OM 석사 2 학기 이연주

Strategy Making as Iterated Processes of Resource Allo-cation Tomo Noda

Josephf L. Bower

AgendaResearch Objective

Methodology

Introduction

Strategy Making as Iterated Processes of Resource Alloca-tion

Toward a Formal Process Theory of Strategy Making in Large, Complex Firms.

Discussions

1. Introduction

• Strategy is a course of action consciously deliberated (Chandler, 1962; Andrews, 1971; etc)

• Inherent organizational complexities and unpredictable environmentHow is strategy actually formed?

• Findings from empirical studies : strategy is emergent from lower levels of organizations

• Strategy process perspectives: strategy is ‘a pattern in a stream of decisions and action’ (Mintzberg & McHugh, 1985)

1. Introduction

1. Bower-Burgelman(B-B) Process Model

Burgelman, Robert A. "A process model of internal corporate venturing in the diversified major firm." Administrative Science Quarterly (1983): 223-244.

1. Introduction

1. Bower-Burgelman(B-B) Process Model

Burgelman, Robert A. "A process model of internal corporate venturing in the diversified major firm." Administrative Science Quarterly (1983): 223-244.

1. Introduction

2. intraorganizational ecological perspective• Bottom-up resource allocation process• Intraorganizational competition among bottom-up initiatives

to survive by getting scarce corporate resources & top managers’ at-tention in the corporate context

Variation Selection Retention

Strategic initiatives are identified and examined in the definition process

impetus process by corporate context as ‘internal selection envi-ronment’

Reinforcement or modifi-cation of corporate con-text

Autono-mous

Strategic initiatives out-side scope of current strategy

Defining strategic con-text for new initiatives

Changes in organiza-tional learning, compe-tence, etc. to lead top management to recog-nize that a major change in strategy is necessary and feasible

Induced

Strategic initiatives seek-ing resources for projects that correspond to internal selection pressures

Initiative selected through administrative mechanisms and cul-tural influencing

Integrated in ex ante vi-sion

Burgelman, Robert A. "Intraorganizational ecology of strategy making and organizational adaptation: Theory and field research." Organization science 2.3 (1991): 239-262.

2. Research Objective

1. Why is it that firms, facing similar opportunities, respond differently and come up with different strategic commitments to the business?

2. How and why do managerial activities at multiple levels of organiza-tion, which add up to such different emergent concepts of corporate strategy, differ among these firms?

Research Questions

1. To fill the gap by comparing multiple firms

2. To extend the B-B model to a comparative analysis of a single busi-ness across multiple firms

Research Objective

3. Methodology

•2 of the 7 regional holding companies(RHCs) by the breakup of AT&T Significant similarities

•Initial local cellular markets were similar: market size, drive intensity, in-come level

Similar business opportunity (even among 7 RHCs)

• Smallest in domestic wireless revenues of the seven compa-nies

• Fairly active international cel-lular operations, but more committed to broadband and multimedia businesses

• No strategic emphasis on its wireless communica-tions businesses

• Largest of the seven RHCs in domestic wireless revenues and international wireless op-erations measured by the number of POPs

• Nation’s second largest paging operator

• Global/mobile strategy:active in a wide range of wireless communication businesses

3. Methodology

Why? & How?

3. Methodology

Iterated B-B process model: to capture multiple, sequen-tial projects

Propositions regarding a formal process of strategy mak-ing in large, complex firms

• Retrospective field studies

• Interviews

• Guided by the B-B process model of strategy making in a multilevel, multi-business organization

Research Methods

4. Strategy making

4. Strategy making: 1st period(Getting started)

4. Strategy making: 2nd Period(Unexpected growth)

4. Strategy making: 3rd Period(Full Bloom)

5. Toward a theory of strategy making

• P1a: Top managers exercise a critical influence on the strategic initia-tives of lower-level managers by setting up the context in which these managers make decisions and take actions

• P1b: Both strategic and structural contexts influence bottom-up initia-tives in the definition process, and shape resource allocation in the impetus process in a way that virtually defines a course of business de-velopment and subsequent emergence of a corporate strategy for the new business

• P1c: A firm’s structural context is relatively stable over time, and its persistent impact on the subsequent business development process constrains the discretion of top managers who may want to change the firm’s course of actions in response to the development of technology and the market for a new business

Q. Application to the types of strategy by Mintzberg(1985)?

1.The role of corporate context in strategy making

5. Toward a theory of strategy making

• P2: In the case of a new business development that in-volves a high degree of uncertainty, the iterations of the re-source allocation process generate a pattern of escala-tion or de-escalation of a firm’s strategic commitment based on early results from operations that confirm or dis-confirm the premises of the first investment and the credi-bility of the champions

2. Escalation (de-escalation) of a firm’s strategic commitment

5. Toward a theory of strategy making

• P3: In the case of successful business development, continu-ous, incremental learning of top managers during business development, and the resulting fine tuning of strategic context shift resource allocation and precede the articulation or change in official statements of the corporate strategy for the new business

Incremental view of strategy making

Deliberate strategy vs. Emergent strategy

(Mintzberg,1985)

3. The determination of strategic context

6. Discussion

1. 저자들은 이 모델이 multi-level management 가 있는 대기업에 적용된다는 boundary condition 을 제시한다 . 그렇다면 작은 기업에서는 이 프로세스가 어떻게 달라질까 ?- 작은 기업의 business manager 들도 top manager 의 의도와 독립적으로

기능할 수 있을까 ?

2. 기술의 발전 속도나 산업의 성장속도가 다른 산업에서도 이 framework 가 그대로 적용될 수 있을까 ?

3. ‘Strategy making as iterated process of resource allocation’ 이 Mintzberg(1985) 의 ‘ emergent strategy’ 에 대해 시사하는 바는 무엇일까 ?