Strategic Renewal Processes in Multi-Unit Firms: Generic Journeys of Change

Vincentia D. Abrita Ryan Vamondo - 1106035581 - 1106114352

Objective and Focuses

Examine how multiunit firms deal with the tensions of renewal processes over time using co-evolutionary frameworks. Main questions : When is renewal a selection or an adaptation process? Are there generic patterns of renewal or is each renewal journey rather idiosyncratic? what roles do managers at the corporate and unit level play in renewal journeys? The role and different possible behaviors of top management and frontline managers Multiunit firms : microlevel of firm co-evolution

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Actually, what is co-evolution ??

interaction between two major groups of organisms with a close and evident ecological relationship, such as plants and herbivores. (Butterflies And Plants: A Study In Coevolution, Ehrlich & Raven, 1964)

Environment

Organizational Ecology (Selection, Variation, Retention of Evolution)

Institutional Effects

Co-Evolution

Managerial Intentionality Strategic Management (Firm-Level Adaptation)

The Map of Chakravarthy 10

Perspective of Micro-co-evolutionary Micro Co-evolution 3 Generic Journeys

4 engines of renewal

Renewal Process

Naive Selection Managed Selection Hierarchical Renewal

Co-evolution Holistic Renewal Tensions Exploration vs Exploitation Adaptation vs Selection Change vs Preservation

Perspective of MicroEvolutionary
Selection Theory Population Ecology Institutional Theory Evolutionary Theory RBV Area of Interest Procedural and structural baggage Industry norms and shared logic Proliferation of routines Exploitation of core competencies Theory Dynamic Capability Theory Behavioral Theory Learning Theory Strategic choice theory Adaptation Area of Interest Latent abilities to renew core competencies Slack and strategic intent Alignment based on learning , unlearning, relearning Dynamic process subject to managerial actions

Discount the ability of organization to self consciously renew themselves

Managerial intentionality

The Generic Journeys (A)

All units alike Constant state of exploration-exploitation Balance achievement : stability of the units. Buying units which are balanced and sell units which are not

The Generic Journeys (B)

Portfolios of units which will be changing and tending to exploitation The portfolio of units range along the explore-exploit continuum and together represent a balanced state. Balance achievement : mixing the portfolio at each point of time for equilibrium

The Generic Journeys (C)

Reversement process of the evolutionary trajectory Balance achievement : retrospective aggregation Only survives if the extreme do not become to great, resulting in breakdown

The Engine of Renewal Framework

The environmental conditions Intra-Unit Learning and Sharing
Hows the knowledge management works

Engines of Renewal Journey

Top Management :
The role and behavior of top management and complementary roles by different management levels

Variation :
What are the sources of variation ? It is based on the concept of knowledge deployments. Is it the incentive offer ? Top managements deliberate fashion ? Outside knowledge ?

Co-Evolutionary Path
Hows the renewal journey works

Selection :
Based on the Top-Management behavior (Proactive/Reactive) and choices of manner (Static/Dynamic)

Naive Selection
Slow-Moving Mature Environments Intra-Unit Learning and Sharing = N/A

Trading Units to Survive

Top Management:
takes a reactive stance towards the industry Interpret and amplify market forces and market signals No intentional synergies creation

Variation
competitive forces for survival narrow incentive based on the close relation to core competence Takes place inside and outside

Co-Evolutionary Path =
Denial of Co-evolution and No pluralistic management roles

Selection
Based on profitability and stability of exploreexploit

Managed Selection
Fast-moving, unpredictable environments Managerial Behavior
Top Management passive
takes a reactive stance towards its ability to shift the industry forces trying to be prepared for the changes that may come about.

Intra-Unit Learning and Sharing

Encouraged by top management:
There is considerable potential for learning across the units of the firm. Top management sets the context and provides the challenge for encouraging sharing.

Balanced Renewal Journey

Variation
Top management creates strategic context for variety generators: variety generators are needed to facilitate
venture creation that parallels or anticipates the selection out of older more mature activities. Top management now focuses on initiatives within proposed by front line managers

Frontline managers active

Co-Evolutionary Path
Facilitative micro coevolution:
take a more balanced view of the possibilities open to management

Selection
A portfolio ranged over the spectrum of explore-exploit:
Top management has a capability to adjust. Selection occurs among competing units.

Hierarchical Renewal
Moderately paced environments Managerial Behavior
Top Management active
Top managers believe they have some power over their environment. strategic renewal depends on their strategic intent.

Intra-Unit Learning and Sharing

Facilitated by top management:
The top management team takes a very directive approach. They facilitate the processes by setting up special units to facilitate knowledge movement.

Aligning and influencing Journey

Frontline managers passive

Variation
Top management creates strategic intent & assists the stimulation: Variation is a process that is directed by the
top. Aimed at creating units that fit with the vision.

Co-Evolutionary Path
Directed macro to micro coevolution:
Renewal journeys are driven by a priori top-managerial intentions that develop cascade-down. The source of renewal is not selection or quasi-selection, but ex ante managerial purpose.

Selection
Selected portfolio based on fitness to the top management vision:
the criteria for a sale or a purchase are based on the capability of stimulating and provoking other units into changing direction.

Holistic Renewal
Any kind of environments Intra-Unit Learning and Sharing Managerial Behavior Top Management active
Top management believes that it should try to influence the world by working closely with the lower levels creating an effective engine for renewal.

Part of the philosophy and purpose of top management:

Collective sense-making which drives both variation and selection is an important requirement for knowledge integration processes. Collective sense-making is a key component of the integrative processes that seek to maximize organization learning.

Cyclical Journey

Frontline managers active

Variation
Created by dualistic process by top and frontline managers: Variation and selection cannot be separated
simply by level or by time; rather, it is integrated.

Co-Evolutionary Path =
Transformational macro to micro co-evolution:
The driver of renewal depends on the socially constructed reality of organizational participants. Sense-making as enactment where the journey is driven by the development of shared strategic schemata or collective frames of reference.

Selection
Selected portfolio based on collective sensemaking:
The top management team act as a transformational leader who drives the process from the front , involves others, and brings them along.

Meta Journey of Renewal

Top Management Passive Frontline Managers Passive
Nave Selection: Emergent
perspective. Slow-moving environment.

Active
Hierarchical Renewal:
Emergent perspective. Slow-moving environment.

Active

Managed Selection:
Facilitative leadership. Fast-moving, unpredictable environment.

Holistic Renewal:
Transformational leadership Any environment.

Conclusion
Organizations are not static, and often resist attempts at simple categorization. Journeys of renewal are idiosyncratic, based on distinct combinations of managerial behaviors that are compatible with balance. There is proactive and reactive behavior of managements with respect to the environment.

Thank you!

Physical concepts are free creations of the human mind, and are not, however it may seem, uniquely determined by the external world. ALBERT EINSTEIN, The Evolution of Physics.