Strategic Systems Thinking

An introduction
 Aims of the Sessions this week
• Introduce the nature of the module
• Identify key ideas that underpin the module
• Explore approaches to strategy
• Examine how we can understand certainty in
the business environment
 Structure of the Module
Two sections to be explored
• Part A: Strategic Systems
– Introducing Strategy and Systems
– Systems Thinking; Hard and Soft Approaches
– Complex Adaptive Systems
– Strategic Thinking in Practice
• Part B: Strategic Knowledge
– Knowledge Management/Environment
– Communities of Practice/Interest
– The Challenge of Performance Measurement
– Intellectual Capital and Social Networks
 Assessment
• Two pieces of work, each worth 50% of the
overall grade
• Details of the assignment tasks are provided in
the VLE.
• Assessment One
– Deadline – Week 4
• Assessment Two
– Deadline – Week 8
 Key Ideas to think about
• Strategic Thinking rather than Strategic
Decision Making
• Business as a ‘social activity’
– ‘It is about people!’
• Different perceptions are interesting to think
about.
• Relationships rather than individual functions.
• Understanding situations rather than simple
answers to simple problems.
 Certainty !!

Innovation
Experience
& Responsibility (CSR)
Creativity

People Thinking
Diversity

Complexity
? Instinct
 The Nature of the Environment
A series of continuums can help to determine the nature of your environment

Simple Complex

Static Dynamic

Certain Uncertain

Important Factors

Maturity Researchability
 Activity
• Food for thought:

• What does the word strategy mean to you?

• How have you used strategies in your life?
 What do we mean by Strategy?
• Strategy is a widely used term in business, politics,
etc.
• However, it is often used as a general idea of doing
something
• Origins in leading armies, expeditions, etc.
• A common basis of strategy is to provide a clear
purpose of the organisation
• Yet, the notion of strategic management is a
relatively modern part of organisational life and is
not an agreed concept (Stacey & Mowles, 2015)
A Definition Of Strategy

Strategy is the direction and scope of an

organisation over the long term which
achieves advantage for the organisation
through its configuration of resources within
a changing environment to meet the needs
of markets and to fulfill stakeholder
expectations.

(Johnson, Scholes & Whittington, 2011)

 Core Strategic Elements

Strategic Analysis

Strategic Development Strategy Implementation

 What do we mean by Systems?
“A system is an entity which maintains its
existence through the mutual interaction of
its parts.” (von Bertalanffy, 1954)

• Systems can be naturally occurring or man

made
• A system has a purpose that defines its
actions
• Things on their own have a limited use or
value
 What do we mean by Thinking?
• The process of considering or reasoning about
something
• Thinking about the world is through established
views or paradigms (Khun, 1970)
• Paradigms are developed as we learn new
things e.g. the earth was thought to be flat
• Strategy is no different: “We use paradigms to
think about and do strategies: what the
important issues are, what we should value,
what customers need, how to serve them and
so on.” (Nonaka & Zhu, 2012)
Approaches to Strategy
Strategy schools: two basic categories
Prescriptive – how strategy formation process should happen –
ex ante or in advance;
Rational, structured approach

(Design, Planning, Positioning)

Descriptive – seeks to understand strategy as it unfolds

 Traditional Design school of Strategy

Thinking, Design Acting, doing

Formulation Implementation

• Agree strategy formulation – then move to implementation (completely

separate)
• Little room for incremental, emergent strategy changes during
implementation
• SWOT model – central in most textbooks
Ways of Thinking About Strategy
The Two Ends of The Spectrum

Planned Emergent

Design Process
Ansoff Mintzberg/Stacey

Prescriptive Descriptive
(What To Do) (How To Do It)
 Development of Strategic Theory
• The idea of managing corporations has
evolved over the recent decades.
• In this time the environment has changed,
thus different questions are asked.
• The idea of ‘paradigm shift’
• There are still important roots that strategy
feeds from:
– Economics, Finance, Social Theory
 Pick a School
Positioning
Design &
Planning

Learning & Emergent

Entrepreneurial
Power & Culture

(Mintzberg & Lampel, 1999)

 Activity

– Food for thought:

– Identify the main aspects of each of the Strategic

Schools we have just introduced.
– What are the key reasons for the development of
different schools?
 Is it possible to plan?
Planning is a natural activity for people and there are
a number of benefits that can be achieved:
• External and Future Awareness
• Competitor Awareness
• Increased Productivity
• Reduced Resistance to Change
• Problem Prevention Culture
• Prioritisation of Problems/ Threats
• Improves Resource Allocation
• Improves Tactical Actions
• Improves Internal Communication (David, 1995 and Greenley, 1986)
 Balance in Planning …
Being able to plan allows us to:
• Be Proactive
• Clarify Objectives for Employees
• Increase Performance? (no clear evidence)
• Enable the realisation of Efficiency & Effectiveness
However, can we fully;
– Understand
– Design
– Plan its operation in detail
– Predict its behaviour
And …
– Control?
 Fallacies of Planning
1. The Fallacy of Predetermination or
Predictability
2. The Fallacy of Detachment
3. The Fallacy of Formalisation

(Source: Mintzberg, H., The Fall and Rise of Strategic Planning, Harvard Business Review Jan/Feb
1994)
 Activity
• Food for thought:
– A certain planner or comfortable with adapting.
– What are the reasons for your choice?
 Calm Certainty or Edge of Chaos?

• Life and economics and strategic management is a

fishbowl!

• i.e. A closed system – predictable – Greek-letter economics

Or

? ?
• Exogenous shocks, e.g., the Web
(Beinhocker, E. 2000)
 Beinhocker, E. (2000) Strategy at the Edge of Chaos.
• Early Thinking on Management in NE:
– Punctuated equilibrium

Time
– Robust strategies rather than focused ones
– Continuous adaptation rather than competitive advantage
– Radical innovator as opposed to the conservative operator
– Diverse strategies, not routinised
– Flexibility, not scale
 Activity
• Food for thought:
– Major changes that have changed or challenged
assumptions (countries, industries) e.g. economic,
technological or political shocks
 The Nature of the Environment
A series of continuums can help to determine the nature of your environment

Simple Complex

Static Dynamic

Certain Uncertain

Important Factors

Maturity Researchability
ENVIRONMENTAL
CONDITIONS

Simple Complex
Static

Dynamic

Making sense of the environment

 Activity
• Food for thought:
– What are the Certainties that can be identified?
– What factors add to the level of Uncertainty?
 How Does Strategy Happen? - Four Levels of Uncertainty

Level 4: True ambiguity

Level 3: Range of futures

Level 2: Alternate futures

Level 1: Clear enough future

Source: Courtney, Kirkland & Viguerie (2000) Strategy under Uncertainty

 Making the Most of Uncertainty -
Adapt or Shape?

• Adapt: existing strategies to market changes

• Shape: the market to fit your strategy
• Drivers: Globalisation; digitisation; unfettered
capital markets
• Risk vs. return equation more polarised
• No dominant solution