Graduate School of Business Seminar Series June, 2006

1. Graduate School of Business Seminar Series June, 2006 Dr Tim O’Shannassy RMIT University Lecturer RMIT Ford MBA Program Manager tim.oshannassy@rmit.edu.au

2. Kenichi Ohmae (1982) – McKinsey and Co. • “…great natural talent…outstanding strategist…an intuitive grasp of the basic elements of strategy…an idiosyncratic mode of thinking in which company, customers, and competition merge in a dynamic interaction out of which a comprehensive set of objectives and plans for action eventually crystallizes…insight is the key to this process…it is creative, partly intuitive, and often disruptive of the status quo, the resulting plans might not even hold water from the analyst’s point of view” (1982, p. 2). • “…strategic thinking…best possible solutions come from a combination of rational analysis, based on the nature of things, and imaginative reintegration of all the different items into a new pattern, using nonlinear brainpower” (1982, pp. 13-14).

3. Peters and Waterman (1982) • “Pathfinding is essentially an aesthetic, intuitive process, a design process. There is an infinity of alternatives that can be posed for design problems…From that infinity there are plenty of bad ideas, and here the rational approach is helpful in sorting out the chaff. One is usually left with a large remaining set of good design ideas, however, and no amount of analysis will choose among them, for the final decision is essentially one of taste” (53)

4. Contemporary Strategy Practice • Traditional view • “top down” strategy formulation • plan passed down to line managers • strategy formulation senior managers, line managers good soldiers and obey orders • Uncertain world • think and act on the run • 21st century manager, better educated, evolution of society, expects buy in… • formulation and implementation intertwined in a complex event

5. How Strategy Has Adapted • Greater demands on the strategy process • greater appreciation of different modes of strategic behaviour • blend thought, analysis and action • importance of strategic conversations • importance of strategic intent • See Hart (1992), Hart and Banbury (1994), Liedtka (1998), Whittington (2005)

6. Mintzberg (2000) & Markides (2000) • “…strategy has to be much more than the CEO…Strategy is the direction of an organization, and it can be very collective…” (Mintzberg, 2000, p. 35) • “…strategy ideas can come from anybody, anywhere, anytime…They can come through trial and error, by simply doing things or through a formal planning process” (Markides, 2000, pp. 359 - 360)

7. Markides (2000) • “The leader must decide decide the basic parameters within which people will be free to operate…the leader must develop the values and beliefs that define the organization…The leader must also strive to achieve emotional buy-in for the strategy…Finally the leader must develop the organizational environment - the culture, the structure, the incentives and the people - that will support and promote the chosen strategy” (p. 362).

8. Henry Mintzberg (1994)The Rise and Fall of Strategic Planning • Favours right brain over left brain; “soft” skills • Strong views • “…strategic thinking is an integrated perspective…a not-too-precisely articulated vision of direction” • “…messy processes of informal learning” • Vision, learning, planning • Involve staff at all levels • Hard data???

9. Mintzberg (1994) VISION LEARNING STRATEGY- MAKING PROCESS PLANNING

10. Stuart Hart (1992)Strategy-Making Process GENERATIVE COMMAND STRATEGY-MAKING PROCESS TRANSACTIVE SYMBOLIC RATIONAL

11. Liedtka (1998) Vocabulary? SYSTEMS PERSPECTIVE INTENT FOCUSED STRATEGIC THINKING INTELLIGENT OPPORTUNISM THINKING IN TIME HYPOTHESIS-DRIVEN

12. Strategic Thinking • Broad • “Strategic planning…has evolved into a viable system of strategic management (or strategic thinking)” (Wilson, 1994, p. 12) • Narrow • “Strategic thinking…is about synthesis. It involves intuition and creativity. The outcome…is an integrated perspective of the enterprise, a not-too-precisely articulated vision of direction” (Mintzberg, 1994, p. 12) • Terminology is contentious

13. O’Shannassy (2005) • Strategic thinking is a particular way of solving strategic problems and opportunities at the individual and institutional level combining rational and generative thought processes. • Thought and action can be intertwined or linear or something in between (also Eccles, 1993) depending on the strategy context confronting the organization. • The activity can involve both internal and external stakeholders depending on the context. • Pragmatically there is no single formula to strategic thinking for the individual or organization and it is evident from the lessons of the evolution of strategy that practicing managers need some flexibility in problem solving style.

14. O’Shannassy (2005) – Strategic Thinking Model Flexible Resource Inputs Entrepreneurial Strategic Intent Strategic Thinking Thinking in Time Participative

15. IV - O’Shannassy (2005) Flexible Resource Inputs Entrepreneurial Strategic Intent Strategic Thinking Participative Thinking in Time • Strategic Planning • Formalization • Documentation • Operationalization • Justification • Sub-strategies • Action plans

16. DV– Organization Performance • Ruekert et al (1985: 15): “…performance is…a multidimensional construct” • Three dimensional conceptualization of performance capturing these dimensions of adaptiveness, effectiveness and efficiency: • “Effectiveness involves the degree to which organizational goals are reached, efficiency considers the relationship between organizational outputs and the inputs required to reach those outputs, and adaptiveness reflects the ability of the organization to adapt to changes in its environment”

17. Research Question • Is there a relationship between the degree of evolution or sophistication of the organization’s strategy process and organization performance?

18. Hypotheses for Discussion • H1: The greater the emphasis on strategic planning, the better organization performance • H2: The greater the emphasis on a more evolved, sophisticated strategy process, the better organization performance • H3: Greater emphasis on a more evolved, sophisticated strategy process, the better non-financial organization performance, the better future financial performance • H4: The better organization performance, the greater the emphasis on a more evolved, sophisticated strategy process • Bi-directional relationship • Publishing around these hypotheses

19. Sample and Method • Critical realism • Sample – heterogenous, 237 surveys completed • Significant proportion of resources dedicated to strategic management in Australia • Preliminary analysis • Exploratory factor analysis • Factor correlation matrix • Reliability analysis • Multiple regression

20. Results

21. Discussion Points • What do the results tell us? • How important is analysis, and how important is experience, instinct and know-how in strategic thinking practice? • What is the role of data in good strategy process? • Who should be involved in strategic thinking activities?

22. Some References: • Hart, S 1992, ‘An integrative framework for strategy-making processes,’ Academy of Management Review, vol. 17, pp. 327-351. • Hart, S. and Banbury, C 1994, ‘How strategy making processes can make a difference’, Strategic Management Journal, Vol 15, pp. 251-269. • Hill, RP and Stephens, DL 2003, ‘The compassionate organization in the 21st century’, Organizational Dynamics, vol. 32, no. 4, pp. 331-341. • Liedtka, JM 1998, ‘Strategic thinking: can it be taught?’ Long Range Planning, Vol. 31, No. 1, pp. 120-129. • Markides, C with Wang, P 2000, ‘Strategy and management: Constantinos Markides discusses strategic innovation’, European Management Journal, vol. 18, pp. 357-366. • Mintzberg, H with McCarthy, D 2000, ‘View from the top: Henry Mintzberg on strategy and management’, Academy of Management Executive, vol. 14, no. 3, pp. 31-45. • Mintzberg, H, 1994, ‘The fall and rise of strategic planning’, Harvard Business Review, January-February, pp. 107-114. • O’Shannassy, T 2005, The Evolution of the Practice of Strategy in Australia, Unpublished Doctoral Thesis, Monash University, Australia.

23. More References • O’Shannassy, T 2001, ‘Lessons from the evolution of the strategy paradigm’, Journal of the Australian and New Zealand Academy of Management, Vol. 7, No. 1, pp. 25-37. • O’Shannassy, T 2002, ‘An investigation of the relationship between manager’s perceptions of environmental uncertainty and strategy process sophistication’, Australia and New Zealand Academy of Management 2002 Conference, La Trobe University, Beechworth, Victoria, December. • O’Shannassy, T 2004, ‘Strategic thinking and strategic planning to optimize organization performance’, Australian and New Zealand Academy of Management 2004 Annual Conference, University of Otago, Otago, New Zealand, December. • Short, JC, Ketchen, DJ and Palmer, TB 2002, ‘The role of sampling in strategic management research on performance: A two study analysis”, Journal of Management, vol. 28, pp. 363-385. • Whittington, R 2004, ‘Strategy after modernism: Recovering practice’, European Management Review, vol. 1, pp. 62-68.