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C H A P T E R 1 2
STRATEGY DEVELOPMENT PROCESSES
Introduction
Chapter 12 now has as its opening organising framework a figure based on the Mintzberg and
Waters explanation of strategy development as deliberate and emergent. The rest of the
chapter is then structured around those two explanations.
Illustration 12.1
The influence of strategic leaders
1. Can you provide other examples of founders or chief executives influence on strategy?
2. What else would you emphasise as an important contribution CEOs make to strategy
development?
The idea of this illustration is to generate a discussion amongst students about the role of CEOs
(but also other strategic leaders such as founders) in strategy development.
Question 1 invites students to think of the influence of other strategic leaders. In doing so, they
should be encouraged to consider, not just who such people are, but what influence they have
Illustration 12.2
Planning cycle for a multinational business
1. What strategic issues are likely to be most significant at each stage and level of the planning
process?
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2. How might a planning process differ in other types of organisation (e.g. local government or
a university)?
3. How do other processes of strategy development explained in this chapter relate to this
planning cycle?
This illustration shows the planning cycle of a major multinational company in fact a
multinational brewer. The questions are designed to get students to think through a planning
Question 2 invites students to think about how planning cycles will differ by different
organisations. For example, a local government or university plan does not have the diversity of
location as for a multinational corporation; but it does have very diverse units within it
Illustration 12.3
An incrementalist view of strategic management
1. With reference to these explanations of strategy development, what are the main advantages
of developing strategies incrementally? Are there disadvantages or dangers?
2. Is incremental strategy development bound to result in strategic drift (see Section 5)? How
might this be avoided?
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However, students should see that there are risks associated with such an approach and Question
2 prompts them to consider if it is bound to result in strategic drift.
The organisation may see itself changing incrementally, when in fact it is stuck in its old
way of doing things, interpreting changes in the environment according to such ways of
doing things and therefore drifting (see Chapter 5, Section 5.2 in the text).
Question 2 also prompts thinking about how such drift might be avoided. This discussion could
usefully draw upon the Strategy Lenses:
Is a design approach, perhaps through a formal strategic planning system or the
encouragement of planned strategies through, for example, strategy workshops, able to
avoid drift? The danger is that managers are able to undertake careful analysis and
evaluation of strategies, but organisational ways of doing things persist and can too easily
override such analytic approaches. Increasingly, strategic planning is being seen as a means
of coordinating/controlling rather than changing things.
Illustration 12.4
Boardroom battles at Hewlett Packard
1. Identify other examples of political activity at the top of organisations that affected strategy.
2. What bases of political influence might executives draw on in disagreements between
themselves?
The purpose of the questions here is to encourage students to consider a political perspective to
strategy development. The events at Hewlett Packard were in the context of a business that was
Question 2 extends the illustration by asking students to think about the bases of political
influence that executives might draw on in such disagreements. This might encourage them to
think about, for example:
The context of such disagreements; for example, different functional responsibilities,
Illustration 12.5
The development of the microprocessor business at Intel
1. What other examples can you think of where resource allocation processes strongly
influence strategy development?
2. What role should top management play in relation to resource allocation processes in
organisations?
The Intel story is an interesting one and is often referred to by academics who wish to qualify
orthodox top-down views of strategy and explain how strategies might emerge in
organisations.
The questions ask students to extend their consideration of such resource allocation processes.
Where else do resource allocation systems influence how strategies develop? Students who have
worked or have experience of government departments or local government may point out how
Key Debate
Honda and the US motorcycle market in the 1960s
This consists of extracts from one of the most widely cited papers on strategy development
processes ever written. The purpose of the original paper by Richard Pascale was to show two
quite different explanations of the same event: one based on BCG and Harvard reports and the
other based on accounts by the executives themselves. It is useful to read that original paper.
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1. Are the different accounts mutually exclusive?
On the face of it, the case represents two quite different views; one is an essentially rational,
economic explanation of the basis of a successful strategy. The inference, students will
suggest, is that this was all carefully designed. Pascale suggests that the other account by the
executives shows the importance of sensitivity to context, improvisation and adaptability
within a culture which allows for this and a concept of strategy more to do with overall
mission than strict guidelines. Students may interpret the executives account as a matter of
being in the right place at the right time and luck.
There is another dimension to this case which contributes to all the above. If the tutor or the
student reads the paper by Mair, they will see that he argues that many interpretations of the
Honda story are biased and somewhat selective in the data they present. Authors have
chosen to present the events in particular ways to support their perspectives on strategy
making and strategy development processes. In other words, they are looking through
particular lenses which colour the argument that they make and the data that they present.
2. Which of the different explanations of strategy development explained in the chapter do you
discern in the Honda story?
A case can be made for many of the processes described in this chapter. We do not know
that a more formalised strategic planning approach did not exist. It may have done. It simply
is not explained in the accounts provided by Pascale. It is, however, unlikely because
3. Do you think Honda would have been more or less successful if it had adopted a more
formalised strategic planning approach to the launch?
It can, of course, be argued that a formal plan could well have prevented the sort of
Video assignment
Pearson
The video features Mark, Anderson who is responsible for strategy and business development in
the international division of the Pearson group. He discusses his role as a strategist and the
strategic planning process at Pearson.
1. The planning process at Pearson seems quite similar to that in Illustration 12.2 and that
2. Anderson highlights a number of benefits of strategic planning system. These include:
Establishing views on priorities at the corporate centre
Providing a coherent framework within which businesses can consider their business
level strategies
Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy, 10th edition,
Instructors Manual on the Web
Assignment 12.1
Deliberate and realised strategies
The purpose of this assignment is to get students to understand the distinction between
deliberate strategy as, for example, stated in the annual report of a company (or perhaps in a
strategic plan) and the realised strategy of the company that which is observably happening.
Arguably, the best way of doing this is to choose a context that the students know well, where
The questions that arise from this may be as follows:
To what extent differences are there between the statements of deliberate strategy in the
annual reports and the experienced realised strategy?
If there are differences, how is this to be explained? Is it that top management do not mean
what they say? Is it that the plans are simply being badly implemented? Is it that the realised
Assignment 12.2
Strategy development processes
This assignment provides students with the opportunity to understand the following:
Most of the strategy development processes explained in the chapter are discernible in most
organisations.
So, for example, the following three organisations are identified in the assignment:
Google: the case notes at the end of this chapter discuss this in detail.
Adnams: this is a firm still strongly influenced by a fairly tightly networked group of
shareholders who value tradition. There may well be planning systems but they are not
Assignment 12.3
Planning systems
This assignment requires students to consider the value of planning systems. Section 12.2.1
discusses some of the benefits and problems that can occur with planning systems and the
assignment encourages students to consider which of these apply in particular contexts. The
instructor can therefore challenge the extent to which the students have thought through the
practical benefits of planning. For example:
Is planning actually to do with making strategic decisions? For example, in the public
sector, many of the decisions have been imposed or strongly influenced by the government,
Assignment 12.4
Incremental strategy development
See the notes on Illustration 12.3 above.
Assignment 12.5
Appropriateness of different strategy development processes
This assignment builds on Assignment 12.2. It is important for students to understand that
different processes of strategy development are likely to be found in most organisations. The
next step is to ask whether or not multiple processes (see Section 12.4.1) make more or less
sense in different contexts. The examples cited in this assignment are as follows:
A traditional university places a great deal of emphasis on the individual skills and
knowledge of researchers and professors. Traditionally, this has been allowed to flourish by
allowing a great deal of latitude for their own personal development in pursuit of their own
academic interests. This could not have been done if there was heavy-handed direction from
the top for example, in the form of a rigid strategic plan. Nonetheless, there is need for an
A high-technology company is likely to face a fast changing environment. It is unlikely to
find rigid centralised planning and control conducive to such change (indeed some high-
tech pharmaceutical and high-technology companies have suffered from this). Studies of
Integrative assignment 12.6
The minimum that can be expected of students here is that they should be able to draw on the
different chapters throughout the book to identify some of the key questions that would be asked
to identify strategic issues that might explain the problems of decline faced by this company.
However, a student should be expected to go further than this. There is a particular context
specified here: a long established, once successful, major multinational business that has
experienced managers. So, rather than looking for a simple check list drawing from the book, it
might be expected that the students consider what, in particular, are likely to be the courses of
decline in a business such as this. That might highlight the following, for example:
Have there been significant changes in the markets or wider environment context this
business faces? If so why had the managers not (a) identified these; or (b) if they have,
failed to take action to address these issues?
So, the emphasis in the assignment should be to encourage students to get underneath the basic
check list of questions that arises in the book, to look for issues of managerial process that might
explain and account for why an organisation is in decline.
Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy, 10th edition,
Instructors Manual on the Web
the basis of the business? What should be the role of the chief executive in such circumstances?
Again, is this top-down direction or the encouragement of questioning and challenging? Or
both? In a major multinational corporation the politics of decision making are likely to be
Case Example
Google: who drives the strategy?
1. Explain how Googles strategy has been developed over the years.
2. What are the strengths and weaknesses of its approach?
The main learning objective for this case is to provide students with a context in which they can
identify and understand different strategy development processes.
All students will be familiar with Google, but this case study provides them with the opportunity
In terms of Questions 1 and 2, for example, to what extent have the following been evident and
with what consequences?
Strategic leadership in terms of:
command, that is, direct control of strategy from the top;
vision, that is, an intent that motivates others and helps shape (but not dictate)
Certainly more recently then influence of Larry Page has become more clearly evident, not least
in his taking the role of CEO and insisting on a greater emphasis on operational efficiency. It
might, however, be worth asking if this apparent change might stifle the sort of innovation on
which Google has built its success in the past.
Planning systems: To what extent is there evidence of formal planning taking place within
Google? If so, what role does it play? The case is written on the basis of information about
To what extent is strategy externally imposed, for example, by government or external
forces that Google cannot control? Interestingly, Google seems to have displayed an ability
to dictate its environment rather than the other way around. They broke the mould with their
Is strategy better described as logically incremental, that is developed through
experimentation and learning? This does seem to have been particularly pertinent to Google.
Indeed its mode of beta product launch and trial and error form of innovation is an ideal
example. The interesting question is whether and how this can be preserved given Googles
changed circumstances, for example, its size and increasing organisational complexity and
its apparent increase in centralised direction from Page.
To what extent is strategy the product of organisational systems: in other words, are there
systems which exist in the organisation which, of themselves, tend to determine what the
strategy looks like? Clearly the peer review comes to mind here. The HR approach is also
an example: strict recruitment criteria continually reiterating, strict processes of quality
3. In what ways should Googles approach to strategy development change in the future?
Question 3 invites students to consider what the strategy development processes should be
in the future. This should pose them with the challenge of reconciling the need for
innovation with the need for coordination and control in a hugely complex organisation and