Ten Schools of Strategy

Ten Schools Of Strategy 1 Following are the ten schools of strategy : The Design School : This school seeks to find a match or fit for internal capabilities and external possibilities. It says to think before you leap. It lays a lot of importance on the analysis of external and internal situations. External covers the threats and opportunities and the internal covers the strenghths and weaknesses. Basically it is a SWOT analysis. Social responsibility and Managerial values also play a role in the formulation of the strategy. Once the alternatives are figured out,the best of them is chosen. once a strategy is chosen,it is then implemented.

Premises of the Design School : ? It should be a deliberate process of conscious thought ? Responsibility regarding the control and consciousness should be attached to the CEO ? The model of strategy should be simple and informal ? They should be one of a kind ? The process is complete when the strategies seem to be formulated as perspective. They need to be explicit. ? Only when the best one is chosen,can we implement it. The criticism against this thought scool are : ? No clarity in the organization in terms of it’s strenghths and weaknesses. ? When ,how and when not should be the strategies formulated ?

The major assumption is that the data can be aggregated and transmitted to the upper levels without substantial losses ? Other major assumption is that environment can always be understood and is sufficiently stable in the future. Example : Design School Microsoft’s share has been falling in the recent past. The reason can be attributed to lack of long term contracts with OEM manufacturers and good design team which can influence the customers to a large extent. In order to bridge this gap,Microsoft entered in to a strategic alliance with NOKIA there by acquiring the capability internally.

The planning school : The basic idea of this thought school is to do a SWOT analysis and articulate them in to actionable items/objectives and then elaboration there on. The main steps in the process are : ? Objective setting stage ? External Audit Stage ? Internal Audit Stage Ten Schools Of Strategy 2 ? Strategy Evolution Stage ? strategy operationalisation stage The premises of this school are as follows : ? Strategies are a result of control,formal planning,breaking down in to steps with a checklist and support by techniques. ? Responsibility of the entire process vests with the leader(The CEO) ?

Strategy needs to be made more explicit in terms of objectives,budgets,programs and operating plans. The major criticism is : ? It assumes that the organizations can predict the future/environment remains fairly stable ? Effective strategy making connects action to thought process which in turn connects implementation to formulation which is missing. ? Formal systems could never internalize, comprehend and synthesize information. Example : Planning School In the last quarter, results of INFOSYS were slightly on the lower side of the market. Now,in the process of improving these numbers it needs to analyse the following : ?

Internal factors : Attrition rate , Number of new clients added ? External Factors : How European markets are performing,General GDP outlook,etc. The Positioning School : While the Design Thought school and the Planning thought school didn’t put constraints on strategies possible in given situation,the positioning thought school argues that only a few key strategies – as positions in the economic market place are desirable in the given industry ,which can be defended against existing and future competitors. This thought school desins generic categories of strategies.

Following are the premises of Positioning School : ? Strategies are generic,especially common,identifiable positions in the market. ? The economic environment is competitive. ? Strategy formation is selection of one such generic positions. ? Analysts play a major role in assisting managers through their calculations. ? Market structure drives deliberate positional strategies that drive the organizational structure. The criticism of This school are : ? The focus is narrow. ? It’s biased towards traditional big business Ten Schools Of Strategy 3 ? It’s more concerned about the process. Position is selected from a restricted list of conditions. Example : Positioning School Positioning is a way to bring customers. Toyota is perceived as an affordable car manufacturer all around the world. When Toyota came with Lexus its luxury Sedan,it felt that its perception of affordable car manufacturer would hurt the sales of Lexus. Henceforth,it decided to hiveoff Lexus as its sub brand and launched it as a different brand. The Entreprenurial School : In this thought school,the strategy building process is vested with the single leader(Usually the CEO) and is built on a vision.

The proponents believe that the key to organizational success was personalized leader ship based on strategic vision. This holds true not only in starting up and building the organisations but also in case of collapsing organisations. The salient features of this thought school are : ? Strategy making is preceeded by rigorous search of opportunities. ? Power is centered at th eleader(usually CEO) ? It is characterised by major leaps in the wake of uncertainty. ? Growth is the dominant goal of such organisations. The premises of the school are : ? Strategy exists as a perspective in the leader’s mind The formulation process is conscious only to an extent ? Leader promotes vision and watches it cloasely and makes changes if necessary ? Strategic vision has got flexibility and hence the organizations. (Simple structure in response to Leader’s directives) The criticism of this thought school is that it centres the strategy formulation on the leader,an individual. In case of confusion the employees may become hostile and may demand a new leader. Example : Entreprenurial School GE is a very good example in this context which claim s to have produced largest number of CEOs than Harvard.

When Jalk Welch took over the leadership he dismantled the way the organization was functioning under Jones and same was the case when Jeff took over Jack. The cognitive school : This school derives it’s thoughts from the field of cognitive psychology. The proponents of this theory are Reger,Huff,Bogner,Thomas and Schwenk. Lyle is the leading proponent. The ideology of this school is that the more information a peron has,the more informed he will be and so will be his decisions. And hence he will make the best decision. Ten Schools Of Strategy 4

The premises of this model are : ? Strategy is a cognitive process which involves the functioning of mind. ? They emerge as perspectives that define how people reac t with the stimulus of the external environment. ? These stimuli are decoded through cognitive maps. ? Strategies are difficult to attain and to change as well. It says the external environment is very dynamic and can’t be predicted by anyone even with utmost cognitive power. Example : Cognitive School Linked in has learnt over time that there is a need for the social networking at professional stage.

They could foresee a need for such network and came up with the site. Now it’s a huge success. The Learning School : This thought school has a view that strategies emerge as people when work collectively learn a lot and understand the organization’s capability of dealing with it. Following are the principles of learning organization : ? Organizations can learn as much from failures as they do from success. ? Learning organisations assume that managers and workers close to design,manufacturing,distribution and sale of product know more about the activities than superiors. Learning organizations works actively in transferring knowledge from one part to the other and ensures that relevant knowledge reaches the desired unit. ? Learning organisations spend a lot to get info from outside their boundaries. The premises of the school are as follows : ? The complex and unpredictable nature of the organisation’s environment makes formulation and implementation indistinguishable beyond an extent. ? Leader must learn but more commonly it is the collective system that learns. ? Learning takes place through behaviour through simultaion so that some sense can be made out of the action.

Criticism of this thought school are : ? There is always a threat of taking the extreme positions wrt strategy i. e No Strategy,lost strategy or wrong strategy. Ten Schools Of Strategy 5 Example : Learning School Aravind Eyecare hospital has an objective to provide affordable eyecare to poor people. The skill was obtained when a large number of operations were performed which helped the organization in identifying the bottlenecks and removing them whih was possible because of continuous learning. The Power School : This thought school is based on political science. The proponents of this school are G. T. Alison and J.

Peffer & Salanick & Astley. Politics was used synonymous to the power in economic terms. It talks about moves to subvert competition and also talks about cooperative stratiegies (Non zero sum game). Power equations build up a strategy. There are basically two types of power relations. ? Micro power which deals with politics within the organization ? Macro power which talks about use of power by the organization The premises of the model are : ? Strategy is build up by power and politics either as a process with in the orhanisation or as a behaviour or of the organization itself in its external environment. Such emerging strategies which result from process take the form of positions and ploys. ? Micropower views strategy as an interplay and confrontation similar to how the politics works. ? Macropower views the organization as supporting the the organization’s development by controlling and cooperating with other organizations by maneuvring in the forms of various networks and alliances. The criticism of this school of thought is that though political dimension can have a positive impact we should not under estimate the disadvantages and the confusion it creates. The following are the major contribution to this field : Coalition ? Political Games ? Collective Strategy ? Significance of politics in promoting strategic change Example : Power School Vedanta used it’s relations with higher ups in politics to get the rights for mining . Though it got in to trouble later on but the political relations worked out for it. Ten Schools Of Strategy 6 The Culture School : This school of thought says that themirror image of power shows the culture. It takes roots from the power school. It also is in a way related to the science of anthropology. It was formulated by looking at how the japanese companies were performing.

They made culture an inherent part of their strategy. Japanese and swedish were the inspiration for this school of thought. The main points of this school are : ? Decision making style ? Resistance to strategic change ? ,overcoming the resistance to strategic change ? Dominant values ? Culture clash The premises of this school are : ? Strategy is formed based out of interactions with society and beliefs and understandings mutually shared by the members. ? Individuals acquire these over time through day to day interactions which is mostly tacit and non verbal rarely through some formal procedures. It takes the form of perspective above all even above positions which is rooted in the common good and it gets reflected in the patterns by which capabilities of the organization are protected and leveraged. ? Culture and in specific the ideology do not support the strategic changeso much as the perpetuation of existing strategy. The criticism of this theory is that it’s very vague. And it’s hard to come up with with a strategic management with this philosophy. Nonetheless this shool of thought adds substantial value to the organization. Example : Culture School Some of the strategies are based on the social forces of the culture.

The survey conducted to know the reason why attrition rate of women aged 25yrs was less in Infosys,the reason was found to be the campuses being big and well maintained in such a good way that they make them forget their family problemsonce they are in to the campus. The Environment school : It is based on the fact that the strategy should be so designed that ut should be reactive based on the external environment. While other schools just factor in the environment but this schol lays a lot of importance to the environment,it believes that environment is the ideal.

The protagonists of this school are Mintzberg and Hannan and Freeman. The basic model is Mintzberg’s four groups of contingency view – stability complexity,market diversity and hostility. The premises of this model are : Ten Schools Of Strategy 7 ? Environment is the central factor for any strategy of an organization ? Organization must respond to the external environmental forces. ? Leadership is passive for reading and adapting to the environment. ? Organizations try to group together in different positions where they operate until the resources become scarce or conditions become way too unfavourable.

Finally they collapse. The criticism of this school is that environment is very subjective and vague. Contribution of the school gives central role to the environment in strategy formation. Example : Environment School When Toyota felt that there were issues ith the cars it manufactured and that the environment was turning hostile,they recalled the cars in huge numbers even though it was turning against them. The Configuration School : It combines all the schools of strategy and then creates an entirely new school of thought.

The proponents of this theory are Mintzberg,Miles & Snow,Miller,Tichy ,stopford,Sherman and Baden-Fuller. The two main aspects of this school are configurations and transformations. The basic models of the school are entrepreneurial organisation,diversified org,machine org,political org,adhocracy org,professional org and missionary org. The types of stages are : ? Stage of Development ? Stage of stability ? Stage of adaption ? Stage of struggle ? Stage of revolution The four main patterns are : ? Periodic bumps ? Oscillating shifts ? Life Cycles ? Regular Progress The premises of This model are : Most of the time an organisation is believed to have a certain static configuration of its attributes. Hence it adopts a form of structure which suits its needs and this gives rise to particular set of strategies ? These periods are sometimes disturbed by some processes. ? These successive patterns order themselves in to patterns over a period of time ? designing of strategy can be conceptual or a formal planning. Ten Schools Of Strategy 8 ? The criticism against this school of thought is that organisations cant be exactly differentiated as black and white. There are some grey ones as well.

Example : Configuration School Google is one of the leaders in todays’ hyper competitive environment. It adapts itself to the environment. For example ,in response to witter it came up with Buzz ,In response to FaceBook it came up with GooGlePlus. It also entered the Operating System industry. It is in to mailing service and last but not the least in to data maintenance. In data collection and maintenance,it is the leader. In mailing service it is posing a tough competition to rest all service providers. References : http://www. strategologybyquattro. com http://facilitatingimpact. blogspot. com http://google. com