Making Strategy

Mapping Out Strategic Success

Fran Ackermann, Colin Eden

• Publisher: SAGE Publications Ltd
• Year: 2011
• ISBN:
  9781446259917
• Edition: 2
• Topic: Business
• Subtopic: Management
• Index: Business

?Demystifies strategy making while at the same time deepening our understanding of what the process entails. Their work is a marvellous guide for those striving to make sense of complexity? -

Karl E. Weick, Rensis Likert Distinguished University Professor of Organizational Behavior and Psychology, University of Michigan

?This book is at the very cutting edge of strategic management theory and yet also of immense practical use. It is truly a rare and stunning achievement? -

John M Bryson, McKnight Presidential Professor of Planning and Public Affairs, Hubert H. Humphrey Institute of Public Affairs, University of Minnesota

?Using this book enabled me to facilitate a multicultural team of seven managers so that they very quickly got to grips with the challenges and opportunities facing the organization and developed a realistic workable strategy, whilst at the same time building a real sense of team cohesion and the feeling that individuals had been listened to? -

Alison Devine, Director, British Council, Taipai

This lucid and highly-accessible text addresses the challenges of how to build a robust and implementable strategy. Strategy making is seen as something relevant to managers of departments, divisions, SME?s, as well as the top management teams of public and for-profit organizations.

Four key routes to creating a strategy are discussed. These routes, when taken together, provide a powerful means for agreeing a negotiated strategy, and comprise: strategic issue management, agreeing organizational purpose, competitiveness from the exploitation and protection of distinctiveness, and the strategic management of stakeholders. The designs have been used extensively, in a wide range of countries, by management teams in all types of organisations.

1

STRATEGY AS FOCUS

Strategy is about agreeing priorities and then implementing those priorities towards the realisation of organisational purpose.

In this book we address a very simple but powerful definition of strategy. We see strategy as about agreeing where to focus energy, cash, effort and emotion for long term sustainable success.

We see strategic management as about implementing the agreements about where to focus energy, cash, effort and emotion.

Thus, strategy is about agreeing priorities and then implementing those priorities towards the realisation of organisational purpose. This means resolving the debate about which issues deserve the most attention; there is always competition across an effective management team for which issues deserve priority attention. Each manager has their own view, and should have their own view, because they have different expertise, a different role with different accountabilities, and they have each experienced the different consequences of not paying attention to their own, let alone others’, views. Thus, strategic management can never be anything other than the outcome of negotiation among those with power to create the future of the organisation.

In addition, strategic management requires an acceptance that one person’s claim on the future will be seen as operational to others, and others’ claims will be seen as too broad and general. Managers who are good strategic thinkers (about what impacts the future success of their organisation) will often be thinking of extensive and sometimes complex ramifications of apparently operational actions but which can have significant strategic implications.

It is also important to negotiate a coherent strategy where:

• Strategy statements do not contradict each other either singly or as meaningful ‘chunks’ of strategy.
• Strategic action programmes do not contradict each other or the overall strategy statements.
• Operational systems and procedures (costing, remuneration, transfer pricing) – including embedded routines – are not inconsistent with strategic intent and are designed so that they increase the likelihood of the implementation of strategy.
• Personal and organisational reward systems are not inconsistent with strategic intent.
• Actual behaviour of the management team does not contradict the rhetoric of strategy.¹

Strategic management is coherent when it can be recognised as a holistic phenomenon.

Thus, strategy and strategic management is coherent when it can be recognised as a holistic phenomenon. In this book we present four ways of thinking about and developing strategy (forums) – each are stand-alone but can come together to make a holistic strategy and take account of the above requirements for coherence and where the whole is greater than the sum of the forums (chapter 12).

As implied by the above list, some of the supposedly operational systems can have enormous strategic implications: for example, the costing system, the transfer pricing system, the management information system, and the underlying assumptions about estimating processing time in the manufacture of products and services. However, we must recognise that often these systems will have grown accidentally rather than as an intended support to the delivery of strategy. Where there is internal coherence of this type of organisational system then these systems can become self-fulfilling and self-sustaining as determinants of the strategic future of the organisation – they support and strengthen one another. Similarly, each of the strategy forums can work together as self-fulfilling and self-sustaining determinants of the future.

NEGOTIATING A SUCCESSFUL STRATEGY: THE SOCIAL PROCESS OF STRATEGY MAKING

Any organisational change that matters strategically will involve winners and losers.

The main thesis of this book is that the process of strategy making is the most important element in realising strategic intent. It is our clear and convinced view that when strategic management fails to manage the real activities of an organisation it is because of the inability of strategy to change the way in which key people in the organisation both think and act as managers of its future. Thus, the issue of political feasibility of strategic change will be central to our considerations. Political feasibility implies, at least, building a powerful coalition within which there is enough consensus to deliver coordinated action to create strategic change.² To argue that political feasibility is key is not new. What is new is that this book considers the issue in some depth (see particularly chapter 2) – relating it to the theory and practice of managing power, politics, multiple perspectives and the power of emotional as well as analytical commitment to delivering strategy.

It is rare for strategy to promote the status quo. Strategy development will almost always imply changes in the organisation – in its relationship with the environment and in its relationship with itself. Any organisational change that matters strategically will involve winners and losers,³ and so will involve some managers seeing themselves as potential winners and some as potential losers. It follows that any strategy development or thinking about strategy will, without deliberate intention, promote organisational politics. Thus strategy is an instrument of power, and so of change; ‘organisations must be seen as tools … for shaping the world as one wishes it to be shaped. They provide the means for imposing one’s definition of the proper affairs of men upon other men’.⁴

A common experience for many managers is that the strategic planning process takes on the form of an ‘annual rain dance’. The activity is taken to be important enough to devote some limited time to because the intellectual arguments for doing so are difficult to argue with – ‘of course an organisation must have a strategy’. However, often the reality is that the activity will simply result in ‘the usual annual budgeting battle’ which is focused on short term issues and the retention of the status quo. Some managers will come off badly and others well, but this will be related more to their political clout and negotiating skills than any consideration of the longer term impact of the budgets on the strategic future of the organisation. These budgeting rounds will have a real impact on the strategic future of the organisation as a part of the ‘emergent strategising’⁵ of the organisation, but not in a thoughtful or designed way.⁶ Statements about the strategic future of the organisation will be used, when appropriate, as a part of the negotiation for resources but will not necessarily form part of a coherent whole, or result in action.

When managers begin to realise that the strategy making process might be ‘for real’ and might actually have some real consequences for their future in the organisation then those participating in the process will begin to make judgements about whether they will gain or lose from the process. This assessment is influenced by their believing that strategic change will shift the balance of power and will value some skills and resources more than others. The surfacing of strategic options carries the concomitant surfacing of anticipated social and political consequences. Any organisational change is seen by many managers as an opportunity for self-aggrandisement and the acquisition of power.⁷ The politics that this process of anticipation creates will be the result of each participant’s personal understanding of the impact of strategy. This understanding may, or may not, be accurate – what matters is that each participant anticipates and takes action to influence strategic thinking on the basis of these anticipations. ‘If men define situations as real, they are real in their consequences’.⁸ As this political dynamic unfolds it can be a major contributor to a team being unable to address the fundamental issues, and being diverted to internal coalition building designed to retain the relative security of the status quo.

The communications within a strategic conversation – a strategy forum – can then become dominated by each participant seeking to influence the definition of the situation in ways that anticipate possible changes in status, power, self-image and so on. Most senior managers are very skilled in the process of defining situations in a light favourable to their own aspirations and inclinations. Thus, the way in which situations are defined becomes crucial as it determines the nature of the agendas to be addressed and the processes by which strategic issues are surfaced. The extent to which a management team is able to address the fundamental strategic issues, rather than address only the fears and aspirations of each member of the team, will be a measure of their likelihood for success. We are not suggesting that fears and aspirations of management, or other staff, may not be a legitimate strategic issue, rather we are making a distinction between those issues that directly affect the core activity of the organisation compared with those that facilitate that activity or support particular manager’s aspirations.

We must consider the elements of negotiation that increase the probability of it being successful.

As long as we accept that strategic management follows from negotiation among power brokers then we must consider the requirements of negotiation that increase the probability of it being successful. Here we consider five such requirements of successful negotiation of strategy.⁹

• REQUIREMENT 1: managers as leaders are good strategic thinkers.
• REQUIREMENT 2: managers can surface and respect the thinking of the different perspectives of their staff.
• REQUIREMENT 3: managers can manage the negotiation between the different perspectives.
• REQUIREMENT 4: managers can create the best from combining the wisdom, experience, and different perspectives.
• REQUIREMENT 5: strategy can, and will, be implemented because it accepts that operations and strategy are not separable.

Managers have to devise ways of tricking themselves into regularly thinking about the important rather than the urgent.

A strategy need not be, and rarely should be, a detailed plan, and this book does not assume a plan will be developed.¹⁰ It does assume that a more or less detailed framework for strategic change will be developed. Strategic opportunism¹¹ is not rejected as inappropriate, but rather thought of as highly appropriate in some organisational contexts. Thus, it may be appropriate to keep many different issues and activities on the go at once, so that chance encounters are likely to be relevant and acted upon with respect to some part of the framework for strategic actio...

Table of contents

• Cover Page
• Title Page
• Copyright
• Summary of Contents
• Contents
• About the Authors
• Acknowledgements
• Introduction
• 1 Strategy as Focus
• 2 Strategic Management is a Social Process
• 3 Strategy as the Prioritisation and Management of Key Issues
• 4 The Issue Management Forum
• 5 Strategy as Purpose
• 6 The Strategy as Purpose Forum
• 7 Strategy as Competitive Advantage
• 8 Strategy as Competitive Advantage Forum
• 9 Strategy as Stakeholder Management
• 10 The Stakeholder Management Forum
• 11 Facilitating Groups in Strategy Making
• 12 The Continuation and Closure of the Strategy Making Journey
• Appendix: Using Causal Mapping Software: Decision Explorer®
• Bibliography
• Index
• Author Index