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5. Forelæsning – d. 23. september 2013. Strategisk ledelse. Lectures, autumn 2013. Introduction. Cybernetic systems and cognitive / human psychology is important for SCT key assumptions

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introduction
Introduction

Cybernetic systems and cognitive / human psychology is important for SCT key assumptions

Strategic Choice is dominant for strategy / change and deals with the general direction in which the organization changes over time

Strategy chosen by powerful top manager(s)

Human interaction is assumed in a certain way inside a system, designed by the dominant coalition

This is a cybernetic system, which requires predictability in order to control the system

Cybernetics is the science of control

cybernetic systems
Cybernetic Systems

Negative feed-back and equilibrium

Is an application of the engineer’s idea of control to human activity

Negative feed-back loops seeks an equilibrium and changes deviations towards restore this

Like economic equilibriums and radiators, cybernetic does not have an internal capacity to chg

Dynamic equilibrium continuously adapts over time

In short time spans, fluctuations may appear

Predictability of outcome and time lag needed

Most theories of management and organization have been based on equilibrium frameworks

cybernetic systems1
Cybernetic Systems

Goal-seeking adaption to the environment

Achieving some purpose; organizations are goal-seeking systems and goals drives their actions

Subsystems of supra-systems which requires adaption to those environments

Organizations are driven by attraction to a predetermined desired state that is in equilibrium with its environment

the organization and the environment
The organization and the environment..

Constraints

Uncertainty

Environment

Organization

Raw materials and other inputs

Products and services

Inputs

Outputs

Drawing Boundaries

Institutionalization

Socially constructed beliefs

environmental contingency theory
Environmental Contingency Theory

Burns and Stalker were among the first to argue, that an organization’s structure should be based on the conditions it faces in its environment. They presented one of the first empirical tests of contingency theory showing that, in stable environments, successful organizations specialize in routine activities, with strict lines of authority and distinct areas of assigned responsibility, while in rapidly changing environments, organizations require flexibility and employees are encouraged to apply their skills as needed, fitting into changing work patterns in whatever way they find to be useful.

cybernetic systems2
Cybernetic Systems

Regulators

  • Regulators use negative feed-back in order to reach their goals and desired state of environment adopt
  • Two types of regulators;
    • Error-controlled; Reactively sensory for corrective actions
    • Anticipatory regulator; proactively sensory for avoidance
  • Forecast of future changes are essential (stat)
  • Challenge is not unforeseen unique events, but in terms of variety or complexity of the events, which is reduced by he regulator
  • Law of requisite variety (Complexity / Speed)
cybernetic systems3
Cybernetic Systems

Cybernetics and causality

Internal feed-back structures unnecessary to understand according to the law of req. variety

Circular causality; Event A -> Event B -> Event A, which makes large pairs difficult to analyze

Statistical models can be made for analyzing disturbances and correlates responses

Cyberneticists looks at what is observed and what is done; detailed analysis of causal links is too complex

formulating and implementing long term plans
Formulating and implementing long term plans

A strategic plan is a formally articulated choice of a particular future composition of activities and a particular market position

Managers to share a common intention, which must be anchored to a future reality

Time span and detailing must be compatible with the required performance

A long term plan requires long term predictability, otherwise it’s a serie of short term plans

Milestones checks outcomes and corrects deviations

When future environment is known, alternatives for action options can be deduced and decided upon

formulating and implementing long term plans1
Formulating and implementing long term plans

Evaluating long-term strategic plans; Acceptability

  • Acceptable financial performance
    • Forecasting financial performance in terms of cash flows, capital expenditures etc,
    • Many difficulties in terms if measurements etc.
  • Acceptable consequences for internal power groups
    • Plans might fail if they’re perceived as morally unacceptable or against customs and beliefs
    • Expectation alignment to avoid resistance
  • Acceptable consequences for external power groups
    • Image impacts from communities or society
    • Reactions from competitors must be taken into account
formulating and implementing long term plans2
Formulating and implementing long term plans

Evaluating long-term strategic plans; Feasibility

  • Financial resources
    • A thoroughly analysis of required funding to carry out a strategy, for its entire life span, is paramount for the strategy’s success
    • A break-even point can be calculated
  • Human resources
    • Availability of the right number of skilled people, both inside- and external to the organization
    • Requires audit (assessment) of internal human resources
formulating and implementing long term plans3
Formulating and implementing long term plans

Evaluating long-term strategic plans; Suitability or fit

  • Does the strategy has a Strategic logic? The pieces of the strategy should fit together (congruence)
  • SWOT Analysis
    • Assessment of internal- and external factors. Match strengths with opportunities, eliminate threats and overcome weaknesses
  • Industry structure and value chain analysis
    • Identification of the competitive situation and advantages in the market
    • Determination of actions needed to secure competitive advantages, e.g. through quantification of value chains
formulating and implementing long term plans4
Formulating and implementing long term plans

Evaluating long-term strategic plans; Suitability or fit

  • Product life cycle
    • It is important to assess product portfolios and map current products in the lifecycles; Embryonic, Growth, Shake-out, Mature, Saturation and Decline
    • Strong capabilities should focus on early stages
  • Experience curves
    • Reflects experience with production. Early stages reflects high experience gains which flattens out over time.
  • Product portfolio
    • Maps the business against a number of dimensions, such as products, market shares and business units
    • Product growth is determining market attractiveness
formulating and implementing long term plans5
Formulating and implementing long term plans

Implementing long-term strategic plans

  • Designing organizational structures
    • Division of labor and hierarchy of authority
    • Reflects the maturity in terms of size and complexity
    • Growth requires changing integration mechanisms
  • Designing systems of information and control
    • Procedures , rules and regulations governing recipients and timing of organizational performance
  • Installing and operating human resource systems
    • Right actions are correlated with motivation, which can be amplified with an appropriate reward system
    • Promotions and career development, job rotation and development schemes are non-monetary motivators
formulating and implementing long term plans6
Formulating and implementing long term plans

Implementing long-term strategic plans

  • Culture Change Programmes
    • Culture, attitudes and beliefs shared by people, should be aligned with the strategy to be effective
    • May require change of culture to avoid resistance
  • Developing appropriate political behavior
    • Interdependence, heterogeneous goals and scarce resources taken together produces conflicts, which may imply political behavior (coalitions etc.)
    • The level of conflict can be managed
organizational design
Organizational design

Unfreeze

Movement

Refreeze

three levels of culture schein
Three levels of culture – Schein

Artifacts are manifestations or expressions of the same cultural core that produces and maintains values and norms

Artifacts

Values are the social principles, goals and standards that cultural members believe to have intrinsic worth. They define what we care most about and are revealed by our priorities.

Values

Norms

Assumptions represent truth, or what members of a culture believe to be their reality. Invisible and typically taken for granted.

Assumptions

gagliardi
Gagliardi

Every organization's primary strategy can be defined as to protect the organizational identity that the core assumptions and values create and maintain. In service to the primary strategy, organizations may develop and implement a range of secondary strategies which can be instrumental (operational in nature) or expressive (symbolic in nature)

next time
Next time

Please read the rest of chapter 4 (4.4 - )