Moving toward emergent strategy: slowly, if at all

The conventional thinking about strategy and its role in the conduct of business has slowly started to change as a result of the shift to a new economy, the postnormal. But it hasn’t gone very far, except in a small segment of businesses, because the control of strategy is seen as the means to effectively manage the business in a top-down fashion, while theoretically giving more autonomy in the execution of strategy to individuals. And in this way, management seeks to continue its dominance over strategy, as a centralized set of activities used to control the business: its direction, goals, and increasingly embedded directly into the values at the core of the organization’s culture.

Note the recent decision of HP’s CEO, Meg Whitman, to curtail the broad practice of remote work this week, saying that she needed to have “all hands on deck” to accelerate the culture building she’s attempting there, trying to bake in a New HP Way (see HP’s Meg Whitman follows Marissa Mayer’s lead: All Hands On Deck).

Henry Mintzberg’s Deliberate versus Emergent Strategy

Henry Mintzberg is one of the best-known advocates for the transition away from what he called deliberate strategy formulations and execution. He condensed the notions of top-down strategy formation, referring to the “design school” approach, where the CEO — or CEO and a small cadre of elite planners — applied a process of “creative design”, not grounded in science or experimentation. And the design school model is based on complete formulation of the strategy prior to execution, which piles up some serious assumptions:

Henry Mintzberg, The Design School: Reconsidering the Basic Premises of Strategic Management

Behind the premise of the formulation-implementation dichotomy lies a set of very ambitious assumptions: that environments can always be known, currently and for a period well into the future, in one central place, at least by capable strategist there. To state this more formally, by distinguishing formulation from implementation, the design school draws itself into two questionable assumptions in particular: first, that the formulator can be fully, or at least sufficiently, informed to formulate viable strategies, and second that the environment is sufficiently stable, or at least predictable, to ensure that the strategies formulated will remain viable after implementation. Under some conditions at least, one or the other of these assumptions proves false.

As Mintzberg points out — in this and other works — those assumptions may have worked in the ’70s and earlier, and to some degree may still have played a role even later. But today there is no doubt that all of these assumptions are now broken. There is far too much going on for a single person — even a Jobsian brainiac, or a Meg Whitman — to comprehend all of the major trends impacting businesses, and things are changing so quickly that the two-step process of formulation followed sequentially by execution yields stumbling, not graceful choreography. And the rate of change has increased to the point of chaos: it’s almost impossible to counter risks because everything is risky when everything is unpredictable. (This is why so much money is sitting outside the traditional areas of investment at the present time: the investors can’t find low-risk investments.)

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Mintzberg also provides a useful way to think about alternatives to deliberate strategy, which he characterizes as emergent strategy. The fundamental distinction? Instead of direction and control, emergent strategy is oriented toward “strategic learning”:

Henry Minzberg, Of Strategies deliberate and emergent

[…] The whole question of how managers learn from the experiences of their own organizations seems to be fertile ground for research. In our view, the fundamental difference between deliberate and emergent strategy is that whereas the former focuses on direction and control-getting desired things done, the latter opens up this notion of ‘strategic learning’. Defining strategy as intended and conceiving it as deliberate, as has traditionally been done, effectively precludes the notion of strategic learning. Once the intentions have been set, attention is riveted on realizing them, not on adapting them. Messages from the environment tend to get blocked out. Adding the concept of emergent strategy, based on the definition of strategy as realized, opens the process of strategy making up to the notion of learning. Emergent strategy itself implies learning what works: taking one action at a time in search for that viable pattern or consistency. It is important to remember that emergent strategy means, not chaos, but, in essence, unintended order. It is also frequently the means by which deliberate strategies change. [stress mine.]

Mintzberg describes a gradient ranging from deliberate through various degrees of emergence. For example, he describes “umbrella strategies”:

Leaders who have only partial control over other actors in an organization may design what can be called umbrella strategies. They set general guidelines for behaviour-define the boundaries-and then let other actors manoeuvre within them. In effect, these leaders establish kinds of umbrellas under which organizational actions are expected to fall-for example that all products should be designed for the high-priced end of the market (no matter what those products might be).

When an environment is complex, and perhaps somewhat uncontrollable and unpredictable as well, a variety of actors in the organization must be able to respond to it. In other words, the patterns in organizational actions cannot be set deliberately in one central place, although the boundaries may be established there to constrain them. From the perspective of the leadership (if not, perhaps, the individual actors), therefore, strategies are allowed to emerge, at least within these boundaries. In fact, we can label the umbrella strategy not only deliberate and emergent (intended at the centre in its broad outlines but not in its specific details), but also ‘deliberately emergent’ (in the sense that the central leadership intentionally creates the conditions under which strategies can emerge).

Mintzberg’s different degrees of freedom are summarized in this table, including uncontrolled emergent strategy:

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I intend to write up a follow-up post to this, mapping Mintzberg’s types of strategies against the archetypes in the 3C psychodynamic model of business that I’ve been working on (see The future of work in a social world: part 1 and part 2). For example, I believe that the consensus style in Mintzberg’s table lines up with the collaborator style of company culture, the entrepreneurial lines up with an entrepreneur culture, and a combination of umbrella and unconnected types of strategy is the sort I’d expect in a cooperator culture.

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But People Are Still Pushing The Old, Top-down Strategy Model

Despite these trends, even people who you’d think would know better are still pushing the old thinking about strategy. In a post entitled Developing a more open and collaborative culture, Torben Rick posted this diagram, even while supposedly making the case for loosening top-down controls:

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He quotes an IBM report, which may make this diagram more understandable:

Openness puts a premium on corporate culture: As CEOs ratchet up the level of openness within their organisations, they are developing collaborative environments where employees are encouraged to speak up, exercise personal initiative, connect with fellow collaborators, and innovate. Equally important, CEOs recognize the need for organisational values and a clear sense of purpose to guide decisions and actions as some formal controls loosen.

So, the diagram might be interpreted differently than it looks: the top-down, deliberate strategy is being deemphasized as more effort is going into cultural norms. But the diagram would be better replaced with Mintzberg’s diagram of an umbrella approach, if that’s what is intended here, where the framework set by the company constrains the independent strategies of individuals and groups.

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But I bet that’s not really what is going on. My bet is that Rick is still convinced that strategy needs to be top-down, even today, and that a grudging relaxation of tight controls at the activities level of his Guiding Path would be offset by a tightening at the Behaviors level of the Driving Path. I don’t see any strategic learning going on, or any feedback from people’s activities back to strategy formulation.  This is the design school thinking of the 1950s, all over again. That’s not progress: it’s the wayback machine.

A Final Note

I am not a fan of the Fail Fast oversimplification of what goes on in innovative companies. If a company is organized around deliberate top-down, design school strategy formulation and execution then failing fast doesn’t get you where you want to go. Alternatively, when a mindset of experimentation and strategic learning dominates, over time, new strategic opportunities emerge, are tested, and can lead to greater degrees of cooperation and consensus. But simply running through top-down strategy formulation and execution, serially, is still way too slow, and does not take advantage of the parallelism and diversity possible in less-controlled strategy regimes, where more than the CEO and a small number of the elite are engaged in strategic play, to the exclusion of others.