I'm stepping down as the bibliographer of the strategy-as-practice website. That site is going through a redesign, and as part of that, the team is considering how/what to do with the bibliography.
My own view is that a social bibliography, such as mine might be more useful than a stand alone bibliographic silo.
As many people know, I keep my bibliography in Zotero. Zotero also does community base groups too, such as this one on strategy as practice
In his HBR article What Is Strategy, Porter argues that operational effectiveness does not represent a strategy. In other words, planning to be the most "operationally effective" is not a strategy.
But I wonder how true this is. Having looked at, and worked with, many SME (Small and medium enterprises), they often have low levels of operational effectiveness. However, much of the time it doesn't matter because they are as effective as the firms with whom they compete. Operational effectiveness is a relative term. Providing a firm is similar to its rivals in operational effectiveness, operational effectiveness cannot provide an edge.
In large firms, management has often paid been a lot of attention to operational effectiveness. Consequently, any further improvement is likely to have limited impact; all the firms tend to be very good, so the cost/benefits of becoming more operationally efficient is limited.
However, this isn't the case in SME. Because they are often relatively operationally inefficient (comapred to their larger brethren), there are significant improvements that can be achieved at relatively low cost. Thus, such improvements can be a source of significant "differentiation" for a firm.
References
Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.
I often find that students understand the concepts behind the BCG growth-share matrix, but don't know what 'numbers' to use when 'drawing' it. So here we are ...
The BCG growth share matrix is a tool for the evaluation of the performance of a company that operates in a number of markets; i.e. it is a way to examine the portfolio of businesses in which the firm operates. I've taken an illustration of the matrix from Hedley's original 1977 paper. The description of stars, question marks, cash cows, and dogs can be found in Hendley's paper.
There are a couple of things to note. Firstly, the Y axis is Business Growth Rate. On this access, the dividing line between cash cows and dogs (the bottom half of the matrix) is at 10%. In other words to be a star or a question mark, the business needs to be growing at 10% or more.
The X-axis is the relative competitive position. It is a logarithmic scale, of a firm's relative comparative position, i.e. their relative market share compared to the best competitor (not oneself). Thus, if my company has 20% market share, and my best competitor has 10% market share, then my relative competitive position is 20/10 which is 2. On the other hand, if my company has 20% market share, and my best competitor has 30%, then my relative competitive position is 20/30 or 0.67. On the X-axis, the difference between stars and question marks is that stars have a relative competitive position of more 1.5. However, for cash cows and dogs, the difference is that cash cows have a relative competitive position greater than 1.
Of course, the numbers are only approximate. As Hedley (1977, p.13) says, there is "no 'magic' that transforms a star to a cash cow as it growth declines from 10.5 to 9.5 per cent". Indeed, all the lines are just guides.
Finally, to convey the importance of each business being analysed, Hedley recommends that the size of the circle represents either turnover or the number of employees.
References
Hedley, B. (1977). Strategy and the "business portfolio". Long Range Planning, 10(1), 9-15.
In a recent article Varoufakis (2008, p.1259-1260) says:
To give an example, consider the following simple N-person game known as the Race-to-Zero. N players are asked to write on a piece of paper (in isolation from one another) a real number between 0 and 100 (inclusive). The player whose chosen number is nearest the maximum choice among all players divided by two wins £1m times her choice of number. (Joint winners divide the spoils.) Is there a 'solution' to this game? Is there an equilibrium towards which the players' choices will tend the more rationally they think? What number should one write down? Nash suggests that rational players would immediately decide that it makes no sense to choose a number in excess of 50, thinking that: 'Since the largest number that can be chosen is 100, and I win if my choice is nearest to that maximum choice divided by 2, I should never choose a number above 50.' However, this thought immediately begets another, infinitely longer, thought:
'If I am clever enough to work this out, then the rest will also work this out too. Therefore none will select a number greater than 50, in which case I must not choose any number above 25. But if this is so, will the others not know this to be so too? And if they do, will they not restrict their choices to a maximum of 25? Then I must not go beyond 12.5.'
And so on. Asymptotically, one's optimal choice of number tends to zero just as surely as the proverbial rock rolls down a hill until, asymptotically, it hits rock-bottom. 'Choose zero' is, therefore, the game's equilibrium.
I often have problems following such ad infinitum reasoning. What Varoufakis is saying is that rational thinkers will select zero as the best option. And yet it clearly isn't the best solution.
Firstly, there is no payout at zero, so it makes no sense to choose zero as ones best choice. Why would anyone make a choice where the payout is guaranteed to be zero (and this isn't even a zero sum game). Any number other than zero is a better number (in fact one could argue that one is a where things will come to rest).
Secondly, If I truly believe that everyone else will chose zero then I should choose 100. If everyone else chooses zero, and I choose £100, we are all the same distance from the maximum choice divided by two (0-50-100), so I am a winner (as is everyone else). But my payout is 50 x £1m, and not 50 x £0.
Now, if everyone thinks as I do, and they all pick 100, then we are all winners, albeit that we have to share the money. Of course, if one some 'smart Alec' goes it alone and picks 50 then I am 'stuffed'... and the circle starts again, and I should then pick 50. And if I do, then everyone else. At which point we're back to what Varoufakis says should happen, everyone gravitates to zero.
Except of course the zero choice makes no sense (as there is no pay-off). Consequently, I don't think there is a 'rational' solution. There is no point of equilibrium (Nash or otherwise -- but since I'm not a mathematician, nor a game theorist perhaps I shouldn't be so bold in my assertion).
As an aside, if one is actually the number that the rest of the players choose, then it still makes sense for me to go for 99 . I'll leave it to you, the reader, to figure out where (if at all) is the point of equilibrium exists in this version of the game.
My argument is that there is no logical (aka rational) solution except not to pick zero. More generally I would say that there is no point of equilibrium for all players in this game. Either that, or if the 'rational' thing to do is to go with zero--and that we expect rational behaviour from everyone else--then best thing to do is be 'irrational' and go with 100.
Someone, please point the error in my logic.
References
Varoufakis, Y. (2008). Game Theory: Can it Unify the Social Sciences? Organization Studies, 29(8-9), 1255-1277. doi: 10.1177/0170840608094779.
I've just had my feedback from the MBA class Integrating Strategy. Everyone one seems pretty happy except one person who gave me very low ratings. I struggled to make sense of this disparity until I read the comments that the student had made.
I struck out the last comment, because that wasn't really about the course.
SO, I'm left wondering why I didn't manage to connect with this person, and more importantly why they they didn't feel there was nearly enough frameworks for them.
For my part, I thought I had given a structure to the discussion (which mirrored in many ways how I had tackled the case, and hence my framework). However, the approach I took was no better than some of the approaches the class took. I wonder if that person wanted something more like the 7s framework.
Clearly, with this person I failed to get my message across -- every case is unique, there is no simple framework (or small set of frameworks) that you can routinely apply to understanding either a case or, more realistically, a business. What is necessary is the analysis of each situation, determining the critical issue, and then some creativity to address the issue (okay, this is rough paraphrase of Kenichi Ohmae, 1982 -- but it probably isn't enough of a framework for this particular student).
Each firm is unique, and therefore the choice of model needs to be based on judgment and ones own strengths, rather than a ritualistic application of a standard solution.
Interestingly, I've been reviewing a book for Wiley this week, and that would be my main criticism -- it tries to provide a stock solution/approach for strategy. Such an approach is fine at an undergraduate level, but it doesn't stand up in the face of MBA students who have to make sense of such models in live settings (i.e. for practitioners).
So, I'll have to go back to the drawing board and see how I can get my message across more clearly and more convincingly.
p.s. I wonder why they didn't draw on the numerous models and frameworks from the Mintzberg et al (2003) text book if they wanted more frameworks.
References
Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (2003). The strategy process: Concepts, contexts, cases (4th ed.). Upper Saddle River, NJ: Prentice Hall.
Paula Jarzabkowski (2004) has recently had one of articles published in Organization Studies. Her article is based on an earlier working paper she wrote a few years ago. Good on her for getting it in to a tier-one journal. As it happens, Paula will be visiting the department in November and will be giving a couple of seminars. If you're interested in strategy (and who isn't), then I would commend her seminars to you.
Anyway, as I was reading her article, my attention was drawn to:
Mir, R., & Watson, A. (2000). Strategic management and the philosophy of science: The case for a constructivist methodology. Strategic Management Journal, 21(9), 941-953.
The abstract for Mir & Watson article goes like:
In this paper, we suggest that constructivism has the potential to inform research in strategic management. The realist paradigm currently dominates strategy research, and constructivism, a well-established tradition in the philosophy of science, is often ignored. However, a study of strategy literature and research reveals that it is drawn upon more frequently than is explicitly acknowledged. Constructivism occupies a methodological space characterized by ontological realism and epistemological relativism. Ontological realism is an important cornerstone of a field as applied as strategy, while epistemological relativism helps us explore the constructed nature of the field, where the researcher is an active participant rather than a reactor or information processor. In this paper, we demonstrate the precedents and possibilities for constructivist research in strategic management. We examine some of the existent constructivist works in the strategy literature, and point to specific techniques, including historical analysis, to demonstrate how this perspective may advance the boundaries of strategy research
For the constructivists, researchers are seen as skillful craftsmen [sic], much in the same way as strategists are seen in strategy-as-practices (no wonder Paula used this article in her work). Whilst there isn't total agreement as too the nitty-gritty of constructivism, Mir & Watson say there is agreement on six main principles, viz:
It is interesting to counterpoint constructivism with realism. Citing Leplin, the authors say that realism is typified by ideas such as:
It's interesting to contrast (and compare) those views with my own about theories. So despite having some constructivist tendencies, there are still elements of realism in the way I think. Nevertheless, I do reject the notion that there are abstract universal principles1 when it comes to research.
As it happened, I used this article as an opportunity to revisit my understanding of classic research issues of ontology2 and epistemology3.
I liked the quote from Foucault that was used:
We must not imagine that the world turns towards us a legible face, which we would have only to decipher; the world is not an accomplice to our knowledge; there is no prediscursive providence which disposes the world in our favor. We must conceive analysis as a violence we do to things, or in any case as practice which we impose on them (emphasise added).
That strongly reminded me of David Thomas' es clues or cues comments.
Anyway, this will be a helpful article when I write the method chapter of my thesis.
References
Jarzabkowski, P. (2004). Strategy as practice: Recursiveness, adaptation and practices-in-use. Organization Studies, 25(4), 529-560.
Footnotes
1 Nomothetic, by another name.
2 Ontology - a theories of objects and things. More particularly, what things are knowable and what things can't be known. Main types of ontology are empiricism, rationalism, pragmatism, constructivism.
3 Epistemology - regarding the truth or falsehood of knowledge. How can we prove if something is true or false (given what we can know... ontology). I hope I've got these round the right way.
A few Porterian quotes taken from:
Harfield, T. (1997). Strategic management and Michael Porter: A postmodern reading. Electronic Journal of Radical Oranizational Theory, 4(1).
Competitive advantage is hardly a new subject. ... marketing, production, control, finance, and many other activities in a firm have a role in competitive advantage. ... Competitive advantage cannot be truly understood without combining all these disciplines into a holistic view of the entire firm.
In practice, a firm must understand where each of its competitors falls on the spectrum from good to bad and behave accordingly. A good competitor understands and plays by the rules of competition in an industry, and can recognize and read market signals.
Some bad competitors will never become good competitors. A firm must be prepared to fight battles in order to convert bad competitors into good ones. For example, a foreign competitor entering what it perceives to be a strategic market is usually a bad competitor. Its stakes are too high, and it may also not understand the rules of the game.
These considerations suggest that a firm must continually work to manage its competitors' expectations and assumptions.
Competitive strategy is about being different.
... a firm can achieve and sustain overall cost leadership, then it will be an above-average performer in its industry provided it can command prices at or near the industry average. A firm that can achieve and sustain differentiation will be an above-average performer in its industry if its price premium exceeds the extra costs incurred in being unique.
A firm that is stuck in the middle will earn attractive profits only if the structure of its industry is highly favourable, or if the firm is fortunate enough to have competitors that are also stuck in the middle. Becoming stuck in the middle also affects successful firms, who compromise their generic strategy for the sake of growth or prestige.
If a firm can achieve cost leadership and differentiation simultaneously, the rewards are great because the benefits are additive--differentiation leads to premium prices at the same time that cost leadership implies lower costs.
So, I wonder, what is your firm doing. How would you describe its strategy?
I read a bit. One book I that had some interesting ideas was The McKinsey way by Ethan M. Rasiel. Many of the ideas are not new, the 80/20 rule, and elevator pitch, and so on, but it does talk about the need to be MECE (pronounced 'me-se') in writing and thinking.
That is to say, every plan, presentation, or even memo must be present their ideas in a mutually exclusive, collectively exhaustive manner. The book puts it this way:
One of the most fundamental tenants of McKinsey problem solving is the concept of MECE, mutually exclusive, collectively exhaustive. MECE can be used when developing and listing issues related to the problem at hand. First, the associate must ensure that the list is mutually exclusive, or that every item is separate and distinct. Then, she must check that it is collectively exhaustive, that it includes every issue relevant to the problem. This approach prevents overlap and confusion. A "major issues list" should contain no less than two, and no more than five issues, with three being the ideal number. The consultant must make a concerted effort to fit each business problem faced by the company or non-profit under one of the 2- 5 issues on the major issues list. If this fails, there is always the option of creating a category of "other issues", although this is most effective when utilized as a sub-heading for presentation purposes.
Everyone at McKinsey gets well drilled in the art of being MECE:
MECE structures your thinking with maximum clarity--when you think you have determined the issues, take a hard look at them. Is each one a separate and distinct issue? If so, then your issue list is mutually exclusive. Does every aspect of the problem come under one (and only one) of these issues? If so, then your issues are collectively exhaustive ... [so that] every document (including internal memos), every presentation, every e-mail and voice mail produced by McKinsey-ite is supposed to be MECE.
This is closely related to the pyramid method described by Barbara Minto in her book The Minto Pyramid Principle: Logic in Writing, Thinking, & Problem Solving.
The ideas behind the pyramid method and MECE are used a lot by the big consulting firms (McKinsey has already been mentioned, but BCG, Anderson/Accenture). They are also used by strategy case competition teams, and even by students writing thesies.
Here is a fragment (well 150k) of a presentation from the Harvard Business School that shows some of these ideas. It is also a good example of how to tackle cases in general.
I've just received the lastest edition of the Journal of Management Education, and there is an element of sychronicity about it. The first article is:
Cunliffe, A. L. (2004). On becoming a critically reflective practitioner. Journal of Management Education, 28(4), 407-426.
In this article, she writes about many of the things I've discussed today, or over the past couple of days, as can be seen from the abstract:
Critically reflective practice embraces subjective understandings of reality as a basis for thinking more critically about the impact of our assumptions, values, and actions on others. Such practice is important to management education because it helps us to understand how we constitute our realities and identities in relational ways and how e can develop more collaborative and responsive ways of managing organizations. This article offers three ways to of stimulating critically reflective practice: (a) an exercise to help students think about the socially constructive nature of reality, (2) a map to help situate reflective and reflexive practice, and © and outline and examples of critically reflexive journalling.
I think the articles literature review is very accessible. In particular, the idea of "knowing and being" (p. 409) that leads to the ideas that "Knowledge is not just theory or information; it also incorporates knowing from within, a tacit practical consciousness of everyday sense making in which we implicitly know things about our surroundings (people,places, actions) and act from this" (p. 410). For me this is very much about bricolage (Ortmann & Salzmann, 2002). It is something I hope to foster in the Business Policy & Strategy course.
The links the author makes to Argyris & Scön are also very appropriate for the Management Theory & Practice course -- hoepful this will be seen later on in the course.
Those students who have been able to achieve a B+ with their journals (for Management Theory & Practice) might like to consider reading the article to see how they might take them to a new level. In fact, I think that anyone in MGMT 3011 could improve their journals by reading the article.
And, even better (for me), the article has implications for my own practice too.
Footnotes
1 Management Theory & Practice
References
Cunliffe, A. L. (2004). On becoming a critically reflective practitioner. Journal of Management Education, 28(4), 407-426.
Ortmann, G., & Salzmann, H. (2002). Stumbling giants. The emptiness, fullness, and recursiveness of strategic management. Soziale Systeme, 8(2), 205-230.
