Reflecting on the Strategy Process

We are the blind people and strategy formation is our elephant. Each of us, in trying to cope with the mysteries of the beast, grabs hold of some part or other, and, in the words of John Godfrey Saxe’s poem of the last century:

Rail on in utter ignorance of what each other mean, And prate about an Elephant Not one of [us] has seen!

Consultants have been like big game hunters embarking on their safaris for tusks and trophies, while academics have preferred photo safaris — keeping a safe distance from the animals they pretend to observe.

Managers take one narrow perspective or another — the glories of planning or the wonders of learning, the demands of external competitive analyses or the imperatives of an internal “resource-based” view. Much of this writing and advising has been decidedly dysfunctional, simply because managers have no choice but to cope with the entire beast.

In the first part of this article, we review briefly the evolution of the field in terms of ten “schools.”1 We ask whether these perspectives represent fundamentally different processes of strategy making or different parts of the same process. In both cases, our answer is yes. We seek to show how some recent work tends to cut across these historical perspectives — in a sense, how cross-fertilization has occurred. To academics, this represents confusion and disorder, whereas to others — including ourselves — it expresses a certain welcome eclecticism, a broadening of perspectives. We discuss this in terms of another metaphor that is also popular in strategic management: the tree with its roots and branches.

Ten Schools of Strategy Formation

In his article “The Magic Number Seven, Plus or Minus Two: Some Limits on Our Capacity for Processing Information,” psychologist George Miller suggested in 1956 that the popularity of typologies using the number seven implies the number of “chunks” of information people can comfortably retain in their short-term memory.2 We hope that people interested in strategy can function at the upper limit of this range and, indeed, a bit beyond, because our historical survey of strategy literature suggests that it has been characterized by ten major schools since its inception in the 1960s — three prescriptive (or “ought”) and seven descriptive (or “is”).

We assume that the reader is familiar with the literature and practice of strategic management, if not necessarily with this particular characterization of them.

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References

1. H. Mintzberg, B. Ahlstrand, and J. Lampel, Strategy Safari: A Guided Tour through the Wilds of Strategic Management (New York: Free Press, 1998); see also:

H. Mintzberg, “Strategy Formation: School of Thought,” in J. Frederickson, ed., Perspectives on Strategic Management (New York: HarperCollins, 1990); and

H. Mintzberg, The Rise and Fall of Strategic Planning (New York: Free Press, 1994).

2. G.A. Miller, “The Magic Number Seven Plus or Minus Two: Some Limits on Our Capacity for Processing Information,” Psychology Review, volume 63, March 1956, pp. 81–97.

3. P. Selznick, Leadership in Administration: A Sociological Interpretation (Evanston, Illinois: Row, Peterson, 1957);

A.D. Chandler, Strategy and Structure: Chapters in the History of the Industrial Enterprise (Cambridge, Massachusetts: MIT Press, 1962); and

E.P. Learned, C.R. Christensen, K.R. Andrews, and W.D. Guth, Business Policy: Text and Cases (Homewood, Illinois: Irwin, 1965).

4. H.I. Ansoff, Corporate Strategy (New York: McGraw-Hill, 1965)

5. M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980);

K.J. Hatten and D.E. Schendel, “Heterogeneity within an Industry: Firm Conduct in the U.S. Brewing Industry, 1952–1971,” Journal of Industrial Economics, volume 26, December 1977, pp. 97–113;

B.D. Henderson, Henderson on Corporate Strategy (Cambridge, Massachusetts: Abt Books, 1979);

S. Schoeffler, R.D. Buzzell, and D.F. Heany, “Impact of Strategic Planning on Profit Performance,” Harvard Business Review, volume 54, March–April 1974, pp. 137–145; and

Sun Tzu, The Art of War (New York: Oxford University Press, 1971).

6. D. Braybrooke and C.E. Lindblom, A Strategy of Decision (New York: Free Press, 1963);

J.B. Quinn, Strategies for Change: Logical Incrementalism (Homewood, Illinois: Irwin, 1980);

J.L. Bower, Managing the Resource Allocation Process: A Study of Planning and Investment (Boston: Harvard University Business School, 1970);

R.A. Burgelman, “A Process Model of Internal Corporate Venturing in the Diversified Major Firm,”Administrative Science Quarterly, volume 28, June 1983, pp. 223–244;

H. Mintzberg, “Patterns in Strategy Formation,” Management Science, volume 24, number 9, May 1978, pp. 934–948;

H. Mintzberg and A. McHugh, “Strategy Formation in an Adhocracy,” Administrative Science Quarterly, volume 30, June 1985, pp. 160–197;

H. Mintzberg and J.A. Waters, “Of Strategies, Deliberate and Emergent,” Strategic Management Journal, volume 6, July–September 1985, pp. 257–272; and

K.E. Weick, The Social Psychology of Organizing (Reading, Massachusetts: Addison Wesley, 1979).

7. E. Rhenman, Organization Theory for Long-Range Planning (London: Wiley, 1973);

R. Normann, Management for Growth (New York: Wiley, 1977); and

B. Hedberg and S.A. Jonsson, “Strategy Formulation as a Discontinuous Process,” International Studies of Management and Organization, volume 7, Summer 1977, pp. 88–109.

8. M.E. Porter, “What Is Strategy?,” Harvard Business Review, volume 74, November–December 1996, pp. 61–78.

9. “What Is Strategy?,” Harvard Business Review, volume 75, March–April 1997, p. 162 (letter to the editor).

10. Ibid., p. 63.

11. C.K. Prahalad and G. Hamel, “The Core Competence of the Corporation,” Harvard Business Review, volume 68, May–June 1990, pp. 79–91; and

H. Itami and T.W. Roehl, Mobilizing Invisible Assets (Cambridge, Massachusetts: Harvard University Press, 1987).

12. See, especially:

J.B. Barney, “Organizational Culture: Can It Be a Source of Sustained Competitive Advantage?,” Academy of Management Review, volume 11, July 1986, pp. 656–665.

13. Chandler (1962).