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Reflective Essay On Business Strategy

Critically analyse the proposition that strategic management is a creative process through which business strategy emerges over time All organizations are faced with the challenges of strategic decisions: some to overcome issues, others to grasp new opportunities. In a fast changing environment, there is an increase need to understand how do strategies form in organizations and how strategy evolves over time. Many perspectives on strategic management have emerged the last twenty years.

There are two main schools of thought: some strategists recommend an approach to strategy that is planned (also called deliberate or prescriptive), while others argue that it is better to include incremental strategy (emergent strategy).

Deliberate strategy put a slant on control whereas emergent strategy focuses on learning. This essay critically explores the claim that strategic management is a creative process through which business strategy emerges over time.

The essay begins by defining strategic management and explains to what extent it is a creative process. It then reviews in detail the deliberate and the emergent strategy.

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Finally, the benefits of combining both strategies will be discussed. There are many definitions of strategic management, but one of the most basic and complete might be the following: “Strategic management consists of the analysis, decisions and actions an organization undertakes in order to create and sustain competitive advantages” (Dess et al 2005 p. 9).

Another goal of strategic management is to ensure the long term survival of the organization (Goldman and Nieuwenhuizen 2006; Pettinger 2004) and to achieve the company’s objective (Pearce and Robinson 2007). There are three main elements of strategic management: understanding the strategic position of an organization, strategic choices for the future and implementation of strategy (Dess et al 2005, Johnson et al 2009, Thompson and Martin 2005, Enz 2010).

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The strategic position is the analysis of the external environment, the internal capability (resources and competence) and the expectations of stakeholders.

Strategic choices are the formulation of a future strategy and the methods by which the strategy could be pursued. Finally, implementation of strategy is making sure that the chosen strategies work in practice (development of control systems). Strategic management is an ongoing process, not an event that once done can be forgotten for a while (Thompson and Strickland 2004; Stettinius et al 2005, Goldman and Nieuwenhuizen 2006). The firm will need to adapt its strategy according to the reaction of competitors.

Thompson and Strickland (2004) indicate that the firm is obliged to re-evaluate strategy as often as needed in order to match the changing internal and external environment of the organization. Managers have ever present responsibilities to detect issues, track progress, monitor customer change and make necessary adjustments. Johnson et al (2009) confirm that the term strategic management underlines the importance of managers regarding the strategy. A successful implementation of the strategic management process allows the growth and development of an organization.

Strategic management is thus crucial for the future. People usually think that strategy and creativity are opposite. However, they are much more similar than expected. “Creativity, among other things, is the ability to challenge assumptions, recognize patterns, see in new ways, make connections, take risks, and seize upon chance. ” (Herrmann 1996, cited in Vidal 2004, p. 408). In other words, creativity requires knowledge, imagination and permits to establish, as Grant (2010) explains, a meaningful connection between concepts that had not previously been related.

The basic idea is that something is creative if it is novel and useful (Bilton and Cummings 2010, Vidal 2004). Torrance, also known as the “father of creativity”, saw creativity as a process and he believed that each person is creative (Kyung Hee Kim, 2006). The creative process is not a mechanical and rational rule for solving a problem but it is an intuitive approach that can lead to a new idea, product, or process (Vidal 2004). This requires that an individual (or a group) dares to go into the unknown and change.

The creative process can be the source of small creative leaps as well as huge changes. Plsek (1996) asserts that one of the first models of the creative process comes from Graham Wallas. His model includes four phases: Preparation (observation, definition of problem, and study), Incubation (do not think about the problem for a while), Illumination (a new idea finally emerges) and Verification. This creative process is reminiscent of the components of the strategic management process described in the first part of this essay.

Indeed, the strategic management and the creative process are consisting of the same four major phases: observation and analysis phase; creation of objectives; a moment of pure creativity where ideas arise; to finish with a phase of control. To this extent, we can say that strategic management is a creative process where “creativity and analytical thinking are complementary” (Plsek 1996). Indeed, as Vidal (2004) argues, security and good management of an organization cannot be based on creativity alone.

Moreover, Bilton and Cummings (2010) demonstrate that creativity and strategy require the same set of approaches and cognitive skills. They go further by saying that all creativity is potentially strategic and all strategy should be creative. The use of strategic and creative thinking in any organization can allow more effective innovation, leadership and entrepreneurship. Nowadays, creativity is necessary to find new opportunities or to deal with persistent problems. A Nobel prize study shows that creativity is, for the majority, at the heart of the organization’ success (Hodgkinson and Sparrow 2002).

The problem is that few organizations understand how to support and apply creativity effectively (Bilton and Cummings 2010). The predominant view of the past fifty years is that strategies, led by senior managers, are developed through analytical and rational processes. Strategies are intended, in other words the product of deliberate choices. The design school is the most influential view of the strategy process since the 1960s (Faulkner and Campbell 2003; Mintzberg et al 1998; Sloan 2006). The two strategists Selznick and Chandler are at the heart of this school.

As explained by Sloan (2006), the famous notion of SWOT is born within this school: assessment of Strengths and Weaknesses of the company and the Opportunities and Threats that this company faced in this environment. The design school claims that the strategy formation is a “fit” between internal capabilities (strenghts and weaknesses) and external possibilities (opportunities and threats) – (Mintzberg et al 1998; Sloan 2006). In the design school, diagnosis (SWOT) is followed by prescription and then action which shows that this school separates thinking and action (Mintzberg et al 1998).

Moreover, only the top manager can be the strategist. He formulates simple, clear strategies and monitors them thanks to budgeting, elaborated planning and systems of control. Ansoff observes that strategic decisions are made under conditions of uncertainty. In his view, it was essential for a firm to anticipate future environmental changes in order to respond to these challenges (Floyd and Wooldridge 2000). Moreover, senior executives like Grant (2010) explains that difficulty in managing companies grew significantly in size and complexity throughout the 1950s and 1960s.

In order to provide long term guidance to companies and help executives in making strategic decisions, corporate planning was developed. The document (normally a five year plan) aimed at setting long term goals and objectives as well as prioritizing key products and business areas. Forecasting economic trends like market demand, revenue, costs of productions in relation to margins and the company’s share were also included (Grant 2010). The planned strategy, headed by Ansoff, actually grew simultaneous with the design school.

Planning suggests clear and articulated objectives, followed by formal controls. Thanks to a systematic planning, strategies are explicit, specific goals are established, activities often complex are organized and the degree of control increases, which can positively affect the employees’ performance (Grant 2010, Floyd and Wooldridge 2000). Leaders, like in Design school, have a central position in planning strategy. Mintzberg and Waters (1985) explain that the employees, outside the planning process, may act, but are not allowed to make decisions.

From Ansoff’s viewpoint, strategic decisions have to be made at the top. Indeed, given partial ignorance and uncertainty in the environment, last minute managerial decisions are required but cannot be delegated below (Floyd and Wooldridge 2000). One of the largest companies in the world, as explained by Enz (2010), has a systematic strategic planning process. Each year, a two day meeting is organized with all the company managers and the corporate executives to whom they report.

They present the detailed objectives to be achieved over the coming years, and specific strategies that will be pursued in order to reach these goals. In order that the presentations of each company contain the same elements, a strict format is followed. Company managers do not dare to implement innovative ideas by fear of failing to achieve goals. In addition, the organization does not especially reward unconventional thinking. Because of this high rigidity, the company has many problems of performance and low shareholder returns for several years now.

This example confirms that the rigidity of planned strategy prevents the creative and thinking processes. Thus, in being over prescriptive, some business opportunities can be missed (Mintzberg et al 1998 and Campbell et al 2002). According to a study, more than 80% of global organizations use strategic planning (Enz 2010). However, Mintzberg suggests that only 10-30% of planned strategies are realized (cited in Grant 2010, p. 21). Another limit of planned strategy, raised by NetMBA Business Knowledge Center (2002), is the lack of responsiveness in a rapid change competitive environment.

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