Niranjan Chatterjee’s Weblog

May 1, 2009

Intended or Emergent – what is the ultimate strategy adopted by an organisation?

Filed under: Corporate Management — niranjanchatterjee @ 10:04 pm

Introduction – Role of Strategy in improving organisational performance

Every organization has to compete for leadership and aspires to leave competition way behind in the highly competitive environment of modern day marketplace. The complex and highly interrelated series of actions and reactions which an organization undertakes are mainly aimed at making the best use of available opportunities and nullifying the lurking threats so that corporate objectives and goals are achieved to the maximum extent possible. The entire gamut of these actions, steps, decisions to act, react, or not to take any action at all, or be proactive before competitors can take the first mover advantage, form what is known as corporate strategy. (Ansoff, 1965)

Intended Strategy

Intended strategy is nothing but a plan or an intended course of action thought to be most suitable for achieving predetermined corporate goals. Sometimes, if the situation so desires, a ploy or a manoeuvre, tricky, cheeky or otherwise, to surmount an immediate obstacle or to browbeat a serious competitor; is also called a strategy. The basic concept of strategy is that it is pre-planned in nature and is given a proper shape after a lot of brainstorming. Strategy also determines the basic consistency in behaviour and approach of a particular firm towards the economy in general and the market in which it operates in particular. Strategy also formalises the positioning of the firm in the market. By positioning it is meant how a firm would relate with the external environment and what would be its reaction in case of a change in the parameters of such environment. Some authors are of the opinion that strategy is in a nutshell the basic prism through which an organisation perceives the entire world outside its own internal environment.

Management experts have also gone on to further classify strategy into content, process and context. (De Wit, B and Meyer, R, 1999)

Content of a strategy is basically an exposition of the current position of the company and the desired status the management would like to attain at the end of the plan period. It is nothing but a detailed brief of where it is now and the broad steps to be taken to reach where it intends to. The context part of a strategy deals in detail with the internal and expected external environment of an organisation and in effect undertakes an extensive SWOT analysis to ensure that the organisation can reach the set targets with least effort. The process part of a strategy actually lays down the timing of different actions and clearly defines who would take part in the actions directly and who would remain in indirect support thus ensuring unity of action and streamlining of efforts to prevent efforts getting wasted by working at cross purposes or overlapping and repetitive actions. But, this analysis of strategy into various components only goes on to further emphasise the basic nature of intended strategy – it is pre-planned and depends entirely on the quality of forecasts available with the management. (McGee, John; Thomas, Howard and Wilson, David, 2005)

Emergent Strategy

The real life scenario is however quite different from what is envisaged by planners as new opportunities and threats continually seem to unfold every day. A company which thinks with its feet and is quick to grab the opportunities while adroitly avoiding the threats and banana peels, is the one which leads the pack. But this is possible only if strategies keep evolving with the internal and external environment and not remain static. Strategy should be as dynamic as the real world scenario and must be adaptable to changing equations. Some authors recognised the importance of dynamism and incorporated agility in the entire system by accepting the fact that strategic corporate decisions are not taken as part of a big picture based on forecasts and predictions but are indeed taken incrementally, as it were, in tandem with changes occurring in corporate environment. Thus, these authors admitted that corporate strategy is actually a bits and pieces approach which is shaped more by external factors than what is desired by Board of Directors. (Burgelman, 1980)

Henry Mintzberg was the first expert who coined the word ‘emergent’ while describing the continuous evolution of corporate strategy of an organisation as it not only strived to keep pace with but also attempted to overtake the external environment to reach the pre-determined targets. The emergent strategy however, is not a brainwave of one person or a group of persons at the helm of affairs of a company. It is not a flash of individual brilliance or motivation but a learning process where the entire corporate entity absorbs facts and figures from external environment and evaluates the changes in external (and internal) environment and proceeds to formulate a proper and relevant answer in the form of a revised strategy. (Mintzberg, The Strategy Concept 1: Five Ps for Strategy, 1987) Thus the final policy adopted by a corporate is nothing but a judicious combination of the basic framework of pre-planned strategy and an adjustment or alteration of the main flow keeping in mind the ground realities in the marketplace. So, realised strategy is nothing but the best of both worlds where the basic corporate goals and objectives are married to market realities. A diagram might clarify this concept even further:

 

(Mintzberg & Walters, Of Strategies, deliberate and emergent, 1985)

The diagram above perhaps clarifies the main contention of emergent strategy in that it is not something which is radically different from the intended strategy of an organisation. Whenever the intended strategy fails to produce the desired results, an automatic introspection and a process of enquiry and learning is triggered within an organisation which evaluates and analyses the intended strategy and its applicability in the current market scenario in great detail. While accepting the inherent market dynamism and uncertainties, the emergent strategy tries to modify the intended strategy so that it fits better with the current market trend. Thus, in a sense intended strategy is the guideline and the emergent strategy is a modification of the guideline so that the realised strategy serves the company best. But some authors, Mintzberg being most notable among them, go to extent of claiming that in reality, knee jerk reactions to market happenings are rationalised as an afterthought and passed off as a properly organised plan in most companies. This is most evident when economies go through unexpected turbulences or melt downs. There is hardly any time available with companies to go through all the steps of a rigid planning procedure as it becomes a desperate exercise to stay afloat.

In fact, Burgelman had done an in-depth analysis of the circumstances under which Intel withdrew from memory chip (DRAM) market. He came to the conclusion that the corporate decision was indeed the cumulated result of many small decisions taken by middle management when they responded to market demand and started shifting resources from DRAM to microprocessors which were gradually taking over the market. This was emergent strategy at its best where the corporate intended strategy actually succeeded emergent strategy which, if stifled by corporate rigidity, would have spelt a major crisis for the company. (Burgelman R. A., 1994)

In this case, middle managers shaped the corporate strategy but does that mean lack of proper management? Most authors do not feel so. They feel it reflected a flexibility of management structure which allowed middle management to respond incrementally to changing market scenario by altering the allocation of resource towards avenues which assured better returns.

One other instance of how emergent strategy can modify the existing strategy without exhausting valuable resources of a company is when Hitachi Corporation was thinking of marketing finger-vein authentication technology which is very similar to digital fingerprint scanning. The original idea was to market this as the ultimate foolproof identification system which should be installed in entry points of all sensitive and critical installations. The makers claimed that this system cannot be compromised and no unauthorized entry in restricted areas is possible if such a device is there at the main entry point. The company was not wrong while making such claims, but it missed out on the most important market of this technology while strategising its sales plan. The most important market was the numerous ATMs which dot the entire globe. As soon as this became clear, Hitachi swiftly changed its focus and the emergent strategy contributed substantially to the bottom-line.

What is the ultimate strategy adopted by an organisation

The ultimate strategy adopted by an organisation is surely a mixture of intended and emergent strategies as these are not exclusive of one another as is evident from the discussions above. Indeed every progressive organisation actively encourages its middle and lower management to be aware of the changes that continually take place in external environment and considers the inputs provided by the middle management as a valuable learning process which is a must in an age where technology is advancing by leaps and bounds and obsolescence has become almost a daily occurrence. Though every company is not as flexible as Intel but almost each one of them is as aware as Hitachi and very rarely can one spot a company which is not awake to the possibilities of causing a market coup.

But all companies or organisations need not be as aware to emergent strategies. Government departments or mining companies need to have strategic stability for proper functioning and operational consistency. Emergent strategies would not be able to deliver desired results, indeed might cause an unprecedented chaos.

So, it can be concluded that while emergent strategies very often lead to unprecedented benefits to an organisation, it is the nature of the organisation and the environment in which the organisation operates which determine the final realised strategy which an organisation adopts.

 

References

Ansoff, H. (1965). Corporate Strategy. Harmondsworth: Penguin.

Burgelman, R. A. (1994). Fading memories – a process theory of strategic business exit. Administrative Science Quarterly, Vol. 39, No. 1 , pp. 24-56.

Burgelman, R. (1980). Managing Innovating Systems: A study in the process of internal corporate venturing. Graduate School of Business (PhD dissertation) . Columbia University.

De Wit, B and Meyer, R. (1999). Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage. London: International Thomson Press.

McGee, John; Thomas, Howard and Wilson, David. (2005). Strategy: Analysis & Practice. Berkshire: McGraw-Hill Education.

Mintzberg, H. (1987, Fall). The Strategy Concept 1: Five Ps for Strategy. Management Review , pp. 11-16.

Mintzberg, H., & Walters, J. (1985). Of Strategies, deliberate and emergent. Strategic Management Journal , pp. 257-72.

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