Mintzberg's 5P's of Strategy
Strategy has been used implicitly in different ways even if it has traditionally been defined in only one. Explicit recognition of multiple definitions can help people to man-oeuvre through this difficult field. Mintzberg provides five P's of strategy:
1) Plan Strategies :
A plan is probably the way in which most people use the word 'strategy. This tends to imply something that is intentionally put in train and its progress monitored from the start to a pre-determined finish. Some business strategies follow this model. 'Planners' tend to produce internal documents that detail what the company will do for a period of time in the future (say five years). It might include a schedule for new product launches, acquisitions, financing (i.e., raising money), human resource changes, etc. Planning is something that many managers are happy with, and it's something that comes naturally to us. As such, this is the default, automatic approach that we adopt-brainstorming options and planning how to deliver them.
2) Ploy Strategies :
A ploy is generally taken to mean a short-term strategy. It lends to have very limited objectives and it may be subject to change at a very short notice. One of the best examples of a ploy strategy is that employed in a football match. If the opposing team has a particularly skillful player, the team manager may use the ploy of assigning two players to mark him for the duration of the game. However, this tactic will only last for one game-the next game will have a completely different strategy. Furthermore, the strategy will only operate for as long as the dangerous player is on the pitch. If he is substituted or gets injured, the strategy will change mid-game. Mintzberg describes a ploy as "a manoeuvre intended to outwit an opponent or competitor". He points out that some companies may use ploy strategies as threats.
For example, they may threaten to decrease the price of their products simply to destabilize competitors. A boss may threaten to sack an employee if a certain performance standard is not met - not because the boss intends to carry out the threat, but because he wants to effect a change in the subordinate's attitude.
3) Pattern Strategies :
A pattern of behavior strategy is one in which progress is made by adopting a consistent form of behavior. Unlike plans and ploys, patterns "just happen" as a result of the consistent behavior. On a simple level, small businesses such as scrap dealers follow pattern strategies. They are unlikely to produce elaborate plans - they simply buy as much scrap metal as they can. If there is a batch of old scaffolding, then they buy it up without thinking about it. However, they would not buy old plastics because that would be outside their pattern of business behavior. Eventually, following this consistent behavior makes the scrap dealer a wealthy person a successful strategy. Such patterns of behavior are sometimes unconscious, meaning that they do not even realize that they are actually following a consistent pattern. Nevertheless, if it proves successful, it is said that the consistent behavior has emerged into a success. This is in direct contrast to planning behavior.
4) Position Strategies :
A position strategy is appropriate when the most important thing to an organisation is how it relates to or is positioned with respect to its competitors or its markets (i.e., its customers). In other words, the organisation wishes to achieve or defend a certain position.
For example, in sports, when a new boxing champion is crowned, his only objective is to remain the champion. He wants to retain his superior position. Strategy is also a position - specifically a means of locating an organisation in an "environment". By this definition strategy becomes the mediating force or "match" between organisation and environment, i.e., between the internal and external context.
5) Perspective Strategies :
Finally, strategy can be seen as a perspective - its content consisting not just of a chosen position but also of an ingrained way of perceiving the world. Strategy in this respect is to the organisation what personality is to the individual. What is of key importance is that strategy is a perspective shared by members of an organisation, through their intentions, actions or both. In effect, when we talk of strategy in this context, we are entering the realm of the collective mind individuals united by common thinking or behavior (or both). The choices an organisation makes about its strategy rely heavily on its culture - just as patterns of behavior can emerge as strategy, patterns of thinking will shape an organization's perspective, and the things that it is able to do well.
For example, an organisation encourages risk taking and innovation from employees might focus on coming up with innovative products as the main thrust behind its strategy. In contrast, an organisation that emphasizes the reliable processing of data may follow a strategy of offering these services to other organizations under outsourcing arrangements.
What is Deliberate and Emergent Strategy ?
Mintzberg and Waters have defined down five types of strategies in their model emergent strategy, intended strategy, deliberate strategy, realized strategy and unrealized strategy. Some of them are as follows :
1) Emergent Strategies :
Emergent strategies are responses or reactions from the organisation to unexpected problems and opportunities that arise in the firm's external environment. These occur typically at the implementation stage of the strategy, i.e., at the business unit level rather than the corporate headquarter level. In organisation, take place with the absence of intentions.
2) Realized Strategy :
Realized strategy is the combination of the emergent strategy and the intentions of the organisation. This strategy ca be realized with force of reference from the external environment.
3) Intended Strategy :
Intended strategy is a strategy which is framed by the top management of the company. This is often the end result of the process of negotiation, bargaining and compromise involving different interest groups and individuals of an organisation. Mindzberg and Waters say that the realized strategy is the actual strategy implemented by the organisation and only 10-30% of the intended strategy is realized by the organisation.
This model is best viewed as a process especially if the factor of time is taken into consideration. The model clearly shows that the realized strategy affects the intended strategy with the passage of time. This implies that the current strategies that the firm employs will impact its future strategies.
Organizations can be classified into two extreme types of strategies - they can either be deliberate strategy or emergent strategy. Every organisation specifically has one of the two types of strategies involved in their process. For being a deliberate organisation, it should have clear intentions and relative level of details. Whereas, for applying emergent strategy, the organizations should be consistent in their actions over time but they do not have any intentions.
What are Mintzberg's Different Types of Strategies ?
In the real world, it is very difficult to find organizations which belong to these two types. But according to Mintzberg and Waters there are many other strategies other than these two strategies that are much common nowadays. Mintzberg and Waters have classified those in eight types :
1) Planned Strategy :
Under this strategy, the organisation have clear cut intentions and a control system. The strategy is led by a leader with clear intentions and it is the duty of the manager to transform those intentions into actions with minimal or no changes. A planned system is created so that the actions are followed in the same manner as intended.
For this strategy to be successful the external environment of the organisation needs to be very stable and predictable. In such an environment, the organisation can employ large number of resources and adopt a rigid command style of work pattern. A good example of a planned strategy is the mining industry.
2) Entrepreneurial Strategy :
This strategy is very much planned but also has a little scope for emergent strategies. The owner has direct and substantial control over the business and its vision and direction are dominant in nature. This strategy is mainly applied in new ventures and businesses. For example, several new startups in areas like technology and e-commerce. Unlike, a planned strategy the intentions are not so clearly laid out in an entrepreneurial strategy. However, the leader the superior authority and organisation is responsive due to which strategy remains deliberate. The strategy evolves from single person and therefore is liable to sudden changes and transformation. As a result, the entrepreneurial strategy is more adaptable than a planned strategy. The adaptation and emergent strategies are not possible by definition. In a planned strategy, articulation of the strategy makes it more rigid than an entrepreneurial strategy.
3) Ideological Strategy :
The ideological strategy originates from a shared vision in an organisation - where the organisation collectively believes in certain goals and objectives. This strategy is overt and articulated in nature which helps one to perceive intentions and the results are deliberate. It forms a collective vision constituting all the members of the organisation unlike planned or entrepreneurial strategy which are individual centric and passive in nature. Since the ideological strategy has a collective vision; it becomes difficult to make changes in the strategy as it may lead to several changes in the mind-sets of all individuals the organisation. It is also closely linked with the organisational culture. Any attempt to change it therefore leads to a great deal of resistance from the people to change. Mintzberg and Waters have not been able to identify any such organisation which has such ideological strategy.
4) Umbrella Strategy :
Based on this strategy Mintzberg and Waters follow the condition of flexible control over the members of the organisation and in some cases over the environment. A leader also has partial control over the members of the organisation. Under this strategy, there are general for conduct. pre-determined boundaries and other members who can manoeuvre within them. Within these boundaries, the members are free to express themselves without much control. The strategies are therefore emergent within the boundaries set by the leader. There is a clear vision which is shared by the leader with the organisation and the leader also sets strategies for the organisation. This strategy is neither deliberate nor emergent; rather, it is both. In an umbrella strategy, the leader not only articulates the vision but also the end objective of the organisation.
For example, NASA in 1960s had a definite goal of sending a man to the moon. For this several strategies were emerged and number of problems was solved by different specialists.
5) Process Strategy :
Process strategy is parallel to umbrella strategy. In this type of organisation, the members need considerable autonomy to decide on strategies to achieve their common goal. Because of which the environment is volatile and unpredictable. In this strategy, the leader controls the strategy indirectly by deciding on the process that has to be followed while making the strategy. The elements of the strategy can differ from time to time. Therefore, in such organizations the strategy can be both emergent and deliberate at times. In other words. leadership designs the process or systems from which other patterns of strategies are developed.
6) Unconnected Strategy :
The unconnected strategy is the least complex of all strategies. In this, every part of the organisation which could be a sub unit or an individual can develop its own strategy without any relation to what others are doing in the organisation. There is no central decision maker who forces his thoughts over other members the organisation. In that way, the intentions are not so well-defined and the strategy is very clearly emergent. However for the sub units, their strategies can be considered deliberate or emergent while for the organisations as a whole, the strategy remains emergent.
7) Consensus Strategy :
A consensus strategy is emergent in nature and is characterized by the lack of intentions. In this, the various members of the organisation agree upon a common pattern or strategy and this becomes pervasive to the organisation. This does not require any central direction or control. The consensus strategy evolves from a common understanding between the various members of the organisation and this leads to the evolution of a strategy which works for the organisation in its environment. This common strategy occurs through consensus of all the members of the organisation and not through a process of intentions shared by top management. The essence of this strategy is its collective actions and individual intentions.
8) Imposed Strategy :
An imposed strategy emerges from outside the organisation and is imposed on the organisation. In this, the external environment forces the management of the company to adopt a particular strategy. Here, an external group can directly impose its decisions and strategies over the organisation. It mainly occurs when a company takes over another company.
For example, when Parle sold its Thums up brand to Coca Cola and Coca Cola imposed its marketing and sales strategies over Thums Up brand. The organisation has to make a choice between determinism and free choice. The environment builds boundaries around organisation's performance just like the top management does under umbrella strategy. No choices are available for the organisation and the environment rarely opens up with all the options available.
These eight strategies from the basis of Mintzberg and Waters theory. Their theory says that there are not many companies which belong to the two extremes of strategies. Most companies follow one of these eight strategies.