DEVELOPMENT OF STRATEGY

CHAPTER 1: THE NATURE OF STRATEGY AND PLANNING

 1.1 Introduction To Development Of Strategy

• 15 Topics
• Each Topic has 5 to 8 Lectures
• 100 Lectures
• Each Lecture is 15 to 20 minutes
• Each Lectures has Case Studies and Discussion Questions for you to internalise the learning and
apply the knowledge
• Study Text is “Development of Strategy” ICSA Study Text by Mark Wearden (2019)
 The Importance Of This Knowledge

• VUCA World (Volatility, Uncertainty, Complexity, Ambiguity) – the term VUCA originated with the
United States Army War College to describe conditions resulting from the Cold War. In the
business context, it refers to an uncertain environment
• Industrial Revolution 4.0 is expected to change how we live, work and communicate. Automation,
robotics and artificial intelligence are change agents in IR 4.0 that will make certain groups of
employees redundant
• People – a new generation of Generation Y and Millennials is the new workforce. There is cross
generational issues between Baby Boomers and Gen X’ers and Gen Y and Millennials in the
business environment.
 Learning Outcomes

• The importance of strategy

• Recognising the changes and challenges we face in a complex ecosystem
 1.2 The Meaning of Strategy

• Plan?
• Ploy?
• Tactic?
• Game Plan?
 The 5 Phases In A Strategic Plan

• Where are we now? (Situational Analysis)

• Where do we want to go? (Objectives & Goals)
• HOW DO WE GET THERE? (Strategy)
• Which way is best? (Action Plan)
• How do we ensure arrival? (Evaluation and Control)
 Desired
State

Present
State
Strategy is that which takes you from the Present State to the Desired State
/ from where you are now to where you wish to go.
 Sustainable Competitive Advantage

• Strategy sets us apart from our competitors

• What’s different in the way we do things?
• How we sustain our businesses
 Learning Outcomes

• Definition of Strategy
• ‘Why Strategy; addressed in sustainable competitive advantage
 1.3 Distinguishing Between Planning And Strategy

Definition of the word ‘plan’

• A detailed scheme or method for attaining an objective
• A proposed, usually tentative idea for doing something
• An outline or sketch
• To have something in mind as purpose
 Definition of the word ‘strategy’

• The art or science of the planning and conduct of a war

• A particularly long-term plan for success especially in politics or business
3 Key Elements Behind Any Strategic Decision By Pettigrew And Whipp
(1991)

• Context: the environment within which the strategy operates and is developed
• Content: the main actions of the proposed strategy
• Process: how the actions link together or interact with each other as the strategy unfolds (this may
be described as the plan)
 Strategic Planning

• The 5 Questions
• The element of ‘risk’ – any situation or decision where there is more than one possible outcome
and such outcomes can be visualised and ranked against likely probability
• “Gap” analysis – “exception analysis” / the comparison of actual performance or events with
projected or desired performance or events. The analysis is required to understand the gap
between the actual and projected/desired.
• Benchmarking / Standards – setting benchmarks and standards for us to gauge our performance
 Learning Outcomes

• The difference between planning and strategy

• 3 key elements behind any strategic decision
• Understanding Strategic Planning
1.4 Characteristics Of Strategic Decisions

• Types of decision
• Timeframe of a decision
• Scope of a decision
• Values and expectations
• Strategic change
• Complexity
 Types Of Decisions

• Irreversible decision
• Reversible decision
• Experimental, staged or subjective decision
 Timeframe Of A Decision

• short-term
• mid-term
• long-term
 Scope Of A Decision

• ‘strategic fit’ – are we dealing with something that is already within our comprehension, or are we
embarking upon a strategic journey which requires the development and expansion of existing
resources and competencies
• our resources and competencies
 Values and Expectations

• Mission
• Values (beliefs and expectations of the people)
• Culture of the organisation
 Strategic Change

• VUCA
• Volatility
• Uncertainty
• Complexity
• Ambiguity
 Complexity And The Development Of Strategy

• The uncertainty of the operational environment

• Continuing rapid changes in technology
• Intricacies of multinational trade
• The incomprehensible nature of many decisions made by others
• Differing styles of leadership
• Complexity of how individuals think
 Learning Outcomes

• Characteristics of strategic decisions:

• Types of decision
• Timeframe of a decision
• Scope of a decision
• Values and expectations
• Strategic change
• Complexity
1.5 Perspectives Of Strategy Mintzberg, Spender, Maccoby & Argyris

Four Different Perspectives Of Strategy From Four Leading Strategic

Thinkers And Academics

• Mintzberg’s Five P’s theory

• Spender’ s Four Paradigms
• Maccoby’s Strategic Intelligence
• Argyris’s Inference and Control
 Mintzberg – 5Ps Theory (2008)

• Henry Mintzberg distinguished five different approaches to strategy for organisations. He called
them the 5 Ps of Strategy.
• These 5 approaches allow an organisation to implement a more effective strategy.
• According to Mintzberg, developing a good strategy is difficult but by considering the 5 different
approaches, an organisation is assured of having considered different perspectives before the final
strategy is drawn out.
Mintzberg’s Five P’s Theory

PLAN

PLOY PATTERN

PERSPECTIVE POSITION
 Spender – Four Paradigms (2015)

• Spender suggests that the development of strategy involves frequent change in identity, intention
and context, sometimes making it sensible to adapt goals rather than sticking to a rigid end vision.
• He suggests there are four basic paradigms from which we approach these questions.
 Spender’ s Four Paradigms

Goals

Flexibility Judgement

People
 Spender’s 4 Paradigms

Goals: the objectives

Judgement: a recognition of inevitable change in the environment

People: that people are not always rational

Flexibility: have the ability to adapt and change

 Learning Outcomes

• Mintzberg’s 5 Ps Theory
• Spender’s Four Paradigms
 Maccoby – Strategic Intelligence (2017)

• Maccoby suggests that the concept of strategy needs to be aligned with the concept of
intelligence.
• Maccoby suggests that we need to develop our intelligence to consider strategy from four
dimensions:
• Foresight
• Visioning
• Partnering
• Motivating
Maccoby’s Strategic Intelligence
 Argyris – Inference And Control (1990)

• Chris Argyris (1923 – 2013) looked at organisations from a systems perspective

• The aspect of his thinking in the development of strategy is a concept called the “ladder of
inference”
• Argyris used his ‘ladder’ to consider how the brain enables us to take any action, from the simplest
to the most complex.
Argyris’s Inference and Control
 Learning Outcomes

• Maccoby’s Strategic Intelligence

• Argyris’ Inference and Control
 1.6 Levels Of Strategy And Planning

Levels Of Planning:
• Operational Plans are accomplished and overseen by each individual employee of an
organisation, at whatever level they might be operating within a hierarchy
• Intermediate Plans are generally overseen by people with some aspect of management
responsibility, working together to being cohesion to the impact of strategic change
• Strategic Plans are generally developed by directors and senior managers, people with
organisation-wide accountability and authority.
 Levels Of Strategy

• Corporate level of strategy development sits at the centre of the organisation, driving all other
strategic dimensions within the organisation
• Business unit level of strategy development is fed directly by the corporate level
• Functional level of strategy puts the strategic intent of the business unit decisions into action.
• Individual / Team level of strategy is where the real day-to-day work takes place and where most of
the key decisions are made
 Learning Outcomes

• Levels of Planning
• Levels of Strategy