Patterns in Strategy Formation Essay

A critical summary of the article â€Å"Patterns in strategy formation† written by Henry Mintzberg, published in Journal Management Science Vol. 24, No. 9, (1978) A short overview The paper,†Patterns in strategy formation†, outlines a new kind of description to the much misunderstood process of strategy formation in organizations. After giving a short summary of the theme, the author, Henry Mintzberg, describes the term â€Å"strategy† and shows how the definition leads to the choice of a research methodology. Following this, he details the four steps of research methodology. With to completed, major studies about two organizations (Volkswagenwerk and the United States government in Vietnam) Mintzberg analyzes three central themes. The first is that strategy formation can be viewed as the interplay between a dynamic environment and bureaucratic momentum, with leadership mediating between the two. Second, that strategy formation over periods of time appears to follow distinct regularities, for example life cycles or change-continuity cycles within life cycle. And third the study of the interplay between intended and realized strategies may be central to the strategy formation process. Definition of strategy and the research methodology In the first section of the paper, Mintzberg describes the term †strategy†. Strategy is generally defined, whether in game, military or management theory, as a deliberate, conscious set of guidelines that determines decisions into the future. In common terminology, a strategy is a plan. Mintzberg illustrates that defining strategy as a plan is not sufficient, because if strategies can be intended, surely they can also be realized. A definition that encompasses the resulting behavior is therefore required. The author proposes to define strategy in general as a pattern in a stream of decisions. To clarify this definition of strategy, he introduces a few illustrations. For example, when Picasso painted blue for a time, that was a strategy †Blue Strategy†. This definition of strategy necessitated the analysis of decision streams in a organizations over time periods to detect the development and breakdown of patterns. Therefore Mintzberg subdivided the analysis of the studies into four central steps. 1st step: Collection of basic data. 2nd step: Inference of strategies and periods of change. 3rd step: Intensive analysis of periods of change. 4th step: Theoretical analysis. After giving a brief review of the periods of strategy in two organizations, using the terminology of the research, the author comes to the core of the paper, which is the presentation of some theoretical conclusions about strategy formation. Strategy formation as the interplay of environment, leadership and bureaucracy Mintzberg outlines strategy formation in most organizations as the interplay of three basic forces revolving around the dynamic environment that changes continuously but irregularly, organizational management or bureaucracy that attempts to stabilize the actions of the organizations whilst operating in the dynamic environment, and leadership of the organizations whose role is to mediate between the two forces. From this point of departure, the author provides a definition of strategy and of strategic change. †Strategy can then be viewed as the set of consistent behaviors by which the organization establishes for a time its place in its environment, and strategic change can be viewed as the organization’s response to environmental change, constrained by the momentum of the bureaucracy and accelerated or dampened by the leadership†. Mintzberg illustrates, that the two organizations (Volkswagenwerk and U.S. government in Vietnam) are stories of how bureaucratic momentum constrains and leadership dampens strategic change. In 1965, for example, when the United States government escalated the Vietnam war in a way that made the escalation inevitable, the new leadership, named Johnson, dampened the strategic change, under the environmental and bureaucratic pressures. Also in 1960, when action was needed in the face of an increasingly changed environment, the central leadership of Volkswagenwerk was not forthcoming. Patterns of strategic change According to Mintzberg, patterns of strategic change are never steady, but rather irregular and ad hoc, with a complex intermingling or periods of change, continuity. Even so, he recognizes some patterns in strategy formation that may enable organizations to understand better their strategic situations. The first pattern is the life cycle of an overall strategy, based on four phases: conception, elaboration, decay and death. The author illustrates that the case of Vietnam represents the classic strategic life cycle. The second pattern is the presence of periodic waves of change and continuity within the life cycle. This second pattern suggests that strategies do not commonly change incrementally. Rather, change takes place in spurts, each followed by a period of stability. Mintzberg notes, that nowhere is the change-continuity cycle better demonstrated than in the stepwise escalation of the Vietnam metastrategy. According to the author, the reason for the periods of change and continuity is that human do not react to phenomena continuously, but rather in discreet steps, when changes are large enough to be perceived. In a similar manner, strategic decision processes in organizations are not continuous, but irregular. Based on both studies, Mintzberg notes, that there are dangers in incremental changes. He argues that strategy-makers seem prepared to assume positions in incremental steps that they would never begin to entertain in global ones. On the other hand, global change is very difficult to conceive and execute successfully. According to the author, this is perhaps the strategy-maker’s greatest dilemma. The danger of incremental changes versus the difficulty of global changes. Interplay between intended and realized strategies The author identifies two kinds of strategies: intended and realized. He illustrates, that these two can be combined in three ways: Intended strategies that get realized, which are called deliberate strategies (e.g. the Volkswagen strategy of 1948 to 1958). Intended strategies that do not get realized, which are called unrealized strategies (e.g. Kennedy’s intended strategy of 1961 of advising the Vietnamese). Realized strategies that were never intended, which are called emergent strategies (e.g. the U.S. strategy of finding itself in a fighting instead of advising role). Furthermore, Mintzberg argues that it is possible to find a number of other relationships between intended and realized strategies, such as intended strategies that, as they get realized, change their form and become emergent; emergent strategies that get formalized as deliberate ones; or intended strategies that get overrealized. This view challenges the tenets of planning theory, which postulates that the strategy-maker formulates from on high while the subordinates implement lower down. Mintzberg argues that this dichotomy between strategy formulation and strategy implementation is a false one under certain conditions – e.g. the formulator isn’t fully informed or the environment isn’t sufficiently stable -, because it ignores the learning that must often follow the conception of an intended strategy. According to Mintzberg, another important point is that the formalization of an emergent strategy as the new, intended strategy is hardly incidental to the organization. The author states that the very act of explicating an implicit strategy changes fundamental the attitude of the bureaucracy and of the environment. He further argues that the very fact of making a strategy explicit provides a clear and formal invitation to the bureaucracy to run with it. But the author also notes that sometimes it can be risky to make strategy explicit, notably in an uncertain environment with an aggressive bureaucracy. He makes the point that the strategy-maker may awake one day to find that his intended strategy has somehow been implemented beyond his wildest intentions. It has been overrealized. Conclusion and critique on the paper In my estimation, the paper †Patterns in strategy formation† is very well-written. The author, Mintzberg, first describes what the paper will be all about. After that, he introduces the theme, strategy as a pattern in a stream of decisions, and shows how this definition leads naturally to the choice of a research methodology. After that, he explains the four steps of the analysis he will use to reviews the major periods of two organizations (Volkswagenwerk and U.S. government in Vietnam). By using these major studies he arouses the reader’s interest and creates a fundamental basis to examine and prove aspects, that strategy formation can be viewed as the interplay of environment, bureaucracy and leadership, that that strategy formation appears to follow distinct regularities and that the study of the interplay between intended and realized strategies may be central to the strategy formation process. Furthermore, he admits that this studies constitute a limited data base, but they do call into question a number of assumptions about the process of strategy formation in organizations, e.g. that a strategy is not a fixed plan, that dichotomy between strategy formulation and strategy implementation is a false one under certain common conditions or that it can sometimes be risky to make strategy explicit. Some general conclusions suggested by these studies are complex and very difficult to understand but, nevertheless, the well-disposed reader understands the approach. This is mainly because, he explains his statements on this two studies closely. To sum up, the paper is well-structured and of a good concept. Furthermore, the paper ties in with very important and interesting research-fields in strategy management.