Towards a Strategic Management and Decision Technology: Modern Approaches to Organizational Planning and Positioning

306 Pages·1989·22.615 MB·English

by  John W. Sutherland (auth.)

TOWARDS A STRATEGIC MANAGEMENT AND DECISION TECHNOLOGY
THEORY AND DECISION LIBRARY
General Editors: W. Leinfellner and G. Eberlein
Series A: Philosophy and Methodology of the Social Sciences
Editors: W. Leinfellner (Technical Universtiy of Vienna)
G. Eberlein (Technical University of Mwrich)
Series B: Mathematical and Statistical Methods
Editor: H. Skala (University of Paderborn)
Series C: Game Theory, Mathematical Programming and
Operations Research
Editor: S. H. Tijs (University of Nijmegen)
Series D: System Theory, Knowledge Engineering and Problem
Solving
Editor: W. Janko (University of Vienna)
SERIES A: PHILOSOPHY AND METHODOLOGY OF THE SOCIAL
SCIENCES
Editors: W. Leinfellner (Technical University of Vienna)
G. Eberlein (Technical University of Munich)
Editorial Board
M. Bunge (Montreal), J. S. Coleman (Chicago), M. Dogan (Paris), J. Elster (Oslo),
L. Kern (Munich), I. Levi (New York), R. Mattessich (Vancouver), A. Rapoport
(Toronto), A. Sen (Oxford), R. Tuomela (Helsinki), A. Tversky (Stanford).
Scope
This series deals with the foundations, the general methodology and the criteria, goals
and purpose of the social sciences. The emphasis in the new Series A will be on well
argued, thoroughly analytical rather than advanced mathematical treatments. In this
context, particular attention will be paid to game and decision theory and general
philosophical topics from mathematics, psychology and economics, such as game
theory, voting and welfare theory, with applications to political science, sociology, law
and ethics.
For a list of titles published in this series, see final page.
TOWARDS A
STRATEGIC MANAGEMENT
AND
DECISION TECHNOLOGY
Modern Approaches to
Organizational Planning and Positioning
by
JOHN W. SUTHERLAND
Virginia Commonwealth University, Richmond
KLUWER ACADEMIC PUBLISHERS
DORDRECHT / BOSTON / LONDON
Library of Congress Cataloging in Publication Data
Sutherland. ~ohn W.
Towards a strateglc management and declslon technology : ~odern
approaches to organlzatlonal plannlng and posltlonlng I ~ohn W.
Sutherland.
p. cm. -- (Theory and declslon llbrary. Serles A. Phllosophy
and methodology of the soclal sclences)
Includes lndex.
1. Strateglc plannlng. 2. Declslon-maklng. 1. Tltle.
II. Serles.
HD30.28.S9 1989
658.4·012--dc20 89-2696
ISBN-13: 978-94-010-6919-9 e-ISBN-13: 978-94-009-0953-3
DOl: 10.1007/978-94-009-0953-3
Published by Kluwer Academic Publishers,
P.O. Box 17,3300 AA Dordrecht, The Netherlands.
Kluwer Academic Publishers incorporates
the publishing programmes of
D. Reidel, Martinus Nijhoff, Dr W. Junk and MTP Press.
Sold and distributed in the U.S.A. and Canada
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In all other countries, sold and distributed
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P.O. Box 322, 3300 AH Dordrecht, The Netherlands.
printed on acid free paper
All Rights Reserved
© 1989 by Kluwer Academic Publishers
Softcover reprint of the hardcover 1s t edition 1989
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical
including photocopying, recording or by ailY information storage and
retrieval system, without written permission from the copyright owner.
For Alban, who for so many years
offered so freely the next best
thing to critical iru)piration -- her
uncritical affection.
FOREWORD
The focus in these pages is on what the modem management, decision and
system sciences can do to assist higher management authorities. For it is they
who are generally charged with the responsiblity for ensuring the overall
strategic 'readiness' of the organizations they serve ... this a measure of the
extent to which an organization is prepared to respond --in both a proper and
timely way-- to whatever opportunities and perils the world may hold in store.
Here then is the essence of the strategic management challenge. And here also
is the core of the problem for these pages. For as things now stand, science has
a great deal less to offer strategic decision-makers than it does their
subordinates at the middle-echelon or line levels of entetprise.
This is just another way of saying that all of us, practitioners, professionals
and academics alike, are better prepared to handle tactical or operational
challenges than strategic issues. The clearest evidence of this is that the
repertoire of currently available decision support instruments is still
monopol1zed by quantitative techniques that simply cannot comprehend the
essentially conceptual or 'notional' matters that are the stuff of true strategic
decision exercises. We might choose to pretend otherwise. But the absolute,
unarguable fact of modem managerial life is this grand paradox:
v
vi
The more sweeping and significant of the decisions taken within the
typical enterprise --those of strategic import-- will be the least likely
to benefit from any fonnal discipline or precision.
Everything that will be done in this book will be aimed at addressing this
paradox.
But it will be addressed from the perspective of the technician, i.e.: from the
view point of the management scientist rather than the management theorist.
And this may seem to present a paradox of another nature. For if it is true that
strategic decisions tum on matters of value, judgement and perspective, then
how might it be that they could fall into the province of the technician?
It will be many pages yet before we can attempt to provide any really
adequate answer to this question. But when it finally does appear, what we'll
be looking at is a strategic management technology centered around two
different but ultimately complementary sets of provisions:
a). Fonnal structuring conventions that are not intended to generate
solutions to problems, but rather provide analytical and procedural
frameworks to help strategic decision authorities tind a disciplined
route to solutions of their own devising. That is, the various
structured strategic management and planning/positioning platfonns
we'll be introducing are designed to assist strategic analysts and
decision-makers in organizing, displaying, evaluating and modifying
their "reasoning" about matters that are too empirically elusive to
admit to any sort of neat mathematical or statistical resolution.
b). But strategic matters are also too important to be left to casual
speculation or raw rhetoric. Hence the requirement for a set of
qualitative analysis techniques and a family of logical processing
facilities ... such intended to do for strategic decision exercises at least
some of what traditional quantitative analysis techniqes ,md data
processin facilities have been able to do for tactical and operational
decision exercises.
The path to be followed towards a strategic management technology may
thus take us through some generally ill-charted ground. And while it's a
reasonably long path, it's also reasonably straight. For this book has seven
chapters divided into three major parts, all hopefully following a fairly neat
elaborative progression of concept') and capabilities.
Particularly, the two chapters con')tituting Part I will try to give a detailed
indication of the rather unique perspective that the technician takes on the
vii
strategic management challenge. Central to this perspective, as will be argued
in Chapter 1, is that true strategic decision exercises take place over
qualitatively-disparate alternatives ... over choices that are 'different in kind'
rather than merely different in degree. 'This, in tum, suggests that strategic
management practice poses some very special requirements in terms of
analytical procedures and instruments relative to tactical and operational
decision exercises.
We'll then go on to elaborate and defend another critical aspect of the
technician's perspective on enterprise: Not all higher-management authorities
may be said to have 'strategic' decision responsibilities! Rather, it's mainly a
matter of the nature of the environmental/competitive context in which their
organization is resident. This then leads, in Chapter 2, to the definition of
several different approaches to strategic management under which
contemporary organizations may elect to operate. And as a critical corollary,
much discussion will be devoted to an indication of the conditions under
which each would become the preferred basis for the pursuit of organizational
"readiness" .
Part II will take us further into the matter of strategic management
technology. For there we'll be looking in some detail at the generation and use
of strategic pi arming/positioning structures, and most particularly the
following ostensibly state- of-the-art platforms:
Chapter 3: Structured Strategic Contingency Planning
" 4: Dynamic Strategic Planning/Positioning
5: Adaptive Strategic Management Protocols
For the most part, the technical initiatives and procedures that will be brought
out in these chapters will not be readily available for any other source. For
most are based on concepts that are not only of very recent origin, but which
have also been confined mainly to certain segements of the modem military
and intelligence communities.
In Part III we tum to a consideration of strategic analysis and decision
technology. And sadly, it will become apparent that even the best that can be
done with existing techniques is often not good enough. For in Chapter 6 we'll
look at how and why strategic decision exercises are so extraordinarily
susceptible to crippling confoundatiofiS ... to conditions that can frustrate or
even defeat any attempt to remain within the bounds of rationality that the
management and decision sciences can now provide. Hence our concern with
the prospect of a shortfall in strategic technology. It's the various symptoms of
this technical 'shortfall' again'>t which we'll target the provisions of a
viii
Strategic Analysis Protocol to be introduced in Chapter 7. This will bring our
inquiry to a close.
For those who might be thinking about joining in this inquiry, there's one
encouraging point to consider. Because strategic management and decision
support facilities will be more logical than algorithmic in nature --and more
qualitative than quantitative in inspiration-- the arguments raised in these
pages should be readily accessible even to those who are not familiar with the
intricacies of modern mathematical or statistical methods. True, you'll see
symbolic notations at various points in the text. But all are intended to make
the lines of argument we'11 be following simpler to track than would otherwise
be the case. Yet while nothing much is demanded of the reader in t~ way of
special technical preparation, the lines of argument we will be following will
at times get rather intricate. For success in strategic matters --as in love and
war-- may often depend on the tiniest turn of judgement and analytical nuance.
It should also be noted that, despite the pragmatic power of modern
structuring conventions and qualitative analysis initiatives, they are not
technical tricks. For in the strategic domain, there are really no reliable
substitutes for concerted intellectual effort. Strategic insights of worth in the
real world will be less likely to arise as speculative windfalls than to have been
hard won.
As for whom this work is intended, it is meant first of all for my academic
colleagues in the administmtive disciplines. The hope is that at least some of
the more speculatively-grounded conceptual and instrumental provisions
raised in these pages will be considered interesting enough to be posed as
items for entry into the management and decision science research and
development agendas. A second audience that might be interested in what's
said here would be those working professionals charged with actually carrying
out strategic analysis and planning activities ... or, indeed, providing any of a
wide variety of technical support services at the higher-echelons of
commercial, industrial, governmental or military enterprises. For the various
strategic planning/positioning structures that will be discussed are available to
serve as the centerpieces for the next-generation management support systems
that are now being designed to take advantage of advances in distributed
systems architecture and command/control COnfigurations.
And of course, by way of a third hoped-for set of readers, there are those
preparing to become strategic managers ... particularly graduate level
students in business or public administration, etc. For it's at the graduate-level
where students are expected to become engaged more completely with
higher-order decision issues. Moreover, graduate students will generally be
more familiar with the traditional, majorally non- technical literature on
ix
higher~management. And what we will be doin here is designed to
complement, not displace, advises from these perspectives. In this sense, our
volume will hopefully be seen as a useful addendum to courses on strategy
and policy, or the increasingly popular attempts at developing "capstone"
courses designed to convey an integrated perspective on organizational
management. Or it may serve as a stand~alone reference for classes that want
to focus on the science vs. the art of higher~management.
Finally, there is an attribution in order. For if there was any trigger that set
this book in motion, it was General Douglas MacArthur's compelling
expression of the ultimate purpose of any endeavors in the strategic domain:
Tell them that if! like, I can finish Leyte in two weeks. But I won't! I
have too great a responsibility to the mothers and wives in America
to do that to their men. I will not take by sacrifice what I can achieve
by strategy.
There is a handsome irony in the fact that it was MacArthur, an American
military commander, that perhaps best carried forward to our times the
classical European insight that strategic issues are not merely tactical issues
writ large. For he gave concrete moment to the realization that while strategic
and tactical initiatives may generally be viewed as woIking complements,
there are also times when it is absolutely crucial to see them as substitutes.
Indeed, the first test of MacArthur's practical genius was his instinctive
recourse to strategic wit as a means to compensate for his tactical
disadvantage in the earlier stages of his Pacific campaign.
But MacArthur's statement provides us with second and even surer test. For
when it came time to contemplate the taking of Leyte, he could if he wished
have expended assets instead of intellectual effort. There are, of course, many
men who owe their lives to his decision to forego force of arms in favor of
finesse. Besides this, it is perhaps a small thing to note that all that follows
here has been done in response to a great general's provision of of a sense of
mission to a minor technician. For while it is clear that an adequate strategic
management and decision technology still rests somewhere beyond our
immediate technical grasp, MacArthur's message is that it is equally clear that
we ought not be content to let it remain beyond our technical reach for very
much longer.
Midlothian, Virginia
January, .1989
CONTENTS
PART I: A Technical Perspective on
Strategic Management Requirements
CHAPTER 1: Sources of the Strategic Management
Challenge ........................................................................... 1
1.1 Distinguishing the Strategic Decision Domain ........ ..... ..... ..... ..... 2
1.2 The Strategic Focus on Organizational Positioning ............. ... ..... 13
1.3 Managerial Implications of Environmental
Complexity ..................................................................................... 15
1.4 Managerial Consequences of Competitive Intensity .... ..... ..... ..... 20
1.5 Contextual Determinants of Strategic Sophistication .................. 31
CHAPTER 2: Alternative Approaches to Strategic Readiness .......... 41
2.1 The Anatomy of a Strategic Planning Structure .......................... 42
2.2 Readiness Orientations and Strategic Management Modalities ... 50
2.3 Prescriptive/Goal-Driven Strategic Planning ............................... 51
2.4 The Sequential Strategic Planning/Positioning Platform ............. 59
2.5 A Brief on Contingency and Adaptive Strategic
Management ................................................................................. 68
PART ll: Modern Strategic Planning/Positioning Platforms
CHAPTER 3: Structured Strategic Contingency Planning ................ 83
3.1 Rudimentary Contingency Planning Concepts ............................ 84
3.2 Matrix-Based Strategic Planning Structures ................................ 88
3.3 Simple Strategic Tree Structures .................................................. 103
3.4 Strategic Threat Projection Networks .......................................... 108
3.5 Interactive Strategic Event/Response Sub-structures ................... 113