Business strategies demand discipline in the execution of long-term strategic plans & flexibility to address emergent changes.

Explain which one of the two features is more critical in your view. Executive Summary: This essay begins by defining the term strategy and arguing that successful formulation will result in an adaptive relationship between the organisation and its environment, which is sustainable and wealth generating. The essay then reviews the strengths and weaknesses inherent in emergent and rational (deliberate) approaches to strategy formulation before, concluding that given the complexity of contemporary markets an increasingly emergent approach to strategy formulation is in the long term likely to be as important as a rational strategic planning; and that within such perspectives the focus of the planning function should be to provide and disseminate the environmental information necessary to engender the organisational (complex) learning required to underpin a mutually beneficial relationship with the organisations chosen market(s).

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trategy may be defined as a! "..pattern of decisions in a company that determines and reveals its ob#ectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be, and the nature of the economic and non$economic contribution it intends to make to its shareholders, employees, customers, and communities.%(%ndrews& $9'(& p.'!) )ohnson & Scholes *$999& + $, differentiate between intended strategy, realised strategy

and unrealised strategy, (see fig &). Intended Strategy is "an expression of desired strategic direction deliberately formulated or planned by managers%, 'ealised trategy "is the strategy actually being performed in practice% and unrealised strategy is strategy which whilst intended "does not come about in practice%, ()ohnson & Scholes& $999& p.-9). They utilise this model to identify five forces affecting the process of strategy formation namely; (laned &mplementation, )ultural * (olitical +orces, &mposed )hoice, )ommand ,imension ((ressure from dominant stakeholders) and &ncremental adaptation to the operating environment so that strategy emerges as a response to such stimuli over time, ( ee +ig &). .ig / - trategy ,evelopment 'outes ()ohnson & Scholes& $999& p." 0 1int2berg & 3aters& $9'"& p.+"')
Strategy as an Outcome (of cultural and political processes) Imposed Strategy

Intended Strategy

Planned Implementation Deliberate Strategy

Realised Strategy

Unrealised Strategy

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uch perspectives differentiate between two clear routes for strategy development within organisations; strategy as a Deliberate planned activity or strategy as an Emergent process which is contingent on a combination of external driving forces identified in +ig &&. ()ohnson & Scholes& $999& + $0 1int2berg& $99-, argue that the reasons advocated for the adoption of a rational, planned approach to strategy development include; the utilisation of the planning function to involve people in the process of strategy formation and thus establish shared ownership, to systemically communicate intent within and outside the organisation, the provision of a systemic and structured (if inflexible) method of analysing complex problems underpinned by rational reductionism, as a mechanism for coordinating the activities of sub$business$units to increase alignment with the overall corporate strategy, to facilitate a long$term (.$/ year) view of internal operations and their ability to respond and adapt to the demands of the market place, provision of a structured method of allocating resources over the medium to long$term, and as a mechanism for the formalisation and differentiation of tasks involved in the strategy formation process. .ig // ,rivers for trategy +ormation ()ohnston & Scholes& + $& p. --)

The Planning Dimension Strategies are the outcome of rational, sequential, planned and methodical procedures

Definite and precise strategic objectives are set and the organisation and environment are analysed Potential strategic options are generated and the optimum solution chosen Defined procedures for implementation and the achievement of the strategic objectives are developed and
the strategy is made explicit in the form of detailed plans The Incremental (Emergent) Dimension Evolutionary but purposeful strategy development

Strategy is developed as issues arise Strategy is continually adjusted to match changes in the operating environment Early commitment to a strategy is tentative and subject to review Strategic options are continually assessed for fit Successful options gain additional resources Strategic options are developed from existing strategies by experimentation
implementation The Political/ ultural Dimension A way of doing things! in the organisation guides strategic direction

and through gradual

Strategies evolve in terms of a core set of shared assumptions based on past experience, values and

beliefs held by the organisation"s members #he shared assumptions guide$ the selection of goals and objectives, the identification of strategic issues, the selection of information and the selection of strategies Strategies are developed by negotiation and bargaining between interest groups

#he interest groups see% to realise their own desired objectives #heir influence on strategy development increases with power
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 Power comes from the ability to create or control the flow of scarce resources and the control and provision

of information A strategy acceptable to powerful interest groups is achieved by a process of accommodation and mutual adjustment The ommand Dimension An individual is the driving force behind the organisation"s strategy&

Strategy is primarily associated with the institutionalised power of an individual or small group& #he strategy represents the aspirations for the organisation"s future of this individual& #he strategic direction may be related to a vision! based on rational understanding and
experience and intuition& #he individual becomes the representation of the strategy for the organisation&&

intuition, or

The Enforced hoice Dimension Strategic choice is prescribed or limited by external forces that the organisation is unable to control or influence& 'rganisations respond to environmental imperatives&

Strategic change is instigated from outside the organisation& (arriers in the environment severely restrict strategic mobility&

They go on to cite the research of (5hyne& $9'!0 1c6ierman & 1orris& $99-) who found very little correlation between the financial performance of organisations and the adoption of deliberate, planned approaches to strategy development. 0ne of the key problems with the contemporary application of such an approach lies in the difficulty of making useful forecasts within complex environments, which in itself is an essential prerequisite for rational reductionism. (7e 3it & 1eyer& $999) state that; "0ne of the difficulties of planning, advocates of this perspective will readily admit, is that plans will always be based on assumptions about how the future will unfold. (lans require forecasts. 1nd as the ,anish physicist 2iels 3ohr once #oked, 4prediction is very difficult, especially about the future. 5ven enthusiastic planners acknowledge that forecasts will be inaccurate.% *7e 3it & 1eyer& $999& p.$"4, 1int2berg *$99-, argues that the failure of strategic planning approaches to strategy to take into account, and adequately respond to such complexity is based on the following fallacies! The Fallacy of Prediction: rational approaches assume that the world is supposed to stay on course while the plan is being developed. The problem here is one of prediction - whilst certain seasonal patterns my be predictable based on historical data, the forecasting of

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discontinuities such as developments in technology, fall in demand for air travel, rising oil prices etc., is problematic. The Fallacy of Detachment! that is that strategy can evolve without specific intervention of senior managers. That, is that the formalisation of strategy does not necessary result in a uniform behaviours of employees. 6ariations in learning as a result of individuals creatively responding to environmental influences may in themselves result over time in a beneficial, wealth generating relationship with the environment. 1dditionally, strategic vision from senior managers, however, well aligned to strategic intent, is not likely to have an effect on the values and beliefs of employees, if it is not communicated across the organisation - thus, strategy in action breaks down. The Fallacy of Formalisation! utilising a rational planning process to formalise procedures underpinning work will never be able to take account of all the contingencies required to respond to discontinuous changes in the environment. ()ohnson & Scholes& $999) develop 1int2berg8s *$99-, arguments to cite the following weaknesses of the rationally, planning approach to strategy formation! strategy is enacted through people therefore cultural and political considerations need to be taken into account, these may not be easily understood from the perspective of bounded rationality; strategy, which originates from the planning department may not be owned by others in the organisation, the process is cumbersome and individuals may not understand the whole; there is a danger that strategy is thought of as a plan rather than a means to and end, and in getting the plan right the organisation can spend so much time trying to forecast the environment that strategy can never be implemented in a meaningful manner. 1dditionally, planning can become an obsessive search for a set of determinants of performance, "if you have no vision and only formal plans, then every unpredicted change in the environment makes you feel like the sky is falling in%, (1int2berg& $99-& p.$$$) (1int2berg& $99-) argues that even at its height in the 789s and :89s, strategic planning in practice often resulted in strategic programming, "the articulation of and elaboration of strategies, or visions, that already exist%, (1int2berg& $99-& p.$ (). ;e goes on to argue that organisations need to differentiate between strategic planning and strategic thinking the latter being concerned with engendering the learning necessary for the organisation to adopt what
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(7e 3it & 1eyer& $999) term and outside$in approach to strategy formation. <hich has at its heart a belief that "firms should not be self$centred, but should continuously take their environment =and an understanding of their markets> as the starting point when determining their strategy%, (7e 3it & 1eyer& $999& p.44 ). ;owever, in advocating a more contingent, emergent approach to strategy formulation, (1int2berg& $99-) does not advocate the demise of the strategic planning role, but argues that the role should be concerned with the rational provision of facts which supports the synthesis of ideas required to develop a sustained strategy. trategists have to respond to dynamic and unpredictable forces for change such as; increased drive towards deregulation, advances in technology especially computer mediated communication and e$commerce, drive towards increased economic efficiency and the short term satisfaction of shareholder financial demands, increased consumerism and customer aspirations, globalisation, pursuit of competitive advantage based on the differentiation of people performance (intellectual capital) etc., as they seek to develop an adaptive and sustainable relationship with the external environment. uccess in this endeavour requires strategists to adopt an open systems perspective which argues that the long$term survival of the organisation lies in its ability to align its internal systems and process to the needs of the market place, such that it is shaped by the environment and in turn is able to exert a reciprocal influence within a state of mutual adaptation which some writers, ( Senge& $99 ), term cultural symbiosis. The dynamic complexity inherent in today9s market places requires a broader, continuous and contingent approach to the development of strategy, which views strategy as a process, which in addition to internal planning, emerges in response to key environmental driving forces such that successful organisations are those who are able to quickly develop product?service offerings in order to respond to rapid and unpredictable change in customer needs and wants. The dynamic complexity of such market places is summarised succinctly by ( 1ason & 1itroff& $9'$) who in challenging traditional approaches to strategy formation, which emphasise the rational derivation of long term strategic plans ie strategy as planning, develop the concept of 4wicked problems9 in order to highlight the complexities of business environments and the limitations of rational reductionism.

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uch environmental complexity is distinguished in terms of problems, with the characteristics of interconnectiveness, complicatedness, uncertainty, ambiguity, conflict and political constraints. (roblems and solutions do not occur in ordered pairs, solving one problem may have important, and unforeseen effects on other parts of the systems, which in turn may have costs and provide unforeseen feedback to other parts of the system. uch dynamic complexity within systems, derived from the interconnectiveness of related elements, will require strategists to take account of emergent forces for strategy development and implementation, in order to ensure that firms possess the internal process necessary to adaptively modify strategic plans, more quickly than their competitors. 1dditionally, similar emergent capability is required to respond to the systemic properties of! complicatedness $ the proliferation of feedback loops in the system means that cause and effect is difficult to predict; uncertainty $ interconnectivity and complicatedness result in a dynamic and largely uncertain environment, what is known today does not always help predict tomorrow; ambiguity $ there are likely to be many perspectives on a problem, especially given the number of global influences on strategy, c onflict $ given the pluralist perspective that exists in most markets conflict of interest is inevitable and the success of strategy may depend on the interaction between powerful interests who will never totally be able to share the same position, thus trade offs are inevitable resulting in a theoretical optimum that is never truly achievable; and social and political constraints $ organisations do not exist in a vacuum and their actions are influenced by political and (olitical considerations, which may not be rationally founded, allied to societal interests and?or the short term political cycle. ,efining the environment in these terms requires a shift in strategic thinking from a totally predictive, planning perspective to one in which strategy can emerge not only form formalised action (planning) but from the meaningful interpretation of causal events in real time. Brown & Eisenhardt *$99', argue that emergent strategies rely on organisational ability to learn from the actual experiences of employees at all levels, predicated on real time communication which supports the rapid dissemination and integration on information as the basis of meaningful individual and organisational learning. To catalyse such learning, managers need to ensure that employees working at the organisational?environmental boundary are sufficiently empowered to respond to complex environments, through for example the establishment of self$organising work teams, development of counter$cultural
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thinking and organisational tolerance towards the establishment of multiple sub$cultures, adopting a systematic approach to sharing learning and the utilisation of temporary flexible structures, in order to promote the "organisational learning required to respond to complexity%, (Stacey& $99+& p.$"). ;e goes on to argues that given such complexity, the real management is problem is managing the unknowable, and the key question is not how to create stable equilibrium within organisations, but how to create sufficient constrained instability to provoke complex learning. The concept of constrained instability reinforces 1int2berg8s *$99-, proposition that the adoption of emergent approach to strategy development whilst an essential prerequisite of complex adaptability does not in itself mean the demise of strategic planning, but instead redefines the strategic planning function in terms of the provision and integration of environmental information required to support individual and organisational learning, (Senge& $99 ) or as (Stacey& $99+) terms complex learning. (@earning that not only results in corrective actions, but also causes organisational members to surface, scrutinise and change the values and beliefs supporting such actions as the basis of catalysing the cultural regeneration underpinning environmental adaptability and thus competitive advantage). Aiven the complexity and unpredictability of globalise market places at the beginning of the BCst century, then whilst the planning dimension remains an important contributor to the formulation of strategy. &n order to quickly respond to discontinuous changes in the environment, successful strategy is likely to emerge from, and be contingent on a combination of cultural, political, societal, technological, legislative and in the case of the pubic sector mandated forces. Thus, organisations, which remain flexible in their response to these, are more likely to develop and sustain competitive positions. This involves senior managers balancing deductive, analysis with creative, inductive (generative?complex) learning (Senge& $99 ) in order to understand the complex interrelations present in environmental variables, and make sense of the dynamic complexity of the system in order to evolve successful strategy. Thus, an increasingly emergent approach to strategy formulation is in the long term likely to be as important as rational strategic planning; and that within such perspectives the focus of the planning function should be to provide and disseminate the environmental information necessary to engender the organisational (complex) learning required to underpin a mutually beneficial relationship with the organisations chosen market(s).
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enge, (., CEE8. The fifth discipline the art and (ractice of the learning organisation. @ondon! )entury 3usiness tacey ', CEEB, Ganaging chaos, @ondon! Dogan (age

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