{"id":108,"date":"2017-08-07T16:03:00","date_gmt":"2017-08-07T16:03:00","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/atd-tc3-management\/?post_type=chapter&p=108"},"modified":"2017-08-07T16:03:00","modified_gmt":"2017-08-07T16:03:00","slug":"how-do-strategies-emerge","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/atd-tc3-management\/chapter\/how-do-strategies-emerge\/","title":{"raw":"How Do Strategies Emerge?","rendered":"How Do Strategies Emerge?"},"content":{"raw":"
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Learning Objectives<\/h3>\r\n
    \r\n \t
  1. Understand the difference between intended and realized strategy.<\/li>\r\n \t
  2. Understand how strategy is made.<\/li>\r\n \t
  3. Understand the need for a balance between strategic design and emergence.<\/li>\r\n<\/ol>\r\n<\/div>\r\nHow do the strategies we see in organizations come into being? In this section, you will learn about\u00a0<\/span>intended<\/em>\u00a0<\/span>and\u00a0<\/span>realized<\/em>\u00a0<\/span>strategies. The section concludes with discussion of how strategies are made.\r\n
    \r\n

    Intended and Realized Strategies<\/h2>\r\n
    \r\n\r\nThe best-laid plans of mice and men often go awry<\/em>.\r\n\r\nRobert Burns, \u201cTo a Mouse,\u201d 1785\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\nThis quote from English poet Robert Burns is especially applicable to strategy. While we have been discussing strategy and strategizing as if they were the outcome of a rational, predictable, analytical process, your own experience should tell you that a fine plan does not guarantee a fine outcome. Many things can happen between the development of the plan and its realization, including (but not limited to): (1) the plan is poorly constructed, (2) competitors undermine the advantages envisioned by the plan, or (3) the plan was good but poorly executed. You can probably imagine a number of other factors that might undermine a strategic plan and the results that follow.\r\n\r\nHow organizations make strategy has emerged as an area of intense debate within the strategy field. Henry Mintzberg and his colleagues at McGill University distinguish intended, deliberate, realized, and emergent strategies. These four different aspects of strategy are summarized in the following figure.\u00a0<\/span>Intended strategy<\/span><\/span>\u00a0<\/span>is strategy as conceived by the top management team. Even here, rationality is limited and the intended strategy is the result of a process of negotiation, bargaining, and compromise, involving many individuals and groups within the organization. However,\u00a0<\/span>realized strategy<\/span><\/span>\u2014the actual strategy that is implemented\u2014is only partly related to that which was intended (Mintzberg suggests only 10%\u201330% of intended strategy is realized).\r\n
    \r\n\r\nFigure 5.11<\/span>\u00a0<\/span>Intended, Deliberate, Realized, and Emergent Strategies\r\n\r\n\"\"<\/a>\r\n\r\n<\/div>\r\nThe primary determinant of realized strategy is what Mintzberg terms\u00a0<\/span>emergent strategy<\/span><\/span>\u2014the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances. Thus, the realized strategy is a consequence of\u00a0<\/span>deliberate<\/span><\/span>\u00a0<\/span>and emerging factors. Analysis of Honda\u2019s successful entry into the U.S. motorcycle market has provided a battleground for the debate between those who view strategy making as primarily a rational, analytical process of deliberate planning (the\u00a0<\/span>design school<\/em>) and those that envisage strategy as emerging from a complex process of organizational decision making (the\u00a0<\/span>emergence<\/em>\u00a0<\/span>or\u00a0<\/span>learning school<\/em>).\r\n\r\nAlthough the debate between the two schools continues,\u00a0<\/span>we hope that it is apparent to you that the central issue is not \u201cWhich school is right?\u201d but \u201cHow can the two views complement one another to give us a richer understanding of strategy making?\u201d Let us explore these complementarities in relation to the factual question of how strategies are made and the normative question of how strategies should be made.\r\n
    \r\n

    The Making of Strategy<\/h2>\r\n
    \r\n

    How Is Strategy Made?<\/h2>\r\nRobert Grant, author of\u00a0<\/span>Contemporary Strategy Analysis<\/em>, shares his view of how strategy is made as follows. For most organizations, strategy making combines design and emergence. The deliberate design of strategy (through formal processes such as board meetings and strategic planning) has been characterized as a primarily top-down process. Emergence has been viewed as the result of multiple decisions at many levels, particularly within middle management, and has been viewed as a bottom-up process. These processes may interact in interesting ways. At Intel, the key historic decision to abandon memory chips and concentrate on microprocessors was the result of a host of decentralized decisions taken at divisional and plant level that were subsequently acknowledged by top management and promulgated as strategy.\r\n\r\nIn practice, both design and emergence occur at all levels of the organization. The strategic planning systems of large companies involve top management passing directives and guidelines down the organization and the businesses passing their draft plans up to corporate. Similarly, emergence occurs throughout the organization\u2014opportunism by CEOs is probably the single most important reason why realized strategies deviate from intended strategies. What we can say for sure is that the role of emergence relative to design increases as the business environment becomes increasingly volatile and unpredictable.\r\n\r\nOrganizations that inhabit relatively stable environments\u2014the Roman Catholic Church and national postal services\u2014can plan their strategies in some detail. Organizations whose environments cannot be forecast with any degree of certainty\u2014a gang of car thieves or a construction company located in the Gaza Strip\u2014can establish only a few strategic principles and guidelines; the rest must emerge as circumstances unfold.\r\n\r\n<\/div>\r\n
    \r\n

    What\u2019s the Best Way to Make Strategy?<\/h2>\r\nMintzberg\u2019s advocacy of strategy making as an iterative process involving experimentation and feedback is not necessarily an argument against the rational, systematic design of strategy. The critical issues are, first, determining the balance of design and emergence and, second, how to guide the process of emergence. The strategic planning systems of most companies involve a combination of design and emergence. Thus, headquarters sets guidelines in the form of vision and mission statements, business principles, performance targets, and capital expenditure budgets. However, within the strategic plans that are decided, divisional and business unit managers have considerable freedom to adjust, adapt, and experiment.\r\n
    \r\n

    Key Takeaway<\/h3>\r\nYou learned about the processes surrounding strategy development. Specifically, you saw the difference between intended and realized strategy, where intended strategy is essentially the desired strategy, and realized strategy is what is actually put in place. You also learned how strategy is ultimately made. Ultimately, the best strategies come about when managers are able to balance the needs for design (planning) with being flexible enough to capitalize on the benefits of emergence.\r\n\r\n<\/div>\r\n
    \r\n

    <\/h3>\r\n<\/div>\r\n<\/div>\r\n<\/div>","rendered":"
    \n
    \n

    Learning Objectives<\/h3>\n
      \n
    1. Understand the difference between intended and realized strategy.<\/li>\n
    2. Understand how strategy is made.<\/li>\n
    3. Understand the need for a balance between strategic design and emergence.<\/li>\n<\/ol>\n<\/div>\n

      How do the strategies we see in organizations come into being? In this section, you will learn about\u00a0<\/span>intended<\/em>\u00a0<\/span>and\u00a0<\/span>realized<\/em>\u00a0<\/span>strategies. The section concludes with discussion of how strategies are made.<\/p>\n

      \n

      Intended and Realized Strategies<\/h2>\n
      \n

      The best-laid plans of mice and men often go awry<\/em>.<\/p>\n

      Robert Burns, \u201cTo a Mouse,\u201d 1785<\/p>\n<\/div>\n<\/div>\n<\/div>\n

      This quote from English poet Robert Burns is especially applicable to strategy. While we have been discussing strategy and strategizing as if they were the outcome of a rational, predictable, analytical process, your own experience should tell you that a fine plan does not guarantee a fine outcome. Many things can happen between the development of the plan and its realization, including (but not limited to): (1) the plan is poorly constructed, (2) competitors undermine the advantages envisioned by the plan, or (3) the plan was good but poorly executed. You can probably imagine a number of other factors that might undermine a strategic plan and the results that follow.<\/p>\n

      How organizations make strategy has emerged as an area of intense debate within the strategy field. Henry Mintzberg and his colleagues at McGill University distinguish intended, deliberate, realized, and emergent strategies. These four different aspects of strategy are summarized in the following figure.\u00a0<\/span>Intended strategy<\/span><\/span>\u00a0<\/span>is strategy as conceived by the top management team. Even here, rationality is limited and the intended strategy is the result of a process of negotiation, bargaining, and compromise, involving many individuals and groups within the organization. However,\u00a0<\/span>realized strategy<\/span><\/span>\u2014the actual strategy that is implemented\u2014is only partly related to that which was intended (Mintzberg suggests only 10%\u201330% of intended strategy is realized).<\/p>\n

      \n

      Figure 5.11<\/span>\u00a0<\/span>Intended, Deliberate, Realized, and Emergent Strategies<\/p>\n

      \"\"<\/a><\/p>\n<\/div>\n

      The primary determinant of realized strategy is what Mintzberg terms\u00a0<\/span>emergent strategy<\/span><\/span>\u2014the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances. Thus, the realized strategy is a consequence of\u00a0<\/span>deliberate<\/span><\/span>\u00a0<\/span>and emerging factors. Analysis of Honda\u2019s successful entry into the U.S. motorcycle market has provided a battleground for the debate between those who view strategy making as primarily a rational, analytical process of deliberate planning (the\u00a0<\/span>design school<\/em>) and those that envisage strategy as emerging from a complex process of organizational decision making (the\u00a0<\/span>emergence<\/em>\u00a0<\/span>or\u00a0<\/span>learning school<\/em>).<\/p>\n

      Although the debate between the two schools continues,\u00a0<\/span>we hope that it is apparent to you that the central issue is not \u201cWhich school is right?\u201d but \u201cHow can the two views complement one another to give us a richer understanding of strategy making?\u201d Let us explore these complementarities in relation to the factual question of how strategies are made and the normative question of how strategies should be made.<\/p>\n

      \n

      The Making of Strategy<\/h2>\n
      \n

      How Is Strategy Made?<\/h2>\n

      Robert Grant, author of\u00a0<\/span>Contemporary Strategy Analysis<\/em>, shares his view of how strategy is made as follows. For most organizations, strategy making combines design and emergence. The deliberate design of strategy (through formal processes such as board meetings and strategic planning) has been characterized as a primarily top-down process. Emergence has been viewed as the result of multiple decisions at many levels, particularly within middle management, and has been viewed as a bottom-up process. These processes may interact in interesting ways. At Intel, the key historic decision to abandon memory chips and concentrate on microprocessors was the result of a host of decentralized decisions taken at divisional and plant level that were subsequently acknowledged by top management and promulgated as strategy.<\/p>\n

      In practice, both design and emergence occur at all levels of the organization. The strategic planning systems of large companies involve top management passing directives and guidelines down the organization and the businesses passing their draft plans up to corporate. Similarly, emergence occurs throughout the organization\u2014opportunism by CEOs is probably the single most important reason why realized strategies deviate from intended strategies. What we can say for sure is that the role of emergence relative to design increases as the business environment becomes increasingly volatile and unpredictable.<\/p>\n

      Organizations that inhabit relatively stable environments\u2014the Roman Catholic Church and national postal services\u2014can plan their strategies in some detail. Organizations whose environments cannot be forecast with any degree of certainty\u2014a gang of car thieves or a construction company located in the Gaza Strip\u2014can establish only a few strategic principles and guidelines; the rest must emerge as circumstances unfold.<\/p>\n<\/div>\n

      \n

      What\u2019s the Best Way to Make Strategy?<\/h2>\n

      Mintzberg\u2019s advocacy of strategy making as an iterative process involving experimentation and feedback is not necessarily an argument against the rational, systematic design of strategy. The critical issues are, first, determining the balance of design and emergence and, second, how to guide the process of emergence. The strategic planning systems of most companies involve a combination of design and emergence. Thus, headquarters sets guidelines in the form of vision and mission statements, business principles, performance targets, and capital expenditure budgets. However, within the strategic plans that are decided, divisional and business unit managers have considerable freedom to adjust, adapt, and experiment.<\/p>\n

      \n

      Key Takeaway<\/h3>\n

      You learned about the processes surrounding strategy development. Specifically, you saw the difference between intended and realized strategy, where intended strategy is essentially the desired strategy, and realized strategy is what is actually put in place. You also learned how strategy is ultimately made. Ultimately, the best strategies come about when managers are able to balance the needs for design (planning) with being flexible enough to capitalize on the benefits of emergence.<\/p>\n<\/div>\n

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      Candela Citations<\/h3>\n\t\t\t\t\t
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      CC licensed content, Shared previously<\/div>