The Culture School

11 02 2010

Mintzberg explains culture as knitting “a collection of individuals into an integrated entity call organization.” Culture is not a new idea. In the 1980’s, the idea of culture was introduced to management. There are two perspectives to look at culture in an organization. The first is from the persective of an outsider looking in or from the perspective of someone already on the inside. Mintzberg also says that “the more closely interpretations and activities are woven together, the more deeply rooted is the culture.” A “rich” culture has strong beliefs that are strongly shared by all of its members in a way that sets them apart from others.

There are 5 premises of the Culture School

  1. Strategy formation is a process of social interaction
  2. Beliefs are acquired through a process of acculturation or socialization, and sometimes formal indoctrination
  3. The members are only a partial representation of the beliefs of the overall culture
  4. Strategy is more perspective than position
  5. Culture and especially ideology do not encourage strategic change so mush as the perpetuation or existing strategy

There are keys that link a culture to its strategy:

  1. Decision-making style
  2. Resistance to strategic change
  3. Overcoming the resistance to strategic change
  4. Dominant values
  5. Culture clash

Critiques of the cultural school:

  1. It can be conceptually vague
  2. It can discourage needed change. By putting too much focus on the culture of the company, the focus on change can be dampened.
  3. It too closely equates strategic advantage with organizational uniqueness.

“Tangible resources, such as machines and buildings, as well as less intangible resources, such as scientific know-how and budgetary systems, interact with members of an organization to produce what anthropologists call ‘mature culture’”





The Power School

11 02 2010

"It's morphing time!" Or maybe time for a new strategy... and new outfits...

Mintzberg’s Power school of strategy is based on politics. It looks at what positions and ploys it can use to accomplish its goals, similar to that of a political or military view.

Main premises of The Power School:

1.) “Strategy formation is shaped by power and politics, whether as an process inside the organization or as the behavior of the organization itself in its external environment

2.) The strategies that nay result from such a process tend to be emergent, and take the form of positions and ploys more than perspectives

3.) Micro power sees strategy making as the interplay, through persuasion, bargaining, and sometimes direct confrontation, in the form of political games, among parochial interests and shifting coalitions, with none dominant for any significant period of time

4.) Macro power sees the organization as promoting its own welfare by controlling or cooperating with other organizations, through the use of strategic maneuvering as well as collective strategies in various kinds of networks and alliances” (260).

Major Criticism of the Power School: “The political dimension can have a positive role in organizations, [but], this can also be the source of a great deal of wastage and distortion in organizations” (260). The Power school can also tend to focus too much on one person or leader.

Major Contributions of the Power School: The power school helps all sides of an issue to be debated, and can help with making confident decisions.





The Quest for Resilience

11 02 2010

“The world is not only changing but changing in ways that simply cannot be anticipated.”

Four Challenges:  Cognitive, Strategic, Political, and Ideological

>Denial – anticipate the worst as opposed to denying that defeat can happen. 1) “Senior managers must make a habit of visiting the places where change happens first.” “…see change close-up” 2) “You have to filter out the filterers.”  Find the trusted people who can anticipate change.  “Talk to potential customers who aren’t buying from you.  Go out for drinks and dinner with your most freethinking employees.” 3) Realize that strategies decay because they can get *replicated and they *lose their distinctiveness.  “Strategies get exhausted as markets become saturated, customers get bored, or optimization programs reach the point of diminishing returns.”

>Variety – matters. Companies need to make several smaller monetary bets instead of going into large risk endeavors.  They need to launch a “swarm of low-risk experiments,” or ‘stratlets.’ (I.E. 1000 ideas turn into dozens of ‘stratlets,’ which may create a few real successes)

>Resources – you must free up your resources so you can “support a broad array of strategy experiments within the core business.”  Businesses can “invest too much in ‘what is’ and too little in ‘what could be.’  With resources, companies need to “distinguish between new ideas and risky ideas.”  Be careful that your company is not “operationally efficient and strategically inefficient.”

>Optimization – is different than resiliency and requires that you change to meet needs.

Resilience in strategy is:  “It’s about continuously anticipating and adjusting to deep, secular trends that can permanently impair the earning power of a core business.  It’s about having the capacity to change before the case for change becomes desperately obvious.”

The single statement that captures the author’s ideas would be in this question:  “But where is the reinforcement for (1) strategic variety, (2) wide-scale experimentation, and (3) rapid resource development?”  Variety, experimentation, and resources were the core of this article and of the four challenges.





The Honda Effect

4 02 2010

This article by Richard T. Pascale gives a very clear example of how Honda has formed their strategy. The process that Honda had to go through to get where they are today could be compared to the learning school’s process. They are adaptive in their decisions, and are willing to be flexible to change their original ‘plans’ to that of a better one. The top executives learn from their mistakes, and continue to improve on both their products and processes as a company. However, Honda’s innovations and ideas did not all come from their executives, they encourage ideas from every worker in the company.

Honda has not always been the large, successful company that it is today. They experienced several disappointments in the beginning, such as major problems and malfunctions with the head gaskets and clutch springs on their motorcycles. The entire next month after this problem occurred was spent researching and developing new designs for these components. The error with these parts was that Honda did not account for the increase in mileage and speed that bikes are driven in the U.S. compared to Japan. However, learning from these mistakes and working to fix the problem quickly proved how Honda is willing to continually improve and not be set back as the result of disappointment.

Honda also “’redefined’ the U.S. motorcycle industry from the Harley Davidson stigma that motorcyclists were rowdy, wild, “Hells Angel’s” type people, and instead had the slogan, “You meet the nicest people on a Honda.” This re-positioning broadened the target market for Honda and helped to increase their market share.

Honda has been flexible in their process of strategy, allowing for innovation and change. Honda understands that the “Ability of an organization to move information and ideas from the bottom to the top and back again in continuous dialogue” (90) is important to its success.

"You meet the nicest people on a Honda"

“In sum,” Honda’s ““strategy” is defined as “all the things necessary for the successful functioning of organization as an adaptive mechanism” (90).





The Cognitive School

4 02 2010

The Cognitive School is based largely on the mental side of strategy. Henry Mitzberg mentioned many times throughout the chapter the importance of looking at the

conceptual side of creating a strategy. He broke the cognitive side of strategy into five categories.

      • Cognition as Confusion
      • Cognition as Information Processing
      • Cognition as Mapping
      • Cognition as Concept Attainment
      • Cognition as Construction

Mitzberg also talks about the Parallel Process Model. The components are:

  • Attention: what information will be processed and what will be ignored
  • Encoding: give information meaning
  • Storage/Retrieval: memory
  • Choice: moving back and forth between options before moving toward a solution
  • Outcomes: the beginning of the feedback process




Competing on Resources

4 02 2010

Companies need to identify their competitive resources and use them to their full potential.

→ A Resource Based View (RBV)

Combines internal analysis of company with external analysis of the industry

There are two valuable resources in a company.  Tangible resources are resources like wiring, paper, tools, etc.  Intangible resources are brand names, warranties, and knowledge.

→ Competitively Valuable Resources

Resources cannot be evaluated on an individual basis.  One company may use a resource more efficiently and effectively than another.  Just like money is amoral (morality of money is based on how it is used) resources receive their value when the company uses them to the best of their ability.

So, to evaluate resources, there are five tests they must undergo:

  1. The test of inimitability.  It is important to have a resource that is not easily recreated.  Although competitors will eventually be able to do so, companies need to stall that process as much as they can.
  2. The test of durability.  How long will the resource last until it starts to depreciate?
  3. The test of appropriability.  Who ultimately captures the value of the resources?
  4. The test of substitutability.  Can the resource be traded off for another valuable resource?
  5. The test of competitive superiority.  Whose resource is truly better?  This will be an assessment of what your resource does that makes it unique.

→ Strategic Implication

Since businesses and competition is always changing, companies need to do the same with their resources.  They can take any of three approaches to their resources:

  1. Investing in resources. Make sure you will always have resources available.  However, do so while studying critically the dynamics of those resources.
  2. Upgrading resources.
  3. Leveraging resources.




The Learning School

4 02 2010

>Seeks to describe strategy rather than prescribe it.

>Questions how strategies actually form, not how they are formed.

>Strategic management isn’t necessarily “management of change but management by change.”

(This might mean that managers don’t cause change themselves but as the environment changes, managers react to it, pay attention to the changes, and learn how to best react to them.  Managers will come up with ‘emergent’ strategies.)

Basic model of the school:

~Companies need to “learn over time;” they must “learn about a situation as well as their organization’s capability of dealing with it.  Eventually they converge on patterns of behavior that work.”

Specifics:

~A process of learning must be the basis for formulating and implementing strategy because trying to control an unpredictable and changing environment is a near-impossible task.

~It is the collective system of an organization/ several potential strategists (not just upper management) that must learn as the environment changes.

~A leader’s job is not to establish preconceived, deliberate notions of strategy but to manage the process of strategic learning where a balance is sought between thought and action, control and learning, and stability and change.

“Learning is overrated”…

Three problems can result from learning:

-No Strategy

-A Lost Strategy

-Choosing the Wrong Strategy

…Learning can be a very expensive and time-consuming exercise as well.

“Learning is fundamental”

The Learning School of thought “offers a counterbalancing force to the ‘rational’ deliberateness that has for so long dominated the literature and practice of strategic management.

…The reality is that our global and work environment is unpredictable and the learning school is a fresh and practical tool to combat those changes.