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Long Range Planning

41/3 June 2008

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Special Issue

 

Richard Whittington and Ludovic Cailluet Theme Editors

The Crafts of Strategy

 

Charles Baden-Fuller Editorial

I am delighted to introduce this Special Issue entitled The Crafts of Strategy organised by Richard Whittington and Ludovic Cailluet.

It is commonly recognised that failure of strategy is one of the most common causes of organisational failure. Firms fail not for operational reasons, but because they are delivering the wrong kinds of products and services to the wrong customers. So it is not surprising that formal strategic planning of some kind or other is undertaken by about 70% of all organisations; yet management journals seem to have stopped questioning the purpose of formal planning and how it might be done well. This special issue sets out to right some of this wrong.

The editors have assembled an impressive group of authors who look at how well known and innovative organisations practice the art of strategic planning and what it means. Starting with an excellent overview by the editors, we have a piece by William Ocasio and John Joseph that blasts away the cobwebs to uncover the continuities of planning practices at GE, one of the world’s most successful companies. A startling example of phenomenon based research, they have uncovered the details of how strategy work has both changed and not changed over the last 40 years, and where it is going now. Further into the issue, Brian King probes carefully the behaviour of some major financial institutions Venture Capital Funds. He find that, while managers of these organisations enforce formal planning on the companies they invest in, paradoxically, they rarely engage in it on their own account. One is tempted to think that this absence of formal planning might be part of the reason why so many financial institutions are struggling in the current credit turmoil. Joaquim Vila` and Ignacio Canales probe carefully how strategic plans can influence and improve organisational effectiveness by studying a single Spanish organisation in detail. Martin Giraudeau looks at the history of a planning failure when Renault opened up its operations in Brazil, and shows how planning per se did not cause the failure, but should have allowed top managementto identify (before the fact) the risks they were taking and that failure might be a serious outcome. Loizos Heracleous and Claus Jacobs look behind the processes that take place when managers come together to make strategy plans. Like others, their probing suggests that the process may be much more influential than the actual content of the strategy. Finally Mattias Nordqvist and Leif Melin examine how strategy planning in family businesses can be assisted by outside agents that stand between the family and the organisation.
Our academic readers will find these pieces, well researched using Strategy as Practice perspectives, open up interesting avenues of discussion. For the practicing manager, I suggest there is good material here, which will challenge you to think carefully about why you plan, how you plan and whether the consequences of planning are as well understood as you think. Some of the pieces will be very accessible (such as the stories of planning at GE and in the venture capital industry), some will be more difficult; but all should be rewarding, as they all detail actual practices that can usefully employed.

 

Richard Whittington and Ludovic Cailluet The Crafts of Strategy - Special Issue Introduction by the Guest Editors  Richard.Whittington@sbs.ox.ac.uk

This themed issue commemorates the twenty-first anniversary of Henry Mintzberg’s classic Harvard Business Review article, ‘Crafting Strategy’. With his striking image of the strategist making strategy as a potter crafts clay, Mintzberg crystallised a widespread reaction against strategic rationality and detachment. The roles of intimacy, intuition and emergence in strategy- making came vividly into view. From this perspective, the notion of formal strategic planning appears anachronistic, even faintly ridiculous.
A twenty-first anniversary is a good time for mature appraisal. Mintzberg is a powerful writer, but in a sense his striking images and vivid turns of phrase may have been too successful, blinding his audiences to the more nuanced propositions that lie behind. Mintzberg himself is emphatic that there are still many important roles for strategic planning, for instance in programming strategy, in feeding-in analysis and hard data, and stimulating strategic thinking within the organisation. Unfortunately, it was the headlines that grabbed attention and since the 1980s strategy scholars have turned increasingly away from strategic planning research. Our contention here is that it is now high time for strategic planning to receive renewed scholarly attention. Planning remains a pervasive practice in today’s organisations, one that is moreover taking on new forms far removed from the academic stereotypes of two decades ago. Hence the aims of this themed issue: to reappraise Mintzberg’s argument in the light of current and historical practice, and to explore new avenues for research on strategic planning. Thus our title, The Crafts of Strategy, recalls Mintzberg’s classic article, but encapsulates both an appreciation of the real skills involved in formal strategy-making and the plurality of forms that such strategy activity can take in different contexts.

We start by recapitulating the debates of the 1980s and 1990s about strategic planning and assess their impact on contemporary strategy research. We then argue for the continuing importance of strategic planning and for a new perspective based on an appreciation of craft. Here we shall be defining strategic planning broadly, to include not just the responsibilities of some designated strategic planning department, but formal strategy-making in all its manifestations, whether undertaken by strategic planners, managers or strategy consultants, or happening in boardrooms, strategy away-days or virtually through electronic communications. We shall also be extending the notion of performance, going beyond the economic performance of the firm to embrace the performance of strategy work itself. It is this concern for strategy work, and the various crafts it involves, that motivates the articles in this themed issue. We conclude, therefore, by introducing the articles of this issue, which range from the formal procedures of General Electric to the delicate strategic interventions of strategy consultants in small family businesses.

In sum, we hope that this themed issue will contribute to the revival of research on strategic planning. The papers in this issue demonstrate the continued vitality and variety of this practice. Strategic planning can support creativity and respond sensitively to diverse and changing circumstances. Managers, planners, consultants and business school teachers all need to know more about the many ways in which strategic planning can be done and how it can be done better. Next generation research should be getting much closer to strategic planning practice. Given the journal’s title, Long Range Planning is a good place to start.

 

William Ocasio and John Joseph Rise and Fall, or Transformation? The Evolution of Strategic Planning at the General Electric Company, 1940-2006 wocasio@kellogg.northwestern.edu

This paper poses a major challenge to the widely accepted version of one of big businesses best-loved tales - how the USA’s giant General Electric Company first espoused and then ditched strategic planning. The authors’ systematic examination of the history and evolution of GE’s strategic planning practices over nearly 70 years - covering the regimes of six consecutive CEOs - effectively explodes this ‘first in/first out’ simplification. Examining carefully what the company actually did in terms of setting up channels to manage its planning efforts, and tracking how these governance channels were adapted, refocused and sometimes renamed to align with contemporary environments, and according to the agendas of successive leaderships, they show instead how GE’s systems of strategy formulation, decision making and control have been the subject of incremental change, rather than of radical transformation. They reveal how awareness of the deeds of celebrity CEOs, and of the adoption of particular planning technologies - decentralisation, SBU planning, Six Sigma, etc - has blinded previous commentators to the fundamental continuity of prevailing practices over the period. The true story is one of a heritage of planning structures becoming ever-more refined and integrated, with most of what was handed down by one CEO being redeployed, rather than discarded, by his successors.

 

Joaquim Vilà and J. Ignacio Canales Can Strategic Planning Make Strategy More Relevant and Build Commitment Over Time? The Case of RACC  jic1@st-andrews.ac.uk

It is all very well for a company to devise a strategic plan, but that does not guarantee positive results. Still, many companies find that how they conceive of strategy and their approach to strategic planning has a major impact on the usefulness of what results from the process. The authors of this paper argue that strategic planning that guides discussion among managers at different levels can play an important role in stimulating the collective process for shaping the development of common goals and priorities, acting as a strong glue to align the organisation around a chief purpose. This paper describes how translating strategy into managerial action requires common understanding of strategy and its underlying logic. It examines how the planning process of Reial Automobil Club de Catalunya (Royal Automobile Club of Catalonia) served to establish a common understanding and commitment to strategy among the firm’s managers over time, yet, in the process, that strategic planning changed both in methodology and in purpose. The study therefore sheds light on the debate of the emergent versus the planned approaches to strategic planning as it suggests that RACC used both a formal and an emergent strategy. The analysis of the case also sheds light on the relationship among distinct components of a planning system and how their interdependencies change as strategic planning is transformed to meet different purposes. In particular, it demonstrates that a firm’s approach to strategic planning influences the prospects for its successful implementation.

 

Martin Giraudeau The Drafts of Strategy: Opening Up Plans and Their Uses giraudeau@univ-tlse2.fr

Even the best-laid plans can lead you in a surprising direction. This paper demonstrates that even if a company sets out to create a clearly-defined plan, the process of creating that plan can result in new strategies or options emerging. The argument is based on the study of plans relating to Renault’s operations in Brazil in the 1990s. In 1994 Renault developed a 60-page document that planned a three-year programme of action in favour of Renault imports. While the document was not meant to be a draft of strategy, it provided Renault executives with so much information about Brazil and its markets that it allowed uses other than the proposed action programme. It therefore became a draft for a strategy different to the one which was explicitly set forth. The following year another plan was devised to provide elements of justification for a strategic decision to make direct investment in a local manufacturing facility. This resulted in some options closing, others remaining open while others remained undecided upon and appraised in terms of relative risk. The 1995 plan also went even further by proposing some radical new strategies. The author describes therefore how a closed programme-plan such as the 1994 one could be read openly, as some sort of hint towards new strategies, while an open scenario-plan such as the 1995 one could be used to narrow down the range of decisions. He also points to the use of plans as thought experiments wherein imagined strategies are devised and explored. The paper concludes with some guidelines for strategy makers on how to make plans play a part in strategy formulation.

 

Loizos Heracleous and Claus Jacobs Crafting Strategy: The Role of Embodied Metaphors loizos.heracleous@wbs.ac.uk

This article examines and illustrates the strategising practice of crafting embodied metaphors; concrete, physical constructions that workshop participants both create and interpret at the same time. This ‘serious play’ technique is recommended for its ability to surface taken-for-granted assumptions by drawing on rich imagery and stories (rather than on dry, objectivist statistics and figures) and develop a memorable and shared vocabulary for debating future strategic actions, as well as its facility to foster team-building and increase participants’ sense of involvement and ownership of the issues and decisions they take as part of the process. An episode of a strategy team constructing an embodied metaphor of its ideal strategizing process - portrayed as the journey of a troop of disaffected and disoriented animals to reach safe ground in a safari park (where constituent functions are strategically aligned, but their freedom to be different is retained) - is thoroughly analysed. The authors draw attention to the benefits of the process for deeper understanding of organizational, divisional or task identities and its potential for shifting the mindsets of strategists, as well as its ability to engage a wider group of actors than are normally involved in strategising.

 

Mattias Nordqvist and Leif Melin  Strategic Planning Champions: Social Craftspersons, Artful Interpreters and Known Strangers Mattias.Nordqvist@ihh.hj.se

This paper examines the performance of people, rather than organisations, in relation to strategy. Specifically, the authors introduce the concept of strategic planning champions (SPCs) to refer to strategy practitioners who introduce, promote and guide the strategic planning process in an organisation. Drawing on previous literature and an in-depth field study of the role of SPCs in two family businesses, they find three roles that the SPC must perform to work effectively, in addition to the traditional role of the competent strategic planning and thinking expert. These three roles are: the social craftsperson, the artful interpreter and the known stranger. Performing the role of a social craftsperson, the SPC blends different expectations from groups and individuals and is sensitive to tensions when trying to reach a positive and common ground in strategic planning. As an artful interpreter, the SPC understands the local routines and norms and adjusts the general strategic planning accordingly. As a known stranger, the SPC strikes a balance between distance and closeness in the interaction that gives other actors both a sense of objectivity and a sense of confidence fostering the exchange of information. The SPC needs to understand and respect the specific values, interests and concerns that form the rules of the game for the work of strategy practitioners. The authors provide implications of their findings for practitioners and scholars who are interested in understanding the work and performance of the people doing strategy.

 

Brian King Strategizing at Leading Venture Capital Firms: Of Planning, Opportunism and Deliberate Emergence brian.king@mail.mcgill.ca

Venture capitalists are often seen as expert strategists, and the ways they help steer those firms in which they invest is well documented. But how do they manage their own strategic needs? Looking at some leading names from Boston and Silicon Valley, the authors find that the planned progress they recommend for their portfolio companies - and insist on via financing rounds and critical milestones - is not the way they do strategy at home, where they cope with their turbulent environment by employing deliberately emergent strategies, including opportunism and themed investing. Examination of venture capitalists’ own decision- making reveals them to be what the authors define as ‘bifurcated strategists’, who in their own turn can be inhibited from following inviting leads and anticipating future trends by brand and reputation considerations, as well as by restrictions laid down by their limited partners who actually put up the money. The article proposes a dynamic model showing how such strategies are put into practice.

 

 

This issue is currently in press. Scheduled date for publication is June 2008. Shortly, it will also be available on www.sciencedirect.com

 
Long Range Planning - International Journal of Strategic Management
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