Models of Strategy Making
The actual methods managers use to develop and carry out their strategies are known as modes of strategic management. They deal with the questions of who has the most sway over the strategic management process and how it is run. According to research, managers often employ one of the three main modes or approaches to strategic management: entrepreneurial, adaptive, or planned.
The level of innovation that takes place within the company is likely to be influenced by the mode chosen. Strategic management places a premium on innovation since failing firms are more likely to fall behind their competitors in the marketplace, especially when the environment is changing quickly.
Competitive Mode
Entrepreneurial mode is an approach where strategy is primarily developed by a strong, visionary chief executive who aggressively seeks out new opportunities, is largely focused on growth, and is prepared to make daring strategic decisions quickly. Organizations that are young or small, have a strong leader, or are in such dire straits that bold are their only hope are more likely to engage in entrepreneurial searches for new modes. It should come as no surprise that in the entrepreneurial mode, the top leaders’ orientation greatly influences how much the strategic management process fosters innovation. They are able to advocate for change thanks to their personality, influence, and knowledge. Strong leaders, on the other hand, have the ability to threaten creative efforts if they so want.
Adjustable Mode
An method to formulating strategies known as “adaptive mode” places an emphasis on making tiny, gradual progress, responding to issues rather than looking for opportunities, and making an effort to appease various organizational power groups. The adaptive mode is most frequently employed by managers in well-established organizations that must contend with an environment that is changing quickly while also having a number of coalitions or power blocs that make it challenging to come to an understanding on clear strategic goals and the corresponding long-term plans.
For instance, the Burger King chain was plagued by regular turnover, marketing issues, poor service, and irate franchisees who routinely told Pillsbury what to do before London-based Grand Metropolitan PLC purchased Pillsbury, including the Burger King Chain. With a strategy that stresses doing “everything it takes to provide a great, memorable experience,” Grand Metropolitan is currently attempting to get the chain back on track. Increasing the number of field representatives who visit Burger King locations, emphasising cleanliness, and recognising staff members who take the initiative to provide better service by going above and beyond are just a few examples of concrete initiatives.
With the adaptive method, the extent to which the strategic management process promotes innovation is likely to depend on the managers’ capacity to concur on at least some main goals and fundamental strategies that establish key orientations.
Additionally, lower-level managers must be given considerable latitude in executing the fundamental strategy rather than being given incredibly precise plans to follow; this technique may be successful in a more stable environment or one in which coalition agreement is simple to come by. However, the adaptive mode may be ineffectual in steering the business in feasible strategic directions without at least some agreement among high-level managers on major goals and directions.
Arrangement Mode
According to Martin, the planning mode is a method for formulating strategies that entails thorough, systematic study as well as the integration of numerous choices and tactics. Executives frequently use planning professionals to assist with the strategic management process when they are in the planning mode. Being able to change the environment is the ultimate goal of the planning mode.
The planning mode is most frequently employed in large organisations because they have the means to perform thorough analysis, can reach consensus internally on key objectives, and operate in environments that are stable enough to support the creation and execution of well-thought-out strategies. Disney, for instance, has aspirations to enter the conference hotel industry with its Swan Hotel and Dolphin Hotel, both of which are run by the Westin Hotel Company and the Sheraton Corporation, respectively. Within Disney World, the two hotels provide 2350 rooms and more over 200,000 square feet of event space. Before the hotels opened in 1990, they were completely booked.
Innovation is more likely to occur in the planning mode when policies openly state the need for new products and services, and when top-level managers, like those at Disney, assist in coordinating efforts to promote innovation.
Evaluating the modes of strategic management
As long as it is matched to the right situation, each mode can be somewhat successful. In reality, using various modes simultaneously within the same organisation might be viable. For instance, a senior manager might choose an entrepreneurial mode for a startup company while using the planning mode for the remainder of the organization’s strategic management.
Depending on how they are applied, each of these types of strategic management can either foster organisational innovation or hinder it. Nevertheless, understanding the strategic management process is necessary to operate in any of the three modes effectively. Managers conduct competitive analysis as part of the process after determining the mission and strategic goals.