A compilation of techniques for building strategic thinking competency.

"Strategic thinking is defined as coming up with alternative viable strategies or business models that deliver customer value." Strategic thinking has to do with finding alternative ways of competing and providing customer value. A company needs to compete, it needs a strategy to compete. A strategy is more than a plan, as strategy implies competing -- outwitting competitors and providing unique value.

Identity is a powerful source of energy for innovation and producing value in pursuit of a mission. The organizational identity is reinforced by the wealth that feeds back into the business. Strategic and operational philosophies should be based on the organizational identity. Identity is a "governing force" that completely shapes an organization and determines the relationship it enjoys with stakeholders. It can be managed to become a positive governing force. Ackerman identifies eight laws of identity and their applications --

• Law of being -- The organization exhibits the distinct capacities of the individuals who make up that organization. Being is defined by the value it creates in the members of the organization, the marketplace, society, and the business itself.
• Law of individuality -- The organization's human capacities fuse into a unique discernable identity. Live according to who you are. Live authentically.
• Law of constancy -- Identity is fixed. How the identity is manifested needs to constantly change. Make change in concert with the identity of the organization.
• Law of will -- Every organization is compelled by the need to create value in accordance with its identity. Drives people to be the best at whatever they do.
• Law of possibility -- Identity foreshadows potential. The richest avenues with the greatest potential for growth lie in understanding the natural drive of the organization.
• Law of relationship -- Organizations are inherently relational, and those relationships are only as strong as the natural alignment between the identities of the participants. Leaders must manage relationships with stakeholders as a whole system, not as a portfolio of separate distinct relationships. Value circle in motion builds relationship momentum that stands the test of time.
• Law of comprehension -- The individual capacities of the organization are only as valuable as the perceived value of the whole of that organization. We must know who we are before we can build potent relationships with others. (Be authentic).
• Law of the cycle -- Identity governs value, which produces wealth, which fuels identity. Companies will receive in direct accordance with what they give.

A holistic approach to strategy formation, planning, and deployment in the context of the firm as a social system.

Ackoff addresses business design with the idealized design concept. It is called idealized because it is unencumbered by the current culture, trajectory, and specific solutions to put the design in place, not because it is unrealistic. This design must be technologically feasible and operationally viable in the business's environment -- but it comes in two forms, bounded and unbounded.

A bounded design assumes the environment of the business organization remains the same while the business organization design is unconstrained. An unbounded design permits the designers to change elements of the environment that can improve the performance of the business organization. This holds out the possibility of an enacted environment.

Ackoff presents an integrated adaptive management system that incorporates this idealized design and regards the firm as a social system.

The general systems theory is extended into humans and human organizations. Individual and social behavior if viewed as a system of purposeful events. From this basis, they produce a detailed model of social systems and their classifications. This culminates in the view and definition of social groups as social systems and as ideal seeking systems.

The authors develop operational definitions of terms such as knowledge, understanding, and wisdom -- being thorough in providing definitions and operational application of their concepts.

Adner and Zemsky present an analysis of sustainable competitive advantage emphasizing the demand-side factors. In particular, the effects of decreasing marginal utility and consumer heterogeneity across market segments is shown to affect the sustainability of competitive advantage through shifts in consumer willingness to pay.

Competitive advantage definition -- The authors define competitive advantage as superior value creation -- with the firm's ability to sustain competitive advantage equivalent to its ability to sustain added value.

The demand-side drivers are 1) marginal utility from performance improvements, 2) consumer taste for quality, and 3) the extent of consumer heterogeneity. At the level of firm resources, competitive advantage erodes not only because imitation undermines the uniqueness of resources, but also because consumer valuation of firm differences declines due to effects of decreasing marginal utility. At the level of firm positions, strategic heterogeneity is shown to be rooted not only in differences between firms' internal resources but also in the extent of consumer heterogeneity in the firms' demand environment.

See the 1987 edition.

Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and noneconomic contribution it intends to make to its shareholders, employees, customer, and communities. In an organization of any size or diversity, "corporate strategy" usually applies to the whole enterprise, while "business strategy", less comprehensive, defines the choice of product or service and market of individual businesses within the firm. Business strategy is the determination of how a company will compete in a given business and position itself among its competitors. Corporate strategy defines the businesses in which a company will compete, preferably in a way that focuses resources to convert distinctive competence into competitive advantage. Both are outcomes of a continuous process of strategic management.

The essence of strategy is pattern. The interdependence of purposes, policies, and organized action is crucial to the particularity of an individual strategy and its opportunity to identify competitive advantage. It is the unity, coherence, and internal consistency of a company's strategic decisions that position the company in its environment and give the firm its identity, its power to mobilize its strengths, and its likelihood of success in the marketplace. It is the interrelationship of a set of goals and policies that crystallizes, from the formless reality of a company's environment, a set of problems an organization can seize upon and solve.

The pattern of goals and policies, rather than their separate substance, is the source of uniqueness that ideally should distinguish every company from its competitors. Especially when values visibly affect economic choices, the special character of a company becomes apparent to its employees and customers.
(from pages 13-15)

"Andrews characterized the role of a strategist as one of finding the match between what a firm can do (organizational strengths and weaknesses) within the universe of what it might do (environmental opportunities and threats)." Foss, 1995.

Ansoff presents strategy as executive decision making.

The need for strategy come out of the realization that a firm needs a well-defined scope and growth direction, that objectives alone do not meet this need, and that additional decision rules are required if the firm is going to have orderly and profitable growth. Such decision rules and guidelines have been broadly defined as strategy or, sometimes, as the concept of the firm's businesss. (pp 103)

Strategy and objectives together define the concept of the firm's business (pp 112) --

• Objectives --
• ROI
• Sales growth rate
• Strategy, a common thread for four interrelated issues --
• product-market scope
• growth vector: product development and concentric diversification
• competitive advantage: patents, research competence
• synergy: use of the firm's research capabilities and production technologies

Ansoff presented the product -- mission matrix as a way for firms to define the common thread of their own strategy and has been used as a means of identifying avenues for growth. One side of the matrix is the present and new mission as compared to the other side of present and new product. The matrix cells are thus --

• Market penetration -- present mission and present product
• Product development -- present mission and new product
• Market development -- New mission and present product
• Diversification -- New mission and new product

These authors are Clayton Christensen's colleagues, the disruptive innovation guru and author of The Innovator's Dilema. The first three author's are members of Innosight, an innovation and investment company founded on disruptive innovation principles. This book serves as a guide to the management and mastery of innovation. See Innovator's Guide to Growth for an introduction to the book.

This paper addresses the potential role of learning and feedback in the decision-making process which had, up to the time of its publication, largely been ignored. The single-loop model of decision making is presented as the most general model of action. A double-loop model is proposed as resulting in more effective decision making when the general model fails.

"Argyris (1982) labels adaptive behaviors that result not simply in different activities but in different rules for choosing activities "double-loop learning." Monitoring environmental feedback on the system's past performance… is an important mechanism of adaptation for any open system." (Scott & Davis, 2007, 92).

In Argyris' terms: "Learning to become aware of one's present theory-in-use and then altering it is a very difficult process, because it requires that individuals question the theories of action that have formed the framework for their actions." (p 370) emphasis added. "…theories-in-use are the basis of behavior, then they represent a source of confidence that one has in functioning effectively in one's world. To change one's theory-in-use would be risky. There are few group, organizational, or societal supports for significantly different behaviors." (p 370)

This book is one of the building blocks of cognitive psychology, with its mechanistic/cybernetic view of the human brain. It specifically addresses the human ability of adaptive behavior. The hypothesis is that adaptive behavior is essentially mechanistic. Without a "critical state," variables of behavior are constant. When a critical state is reached, a "step-function" changes the field of variables (pp 90-91).

This appears to be an early model of double-loop learning as described by Argyris (1976).

A framework is presented for harnessing complexity -- "deliberately changing the structure of the system in order to increase some measure of performance, and to do so by exploiting an understanding that the system itself is complex." The three stages of the framework are variation, interaction, and selection.

Strategy is trivialized as "a conditional action pattern that indicates what to do in which circumstances" or "the way an agent responds to its surroundings and pursues its goals." Biological evolution is touched on as point of reference to teach about business organizations dealing with complexity. This is not done effectively. "Exploitation" is misinterpreted as copying, or replication, as opposed to the refinement and extension of existing competencies, technologies, and paradigms. The framework seems to be more problem focused than opportunity discovery focused.

Chester Barnard was the chief executive of AT&T. Along with Alfred Sloan of General Motors in 1963, he was one of the first executives to draw attention to the need for strategy in the context of business.

This book is the first, or one of the first, to bring explicit definition to the functions of the executive, "executive processes, which are specialized functions in what we know as "organizations."" (1938, xxvii). Barnard notes the lack of understanding of psychologists, sociologists, and economists in explaining the phenomenon of organization while he also found that leaders of organizations of all types recognized "universal characteristics of organization that are active understandings, evaluations, concepts, of men skilled in organizing not only in the present but in past generations..." (xxviii). The uniqueness, at the time it was written, of Barnard's contribution is reflected in his comment about separating himself from economics and those who regarded man as "economic man" -- "though I early found out how to behave effectively in organizations, not until I had much later relegated economic theory and economic interests to a secondary -- though indispensable -- place did I begin to understand organizations or human behavior." (xxxi).

Barney defines culture and the criteria it meets in order to enable a sustained competitive advantage.

Barney introduces the concept of a strategic factor market, i.e. a market where the resources necessary to implement a strategy are acquired. Based on this construct, he concludes that a firm seeking greater than normal economic performance should seek it in its unique skills and capabilities, rather than from the analysis of its competitive environment.

Barney provides fundamental definitions and criteria for sustained competitive advantage and the resource-view of strategy.

An interesting discussion of positioning the resource-based view relative to the Structure-Conduct-Performance theories of advantage (Porter, 1980), neo-classical economics (Ricardo, 1817), and evolutionary economics (Nelson & Winter, 1982).

A textbook covering the basics of strategy, strategic analysis, business strategies, and corporate strategies.

Effective formal strategic planning –
Premise: Real strategies are rarely, if ever, made in a formal meeting, but do develop in less formal settings such as informal gatherings and during times for reflection. The formal planning process must be owned by the CEO, though the planning group can convene and run the meetings.

Formal planning has two productive uses --
The first is to create prepared minds to make sure decision makers have a solid understanding of the business, its strategy, and the assumptions behind that strategy. This enables the executives to make effective real-time strategic decisions throughout the year. The critical details:

1. Real conversations take place in small groups of no more than ten.
2. One third of an executive's time should be spent on strategy. 80 days, of which 20 to 30 days should be in intensive, well prepared discussions.
3. The venue for the sessions should be the site of the business unit.
4. Avoid combining strategy reviews with discussions of budgets and financial targets. Separate the meetings in time.
5. Those who carry out the strategy must make it.
6. Corporate guidance for the reviews should only specify the basic requirements, leaving a lot of leeway for the business unit.
7. Provide a week for the documents to be covered at the meeting to be reviewed by the attendees.
8. Culture and tone is critical. The sessions are to be constructive, not confrontational.
9. Disciplined follow-up with notes and connections to other critical corporate processes is essential.

Second, is to drive strategic creativity, increasing the innovativeness of a company's strategies through engaging conversations that challenge the status quo, produce experiments, and address themes that cut across the business units. Creative thinking cannot be forced. Nevertheless, companies can create conditions where it is much more likely that creative accidents will happen. The mechanisms to increase the odds of promoting creative accidents in strategy :

1. Bottom-up strategy by experiment. Experiments are built around the core competencies of the business and designed to test hypotheses regarding future opportunities.
2. Top-down: Drive cross-cutting themes to deal with issues that are bigger than individual business units. This is where the CEO level can add strategic value to the organization.

The method for approaching strategy accounts for the real world phenomena such as evolving complexity, punctuated equilibrium, and path dependence. In this type of world, the ability to make accurate predictions is suspect. The basis for strategy therefore needs to by based more on a portfolio of strategic initiatives that cover the competitive landscape, allowing for progressive evolution of the business in an unpredictable world.

Six major actions for creating robust adaptive strategies are given:

• Invest in diversity
• Value strategies as real options
• Map jumps on the landscape -- the population of strategies needs to be diverse along the dimensions of time, risk, and relatedness to the current business.
• Test the population of strategies -- to ensure the population of strategies is sufficiently diverse
• Bring the market inside -- the selection pressures on the internal population of strategies reflects the selection pressures of the marketplace
• Use venture capital performance metrics -- meeting milestones against a business plan, progress in technology development, establishing key relationships, building talent, and market acceptance -- all better than traditional financial measures at assessing the creation of value.

Insightful, Intriguing, significant weaknesses

Beinhocker presents an economic paradigm he calls complexity economics. It serves to explain the true nature of the economy and patterns of business performance. He presents an evolutionary algorithm to explain the evolutionary nature of economics, markets, and businesses. Businesses which fail to evolve, which is most of them, certainly fail to thrive and often go out of existence.

Because economic evolution is unpredictable, there is no such thing as a static sustainable competitive advantage. Designing organizations to be better evolvers is what increases the odds of longevity and greater value creation.

Complex and dynamic problems cannot be solved by rigid structures and bureaucratic decision making. Culture that enables dynamic decision makes for a more responsive organization.

In the first section of the book, Beinhocker does a great job of presenting classical and neoclassical economics, along with their associated problems. This insightful compendium of economics history is worthy of a five star rating.

The later sections of the book are also engaging for the implications of dynamics for management and leadership in strategically guiding their organizations. Call it the practical application of complexity economics. The explanatory framework of wealth created out of the increasing order produced by the co-evolution of physical technologies, social technologies, and business designs is useful. Business designs are reflected in Business Plans that meld the physical and social technologies under a strategy. In an evolutionary world, there is no optimal strategy, the shelf-life of a strategy is limited, and that shelf-life is unpredictable. At best, strategies can only be better than others for a limited time. Unfortunately, as intriguing as the later sections are, the build up is weak.

The core of the book explains complexity economics Beinhocker's integrity is negatively impacted by his erroneous conclusions from his many cited resources and lack of sufficient citing. For example, in describing the source of economic progress, Beinhocker throws out Schumpeter's entrepreneur as the driving force of creative destruction, replacing him with impersonal technology evolution. He uses a 1990 study by Romer as his justification, saying Romer's study replaced the entrepreneur with technology as the driving force. Here is a quote from Romer (1990), "The source of energy for growth is technological change, knowledge built upon knowledge, arising from intentional actions taken by people who respond to market incentives." There is an intelligent agent in Romer's process that Beinhocker does not acknowledge.

His message is also much more trivial than he makes out. If the origin of wealth creation is knowledge, so what? Drucker told us that decades ago: "Business can be defined as a process that converts an outside resource, namely knowledge, into outside results, namely economic values." (Peter F. Drucker, Managing for Results, Harper, 1964, page 5).

Though the book has great information and ideas, it is less than it purports to be.

See the reviews on Amazon.com for further criticisms.

This is a collection of four of Bennis's short writings. The one entitled Everything You Always Wanted to Know About Change is a treasure of insights into innovation and organizational change. In reference to change, Bennis speaks of "Role innovators shift the whole paradigm in a practice sense." The impetus for the organization to change comes from the power of the new paradigm communicated as a metaphor. "It is not so much the articulation of goals of what... should be... that creates a new practice. It's the imagery that creates the understanding, the compelling moral necessity that the new way is right." (p 30),

The authors identify four leadership strategies, each with their own themes, areas of competency, and human handling skills (p 25-72):

• attention through vision -- the creation of focus with compelling visions that pull people toward them.
• meaning through communication -- the capacity to relate a compelling image of a desired state of affairs -- the kind of image that induces enthusiasm and commitment in others
• trust through positioning -- trust is based on predictability of people who make themselves known and make their positions clear. Positioning is the set of actions necessary to implement the vision of the leader.
• the deployment of self through --
• positive self-regard -- the creative and healthy use of one's self. 1- recognize strengths and compensate for weaknesses; 2 - nurture skills with discipline, having a capacity to develop and improve, being a self-evolver; 3 - the capacity to discern the fit of one's skills with what the job requires. Positive self-regard is related to emotional wisdom.
• the Wallenda factor -- learning requires trying which involves failure, something from which one can continue to learn. To continue to try in the face of the potential for failure requires a fusion between positive self-regard and optimism about a desired outcome.

Bennis and Nanus emphasize key points that they feel get at the essence of leadership in their introduction to the second edition.

• Leadership is about character
• To keep organizations competitive, leaders must be instrumental in creating a social architecture (i.e. culture) capable of generating intellectual capital (engaging people's interest and desires in achieving the objective of the leader or purpose of the organization).
• A strong determination to achieve a goal or realize a vision -- a conviction, even a passion... defining reality... purpose and direction.
• The capacity to generate and sustain trust is the central ingredient in leadership.
• True leaders have an uncanny way of enrolling people in their vision through their optimism -- sometimes unwarranted optimism.
• Leaders have an action towards bias toward action the results in success -- translating vision and purpose into reality.

Contrast the leadership criteria above with the oft used criteria organizations use to evaluate their executives:

• technical competence
• people skills
• conceptual skills
• track record
• taste
• judgment and character

What is most important to leadership cannot be quantified.

Pettigrew (1987, p 655) leveled charges at Bennis and Nanus's work which is worthy of consideration by the student of management. "As yet the absence of sustained empirical inquiry into the activities of corporate leaders suggests an over confident and over simple view of their role in organizational transformation. Part of the difficulty here is a rush into prescriptive writing before description and analysis (Bennis and Nanus, 1985), but more important are the analytical deficiencies underlying much of the research on leadership behaviour in the firm. These analytical difficulties include a concentration on leadership episodes rather than long-term leadership processes, a tendency to explore leader—follower relations without reference to the antecedent conditions which may influence their expression, and more significantly, the limited attempts to place leader behaviour in the context of political and cultural forces within the organization, and the wider economic and competitive forces with which the firm must operate."

Strategy as structured chaos addresses the dilemma of how to exploit the and explore the new without falling into either what the authors call the "overconnect trap" associated with efficient exploitation or the "disconnect trap" of creating such a big chasm between the old and the new that it cannot be overcome. The edge of chaos is the 'happy medium' between these two extremes. The book includes other illuminating frameworks about strategy as well.

Brown and Eisenhardt present the concept of patching, a concept underpinned by the idea of modularity. "Patching refers to the dynamic mapping of modular business (or products and services) onto marketplace opportunities. It is about continuously realigning businesses with markets." (228)

Burgelman presents a framework for strategy creation in large, complex firms. This model is consistent with the variation-selection-retention, i.e. evolutionary, model explaining organizational survival, growth, and development. These firms are relatively independent of the tight control of external environment selection, such as large enough firms or sufficiently resource-rich, can engage in "strategic choice" (Child, 1972). Their strategic choice process involves substantive inputs from managers from different levels of the organization. Internally generated variation, resulting from the "enactment" (Weick, 1979) fo the environment, is at the minimum, a very important source of variation in such firms (Penrose, 1968). Strategic behavior, in Burgelman's model, refers to such enactments.

This model integrates the business and corporate levels of analysis.

The strategic behaviors in this model include the generic categories of induced and autonomous. Induced strategic behavior uses the categories provide by the current concepts of strategy to identify opportunities in the "enactable environment" (Weick, 1979). This behavior is shaped by the current structural context of the firm. The autonomous behavior comes from the reservoir of entrepreneurial potential that exists at the operational levels of these firms. Autonomous strategic behavior introduces new categories for the definition of opportunities -- concepts of new business opportunities. Unlike induced strategic behavior, which follows corporate strategy, autonomous behavior precedes corporate strategy.

This is largely a case study of the history of the evolution of Intel. The framework used to lend perspective and understanding to Intel's strategies is an evolutionary framework of the strategy making process. This process consists of balance of an induced strategy process and an autonomous strategy process. The induced process creates alignment amongst the strategic actions of the firm, reduces variation, and carries out a defined strategic intent. The autonomous process creates linkage of new business opportunities to the corporate strategy, thereby amending it. It increases variation and fosters internal entrepreneurship.

A masterful synthesis of the essential elements of the strategy process. More importantly, the authors go beyond the concept of balancing the induced (which seeks to reduce variation) vs. autonomous (which seeks to increase variation) strategy making process to providing pragmatic insights to managing this paradox. The relationship between strategic leadership and strategy making is a key highlight.

Burns presents a taxonomy of leadership, distinguishing, for example, intellectual leadership from executive leadership. He developed the concept of transformational leadership which stands in contrast to transactional leadership -- the two basic styles of leadership.

• leadership -- "I define leadership as leaders inducing followers to act for certain goals that represent the values and the motivations -- the wants and needs, the aspirations and expectations -- of both leaders and followers." (Burns, 1978, pp 19).
• transactional leadership -- "Such leadership occurs when one person takes the initiative in making contact with others for the purpose of an exchange of valued things." (Burns, 1978, pp 19).
• transformational leadership -- "Such leadership occurs when one or more persons engage with others in a way that leaders and followers raise one another to higher levels of motivation and morality." (Burns, 1978, pp 20)

Social theory is explained in terms of four distinctively different perspectives, paradigms, of the phenomena of society and organizations. Burell and Morgan's framework juxtaposes the subjective and objective views of social reality against two alternative models for the analysis of social processes -- conflict, which they call radical change, and order, which they call regulation. This framework, and the four paradigms it defines, brings a depth of understanding to the theories and practices related to organizations.

In the process of explaining their sociology framework, they provide a framework primer, explaining in depth what a frameworks are, how to use them, and their benefits.

In setting the stage for presenting their research on corporate demographics, Carroll & Hannan present solid definitions of organizational form, identity, and populations.

This book is a short-course in philosophy using jokes to make the philosophical points. See the author's website.

A series of case studies on the effective administration and growth of major American companies.

Chandler explored how large businesses adapted their administrative structures to accommodate strategies of growth. In this work he gave a basic definition of strategy and structure which would have long-lasting resonance in the field: "strategy can be defined as the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals...Structure can be defined as the design of organization through which the enterprise is administered" (1962: 15-16). Chandler also suggested, based on his data, that "structure follows strategy and that the most complex type of structure is the result of the concatenation of several basic strategies" (1962: 16). (From: Heracleous, 2003, pp 4)

Noting that invention and innovation typically evolve from experimentation to pattern recognition, Christensen analogously identifies the initial set of patterns for companies to understand in forming a competitive advantage, from how to disrupt competitors to how to purse strategy.

Churchman (1971, p.18) recast the theories of knowledge of philosophers Leibnitz, Locke, Kant, Hegel, and Singer "in the language and design of inquiring systems," providing "a description of how learning can be designed, and how the design can be justified." Each of the philosopher's approaches provides for a different way of gathering evidence and building models to represent a view of the world.

Coase examined the question of why business organizations exist in a specialized exchange economy in which the distribution of resources is "organized" by the price mechanism.

Key points:

• He theorized that the reasons business organizations form, as opposed to a network of freelance contractors, is to minimize transaction costs.
• A firm consists of a system of relationships where the direction of resources is dependent upon an entrepreneur.
• Outside the firm production is coordinated through a series of exchange transactions in the market. Inside the firm, these complicated market transactions are eliminated, and instead the entrepreneur-coordinator directs production.
• The firm eliminates at least two costs it would have using the price mechanism to "organize" production: (1) discovering what relevant prices are, and (2) the costs of negotiating and concluding a separate contract for each exchange transaction
• At the margin, the costs of organizing within the firm will be equal either to the costs of organizing in another firm or to the costs involved in leaving the transaction to be "organized" by the price mechanism.

Synopsis from Weick (Weick, 1979, 21-22) --
Organizations are characterized as garbage cans into which are dumped problems, people, choice situations, and solutions (See organizations for the resulting definition of organization. A crucial variable in this model is timing. It is assumed that there is a continual stream of people, solutions, choices and problems that flow in an organization. Every now and then some clusters of these elements coincide, and a decision is produced. In other words, problems may attach themselves first to one choice situation then to another, and the same holds true for people and solutions.

Two major decision strategies in a garbage can organization are the strategies of oversight and flight. The strategy of oversight involves making quick choices. You make a choice whenever important problems are attached to some other choice and before they can drift to the choice you're making. Having made the choice you solve nothing, since the problems are still attached to other choices. Likewise, the decision style of flight involves delaying a choice until the problems wander away and attach themselves to other choices. Once the problems have left, then you make the choice. Again the choice solves no problems, since none are attached to it.

In the computer simulation of this process, most decisions involve flight and oversight. This suggests why organizations can keep making decisions yet never solve any of their problems.

Decision styles (From Cohen, March, and Olsen, 1972, pp 8) --
Within the kind of organization postulated, decisions are made in three different ways.

By resolution. Some choices resolve problems after some period of working on them. The length of time may vary, depending on the number of problems. This is the familiar case that is implicit in most discussions of choice within organizations.

By oversight. If a choice is activated when problems are attached to other choices and if there is energy available to make the new choice quickly, it will be made without any attention to existing problems and with a minimum of time and energy.

By flight. In some cases choices are associated with problems (unsuccessfully) for some time until a choice more attractive to the problems comes along. The problems leave the choice, and thus it is now possible to make the decision. The decision resolves no problems; they having now attached themselves to a new choice.

Some choices involve both flight and resolution—some problems leave, the remainder are solved. These have been defined as resolution, thus slightly exaggerating the importance of that style. As a result of that convention, the three styles are mutually exclusive and exhaustive with respect to any one choice. The same organization, however, may use any one of them in different choices. Thus, the decision style of any particular variation of the model can be described by specifying the proportion of completed choices which are made in each of these three ways.

Collins and Porras (1994) identified visionary companies, those with "underlying timeless, fundamental principles and patterns that might apply across eras." These companies had superior market performance over the long term (as long as 1926 – 1990 for many of the companies). They identified 18 companies that met their visionary criteria. Eighteen comparison companies were selected. These companies that started at similar times, were in the same industry, and had performed well. In many cases, they performed better than the visionary companies early in their life. The study sought to identify what was different about the visionary companies that gave them the performance edge over the merely good companies. The visionary companies' success was attributed to the following characteristics:

1. Clock building, not time telling – leaders of these companies build companies that prosper far beyond the term of any one leader. The company's success is not based on a leader with one great idea or a charismatic leader. The visionary leaders focus on the creation of the company itself.
2. No "tyranny of the OR" (embrace the "genius of the AND") – accept paradox, manage paradox. The "tyranny of the OR" leads people to believe "it" must be one or the other, not both. This is overly analytic, arrogant, and narrow-sighted. If fails to recognize the inherent irresolvable conflicts in most the real world situations.
3. More than profits – visionary companies have an ideological nature. This is a pragmatic idealism of a core ideology made up of the organization's core values and a sense of purpose beyond just making money which guides and inspires.
4. Preserve the core/stimulate progress – visionary companies have a relentless drive for progress that drives change and forward movement in all that is not core ideology. A visionary company culture satisfies the human need to explore, create, discover, achieve, change, and improve.
5. Big hairy audacious goals – A BHAG engages people with clear and compelling goals that stimulates and orients organizational change and progress toward great achievements. BHAGs are bold, going beyond reason in determining what they should be. They are visionary. BHAGs require commitment, thus the risk of irreversible decisions made along the way.
6. Cult-like cultures – visionary leaders build an organization that fervently preserves it core ideology in specific ways with tangible mechanisms that send a consistent set of reinforcing signals. A sense of belonging to something special is created.
7. Try a lot of stuff and keep what works – experimentation, trial and error, and opportunism are key to success. Consciously harnessing the evolutionary process of undirected variation and selection stimulated progress and the addition to the gene pool of the company of what is selected.
8. Home grown management – promoting from within preserves the core, but it requires developing leaders from within. Of the "seventeen hundred years of combined history in the visionary companies, we found on four individual cases of an outsider coming directly into the role of chief executive."
9. Good enough never is – visionary high performance companies are very demanding of themselves. Comfort of the members is not the objective. Powerful mechanisms produce a creative discomfort that obliterates complacency and stimulates improvement before the outside world demands it.

Like other writers of blockbuster business books, the authors are astute observers of the business world. What they dispense is knowledge worthy of strong consideration. Unfortunately, Collins and Porras cannot rightfully claim that their 1994 Built To Last work is scientific. It is all post hoc and lacks predictive value. The timeframe of Collins and Porras' study ends in 1990. In the next five and ten year periods, one-half of the visionary companies failed to match the performance of the S&P 500. In the five years following the study, 11 of these companies had profits decrease while 5 increased. The comparison companies, those that were merely good, had a majority perform above the S&P 500, 8 with increased profits and 4 with decreased profits.

Collins (2001) identified companies that had been good for at least 15 years that subsequently became great. These companies had the following pattern: "fifteen-year cumulative stock returns at or below the general stock market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years." Directly comparable companies were found that did not make the same transition and some companies that made a short-term shift from good-to-great but failed to sustain it. These candidate companies were studied in depth to determine what was different about the good-to-great companies vs. the others. The distinctive characteristics of good-to-great companies are complementary and are part of an integrated set of behaviors that includes a continual disciplined management process, analogous to building momentum in a flywheel, which results in a breakthrough to greatness. The distinctive characteristics of the good-to-great companies are as follows:

1. Level 5 Leadership – a paradoxical blend of personal humility and professional will.
2. First Who…Then What – using the analogy of a bus – first get the right people on the bus, the wrong people off, get people in the right seats, and then figure out where to drive the bus. The "right people" are your most important asset.
3. Confront the Brutal Facts – this is the Stockdale paradox, employing the image of Admiral Stockdale's imprisonment in the Hanoi Hilton as a prisoner of war – "You must maintain unwavering faith that you can an will prevail in the end… AND at the same time have the discipline to confront the most brutal facts of your current reality…"
4. Hedgehog Concept – you must determine what you can be the best in the world at, not necessarily what you are currently the best at. The "place" where you can be the best in the world is a place where three elements intersect – what you are deeply passionate about, competence wise what you can be the best in the world at, and the profound insight as to what exactly drives your economic engine, ideally expressed in the form of a single "economic denominator," expressed as profit per ___, that ties the strategy and performance measures together.
5. Culture of Discipline – discipline provides structure while freeing people to exercise their fullest potential while pursuing the Hedgehog Concept. This culture of discipline combines with an ethic of entrepreneurship to create a great company.
6. Technology Accelerators – technology is never a primary reason for the greatness of a company, but its successful employment makes the company great, and can even result in radical new technological discoveries.

The good-to-great companies are Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bose, Walgreens, Wells Fargo.

Like other writers of blockbuster business books, the authors are astute observers of the business world. What they dispense is knowledge worthy of strong consideration. Unfortunately, Collins cannot rightfully claim that this work is scientific. It is all post hoc and lacks predictive value.

A description of the resource-based view of strategy with five tests of what constitutes a valuable resource-capability combination.

Contains the definition of a Statement of Strategy, identifying the three critical components of objective, scope, and advantage. This statement definition is a brief statement, typically one concise sentence for each critical components accompanied by detailed annotations that "elucidate the strategy's nuances...and spell out its implications."

The process to prepare the statement, of course following the development of a great strategy, is rigorous and challenging. A concise, well thought out statement, provides guidance critical to the effective organizational pursuit of the strategy. In the "Hierarchy of Company Statements, Strategy follows the Mission - Why we exist; Values - What we believe in and how we behave; and Vision - What we want to be -- with "What our competitive game plan will be; its ends, domain, and means.

"Companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organizations' true nature is that of a community of humans."

Business organization success and longevity are interwoven. The business world has shifted from one dominated by capital to one dominated by knowledge. Unless their companies can accelerate the rate at which they learn, their primary asset will stagnate, and their competitors will pass them by.

This is a meta-analysis of the studies since 1990 that have identified the characteristics of high performance organizations (HPOs). From this analysis, several characteristics that seem to be decisive factors for achieving lasting good performance are identified.

A framework with eight factors organizes the HPO characteristics --

• Organization design
• Strategy
• Process management
• Technology
• Leadership
• Individuals & Roles
• Culture
• External orientation

There is a white paper associated with this article that includes the details of the study.

Jerker demonstrates that in a population of organizations that the outstanding performance of a few companies can be explained by purely random events. This finding strikes at the foundation of research that selects winners, post hoc, then draws conclusions about the behavior that leads to that success.

This dramatic finding is important for strategists to understand in where they look for guidance in achieving and sustaining their own organization's competitive advantage.

Related works -- This article is a great complement to Rosenzweig's The Halo Effect and Wiggins & Ruefli's, Sustained Competitive Advantage... and Schumpeter's Ghost.... It also ties in with understanding how humans tend to think, and their difficulty with probabilistic events, as revealed in Talib's The Black Swan and Douglas's Trading in the Zone.

Why would a strategist care about the ideas of a trader? Mark Douglas defines a particular way of thinking that enables one to thrive in an environment fraught with uncertainty. It is a sort of intuition combined with disciplined anti-intuitive thinking where pattern recognition meets rigorous rules in order to make consistent gains in the face of continuous uncertainty.

This type of thinking holds some clues to how managers might train their minds to be highly capable probabilistic thinkers. Knowing anything can happen, you find you don't need to know what is going to happen next in order to make money. When facing an environment with Gaussian events (normal distribution), an edge with a lot of bets will serve you well.

Modes of thinking -- The "trader mindset - probabilistic thinker" is in contrast to the "uncertainty realist", who recognizes that the "big" events in this world are not only unpredictable but cannot even be assigned probabilities (see Taleb, The Black Swan) and the "modeler's" mind where analysis is king and the objective is to eliminate uncertainty.

The first book to look upon a "business" as an "organization" that is, as a social structure that brings together human beings in order to satisfy economic needs an wants of a community.

This is the first book to identify the management discipline. The ideas in it launched the field of management and essentially created the field of management consulting.

The first comprehensive definition of the discipline of management. Coined the term ‘knowledge worker'.

Drucker argued for an active approach to management which entailed planning and actions intended to shape a firm's environment as opposed to reacting passively to it. This is in essence strategic management. This is consistent with Drucker's later famous quote that the purpose of a business is to 'create a customer.'

The three different dimensions of the economic task of a business, thus the entrepreneurial tasks, are: (1) Make the present business effective, (2) the business potential must be identified and realized, and (3) make the business into a different business in the future.

Drucker identifies eight business principles that must be pulled together into a coherent whole for effective management. A couple of key points: (1) management needs to focus on allocating resources to finding opportunities, not solving problems (innovating, not optimizing), and (2) businesses have a tendency to drift towards a diffusion of energy while concentration is the key to economic results.

One of management's biggest challenges is developing and maintaining the discipline of sticking to what they clearly know are sound principles of business. Note Collin's keys to becoming a great company -- disciplined people, disciplined thought, disciplined action.

Gave us the notion that strategic planning is action oriented – at at time when it was elitist thinking, centralized, and bureaucratic. It has not been until the early 2000s that strategy based on the evolutionary algorithm is being promoted as a learning by experimentation process as opposed to comprehensive analysis.

Drucker essentially explained that the world is flat, over 20 years before Friedman.

The overall economy is as described by Joseph Schumpeter, one of dynamic disequilibrium brought on by the innovating entrepreneur. Innovation is the tool of entrepreneurs used to exploit change. Entrepreneurship is necessary for competitive advantage to be produced or sustained. Not being entrepreneurial is higher risk than being entrepreneurial. Entrepreneurship is a management discipline which practices systematic innovation.

Managers need to focus on wealth creation, not the fiction of financial profits.

A comparative study of ADHD in a population of nomadic people, some of whom are nomadic and some now settled. Those with ADHD and nomadic were found to have higher BMI, due primarily to differences in fat free body mass, than those who were settled.

This seems to indicate that certain behavioral characteristics, such as that behavior in people with ADHD genetics, favor an exploratory existence as a nomad vs. a more exploitative existence of a settled person.

Fahey lays out the principles and process of scenario planning.

See Stacey, 2000, for information on the series this book is part of.

This reveals the complementary nature of the resource-based and evolutionary theories of the firm and in strategy process development. These schools of thought have continued on in the theories of dynamic capability.

Conceptualization of social systems (pp 23-26) –

• Structure(s) – the rules implicated in the production and reproduction of social systems and resources. Rules and resources, or sets of transformation relations, organized as properties of social systems.
• Systems(s) – Reproduced relations between actors or collectivities, organized as regular social practices.
• Structuration – Conditions governing the continuity or transmutation of structures, and therefore the reproduction of social systems.

Structure, as recursively organized sets of rules and resources, is out of time and space, save in its instantiations and co-ordination as memory traces, and is marked by an ‘absence of the subject.' The social systems in which structure is recursively implicated, on the contrary, comprise the situated activities of human agents, reproduced across space and time. Analyzing the structuration of social systems means studying the modes in which such [social] systems, grounded in the knowledgeable activities of situated actors who draw upon rules and resources in the diversity of action contexts, are produced and reproduced in interactions (bold italic emphasis added).

All competent members of society are vastly skilled in the practical accomplishments of social activities and are expert 'sociologists'. The knowledge they possess is not incidental to the persistent patterning of social life but is integral to it. This stress is absolutely essential if the mistakes of functionalism and structuralism are to be avoided, mistakes which, suppressing or discounting agents' reasons — the rationalization of action as chronically involved in the structuration of social practices — look for the origins of their activities in phenomena of which these agents are ignorant. But it is equally important to avoid tumbling into the opposing error of hermeneutic approaches and of various versions of phenomenology, which tend to regard society as the plastic creation of human subjects. Each of these is an illegitimate form of reduction, deriving from a failure adequately to conceptualize the duality of structure.

According to structuration theory, the moment of the production of action is also one of reproduction in the contexts of the day-to-day enactment of social life. This is so even during the most violent upheavals or most radical forms of social change. It is not accurate to see the structural properties of social systems as 'social products' because this tends to imply that pre-constituted actors somehow come together to create them. In reproducing structural properties to repeat a phrase used earlier, agents also reproduce the conditions that make such action possible. Structure has no existence independent of the knowledge that agents have about what they do in their day-to-day activity. Human agents always know what they are doing on the level of discursive consciousness under some description.

A study identifying two key variables involved in building and sustaining organizational inertia, resource and routine rigidity. These variables do not tend to change in the same way when the organization is threatened in a way that requires that it change, that the organizational inertia be decreased. This calls for managements' attention to managing both factors in different manners.

• Transparent - where the product changes but its representation does not, e.g. personalized offerings of hotels that track guests preferences
• Collaborative - the product changes as well as its representation, e.g. ordering a Dell computer
• Adaptive - the product does not change and neither does its representation, e.g. a mattress which adjusts it firmness to the sleeper
• Cosmetic - the product does not change but its representation does, e.g. the personalization of an otherwise standard product

A clear distinction of five types of economic offerings is made - commodities, goods, services, experiences, and transformations. This echelon of offerings go from lowest value to highest, and from tangible to intangible.
These distinctly different offerings have significant strategic implications. Experiences and transformations are distinguished from the others in that they are inherently personal, with transformations changing the individual.
Any type of offering which is not tailored to the individual will eventually be commoditized. The only means to achieve creating new value and receive commensurate revenues is to pursue experiential and transformational offerings tailored to individuals.

Given that services and experiences are inherently personal in nature, the notion of a market is obsolete and needs to be replaced with the notion of an individual customer.

A compilation of Harvard Business Review articles on systems archtiecture, modularity, and mass customization.

The insight that "the experience is the marketing" is an extension of Drucker's (1993) dictum, "The aim of marketing is to make selling superfluous." to which is added, "the aim of experiences is to make marketing superfluous.

To lend substance to this claim, not only are many examples given but a full location hierarch model identifies the elements and decisions to be made in establishing a full compliment of experiences which do the marketing.

There are five physical levels and five corresponding virtual levels --

• Flagship location and flagship site
• Experience hubs and experience portals
• Major venues and major platforms
• Derivative presence and derivative placement
• World-wide markets and world-wide web

This truly is a tour de force that deserves the potent descriptors of "groundbreaking" and "defining a management discipline."

This may be a challenging read, not due to the writing per se, but because of the newness and depth of the subject. Gilmore and Pine's take on authenticity is novel enough that the reader may not have the mental hooks in their management theory framework to immediately hang the new ideas. But this is exactly what I would expect from the definition of a new management discipline.

The book builds the case for authenticity as a dominate consumer sensibility. From there, the construct framing the realness and fakeness of economic offerings forms the foundation for all that follows. Rendering authenticity takes authenticity out of the realm of ambiguity and into the realm of explicit definition. This process addresses the essence of business-organization identity and the underpinnings of the value of its offerings. The author's approach to rendering authenticity is a uniquely substantive approach to 1) exploring and defining your identity, what it is "you will be true to", 2) defining your total offering "to be what it says it is," and 3) the possibility of joining these two together for greater synergy, forming a more powerful authentic offering.

The book culminates with an approach to acting into the future. This approach employs the authenticity framework and the juxtaposition process used to understand and render authenticity, but extends it to explore an unlimited number of dimensions to spur the creation of novel value.

The book contains a wealth of information for improving organization decision making. For example, Gladwell's examination of insight is particularly powerful. Organization leaders are often their own worst enemy. Their demand for justification for new ideas often kills these ideas before they have a chance to mature. "Insight is not a light bulb that goes off inside our heads. It is a flickering candle that can easily be snuffed out." This has strong implications for organizations seeking to nurture new ideas for innovation, especially since creative ideas are typically the result of intuitive insight rather than deductive reasoning.

Our preconceived notions work against making effective decisions without our slightest awareness. These biases prevent people from objectively seeing what is actually right before their eyes, even when they are sincerely attempting to be objective.

Frugality in decision making matters. Overloading decision makers with information destroys their ability to intuitively pick up the underlying pattern necessary to make effective decisions.

Gladwell's insights into behavior have significant implications for organization design and development, thus strategy. Gladwell's research indicates the convictions of your heart and the actual contents of your thoughts are less important, in the end, in guiding your actions and the immediate context of your behavior.

• We are more than sensitive to changes in context, we are exquisitely sensitive to them.
• The power of context is an environmental argument. Behavior is a function of social context.
• There are specific situations so powerful that they can overwhelm our inherent predispositions… Behavior can be powerfully affected nearly by changing the details of a person situation.

Tests of good organization design

As organizations grow and develop over time they move from one state to another. The movement from one state to the next requires a successful 'revolution' of sorts, or the firm will fail to continue developing and growing. The problem solved by each revolution sows the seeds for the next one.

See Stacey, 2000, for information on the series this book is part of.

Peter Guber notes that storytelling is central to business executives and entrepreneurs. Effective storytelling communicates in a way that inspires people to act. Stories that move and captivate people have four essential characteristics; they are true to the teller, the audience, the moment, and the mission.

• truth to the teller -- Authenticity is a crucial quality of the storyteller. He must be congruent with his story -- his tongue, feet, and wallet must move in the same direction. When you pitch a story, you are selling yourself. Being true to yourself also involves showing and sharing emotion. The spirit that motivates most great storytellers is "I want you to feel what I feel," and the effective narrative is designed to make this happen. That's how the information is bound to the experience and rendered unforgettable.
• truth to the audience -- There is an implicit contract between the storyteller and his audience. It includes a promise that the listener's expectations, once aroused, will be fulfilled. Listeners give the storyteller their time with the understanding that he will spend it wisely for them. To meet the terms of this contract -- and ideally even over-deliver on it -- the great storyteller takes time to understand what his listeners know about, care about, and want to hear. Then he crafts the essential elements of the story to so that they elegantly resonate with those needs, starting where the listeners are bringing them along on a satisfying emotional journey.
• truth to the moment -- A great storyteller never tells a story the same way twice.Instead, he sees what is unique in each storytelling experience and responds fully to what is demanded. The context of the telling is always part of the story.
• truth to the mission -- A great storyteller is devoted to a cause beyond self. That mission is embodied in his stories, which capture and express values that he believes in and wants others to adopt as their own. The story itself must offer a value proposition worthy of its audience.

A robust perspective on the phenomena of innovation in organizations.

Contains an excellent business model / business design construct.

Hammer and Champy define reengineering, or business reengineering, as "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed." (2001, pp 35).

Three "C's" dominate today's business environment -- customers have taken charge, competition intensifies, and change becomes constant. These dominant factors have obsoleted previously successful business structures and operations. Reengineering is called for to rebuild the activities of the firm, focusing those activities on creating and providing more value than ever before while eliminating wasteful activities.

The most important concept to grasp in reengineering is "process" ... making one's processes the heart of one's organization. (2001, pp 239-240).

Reengineering creates and organizational environment in which hierarchy is diminished, workers are more skilled, and structures are more flexible. The emphasis in this environment is on work, not on administration. Learning how to work and to manage in such an organization is a critical requirement for harvesting the benefits of reengineering. (2001, pp 245). Following that, change drives reengineering to be a regular activity.

A population ecology perspective on organization-environment relations defined. This view comes from the theory that patterns in nature are due to the action of the selection process, therefore patterns of organizations, i.e. organization structure, should primarily be a derivative of the selection process. At the time of this article's publication, most organization literature subscribed to the adaptation view of how organizations come to be defined.

A great source of knowledge regarding strategic management. Loizos's review of historical approaches and perspectives on strategic management build a strong basis for what he calls the organizational action (OA) perspective. He rightly calls this a framework, rather than a model, as it knits together the complex variables in a logical pattern to define strategic management.

This work is a report on the Evergreen project, a "statistically rigorous" search for the key to 'evergreen' business success. The findings are that a company that excels in 6 areas will have a better than 90% chance of being a winner. The four areas all companies must excel at are:

• Strategy -- Devise and maintain a clearly stated, focused strategy
• Execution -- Develop and maintain flawless operational execution
• Culture -- Develop and maintain a performance-oriented culture
• Structure -- Build and maintain a fast, flexible, flat organization

In addition to the four above, a company must excel at two of the following:

• talent -- hold on to talented employees and find more
• leadership -- keep leaders and directors committed to the business
• innovation -- make innovations that are industry transforming
• acquisitions and mergers -- make growth happen with mergers and partnerships"

This research and its conclusions are fraught with difficulties. The authors have not revealed their study methods and their claims are not substantiated by what is presented in the book. Direct requests for that information have been ignored. In addition, the areas of excellence are so broad as to be nearly meaningless.

"The resource based view of strategy has a coherence and integrative role that places it well ahead of other mechanisms of strategic decision making. After thirty years or so, the subject of strategy is genuinely acquiring what can be described as a paradigm - to use the most overworked and abused term in the study of management."

"The objective of a firm is to increase its economic rent...Economic rent is the measure of the competitive advantage which effective established firms enjoy, and competitive advantage is the only means by which companies in contestable markets can earn economic rents."

The opportunity for companies to sustain these competitive advantages is determined by their capabilities. The capabilities of a company are of many kinds. For the purposes of strategy the key distinction is between distinctive capabilities and reproducible capabilities.

Kay cites pluralism, true diversity with open debate and decentralized authority as opposed to central planning and homogeneous harmony, as the mechanism that produces economic evolution and growth. The other extremes, strong centralized planning or unrestrained greed and opportunism leads to poor countries, not rich. Kay describes "disciplined pluralism" as the right mechanism.

"In an uncertain, changing world, most decisions are wrong, and success comes not from the inspired visions of exceptional leaders, or prescience achieved through sophisticated analysis, but through small-scale experimentation that rapidly imitates success and acknowledges failure. This disciplined pluralism is the true genius of the market economy."

A compilation of techniques for thinking, learning, and acting differently in order to build the firm's competitive advantage.

Knight distinguished between risk, where outcomes are known and probabilistic, and uncertainty, where the outcomes are not known. "Risk" designates a measurable uncertainty. "Uncertainty" designates an unmeasurable uncertainty. (p 233).

Risk and uncertainty pose two different challenges to management. Management strives for as much predictability as is reasonably possible, but uncertainty indicates that prediction is futile. This is where rational thinking and methods break down. You cannot plan for scenarios if you don't know the possibilities are, or if you cannot assign a reasonable probability to a possibility.

Leadership and management for transforming organizations. An eight stage change process is defined --
1 - establishing a sense of urgency
2 - creating a guiding coalition
3 - developing a vision and strategy
4 - communicating the change vision
5 - empowering employees for broad based action
6 - generate short-term wins
7 - consolidating gains and producing more change
8 - anchoring new approaches in culture

Kuhn explored social change, how it comes about, using the context of scientific revolutions. He popularized the term paradigm and paradigm shift. Kuhn's book argues that the evolution of scientific theory does not emerge from the straightforward accumulation of facts, but rather from a new metaphor, a new paradigm, that is attractive enough to draw attention away from the established modes of thinking. Change is not linear, not necessarily logical, and rarely from those exposing the dominant discourse of the field of knowledge.

A provocative examination of the nature of the human experience with the computer, both what it is and its potential is. The art and structure of drama is proposed as the best analogy for achieving the highest potential of the human-computer interaction. Drama serves as the model for experiences in general and human experiences with computers in particular.

Learned et al. echoed Chandler (1962) when they defined strategy as "the pattern of objectives, purposes, or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in, or is to be in and the kind of company it is or is to be" (1965-9:15). They viewed strategy formulation as a process interrelated but practically distinct from strategy implementation, a distinction that has been questioned by strategy scholars, even those aligned with industrial organization economics such as Michael Porter, who has asserted that "there is no meaningful distinction between strategy and implementation, because strategy involves fine-grained choices about how to configure particular activities and the overall value chain" (1999: 25). In formulating strategy, Learned et al. proposed that managers should balance external market opportunity with internal firm competence and resources, managers' personal values and aspirations, and obligations to stakeholders other than the stockholders. Strategy could then be implemented through mobilizing resources, exhibiting leadership, and configuring the appropriate organization structure, incentives, and control system. This broad approach was consistent with that of Chandler (1962), and incorporated Selznick's (1957) concept of "distinctive competence" as well as the idea of an uncertain environment. (From: Heracleous, 2003, pp 4-5).

A masterful work addressing the nature of man. His recap of the history of human nature is comprehensive, even-handed, and highly insightful. This forms the basis for critically examining current theories of human nature, revealing the weaknesses in the predominant thinking with evolutionary theory, sociobiology, evolutionary psychology, and cognitive science.

Malik reveals the paradox of man as unique, possibly unreachable in understanding through the means of science, which is an invention of man, and man as beast or zombie. The discussion of what science can and cannot explain about human nature is worth the read in and of itself.

From the back cover: "It deftly interweaves philosophy, science, and history to answer the most fundamental question of all: what is a human being?"

March and Simon's book is a seminal book in organization theory. It is a complete management theory. It includes discussions of classical organization theory, decision making, conflict, bureaucracy. Key concepts introduced in this work are:

1. bounded rationality
2. satisficing
3. garbage can model of decision making
4. uncertainty absorption
5. problem solving
6. innovation

The concepts of this work greatly expanded the notion of what an organization is about and how it functions, well beyond the predominant rational and mechanistic views of organization. Weick and March are associated with moving management theory into the realm of the business/organization as an open system and the people/organization as social, vs. rational, actors.

There are powerful forces which naturally pull organizations towards exploitation of old certainties and away from exploration of new possibilities. Organizations must actively manage to achieve equilibrium between exploration and exploitation to develop and sustain a competitive advantage.

March's models reveal how organizational learning works – what makes it effective with exogenous turbulence and a varying number of competitors.

Learning is something to be strategically planned and controlled to enhance the evolutionary capability of the organization. The management of learning produces the returns to knowledge that produce the performance characteristics of the organization that make it competitive in its particular environment and context. For example, in a highly competitive environment, returns to changes in knowledge are greater if it increases the variability of the organizations realized performance than if it increases the expected value (average) of the realized performance.

Management implications --
In a turbulent environment with a significant number of competitors, exploration, which brings in an influx of new knowledge from members, new technologies, and cultural diversity all increase the variability of change in knowledge in a positive way, which increases the odds of an organization having a competitive advantage.

A primer of ideas for thinking about how decisions happen. The incisive insights into how decisions actually happen provides a understanding of the extreme difficulty in making intelligent choices. "The idea of decision making give meaning to purpose, to self, to the complexities of social life. It ennobles as it frustrates." (March, 271-212).

A panoramic overview of organizational action research and theories during the 1900s. This serves to provide an order and perspective useful to those seeking to make sense of the great deal of activity in this arena.

March premise is that business organizations' pursuit of intelligence, the gaining of knowledge, are ordinary tasks. These tasks are in both the exploration and exploitation needed in order for a firm to sustain its competitive advantage. March reflects on the effectiveness of three categories of technology (technology is the application of human knowledge to work. (Drucker, 1985)) in this pursuit of advantage and its renewal.

Rational technologies --
There are the well-established rational technologies in common use such as budgeting, planning, TQM, strategic analysis, and management techniques in general. Rational technologies involve three components:

• abstractions -- models of situations that identify sets of variables, their causal structures, and sets of action alternatives
• collections of data -- capturing histories of the organization and the world in which it acts
• decision rules -- that consider alternatives in terms of their expected consequences and select the alternative that has the best expected consequences from the point of view of the organization's values, desires, and time perspectives.

This technology serves very well as an instrument of exploitation, especially in simple environments, but can be ineffective, even dangerous, applied to exploration or complex problems.

Feedback-based adaptation technologies --
These technologies less structured and not as explicitly defined and implemented, but no less common than rational technologies in use in business enterprises. Contemporary theories that emphasize feedback include theories of:

• experiential learning
• learning from others (diffusion, imitation)
• variation/selection

These theories of feedback-based change over time posit that procedures or attributes associated with successes are more likely to survive or replicate at a more rapid rate than procedures or attributes associated with failures.

The central requirements of adaptive processes are:

1. a reproductive process that replicates successes where the attributes associated with survival are reproduced more reliably than the attributes that are not.
2. that it generate variety that offer opportunities to experiment with new possibilities

In order to meet these two requirements, adaptive processes engage in activities associated with exploitation – the refinement and implementation of what is known – and exploration – the pursuit of what might come to be known. The character of adaptation is local, contributing to the firm's survival in the short-run but rarely in the long-run. Feedback-based adaptation favors exploitation over exploration, biasing it against risky alternatives. A bias against risk is a bias against exploration.

Technologies of foolishness --
Technologies of foolishness are an answer to the need to deliberately induce greater variation in order to supplement exploration beyond what the technologies of rationality and adaptive feedback can provide. These technologies include foolishness, brainstorming, identity-based avoidance of the strictures of consequences, devil's advocacy, conflict, and weak memories.

Application of the technologies --
Technologies of rationality are effective instruments of intelligence and exploitation. They work well in situations with simple to moderate complexity. On the other hand, they do not work well for complex problem solving. As a result, unintended exploration produced through the technologies of rationality in complex situations seems to produce more disasters than successful discoveries.

Adaptation technologies respond to the recorded events of history, not to the underlying distribution of possible events. As a result, they essentially exaggerate the likelihood of what has happened and underestimate the likelihood of what might have happened. Any probabilistic historical process is subject to sampling error in its realizations.

Rationalist technologies depend on abstract models of reality that reduce the complexity of any particular context to what are believed to be its essential components and relations. The models depend on strong assumptions about the extent to which present knowledge encompasses the causal structure of the world and the preference structures of human actors. Within such abstractions, the forecasts of rational calculation compound so that small errors or oversights multiply into large ones and multiply at an increasing rate as complexity increases. These errors are often costly, even deadly, in their consequences.

Technologies of rationality are not so much enemies of foolishness and exploration as they are agents of them. The characterization of rationalist technologies as reliable but inhibiting creative imagination probably underestimates the potential contribution of rational technologies to foolishness and radical visions. Besides being seen as simple instruments of exploitation, technologies of rational choice may be seen partly as instruments of exploration where they are dangerous fools, thereby joining the pool of dreamers out of which come great ideas as well as monstrous and idiotic ones.

This again is a post hoc study of what makes for big winner and big losers in business. Big winners<

1. Occupied sweet spots.
2. Possessed the ability to move into these spots. 
3. Disciplined themselves to defend their spots.
4. Exploited and extended their positions.

Big losers:
1. Occupied sour spots.
2. Were rigid. 
3. Could not defend their positions. 
4. Could take advantage of their positions.

As is typical of this genre of work, it does not address how you make strategy, formulate a competitive advantage, make an effective strategic choice, or explain what a sound choice looks like.

In this study, McGahan and Porter examined the importance of year, industry, corporate-parent, and business specific effects on the profitability of U.S. public corporations, seeking to understand the degree to which each of these factors explain profit variation when industries are defined by the SIC system. This study cover thousands of companies from 1982-1994. The results are as follows --

• year -- 2 percent, attributable to macroeconomic fluctuations that effect all business segments to the same degree each year
• industry -- 19 percent, is attributable to stable industry performance
• corporate-parent -- 4 percent
• business-specific effects -- 32 percent, attributable to stable the business-segment by SIC code, not business-unit. The authors speculate that the average business segment probably covers many business units. These segment-specific effects encompass all business-segment differences, including diversity in market share, differentiation, heterogeneity in fixed assets, differences in organizational processes, differences in organizational effectiveness, heterogeneity in activity configurations, anomalies in accounting practices, and differences in managerial competence.

McGahan and Porter concluded that industry did, and still does, really matter --

• industry accounts for 19 percent of aggregate variation in business-specific profits, and 36 percent of explained variance
• industry influences the