Strategic Management

A Critical Introduction

Richard Godfrey

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9780415738750
• eBook ISBN: 9781317812715
• Topic: Business
• Subtopic: Business General
• Index: Business

Regularly considered to be the cap-stone course on any business or management degree, strategy has developed into a wide-ranging and sometimes overwhelming field of study. However, in recent years the theory of strategy has come under increasing scrutiny for its perceived failures and detachment from real world practice.

With an engaging and conversational tone, this new concise textbook offers an accessible and timely review of the theory and practice of strategic management, explored from a more critical perspective. In a refreshing change from much of the literature, Richard Godfrey takes a wider view of strategy, incorporating insights from the worlds of sociology, psychology and history to highlight the complexity and plurality at the heart of the discipline. The book also incorporates a number of extensive case studies on contemporary business strategy from the likes of Apple, Nike, Zara and IKEA.

Written for both an undergraduate and postgraduate audience, the book challenges a number of underlying assumption and beliefs about strategy and seeks to add clarity and context to the field.

1 What is strategy?

Of the topic areas taught in business schools on a global scale, few can be seen as more significant than strategy in its various forms. Equally, of the various discourses and practices that are involved in managing a large organization whether a private or public corporation, none is treated with as much importance and secrecy as strategy.

(Knights and Mueller 2004: 55)

Set against the importance of strategy as outlined in the quote above, we begin our study of the fascinating subject of strategy with something of a problematic: no one really knows what strategy actually is! As we will quickly discover, there is no single agreed-upon definition of the term either in the business field or in any wider context in which the term is used. For many, strategy simply means a plan, possibly with the instigation of a predetermined objective or goal. For others the word is synonymous with the military and the conduct of war and military campaigns. A cursory glance at the newspaper, our favourite blog site or any current affairs television programme and we find the word ‘strategy’ used with increasing frequency: businesses have strategies of growth and expansion, hospitals have strategies for improving healthcare, universities have strategies for recruiting more students, and individuals have strategies for managing their finances, improving their fitness or completing their work on time. As Clegg et al. (2010) observe, we increasingly live in a world constructed and shaped by strategies and yet we seldom know much about how these strategies come into creation, who has constructed them and what processes have been employed in their development. The outcome of strategy-making often simply appears to us in the form of a shiny company brochure, government policy document or dazzling PowerPoint presentation. However, such texts are simply the tip of the iceberg. What we need to do, as students of strategy, is delve beneath the surface into the murky waters where the jagged, impenetrable yet curiously beautiful iceberg reveals its full majesty. By exploring the processes and practices that constitute the doing of strategy we can better understand the strategies of companies and organizations and hopefully develop better strategies for ourselves.

In this chapter we begin by introducing a number of different ways of thinking about the question ‘what is strategy?’ We discuss the distinction between strategy as a management practice and strategy as a business subject. We look at different ways of framing strategy as an academic discipline and discuss some different definitions of (business) strategy. We conclude by outlining the structure of the book and a case is made for the value of a critical approach to studying strategy.

Strategy: the oldest and newest of management disciplines?

So where do we begin in seeking to tackle the question, ‘what is strategy?’ One useful starting point could be to draw from Alvesson and Willmott’s (1996) keen observation that strategy is both one of the oldest management disciplines and also one of the newest. It is old in the sense that ‘managers’ and ‘organizers’ have always had to deal with issues that we would today define as ‘strategic’. From the running of a humble market stall in ancient Rome to the building of the pyramids, the Great Wall of China and Mayan temples, from the management of the fourteenth-century Italian city states to the birth of the industrial revolution, issues such as how to allocate scarce resources, concerns about competition and other external forces, and the need to identify some sort of advantage have always been of key concern. And yet the academic discipline of (business) strategy really only emerged in the 1950s and 1960s. (see Chapter 2 for a detailed history of the strategy field). As such, we can suggest that the practice of strategy has always been of importance even if, for much of its history, there was no common language for describing strategic phenomena. In this regard strategy shares a similar history to its sister discipline of marketing, where the practices of advertising, product placement, premium pricing and market segmentation have existed since the earliest forms of market exchange and yet only developed into a coherent business discipline in the 1950 and 1960s.

Is strategy a science, an art or a humanity?

We might also seek to locate strategy within a wider paradigm of knowledge. As a business discipline, it might reasonably be suggested that strategy is best conceived of as a science. In its most familiar form, what we might call the orthodox version of strategy, it bears all the hallmarks of management science, drawing as it does on positivist methodologies and quantitative methods of enquiry. To this day, the mainstream literature, as indexed in the best-selling textbooks and most cited journal articles, still reflects this position, with many of the most famous strategy models and tools, from Porter’s five forces, to SWOT, to the Boston Box, all reflecting a set of underlying assumptions that speak to a science of strategy. So, with some confidence we might say that strategy is, or has been, conceived of as a science.

However, we can also think of strategy as an art. Here we borrow from the military antecedents of business strategy and conceive of the charismatic (entrepreneurial) leader who can envision certain futures and certain scenarios that do not come from rational, quantitative scientific planning but from intuition, perception and self-belief. There is a strand of the literature that sees strategy very much as an art form to be crafted and mastered by those few true visionaries and geniuses that, like their counterparts in other artistic pursuits, are capable of things that we mere mortals cannot possible comprehend (note, for example, the number of times the words ‘visionary’ and ‘genius’ were used in the obituaries of Apple co-founder and CEO, Steve Jobs, when he passed away in 2011).

Finally, Leavy and McKiernan (2009) also encourage us to think of strategy as a humanity. That is to say, strategy is also concerned with, and shaped by, the emotional, the spiritual, the historical, the cultural and the linguistic dimensions of organizational life. For example, the language of strategy is neither neutral nor objective but is infused with a grammar of power and control; with a vocabulary that is deeply gendered and which renders that which is knowable and speakable on matters of strategy. Equally, strategies can be seen as historical artifacts: shaped by the social, cultural and economic forces directing organizational activity – in this regard they act as windows on the past. In sum then, and reflecting the vagueness surrounding the term, strategy can be equally conceived of as science, art and humanity.

For some, this disciplinary vagueness is a source of concern. Gavetti and Levinthal (2004: 1309) for example worry that such ‘intellectual diversity … may perhaps relegate strategy to a low-paradigm status.’ Elsewhere, Meyer (1991: 821) expresses concern that such diversity of interest makes it difficult to ‘determine unequivocally whether a given contribution is unique to the strategy area’. This seems like a strange and perhaps overly protective view. Surely any contribution that enhances our understanding, appreciation and ability to ‘do’ strategy is a welcome one? That Michael Porter is an economist, that Alfred Chandler was a historian and that Peter Selznick was a sociologist surely adds to rather than detracts from their credentials as commentators on strategy as they bring to bear on the subject a range of academic knowledge, complementary and oftentimes competing perspectives, and a tool box of methods, models and interpretive lenses that can only enrich our understanding. In the post-disciplinary world of organization theory it seems strange that this should still be deemed problematic. Does it make the question ‘what is strategy?’ harder to answer? Yes, but its value and contribution far exceed such challenges. The desire for unequivocal boxing off of knowledge is something we should resist.

Strategy or strategizing?

One of the more recent contributions to the strategy field and one that helps us better articulate an answer to the ‘what is strategy’ question is to distinguish between strategy as a product, typically in the form of a document, policy or presentation, and the process of strategizing itself – the doing of strategy, or what goes into making the strategy product. Historically, these have been referred to as strategy content and strategy process, respectively.

The distinction between content and process is well summed up by Chia and MacKay (2007: 219), who report that: ‘strategy content research focuses on the question of what strategic decisions are taken, strategy process research examines how a particular organizational strategy emerges’. They go on to distinguish underlying practices between the two approaches, where strategy content research typically takes place ‘from afar’, studying strategy documents and other texts to understand what the strategy contains, relying primarily on secondary data sources to decode the strategy and predicated on a ‘variance model of explanation that uses contingency thinking and the language of states and positions to conceptualize the “fit” between the resource base of an organization and its strategic location within a competitive environment’ (Chia and MacKay 2007: 220).

In contrast, strategy process research seeks to capture the actual organizational doing of strategy-making, in practice. Relying more on primary research methods of observation, interviews and ethnography, process researchers are interested in the who, how, where and why of strategy: ‘In seeking to capture the dynamic and evolving qualities of human conduct in organized settings the process perspective is underpinned by the premise that it is the basic strengths of everyday operations that drive strategy process and emergence’ (Chia and MacKay 2007: 220–1). Today, the growing strategy-as-practice field is leading the way in developing new insights into strategy process (see, for example, Jarzabkowski 2004; Whittington 1996, 2006).

So let us sum up the discussion so far – strategy is both old and new; it is a science, an art and a humanity; and it is both a process of doing (a verb) and a thing, a product (a noun). While embracing such diversity we are still left with the difficulty of making strategy a manageable feast. How are we to make sense of it and work with this rich, diverse literature? How are we to create working parameters around the discipline? How are we to distinguish the strategic from the non-strategic in organizational life? Perhaps one way of narrowing down our answer is to consider some of the ways in which strategy has been more explicitly defined within the discipline of business and management studies.

Defining strategy

Before delving into specific definitions drawn from the management field it is perhaps worth thinking briefly about wider definitions of strategy and how the word itself came about. The origins of the word strategy can be traced back to Greek the word strategos – itself a compound; of stratos, which means army – ‘or more properly an encamped army spread out over ground’ (Cummings 1993: 133) – and agein: to lead. Thus, in its earliest form strategy was used to describe a military leadership role; we shall revisit this theme in the next chapter.

The Anglo word strategy, according to Freedman (2013), only came into widespread use in the western world in the late eighteenth century with the emergence of the state-controlled military apparatus. In was in the relationship between the state and the military that many of the common features of contemporary strategy first emerged – for example, distinguishing the separation of formulation and implementation, or in other words, those who craft the strategy (generals, politicians) from those that implement it (the soldiers on the ground). The rational logic of the Enlightenment also informed the structure and management of the military in which rationality, accounting and logistics drove military practice (of which more in the next chapter also).

In the world of business, it was only in the post-World War II era that strategy really began to appear in common usage; prior to this time issues of a strategic nature were referred to as policy. One of the first definitions of business strategy as we understand it today was provided by Alfred Chandler, the business historian and, according to some, one of the founding fathers of the strategy discipline. In his seminal work of 1962, Strategy and Structure: Chapters in the History of the Industrial Enterprise, he defined strategy as: ‘the determination of the basic, long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals’ (p. 13).

From Chandler’s early definition we can identify a number of important terms and concepts. First, strategy is about the long term. It is not something that reflects the here-and-now but is somehow connected to the distant future of the organization. Second, strategy reflects organization-level goals and objectives. This suggests that it has a high level of importance. Third, the definition sees strategy as being about not just the setting of long-term goals but also concerned with the processes of getting there. So, strategy is both product – the articulation of a desired goal or outcome, and process – the more practical concern of how to achieve the goal or outcome. Fourth, it introduces the term resources, and the recognition that that which the organization possesses, its resources and assets, is of strategic value. In sum, for Chandler strategy is about setting direction at the highest level combined with the more nitty-gritty business of how to get there.

As both testament to the early work of this strategy pioneer and perhaps a reflection on how little we have travelled since, a contemporary definition of strategy from a leading textbook offers what is in essence a minor revision or update to Chandler. According to one of the best-selling contemporary strategy textbooks, Johnson, Scholes and Whittington’s Exploring Corporate Strategy (2009: 21), ‘Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.’

In many ways this might be seen as an updated version of Chandler’s definition, adding a number of terms that have become more important in the intervening years. It still considers strategy to be about organizational direction over the long term and about allocating resources, but it introduces a more explicit end: that of achieving ‘advantage’. We will explore the notion of competitive advantage in more detail elsewhere, but suffice to say for now that this is a recurring term in the strategy field and one that has vague connotations. This definition also brings in another dimension: that of the external environment. Thus, it makes us aware that strategy is not just about what goes on inside the organization but must also reflect, engage with or at least consider issues outside the organization’s area of influence or control, as indexed by the mention of this environment being a ‘changing’ one. Finally, we can identify a very explicit element to this definition, which sees the ultimate goal, or outcome of achieving this advantage, as being one that fulfils the expectations (however defined) of those with an interest or ‘stake-hold’ in the organization. So strategy carries with it the burden of being accountable to numerous groups, parties and individuals.

Let us take just one more. This time we turn to Richard Rumelt, a long-time writer and student of strategy who seeks to bring the worlds of business strategy and military strategy closer together. He defines strategy as: ‘a cohesive response to an important challenge. Unlike a stand-alone decision or goal, a strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a high-stake challenge’ (Rumelt 2011: 6).

Rumelt’s definition is interesting for a number of reasons. First, he draws attention to the relative importance of a strategy versus a more routine or everyday decision. A critic of the excessive use of the word strategy to define any and all activity, Rumelt wants to reaffirm the elevated status of strategy. Second, Rumelt draws attention to the art and humanities aspects of strategy-making when he observes that it is more than just plans and goals. It is about courses of action and arguments. This draws our attention to the contested nature of strategy and offers a glimmer of the politics and power inherent in strategy. Recognizing the action dynamic in strategy-making also draws our attention to not only the way strategies are written, or formulated, but also how they come to be enacted or implemented. Thus, for Rumelt, strategy is both a verb and a noun: it is a doing word as well as a describing word.

In sum, what these three definitions show us is that while there is a set of recurring themes that might in and of themselves be considered ‘strategic’, the possibility of a universally agreed-upon definition is unlikely to materialize, partly for the reasons captured in Rumelt’s definition. Indeed, so numerous and varied are definitions of strategy that Markides has even suggested that ‘nobody really knows what strategy is’ (1999: 6).

With this in mind, perhaps the best way to progress with our investigation is to recognize the multiplicity of meanings that strategy possesses and not to rest comfortably on any one clear, clever or simple definition. Indeed, this is something that Henry Mintzberg, who we shall be hearing a lot more from as we travel the strategy path, has sought to do when offering his own definition(s) of strategy.

Mintzberg’s 5Ps

Henry Mintzberg (1987a), who has been studying strategy, management and organizations for more than four decades, rejects any simple or singular definition of strategy and instead provides us with five separate but interrelated ways of answering our question, ‘what is strategy?’ In a trademark act of academic branding he refers to these as the 5Ps.

Strategy as plan

For Mintzberg, strategy is first and foremost a plan. At least in the sense that this is how most people think of strategy, and with good reason. Type the word strategy into any online dictionary or even leaf through a paper edition and you will see that in common parlance strategy is frequently conceived of as a plan, or as Mintzberg describes it, ‘some sort of consciously intended course of action’. This, of course, is very much the orthodox definition of strategy, as provided by Chandler and by Johnson et al. earlier. It is also, as we shall see, the dominant noti...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• 1. What is strategy?
• 2. Strategy: a brief history
• 3. Strategy by design and an emergent critique (part 1)
• 4. Strategy by design and an emergent critique (part 2)
• 5. Strategy and the multi-business firm
• 6. Creating strategy from the outside-in
• 7. Creating strategy from the inside-out
• 8. Creating strategy through value innovation
• Concluding discussion
• Case 1: IKEA: daring to be different
• Case 2: fast fashion at Zara
• Case 3: innovation and change at Nike
• Case 4: Apple Inc. in 2014
• References
• Index