Strategisk Ledelse

1. Strategisk Ledelse 5. undervisningsgang – 24. september 2012

2. Lectures, Autumn 2012

3. Introduction • Cybernetic systems and cognitive / human psychology is important for SCT key assumptions • Strategic Choice is dominant for strategy / change and deals with the general direction in which the organization changes over time • Strategy chosen by powerful top manager(s) • Human interaction is assumed in a certain way inside a system, designed by the dominant coalition • This is a cybernetic system, which requires predictability in order to control the system • Cybernetics is the science of control

4. Cybernetic Systems Negative feed-back and equilibrium • Is an application of the engineer’s idea of control to human activity • Negative feed-back loops seeks an equilibrium and changes deviations towards restore this • Like economic equilibriums and radiators, cybernetic does not have an internal capacity to chg • Dynamic equilibrium continuously adapts over time • In short time spans, fluctuations may appear • Predictability of outcome and time lag needed • Most theories of management and organization have been based on equilibrium frameworks

5. Cybernetic Systems Goal-seeking adaption to the environment • Achieving some purpose; organizations are goal-seeking systems and goals drives their actions • Subsystems of supra-systems which requires adaption to those environments • Organizations are driven by attraction to a predetermined desired state that is in equilibrium with its environment

6. The organization and the environment.. Constraints Uncertainty Environment Organization Raw materials and other inputs Products and services Inputs Outputs Drawing Boundaries Institutionalization Socially constructed beliefs

7. Environmental Contingency Theory Burns and Stalker were among the first to argue, that an organization’s structure should be based on the conditions it faces in its environment. They presented one of the first empirical tests of contingency theory showing that, in stable environments, successful organizations specialize in routine activities, with strict lines of authority and distinct areas of assigned responsibility, while in rapidly changing environments, organizations require flexibility and employees are encouraged to apply their skills as needed, fitting into changing work patterns in whatever way they find to be useful.

8. Cybernetic Systems Regulators • Regulators use negative feed-back in order to reach their goals and desired state of environment adopt • Two types of regulators; • Error-controlled; Reactively sensory for corrective actions • Anticipatory regulator; proactively sensory for avoidance • Forecast of future changes are essential (stat) • Challenge is not unforeseen unique events, but in terms of variety or complexity of the events, which is reduced by he regulator • Law of requisite variety (Complexity / Speed)

9. Cybernetic Systems Cybernetics and causality • Internal feed-back structures unnecessary to understand according to the law of req. variety • Circular causality; Event A -> Event B -> Event A, which makes large pairs difficult to analyze • Statistical models can be made for analyzing disturbances and correlates responses • Cyberneticists looks at what is observed and what is done; detailed analysis of causal links is too complex

10. Formulating and implementing long term plans • A strategic plan is a formally articulated choice of a particular future composition of activities and a particular market position • Managers to share a common intention, which must be anchored to a future reality • Time span and detailing must be compatible with the required performance • A long term plan requires long term predictability, otherwise it’s a serie of short term plans • Milestones checks outcomes and corrects deviations • When future environment is known, alternatives for action options can be deduced and decided upon

11. Formulating and implementing long term plans Evaluating long-term strategic plans; Acceptability • Acceptable financial performance • Forecasting financial performance in terms of cash flows, capital expenditures etc, • Many difficulties in terms if measurements etc. • Acceptable consequences for internal power groups • Plans might fail if they’re perceived as morally unacceptable or against customs and beliefs • Expectation alignment to avoid resistance • Acceptable consequences for external power groups • Image impacts from communities or society • Reactions from competitors must be taken into account

12. Formulating and implementing long term plans Evaluating long-term strategic plans; Feasibility • Financial resources • A thoroughly analysis of required funding to carry out a strategy, for its entire life span, is paramount for the strategy’s success • A break-even point can be calculated • Human resources • Availability of the right number of skilled people, both inside- and external to the organization • Requires audit (assessment) of internal human resources

13. Formulating and implementing long term plans Evaluating long-term strategic plans; Suitability or fit • Does the strategy has a Strategic logic? The pieces of the strategy should fit together (congruence) • SWOT Analysis • Assessment of internal- and external factors. Match strengths with opportunities, eliminate threats and overcome weaknesses • Industry structure and value chain analysis • Identification of the competitive situation and advantages in the market • Determination of actions needed to secure competitive advantages, e.g. through quantification of value chains

14. Value Chains

15. ValueChains

16. Formulating and implementing long term plans Evaluating long-term strategic plans; Suitability or fit • Product life cycle • It is important to assess product portfolios and map current products in the lifecycles; Embryonic, Growth, Shake-out, Mature, Saturation and Decline • Strong capabilities should focus on early stages • Experience curves • Reflects experience with production. Early stages reflects high experience gains which flattens out over time. • Product portfolio • Maps the business against a number of dimensions, such as products, market shares and business units • Product growth is determining market attractiveness

17. Formulating and implementing long term plans Implementing long-term strategic plans • Designing organizational structures • Division of labor and hierarchy of authority • Reflects the maturity in terms of size and complexity • Growth requires changing integration mechanisms • Designing systems of information and control • Procedures , rules and regulations governing recipients and timing of organizational performance • Installing and operating human resource systems • Right actions are correlated with motivation, which can be amplified with an appropriate reward system • Promotions and career development, job rotation and development schemes are non-monetary motivators

18. Dimensions of Organizational Social Structures

19. Formulating and implementing long term plans Implementing long-term strategic plans • Culture Change Programmes • Culture, attitudes and beliefs shared by people, should be aligned with the strategy to be effective • May require change of culture to avoid resistance • Developing appropriate political behavior • Interdependence, heterogeneous goals and scarce resources taken together produces conflicts, which may imply political behavior (coalitions etc.) • The level of conflict can be managed

20. Organizational design Unfreeze Movement Refreeze

21. Three levels of culture – Schein Artifacts are manifestations or expressions of the same cultural core that produces and maintains values and norms Artifacts Values are the social principles, goals and standards that cultural members believe to have intrinsic worth. They define what we care most about and are revealed by our priorities. Values Norms Assumptions represent truth, or what members of a culture believe to be their reality. Invisible and typically taken for granted. Assumptions

22. Three levels of culture - Artifacts

23. Gagliardi Every organization's primary strategy can be defined as to protect the organizational identity that the core assumptions and values create and maintain. In service to the primary strategy, organizations may develop and implement a range of secondary strategies which can be instrumental (operational in nature) or expressive (symbolic in nature)

24. Cognitivist and humanistic psychologySender-Receiver model • Initially, the human brain was thought of as a deductive computer, performing logic operations • Intelligence was equaled with computation, so cognition (human knowing) could be understood as a process of computing representations of reality • Learning is when the pre-given reality is more and more accurate represented by negative feed-back • Emphasis on internal representation of external environment and learning by negative feed-back • Sender-Receiver model of communications • The human mind becomes one of the variables that can be designed and changed as cybernetic systems

25. Cognitivist and humanistic psychologyHumanistic psychology • Takes an optimistic view on human nature • Alienation of the true self because of revivalism • Focus on human motivation, values, beliefs and the importance of leadership vs. rational decisions • Sharing culture and formulating a common vision, which still is at the core of cybernetics theory

26. Cognitivist and humanistic psychologyHumanistic psychology - motivation

27. Cognitivist and humanistic psychologyHumanistic psychology • Mission statements (believing in what is being done) captures emotional support from employees and thereby paves the way for motivated employees • Vision: picture of future state • Mission: a way of behaving • Organizations will be successful when people are emotionally engaged and inspired by visions and a sense of a mission and it is the role of leaders to choose these

28. Cognitivist and humanistic psychologyLeadership / Groups • Leader translates higher level directives to goals and tasks for his/her part of the organization, monitors performance and ensures motivated employees • Two basic leader styles; autocratic / delegating • Leadership style applied is context dependant • Formal groups requires psychological awareness, clear goals, tasks and their purpose is to solve problems • Informal groups may develop, primarily driven by physical proximity and not hierarchal relation • Such informal groups may jeopardize motivation, control systems and other formal structures

29. Strategic Choice Theory • Key questions: • Strategy determines structure or vice versa? • Market position or resource base determines competitive advantage? • Limits to strategic choice, particular when it comes to uncertainty and the impact of cognitive frames in interpreting situations. • Process versus content leading to an emphasis on learning rather than simple choice

30. Next time • Please read chapter 5