Need for Strategic Thinking in Business

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Table of Contents

Introduction
Critical Analysis of the Classical School of Strategic Thinking
The Classical Scientific School
The Classical Administrative School
Critical Analysis of Other Schools of Strategic Thinking
Conclusion
Reference List

Introduction

Both classical and many other schools of strategic thinking have been used to describe the concept of business management strategy. Strategic thinking has become a major concern of many business organizations because of the need to achieve mutual benefits between the organization and the employees through proper management strategies.

Proper strategies are necessary for the business to improve its productivity. Business productivity can never be improved without the member taking part in the strategy formulation (Lampel & Mintzberg, 1999, p. 21). The reason for the emergence of these schools of strategic thinking is the question of why some strategies fail and others succeed.

The main issues addressed in these schools are the factors that may cause these strategies to fail or succeed. Strategic thinking is a mean of understanding the key drivers of business as well as improving the conventional thinking through dialoguing with members in the organization (Mintzberg, 1996, p. 96). The main objective of this essay is to present a Critical Analysis of the fundamental concepts of the ‘Classical’ schools and other schools of strategic thinking.

Critical Analysis of the Classical School of Strategic Thinking

The classical schools of management are based on the assumption that the employees only pursue the economical and the physical needs which are their source of satisfaction. The school assumes away the social and job satisfaction needs of the workers.

Though the school argues that these needs are either absent or are not important in the course of the service offered by the employees, the claim is without clear attestation. The main focus of the school is high labor specialization and bureaucratic process of decision making where decisions are made from a central point. Profit maximization is also a major concern of the school.

This indicates that the social and job satisfaction needs of the employees are locked out in the proposed management strategy (Whittington, 1993, p. 9). The classical school of strategic thinking was developed during the industrial revolution when factories in the industries faced management problems. There were vast labor dissatisfactions and the management was unsure of how to deal with the situation. The other issue was how to train the employees to make them loyal members of the organizations.

The key objective of this school of thought was to determine the best way that could be used to undertake and manage tasks (CliffsNotes, 2010, p. 1). In this sense, the classical school was meant to solve the management problems related to labor dissatisfaction for the betterment of the industries but with less concern about the social life and job satisfaction of the employees. The classical school of strategic thinking was broadly categorized into classical administrative school and the classical scientific school of thought.

The Classical Scientific School

The major concern of this school was productivity and efficiency within the industries. The school assumed that productivity and efficiency could be achieved through close examination of the work process and the skills possessed by the work force (Steiner, 1979, p. 18). The main aim was to ensure that the most work is done and that the workforce has the most desired skills to do the work. This could not hold in the sense that despite the excellent skills of the work force, their productivity will be very low if job satisfaction is not realized.

The best motivation of the workforce comes from within and is evident when job satisfaction is met. The main proponents of the scientific classical school are Lillian Gilbreth, Fredrick Taylor, Gantt and Frank whose contribution led to the development of the school. Taylor, for instance, believed that tasks study and precise procedure development would improve productivity in an organization.

He advocated increase of working hours and reduction of the workforce accompanied by increased payment to workers who meets the high standards of production. He thought that paying more money for extra time worked will motivate the workers and improve production. The reality however is that, overworking workers will in the long run reduce labor productivity and quality of work (Cunningham& Lischeron, 1991, p. 49).

These proponents argued that there should be procedures for performing jobs and that work should be shared between the employees. They proposed also that workers should be developed and trained to perform certain duties but should not be left to choose their own tasks. However, allowing workers to choose their own tasks would be more effective because they choose what they feel they are competent to handle.

The Classical Administrative School

This school proposed bureaucratic management principles in organizations. The proponents argued that the organization should have a formal structure that will be followed by the stakeholders. This structure will allow formal flow of information from the highest rank to the lowest (Steiner, 1969, p. 12). Power was believed to flow from a centralized place. Max Weber, one of the proponents of this school, argued that, every organization should have a bureaucratic structure characterized by specified principles.

For instance, every structure should have a well defined hierarchy, labor division and specialization, specific rules and regulations, work based relationship between employees and their bosses, employment based on competence and a concise record of activities of the organization. Henri Fayol also had the same idea as Weber but his process was enriched with other aspects like team work strategy, equity and stability of tenure of personnel.

The administrative school concentrated on the total organization where emphasis was laid on the development of managerial principles in an organization.

The proponents of the administrative school based their study on the flow of information in an organization. Their main emphasis is to understand how the organization operates and how it can be improved to increase the performance (Porter, 1980, p. 23). One of the greatest proponents of this school, Max Weber, argued that, the organization should not be managed personally because people will be loyal to their personal supervisors instead of the organization itself.

Weber believes in a bureaucratic structure of the organization where there are rules to be followed by the members of the organization. This way, he believed, would detach the organization from the personalized management. He condemned the European organizations for personalizing their management which he described as family-like system of management. The other proponents of the administrative school include Henri Fayol, Mary P.F., and Chester B. whose contributions were very significant in the development of the school.

The classical administrative school as the scientific school did not address the issue of social needs and the job satisfaction needs of the employees. They both seem to be organization oriented and any strategy laid is meant to benefit the organization through profit maximization and engaging the workforce into long working hours. The targeted production level may not be achieved unless the employees are full satisfied.

Critical Analysis of Other Schools of Strategic Thinking

Besides the classical schools of strategic thinking, more schools of thought have been developed in order to describe the concept of strategy in business management. The classical schools have failed in some instances to describe the best way that could be employed for effective business management strategies.

The question that has brought about the emergence of these schools is why some strategies fail while others succeed (Miller, 1987, p. 561). One of these schools is The Planning School that describes strategy systems as conscious processes of formal planning (Mintzberg, 1990, p. 171). In this sense, the organization strategist formally communicates the strategic decisions to the whole organization.

This school argues that the strategy systems are subject to control and can be decomposed in to various distinct steps (Ansoff, 1987, p. 13). Strategies therefore are not spontaneous activities but are planned in a formal manner and can be achieved in stages as per the formally planned time line. The members of the organization are therefore aware of the strategies taken.

The other school is The Design School of strategic thinking. This school describes strategy systems as processes of conception and deliberate action of conscious thought (Goold, 1992, p. 169).

In this case, the strategies are based on individualized design and are very informal. This school also asserts that the chief executive officer has the responsibility of controlling the strategy systems in the organization. In the real sense, the CEO alone cannot manage the whole responsibility of strategy formulation but the whole organization members need to be involved (Ansoff, 1987, p. 513).

The Positioning School of Strategic Thinking has its roots in economics. It is mostly focused on the external environment. The organization has analysts that assesses the external environment and propose the course of action. This school describes the strategy systems as analytical processes that are carried out by the analysts in the organization. The strategies of business management are described as being identifiable and generic in nature (Chakravarty, 2005, p. 1).

The Entrepreneurial School on the other hand argues that, the strategies are long-term plans of the organization and that they define the vision of the organization (Segars & Grover, 1999, p. 202). Leaders in this case are assumed to have entrepreneurial skills which they apply to formulate the strategies of the organization. This could be very insightful if the leaders keeps watch on the changing business environment and base their decision on the observations they make (Cunningham& Lischeron, 1991, p. 55).

There is also Cognitive School whose notions are based on psychology. The school describes that there are cognitive processes in the mind of the strategist and they determine the success of the strategies implemented. The strategies undertaken in this case depends on the strategist himself. He comes up with the strategies he finds best applicable in the situation of the enterprise.

The Learning School is also based on psychology of the strategists and the strategy systems are taken to be processes that are learnt over time. The behavior of the enterprises is unpredictable and there is therefore need to learn many strategies that could be used if needs arise. Strategies learned are plans for the future and are based on experience (McKiernan, 1997, p. 796).

The Power School of strategic thinking asserts that strategies are a result of power game within the organization and is therefore believed to have its roots in politicology (French, 2009, p. 59). The strategies are therefore shaped by the power and politics within the organization. The strategies may not be perspective in nature but may take the form of positions that may not improve the organization performance. They may not be need oriented but based on greed for power.

The other school is Environmental School which has its origin in biology. This school describes strategy systems as reactive processes resulting from the reactions of the organization to the external environment (Kemp & Ashish, 2003, p. 1). The prevailing environmental conditions are the main determinants of the next move to be taken by the organization. For instance, the change in the dimension of competition in the market will necessitate the organization to come up with strategies that will make the organization more competitive.

The Cultural School argues that the strategies undertaken by the organization depends on the cultural interaction of the members within the organization. The school is based on anthropology and describes strategy systems as collective processes of social interaction of members in the organization. According to Kotter (1995, p. 5), the strategies are taken as the result of social interactions of both junior and senior employees within the organization.

The members are the ones that determine the next course to be taken by the organization depending on the current needs and prevailing business environment. Their decision may not result in the same strategies every time. The last school in this list is called The Configuration School that describes strategy as a form of organizational transformation (Miller, 1986, p. 236).

In this sense, the strategies are taken as changing plans of the organization that transforms the focus and functioning of the organization. The strategies are constantly replaced by new ones depending on the prevailing needs of the organization. This is contrary to the beliefs of the administrative classical school that proposes a fixed bureaucratic procedure in the organizations. The same strategy may not apply in all circumstances. Some situations will demand the strategies to be revamped (Drucker, 2010, p.16).

Conclusion

The strategy systems are a complex process defined by several factors that are described in the above schools of strategic thinking. The concepts in these schools are interrelated in one way or another and are all focused on understanding the concept of business management strategies.

Reference List

Ansoff, I., 1987. The Emerging Paradigm of Strategic Behavior. Chichester: Strategic Management Journal, 8(2), 1987pp.501-515.

Chakravarty, M., 2005. The 10 schools of strategic planning. [e-book] India: rediff. India Limited. Web.

CliffsNotes. 2010. CliffsNotes.com. Classical Schools of Management. [e-book] New York: Wiley Publishing, Inc. Web.

Cunningham, B., & Lischeron, J. 1991. Defining Entrepreneurship. Journal of Small Business Management, 29(1), 1991 pp.45-59.

Drucker, P. F., 2010. The Theory of the Business. Boston: Harvard Business School Publishing.

French, S., 2009. Re-thinking the foundations of the strategic business process. Journal of Management Development, 28(1), pp. 51-76.

Goold, M., 1992. Research Notes And Communications Design, Learning And Planning: A Further Observation On The Design School Debate. Strategic Management Journal (1986-1998); 13, 2; ABI/INFORM Global pg. 169.

Kemp, J. & Ashish, J., 2003. The 9 Schools of Strategic Thinking. [e-book]New York: The Free Press. Web.

Kotter, J.P., 1995. Leading Change: Why Transformation Efforts Fail. Boston: Harvard Business School publishing.

Lampel, J. & Mintzberg, H., 1999. Reflecting on the strategy process. Sloan Management Review; 40, 3; ABI/INFORM Global pg. 21.

McKiernan, P., 1997. Strategy past: Strategy futures. Oxford Long Range Planning, 30(5), pp. 790-798(9).

Miller, D., 1986. Configurations of Strategy and Structure: Towards a Synthesis. Strategic Management Journal ,7(3): 233–249.

Miller, D., 1987. The genesis of configuration. The Academy of Management Review. 12(4). 556-701.

Mintzberg, H., 1990. The Design School: Reconsidering The Basic Premises of Strategy management. Strategic Management Journal, 11(3), pg. 171.

Mintzberg, H., 1996. Reply to Michael Goold. California Management Review, 38(4), pg. 96.

Porter, M.E., 1980. How Competitive Forces Shape Strategy. New York: The Free Press.

Segars, H. & Grover, V., 1999. Profiles of Strategic Information Systems Planning. Information System Research, 10(3). Pp. 199-232.

Steiner, G.A., 1969. Top Management Planning. Toronto: Collier-Macmillan.

Steiner, G. A., 1979. Strategic Planning, What Every Manager Must Know. New York: The Free Press.

Whittington, R., 1993. What is Strategy and does it matter. London: Rountledge.

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