1. Chapter 7 Strategy Formation
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

2. © 2014, Cengage Learning EMEA, ISBN 97814082683
Contents
Introduction
The issue of realized strategy
The paradox of deliberateness and emergence
Perspectives on strategy formation
Managing the paradox of deliberateness and emergence
Strategy formation in international perspective
Readings and Case 7
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

3. The issue of realized strategy
Strategy formation activities
Strategic issue identification activities – mission setting and agenda setting
Strategic issue diagnosis activities – external assessment (of both the direct market environment and the wider environment) and internal assessment (of the systems used by the company itself)
Strategy conception activities – option generation and option selection
Strategy realization activities – action
taking and performance control
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

4. The issue of realized strategy
The main strategy formation activities
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

5. The issue of realized strategy
Strategy formation roles
There can be significant differences in who carries out the conception activities
Top vs. middle vs. bottom roles – different levels of management involved
Line vs. staff roles – many organizations have staff members involved in the strategy formation process
Internal vs. external roles – some roles
can be outsourced
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

6. The paradox of deliberateness and emergence
Duality of wanting to design the future while needing to explore, learn and adapt to an unfolding reality; the need to figure things out in advance, versus the need to find things out along the way
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

7. The paradox of deliberateness and emergence
The demand for deliberate strategizing
Advantages:
Direction – plans give organizations a sense of direction
Commitment – by setting objectives and drawing up plans organizations can invest resources, train people, build up production capacity and take a clear position within their environment
Coordination – all strategic initiatives are brought into a single cohesive pattern
Optimization – plans facilitate optimal resource allocation
Programming – plans allow activities to be
programmed and controlled
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

8. The paradox of deliberateness and emergence
The demand for strategy emergence
A strategy emerges when it comes into being along the way, gradually shaped during an iterative process of thinking and doing
Advantages:
Opportunism – able to grab unforeseen opportunities as they emerge
Flexibility
Learning – learning by experimentation
Entrepreneurship
Support – building support is an on-going process – changes cannot always be imposed from the top down
Read carefully Exhibit 7.1 TomTom:
Navigating through uncharted waters
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

9. Perspectives on strategy formation
The strategic planning perspective
Strategies should be deliberately planned and executed ‘Think before you act’
The purpose of strategizing is to give organizations direction
Allows for formalization and differentiation of strategy tasks
Encourages long-term thinking and commitment
But – plans will always be based on assumptions about future events which are hard to predict so useful to have contingency plans
Read carefully Exhibit 7.2 STMicroelectronics
plan to unveil new strategic plan
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

10. Perspectives on strategy formation
The strategic incrementalism perspective
New strategies emerge over time
Strategy is not about rigidly setting the course of action in advance but flexibly shaping the course of action by blending together initiatives into a pattern of action
Planning and control are valuable for routine activities but less suitable for non-routine activities – doing new things
Strategy formation is essentially an innovation process, inherently subversive
Planning is inappropriate when dealing with wicked problems
Read carefully Exhibit 7.3 Institutionalizing
emergent strategy: Pixar’s process for ‘going
from suck to non-suck’
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

11. Perspectives on strategy formation
The strategic incrementalism perspective
Planning is inappropriate when dealing with wicked problems
Problems cannot be simply recognized and analysed, the strategizing manager must make sense out of complex problems
A full analysis of a wicked problem is impossible
Dangerous to develop a comprehensive plan to tackle a wicked problem
As soon as an organization starts to implement a plan, the plan will be outdated
Strategy has to do with the future which is unknown
Read carefully Exhibit 7.3 Institutionalizing
emergent strategy: Pixar’s process for ‘going
from suck to non-suck’
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

12. Managing the paradox of deliberateness and emergence
Balancing
Within business units production departments are generally more planning-oriented, product development units take a more incremental process, research and development takes a bit of both
Balancing the paradox of deliberateness and emergence can be institutionalized into a formal process
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

13. Managing the paradox of deliberateness and emergence
Strategic planning versus strategic incrementalism perspective
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

14. Managing the paradox of deliberateness and emergence cont.
Juxtaposing
A corporate level manager needs to engage in different strategy formation processes. The strategizing manager is involved in the corporate strategy process and in formation processes in other corporate units and company-wide initiatives, international activities and ad hoc projects. The manager needs to be juxtaposing, managing opposites simultaneously.
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

15. Strategy formation in international perspective
Level of professionalism
Formal planning systems are popular in Australia, UK, Canada, New Zealand and the US
In Germany and Japan senior employees are expected to be involved in operational matters while junior employees are expected to contribute to strategy formation
Formalized planning and control systems are a logical consequence of having professional management
The national propensity to engage in formal planning is influenced by the level of professionalism
of management within the country
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN

16. Strategy formation in international perspective
Preference for internal control
Countries also differ with regard to the level of internal control their citizens prefer. In some cultures, people have a strong desire for order and structure.
Planning as a means for structuring and controlling is particularly important in cultures where there is little confidence in self-organization. In individualistic cultures organizational members cannot always be counted on to work towards the common good and control systems are used to get people to serve the organization’s interests. In cultures with a stronger group-orientation, there is more trust that individuals will be team players so formal control
mechanisms are not needed.
Only to be used with Strategy : An International Perspective 5th edn by Bob de Wit
© 2014, Cengage Learning EMEA, ISBN