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Amity School of Business

Strategy As An Emergent Process


Criticism of Formal Planning:
Unpredictability of Real World
Autonomous Action: Strategy making by lower
level managers
Serendipity and Strategy

Amity School of Business
Strategy Making in an Unpredictable World
Environment is uncertain, complex &
ambiguous
Small changes may have large & unpredictable
impact rendering strategic planning useless
Premium on being able to respond quickly &
alter strategies


Amity School of Business
Autonomous Action:
Strategy making by lower level managers
Too much importance to Top level management
Many important strategic decisions are initiated by lower
level managers
Out of their own initiatives lower level managers come up
with newer strategies and then lobby top managers for
resources
Helpful for established companies in responding to
paradigm shifts in industry
Top-level management sometimes have inertia


Amity School of Business
Autonomous Action:
Strategy making by lower level managers

Example
Starbucks also sells music CDs at many of its outlets
Sales of those outlets with CDs are generally higher
Idea came into being when Tim Jones, a stores manager started bring his
own music compilations
He started getting requests from customers for copies of those CDs
Jones suggested the CEO, Howard Schultz that Starbucks should sell its
own music
Since then, Starbucks has also moved into music downloading, where
customers can burn their CDs while in the store


Amity School of Business
Serendipity & Strategy

Examples of accidental events abound that
help push companies in new & profitable
directions

Some companies miss these opportunities
because serendipitous discoveries do not fall in
line with their prior strategies




Amity School of Business
Serendipity & Strategy

Example #1
Richard G. Drew invented one of the most practical items
to be found in any home or office: transparent adhesive
tape in 3M
Initially it had adhesives only along the edges
One day, a researcher working with florocarbons in a 3 M
lab spilled some liquid on her shoes. Later when she spilled
coffee on her shoes, she saw coffee formed into little liquid
beads and ran off her shoes without leaving a stain. Thus
the idea of scotchgard was born.


Amity School of Business
Planned Strategy
Unrealized
Strategy
Emergent
Strategy
Realized Strategy
Deliberate Strategy
Serendipity
Autonomous
Action by Lower
Level by Managers
Unplanned
Shift by Top
Level
Managers
Unpredicted
Change
Mintzbergs Model of Strategy Development
Emergent and Deliberate Strategies
Amity School of Business
Intended &
Emergent Strategies
A companys realized strategy is the product
Planned strategies that are actually put into action and
Any unplanned strategies

Many Planned strategies not implemented because of
unpredicted changes in the environment

Emergent strategies are unplanned responses to unforeseen
circumstances
Arise from:
Autonomous action by individual managers,
fateful discoveries,
unplanned strategic shift by top level managers when environment changes

Sometimes emergent strategies are more successful than the
planned ones
Amity School of Business
Intended &
Emergent Strategies
Example:
Entry of Honda into US motorcycle market in 1959
Honda executives (from Japan) focused on selling 250-cc
& 350-cc machines
Sales were sluggish
Honda executives themselves were using 50-cc bikes &
were attracting attention
They got a call from Sears & other stores
Honda launched those bikes
By 1964 one out of two motorcycles sold in US was a
Honda


Amity School of Business
Intended &
Emergent Strategies
Example (Contd.)
Credit should be given to Honda for recognizing the
strength of the emergent strategy & for pursuing it
Management need to recognize:
Strategies can take root wherever people have the capacity
to learn
Process of emergence; ability to judge the worth
Whether emergent strategies fits companies needs &
capabilities
Emergent strategies are a function of corporate culture &
controls put in place
The Risk of Strategic Drift
Phase 1
Incremental
Change
Phase 2
Flux
Phase 3 / 4
Transformational
Change or Demise
1
2
3
4
5
A
m
o
u
n
t

o
f

C
h
a
n
g
e

Time
Environmental change
Strategic change
Patters of Strategy Development
Incremental

Flux

Transformational

Demise
Strategy Development in Environmental
Contexts
Environmental conditions
Simple Complex
Static
Dynamic
Historical Analysis
Forecasting
Scenario Planning
Decentralized
Planning
Experience &
Learning
Strategic Planning in Practice
For strategic planning to work, managers need to take
not of current & future competitive environment

To forecast how the future may look like Scenario
Planning can be used

Operating managers can be involved (Decentralized
Planning)
Involves formulating plans for what if scenarios about the future

Some scenarios are Optimistic & some are Pessimistic

Managers are asked to prepare strategies to cope up with each scenario

A set of indicators is chosen, and the indicators are used as signposts to
track trends and identify the probability that any particular scenario will
come to pass

As a result of scenario planning, organizations might pursue one dominant
strategy, but make investments that will payoff of other scenarios come to
fore

Helps managers understand the environment, thinking strategically &
generating strategic options

Pushes managers to think outside the box



Scenario Planning
Identify Different
Possible Futures
Hedge your bets by
Preparing for
Other scenarios
And..
Invest in one
Plan, but
Formulate Plans to
Deal with those
Futures
Switch strategy if
Tracking of signposts
Shows alternative
Scenarios becoming
More likely
Scenario Planning
Decentralized Planning
Strategic planning process is generally top
managements responsibility in companies

They may not have understanding of the
operating realities

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