Managerial Theory of Strategic Behavior of Environment

Serving OrganizationsIntroduction to Strategic Behavior

Prepared by: Corinne JenniApril 18th, 2008

State of Knowledge

state of knowledge

Behavior of Complex Organizations in Turbulent Environments

Practical Knowledge how organizations should behave

Theoretical Knowledge why and how organizations

do behave

gaps in knowledge

Theory and Practical Technology are only vaguely related

Goal of the Book

THEORY PRACTICE

Applied Theorygeneric concepts translatable into practical problem-solving

Mintzberg attacking Ansoff:“Now, let’s fill the gaps between theory and practice.”

Basic Hypothesis of the Book

Environment-Serving Organization ESOs work: entrepreneurial and strategic work, operations, marketing, political work

ESOs income:• commercial transactions (goods/services sold to customers)• subsidy transactions (external agent grants resources w/o tangible return)

ESOs success:• selling products/services needed by customers• using resources efficiently to supply needs• strategic budget determines success of strategy

ESOs management:Change of Power

• manager as leader/motivator• employees with knowledge power (i.e. technology)

Definition - Axiom

Merriam-Webster Dictionary:

1. a maxim widely accepted on its intrinsic merit

2. a statement accepted as true as the basis for argumentor inference

3. an established rule or principle or a self-evident truth

(http://www.merriam-webster.com)

Basic Axiom“… the art of life is first to be alive, secondly, to be alive in a satisfactory way, and thirdly, to acquire an increase in satisfaction.”

Alfred North Whitehead

Maslow’s hierarchy of needs

6. Growth (personal growth)

5. Self-Actualization (morality, creativity, etc)

4. Esteem (respect, confidence)

3. Love (family, friends)

2. Safety (employment, health)

1. Physiology (air, water, food)

Whitehead’s Axiom

Individual is motivated by an aspiration for security (survival) and achievement making trade-offs between the two aspirations depending on entailed risk

Individuals create, join and use organizations to achievesecurity and/or achievement

Individuals’ aspirations is determined by his achievement

drive and power at his disposal

Machiavelli’s Axiom

Individuals/Groups seek to attain their aspirations by influencing others to behave in accordance with their preferences.

Their influence depends on the degree of control which they possess over allowing and/or denying others the fulfillment of their aspirations.

J.V. Thompson’s Axiom

Organizations have behavior tendencies which are independent and frequently contrary to the preferences of powerful participants.

Organizations have recognizable collective aspirations which arenot necessarily those of powerful participants.

Organizations resist efforts to change their prior behavior.

The behavior of organizations in an environment may rangebetween the extremes of reluctant, passive adaptation to theenvironment, and aggressive, creative modification of theenvironment.

Emery-Trist Axiom

The environment determines the modes and conditions ofbehavior necessary for survival and/or achievement oforganizational aspiration.

Chandler’s Axiom

The success/survival of an organization depends on a two way alignment:

a)between its behavior in the environment and the conditions forsuccess/survival defined by the environment.

a)between its behavior and its internal configuration.

Hypothesis 1.1: Survival DriveWhen an ESO is confronted with the prospects of extinction, it

focuses all of its energy on a search for a survival strategy.

psychologicalroots

sociologicalroots

systemic roots

Survival Drive reflects the individual’s drive for personal security, the tribal interdependence and allegiance of social groups, and the inertial tendency of complex bureaucratic systems to continue functioning in a previously established mode.

Hypothesis 4.1: Convergence of Firms and Non-Profits

For-Profit Not-For-Profit- less profit-seeking behavior - more efficient- more focus on ethics - entrepreneurial- environmental conscious - more aggressive

In the future, the firm’s commercial focus will become progressively diluted, and not-for-profits will become more commercial.

no longer clearly

distinctive behavior

Hypothesis 4.2: Growth of Environmental Turbulence

During the twentieth century the key events in the environment of ESOs have become progressively more novel; costlier to deal with;

faster; more complex; and more difficult to anticipate.

oIndustrial Revolution (business firm)oMass-Production Era (Model T)oMass-Marketing Era (market mentality)oPost-Industrial Era (Drucker - ‘Age of Discontinuity’)oPorter’s 5 forces - widely recognized in business firmsoBarney – sustainable competitive advantage (“a green

edge”)