I gave an opening speech today at a breakfast meeting for communication professionals at the Helsinki School of Economics. It was a pleasant invitation as I had not had interactions with many of the companies who were represented and have had too few dealings with the HSE, which is a well-reputed school just across the street.
I was confronted with a group of experienced and inquisitive senior communication officials and researcher colleagues. Answering their challenging questions proved to be a highly pleasurable ordeal. I had prepared a speech on the development and historical debates within the strategic management discipline. I chose to focus on particular dissident thinkers who have caused revolutions within the strategic management discipline.
Key dissidents within strategic management
Strategic management was born as a business discipline in the 1960s. Management teachers in the U.S. had become more and more aware of the role the changing business environment has in the practice of management. Many attribute the birth of the discipline of strategic management to Harvard, and more specifically its course on general managers.
Indeed, it is striking how the early texts from the discipline such as Business Policy: Texts and Cases by Learned, Cristensen, Andrews and Guth, and Concept of Corporate Strategy by Andrews are focused on teaching strategy. These early authors, who are often labeled as the Business Policy authors were indeed concerned with the holistic development of their students as strategists. Andrews (1971: 238) indeed wrote that
"Corporate purposes are by definition a projection in part of the leader’s own personal goals and a reflection of his character […] a corporation is essentially the lengthened shadow of a man.”
The Business Policy authors were also leaning towards what is known as the planning school (apparently Mintzberg's term) in strategic management. Strategy was regarded as a future-oriented business, where strategic choices lead to objectives, to be implemented with the use of various plans. While this view is often associated closest with Igor Ansoff, Learned et al. (1969: 15) also defined strategy as :
"the pattern of objectives, purposes, or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is to be."
Dissident 1. Michael Porter - Strategy as an instrument
The first revolution in strategic management was caused by Michael Porter, a graduate from Harvard Business School who gained a PhD from Harvard in Economics, was successful in applying rigorous techniques from the field of microeconomics to the study and teaching of strategic management. In the a new introduction to his first milestone Competitive Strategy (Porter, 1980: x), he reflects upon the success of the book:
“This book filled a void in management thinking. After several decades of development, the role of general managers versus specialists was becoming better defined. Strategic planning had become widely accepted as the important task of charting a long-term direction for an enterprise. Early thinkers such as Kenneth Andrews and C. Roland Christensen had raised some important questions in developing a strategy [...] Yet, there were no systematic, rigorous tools for answering these questions – assessing a company’s industry, understanding competitors, and choosing a competitive position.”
Andrews and Christensen had become "early thinkers" in their approach to strategy, and Porter's powerful view started to atttract followers. Eventually, the focus started to shift away from understanding the strategists to understanding and employing strategy instruments.
Dissident 2. Henry Mintzberg - Strategy as a process
It is open to debate whether Henry Mintzberg is the founder of the strategy process school, but he probably is the most widely known. Where Michael Porter managed to switch focus away from the strategists, Mintzberg attacked the early authors', most notably Igor Ansoffs view of strategy as a premeditated plan. In a famous figure (below) in his 1977 article, Mintzberg reminded us that we understand little of strategy if we focus merely on what companies intend in their strategies, without understanding what they do.
Mintzberg's work on strategy-as-process, as well as Porter's, has fundamentally affected organizational practice as well as management studies.
Dissident(s) 3. David Knights and Glenn Morgan - Strategy as a discourse
In 1991, David Knights and Glenn Morgan published a paper in Organization Studies, where they studied strategy in a funny way. Instead of looking at strategy content or process as organizational phenomena, they took the whole discipline of strategic management under the looking glass. They conducted a foucauldian geneology on the discipline, and focused on the way strategic management constructs top managers.
Knights and Morgan's paper was revolutionary in at least two respects:
1. Through its research setting it critically examined the dogma that strategy work in some form is necessary for companies. That is, it showed the boundaries of the strategy concept in management, which had become almost overwhelming.
2. It questioned the power of top managers as craftsmen of strategy, the key premise in the Business Policy tradition. Instead, they demonstrated in an uncomfortably convicing way how the opposite is true: the strategy discipline constructs the managers.
Dissident(s) 4. David Barry and Michael Elmes - Strategy as fiction
In a way, Barry & Elmes's paper "Strategy Retold" in the Academy of Management Review in 1997 about strategy as a narrative returns the focus to a core aspect of the early planning school: viewing strategy as a text. When we look at strategy as a plan, our focus is on formulations of that plan in various documents.
There is a twist, however. Barry and Elmes treat strategy as a form of fiction and use a number of methods from literary studies to make sense of strategy as a fictional narrative.
Another key point of departure from the planning school is that Barry and Elmes also treat an organizational narrative as a polytonal form of fiction, social and shared, as well as written text. The notion of polytonality is a powerful notion in organizational strategy practice, as well as it is novel in strategy literature.
Dissident 5. Richard Whittington - Strategy as work
In 1996 Richard Whittington published a short paper in Long Range Planning, where he promoted a novel view on strategy, which he called strategy as practice.. The paper was intended for opening a discussion on a new approach for studying strategy: "The focus of this approach is on strategy as a social 'practice', on how the practitioners of strategy really act and interact." (Whittington, 1996: 731).
The discussion grew in conferences and workshops. Many well-established senior scholars joined in, followed by a number of junior scholars. Strategy-as-practice has established itself as an open discipline, with a variety of theoretical and methodological viewpoints. Although the discussion is rather diverse, the shared focus remains on understanding strategy as something that real people do in real organizations. I like to think of it as a rain dance of a sort, and us scholars as anthropologists, seeking to understand the ways and local reasons why it is performed.
Concluding reflections
I think this story has a practical dimension. The views, promomoted by the dissidents are part of the implicit, often conflicting cognitive background of strategy practice in organizations. Becoming aware of the tensions that exist in he background assumptions regarding strategy is helpful, as it enables one to be more reflexive in one's practice.
I have used a number of important scholars to plot out one possible interpretation of what has happened within the discourse of strategic management. Why these scholars were chosen over others is determined by my personal interpretation and does not represent a particularly authoritative view. Indeed, within the strategy-as-practice community there exist a number of theoretical and methodological leaders who have made the community what it is today. Furthermore, all seven of my "dissidents" are white males. I have sought to include voices which some may regard controversial or even "marginal" (I doubt Knights and Morgan, 1991 is a part of the staregy readings at Harvard Business School - correct me if I'm wrong), yet the men themselves do not seem to represent particularly marginal groups. I can only claim that this is the characteristic of the discipline itself, not a failure in my perception.
I was confronted with a group of experienced and inquisitive senior communication officials and researcher colleagues. Answering their challenging questions proved to be a highly pleasurable ordeal. I had prepared a speech on the development and historical debates within the strategic management discipline. I chose to focus on particular dissident thinkers who have caused revolutions within the strategic management discipline.
Key dissidents within strategic management
Strategic management was born as a business discipline in the 1960s. Management teachers in the U.S. had become more and more aware of the role the changing business environment has in the practice of management. Many attribute the birth of the discipline of strategic management to Harvard, and more specifically its course on general managers.Indeed, it is striking how the early texts from the discipline such as Business Policy: Texts and Cases by Learned, Cristensen, Andrews and Guth, and Concept of Corporate Strategy by Andrews are focused on teaching strategy. These early authors, who are often labeled as the Business Policy authors were indeed concerned with the holistic development of their students as strategists. Andrews (1971: 238) indeed wrote that
"Corporate purposes are by definition a projection in part of the leader’s own personal goals and a reflection of his character […] a corporation is essentially the lengthened shadow of a man.”
The Business Policy authors were also leaning towards what is known as the planning school (apparently Mintzberg's term) in strategic management. Strategy was regarded as a future-oriented business, where strategic choices lead to objectives, to be implemented with the use of various plans. While this view is often associated closest with Igor Ansoff, Learned et al. (1969: 15) also defined strategy as :
"the pattern of objectives, purposes, or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is to be."
Dissident 1. Michael Porter - Strategy as an instrument
The first revolution in strategic management was caused by Michael Porter, a graduate from Harvard Business School who gained a PhD from Harvard in Economics, was successful in applying rigorous techniques from the field of microeconomics to the study and teaching of strategic management. In the a new introduction to his first milestone Competitive Strategy (Porter, 1980: x), he reflects upon the success of the book:“This book filled a void in management thinking. After several decades of development, the role of general managers versus specialists was becoming better defined. Strategic planning had become widely accepted as the important task of charting a long-term direction for an enterprise. Early thinkers such as Kenneth Andrews and C. Roland Christensen had raised some important questions in developing a strategy [...] Yet, there were no systematic, rigorous tools for answering these questions – assessing a company’s industry, understanding competitors, and choosing a competitive position.”
Andrews and Christensen had become "early thinkers" in their approach to strategy, and Porter's powerful view started to atttract followers. Eventually, the focus started to shift away from understanding the strategists to understanding and employing strategy instruments.
Dissident 2. Henry Mintzberg - Strategy as a process
It is open to debate whether Henry Mintzberg is the founder of the strategy process school, but he probably is the most widely known. Where Michael Porter managed to switch focus away from the strategists, Mintzberg attacked the early authors', most notably Igor Ansoffs view of strategy as a premeditated plan. In a famous figure (below) in his 1977 article, Mintzberg reminded us that we understand little of strategy if we focus merely on what companies intend in their strategies, without understanding what they do.Mintzberg's work on strategy-as-process, as well as Porter's, has fundamentally affected organizational practice as well as management studies.
Dissident(s) 3. David Knights and Glenn Morgan - Strategy as a discourseIn 1991, David Knights and Glenn Morgan published a paper in Organization Studies, where they studied strategy in a funny way. Instead of looking at strategy content or process as organizational phenomena, they took the whole discipline of strategic management under the looking glass. They conducted a foucauldian geneology on the discipline, and focused on the way strategic management constructs top managers.Knights and Morgan's paper was revolutionary in at least two respects:
1. Through its research setting it critically examined the dogma that strategy work in some form is necessary for companies. That is, it showed the boundaries of the strategy concept in management, which had become almost overwhelming.
2. It questioned the power of top managers as craftsmen of strategy, the key premise in the Business Policy tradition. Instead, they demonstrated in an uncomfortably convicing way how the opposite is true: the strategy discipline constructs the managers.
Dissident(s) 4. David Barry and Michael Elmes - Strategy as fiction
In a way, Barry & Elmes's paper "Strategy Retold" in the Academy of Management Review in 1997 about strategy as a narrative returns the focus to a core aspect of the early planning school: viewing strategy as a text. When we look at strategy as a plan, our focus is on formulations of that plan in various documents.There is a twist, however. Barry and Elmes treat strategy as a form of fiction and use a number of methods from literary studies to make sense of strategy as a fictional narrative.
Another key point of departure from the planning school is that Barry and Elmes also treat an organizational narrative as a polytonal form of fiction, social and shared, as well as written text. The notion of polytonality is a powerful notion in organizational strategy practice, as well as it is novel in strategy literature.
Dissident 5. Richard Whittington - Strategy as work
In 1996 Richard Whittington published a short paper in Long Range Planning, where he promoted a novel view on strategy, which he called strategy as practice.. The paper was intended for opening a discussion on a new approach for studying strategy: "The focus of this approach is on strategy as a social 'practice', on how the practitioners of strategy really act and interact." (Whittington, 1996: 731).The discussion grew in conferences and workshops. Many well-established senior scholars joined in, followed by a number of junior scholars. Strategy-as-practice has established itself as an open discipline, with a variety of theoretical and methodological viewpoints. Although the discussion is rather diverse, the shared focus remains on understanding strategy as something that real people do in real organizations. I like to think of it as a rain dance of a sort, and us scholars as anthropologists, seeking to understand the ways and local reasons why it is performed.
Concluding reflections
I think this story has a practical dimension. The views, promomoted by the dissidents are part of the implicit, often conflicting cognitive background of strategy practice in organizations. Becoming aware of the tensions that exist in he background assumptions regarding strategy is helpful, as it enables one to be more reflexive in one's practice.
I have used a number of important scholars to plot out one possible interpretation of what has happened within the discourse of strategic management. Why these scholars were chosen over others is determined by my personal interpretation and does not represent a particularly authoritative view. Indeed, within the strategy-as-practice community there exist a number of theoretical and methodological leaders who have made the community what it is today. Furthermore, all seven of my "dissidents" are white males. I have sought to include voices which some may regard controversial or even "marginal" (I doubt Knights and Morgan, 1991 is a part of the staregy readings at Harvard Business School - correct me if I'm wrong), yet the men themselves do not seem to represent particularly marginal groups. I can only claim that this is the characteristic of the discipline itself, not a failure in my perception.
posted by Saku Mantere at 1:43 PM
5 Comments:
Saku,
I greatly enjoyed reading your blog because you covered people and perspectives which are not often talked about, especially on “strategy as a social practice, on how the practitioners of strategy really act and interact."
Another topic that isn’t greatly talked about: “how do authors, universities, and consulting firms market their strategic management methodologies?”
My personal belief is that Michael Porter is the business genius of our time, but his methodologies are not used in practice at levels one would expect from the global population of MBAs trained in his methodologies because:
1) Consulting companies market their own methodology, which they claim is a superior blend of methodologies
2) Information vendors do not provide industry data at the level appropriate for a Michael Porter Five Forces industry analysis. (They provide industry sector data or industry information arbitrarily limited to a given country or region.)
To the best of our knowledge, eCompetitors.com will soon be the first to provide industry data at the Porter-level (covering about 9,400 global industries).
Do you agree that the term “industry” is not well understand by most people (including executives, planners, and information vendors) and, because an industry analysis is Step 1, that’s a big reason why strategic management, as a discipline, needs improvement?
Your writeup reminds me of Henry Mintzberg's book, Strategy Safari, which carves up the strategy literature with ten different animal metaphors. I'm not sure that he's captured the "strategy as work" approach, but he might choose to embed that into one of the other categories.
I'm afraid that I try to avoid using the word "strategy" any more, in almost any context.
I've attended one too many David Hawk lectures, where he points out the origins of "strategy" in the military -- Clausewitz, and Sun Tzu -- so I'm always extra conscious about the need for deception in strategy. (I'm amused by a recent HBR article on making strategy clearer. If a business executive makes the effort to be extra clear on the strategy to his employees or business partners, is it going to be hard for the competitors to figure it out?)
In addition, in the IBM methods -- where we have had some really rigourous ontologists -- the experts decided that the word "strategy" was too ambiguous. (Everyone has a "strategy" ... but then trying to converge on the strategy becomes a struggle). The methods experts decided to specify an artifact names as "business direction", which is a good boundary object with which IT designers can align their efforts.
Michael, thanks for your comments, which I enjoyed reading.
You bring out a very important point when you note that the topic of how different players (universities, consultants, politicians, the military) influence strategic management discourse and practice is underexamined.
Interest in this area has been aroused recently, however, by scholars working on strategy as practice. In particular Whittington and his colleagues have been working on just this topic, in particular you might enjoy reading the paper "Taking Strategy Seriously" by Whittington, Jarzabkowski, Mayer, Mounoud, Nahapiet and Rouleau (Journal of Management Inquiry, 2003, vol 12/4). In the abstract, the authors argue that:
Strategy is a pervasive and consequential practice in most Western societies. We respond to strategy’s importance by drawing an initial map of strategy as an organizational field that embraces not just firms, but consultancies, business schools, the state and financial institutions. Using the example of Enron, we show how the strategy field is prone to manipulations in which other actors in the field can easily become entrapped, with grave consequences. Given these consequences, we argue that it is time to take strategy seriously in three senses: undertaking systematic research on the field itself; developing appropriate responses to recent failures in the field; and building more heedful interrelationships between actors within the field, particularly between business schools and practitioners.
I would hesitantly agree that yes, Michael Porter is a business genious. What do I mean by that? Well, in retrospect, he managed to profoundly influence the way we think about strategy. Whether this was a good or bad thing, that we can argue about.
In the same respect, I would argue that all the seven dissidents I've mentioned are geniuses, as they have managed to build a radically novel view on strategy, some of which have been more influential than others.
Whether Porter's methodology has been correctly applied, I don't know. However, I would suspect that no tools are ever used exactly the way they were intended to. The SMS text message, for instance, was originally designed to send code commands to telecommunication platforms. Technologies really only make sense as parts of social practice. Porter's is a conceptual tool for management. I am sure that they use it in a number of ways.
However, I was intrigued about what you meant when you said that the term "industry" is misused. Could you elaborate a bit on that?
Does strategy management as a discipline, need improvement? I don't know. I am sure that a lot of people would like to influence it in a number of ways. In essence, I view strategic management practice a bit like a rain dance, performed by a strange and wonderful alien tribe. My interest is not whether it is most efficient for producing rain, but what it means in the social practice of the tribe.
David, thanks again for your comment.
For me, the military roots of strategy are interesting, but their actual relevance for contemporary management thought is unclear. I have also heard David Hawk's argument about deception and it has weight, however, I am not sure how well read the contemporary strategy classics are in Sun Tzu and von Clausewitz.
The Mintzberg, Ahlstrand and Lampel book is a good overview of the strategy field and I particularly like its meta-focus on strategy literature instead of trying to map out strategy as a phenomenon. The big dissapointment is the figure in the end where they try to link all the school. For me, this pretty much ruins the book, but maybe that's just me.
Saku,
What I meant when I said that the term "industry" is misused is the following. Most people use the term industry anyway they want. For example:
“The financial services industry”
.. “The banking industry”
… “The commercial banking industry”
….. “The corporate cash management industry”
……. ‘The wholesale funds transfer services industry”
But all of the above are industry sectors (or industry groups) except for “Wholesale Funds Transfer Services” which is a true industry at the appropriate level for a Michael Porter Five Forces analysis. Other non-banking examples include: “Frozen Pizza Manufacturing;” “Individual Term Life Insurance;” and “Retail Discount Brokerage Services.”
Most people incorrectly perform an industry analysis on industry sectors – which is a waste of time. The fact that no global industry vendor (except eCompetitors.com) provides true industry data has made the problem difficult even for those people who want to plan correctly. That is because there are basically two types of “industry” information vendors. The most common type just lumps company data into arbitrary industry sectors and calls them industries. The second type aligns itself with SIC, or NAICS, or ISIC or other “industry” segmentation schemes developed by government agencies and limited by geographic scope and stuck with hierarchical schemes developed over 50 years ago. Given your interest in “the social practice of the tribe” – imagine studying the dysfunctional joint meetings between the numerous government agencies which try to classify industries, and their respective interactions with academic gurus and universities, and the impact these decisions have on how companies are classified and, therefore, how they are analyzed.
Specifically to address this issue – that Porter is the leading strategic management guru and companies haven’t been able to correctly perform Step 1, which is to define the industries they compete in - I and a small team have spent the last five years creating the Global Industry Dashboard [TM] which provides strategically relevant information on over 9,000 “industries” which cover approximately 92% of the world's economy.
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