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Pragmatic Strategy

Pragmatic Strategy. Dancing with Efficiency, Creativity and Legitimacy. Zhichang zhu. University of Hull Business School, UK. July 2004 , Xiamen and Guangzhou , China. Contents. Background: towards pragmatic strategy Strategy: what do strategists do and how do they do it?

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Pragmatic Strategy

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  1. Pragmatic Strategy Dancing with Efficiency, Creativity and Legitimacy Zhichang zhu University of Hull Business School, UK July 2004, Xiamen and Guangzhou, China

  2. Contents • Background: towards pragmatic strategy • Strategy: what do strategists do and how do they do it? • Firms: what are they and how do they differ?

  3. Background • What is strategy? • Why pragmatism, why now? • Pragmatism East and West

  4. What is strategy? Strategy is about envisioning a valued future for common goodness and realising it with available resources, workable means and novel manoeuvre, which is based on profound understanding of situated particulars and unique organisational profiles.

  5. ‘Say’ theories ‘Believe’ exemplars ‘Do’ actions ‘Have’ contents What is strategy?

  6. Practical Creative Moral Holistic What is pragmatism? The ‘four faces’ of Confucian pragmatism

  7. Pragmatism and strategy • Pragmatism facilitates people to respect, to share, to create and to act upon what works, and the real world appears to reward what works and penalises what does not. • Practical strategies are generated by ethically informed, interested managers who take the responsibility skilfully to make timely political judgments and situated decisions, with idealistic inspirations and realistic manoeuvres, without knowing what is to unfold yet able to mobilise others working together toward an imagined ideal world. • Strategies and knowledge are validated on the consequences of acting upon them.

  8. Problem 1: the phronetic gap • Detached • Reductionist • Rountinised • Utopian

  9. Problem 2: fragmentation • Theory led • Boxes syndrome • Imperialist pluralism

  10. Outcomes Profit-maximising Evolutionary Classical Processes Deliberate Emergent Systemic Processual Plural Boxes syndrome ‘Generic approaches’ to strategy (source: Whittington 2001:3)

  11. Searching for coherent strategy • Unifying paradigm • Good science is conversation • Conversation needs a vocabulary • Towards a pragmatic vocabulary

  12. Tasks at hand • Practicality • Coherency Towards ethical, coherent and effective strategy

  13. Pragmatism East and West Moral virtues 事理Shili Intellectual virtues 时中Timely balancing Phronesis Praktikes 物理Wuli 人理Renli Techne Episteme Theoretikes Aristotelian hierarchical ‘what’: practical wisdom as the highest intellectual virtue Confucian circular ‘how’: acting wisely as timely balancing wuli-shili-renli Aristotle vs. Confucius: different approaches to practically wise strategy?

  14. Learning from differences • What knowledge vs. how to act • Articulative reasoning vs. suggestive exemplars • Hierarchical vs. circular knowledge • Polarising-and-choosing vs. associating-and-complementing

  15. Contrasting Aristotelian and Confucian practical teaching

  16. What and how strategists do? Emergent action Rational action Constrained action Creative network Conservation Charismatic leadership Choice Crisis Strategic management Entrepreneurial action Confusion Emergent, rational and constrained actions (source: Hirst 1995).

  17. Shili Virtual psycho-cognitive mentalities Wuli Renli Actual material-technological resources Social moral-normative orientations WSR: acting rationally, creatively and normatively

  18. WSR Shall we? How to? What is?

  19. Timely balance • The Tao of Haven operates mysteriously and secretly (天道玄默); it has no fixed shape (无容), and it follows no definite rules (无则); it is so great that you can never come to the end of it, it is so deep that you can never fathom it (Huai-nan-zi (?-122 bc) 9/1/2). • Po I among the sages was the pure one; Yi Yin was the responsible one; Hui of Liu-hsia was the accommodating one; and Confucius was the timely one (Mencius 5/2/1). • The Superior Man is in the state of zhong (balance) and rung (normality); the small man is in the reverse of these states. The superior Man exhibits them, because he is the Superior Man, and holds to the timely balance; the small man is the opposite of them, because he is the small man, and has no caution (Doctrine of the Mean 2/1 and 2)

  20. On-going stream of strategic actions ?? W? ??? S+R? S? W+S+R? W+S? S? W? R? ?? W WSR bubbles S R Timely balance The bubbling of WSR concerns, issues and problems

  21. Envisioning a valued future shili事理situated creativity Timely balance wuli物理technical efficiency renli人理Social legitimacy Getting the fundamentals right Realising shared goodness Strategy: dancing with efficiency, creativity and legitimacy

  22. Does strategy matter? Structure Structure Downwards reduction Upwards reduction Agency Agency How actors make choices Why actors do not have choices to make

  23. The structure- action- agency paradigm The WSR folk metaphysics Wuli Shili Renli (Multidimensionality) Material technological Mental cognitive Social relational Structure (Stratified reality) Rational Inertial Creative projective Normative evaluative Action Habitual performative Reflexive imaginative Political positional Agency A systemic view of reality

  24. Structure complexity Enduring Emerging Complementary Competing Action complexity Performative Innovative Fallible Effective Agency complexity Inherited Earned Mutually supportive Mutually antagonistic Sources of creativity: structure, agency and action complexities

  25. The structure- action- agency paradigm The WSR folk metaphysics Wuli Shili Renli (Multidimensionality) Material technological Mental cognitive Social relational Structure (Stratified reality) Activated structure ba Gaming, learning, gesturing and responding Action Distributed agency Habitual performative Reflexive imaginative Political positional Agency ba: where structure meets agency

  26. Why is strategy possible? • Structure complexity generates emerging opportunity • Agency complexity allows actors exploit opportunities in different ways • Actions complexity brings structure an agency into interplay

  27. Structure complexity generates contingent opportunities Agency complexity enables varying strategies WSR Structure WSR Actions WSR Agency Dimensionality Dimensionality Dimensionality W: Material-tech. S: Mental-cognitive R: Social-relational W: Rational S: Creative R: Normative W: Performative S: Reflexive R: Positional Complexity Complexity Complexity Enduring / emerging Complementary / competing Routine / innovative Fallible / effective Inherited / earned Reinforcing / mutual denying Structuration as embodiment of knowledge Agentisation as embodiment of knowing Paradox Paradox Paradox Medium / Outcome Producer / Product Continuity / Transformation Action complexity brings structure and agency into interplay Knowledge creation transforms structure over time Knowledge creation transforms agency over time Strategy as knowledge-creation

  28. Theories of the firm Neoclassical economics Wuli efficiency theories Industrial organisation economics Resource-based theory Planned coordination theory Behaviourist theory Shili creativity theories Renli relationality theories Transaction cost economics Team monitoring theory Principal-agent theory Property-rights theory Social relation theory Entrepreneurship theory Evolutionary theory Subjectivist theory Knowledge-based theory Postmodernist theory Institutional theory

  29. The table

  30. Resource-based Inside-out Market positioning outside-in Searching for technical efficiency Managerial planned coordination Wuli theories of the firm

  31. Competitive market process demands dynamic capability Entrepreneurial Evolutionary Path-dependent knowledge acquisition and utilisation Facilitating innovation Generating subjective opportunity set Knowledge creation as bringing forth a world Subjectivist Knowledge-based Shili theories of the firm

  32. Ex ante design Ex post handling Aligning principal-agent incentives Team production effort monitoring The firm as legal fiction Shared purpose as distinctive institutional logic The firm as political authority Assigning residual right of control Economising transaction costs A challenging opposite Renli theories of the firm

  33. Theories of the firm:different groupings

  34. f0 = {w0, s0, r0} S f1 = {w1, s1, r1} s0 t0 t1 f0 s1 f1 R r1 r0 w1 w0 W A WSR view of firms

  35. ‘The theory of the firm’ or ‘theories of firms’? • Is the firm a firm? • Is a firm the firm • Firms, markets and social models

  36. What follows? - 1 Wuli efficiency: getting the fundamentals right • Strategic positioning • Competing on resources • Creating relationship advantage • Value chain, value web and business model • God is in details: samurai strategisinig

  37. What follows? - 2 Shili creativity: envisioning a valued future • Subjectivity and strategy • Dominant design and innovation • Creative destruction and dynamic capability • Living with uncertainty • SECI: an envisioning procces

  38. What follows? - 3 Renli legitimacy: realising shared goodness • Strategic games • Contracting opportunism • Ethical business • Embedded strategists • ba: a fountain of shared goodness

  39. What follows? - 4 • Phronesis as practical knowledge • Phronesis as pragmatic action • Phronesis as distributed leadership Strategy in action

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