renewal journeys are driven by a priori top-managerial intentions that develop cascade-down. The source of renewal is not selection or quasi-selection, but ex ante managerial purpose.

VariationTop management creates strategic intent

& assists the stimulation: Variation is a process that is directed by the top. Aimed at creating units that fit with the vision.

Managerial BehaviorTop Management → active Top managers believe they have some power over their environment. strategic renewal depends on their strategic intent.Frontline managers → passive

Aligning and influencing Journey

Holistic RenewalAny kind of environments

SelectionSelected portfolio based on collective sense-

making: The top management team act as a transformational leader who drives the process from the front , involves others, and brings them along.

Intra-Unit Learning and SharingPart of the philosophy and purpose of top

management: Collective sense-making which drives both variation and selection is an important requirement for knowledge integration processes. Collective sense-making is a key component of the integrative processes that seek to maximize organization learning.

Co-Evolutionary Path = Transformational macro to

micro co-evolution: The driver of renewal depends on the socially constructed reality of organizational participants. Sense-making as enactment where the journey is driven by the development of shared strategic schemata or collective frames of reference.

VariationCreated by dualistic process by top and

frontline managers: “Variation” and “selection” cannot be separated simply by level or by time; rather, it is integrated.

Managerial BehaviorTop Management → active Top management believes that it should try to influence the world by working closely with the lower levels creating an effective engine for renewal.Frontline managers → active

Cyclical Journey

Meta Journey of RenewalTop ManagementTop Management

Fron

tline

Man

ager

sFr

ontli

ne M

anag

ers

PassivePassive ActiveActivePa

ssiv

ePa

ssiv

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tive

Activ

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Naïve Selection: Emergent perspective. Slow-moving environment.

Naïve Selection: Emergent perspective. Slow-moving environment.

Hierarchical Renewal:

Emergent perspective. Slow-moving environment.

Hierarchical Renewal:

Emergent perspective. Slow-moving environment.

Managed Selection:

Facilitative leadership. Fast-moving, unpredictable environment.

Managed Selection:

Facilitative leadership. Fast-moving, unpredictable environment.

Holistic Renewal: Transformational leadership Any environment.

Holistic Renewal: Transformational leadership Any environment.

Conclusion

• Organizations are not static, and often resist attempts at simple categorization.

• Journeys of renewal are idiosyncratic, based on distinct combinations of managerial behaviors that are compatible with balance.

• There is proactive and reactive behavior of managements with respect to the environment.

Thank you!

Physical concepts are free creations of the human mind, and are not, however it may seem, uniquely determined by the external world.ALBERT EINSTEIN, The Evolution of Physics.