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Strategy
capabilities as decision rules. Journal of Management
Studies, 41, 1349–1377.
Maor, M., Gilad, S., & Ben-Nun Bloom, P. (2013).
Organizational reputation, regulatory talk and
strategic silence. Journal of Public Administration
Research and Theory, 23, 581–608.
STRATEGY
Strategy is a cognitive structure to simplify and
explain the world and thereby facilitate action.
Strategic management scholar Henry Mintzberg
wrote that people need strategies because they
have a need for consistency. Consistency provides
people with a sense of control. Strategy provides
relief from the anxiety created by complexity,
unpredictability, and incomplete information. Furthermore, it helps overcome the paradox of competence. As Stuart Albert describes this paradox in
his research on timing, the human brain has what
is called the quantum capacity, or Q capacity,
which allows people to think about the distant
past and the future without analyzing all of the
intermediate steps involved. He says that people
would be paralyzed if it took an hour to think
about any action that took an hour to accomplish.
But the mind’s ability to jump from point to point
makes it easy to miss sequences or other temporal
matters that affect decision making. Relatedly, the
brain faces what Albert calls Copland’s Constraint. Copland’s Constraint was named after the
composer Aaron Copland, who pointed out that
when people listen to music, it is often difficult to
listen to more than four melodies at one time
before the composition becomes a blur of sound
and the internal organization of the music is lost.
Thus, making sense of a large number of synchronic processes or events is not something most
people can do in their heads. Instead, when planning, people must think sequentially in terms of
what follows what.
Mintzberg argued that organizations need strategy because strategy helps them to set a direction for
themselves, to outmaneuver their competitors, to
maneuver themselves through threatening environments, to focus their efforts and promote the coordination of efforts, to define the organization, and to
provide consistency. Strategy in organizations settles
the big matters so that people can get on with the
little details. The CEO too must get on with managing the organization in a given context; he or she
cannot continually put that context into question.
Organizational definition is important for insiders
and outsiders (outsiders need to feel that they
know the business without being in the business).
Strategies reduce uncertainty and provide consistency (however arbitrary), to aid cognition, to
satisfy people’s intrinsic need for order, and to promote efficiency under conditions of stability by
concentrating resources and exploiting past learning. Strategies can help reduce the need for learning in the broad sense, in the sense that having a
strategy facilitates fast, almost automatic responses
to known stimuli. Strategies enable people to “get
on with things” without having to think them
through each time. All these ideas help illustrate
that strategy is a force that resists change and does
not encourage it.
This entry reviews various definitions of strategy, the problem with strategy development and
implementation (including a discussion of strategic
planning), and the relationship between strategies
and tactics. The entry concludes with a discussion
of the limits of reputational enhancements and the
consequences of operating without strategies.
What Is Strategy?
History
In 1980, Michael Porter highlighted the relevance of generic competitive strategies. Porter
argued that there are two basic types of competitive advantage for companies: lower costs and differentiation. Lower costs relate to the ability of a
firm to offer a standardized product or service
more efficiently than its competitors; this entails
reaping cost advantages from all sources. This
strategy, however, does not neglect quality. The
other strategy companies can undertake for competitive advantage is differentiation—the ability to
provide unique and superior value to the buyer in
terms of the product or service itself or of the service experience. Thus, differentiation as a strategy
permits a firm to command a premium price. Provided the cost position is not too far above its
competitors, the strategy should lead to superior
profitability. Another strategy that scholars since
Strategy
Porter have identified is corporate reputation as a
source of differentiation that provides value for a
firm.
Five Types of Strategy
Mintzberg identified five different definitions of
strategy: strategy as a (1) plan, (2) ploy, (3) pattern,
(4) position, and (5) perspective.
Strategy as a plan refers to a consciously
intended course of action and a set of guidelines
for how to deal with a situation. Here, strategy is
a unified, comprehensive, and integrated plan
designed to ensure that an organization’s objectives are achieved.
By this definition, Mintzberg notes, strategies
have two characteristics: (1) they are made in
advance and (2) they are developed consciously
and purposefully. This produces an intended strategy, one that is planned before action takes place.
As plans, Mintzberg points out, strategies can also
be ploys, designed to outmaneuver one’s competitors. In both cases, as plans or as ploys, if strategies
can be planned, they can be realized, Mintzberg
says. A realized strategy is a strategy that is accomplished. This may be the result of a deliberate strategy or an emergent strategy. A deliberate strategy
is one that is intended and is seen through to realization. An emergent strategy is one that is not
intended or planned ahead of time but emerges
step by step. Once it is discovered, however, an
emergent strategy can become deliberate. Finally,
an unrealized strategy is one that is planned ahead
of time but abandoned before realization.
The observation that realized strategies may not
be intended strategies is what led Mintzberg
to conclude that strategies can be observed as
patterns—that is, as a pattern of actions in a
stream of behavior. He gives the example of a situation where a successful approach that was not
part of an intended strategy merges into a pattern
of action and then becomes the strategy. Put more
simply, one can have a pattern as a strategy without having a plan. Mintzberg notes that many
journalists impute or infer strategies from a pattern of actions they observe and call them strategies. As Mintzberg suggests, strategies may be the
result of human action (patterns) or human designs
(plans). According to this definition, a strategy
involves consistency in behavior, whether intended
825
or not. From this perspective, strategy can be
inferred from patterned behavior and labeled so. In
this sense, strategy is a realized strategy.
Mintzberg also points out that labeling strategies as plans and strategies as patterns still begs the
question of strategies about what. Labeling something as a strategy entails identifying its purpose, a
strategy for what—strategy for the important
things and tactics for the details. The problem is
that, in retrospect, details can sometimes prove
strategic.
This observation led to Mintzberg’s fourth definition of strategy, strategy as a position, which
focuses on location. Here, strategy is a means to
locate and identify an organization in its environment. It describes the organization’s choice place in
the market or environment where it concentrates
resources and the decision rules for coping with that
niche. This view of strategy is not focused on contending with one competitor but with all competitors and also on avoiding competition altogether.
Likewise, this view allows for collaboration.
The fifth view of strategy for Mintzberg is of
strategy as a perspective. The location of the strategy is in the mind of the strategist. Here, strategy
is not just a chosen position but also an ingrained
way of perceiving the world. The earliest articulation of this view was that of Phillip Selznick, who
wrote about the “character” of organizations—
their distinct and integrated commitments to ways
of acting and responding. A strategy’s content
consists not just of a chosen position but also of
the process of seeing and understanding the world
in a particular way. In the terminology of psychology and organizational development, this definition is very similar to mental models, interpretive
schemas, and scripts. Sociologists would see this
view of strategy as similar to ideology. According
to Mintzberg, this view of strategy suggests that
strategy is a concept, an abstraction existing in the
mind of interested parties—those who pursue it,
those who are influenced by this pursuit, and those
who wish to see others pursuing it. A strategy is a
perspective shared by members of an organization,
through their intentions and their actions, and
involves the emergence of a collective mind in
which individuals are united by common thinking
and behavior.
Mintzberg says that the function of a strategy is
not to solve a problem but to structure situations
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Strategy
so that emergent problems are solvable. Strategies
are not realities themselves, they are only abstractions of reality in the minds of people. But good
strategies, like good theories, should minimize the
amount of distortion. He also observes that strategy is rooted in the idea of stability. Strategy is not
about adaptability in behavior but about regularity in behavior. It is not about discontinuity and
change but about continuity.
The Problem With Strategy Development
and Implementation
Organizations face a number of problems with
strategy development and implementation. Andrew
Campbell and Marcus Alexander give three reasons for such problems. First, many organizations
are unclear about the difference between organizational purpose and organizational constraints—
defining organizational purpose as what an
organization exists to do and organizational constraints as what it must do to survive. Second,
Campbell and Alexander suggest that organizational leaders are confounded by the process of
developing strategy. Objectives are often intertwined with strategy development, making it difficult to decide where to start. Third, they suggest
that organizational leaders assume that strategic
planning processes will lead to new insights, but
they seldom do, because such planning meetings are
not the source of insights into value creation; such
insights come instead from those involved in implementation. The solution, Campbell and Alexander
suggest, lies in management understanding the
benefit of having a well-defined purpose and the
importance of discovering, understanding, documenting, and exploiting how to create more value
than the competition.
Campbell and Alexander argue that the more
focused and detailed a company’s purpose is, the
better it will be able to come up with successful
strategies, as a company’s purpose limits the range
of choices that need evaluation and thus helps the
strategy development process. In addition, they
argue that the company’s competitive advantage is
not tied to its purpose but to its constraints. If
companies do not satisfy the demands of their
stakeholders, they will go out of business. But
recognizing this requirement itself, Campbell and
Alexander note, provides no guidance on how best
to fulfill it.
Strategic Planning
A common strategic planning framework that
organizations use is the MOST (mission, objectives, strategy, and tactics) framework, which suggests a structure and order from which to proceed.
First, an organization must choose a mission, a
long-term purpose for the organization. Second, it
must develop the objectives, both short-term and
midterm, that will further the organization in the
accomplishment of its mission. Third, it must
develop a strategy to achieve the objectives, using
a number of short-range tactics to implement the
strategy.
Campbell and Alexander argue that most organizations face a sequencing problem in the relationship between strategy and tactics. First, they
suggest that separating strategy from tactics (which
are tied to implementation) is a bad idea. Managers must be able to envision the tactic, and tactics
must be worked out before a strategy can truly be
determined. Managers who begin with objectives
without considering the necessary strategies often
meet resistance from those setting the strategies
because they cannot find a way to meet them and
sufficiently satisfy all their stakeholders’ demands.
Formulating a strategy without clear objectives
can be overwhelming. Without an agreed-on strategy, it is difficult to work out the details of the
tactics. Tactics are not just about implementing
today’s strategy, they are also important for discovering tomorrow’s strategy.
On the other hand, managers who select strategies, goals, and objectives may find that others do
not follow them easily because they cannot work
out the tactics for implementation. Campbell and
Alexander further suggest that it is only by understanding the details of the tactics that management
will be able to develop a winnable strategy that
encourages managers to set challenging but still
achievable objectives. Thus, they argue, strategy
development is not a sequential series of steps but
a simultaneous coming together of elements. This
still leaves open the question of where an organization should begin the process. The answer to
this dilemma they offer is in understanding one
Strategy
primary building block of good strategy: the role
of insight into how to create more value than one’s
competitors do.
Campbell and Alexander suggest that insights
do not come as a result of a strategy development
exercise and that attempting to develop strategy
without insights is dangerous because it can lead to
unrealistic plans. They further suggest that if companies can come up with true insights, then developing strategies to exploit tactics becomes viable.
Insights are what give meaning to tactics. In turn,
these insights make strategies more doable. They
argue that experience from today’s operating tactics is what provides the necessary feedback for
tomorrow’s insights. Thus, unless implementation
is part of the strategy development process, tomorrow’s insights will be limited.
Strategies and Tactics
Tactics are short-term operating decisions, but as
Richard Rumelt observed, one person’s strategies are
another person’s tactics. Alfred Chandler said that
strategies were about the deployment of resources.
Mintzberg’s response was “Which resources and for
what purpose?”—concluding that strategies can
potentially be about anything. Strategies and tactics
can best be differentiated by the establishment of a
pattern. Tactics appear strategic when a pattern
emerges between or among them over time. The
most common tactics include a combination of
organizational actions together with interpersonal
communication, organizational media, news media,
advertising and promotional media, and social
media. Tactics have continuity when their scheduling presents a message or an inference to observers
at a consistent level throughout a particular period
of time. However, it is often expensive to establish
sufficient levels of continuity with enough frequency
and intensity to be recognized as such by the desired
observers. Thus, organizations may use flighting,
which is the presentation of a message in waves,
with periods of intense communication interspersed
with periods of silence or inactivity. Organizations
use this approach when organizational activity may
fall into predictable or discrete periods. Pulsing is a
combination of continuity and flighting, whereas
massing is the concentration of various presentations of a message into a very short period of time.
827
Strategy and the Limits of
Reputation Enhancements
The ability of reputation to create value for organizations is firmly established, but the relevance of
reputation enhancement to an organization varies
according to the strategies it employs more generally. Put more simply, reputation enhancement is
more important for the pursuit of some competitive strategies than others. Building on Porter’s
description of generic competitive strategies, David
Faulkner and Cliff Bowman developed the customer matrix for the consideration of hybrid competitive positions. This matrix was later augmented
by Ysanne Carlisle and Faulkner, who overlaid
the value of reputational enhancement on the perceived added value. For companies pursuing
corporate strategies of differentiation, focused differentiation, or a hybrid (differentiation but with a
lower price), reputational enhancements matter.
On the other hand, for firms pursuing a low-cost
strategy, it can be argued that reputation enhancement does not matter. The risks of reputational
damage, however, matter to all firms, regardless of
which strategy positions they employ. What the
augmented model suggests is that, in the absence
of a viable threat to reputational damage, legislation may be required to change some firms’ social
and environmental practices.
Without Strategies
Without strategies, organizations face cognitive
overload, and members have no way of dealing
with experiences consistently. Thus, a strategy is a
categorizing scheme by which incoming stimuli
can be ordered and dispatched; it can help an organization move in a relatively straight line, but it
reduces peripheral vision. The very role of encouraging people to “get on with it” impedes an organization’s ability to respond to environmental
change.
Strategies can be vital to organizations, not only
through their presence but also through their
absence. Sometimes a lack of strategy is necessary
and may represent a stage of transition from an
outdated strategy to a more viable one, or the environment may have turned so dynamic that it
would be unwise to be consistent. We function best
828
Strategy
when we can take some things for granted, at least
for a period of time, but the problem is that eventually situations change, the environment destabilizes, and niches disappear. Since the very role of
strategy is to protect the organization from distraction, a strategy can blind an organization to its
own outdatedness.
The question remains as to how long an organization can survive with outdated strategies or no
strategies at all. Mintzberg suggests that an organization without a strategy is like a person without
a personality and that an organization without a
name cannot be discussed.
Craig E. Carroll
See also Accountability; Action and Performance;
Activist Campaigns; Advertising; Alignment Between
Identity and Reputation; Anonymity and Privacy;
Apologia Theory; Audiences; Authenticity;
Benchmarking; Best Practices; Brand Bully; Brand
Co-Creation Model; Brandjacking; Capability
Reputation; Cause-Related Marketing; Co-Creation
Theory; Channels; Cognitive Dissonance; Coherence;
Collective Intentionality; Communication
Management; Communication Strategy; Corporate
Diplomacy; Corporate Governance; Corporate Social
Performance; Crisis Response Strategies; Disclosure;
Engagement; Ethics of Reputation Management;
Executive Leadership; Expectation Management;
Facework; Feedback; Impression Management
Theory; Information Processing; Innovation; Issue
Ownership Theory; Key Messages; Leadership’s Role
in Reputation; Legacy Organizational Identity;
Legitimacy; Management, Corporate Reputation;
Media Relations; Message Design; Mindful Learning;
Naming and Shaming; Nonmarket Strategy;
Objectives; Organization Development;
Organizational and Corporate Image; Organizational
Character; Organizational Culture; Organizational
DNA; Organizational Effectiveness; Organizational
Health; Organizational Identity; Organizational
Learning; Organizational Listening; Organizational
Renewal; Organizational Trust; Partnerships and
Alliances; Political Positioning; Product Performance;
Product Recalls and Public Safety; Public Relations;
Public Sector Reputation; Publicity; Paradox of;
Publics; Ratings; Rebranding; Reputation, Dimensions
of; Reputation Capital; Reputation Continuity;
Reputation Council; Reputation Crisis; Reputation
Formation; Reputation Gaps; Reputation
Management Problems; Reputation Monitoring;
Reputation Renting; Reputation Repair; Reputation
Risk; Reputational Criteria; Reputational Spillovers;
Reputational Stickiness; Resilience; Return on
Investment; Sensemaking Theory; Signal Theory;
Spokesperson; Storytelling; Strategic Alignment;
Strategic Aspirations; Strategic Inaction; Strategic
Silence; Theory of Planned Behavior; Thought
Leadership; Timing; Transparency; Valorization; Value
Further Readings
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environmental change. Academy of Management
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Basdeo, D. K., Smith, K. G., Grimm, C. M., Rindova, V. P.,
& Derfus, P. J. (2006). The impact of market actions
on firm reputation. Strategic Management Journal,
27(12), 1205–1219.
Carlisle, Y. M., & Faulkner, D. O. (2005). The strategy of
reputation. Strategic Change, 14(8), 413–422.
Carroll, C. E. (Ed.). (2013). The handbook of
communication and corporate reputation. Oxford:
Wiley-Blackwell.
Chen, M.-J., & MacMillan, I. C. (1992). Nonresponse
and delayed response to competitive moves: The roles
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Chen, M.-J., & Miller, D. (1994). Competitive attack,
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D’Aveni, R. (1994). Hypercompetition: Managing the
dynamics of strategic maneuvering. New York: Free
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Deliège, I. (2001). Prototype effects in music listening: An
empirical approach to the notion of imprint. Music
Perception: An Interdisciplinary Journal, 18(3),
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Faulkner, D. O., & Bowman, C. (1995). The essence of
competitive strategy. London: Prentice Hall.
Fombrun, C. J. (1996). Reputation: Realizing value from
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Symbiotic Sustainability Model
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SYMBIOTIC SUSTAINABILITY MODEL
The symbiotic sustainability model is a theory
focusing on the pattern and outcomes of partnerships between nonprofit, nongovernmental organizations (NGOs) and for-profit corporations.
The model is important for the study of corporate
reputation, because corporations often form relationships with NGOs to enhance aspects of their
reputation.
The theory assumes that communicating the
existence and character of the cross-sector relationship to the stakeholder is more important than
the resources exchanged within the relationship.
Through communication, corporations and NGOs
try to convince stakeholders of the legitimacy and
character of the relationship in order to reap
rewards. Stakeholders include consumers, activists,