Strategy Week 8

In the strategy-as-practice perspective, how does the TRADITIONAL view define strategy?

Strategy = top-management decisions; focus on WHAT strategy is; linear (analysis -> choice -> action); emphasis on economic rationality.

In the strategy-as-practice perspective, how does the PRACTICE-ORIENTED view define strategy?

Strategy = distributed activity across organisational levels; focus on HOW strategy is actually done; iterative, messy, human-centred; integrates economics, psychology, and sociology.

What are the three guiding questions of the strategy-as-practice framework?

(1) WHO should be involved in strategy making (strategists)? (2) HOW should strategising activities be carried out? (3) WHICH methods/tools should guide the work?

In strategy-as-practice, what three elements correspond to the questions Who / What / Which?

Strategists (Who?), Strategising activities (What?), and Strategising methods (Which?).

In strategy work, what are the CEO's key contributions?

Sets strategic direction and discipline; allocates resources to strategic priorities; represents strategy externally to investors, media, and regulators.

In strategy work, what are the CEO's potential pitfalls?

Hubris (overconfidence in personal judgement); isolation (strategising without diverse input); short-termism (quarterly results vs long-term vision).

In strategy work, what are the Top Management Team's (TMT) key contributions?

Brings diverse functional expertise; challenges CEO assumptions through debate; translates strategy into operational priorities.

In strategy work, what are the Top Management Team's (TMT) potential pitfalls?

Groupthink (consensus-seeking suppresses dissent); role confusion (difficulty detaching from operational duties); skill gaps (limited enterprise-level strategy experience).

In strategy work, what are the Non-Executive Directors' (NEDs) key contributions?

Provide external perspective and expertise; hold executive management accountable; shape strategy processes (e.g., insisting on better information).

In strategy work, what are the Non-Executive Directors' (NEDs) potential pitfalls?

Part-time engagement (limited bandwidth); information asymmetry (depend on executive briefings); informal influence (impact often via private conversations, not formal board meetings).

When preparing for a board strategy session, what should a CEO do?

Prepare a one-page 'strategy narrative' connecting vision to concrete actions; avoid jargon; focus on trade-offs.

When preparing for a board strategy session, what should TMT members do?

Come with data that challenges assumptions; ask 'What would make this strategy fail?'

When preparing for a board strategy session, what should NEDs do?

Request pre-reads 72 hours in advance; prepare 2-3 probing questions on strategic risks.

What is a strategic planner (dedicated strategy department), and how does it differ from a line manager?

A professional whose PRIMARY responsibility is the strategy process - distinct from line managers, for whom strategy is just one of many duties.

What are the three core tasks of strategic planners (dedicated strategy departments)?

(1) Information & Analysis; (2) Managing the strategy process; (3) Special (strategy) projects support.

For strategic planners, what does the 'Information & Analysis' task involve?

Conduct PESTEL, Five Forces, VRIO analyses on demand; package insights into usable formats (dashboards, one-pagers, scenario briefs); always link analysis to a specific decision.

For strategic planners, what does the 'Managing the Strategy Process' task involve?

Coordinate planning cycles across business units; provide templates, training, analytical support to line managers; act as a 'bridge' between corporate centre and operations (e.g., a 'strategy calendar').

For strategic planners, what does the 'Special Projects Support' task involve?

Lead/support M&A due diligence, organisational redesign, market-entry studies; work in cross-functional teams; use project tools (Gantt charts, RACI matrices).

Why are strategic planners influential despite usually lacking formal authority?

Their proximity to the CEO and control over information flows make them influential - they are often the 'first call' for managers testing new ideas.

Contrast the traditional vs contemporary view of middle managers in strategy.

Traditional: middle managers = implementers only. Contemporary: middle managers = essential strategists (granular market knowledge, translate strategy locally, adapt in real time, champion bottom-up innovation).

What are the four strategic roles of middle managers?

(1) Information Source; (2) Sense-Maker; (3) Adapter; (4) Champion.

Middle-manager role - what does 'Information Source' mean? (with example)

Provide ground-truth data on market shifts, operational bottlenecks, customer feedback. Example: a regional sales manager reports a competitor undercutting prices by 15%, prompting a pricing review.

Middle-manager role - what does 'Sense-Maker' mean? (with example)

Interpret and communicate strategy in ways that resonate with their teams. Example: a plant manager frames cost-reduction not as 'cutting jobs' but as 'investing in automation to secure long-term employment.'

Middle-manager role - what does 'Adapter' mean? (with example)

Adjust strategy implementation to local conditions without waiting for top-down directives. Example: a country manager modifies a global campaign to comply with local advertising rules while keeping core messaging.

Middle-manager role - what does 'Champion' mean? (with example)

Advocate for novel ideas that could become strategic initiatives. Example: a product manager prototypes a new service feature from customer requests; after testing it becomes a company-wide priority.

In the public sector, why is the traditional split between strategy (politicians) and implementation (officials) blurring?

Rising importance of specialised expertise (favouring career officials); creation of quasi-autonomous agencies with strategic discretion; decentralisation granting more executive responsibility to public managers.

What are the typical contributions of strategy consultants (e.g., McKinsey, BCG, Bain)?

Design/facilitate strategy processes; provide analytical rigour and external benchmarking; transfer best practices across clients; support implementation of strategic change.

What are the key considerations when using strategy consultants?

Client ownership (internal teams lead, consultants support); knowledge transfer (build internal capability, not dependency); cost-benefit (weigh fees against expected value created).

How do investors (VCs, private equity, activist funds) shape strategy?

Influence strategy through capital allocation; provide strategic advice from portfolio experience; push for performance improvements via divestments and cost cuts.

What are the key considerations when investors shape strategy?

Alignment (investor time horizons match strategic needs); autonomy (preserve management's ability to execute long-term); transparency (communicate rationale to manage expectations).

What is the four-step best practice for working with consultants?

(1) Selection: firms with relevant sector experience and cultural fit; (2) Briefing: clear written scope with success metrics; (3) Collaboration: joint internal+external teams for knowledge transfer; (4) Review: post-engagement review to capture lessons.

Besides informing 'good' decisions, what purposes can strategy analysis serve?

Delay decisions (procrastination); rationalise decisions already made (symbolic); build buy-in from resistant managers; advance political agendas.

What is the practical implication of analysis serving political/symbolic purposes?

Design analysis to fit its real purpose (informational, political, or symbolic). Don't always insist on technical perfection - a 'good enough' SWOT that lets managers vent can be more useful than a rigorous but alienating one.

What is strategic issue-selling, and why is it needed?

Strategic issues compete for limited top-management attention; to get noticed, managers must 'sell' issues effectively.

What four factors should managers consider when selling a strategic issue?

(1) Issue packaging; (2) Formal vs informal channels; (3) Selling alone vs in coalitions; (4) Timing.

In issue-selling, what does 'issue packaging' involve?

Frame issues clearly, link them to strategic goals/performance metrics, keep messages succinct, and ideally propose solutions alongside the problem.

In issue-selling, what is the guidance on formal vs informal channels?

Use both. Formal = annual reviews, strategy retreats, reporting systems. Informal = corridor conversations, meals, ad-hoc chats (can be equally or more decisive).

In issue-selling, what is the trade-off of selling in coalitions vs alone?

A coalition adds credibility and weight, but may require compromises that blur your original message.

In issue-selling, what is the guidance on timing?

Avoid pressing long-term strategic issues during short-term crises or leadership transitions.

Behavioural economics (Kahneman) identifies five cognitive biases in strategic decisions. Name them.

Confirmation; Anchoring; Saliency/Halo; Affect/Champion's bias; Risk bias.

Cognitive bias - what is CONFIRMATION bias, and how do you mitigate it?

Seeking data that supports favoured options. Mitigation: require consideration of alternative options.

Cognitive bias - what is ANCHORING, and how do you mitigate it?

Over-reliance on one piece of information (e.g., past trends). Mitigation: introduce different analytical methods to surface new assumptions.

Cognitive bias - what is SALIENCY/HALO bias, and how do you mitigate it?

Letting one successful analogy or reputation dominate judgement. Mitigation: actively seek disconfirming evidence and alternative comparisons.

Cognitive bias - what is AFFECT/CHAMPION'S bias, and how do you mitigate it?

Emotional attachment to a proposal. Mitigation: consult less enthusiastic team members individually.

Cognitive bias - what is RISK bias, and how do you mitigate it?

Over-optimism or excessive risk aversion. Mitigation: use 'outside view' benchmarks; review incentives to balance risk/reward.

Besides debiasing techniques, what three additional insights apply to strategic decision making?

Constructive conflict exposes biases (use diverse teams + devil's advocates); balance 'mercenary' (rational) and 'romantic' (inspirational) strategies; remember many strategies emerge without explicit formal decisions.

Why is communicating strategy a two-way process?

It requires both advocacy (senior management explaining strategy) AND inquiry (listening to stakeholder concerns).

What are the three effective approaches to communicating strategy?

(1) Narrating strategy; (2) Visualising strategy ('strategography'); (3) Embodying strategy.

Communication approach - what is 'narrating strategy'? (with example)

Turn bullet points into a coherent, motivational story with a clear plot and actors. Example: Alessi publishes books about its strategy changes.

Communication approach - what is 'visualising strategy / strategography'? (with example)

Use diagrams, maps, or cartoons to convey meaning memorably. Example: Amazon's flywheel model communicated its self-reinforcing growth logic simply and powerfully.

Communication approach - what is 'embodying strategy'? (with example)

Leaders must 'walk the talk.' Example: Steve Jobs embodied Apple's elegance through his presentation style; a mismatched leadership style undermines credibility.

In communicating strategy, why does openness matter?

Continuous transparency (e.g., publishing strategy minutes, live-streaming meetings) builds trust and engagement, especially in open-strategy approaches.

What are the three key areas where digital technologies transform strategy work?

(1) Environmental analysis; (2) Strategic option generation; (3) Implementation and adjustment.

Digital strategy tools - how do they aid environmental analysis?

AI can scan massive datasets (media, analyst reports, internal logs) to spot emergent trends; digital visualisation (e.g., word clouds) communicates patterns dynamically.

Digital strategy tools - how do they aid strategic option generation?

Corporate social media (e.g., Yammer), strategy 'jams' (IBM), wikis, and polling tools enable crowdsourcing ideas and continuous development of options.

Digital strategy tools - how do they aid implementation and adjustment?

CEO blogs, virtual town halls, and video Q&As help disseminate and interpret strategy across levels and geographies, enabling dynamic conversations about strategic meaning.

What is a strategy workshop ('away-day')?

An intensive, off-site meeting where executives work on strategy - to formulate strategy, review progress, address implementation, or communicate decisions.

What are the keys to a successful strategy workshop?

Clarity of purpose (strongly correlates with success); appropriate tools and facilitation (challenge thinking, use a specialist facilitator); visible sponsor support (CEO must visibly back it); reducing hierarchical barriers (off-site, 'serious play').

How should workshop design differ for developing NEW strategy vs REVIEWING current strategy?

Developing new strategy: encourage challenge, creativity, detachment from hierarchy. Reviewing current strategy: maintain operational focus and functional roles.

What are common pitfalls of strategy workshops and their solutions?

Ideas don't translate to action -> agree concrete actions before closing, set up project groups. Workshops become routine -> vary participants, nest in a series. Radical ideas feel disconnected -> use a series that gradually increases operational focus + visible top-management commitment.

What four project-management elements make strategy projects succeed?

(1) Clear brief/mandate (guard against scope creep); (2) Top-management commitment; (3) Milestones and reviews; (4) Appropriate resources (right skill mix; balance project duties vs 'day jobs').

What is 'portfolio oversight' in the context of strategy projects?

Senior management should actively manage the portfolio of strategy projects - merging, ending, or reprioritising as needed - to avoid 'initiative fatigue.'

What is hypothesis testing as a strategy method?

A methodology for prioritising investigation under time pressure, adapted from scientific practice.

What are the four steps of the hypothesis-testing process in strategy?

(1) Start with a descriptive hypothesis; (2) test it with real-world data; (3) if confirmed, develop prescriptive hypotheses; (4) test the prescriptive hypotheses further.

How does strategic hypothesis testing differ from the scientific method?

Goal is to concentrate on a limited set of promising hypotheses ('don't boil the ocean'); data gathering often aims to SUPPORT (not refute) favoured hypotheses; aim is a robust, satisfactory solution within constraints - not ultimate truth.

What is Quick and Dirty Testing (QDT)?

Using existing experience and easily accessed data to rapidly reject unpromising hypotheses before investing significant time.

What is open strategy?

Wider inclusion of internal and external stakeholders, plus greater transparency, in strategy processes.

What are the main forms of inclusion in open strategy (by participation level)?

Strategy workshops (multiple org levels); strategy projects/task forces (cross-level/cross-functional); delegated decisions (e.g., Valve's 'rule of three'); social media and polling to solicit and prioritise ideas.

What are the advantages and disadvantages of greater inclusion in strategy?

Advantages: access to more ideas; improved implementation through greater understanding/commitment. Disadvantages: slower processes; undermined managerial authority; risk of leaking sensitive info; employees may lack incentives to take risks.

In the 'who to include in strategy making' matrix, what are the two axes?

Discontinuity (degree of major strategic change) on the vertical axis; Urgency on the horizontal axis.

Who-to-include matrix: HIGH discontinuity + LOW urgency (e.g., 'How should we grow?') - what participation?

Broad participation - strategy workshops.

Who-to-include matrix: HIGH discontinuity + HIGH urgency (e.g., 'Acquisition threat or opportunity?') - what participation?

Narrow participation - project teams or taskforces.

Who-to-include matrix: LOW discontinuity + LOW urgency (e.g., 'Who are our key competitors?') - what participation?

Open participation - ongoing strategic conversation.

Who-to-include matrix: LOW discontinuity + HIGH urgency (e.g., 'How to respond to a competitor move?') - what participation?

Limited participation - meetings, project teams.

What is the overall principle for deciding who to include in a strategic issue?

There's no universal rule - match inclusion to the nature of the issue, balancing speed, sensitivity, and the need for diverse input.

Under STANDARD MICROECONOMICS, what is assumed about individuals?

They act as agents who are consistently rational, narrowly self-interested, and pursue their subjectively defined ends optimally; decision-making under full (symmetrical) information.

Under STANDARD MICROECONOMICS, what is assumed about firms?

Firms have clear goals and seek profit maximisation.

Under BEHAVIOURAL THEORY, what does 'bounded rationality' (March & Simon) mean for individuals?

Human decision-makers are INTENDEDLY rational but only LIMITEDLY so - limits on the information they have (asymmetrical), can process, and the number of alternatives they can handle.

What cognitive limitations does behavioural theory attribute to individuals under bounded rationality?

Oversimplifying; inability to predict consequences of actions; making false analogies between old and new experiences (or relying on past experience); groupthink.

Under BEHAVIOURAL THEORY, how is the firm conceived?

As a COALITION of participants, each receiving inducements and making contributions - participants keep participating as long as inducements outweigh contributions (within their constraints).

What three additional concepts characterise the firm in behavioural theory?

Organisational subgoals; bargaining power & organisational slack; satisficing behaviour.

In behavioural theory, contrast MAXIMIZERS and SATISFICERS.

Maximizers exhaustively seek the best, compare with others, spend more time/energy, and end up unhappier. Satisficers accept 'good enough,' don't obsess over options, move on after deciding, and are happier with outcomes.

Summarise the four core claims of behavioural theory about the firm.

(1) The firm is a coalition of participants, not a holistic entity; (2) it has no single objective; (3) information cannot be transmitted without costs; (4) bounded rationality replaces full rationality.

Behavioural economics bias - what is AVAILABILITY?

Recent information is weighted more heavily / matters more in judgement.

Behavioural economics bias - what is REPRESENTATIVENESS?

Judging by stereotypes - assuming something fits a category because it resembles a typical case.

Behavioural economics bias - what is LOSS AVERSION?

Weighting losses more heavily than equivalent gains.

Behavioural economics bias - what is the ENDOWMENT EFFECT?

Overvaluing something simply because you currently own it.

Behavioural economics bias - what do 'reciprocity and fairness' describe?

People act on reciprocity and fairness norms instead of purely maximising their own payoff.

What is the relationship between behavioural theory and behavioural economics regarding bounded rationality?

Biases (systematic errors) and heuristics (rules of thumb) FURTHER limit the bounded-rationality assumption - they explain HOW rationality is bounded in practice.

What four categories of activities do firms employ for strategizing (lecture overview)?

Analysis; issue-selling (firms as coalitions); decision making (biases and heuristics); communicating.