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TIIE NATIJRE OF STRATEGY

1.

Origins: The origins of strategic rnanagement can be traced back to the earliest civilisations where people began organising themselves socially, politically and commercially. The term "strategy" is derived from the ancient Greek ('stratos' - army. 'agein' - to lead), where it was used to describe the elements involved in the preparation and conduct of military campaigns. The dominance of the military/state on the development of stategy continued up to WW2. Until this period leaders such as Napoleon, Von Clauswiz,,I-eri4 Mao Tse-Tung, Sun Te-Zu, and Montgomery, etc. were seen as great strategists, positioning their various forces to overcome some enemy. Commerce pre WW2 was inextricJbly linked to military power and visa versa. WW2 was a watershed in the application of strategy in that it was recognised that many of the skills, processes and contexts used in the art of war could be used independently to gain commercial success. In its simplest form the development ofstrategy in a business/corporate sense can be seen in four distinct phases.

a. b. c. d.

1900's:- Budgeting and Control: Featured systematic management; assumed that past conditions would prevail in the future' Dominated by
military/bureaucracie
s.

1950's:- Long-Range Planning: Plans based on forward projection of trends. 1960/70's:- Strategic Planning: Analysis of the business environment was
important, as were business cycles, in particular, annual ones. 1970's*: - Strategic Management: Also an environmental emphasis but, due to the failure of the planning regimes in the 1970's, the process avoids use of planning cycles and depends on continual adjustment.

The route taken has been one that has recognised the increased complexity of the environment in which businesses have to operate. It acknowledges that our understanding ofthe business environment has increased, as has the amount of information, resulting in more detailed, and thus complex, analyfical and decision making techniques. It is important to recognise that strategic management is about selecting the optimal solution for your parlicular situation from the information at your disposal.

2.

Definition of Strategy: There are many definitions of strategy. J&S have put forward
that covers the main aspects of the subject'

a statement

Sf,-ategy is the direction and scope of an organisation over the long-term which matches its resources to its changing environment and, in pafticular, its customers/markets, so as to meet stakeholder expectations.

Notice that J&S do not mention planning. Strategic management is not planning. It may well
include planning but strategy is far more subtle and responsive than a set of plans. Planning cultures and regimes frnd it difficult to respond to rapid changes in their environments and consequently suffer at the hands of those organisations with less rigid management systems. Michael Porter at Harvard led the field in strategic determination with respect to the external environment (MBV). Other writers, notably, Hamel and Prahalad have championed internal aspects through RBV. We can suppose that the best approach to strategic determination encompasses both intemal and external factors since it would be foolish to claim that an organisation can operate without regard to its external environment and in the same vein it is impractical for organisations to develop suicessfully without a clear understanding of their own internal resources and capabilities. Increasingly, writers and practitioners are moving towards a holistic (the organisation and environment) approach towards strategic determination.

3.

The scope of strategy: Strategy should consider all the elements of an organisation and how they inter-relate with eaih other and, most importantly, with the environment in which they operate. It should not be the preserve of the board of directors to formulate strategy. Both formulation and implementation should involve other members of the organisation'

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Essentially the process of sEategy making should be viewed within an external environment continuum. If the environment is relatively stable then a iational (prescriptive) approach is appropriate. If the environment is fast changing, or even chaotic, then emergent (descriptive) techniques ar more appropriate. The incrementalist view seeks to build a 'change culture' within the company such that some aspect of stategic change is always being determined. Incremental (descriptive) change usually happens in moderately dynamic/dynamic/chaotic environments.

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Minuberg has written widely on this subject and developed a concept of ten strategic schools, which distinguish in the way a corporate srategy is formed. Essentially, however, the division is between
prescriptive approaches (three schools: Planning, Positioning, Design) and descriptive approaches (seven schools: Entrepreneurial, Cognitive, Learning, Power, Cultural, Environmental, Configuration.) The choice essentially relates to the state of the environment and the cultural make-up of the company. (See Strategy Safari: Minuberg, Ahlstrand and Larnpel, Prentice Hall, 1998)

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