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Academy ol Management Executive. 2004, Vol. 18, No. 2
The future shape of strategy:
Lemmings or chimeras?
Stephen Cummings and Duncan Angwin
Executive Overview
Despite revolutionary claims about the changing shape of organizations and strategy,
the predispositions of executives are often framed and limited by the structures assumed
by strategy’s foundational works of the 1960s. These works emphasize top-down planning,
generic linear processes, simple either/or choices, and singular outcomes. We argue that
there is a need to evolve these mental frames to better enable executives to appreciate
how today’s firms can compete more effectively through individualized approaches that
seek both economies of scale and unique identities in the marketplace. This evolution
necessitates a new framework that can handle complex, multi-dimensional processes.
Such a generic framework would conceptualize the need to simultaneously customize
products and services for individual consumers while trying to reduce costs through
efficient production and service provision. In working with executives in Europe and
Australasia, we have drawn upon the chimera, a creature with a single body and
different formidable heads operating on many fronts, as an analogy for the firm
confronting numerous, quite different, and often paradoxical challenges. The chimera has
inspired us to create a new framework: the Value Chimera—a multi-faceted, multidimensional means of assessing how firms can manage their value-adding processes to
target multiple customer groups in complex business environments.
Organizations are said to have changed dramatically in shape and configuration, but our experience in working with executives suggests that this
proclaimed revolution in form has not greatly
changed executive preconceptions or views on
strategy and how firms add value.
In response to this gap between theory and practice, we propose a more evolutionary change: a
framework that retains much of the strength and
language of classic strategy frameworks, while enabling managers to respond to a changing business environment. This framework builds upon the
classic concepts behind the generic value chain
but enables highly individualized renditions. It
picks up on ideas relating to the resource-based
view of the firm and networking resources to create
inimitable capabilities but in a way that enables
people to diagram and communicate individual
networks and plot how resources should be allocated. And in a way that does not view the organization as a unitary body with one competitive
advantage but as a multi-dimensional body with
different distinctive capabilities, resources, and
thus competitive tensions, within. It enables an
understanding of key strategic relationships but
without privileging those at the top, bottom, or
middle of an organization. It can show how big
companies can be nimble or how firms can effectively combine different cost or differentiation
strategies without treading on their own toes or
compromising core competencies. In a post-corporate world, where the fragmentation of conventional forms may appear to leave little to hang a
strategy on, it provides a way of communicating
complex but workable strategies. We call this
framework the Value Chimera, a value-adding
beast with a single body but many different heads.
Before we introduce the Value Chimera and attempt to shift conventional views, we should pause
for thought to consider why views of structure and
strategy are so little changed in practice despite
great revolutions in theory. It seems that the problem is not so much generating new ideas but creating enough of a space for them to take root. For
this to occur we must begin to understand what
these preconceptions are, with regard to the shape
21
May
Academy of Management Executive
22
of Strategy, and how deeply they are ingrained. As
the French philosopher Michel Foucault asserted:
“To free us from what we often unwittingly think,
thus enabling us to think differently, we must first
consider the assumptions granted us by history.”‘
1
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management pro(;ess
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Conventional Shapes of Strategy
When we think of the history of strategy, we tend to
see our founding fathers as Alfred Chandler
and Igor Ansoff. Chandler developed strategy’s
foundational definition: “The determination of the
basic long-term goals and objectives of an enterprise.” This definition, when combined with Chandler’s claim that “Modern business enterprise is
easily defined.. .it contains many distinct operating units and it is managed by a hierarchy of
salaried executives” sets our view of the relationship between organization and strategy. Chandler
illustrated this view at the beginning of his masterworks Strategy and Structure and The Visible
Hand (Figure 1).2
FIGURE 1
Chandler’s depiction of the modern organization
Ansoff consolidated this generic shape. He argued that the only framework available for executives in his day w^as the micro-economic model of
the firm. This model saw organizations turning
resources into outputs through a production function and assumed that managers manipulated this
function to maximize efficiency. Ansoff built upon
this model, adding a layer called “management
process” (Figure 2) and then outlining three distinctive decision areas: administrative or tactical
(2), operational (3), and strategic (1). He defined
strategic action as related to linking the whole
organization’s capabilities to its environment.^
This is carried out by the “men at the top”—those
best placed to gain a rational, objective, or global
view, then forecast and represent changes in the
environment and fit the organization to the environment.^ R. N. Anthony followed suit. He published
Planning and Control Systems in 1965, which described the ‘management triangle’ (Figure 3).
The influence of Chandler, Ansoff, and Anthony’s shapes can be seen in textbooks that now
logistic process
products
services
FIGURE 2
Ansoff’s development of strategy
(Source: Figure 1 from Igor Ansoff. 1969. Business Strategy.
Harmondsworth: Penguin. Adapted figure, with levels superimposed, from Stephen Cummings. 2002. flecreafing Strategy. London: Sage.)
speak of a hierarchy of strategy from separate corporate to business to functional levels, of a hierarchy of control from strategic to tactical to operational levels, and that depict a strategy process
beginning with vision at the top and ending with
implementation at the bottom.
The design of the conventional business degree
curriculum reinforced these conventions. In 1959
the Ford and Carnegie reports concluded that business school programs should follow a generic form
with economics as the central stem to which other
prescribed business courses would be related.
Having outlined this plan, they recommended the
development of “capstone courses” that would
“pull together what was learned in the separate
business fields.”^ These tips of the business
school’s educational triangle became courses in
strategy. As Kenneth Andrews noted in 1969, “The
establishment of Business Schools provided the
basis for the education of strategic managers, and
the divisionalized structure of organizations provided the form for them to work within.”^
Thus strategy came to be regarded as an exercise carried out by those at the top, as separate
from and preceding organizational action in a linear-hierarchical manner. (Even Henry Mintzberg’s
supposedly revolutionary view of organization and
strategy, developed in his 1983 book Structure in
Fives, was still premised on a triangular form with
a broad operational base, an administrative central stem, and a strategic apex.)” Strategy, in a
sense, involved looking down from this apex so as
to see the big picture, developing the most accurate objective grid or map of the environment possible, and then orienting the company. A plethora
of generic frameworks were developed to guide
this gridding (e.g., the Generic Strategy Matrix,
2004
Cummings and Angwin
23
Areas of concern
Emphasis on
planning
Broad issues and
strategies
Strategy
implementation and
policies
Emphasis on
control
Operational
decisions
Operations and
procedures
FIGURE 3
“The Management Triangle”
(Source; Based on R. N. Anthony. 1965. Planning and Control Systems. Boston; Harvard University Press).
Ansoff’s Box, directional policy matrices). Generally, these frameworks encourage either/or choices—between, for example, a focus on cost reduction or differentiation; or between divestment or
acquisition—or they offer a discrete range of elements that may be applied to analyze any environment, industry, or company.
The most popular and prevalent means for depicting how firms add value in this context is Michael Porter’s Generic Value Chain (Figure 4). This
depiction not only fulfills a similar function to
those grids listed above but also mirrors the conventional shapes outlined in Figures 2 and 3. It
duplicates the micro-economic, input-processoutput, view of the firm and its underlying emphasis on efficiency (as per Figure 2) and lays tactical
and strategic functions atop operational ones (as
in Figures 2 and 3).
The Revolution Against the Conventional Shapes
of Strategy
While the images above may have been well
suited to the corporate landscape of the 1960s and
1970s when they were developed, are they still
appropriate at the beginning of the 21st century?
Many think not. The past decade has witnessed
strong claims for overthrowing the conventional
beliefs outlined in the preceding paragraphs.
The resource-based view of the firm emphasizes
viewing organizations in terms of their distinctive
constellations of tangible and intangible resources,
the sum of whose parts create unique and often in-
imitable capabilities.^ Christopher Bartlett and
Sumantra Ghoshal have similarly encouraged us to
see each organization as unique and to treat it as
such.^ In keeping with this idea, a recent paper by
Mintzberg bemoaned the inadequacy of seeing organizations in terms of triangular organization charts,
promoting instead the drawing of Organigraphs: individualized picture-maps that depict what each organization actually does to add value. i°
The recent Special Issue on “Services: Enhancing Effectiveness” in The Academy of Management
Executive provided a range of ways of seeing strategy differently, so as to better organize according
to customers’ motivations and needs.” Others
have emphasized the importance of seeing strategy and knowledge creation in this regard as
drawing on flexible hub-and-spoke type arrangements.’2 More naturalist analogies have also been
made, with starbursts, shamrocks, and spider
webs among the favorites.^^ Authors like Gerry
Davis see this fragmentation as one of the reasons
contributing to a decreasing role for conventional
corporations in our economies and the emergence
of a more chaotic post-corporate future. ^’^
Others have challenged our understanding of
where strategy really comes from, encouraging us
to see it as something that emerges out of day-today microinteractions between employees and
customers, employees and suppliers, or employees
and other employees, rather than the long-term
plans that result from the rational forethought and
analysis of those at the top.’^ Likemindedly, advocating turning organization charts on their heads
Academy of Management Executive
24
FIRMilNFRASTRUCTdRE
HUMAN RESOURCE MANAGEMENT
R
E
S
O
U
R
C
E
S
May
ww
\\
\
TECHNOLOGY DEVELOPilENT
^PROCUREMENT;
INBOUND
LOGISTICS
OPERATIONS
OUTBOUND
LOGISTICS
MARKETING
& SALES
SERVICE /
o
u
T
P
U
T
S
/
A/
MARGIN
FIGURE 4
Porter’s ‘Generic Value Chain’
(Source: reprinted with the permission of The Free Press, A Division of Sinion & Shuster, Inc., from COMPETITIVE ADVANTAGE:
Creating and Sustaining Superior Performance by Michael E. Porter. Copyright © 1985, 1998 by Michael E. Porter, triangle superimposed).
has become commonplace.^^ Moreover, others still
have highlighted the pivotal role that middle managers, previously maligned as an unnecessary and
wasteful layer, play in strategy development as
“wind-readers,” “mid-wives,” and “amplifiers of
knowledge.””’
Going against some classic strategy assertions,
Bartlett and Ghoshal and others have outlined why
firms will no longer be able to survive unless they
are able to both reduce costs and differentiate,
globalize and localize, centralize and decentralize.’^ And a recent California Management Review
forum concluded that the most important strategic
capability is “agility,” the ability to move seamlessly between different approaches.’^ Even corporate giants, previously presupposed to be lumbering elephants, now aim to be nimble.^o
Firms are told to bring the customer
“inside the tent.”
There are new arguments against seeing what
firms do in terms of value chains where customers
passively take what is given off the end of the
chain. Instead value-webs or value constellations
are spoken of, and firms are told to bring the customer “inside the tent.” Furthermore, researchers
who have looked at the value of tacit organizational knowledge have encouraged us to appreciate the joys of “slack” rather than using the analogy of the chain and seeing how excess can be
trimmed.^’
Table 1 compares the conventional approaches
outlined in the previous section with the new imperatives described above.
Only a Theoretical Revolution?
But despite all this good work in theory, our experience suggests that most executives and students
of management still see the shape of strategy in
terms of the conventional approaches outlined in
the left-hand column of Table 1.
Asking people to draw words, as in the game
Pictionary, is a great way of surfacing shared predilections. When we give the word ‘organization’ to
our MBAs or members of executive programs and
ask them to draw it (as in a game of Pictionary), we
almost always end up with shapes like that shown
in Figure 1. Despite strategy gurus expending a
good deal of energy deriding machine bureaucracy and advocating more democratic constellations and webs, almost everywhere we have run
this exercise (in countries as diverse as England,
Ireland, Australia, Belgium, France, Sweden, and
New Zealand), abstract hierarchies dominate the
minds of around eighty per cent of people trying to
express organization. This response has remained
unchanged over the past fifteen years.
Having asked people to draw organizations and
having reflected their images back to them, we
ask: “If this is what organization looks like, where
does strategy come from and what direction does it
take?” Almost without exception they point to the
top of their triangles and point downwards.
Ask most MBA students how many forces there
are acting on an industry and most say five (because of Michael Porter’s Five Forces Model). Ask
practicing managers in executive courses to draw
how value is added and most will outline the value
chain. A recent Haivaid Business Review paper
entitled “Do You Have a Well-Designed Organiza-
2004
Cummings and Angwin
25
Table 1
Proposed Revolutions in the Shape of Strategy
From old conventions
—
To new imperatives
Organization structure i s . . .
generic triangular hierarchies depicted
through organization charts
distinctive individualized forms depicted
through unique organigraphs
Strategy is about…
long-term plans based on firm
competencies
agility, responsiveness to customer needs
Strategy comes from…
top-down planning and rational analysis
emergent activities that can come from
any part of the firm
Key personnel are…
senior executives and their consultant
advisors
—
employees who interact directly with
customers, suppliers, etc.; middle
managers
The nature of strategic choice is.
generic, either/or, e.g., between cost or
differentiation; global or local
individualized, attempt to achieve both
local/global, cost/differentiation, etc.
The underlying measure of
strategy is…
efficiency
knowledge and nimbleness which
requires organizational slack
Value added is depicted…
via an expression of the generic value
chain
fluid and flexible value webs and value
constellations
tion?” was introduced with a simple graphic: a
triangle. Strategy texts continue to depict triangular hierarchies on their covers. It is an image that
still seems completely normal in these settings.22
Despite all the talk of starbursts, shamrocks, and
different individualized configurations, quite different predispositions remain.
What Is Stopping the Revolution in Executives’
Minds?
What is stopping us from replacing conventional
shapes and understandings of strategy and how
firms add value? Is it that the conventional views
of strategy and organization are necessarily foundational or innate? The fact that 20 per cent of the
respondents in our surveys do draw something
other than a triangular hierarchy, such as human
bodies, families and networks, suggests not. Conventional shapes are learned. Ask children to draw
organization, and it is hard for them to know what
to do—unless you explain the concept to them first.
While it is impossible to prove cause and effect,
our experience suggests a number of interrelated
factors that work against overthrowing these conventions and the homogeneity with which most
executives see organization and strategy. First, the
curriculum defined in 1959 has now spread worldwide with only minor variation.^^ Subsequently,
the last 20 years have witnessed the rise of a transnational body of managers who have done an MBA
and subsequently speak a converging corporate
language. Hence, the value chain is the value
chain and an organization is a triangular hierarchy in any manager’s language. Indeed, the ma-
jority of those we surveyed who draw different
pictures come from non-managerial backgrounds.^^
Second, we still use the ideas of Chandler, Ansoff, and Porter as foundations for the way we
teach strategy. And how much time in our MBA and
executive development programs do we devote to
a critical reflection upon the context in which they
were developed? There is certainly some truth in
the idea that those who do not question history are
destined to repeat it.
Third, the increased intensity of empowerment,
accountability, and shorter reporting cycles is
making managers increasingly risk-averse. One
can see this in the adoption by many of best practice as a strategy-making tool. Under-pressure
managers modeled company performance against
best-in-class competitors, as this was easy to understand, easy to measure, and enabled clear targets. It gave an aura of being ambitious but not too
risky. However, studies now show that widespread
benchmarking in an industry will eventually lead
to convergence of products and services, customers seeing price as the main differentiating factor,
and prices (and margins) trending downwards. Indeed, associating this sort of risk avoidance with
good management recently led Clayton Christiansen to claim that “Good management was the
most powerful reason [why leading firms] failed to
stay atop their industries.”^^ Similarly, sticking
with widely held shapes and frameworks is easier
than striking out with new, individualized conceptions or explaining seemingly paradoxical positions. As Warren Buffet puts it, “As a group, lemmings may have a rotten image, but no individual
lemming has ever received bad press.”^^
Academy of Management Executive
26
Finally, however, it is clear that managers cling
to conventional generic approaches because they
are useful to them. The approaches enable managers to analyze different cases, situations, and
scenarios and to make and communicate coherent
decisions.^’^ Indeed, a recent issue of this journal
contained an excellent retrospective assessment of
the continued impact and worth of Michael Porter’s
work. Despite revolutionary claims, many of the
underlying conventions still hold, in particular, the
notion that organizations must think abo …
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