The Process of Business Strategy Planning: the Design School of Thought - Essay Example

Contents Contents Introduction 2 Resources and Capabilities 3 Design School of Thought 4 Contrast between other schools of thoughts 6 The cognitiveschool 7 The Power School 7 Conclusion 9 References 9 Introduction Strategic management is a consistently evolving field encompassing many changes taking place over the period of time. As strategic management advocates that only constant is change therefore the literature on the subject is also changing and evolving as the corporate world changes and new and more innovative managerial practices evolve. Henry Mintzberg is one of the leading thinkers on the strategy and has contributed largely towards the formulation of modern literature on the subject. His book "Strategy Safari" is considered as one of the most critical additions to the strategy literature which has effectively increased the awareness and scope of the subject. Strategy Safari presents ten schools of thought which according to Mintzberg are classified into two broader areas of Descriptive schools as well as Perspective schools. Under these two broader areas, there are ten different categorization of the various schools of thoughts. Perspective schools of thoughts are those which consider that the companies based on their assessment of their current situation and resources attempt to formulate strategies whereas under descriptive schools of thoughts, organizations tend to take a historical view of the events which has caused the companies to reach at their present status and position. The ten schools of thoughts than are discussed according to their individual characteristics as well as assumptions in order to accurately define the respective schools of thoughts. This essay will attempt to critically analyse the underlying assumptions, perspectives as well as the paradigm stance of the Design School of Thought as discussed in Strategy Safari by Henry Mintzberg. Resources and Capabilities Before discussing the design school of thought, it is of great importance that we must first attempt to initiate a debate on the concepts of resources and capabilities and how both the concepts have been utilized in the literature and their link with the design school of thought. Apparently, the strategies within the organization are driven by two critical perspectives called - Inside Out and Outside In perspective. Outside In perspective of the strategy formulation look at the market and the external situations as the major influence over the strategy making process within the organization and is largely opportunity driven while working on Positioning approach. This approach also allows firms to be more responsive to the changes taking place outside and convert them into opportunities. However continuous repositioning by the firms may keep their focus away from their distinctive competencies. However on the other hand, the inside out perspective of strategy formulation tend to take into account the resources of the firms and not the market as the chief source of strategy making within the organization. The focus of this approach has been on resources and capabilities of the firm and not on the external forces such as market. This approach is basically strength driven based on the internal capabilities of the firm with more emphasis on delivering and achieving more internal competencies. This approach also allows the firm to tap the opportunities in much better way as compared to the firms working on the basis of outside in perspective. The inside out perspective is what the key perspective of design school of thought is basically. Design School of Thought In its essence, Design school of thought see strategy as a conceptual process. It attempts to match the internal resources of the firm to the external environment in order to find a best strategic fit between the organisational resources and organisational strategies. The historical roots of this school of thought can be traced to the Harvard Business School as it appeared in the work of Selznick in 1957 when he first coined the word of distinctive competencies. It is also believed that the core principles of this school of thought has been outlined by learned and others in "Business Policy: Text and Cases" in 1965. This is also known as the Alfred Chandler's Strategy and Structure. (Ryall et al, 2003). The recent additions to this school of thought now label it as SWOT model also as it attempts to sum up the internal capabilities as well as external influences over the business. The basic approach of this school of thought is based on the premise that if strategies are to be made in clear and unique way than the process of strategy formulation should be deliberate and this is achieved through matching the internal capabilities and resources of the firm with the external situation of the environment. Thus this school of thought basically focuses on the assessment and evaluation of the internal capabilities of the firm and based on this assessment of the internal competencies and the influence of external environment strategies should be designed and prepared. (http://www.12manage.com.2008). This school of thought use architecture as the metaphor for the basis on which this school of thought is built however it attempts to find and establish a strategic fit between the internal resources as well as external elements. In doing so, it attempts to achieve less disorder, reducing the ambiguity in the strategic management process as well as creates simplicity in the process. Further this school of thought also emphasis on the more visionary leadership as the necessity for organisations following this school of thought in relatively stable and environment. The design school of thought also emphases a strong but informal planning process within the organization with the use of effective prognosis and projection techniques to derive the strategy as a more conceptual framework. Further as discussed above that this school of thought put more focus on the internal capabilities of the firm therefore in that process it also attempts to create a link or a relationship between the strategic planning within the organization with the financial management systems of the firm so that the resources and strategies are balanced in an strategic fit. A typical strategic planning process in this school of thought outlines that the organisation first take into account its internal analysis by evaluating its strengths and weaknesses as well as identifying its special competencies. The second phase of the strategic management in this school of thought leads to the external analysis where threats and opportunities are analyzed. Based on both of these analysis, the critical success factors are defined which than lead to the strategy formulation, evaluation and choosing of the alternatives as well as the implementation of the chosen strategy. This process suggest that this school of thought put a lot of emphasis on strategy making process as a concept based on a certain design, a logical string of steps which lead to the strategy formulation and implementation. It is also very critical to understand that the basic philosophy behind this approach is the focus on approach strategy as a process- a systematic approach towards achieving the best possible fit between the internal resources of the firm and its strategies keeping in view the external environment also. This fact alone give this approach a much more credibility in terms of its acceptability as a rational model which put lot of emphasis on generating the internal resources of the firm. It must also be noted that the Henry Mintzberg criticised this approach based on two broader perspectives. Mintzberg questioned the methodological soundness of this school of thought as well as its factual veracity. (Ansoff, 2006). These two though are also being questioned by many researchers but they are also considered as two of the basic and most important academic weaknesses of the design school of thought. Contrast between other schools of thoughts There are ten schools of thoughts which have been mentioned by the Henry Mintzberg in his book "Strategy Safari". We have discussed "The design school of thought" which basically deals with the assumption that the strategy formulation is a conceptual process involving a set pattern of actions which define the whole process of strategy formulation within the organisation. The following two sections will discuss its contrast with two other schools of the thoughts .i.e. the cognitive school and The Power School. The cognitive school This school of thought believes that the strategy formulation within the organisations is a mental process as against the fact that it is a conceptual process as defined in the design school of thought. The basic difference between the two approaches in their basic philosophy is the fact that cognitive school of management is based on the principles of psychology whereas the design school of thought is not. This school of thought emerged during 1990s whereas the design school of thought is bit older than it therefore the cognitive school of thought can be considered as more modern with the capability of embarrassing the latest changes happening in the literature on strategic management. As against the design school, this school of strategic management is based on the basic assumption that the strategy formulation process occurs in the mind of the strategist and the strategies emerge as a perspective rather than descriptive in nature as in the case of the design school of thought. Like the design school of thought, this school of thought also believes that strategy formulation is a methodological process however there is a difference between the methodologies of the two schools. The cognitive school of thought assumes that the seen world can be represented through models and can be constructed however since strategy formulation is a psychological process therefore the mind of the strategist can easily be distracted thus the strategies are difficult to formulate, implement and change whereas the design school has more flexibility in this regard.(Mathews,2005). The Power School There is a major difference between the power school of thought and the design school. The power in its essence means the ability to influence therefore this school of thought, in its very basic assumptions, assume the use of power and influence in the strategy formulation process. However this power and influence is being considered as an influence from external agents which have the ability to impact the organisation therefore organisations in order to formulate their strategies need to take into account the extent of power being exerted by the various external variables on the organisation. This school of thought view strategy as a process of negotiation rather than a conceptual process as envisaged by the design school of thought. Thus the very core of this process requires that the strategy formulation should be a political process whereas the design school of thought views the strategy formulation as a conceptual process. The basic premise of this school of thought suggest that strategy formulation process is shaped by the various political as well as power structures within the organisation and that the strategies formulated through this process take their own time to emerge and often emerge in the form of different ploys as well as different forms of positions. The basic difference between both of these schools of thoughts is the fact that design school of thought completely ignores the politics as a real part of the organisation and how it can impact the strategy formulation whereas the power school attempt to reconginse politics within the organisations as a real part and parcel of the organisations and how through bargaining as well as positioning can help various political as well as power groups within the organisations to exert their pressure on the strategy formulation. Conclusion The design school of thought emerged during the 1950s and 1960s and emphasis on taking into account the external environment as well as internal capabilities with the help of SWOT analysis and attempt to define strategy formulation as a process which can help organisations to find a best strategic fit between its external and internal environment. This approach emphasized on the use visionary leadership as a necessity for implementing such strategic management style and that the strategy formulated by those leaders should help provide or achieve the competitive advantage to the firms based on their internal competencies. However what is most critical about this school of thought is the fact that it considers strategy formulation as a deliberate conscious effort which is the result of controlled process of thinking in organisation. References 1. Ryall, M. J, Sadler, Philip. Craig James C., (2003). Strategic Management. 2nd ed. London: Kogan Page Publishers. p15. 2. http://www.12manage.com. (2008). Ten Schools of Thoughts. Available: http://www.12manage.com/methods_mintzberg_ten_schools_of_thought.html. Last accessed 10 August 2008. 3. Ansoff, H. Igor. (2006). Critique of Henry Mintzberg's The design school: Reconsidering the basic premises of strategic management. Strategic Management Journal. 12 (6), 449 - 461. 4. Matthews, Joseph R. (2005). Strategic Planning and Management for Library Managers. New York: Libraries Unlimited, 2005. P36 . Read More