Serial top management decision-making has been characteristic of many business firms in the past and still remains a typical pattern of behavior. An alternative mode of behavior, which is being exhibited by an increasing number of firms, can be called parallel decision-making in which attention to strategy is more direct and response to strategic challenges is quicker. This behavior is modeled in Figure 3.
Attention to strategy can now be triggered in two ways: firstly, through diagnosis of problems signaled by the logistic process, and secondly through a direct response to environmental changes. The nature of this response can vary between firms. It may still be lag response (recognition of a significant change which has already occurred, such as introduction of a radically new product by competitors), it may be anticipatory response in which the firm seeks through forward planning to foresee significant changes in the environment, or it may be self-triggered response in which the firm continuously searches for growth and expansion opportunities. The latter mode is usually described as entrepreneurial behavior. Lag response implies occasional concern with strategy by top management, whereas both anticipatory or self-triggered responses imply attention to strategy which is either continuous or conducted on a regular periodic basis.
Granting that the preceding discussion is properly descriptive of the observable strategic behavior, two questions need to be asked. First, what should be the sensitivity of top management to the problem of strategy, and second, how can such sensitivity be brought about.
The answer to the first question depends on two major factors: the growth and the profitability objectives of the firm, and the characteristics of its product-market environment. In the matter of objectives, we must depart from the micro-economic theory and recognize that both the assortment and the values of goals will vary from firm to firm (5) (6, Chapters 3 and 4). Given the vector of objectives for a firm, the sensitivity to strategy should vary between the extremes of occasional lag responses and of self-triggered behavior, in proportion to the difference between the goals and the potential offered by the firm's present product-market position for satisfying the goals.
The characteristics of the firm's environment have an independent effect on the firm's attention to strategy. Thus, if the present environment appears to hold a satisfactory goal potential, the firm still needs to be responsive to change if the environment is turbulent and subject to changes in products, markets or technology. Thus, management sensitivity to strategy should be proportional to the instability of the environment of the firm.
The question of how appropriate sensitivity to strategy is to be attained takes us into realm of organizational structure and thus outside the self-imposed limits of this paper. Stated briefly, the organizational structure must provide an environment in which top management can devote appropriate attention to strategy, unencumbered by operating demands. The structure must also support this management with appropriate kinds of information and staff support. However, the structure provides only a shell which will operate effectively only if the responsible top management have appropriate entrepreneurial attitudes and skills. It is the difference in these attitudes and skills among managers that is the major determinant of the aggressiveness of a firm's strategic behavior.
We can summarize this section of the paper through a series of propositions about strategic behavior of firms. Descriptive propositions are preceded by the letter D and an appropriate subscript. Prescriptive propositions are coded with N.
D1 Continued profitability and survival of the firm requires that it maintain a product line which remains competitive and in demand.
D2 Strategic decisions, which are concerned with maintenance of a viable product line, compete for top management attention with operating and administrative decisions.
D3 As a result of historical evolution, operating decisions tend to take precedence over strategic unless special provisions and/or circumstances arise.
D4 The major factors which determine the degree and continuity of attention devoted to strategy in the firm are the following:
(1) A history of unprofitable operations.
(2) Entrepreneurial propensity and training of top management.
(3) Organizational structure which makes special provisions for attention to strategy.
(4) Gap between objectives and past performance.
(5) Gap between objectives and forecasted performance.
(6) Past history of active concern with strategy.
(7) Forecasted instability of the firm's environment.
(8) Active strategic behavior by the firm's competitors.
D5 The above factors combine to produce an observable strategic behavior which ranges from lag response, in which operating decisions take precedence, to self-triggered response in which strategy is attended to continuously and independently of operations.
Ni A particular firm's position between these extremes within this range should be proportional to:
(1) The gap between the objectives and the future potential of the firm's present strategic position.
(2) The degree of instability of the firm's present product-market environment.
N2 The organizational structure of the firm should be designed to provide adequate resources and management attention to the strategic needs of the firm.
N3 Top managers charged with strategic decisions should be selected on the basis of their entrepreneurial propensities and talents.'
No comments:
Post a Comment