Schools in Strategic Management

By | August 29, 2019

Major premises of this model are the following (Minzberg and Ghoshal 30):

  • The formation of strategy is a controllable process of thought
  • Strategy formation is the responsibility of the CEO, while other members of the company are implementing the decisions
  • Strategy formation is a creative act and is based on judgement rather than operationalized
  • Unique strategies based on distinctive features of the company are the best
  • Strategies should be kept brief and simple
  • After a strategy is formulated, it must be implemented

In general, design model is focused on improvisation, creativity and simplicity of organizational strategy. This approach has been (and remains) one of the leading methods for making strategic decisions.

Planning School

Planning school of organization management in fact also uses the model shown on Figure 1, with one significant difference: the focus of planning school is on setting formal objectives (rather than incorporating organizational values in the design school variant). In addition to this, several premises of these schools are common. For example, planning school also suggests that a strategy is a product of human thought, which should be first of all formulated, and then implemented. However, the premise to keep strategy simple and informal used by the design school is not accepted by planning school, and this is one of the major differences.

The approach of this school suggests that the very process of developing strategy can be formalized from the beginning to the end, and it is possible to use appropriate methods and follow their steps without any alteration to reach optimal result. A good example of planning school is Ansoff model, where 57 boxes should be filled to arrive to the strategy (Mintzberg 62). Ansoff offers various choice rules, weights and points for managerial decisions, and the process of strategic decision-making is maximally routinized. Mainline Steiner model is another example of planning school approach. In these models, the role of CEO is not so crucial and to a certain extent more value is transferred to the departments responsible for planning and implementing a set of actions.

Distinctive premises of planning school are (Mintzberg 63):

  • The process of strategy formation is a formalized structure which can be divided into several distinct steps, with techniques elaborated for each step
  • CEO is responsible for the whole process (with focus on adjusting and approving the strategy)
  • Planners are responsible for execution of the strategy
  • Strategy resulting from the planning process is a fully developed one which should be applied and implemented in detail

Planning school models commonly operate four basic hierarchical concepts: objectives, budgets, strategies and programs (Minzberg and Ghoshal 23). Construction of clear organizational objectives is one of the necessary elements of virtual every planning model. However, the connection between the four hierarchies appeared to be not obvious, and often the very idea of strategy is difficult to figure out on the process of planning and implementation. There is a variety of models suggesting different approaches to address this issue, but the choice between these models can be a complicated decision as well.

Comparison of two schools

First of all, design school allows to create and formulate unique strategies while planning school leads to the formation of generic strategies, unless the set of techniques does not incorporate uniqueness. The models of design school are better addressing the issues of uncertainty, but provide less flexible reaction to rapid changes of the environment. While according to the philosophy of design school, effective strategy is to a certain extent a matter of creativity and success, rationalistic approach of planning school allows to reshape the strategy and select the appropriate course of action in a more certain way in case or emergency. However, if the environment is volatile with a large part of uncertainty, using approaches of planning school might be really difficult.

Another significant difference is the role of CEO: while in the design school approach CEO or top management are the only structure responsible for shaping the strategy, in the planning school approach the responsibility is shared between CEO, planners and control institutions.

Both schools have some axioms at the background. Design school suggests that the results of SWOT analysis or other similar analysis truly reflect the reality, and planning school suggests that there exist clear organizational goals and objectives, and that they are correctly chosen.

Thus, both schools have their advantages and disadvantages, and in my opinion, the truth is somewhere in between these approaches. Indeed, in predictable and stable environments planning school should work best, while for volatile and rapidly developing environments the approach of design school will be the most appropriate solution. The task of an effective manager is to be aware of these two approaches and to be able to select the correct position for every situation.

 

References

Mintzberg, H. The rise and fall of strategic planning. Pearson Education, 2000.

Minzberg, H. and S. Ghoshal. The strategy process: concepts, contexts, cases. Pearson Education, 2003.

Rickards, T. Creativity and the management of change. Wiley-Blackwell, 1999.