1. Pragmatic Strategy Dancing with Efficiency, Creativity and Legitimacy Zhichang zhu University of Hull Business School, UK July 2004, Xiamen and Guangzhou, China

2. Contents Background: towards pragmatic strategy Strategy: what do strategists do and how do they do it? Firms: what are they and how do they differ?

3. Background What is strategy? Why pragmatism, why now? Pragmatism East and West

4. What is strategy? Strategy is about envisioning a valued future for common goodness and realising it with available resources, workable means and novel manoeuvre, which is based on profound understanding of situated particulars and unique organisational profiles.

5. What is strategy? ‘Say’ theories ‘Have’ contents ‘Do’ actions ‘Believe’ exemplars

6. What is pragmatism? PracticalCreative HolisticMoral The ‘four faces’ of Confucian pragmatism

7. Pragmatism and strategy Pragmatism facilitates people to respect, to share, to create and to act upon what works, and the real world appears to reward what works and penalises what does not. Practical strategies are generated by ethically informed, interested managers who take the responsibility skilfully to make timely political judgments and situated decisions, with idealistic inspirations and realistic manoeuvres, without knowing what is to unfold yet able to mobilise others working together toward an imagined ideal world. Strategies and knowledge are validated on the consequences of acting upon them.

8. Problem 1: the phronetic gap Detached Reductionist Rountinised Utopian

9. Problem 2: fragmentation Theory led Boxes syndrome Imperialist pluralism

10. Boxes syndrome DeliberateEmergent Profit-maximising Plural Outcomes Processes Classical Evolutionary Systemic Processual ‘Generic approaches’ to strategy (source: Whittington 2001:3 )

11. Searching for coherent strategy Unifying paradigm Good science is conversation Conversation needs a vocabulary Towards a pragmatic vocabulary

12. Tasks at hand Practicality Coherency Towards ethical, coherent and effective strategy

13. Pragmatism East and West 物理 Wuli 人理 Renli 事理 Shili 时中 Timely balancing Confucian circular ‘how’: acting wisely as timely balancing wuli-shili-renli Intellectual virtues Moral virtues Phronesis Techne Episteme Aristotelian hierarchical ‘what’: practical wisdom as the highest intellectual virtue Theoretikes Praktikes Aristotle vs. Confucius: different approaches to practically wise strategy?

14. Learning from differences What knowledge vs. how to act Articulative reasoning vs. suggestive exemplars Hierarchical vs. circular knowledge Polarising-and-choosing vs. associating- and-complementing

15. Contrasting Aristotelian and Confucian practical teaching Aristotelian Practical wisdom Confucian Pragmatism Underlying questionWhat is practical knowledge?How to act practically wise? Stylish approachArticulative reasoningSuggestive exemplars Image of knowledgeHierarchical knowledgeCircular wuli-shili-renli Strategy forwardPolarising-and-choosingAssociating-and-complementing

16. What and how strategists do? Choice Crisis Emergent actionRational actionConstrained action Creative network Entrepreneurial action Conservation Confusion Charismatic leadership Strategic management Emergent, rational and constrained actions (source: Hirst 1995).

17. WSR: acting rationally, creatively and normatively Actual material-technological resources Social moral-normative orientations Virtual psycho-cognitive mentalities WuliRenli Shili

18. WSR What is? How to? Shall we? Wu 物 Shi 事 Ren 人 Objective particulars, resources, constraints Subjective mentalities, schemas, mindscapes Intersubjective values, norms, expectations Wuli 物理 Shili 事理 Renli 人理 Relating with the world, Patterns of connecting, conditioning, transforming Relating with the mind, Ways of seeing, imaging, communicating, doing Relating with others, Rules of involving, engaging, organising

19. Timely balance The Tao of Haven operates mysteriously and secretly ( 天道玄默 ); it has no fixed shape ( 无容 ), and it follows no definite rules ( 无则 ); it is so great that you can never come to the end of it, it is so deep that you can never fathom it (Huai-nan-zi (?-122 bc) 9/1/2). Po I among the sages was the pure one; Yi Yin was the responsible one; Hui of Liu-hsia was the accommodating one; and Confucius was the timely one (Mencius 5/2/1). The Superior Man is in the state of zhong (balance) and rung (normality); the small man is in the reverse of these states. The superior Man exhibits them, because he is the Superior Man, and holds to the timely balance; the small man is the opposite of them, because he is the small man, and has no caution (Doctrine of the Mean 2/1 and 2)

20. Timely balance W? S? S+R? W+S+R? R? W+S? ?? ??? SR ?? W? W S? WSR bubbles On-going stream of strategic actions The bubbling of WSR concerns, issues and problems

21. Strategy: dancing with efficiency, creativity and legitimacy Getting the fundamentals right Envisioning a valued future Realising shared goodness shili 事理 situated creativity wuli 物理 technical efficiency renli 人理 Social legitimacy Timely balance

22. Does strategy matter? Structure Agency Structure Agency Why actors do not have choices to make How actors make choices Downwards reduction Upwards reduction

23. A systemic view of reality The WSR folk metaphysics WuliShiliRenli (Multidimensionality) ( Stratified reality ) Structure Agency Action The structure- action- agency paradigm Material technological Mental cognitive Social relational Rational Inertial Creative projective Normative evaluative Habitual performative Reflexive imaginative Political positional

24. Sources of creativity: structure, agency and action complexities Complementary Enduring Performative Fallible Inherited Mutually supportive Competing Emerging Innovative Effective Earned Mutually antagonistic Structure complexity Action complexity Agency complexity

25. ba: where structure meets agency The WSR folk metaphysics WuliShiliRenli (Multidimensionality) ( Stratified reality ) Structure Agency Action The structure- action- agency paradigm Material technological Mental cognitive Social relational Habitual performative Reflexive imaginative Political positional ba Gaming, learning, gesturing and responding Activated structure Distributed agency

26. Why is strategy possible? Structure complexity generates emerging opportunity Agency complexity allows actors exploit opportunities in different ways Actions complexity brings structure an agency into interplay

27. Strategy as knowledge-creation Dimensionality W: Material-tech. S: Mental-cognitive R: Social-relational Complexity Enduring / emerging Complementary / competing Paradox Medium / Outcome WSR Agency Dimensionality W: Performative S: Reflexive R: Positional Complexity Inherited / earned Reinforcing / mutual denying Paradox Producer / Product WSR Actions W: Rational S: Creative R: Normative Dimensionality Complexity Routine / innovative Fallible / effective Structure complexity generates contingent opportunities Agency complexity enables varying strategies Action complexity brings structure and agency into interplay Knowledge creation transforms structure over time Knowledge creation transforms agency over time Structuration as embodiment of knowledge Agentisation as embodiment of knowing Paradox Continuity / Transformation WSR Structure

28. Theories of the firm Industrial organisation economics Resource-based theory Planned coordination theory Entrepreneurship theory Evolutionary theory Subjectivist theory Knowledge-based theory Transaction cost economics Team monitoring theory Principal-agent theory Property-rights theory Social relation theory Behaviourist theory Wuli efficiency theories Shili creativity theories Renli relationality theories Institutional theoryPostmodernist theory Neoclassical economics

29. The table

30. Wuli theories of the firm Market positioning outside-in Resource-based Inside-out Managerial planned coordination Searching for technical efficiency

31. Shili theories of the firm EntrepreneurialEvolutionary Knowledge-basedSubjectivist Competitive market process demands dynamic capability Path-dependent knowledge acquisition and utilisation Knowledge creation as bringing forth a world Generating subjective opportunity set Facilitating innovation

32. Renli theories of the firm Ex ante designEx post handling The firm as legal fiction The firm as political authority Aligning principal- agent incentives Assigning residual right of control Team production effort monitoring Economising transaction costs Shared purpose as distinctive institutional logic A challenging opposite

33. Theories of the firm: different groupings Nonaka and ZhuWuli Technological efficiency Production Shili Imaginative creativity Innovation Renli Relational legitimacy Cooperation WilliamsonTechnologicalOrganisational Bounded rationality (?)Opportunism Foss, LangloisCompetence Production oriented Governance Exchange oriented

34. A WSR view of firms f 0 = {w 0, s 0, r 0 } f 1 = {w 1, s 1, r 1 } W S R f0f0 f1f1 w0w0 s0s0 r0r0 w1w1 s1s1 r1r1 t0t0 t1t1

35. ‘The theory of the firm’ or ‘theories of firms’? Is the firm a firm? Is a firm the firm Firms, markets and social models

36. What follows? - 1 Strategic positioning Competing on resources Creating relationship advantage Value chain, value web and business model God is in details: samurai strategisinig Wuli efficiency: getting the fundamentals right

37. What follows? - 2 Subjectivity and strategy Dominant design and innovation Creative destruction and dynamic capability Living with uncertainty SECI: an envisioning procces Shili creativity: envisioning a valued future

38. What follows? - 3 Strategic games Contracting opportunism Ethical business Embedded strategists ba: a fountain of shared goodness Renli legitimacy: realising shared goodness

39. What follows? - 4 Phronesis as practical knowledge Phronesis as pragmatic action Phronesis as distributed leadership Strategy in action