Strategy

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IESE
UNIVERSITY OF NAVARRA

STRATEGIC THINKING:
STRATEGY AS A SHARED FRAMEWORK
IN THE MIND OF MANAGERS

Esteban Masifern*
Joaquim Vilà*

RESEARCH PAPER No 461
March, 2002

* Professors of General Management, IESE

Research Division

IESE
University of Navarra
Av. Pearson, 21
08034 Barcelona - Spain

Copyright © 2002, IESE
Do not quote or reproduce without permission

STRATEGIC THINKING: STRATEGY AS A SHARED FRAMEWORK
IN THE MIND OF MANAGERS

Abstract
Even though most academics, business people and consultants recognize that the purpose of strategy formulation can no longer be to generate strategic plans, critics of formal strategic planning offer little guidance on how to overcome its limitations and rarely address CEOs’ concerns about turning strategic vision into an operational reality. This paper proposes a managerial approach to strategic thinking and strategy formulation which takes both process and content issues into account. Strategic thinking is understood as a deliberate and creative process as well as the resulting state of mind. Strategy is presented as a shared framework which guides managers’ daily actions. The approach is developed in a way that attempts to respond to CEOs’ concerns regarding the need to manage by strategy in today’s rapidly changing environment. Key building blocks of the new approach to strategy formulation are presented. Some initial empirical tests provide support for this approach. The framework outlined here seeks to contribute to top management’s efforts to build a shared understanding of strategic issues and encourage actions at the front line which are consistent with the strategy pursued by the firm.

(*) (Under review) Managing Strategically in an Interconnected World, edited by M. A. Hitt, J. E. Ricart and R. D. Nixon, The Strategic Management Series, 1997 Volume, John Wiley and Sons.

STRATEGIC THINKING: STRATEGY AS A SHARED FRAMEWORK
IN THE MIND OF MANAGERS

1. Introduction
Whereas during the 1970s and 1980s many chief executives channeled their energies towards the development of a strategy for their companies and for individual business units, in the 1990s the emphasis has shifted to the search for sources of sustainable competitive advantage and ways of translating strategy into action. Progress in the strategic management field continuously sheds new light on the drivers of company performance, yet it is hard to claim that this has had any significant impact on the work of most practicing managers. A number of factors have been cited to explain why developments in strategic management are applied so slowly. Some authors (e.g. Prahalad and Hamel, 1994) refer to the excessive emphasis on analysis to the detriment of creativity and exploration. It is claimed that analysis inhibits creativity and precludes the chance to regenerate strategy. Others argue that most models and tools, even when presented as the definitive way of thinking about strategy, are actually applicable only in very limited settings (Coyne and Subramaniam, 1996). Still others suggest that the slowness in putting ideas on strategy into practice may be due to the artificial distinction between formulation and implementation. When it comes to incorporating strategy into management practice, one of the problems is the tendency to ignore organizational issues in strategy formulation. This is something that the defenders of the current state of practice (such as the deductive approaches of Planning, Programming and Budgeting systems during the 1960s and 1970s) tried to overcome, yet most failed as a result of political pressures to avoid loss of status and influence with firms. Also, until very recently academics have looked at company organization and structure in detail only at the time of implementing a strategy. In short, the source of the problem may have something to do with the way we approach the notion of strategy and the widespread tendency among scholars to separate...
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