Guest Editorial Is strategy still relevant?

Transcription

1 Strat. Change 10: (2001) DOI: /jsc.551 Strategic Change Guest Editorial Is strategy still relevant? Is strategy still relevant? is a question that has been raised recently by Arthur D Little, the global management consultants. That such a question should be aired in public by such prestigious consultants is a sure sign that the contribution of strategy processes and strategy thinking to the management of businesses needs further justification than the unspoken assumption that strategy is good for you. This editorial outlines some of the reasons underlying the current unease with strategy and argues for the need to view strategy as a contingent process. It concludes on an ironic note, arguing that many of the characteristics of the contingency approach resemble ideas and issues found in post-modernism. As the adoption of a post-modern stance suggests the impossibility of standard frameworks, formulas or frameworks and the impossibility of comparing like with like (because there are no likes), strategy becomes empty, once again meaningless and perhaps irrelevant. Introduction In a recent paper by Arthur D Little (1998), the multinational consulting company, the writers made this assertion: Many thoughtful people are asking whether...it makes sense to do strategy at all. How useful is it to engage in strategic reviews, analysing market positions and setting goals and tactics, when at the end of the process the world will have changed and will continue changing? Is strategy still relevant? The answer is: yes it is. If strategy is about the future and about anticipating and shaping tomorrow to achieve managerial and organizational goals, why is it that a leading consulting company has the audacity to raise this issue publicly? Just what is going on in strategy thinking and practice that has led Arthur D. Little both to raise the question and then come to the defence of strategy? * Correspondence to: Peter Franklin, Emeritus Professor of Strategy, The Internet Journal of Strategy and Planning. Editors@strategyfirst.net.

2 184 Editorial Having lots of meanings, strategy is meaningless One of the problems with strategy is that it suffers from endless meanings and interpretations and has been applied thoughtlessly to all sorts of activities. (Franklin, 1998; Beaver, 2000). Following Ansoff s influential study in 1965, the term strategy has been appropriated by writers and speakers to the point that the idea and practice of strategy has so many meanings that now that it has none. Consider two pieces of evidence. One is the fact that the term strategy is now applied to virtually every function of the organization. Thus we have books, articles and practice concerning $ human resource strategy $ information technology strategy $ marketing strategy to name but three. Indeed, there appears to be no self-respecting field of study that does not have the term strategy bolted-on to give it attention and to enhance the credibility of writers and users. This leads to the second piece of evidence, namely that the word strategy is brought out under the cover of darkness when writers and speakers, theorists and managers, are looking for a more impressing word than important. The idea of strategic objectives sounds so much more impressive than the idea of business objectives on their own. The idea of a business policy sounds second rate to the idea of a business strategy. The idea of strategy, or rather its common usage, has been deified so that no self-respecting scholar or manager fails to engage in strategy in preference to other apparently more mundane issues. As Alvesson and Willmott (1996, p. 134) put it: One could argue that not only different talk about strategy is needed, but also less talk. The dis-regard and dis-ease of strategy The de-meaning of strategy has been accompanied by unease with traditional strategy models and disregard for its disciplines. Evidence of the former can be found in a range of books and articles by journalists and distinguished writers. Here the work of just three experts is cited to make the point that people are uneasy with strategy. The first item of evidence is from Prahalad and Hamel (1994, p. 6): Thoughtful members of the academic community are increasingly recognising that the concepts and tools of analysis that formed the backbone of the strategy literature during its period of major growth ( ), may need a

3 Editorial 185 basic re-evaluation in order to pave the way for new ideas... We argue that the need for strategic thinking and behaviour among managers has never been more urgent. This reality should force us to re-examine the traditional strategy paradigms. In the above, the two strategy gurus acknowledge the unease with the existing strategy models. On the same subject, but in a different vein, Kay (1993, p. 358) makes a similar point: The subject of strategy which I have described, falls a long way short of an established discipline, characterised by a widely accepted organising structure and growing body of empirical knowledge. So there is some evidence that distinguished writers are troubled by the state of strategy thinking and practice. But what is the root cause of this unease or if I am allowed the pun, what is the dis-ease of strategy? The dirty little secret about strategy Hamel s work on strategy as revolution surfaces what might be thought to be the main dis-ease. In a document once found on his web site ( now removed but echoed in a recent article (Hamel, 1998), he discards most of the prior work on strategy: The strategy industry doesn t have a theory of strategy creation. It doesn t know where the bold, new value-creating strategies come from. There is a gaping hole in the middle of the strategy discipline. No, let me put it differently: there is no foundation to the strategy discipline. Back to basics for strategy There is probably a touch of exaggeration in Hamel s assertion, but what cannot be denied is that much of strategy theory and practice is based on the positioning school of strategy thinking, which has given us a new vocabulary such as $ the five forces $ competitive advantage $ generic strategy $ the value chain As stated elsewhere (Franklin, 2001), while much of this vocabulary might have been new, many of the ideas are echoes of former work in micro and industrial economics that best suits a

4 186 Editorial more deterministic world, a world where there is little change and uncertainty, a world where the gaining and maintaining of competitive position can be easily analysed and, with appropriately managed resources and some managerial flair, won and maintained. However, according to other researchers and writers (for example, Brown and Eisenhardt, 1998), we live in an increasingly complex, uncertain and dynamic world. In these conditions, these and other writers argue that we need different strategy models, models which can reflect and ideally incorporate and handle turbulence (McGuinness and Morgan, 2000). In these conditions, perhaps the models most likely to yield helpful insights to managers are those that adopt and use contingency theory. Strategy and contingency theory: the quandary of the post-modern While there is little discussion of contingency theory in most strategic management books (Joyce and Woods, 1996), other work by Ansoff, Mintzberg, Quinn and many other prominent writers consider the idea of strategy as a contingent and emergent process. The seminal work in this area is the work by Ansoff and McDonnell (1990), who propose that organizations should choose strategies that best fit the contingencies of their business, in the context of the level of uncertainty or environmental turbulence. The potential benefit of such a contingency approach to strategy has recently been taken up by the management consulting firms McKinsey and Co. (1996) and Arthur D Little (1998). In an oft-cited paper by Coyne and Subramanian (1996, pp ) from McKinsey, the authors argue about the need to develop theory and practice that takes account of the chaotic and turbulent conditions of our time: The traditional model assumes that uncertainty is sufficiently low in an industry that you can make reasonably accurate predictions on which to base your strategy. In reality however, the future is usually much harder to foretell. When faced with uncertainty, executives tend to leap to extremes. Some simply pretend the uncertainty does not exist; others see it, but it paralyses them. What should strategists do when the true results (at least in part) of their situation analysis is: I don t know, and no amount of good analysis will tell me? Certainly, they should not just apply scenario planning and recommend options. Rather, the secret of devising successful strategies under high uncertainty lies in ascertaining just how uncertain the environment really is and tailoring strategy to that degree of uncertainty. Coyne and Subramanian identify four levels of uncertainty, which are represented by contexts in which managers can

5 Editorial 187 (1) make useful predictions (2) describe discrete scenarios (3) recognise continuous uncertainty (4) recognise true ambiguity In the same vein as McKinsey, Arthur D Little have also seen the contingency approach to strategy as life saving. In their recent work, with the purpose of promoting their Ambition-Driven Strategy Framework, they propose a sort of scenario approach where it is possible to develop a 3-by-3 Impact/Uncertainty Matrix, which postulates a relationship between the degree of uncertainty (low, medium and high) and its business impacts (low, medium and high). At face value, a contingency approach to strategic management would seem valuable. Indeed, as Hussey (1999) and the Ansoff Institute have recently pointed out, the contingency approach has been empirically tested: that is, it seems to stand up to empirical evaluation and appears to pass the pragmatic test. However, as a theory, it suffers different failings than those of the strategy schools that adopt a deterministic approach. In particular, if strategy is or should be seen as a contingent process, there are no standard frameworks, formulas and processes that managers can rely on. In this context, knowingly or not, strategy theory has entered the post-modern world where each case is different and unique. Here there are no reference points and no available benchmarks. Here it becomes impossible to compare like with like because there are no likes. Conclusion: a final destiny? Strategy and the local landfill site This editorial has focused on the relevance of strategy. In grappling with this question evidence from prominent writers reveals their concern with strategy theory. The dreadful little secret of strategy has been revealed here, and the possibility that a contingency approach to strategic management could be labelled and fall within the postmodern has been confronted. In conclusion, as practitioners and researchers of strategy, we are faced with some ironies. Either we continue to practise strategy knowing that it has so many meanings that strategy is meaning-less, or we adopt a contingency approach where strategy has no meaning at all, where it has become de-meaned. Neither stance offers much comfort to those who practise, advise or think about strategy. In any case, judgements about the relevance of strategy are probably based for the most part on the contexts of our current thinking and experience, and are thereby contingent! Is strategy still relevant? There is no answer. It is up to you.

6 188 Editorial Biographical note Peter Franklin is Emeritus Professor of Strategy and Management at The Nottingham Trent University. He is the founder and general editor of The Internet Journal of Strategy and Planning and a member of the Editorial Board of Strategic Change. He has written extensively on strategy, management thinking and behaviour. References Alvesson M, Willmott H Making Sense of Management: A Critical Introduction. Sage: London. Ansoff HI Corporate Strategy. McGraw-Hill: London. Ansoff HI, McDonnell E Implanting Strategic Management. Prentice Hall, : Englewood Cliffs, NJ. Arthur D Little A strategy for supporting innovation and growth in terms of high uncertainty. Prism Beaver G The language of strategy. Strategic Change 9: Brown SL, Eisenhardt KM Competing on the Edge: Strategy as Structured Chaos. Harvard Business School Press: Boston, MA. Coyne KP, Subramaniam S Bringing discipline to strategy. McKinsey Quarterly, no.4: Franklin P Thinking of strategy in a post-modern way. Towards an agreed paradigm. Part 1. Strategic Change 7: Franklin P Being strategic: Part 1. The Internet Journal of Strategy and Planning. ylibrary/stratthinking/pjf/beingstrategic/beingstrategic1.htm Hamel G Strategy innovation and the quest for value. Sloan Management Review, Winter: Hussey D Igor Ansoff s continuing contribution to strategic management. Strategic Change 8: Kay J Foundation of Corporate Success. Oxford University Press, Oxford: xx. Joyce P, Woods A Essential Strategic Management. Butterworth Heinemann: Oxford. McGuinness T, Morgan RE Strategy, dynamic capabilities and complex science: management rhetoric vs reality. Strategic Change 9: Prahalad CK, Hamel G Strategy as a field of study: why search for a new paradigm? Strategic Management Journal 15: Peter Franklin