Strategic learning rooted in emergent strategies

The literature on strategy formation can be classified into two schools of thought based on their underlying understanding of the nature of strategy: the planning school (Ansoff 1991, 1994) and the learning school (emergent view) (Mintzberg 1991, 1994a, 1994b). A purely planned strategy involves an explicitly articulated intention about the future, commonality of intentions among actors, and the exact execution of intensions as planned (Mintzberg & Waters 1985; Titus et al. 2011).

A purely emergent strategy, in contrast, is an ongoing social learning process where strategy is born and shaped by actions initiated by actors without any for-mal plan or intention to do so (Burgelman 1991; Mintzberg & Waters 1985; Titus et al. 2011).

The idea of emergent strategy originates from the extensive work of Mintzberg (1978, 1987, 1994a, 1994b, 1994c, 1994d) and his co-authors (e.g., Mintzberg, Ahlstrand & Lampel 1998; Mintzberg & McHugh 1985; Mintzberg & Waters 1982, 1985; Mintzberg, Brunet & Waters 1986, among others) and their critique of the traditional planning school of strategy. Mintzberg´s (1994b) work on the shortcomings or fallacies of traditional strategic planning has been so influential that it can be considered to have led to a reorientation of strategy research and launched a new era in strategic management (Wolf & Floyd forthcoming). Ac-cording to Mintzberg (1994d) the three main fallacies of traditional strategic planning are the fallacy of predetermination; the fallacy of detachment; and the formalization fallacy. The first weakness of the traditional strategic planning models relates to the “predict-and-prepare” approach of coping with the future (Mintzberg 1994d: 34). The main assumption behind traditional strategic planning is that plans can be created by analyzing and forecasting the future and that the postulated strategic situations are supposed to hold true even as the planning and

execution processes proceed. However, especially in fast changing industries, this is often not the case as opportunities emerge quickly and knowledge rapidly be-comes obsolete. This suggests that the most viable strategies might not be prod-ucts of detailed planning and execution but a process that captures the dynamic nature of strategy. Building on this idea, Mintzberg and Waters (1985) delineate between different types of strategy: emergent strategy, intended strategy, deliber-ate strdeliber-ategy, realized strdeliber-ategy and unrealized strdeliber-ategy, and argue that only a hand-ful (10–30 percent) of intended strategies (i.e., planned strategies) materialize as realized strategies (i.e., the actual strategy that is implemented) (Figure 2.). Fol-lowing this logic, the majority of intended strategies are unsuccessful and result in unrealized strategies. Consequently, the primary determinant of realized strategy is something that is not planned but emerges “at any time and at any place in the organization, typically through processes of informal learning more than ones of formal planning” (Mintzberg 1994b: 16). The conceptualization of strategy for-mulation as an emergent process allows an emphasis on strategic learning and makes it possible to give leeway for the organization’s ability to experiment (Ku-wada 1998; Lowe & Jones 2004; Mintzberg & Waters 1985). In the emergent strategy formation process, feedback loops, both negative and positive, play an important role. As shown in the Figure 2 the feedback from the realized strategies that have mostly emergent qualities, feed information back to the formulation of intended strategies and finally change the deliberate strategies of organizations.

Thus, Mintzberg and Waters (1985) emphasize that it is through emergent strate-gies that the managers and others in the organization change their strategic inten-tions.

Unrealized strategy

90-70 %

Feedback loop

Figure 2. Strategy formation in dynamic environments (adapted from Mintzberg & Waters 1985: 271)

The second fallacy relates to the planning school’s inclination to detach strategic planning from its execution. The danger here is that the separation of strategic thinking from strategic doing precludes the notion of learning from prior strategic activities. By enabling organizational members who have information current and detailed enough to shape strategies helps management to acquire insights and knowledge from customers, suppliers or competitors that would otherwise be un-attainable. The learning approach sees the process of strategy formation as inter-active; strategies only become what they are through social interaction, enact-ment, and reinterpretation. In other words, a strategy only becomes meaningful through the process of its acceptance and modification within the organization and acceptance cannot be enabled without organizational members being in-volved actively in the process (Lowe & Jones 2004). It is also important to note that emergence is not the result of the process of interactions but that it takes place during the process of interacting (Schindehutte & Morris 2009). In other words, strategy in dynamic environments is formed in a continual process of in-teraction rather than being characterized by separate planning and execution phases.

The third fallacy, the formalization fallacy, criticizes the notion found in tradi-tional planning that formal systems are superior to human systems in terms of information processing and decision-making and that strategy formation process-es could be formalized. The emergent strategy perspective seprocess-es that although larger amounts of data can be processed through formal systems effectively, tradi-tional planning ignores the role of learning as formal systems cannot internalize, comprehend or systematize information in the same creative way as people can (Mintzberg 1994d). Consequently, the dynamic needs of strategy-making includ-ing creativity and constant change that would be better accomplished informally deteriorate when the process is formalized.

In sum, the conceptualization of the strategy formulation as an emergent and evolving process allows an emphasis on strategic learning and enables researchers to give space to the organization’s ability to experiment. However, this is not to say that strategic planning is of no use to organizations. Instead, as Mintzberg and Waters (1985: 271) state “strategy formation walks on two feet, one deliberate, the other emergent”. Following this insight, in this dissertation the effective stra-tegic management in dynamic environments is seen as a balance between plan-ning that enables direction to realize intentions and emergence that enables strate-gic learning and responding to unfolding patterns in the industry. Building on this dual approach article 4 examines the interplay between planning and emergence in more detail.