- Email: [email protected]
Strategic management to strategic change?
CHAPTER 30
Strategic management to strategic change? The aim of this chapter is to provide some personal views on the way strategic management might develop, and to add a few thoughts about strategic success.
Strategic management has made great strides since it emerged as a topic under its old name of long-range planning. We now have better techniques of strategic analysis, and new concepts of strategy formulation, and we understand more about the behavioural aspects of managing strategically. It is perhaps of interest to try to speculate where the subject might be heading. In trying to forecast its future I should like to steal from some of my editorials from the early issues of the Journal of Strategic Change, and from material that Igor Ansoff wrote to mark the launch of this journal in early 1992. I have always been an admirer of elephants, and once lived in a country where they roam wild. There is something that I find appealing about these majestic animals, and I have in the past used them to illustrate some of the issues around strategic change. Despite this, I was unprepared for the brief report which appeared in the Daily Telegraph of 22 May 1992. ‘Rider trapped for 2 days on mad elephant’. Naturally I read on. The story was about an Indian elephant rider who, it said, was trapped on the back of an elephant while it ran amok for 200 miles before it could be tranquilised and he could be rescued. It was in a state of sexual frenzy, known as a must (what else could it be called!). However, the mahout did not suffer from hunger, as he grabbed fruit that had been tied to trees for him along the elephant’s route. This implies some careful planning and forecasting, in order to predict the route correctly, and needed a high degree of accuracy. An inch too far to the left or right, and the poor mahout would have gone hungry, with food just out of reach. I do not know if the story was a left-over from 1 April although from the tone of the article I think the Telegraph were keeping their options open. From observation over many years, I believe that many organisations follow a strategic path in a somewhat similar fashion to this elephant, stimulated by something, and charging off down a path without thinking about the implications.
599
Quick response, of which the hanging down of food for the mahout is a simile, saves some of the problems from becoming disasters. Somehow we do not seem to learn as much as we should from past experience. To my knowledge there has been at least one major study of the failure rate in acquisitions at roughly ten yearly intervals. The conclusions in the 1970s, 1980s and more recently 1993 had one thing in common. The failure rate was around 50 per cent. Either something continually goes wrong in the pre-merger strategy, or we are still struggling to learn how to implement the strategies which are so perfect on paper. The headlong rush of the maddened elephant reminded me of a cartoon sequence I devised some years ago for a lecture about the difficulty of making change happen in organisations. The first picture showed a number of bowlerhatted, pinstriped city gents trying to make a reluctant elephant move, pushing and prodding with their umbrellas: it dealt with the difficulty of getting any willingness to change at all. The second slide showed the same characters trying to restrain an elephant that was charging off in the wrong direction. I now know that it was suffering from a must! This was to illustrate the difficulty of ensuring that the right change was implemented. There were other cartoons in the sequence, which ended with a suggestion that the wrong strategy could result in the organisation becoming a white elephant. My previous company, Harbridge Consulting Group, has had encounters with elephants, both of the varieties illustrated in the cartoons and the real thing. A few years ago, two of my colleagues were running a course in Zambia. The hotel, in a game park, consisted of a series of low buildings with verandahs which were used for breakout groups. Into the hotel compound strolled a bull elephant with one broken tusk. Whether the students by that time had learnt much about strategic change was doubtful, although they demonstrated that they needed no coaching in how to beat a fast tactical withdrawal in the face of changed prospects. The elephant was not undergoing a must, and among our corporate souvenirs is a photograph of the animal attentively studying the flip chart. We have had no reports that he has applied the learning he gained within his own community! The elephant theme has been used by others, including the mind-blowing image of teaching elephants to dance, although this probably owes more to Rudyard Kipling than to Rosabeth Moss Kantor. My belief is that the next decade of advances in strategic management will be much more about managing strategic change than formulating strategy. Indeed one could see the term ‘strategic change’ becoming the new byword for the next phase of strategic management. Strategic emphasis has, over time, been moving to a greater focus on implementation. I think the future will bring a greater merging of formulation skills with those of organisational behaviour and change management. Put another way, successful change comes about through a blend of the hard and soft disciplines, the analytical and the behavioural. Neglect of one in favour of the other is likely to lead to actions which do not yield the desired results. Trends in management rarely appear from nowhere, and the emphasis I see on strategic change is a logical step in the evolution of strategic management. Nevertheless, it does challenge the traditional boundaries between functions, and requires a closer binding of many functions which have traditionally been regarded as independent. This does not mean that planners have to report to
600
organisational development people, or that human resources in some way comes under planning. It does mean that traditional views of roles have to change, and that each should be seen as a non-watertight element of an overall task that has to be conceived as an entity. Igor Ansoff can fairly be described as the father of strategic management, first exposing the concept of strategic planning and later leading the thinking that developed this to the concept of strategic management. In a letter to me about the new journal, he observed: ‘The role of the corporate planner . . . is already obsolete, both in theory and practice, and the journal could contribute to the concept of the strategic change manager . . . who combines four disciplinary perspectives: analytic, psychological, sociological and political.’ While the title of corporate planner – or the many other variations on this theme – may live on, the role in successful organisations is much as Igor describes it. Similarly, organisational development can no longer be a staff activity whose efforts are unrelated to the corporate objectives and strategy, while those organisations which give little thought to organisational behaviour must find mechanisms to bring these skills into the change process. The same argument can be made for many of the activities of the human resource function, such as management development. Overall there is a need for leadership and management of a high order, activities which cannot be separated from strategic decision making or organisational development. The real issue for all players is how to manage strategic change in an era of increasing turbulence. While there are many structural solutions, the most important step is the realisation of the mutual interdependence of all these players, if successful change is to take place. The turbulence in the business environment is a driver of change, and leads to what might be called a situational approach to strategic management. In particular I refer to the recent thinking by Igor Ansoff which appears elsewhere in this book. However, the events which change the business prospects also change the expectations and attitudes of the people we employ. The future of strategic management, which I see as strategic change, will also be a future which takes far more account of the economic value of human resources. I foresee far more emphasis on approaches and techniques to address this issue than has been the case in the past, and I would hope for a kit bag of tools which matches the range of choice now available for dealing with other aspects of strategy. I should like to leave the last new thought with Igor Ansoff1: . . . important as they are, unidisciplinary perspectives of a multidisciplinary problem do not automatically add up to a solution of the total problem. This fact is amply supported by the voluminous literature in cybernetics, general systems theory and sociology. The second reason is that I cannot think of any really important problem in today’s society and its organisations whose solution is not vitally dependent on intimate contemporaneous interplay of the whole range of ‘hard’ and ‘soft’ sciences.
(The extract refers to the role he sees for the journal, and the omissions do not distort his intentions.)
601
If I try to summarise this chapter, it is to say that strategic management will move to a new dimension of strategic change management in intent if not in name. More emphasis will be placed on methods that provide a better strategic insight into human resource management; leadership and management of a much higher order will be required; and a more situational approach to strategic management will become the norm, in order to relate to the degree of environmental turbulence faced by the particular organisation. But let me finish with a caution. New ideas are important, and take strategic management forward. However, we should never allow an author’s enthusiasm to destroy our own judgement. A sign of true professionalism in the development of management theory and practice is that a body of knowledge is built up over time. The new may be very different from the old, and be designed to deal with situations that did not exist in the past, but we should distrust the hype that surrounds so many of the new concepts. There seems to be a need to persuade the world that all that is needed is the new idea, and everything previous is of little account. Well, as we saw in Chapter 1, not all new concepts are as original as their authors believe, and even the language they use to promote them is the same as has been used to ‘sell’ many previous ideas. Management should not be about following fashions. It should be about choosing the ideas, concepts and techniques that are appropriate for particular situations. In order to make an informed choice, managers need to know the concepts they are rejecting, as well as the one they have chosen. It is obvious that no concept can have the same degree of success for every organisation. For example, proponents of core competencies as the ‘right’ way have claimed that it can enable an organisation to transform an industry. Controlling your own destiny, and pulling the rug from under the feet of competitors, may appeal to the emotions. But think about it. The competitors read the same books, and it is clearly impossible for every competitor to transform the industry. If the game is to win, someone must lose. Core competencies have something to offer as a concept, but so do many of the other concepts and techniques. Nothing should be taken in isolation from the rest of the body of knowledge, and the wise will use several approaches to help them on the way to taking strategic decisions.
Reference 1 Ansoff, H. I. ‘Welcome to the Journal of Strategic Change’, Journal of Strategic Change, 1, No. 1, January/February 1992.
602
Strategic management to strategic change? The aim of this chapter is to provide some personal views on the way strategic management might develop, and to add a few thoughts about strategic success.
Strategic management has made great strides since it emerged as a topic under its old name of long-range planning. We now have better techniques of strategic analysis, and new concepts of strategy formulation, and we understand more about the behavioural aspects of managing strategically. It is perhaps of interest to try to speculate where the subject might be heading. In trying to forecast its future I should like to steal from some of my editorials from the early issues of the Journal of Strategic Change, and from material that Igor Ansoff wrote to mark the launch of this journal in early 1992. I have always been an admirer of elephants, and once lived in a country where they roam wild. There is something that I find appealing about these majestic animals, and I have in the past used them to illustrate some of the issues around strategic change. Despite this, I was unprepared for the brief report which appeared in the Daily Telegraph of 22 May 1992. ‘Rider trapped for 2 days on mad elephant’. Naturally I read on. The story was about an Indian elephant rider who, it said, was trapped on the back of an elephant while it ran amok for 200 miles before it could be tranquilised and he could be rescued. It was in a state of sexual frenzy, known as a must (what else could it be called!). However, the mahout did not suffer from hunger, as he grabbed fruit that had been tied to trees for him along the elephant’s route. This implies some careful planning and forecasting, in order to predict the route correctly, and needed a high degree of accuracy. An inch too far to the left or right, and the poor mahout would have gone hungry, with food just out of reach. I do not know if the story was a left-over from 1 April although from the tone of the article I think the Telegraph were keeping their options open. From observation over many years, I believe that many organisations follow a strategic path in a somewhat similar fashion to this elephant, stimulated by something, and charging off down a path without thinking about the implications.
599
Quick response, of which the hanging down of food for the mahout is a simile, saves some of the problems from becoming disasters. Somehow we do not seem to learn as much as we should from past experience. To my knowledge there has been at least one major study of the failure rate in acquisitions at roughly ten yearly intervals. The conclusions in the 1970s, 1980s and more recently 1993 had one thing in common. The failure rate was around 50 per cent. Either something continually goes wrong in the pre-merger strategy, or we are still struggling to learn how to implement the strategies which are so perfect on paper. The headlong rush of the maddened elephant reminded me of a cartoon sequence I devised some years ago for a lecture about the difficulty of making change happen in organisations. The first picture showed a number of bowlerhatted, pinstriped city gents trying to make a reluctant elephant move, pushing and prodding with their umbrellas: it dealt with the difficulty of getting any willingness to change at all. The second slide showed the same characters trying to restrain an elephant that was charging off in the wrong direction. I now know that it was suffering from a must! This was to illustrate the difficulty of ensuring that the right change was implemented. There were other cartoons in the sequence, which ended with a suggestion that the wrong strategy could result in the organisation becoming a white elephant. My previous company, Harbridge Consulting Group, has had encounters with elephants, both of the varieties illustrated in the cartoons and the real thing. A few years ago, two of my colleagues were running a course in Zambia. The hotel, in a game park, consisted of a series of low buildings with verandahs which were used for breakout groups. Into the hotel compound strolled a bull elephant with one broken tusk. Whether the students by that time had learnt much about strategic change was doubtful, although they demonstrated that they needed no coaching in how to beat a fast tactical withdrawal in the face of changed prospects. The elephant was not undergoing a must, and among our corporate souvenirs is a photograph of the animal attentively studying the flip chart. We have had no reports that he has applied the learning he gained within his own community! The elephant theme has been used by others, including the mind-blowing image of teaching elephants to dance, although this probably owes more to Rudyard Kipling than to Rosabeth Moss Kantor. My belief is that the next decade of advances in strategic management will be much more about managing strategic change than formulating strategy. Indeed one could see the term ‘strategic change’ becoming the new byword for the next phase of strategic management. Strategic emphasis has, over time, been moving to a greater focus on implementation. I think the future will bring a greater merging of formulation skills with those of organisational behaviour and change management. Put another way, successful change comes about through a blend of the hard and soft disciplines, the analytical and the behavioural. Neglect of one in favour of the other is likely to lead to actions which do not yield the desired results. Trends in management rarely appear from nowhere, and the emphasis I see on strategic change is a logical step in the evolution of strategic management. Nevertheless, it does challenge the traditional boundaries between functions, and requires a closer binding of many functions which have traditionally been regarded as independent. This does not mean that planners have to report to
600
organisational development people, or that human resources in some way comes under planning. It does mean that traditional views of roles have to change, and that each should be seen as a non-watertight element of an overall task that has to be conceived as an entity. Igor Ansoff can fairly be described as the father of strategic management, first exposing the concept of strategic planning and later leading the thinking that developed this to the concept of strategic management. In a letter to me about the new journal, he observed: ‘The role of the corporate planner . . . is already obsolete, both in theory and practice, and the journal could contribute to the concept of the strategic change manager . . . who combines four disciplinary perspectives: analytic, psychological, sociological and political.’ While the title of corporate planner – or the many other variations on this theme – may live on, the role in successful organisations is much as Igor describes it. Similarly, organisational development can no longer be a staff activity whose efforts are unrelated to the corporate objectives and strategy, while those organisations which give little thought to organisational behaviour must find mechanisms to bring these skills into the change process. The same argument can be made for many of the activities of the human resource function, such as management development. Overall there is a need for leadership and management of a high order, activities which cannot be separated from strategic decision making or organisational development. The real issue for all players is how to manage strategic change in an era of increasing turbulence. While there are many structural solutions, the most important step is the realisation of the mutual interdependence of all these players, if successful change is to take place. The turbulence in the business environment is a driver of change, and leads to what might be called a situational approach to strategic management. In particular I refer to the recent thinking by Igor Ansoff which appears elsewhere in this book. However, the events which change the business prospects also change the expectations and attitudes of the people we employ. The future of strategic management, which I see as strategic change, will also be a future which takes far more account of the economic value of human resources. I foresee far more emphasis on approaches and techniques to address this issue than has been the case in the past, and I would hope for a kit bag of tools which matches the range of choice now available for dealing with other aspects of strategy. I should like to leave the last new thought with Igor Ansoff1: . . . important as they are, unidisciplinary perspectives of a multidisciplinary problem do not automatically add up to a solution of the total problem. This fact is amply supported by the voluminous literature in cybernetics, general systems theory and sociology. The second reason is that I cannot think of any really important problem in today’s society and its organisations whose solution is not vitally dependent on intimate contemporaneous interplay of the whole range of ‘hard’ and ‘soft’ sciences.
(The extract refers to the role he sees for the journal, and the omissions do not distort his intentions.)
601
If I try to summarise this chapter, it is to say that strategic management will move to a new dimension of strategic change management in intent if not in name. More emphasis will be placed on methods that provide a better strategic insight into human resource management; leadership and management of a much higher order will be required; and a more situational approach to strategic management will become the norm, in order to relate to the degree of environmental turbulence faced by the particular organisation. But let me finish with a caution. New ideas are important, and take strategic management forward. However, we should never allow an author’s enthusiasm to destroy our own judgement. A sign of true professionalism in the development of management theory and practice is that a body of knowledge is built up over time. The new may be very different from the old, and be designed to deal with situations that did not exist in the past, but we should distrust the hype that surrounds so many of the new concepts. There seems to be a need to persuade the world that all that is needed is the new idea, and everything previous is of little account. Well, as we saw in Chapter 1, not all new concepts are as original as their authors believe, and even the language they use to promote them is the same as has been used to ‘sell’ many previous ideas. Management should not be about following fashions. It should be about choosing the ideas, concepts and techniques that are appropriate for particular situations. In order to make an informed choice, managers need to know the concepts they are rejecting, as well as the one they have chosen. It is obvious that no concept can have the same degree of success for every organisation. For example, proponents of core competencies as the ‘right’ way have claimed that it can enable an organisation to transform an industry. Controlling your own destiny, and pulling the rug from under the feet of competitors, may appeal to the emotions. But think about it. The competitors read the same books, and it is clearly impossible for every competitor to transform the industry. If the game is to win, someone must lose. Core competencies have something to offer as a concept, but so do many of the other concepts and techniques. Nothing should be taken in isolation from the rest of the body of knowledge, and the wise will use several approaches to help them on the way to taking strategic decisions.
Reference 1 Ansoff, H. I. ‘Welcome to the Journal of Strategic Change’, Journal of Strategic Change, 1, No. 1, January/February 1992.
602