Page 71 - 6484

the two views complement one another to give us a richer understanding of strategy
making?” Let us explore these complementarities in relation to the factual question of
how strategies are made and the normative question of how strategies should be
made.

The Making of Strategy
How Is Strategy Made?
Robert Grant, author of Contemporary Strategy Analysis, shares his view of
[5]
how strategy is made as follows. For most organizations, strategy making
combines design and emergence. The deliberate design of strategy (through formal
processes such as board meetings and strategic planning) has been characterized as a
primarily top-down process. Emergence has been viewed as the result of multiple
decisions at many levels, particularly within middle management, and has been
viewed as a bottom-up process. These processes may interact in interesting ways. At
Intel, the key historic decision to abandon memory chips and concentrate on
microprocessors was the result of a host of decentralized decisions taken at divisional
and plant level that were subsequently acknowledged by top management and
[6]
promulgated as strategy.
In practice, both design and emergence occur at all levels of the organization.
The strategic planning systems of large companies involve top management passing
directives and guidelines down the organization and the businesses passing their draft
plans up to corporate. Similarly, emergence occurs throughout the organization—
opportunism by CEOs is probably the single most important reason why realized
strategies deviate from intended strategies. What we can say for sure is that the role
of emergence relative to design increases as the business environment becomes
increasingly volatile and unpredictable.
Organizations that inhabit relatively stable environments—the Roman Catholic
Church and national postal services—can plan their strategies in some detail.
Organizations whose environments cannot be forecast with any degree of certainty—
a gang of car thieves or a construction company located in the Gaza Strip—can
establish only a few strategic principles and guidelines; the rest must emerge as
circumstances unfold.
What’s the Best Way to Make Strategy?
Mintzberg’s advocacy of strategy making as an iterative process involving
experimentation and feedback is not necessarily an argument against the rational,
systematic design of strategy. The critical issues are, first, determining the balance of
design and emergence and, second, how to guide the process of emergence. The
strategic planning systems of most companies involve a combination of design and
emergence. Thus, headquarters sets guidelines in the form of vision and mission
statements, business principles, performance targets, and capital expenditure budgets.
However, within the strategic plans that are decided, divisional and business unit
managers have considerable freedom to adjust, adapt, and experiment.
KEY TAKEAWAY
You learned about the processes surrounding strategy development.
Specifically, you saw the difference between intended and realized strategy, where
intended strategy is essentially the desired strategy, and realized strategy is what is

71