Sunday, June 07, 2020

Most Good Strategies Are Not Planned

Most Good Strategies Are Not Planned
Many people are discussing strategy and strategizing as if they were the sole outcome of a rational, predictable, analytical process.

But reality is often the opposite; emotional, unpredictable, and chaotic.  

How organizations create and implement strategy is an area of intense debate within the strategy field.

Famous researcher on management and strategy Henry Mintzberg has a very clear position in this debate. He distinguishes between intended, deliberate, realized, and emergent strategies.

These four different kinds of strategy are summarized in the figure below. 
Emergent Strategy
Intended strategy is strategy as conceived by the top management team. Even here, rationality is limited and the intended strategy is the result of a process of negotiation, bargaining, and compromise, involving many individuals and groups within the organization. 

Realized strategy—the actual strategy that is implemented—is only partly related to that which was intended. Mintzberg suggests only 10%–30% of intended strategy is realized. This part is named deliberate strategy.

The primary driver of realized strategy is what Mintzberg terms emergent strategy—the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances. 

Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. The term “emergent strategy” implies that an organization is learning what works in practice.

Thus, the realized strategy is a consequence of deliberate and emerging factors. 

The battle between those who view strategy making and implementation as primarily a rational, analytical process of deliberate planning (the design school) and those that envisage strategy as emerging from a complex process of organizational decision making (the emergence or learning school) is still very much ongoing.

But instead of joining this battle on one of the sides, the question you should ask yourself is:

 “How can the two views complement one another to give us a better understanding of strategy making and implementation?” 

Because in reality, both design and emergence occur at all levels of the organization. 

The strategic planning systems of large companies involve top management passing directives and guidelines down the organization and the businesses passing their draft plans up to corporate. 

Similarly, emergence occurs throughout the organization—opportunism by CEOs is probably the single most important reason why realized strategies deviate from intended strategies. 

What I think we can say for sure is that the role of emergence relative to design increases as the world and business environments becomes increasingly volatile and unpredictable.

The world events of the last few months make this pretty obvious.

In a nutshell: Many strategies emerge instead of being planned.
Posted on Sunday, June 07, 2020 by Henrico Dolfing