G. Alagirisamy Page 1 SYNOPSIS This paper discusses via critical analysis the ideas of Henry Mintzberg, the Canadian theorist and Cleghorn Professor of McGill University, on the topic of strategic management, alongside an in-depth evaluation of his writings and contributions to the study and use of strategy in the domain of business and management. The overview highlights the contextual definitions of strategy and strategic management, the theoretical developments, and in particular, the debates between management theorists against the backdrop of a changing business landscape. These debates provide an insight into Mintzberg’s perspectives and by evaluating his wider contributions; his viewpoints can be weighed for the extent of effective real- world application in the context of the business industry, past, present and future. OVERVIEW The topic of strategy originated in the military context in the form of plans and tactics for nations to win battles and wars using soldiers and weapons as key resources. Applicable in the general and game contexts, the development of global economics has seen this concept evolve into the form of ‘business policy’ in the 1960s and thereafter, termed as ‘strategy’ to the present day. It was consequently inevitable that the subject of strategy and its management were to be born of several fathers. Strategy Within the context of this paper, it is necessary to adopt a basic premise of strategy and its scope: Strategy is what an organization does, or plans to do, with its
Transcript
G. Alagirisamy Page 1
SYNOPSIS
This paper discusses via critical analysis the ideas of Henry Mintzberg, the Canadian
theorist and Cleghorn Professor of McGill University, on the topic of strategic
management, alongside an in-depth evaluation of his writings and contributions to
the study and use of strategy in the domain of business and management.
The overview highlights the contextual definitions of strategy and strategic
management, the theoretical developments, and in particular, the debates between
management theorists against the backdrop of a changing business landscape.
These debates provide an insight into Mintzberg’s perspectives and by evaluating his
wider contributions; his viewpoints can be weighed for the extent of effective real-
world application in the context of the business industry, past, present and future.
OVERVIEW
The topic of strategy originated in the military context in the form of plans and tactics
for nations to win battles and wars using soldiers and weapons as key resources.
Applicable in the general and game contexts, the development of global economics
has seen this concept evolve into the form of ‘business policy’ in the 1960s and
thereafter, termed as ‘strategy’ to the present day. It was consequently inevitable that
the subject of strategy and its management were to be born of several fathers.
Strategy
Within the context of this paper, it is necessary to adopt a basic premise of strategy
and its scope: Strategy is what an organization does, or plans to do, with its
G. Alagirisamy Page 2
resources in order to achieve and sustain a competitive position in the market that
will enable the fulfilment of the organization’s vision (or mission) and objectives.
Strategic Management
How organizations go about designing and choosing a strategy towards a set of
actions to be implemented and sustained for its relevance and competitive advantage
to enable continuous gain has always been the crux of the strategic management
debates between theorists, industrial economists and practitioners. The practical and
non-practical use of their numerous prescriptions for an organization’s effective
modus operandi in strategy has shaped and defined the landscape of business
across the globe since post-war times.
As represented in Figure 1, the entirety of strategic management can be abridged as
the sequence of activities, what Mintzberg termed as ‘streams of behaviour’
(Mintzberg and Waters, 1985:257), undertaken by an organization in the following
stages:
formulating and choosing its business strategy,
implementing the chosen strategy to achieve its envisioned objectives,
managing and sustaining the implemented strategy to maintain its competitive
advantage in the market
G. Alagirisamy Page 3
The above pictorial representation of the key stages in strategic management
overviews how key theorists, including Henry Mintzberg, approached and advocated
the design and management of strategy by businesses in order to reach optimal
choices and decisions.
Figure 1: An Overview of Strategic Management, comprising Strategy Formulation
and Strategy Implementation
G. Alagirisamy Page 4
Theoretical Developments
Richard Whittington, an Oxford University academia, charted his perspectives on the
theoretical developments of strategy (Whittington, 2001:39). His collation, shown in
Figure 2, attributes each school of thought with regards to the approach to strategy,
the guiding principles, the influences and the analytical tools devised and advocated
by key management thinkers.
Mintzberg & the Processual School of Strategic Learning
While Alfred Chandler, the historian and scholar, was raving about the importance of
structure for the success of an organization (Chandler, 1962) in a supportive study of
strategic success within the General Motors and Du Pont industries, Igor Ansoff, the
academic, coined ‘Corporate Strategy’ (Ansoff, 1965). In effect was born, the
foundations for strategy in management as laid by these Classical thinkers.
Mintzberg, however, was focused on the reality of the managers’ daily grind
(Mintzberg, 1973), a field study which set him apart as a pragmatic academic
Figure 2: The four perspectives on strategy (Whittington, 2001:39)
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amongst the prescriptive theorists on managerial success. He then turned his
attention to organizations and their structure (Mintzberg, 1979), which was
compounded with his design methodology; Structure in Fives (Mintzberg, 1983).
It was no surprise then that he would soon be hailed as a formidable thought leader
after Cyert and March (1963), the Carnegie school’s founding advocates of the
Processual school of strategy, where strategic management is seen as a combination
of many processes to be learnt from and negotiated due to the limitations of the
environment and the bounded rationality of human beings (Cyert and March, 1963),
resulting in the divergence of strategies, those deliberately planned and those that
emerge out of patterns of behaviour and events (Mintzberg and Waters, 1985).
Figure 3: Types of Strategies (Mintzberg and Waters, 1985:258)
A distinguishing viewpoint of this school is ‘satisficing’ (Simon, 1959) – making the
best of the situation. It describes the process of strategy-making as consequential
effect of the need to cope with the imperfections of the real world where limitations
exist
in the time available to explore all options possible
in the information available for analysis and choices
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in the capacities of managerial leaders to process every information received
STRATEGIC MANAGEMENT: STRATEGY FORMULATION To ‘operationalize’ the management of strategy into stages of formulation and
implementation (Mintzberg and Waters, 1985:257) it is necessary to analyse the
strategy formulation phase in Figure 1 into the following tasks for strategy design and
making:
the setting of the objectives to be achieved
the internal and external analysis of the organization and the industry
establishing the choices of strategy available to organization
selection and decision-making for strategy to be used by organization
By juxtaposing the strategy formulation phase in Figure 1 with Figure 2: Whittington’s
perspectives (2001:39), an extended interpretation of Whittington’s model emerges as
in Figure 4 below.
Figure 4: Strategy Formulation - An Interpretation of Whittington’s Perspectives (2001:39)
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In its self-explanatory format, it condenses the primary concerns of each school and
yet, prompts for awareness that each school can be seen as a subset, an extension
and/or a variation of the previous, as indicated by the header row. Strategic theories of
the 1960s have not expired, but only exist in close proximity to the latter models. The
discussion to follow unpacks the areas of differences between these schools and
where Mintzberg’s critiques and contributions were born.
Strategy Formulation: Rationale for Strategy Objectives
The Growth Share Matrix was introduced by the Boston Consulting Group (BCG), a
classical school proponent. As an analytical tool that relies on deliberate calculations,
it corroborates their profit-making rationale for setting strategic objectives based on
current and desired market positioning, growth and share, as they perceived profit-
maximisation as the only cause and consequence of strategy for success.
Mintzberg’s refuting attitude to this ‘unitarian’ profit-only goal of strategy is
accentuated by the traditionalists’ lack of acknowledgement and regard for the other
effects of good strategy; such as company morale, focused direction and effort
specialization that will go towards defining the organization’s standing in the industry
and as a result, shape its success (Mintzberg, 1987). The Dutch business culturalists,
Figure 5: Strategy Objectives - An Interpretation of Whittington’s Perspectives
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Hampden-Turner and Trompenaars (1993), went on to substantiate Mintzberg’s claim
by proving in their study that the profit-only strategy was a more American (Western)
attitude and not reflected with equal importance in the Asian business world.
The short-sighted Evolutionary theorists, however, view strategy as a distraction to
managers who can otherwise be focusing on immediate, reactionary tasks to ensure
business fit for the current market conditions. They do not acknowledge that strategic
decisions have any effect on a company’s success, which they believe, is achieved
only by those that are equipped enough to survive the market conditions; ‘evolution is
nature’s cost-benefit analysis’ (Einhorn and Hogarth 1988:114). This is reminiscent of
Sony’s short-lived marketing strategy of the eighties, where a multitude of Walkman
models were released to allow market conditions and consumers’ preferences to
determine the products’ endurance in the market and in Sony’s production line
(Whittington, 2001).
While the Evolutionary school was pounded by the Planning school for the lack of
scientific or rational analysis in their ‘abstract and unrealistic’ (Whittington, 2001:16)
notions, Mintzberg had already established his 5-Ps strategy model (1987) in
defiance of the expectation to adhere to a single (profit-oriented) definition for the
concept of strategy. By approaching strategy formulation in the form of the 5-Ps: a
plan, ploy, pattern, position and perspective, an all-encompassing view of the
business is more viable and therefore the objectives set are more tenable towards a
strategy that is multi-pronged, long-term and even sustainable for a company’s
growth and advantage.
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In support of his model, Mintzberg later wrote a McKinsey-award winning article of
how he believed that strategy making is a ‘crafting’ process (Mintzberg, 1987:66); a
continuous process of feedback and adaptive learning within the organization in
much the same way that a potter (his wife, as accredited in his article) shapes her
clay using ‘tacit’ (Mintzberg, 1987:66) or implicit knowledge from experience of the
medium and the feedback sensations received through her tactile experience.
Ikujiro Nonaka, renowned for his in-depth studies on knowledge creation and
management, exemplifies the importance of tacit and explicit knowledge (Nonaka,
Toyama, & Konno, 2000) that can be enabled by the vision, strategy, structure,
system and staff of an organization (Nonaka, 1991). His viewpoint stresses strategy
to be either product related or knowledge related in order for a company to attain
competitive advantage.
Figure 7: The Knowledge-Creating
Company (Nonaka and Takeuchi, 1995)
Figure 6: Nonaka’s SECI Process of Knowledge Conversion
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Strategy Formulation: Strategic Leadership & Decision making The military proximity (Sun Tzu, 1963) has shaped the post-war Classical school of
strategy, with the persuasive, charismatic and visionary leader (Bas, 1990), who instils
a sense of purpose in his subordinate soldiers, quoting the logic of Freudian’s
transference theory (Kets de Vries, 1988).
Figure 8: Strategic Leadership & Decision-making - An Interpretation of Whittington’s
Perspectives
The visionary leader and decision-maker, in the form of a CEO, is hailed by Classical
strategists as the only saviour to carry an organization’s vision to execution. But the
Systemic theorists are suspicious of the visionary leader whose self-interests can be
dictated by his professional bias (in a functional area such as finance, marketing or
operations, etc.) or his social and cultural make-up of built-in values. The case of a
German leader comes to mind in this context. Miles and Snow (1978) stress that the
top management, dominated by a leading functional group within the organization,
can lead to a biased strategy leaning towards the perspective and norms of the
functional group as opposed to being neutral from the business perspective.
Mintzberg, however, acknowledges the power and positive impact of visionary
leaders (Westley and Mintzberg, 2001) in exceptions such as Apple’s Steve Jobs and
General Electric’s Jack Welch. Yet, he questions the relevance of the military
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(Mintzberg, 1990) style of control and direction in strategic management because he
sees strategy as a consequential effect of the trials and errors from the activities and
experiences of middle management (Mintzberg, 1978).
He identifies the following roles as pertinent to strategy leaders being successful in
strategic management: planner, communicator, identifier, analyst and catalyst. In
effect, for Mintzberg (1994), just planning a strategy alone makes not a strategist.
One must be able to
champion and manage the chosen strategy to gain supporters
recognize and identify potential and inadvertent strategies in the making
analyse and offer new perspectives
offer catalytic influence and support strategic creativity
However, he also cautions against ‘the creative strategists … they drive everybody
nuts.’ (Mintzberg, 2000:37), proving that he is fully in touch with the real world and is
not a textbook theorist.
Decision-making should be a process fed by information shared across all levels of
the organization. Mintzberg highlights the outdated nature of applying the detached
top-down model of minds versus hands, where strategy is designed, or dictated as
the case maybe, at the top-levels of management and then subsequently
disseminated to the lower levels for implementation. Referring to this as the Fallacy
of Detachment (1994), he cautions against ignoring the impact and influence of
middle management in the decision-making process.
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Nonaka (1991) purports the same logic when he discusses the ‘middle-up-down
management’ in relation to the value of tacit and explicit knowledge shared within an
organization for the benefit of the strategy, product or knowledge oriented. ‘Good
strategies grow out of ideas that have been kicking around the company, and
initiatives that have been taken by all sorts of people in the company.’(Mintzberg,
2000:35)
In the case of United Parcel Service (UPS), although the founder instilled a military
style management, the newly appointed CEOs had worked their way up through the
company, knowing its functions bottom up and the strategy groups were formed of
key staff from various divisions of UPS. The bottom up, top down approach to
interactive and iterative decision making was effectively in play.
Strategy Formulation: Choices for Strategic Design and Decisions
As articulated in Figure 1, the core of strategy design and formulation lies in the review
and analysis of external and internal factors. It determines and directs the strategy
route to be undertaken based on the choices that become available as a result of this
activity and the decisions made consequently.
Much of the debate centres on the merits of outside-in or inside-out approach to
strategy design that is carried out by the business. In so doing, it is inevitable to
acknowledge the various tools and techniques proliferated within the planning school
of strategy. Therein lays opportunity to uncover Mintzberg’s perspectives and his
counter-response.
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Figure 9: Choices for Strategic Design and Decisions - An Interpretation of Whittington’s Perspectives
Proponents of the planning school use quantitative modelling methods and tools to
qualify an organization’s industry position by way of its financial measures. Ansoff’s
Matrix (Ansoff, 1957), the BCG Growth Share Matrix by the Boston Consulting Group
(BCG) are examples of rational tools exalted by these followers. Pictured below,
analytical tools such as PEST Analysis (Aguilar, 1967), SWOT Analysis and Porter’s
Fives Forces Model (Porter, 1980) were deemed by Classicalists as vital frameworks
within which to analyse a firm’s macro environment in which it operates and
therefore, to support the planning of its strategy in the industry.
Porter’s milestone contributions in the field of strategic management included
the Five Forces Model (1980) - the five competitive market forces at play
the Generic Strategies – cost leadership, focus and differentiation
the Value Chain proposition – functional areas where business can add and create
value
Figure 12: SWOT Analysis (Humphrey,
1960-1970) Figure 13: BCG Growth Share Matrix
(Boston Consulting Group, 1970)
Figure 14: Porter’s Five Forces (Porter, 1980)
G. Alagirisamy Page 15
More tools and techniques have since emerged to validate and justify analytical
choices and the resulting decisions. Mintzberg’s critique of the rational models and
planning tools, released post-Pittsburgh conference in 1977 were substantial and
subsequently catalytic to his own theses in response. He critiques them for promoting
the ‘fallacy of prediction’ (Mintzberg, 1994), for disregarding the dynamic nature of the
market. While the Five Forces model provides a significant snapshot at a point in time,
it is misleading to apply it as a predictive tool and assume that the industry landscape
will remain unchanged.
Mintzberg (Mintzberg et al, 2009) also challenged the single-minded focus of the
planning approach to consider only the quantitative and financial elements in the
context of economics. There is little consideration of the other factors which do play a
part in strategy design. Political, social, cultural and other qualitative factors, as in the
PEST analysis, are not taken into account by these methods of assessment.
Therefore, there is a form of ‘detachment’ (Mintzberg, 1994) in the planning methods
where information that cannot be captured or communicated in numbers and budgets
is lost during the strategy design phase.
As a result, the ensuing choices and decisions available for strategy making are in fact
less than optimal and more susceptible to failure upon execution. By the logic of
bounded-rationality (Cyert and March, 1963), the information used in the formal
analyses is ‘inherently limited’ (Whittington, 2001:72) and thus, warranting the risk of
impaired decisions being made from biased judgement which results from the use of
these tools and techniques.
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Mintzberg is suspicious (Mintzberg et al, 2009) of Porter’s models being applicable
only in markets that have matured and industries that have reached stability, as noted
in the carefully chosen case studies by Porter (Mintzberg, 1987). Thus, it is
questionable if these planning models will be useful when applied to dynamic markets
that are in constant flux. For Mintzberg, this ‘fallacy of formalization’ (Mintzberg,
1994:111) precludes identifying unique market situations for the firm, multi-directional
information exchange within the firm and the possibility of designing a unique strategy
to custom-fit the company’s unique position in the industry.
MINTZBERG ON STRATEGY DESIGN & FORMATION Having traversed the strategy formulation part of strategic management in Figure 1, it
becomes clear as to where and how Mintzberg differs in his approach and methods
in contrast to the likes of Porter. His in-depth study and analysis of strategy
formulation is exemplified by his perspective discourse about the ten schools of
thought on strategy formation (Mintzberg, 1989).
In 1990, Mintzberg went on to deconstruct the prescriptive ‘Design School’ (Mintzberg,
1990). He expands on this school’s seven basic principles of strategy design and
Figure 15: Ten Perspectives on Strategy Formation (Mintzberg, 1989)
G. Alagirisamy Page 17
progresses to critically analyse its shortcomings in the real world. This work by
Mintzberg can easily be construed as the summary of his concerns in his
investigations into the Harvard school beginnings and the idealistic world of strategic
management as conceived by the Planning school of strategy in the sixties, from
Chandler (1962) to Porter (1985).
He critics the purely academic, detached assessment style used to predict strengths
and weaknesses of an industry or market. Mintzberg describes such a design style as
something conceived and not learnt by experience. With unreliable and too
generalistic results, he highlights the tendency for biased hopes from a strategy
planned and designed using theoretical and predicted value of a competence, whether
it is a strength or weakness in the real world.
While Chandler (1962) stressed that structure follows strategy, Mintzberg’s emphasis
lies in practicality: an organization’s structure is not changed whenever a strategy is
put in place, nor can it be disregarded whenever a new strategy is designed. He
advocates the importance of taking into account the organization’s competences, its
structure and how the CEO or strategist needs to formulate strategy using an
integrated and adaptable approach rather than an arbitrary or sequential system.
This leads to another concern of Mintzberg; the condoned detachment within the
process of strategy design and formulation. Explaining the machine bureaucracy
(1979) he points out the minds versus hands and thought versus actions processes.
For Mintzberg, strategy formation is a learning process with implicit and explicit
articulation and must be flexible enough to support the organization during all periods:
G. Alagirisamy Page 18
uncertainty and periods of formulation and reformulation while increasing coherence
via discussion, investigation, discussion and debate.
MINTZBERG ON STRATEGY IMPLEMENTATION
In this discussion thus far about Mintzberg’s approach to strategy formation, it is only
too logical to comprehend how he envisages the execution of a strategy. Although
his three-step formula of ‘code, elaborate, convert’ (Mintzberg, 1994) comprises a
controlled part of the strategy formulation, he advocates that the designed strategy
must be open to inputs from within the organization so that it can evolve and be
emergent in some aspects. Emergent ‘strategy stems from doing something, and
finding out what works’ (Foster, 1989:74). In effect, there should be little distinction
and more integration between the strategy processes of formation and
implementation.
One can see why Peters and Watermans (1982) characterized the learning process
as ‘Ready, fire, aim’, implying the readjustment that will be useful and necessary
based on the outcome of an action, as opposed to the ‘Ready, aim, aim’ process of
the planning school and the ‘Fire, fire, fire’ process of the visionary leader, suggesting
a lack of feedback intake in their processes.
Mintzberg is highly critical of the motorcycle market analysis by Boston Consulting
Group (BCG) for the British government; it further removed the manufacturers from
the field and detached them from the realities of the industry. In stark contrast was
Honda and how it learnt and adapted its way into the US motorcycle industry
(Pascale, 1984: 47-72).
G. Alagirisamy Page 19
He considers diversification a form of strategy in action just as scenario planning is
an effective tool that favoured by the learning school as it encourages creative
thinking by using challenging assumptions and potential changes in the industry.
United Parcel Service (UPS) implemented this method as well as Shell to survive and
divert the potential downturn in their survival. The blurred distinction in planning for
potential scenarios clearly shows how strategy formation and implementation is an
integrated and iterative process, just as Mintzberg advocates.
CONCLUSION
By situating Mintzberg’s reactions and responses to the various schools of thought on
strategy, Mintzberg’s perspective and contributions on strategy design and
implementation can be easily understood and weighted. Against this backdrop of
strategy debates, he has reduced the strategy approaches to planning, visionary and
learning; hence, simplifying the prescriptive theories for real-world applicability with
his composite field knowledge of managers and organizations.
While he disputes the various misgivings of the planning approach, he is open to the
visionary leader approach because of the potential learning that can be adopted by
the leader. His proposition of the learning approach calls for the use of information,
quantitative and qualitative, from all parts of an organization’s hierarchy and for the
strategy leader to be open-minded enough to adapt an intended strategy based on
practical information that filters through from the real world.
Interpreting Mintzberg and Waters (1985), the following figure summarizes his
viewpoint and recommendation; to adopt and to adapt strategy, its formulation and
G. Alagirisamy Page 20
implementation according to what suits and is the best for the organization, which in
essence requires learning and customization to be built-in elements and less rigidity
and distinction between the processes of design and execution.
By mere synthesis of the classical school and its present day evolution, Mintzberg
has been able to propagate a far extending wave to instigate an intuitive yet
interactive strategy process within organizations. Consulting firms are using him as a
reference point. By far, Mintzberg’s main contribution to the field of strategy and
strategic management is his injection of practical thought and a dose of reality for the
business strategist.
Just as the potter has an on-going, two way conversation with her clay when crafting
the exquisite sculpture, Mintzberg has demonstrated his in-depth thought-leadership
by recognizing and imparting that a business strategy can only be crafted in a similar
iterative manner if it were to be successful and sustainable in the real world with
dynamic elements in play.
Word Count: 3778
Figure 16: An interpretation of Mintzberg’s spectrum on strategy
G. Alagirisamy Page 21
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