Strategy as Practice

1 Strategy as Practice Introduction The aspect of strategy has been around for quite a while now. Early scholars and managers studied strategy and attempted to come up with numerous models that could help organizations attain their objectives in the easiest and most effective ways. In these attempts, simplified models were defined and documented as standardized strategies to be used by all managers. However, some strategy ideas and models simply never worked. As managers took the ideas and incorporated them in their organizations, they got pure results that left the organizations in very awkward positions. Thus, there was need for researchers in this field to get back onto the drawing board and ascertain why some organizations worked perfectly well with particular strategies while others failed completely. This paper analyzes the whole issue of strategy, but puts much emphasis on complexity theory and how it dominates the strategy narrative in general.

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How Strategy Happens Organizations are entities that are formed specifically for purposes of achieving particular results. The main divisions of organizations under this aspect include those formulated mainly for profits purposes and those that are started with other motives that are far from profits.

Humanitarian organizations, such as the Red Cross and the Red Crescent, are examples of organizations that do not pursue profits in their operations. However, these organizations exist because they intend to fill a void. They have a goal which they intend to attain and, therefore, have designed a formula that helps in accentuating this goal. This is the essence of strategy (Løwendahl & Revang, 1998).

The organization’s structure is purposely designed to break the entire load of work into more discrete components. This breakdown of tasks makes up the divisions and or functional departments seen in organizations. The individual workers in these functions and divisions perform their operations within defined frameworks that target particular objectives. The framework of objectives is a combination of plans and policies with the ultimate purpose of controlling their efforts. In designing strategy and realigning it with the organization’s external environment in order to make it operational, numerous aspects often considered very vital are critically analyzed; firstly, the workers, who are the ones executing the task directly, need to be empowered wholesomely. That is, they need to have the right knowledge and technical knowhow in order to be equal to the challenge. Secondly, workers require motivation so as to constantly keep their efforts and zeal maintained at an appropriate level, and lastly, they also need to be rewarded for their efforts (Yu & Efstathiou, 2006).

3 Strategies require coordination and an elaborate communication system within the organizational set-up in order to ensure that every detail or piece of information, however small, is relayed from end to and on a timely and accurate manner. Strategies are no longer rigid frameworks that operate automatically once initiated. The business environment is highly dynamic and the constant alterations in the environment need to be analyzed keenly with the need of making counter adjustments for purposes of remedying the whole situation. Thus, very elaborate and reliable communication system must be in place to enable this. Managers must be briefed on very short intervals about the situation and how it is changing so that they can, in turn, put rightful measures in place. At no one time should the strategic leader or manager be left in the dark as far as the strategy’s progress is concerned (Moldoveanu & Bauer, 2004).

In an environment that is competitively chaotic, the strategy leader must come out strongly and provide, and also share his vision, direction, and objective for the organization.

Considering the various ways through which strategies might be formed, there is every reason to formalize plans, as well as all the related action plans. In other words, strategy implementation implications cannot be divorced from strategies and their proposals for change. However, several questions on strategy remain to be answered to ascertain a few things; is the strategy structure alone enough to sustain the implementation of ideas? Are managers suitably empowered to oversee strategy implementation? Do the set organizational policies sustain the strategies? If, for any reasons, some of the questions return negative answers, then it becomes prudent that either one, or a combination of the following aspects need to be reviewed; the strategic ideas, the structure itself, policies f the organization, or resource management aspects. On the other hand, if the questions return all positive answers, then the organization will comfortably be able to

4 establish control and order in the chaos observed in the environment (Thoemmes & Conway III, 2007).

What is a Strategist?

More often, strategy is associated with managers placed at the higher hierarchical levels of organizations. Attention predominantly focuses on the company’s chief executive officer because they can affect the manner in which firms perform. This perspective effectively puts the chief executive officer, together with other top managers and boards of directors as important strategists to be relied upon in the organization. However, the recent past has seen the emergence of new types of managers, senior strategy executives, abbreviated as CSO, also referred to commonly as the C-level executive. Although different organizations could refer to this group of strategy managers with different titles, one thing remains common; senior strategy executives have a lot to share in their roles (Slater & Olson, 2000).

Basically, senior strategy executives engage in strategy formulation, refining the strategy after several executions, and strategy implementation. In other words, these strategists straddle the traditional divide in strategy, from formulation through to implementation. The breadth of activity under scrutiny implies that the chief strategist officers have to contend with tackling a whole range of challenge, including consumer innovation, communications, expansion into international markets, a well a process design among many other roles and tasks. The chief strategist officers influence a very wide range of managers and senior company executives whom they work within their strategizing roles. Thus, it is worth pointing out that these strategy officers need to be widely experienced in order to be expected to perform their duties with precision. The strategists often have significant authority to enable them make things happen. They have to

5 make critical decisions on behalf of the organization, including going out to find new business opportunities (Camerer, 1991).

Generally, chief strategist officers must have direct authority and, where possible, use reflected authority from the CEO to make decisions. These are powerful individuals who, although most of their activities are mainly behind scenes, their direct actions influence the way managers arrange their work. Managers have to, therefore, realign and align their commitments according to the directives of the chief strategic officer. This has to happen like that so as to attain strategic alignment. The CEO of any organization is often faced with the daunting task of steering the company forwards, ensuring the environment is made conducive for good performance. The company’s senior most executive is therefore by no doubt the leading strategist in the firm. However, balancing a CEO’s complex role of leading the company with the constant demands of strategy is a bit unrealistic. Thus, the chief strategist officers’ role comes in handy in supporting the executive. The strategist’s role remains dependent upon the company chief executive in order to sign-off decisions. The strategist has to be an able compliment of the senior executive because of the critical nature of the latter’s roles and tasks. The CSO must add value to the organization through their ability to explore on strategic choices’ variety (Williamson, 1999).

The CSO literally has one of his feet stepping inside the corporate suite while the other foot steps in the business units. In essence, they receive business feedbacks, overlay global trends, before finally prioritizing opportunities. In doing all these, the CSO is expected to balance perfectly between the immediate as well as long-term goals of the company. The Strategy-as-Practice view evaluates strategy as a social activity which is accomplished through

6 the actions of executives in their different levels of management. There are three main concepts which form the basis of Strategy as Practice; The first one is the practitioners. This refers to workers of strategy, including the CSO’s, their respective strategy teams, and numerous other strategy stakeholders who together, influence the entire strategy process. Other senior managers of the company, as well as external consultants, including lawyers, accountants and investment bankers make up the practitioners.

The second concept is the Praxis; it refers to the actual strategy work. In other words, it is what the strategists do. Among the tasks considered under praxis include making presentations, conducting meetings, making consultations, writing notes, and making effective and timely communications among many others. These deliberate activities help in the making and execution of strategy.

Finally, the last concept is practices. They refer to routines of behavior, such as traditions, norms, as well as the procedures for thinking, putting thoughts into operations, and using things or tools for purposes of aiding the entire decision making process (Farjoun, 2002).

Practitioners or the CSO’s Strategy officers may be oriented towards different functional activities in the organization. Whilst there are practitioners whose roles mainly focus on process management, there are others whose roles focus more on planning. However, it is worth noting that despite the differences in their orientations, all practitioners operate across a portfolio of activities which is broad. In organizational structures and charts, practitioners are often placed or positioned in three different hierarchical levels relative to the company chief executive officer (Gavetti & Levinthal, 2004).

7 In the first instance, the CSO or practitioner is allowed to sit on company board meetings.

Such CSO’s are often long serving executives and with previous line experience. In the second format, the CSO’s are answerable to a board director who also has immense say on the organization, and who also works closely with the company’s chief executive officer. Such practitioners are frequently high powered consultants whose superior skills and industry knowledge is highly needed by the management. A third format involves a CSO who never sits in board meetings but is highly depended upon by the company’s senior executive officer. Often, such practitioners happen to have been former senior partners of consulting firm, or an important industry figure brought from outside of the firm (O'Sullivan, 2004).

Praxis CSO’s have a number of strategy issues which they deal with in their daily operations.

These includes formulating strategies, putting the strategies into context, play a sounding board role, and translating the formulated strategies into practical plans that are implementable. They also communicate the strategies to stakeholders, both internal and external, and participate in efficient resource allocation. The practitioners also need to align internal stakeholders so as to be able to comply with strategy. They act as strategy brokers for the different interest groups within the company and play an active role in guiding and managing strategy implementation. Most importantly, practitioners need to evaluate how the strategy is generally performing. Where the strategy fails to meet its objectives, the practitioners need to act with speed and make corrections before the company suffers the consequences (Homburg, Krohmer & Workman, 1999).

Where does Strategy Happen?

The organizational environment or surrounding where strategy implementation occurs is quite complex. The organization is bombarded with a myriad of issues both from within and

8 from the outside environment. The organizational structure and format is such that it may be easier and possible for the company to accentuate its aims and goals as drawn on paper during planning. However, numerous limitation factors in the overall environment impede on the execution and success of strategy. Strategy, despite all the setbacks and limitations, must happen in both environments and must be capable of withstanding the pressures that abound.

The external environment of an organization mainly comprises of factors that either present opportunities to the organization, or, pose threats. In other words, the composition of the external environment includes the following; international, national, as well as local economies, social changes, political systems, demographic variables, technological changes, raw materials, sources of energy, the general attitude towards business, and numerous other macro-level factors.

These environmental factors and concepts are considered as general environment. Strategies are formulated with the view of tackling the general environment. They are meant to position the organization in such a way that it may be possible to tackle the uncertainty that these general environmental factors pose. However, the immediate concerns of organizations are focused more on just a fraction of this general environment. This is what is termed as the strategic relevance of an organization (Dess, Lumpkin & Covin, 1997).

Identifying the relevant environment consciously gives the organization the power to focus all its attention on factors intimately related to the overall mission, objective, purpose, as well as strategies of the organization. Influences that fall within the surroundings of the organization often affect the manner in which strategic management process will be undertaken.

Thus, it is important for organizations to systematically appraise the relevant environment and use the appraisal’s results in planning its own strategy. Coping with the complex nature of the environment, however, requires that it is feasibly divided into various components and sectors.

9 Examples of environmental sectors within which strategy can be formulated to focus on include market, supplier, technology, economy, politics, authority and regulation, social cultural aspects, as well as international issues. To different organizations, certain sectors warrant more attention than others, depending on the nature of operation or business that the company is dealing in (Friston, 2000).

Classifying the general environment such that the organization ends up with specific sectors is very important as it enables organizations focus more of its attention to complexities, as well as comprehend the various influences existing in the environment together with relating the environmental changes to the strategic management process. In planning and formulating strategies, it is very vital that all the environmental factors be considered. In subdividing the general organizational environment into sectors, the organization must consider itself in a number of ways, including its general size, its scope of activities, how wide the markets are spread geographically, the nature of products or services that it deals in, the technology employed, as well as the managerial philosophy under preference (Tainter, 2000).

Apart from the external environment which is also largely unpredictable, the organizational strategy must also focus on the internal environment. Opportunities open to the organization, together with other threat factors combine to form the internal environment of the organization. Often, the internal environmental factors can be controlled by the organization itself in order to enhance performance. However, these factors can also inhibit the general performance of the organization if they are not critically assessed and analyzed. Institutional strategy factors include such factors as the corporate culture, the organizational form of the firm, as well as inter alia. Additionally, other factors such as the level of skill of an organization’s strategist and resource availability play a very crucial role in determining the success of a

10 strategy. The individual characters and behaviors of the executive members of the organization must be such that it offers support and commitment to strategy objectives. It is worth noting that the other junior staff members will emulate their superiors in various ways and therefore their conduct must be acceptable and supportive to the strategy (Schoemaker, 1990).

Conclusion Strategy is the roadmap that defines an organization’s set of plans that it intends to follow towards achieving its goals and objectives. These set plans are drawn in consideration to a complex combination of factors which are generally categorized as internal and external environments. Although strategies appear as formal and rigid representations on paper, they are in actual fact not fixed or standardized. Every organization requires its own unique strategy in order to be able to attain its goals and objectives. This is because organizations pursue different modes of operations which, in essence, can only be sustained by a supportive strategy. Strategies are mainly formulated by company executives, in cooperation with other functional managers.

Managers must be experienced and also hold the appropriate knowledge and skill in order to be able to design strategies with the potential of enabling the organization prosper. In the recent years, organizations have been employing professionals as chief strategist officers to assist the chief executives in determining the most appropriate business strategy for the organization. The external environments are often highly dynamic and the organization lacks control over them while the internal environmental factors are controllable and also less dynamic.

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