Business Architecture, Inc.

Contextual Factors

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Contextual Factors Affecting the Approach to Strategy

There is no one-size-fits-all approach to strategy development. To be effective, the approach itself will vary based on the particular situation, or context, of the organization.

  • Need for Learning -- Context determines whether to employ deliberate strategy formation, where an intended strategy is brought to realization, or emergent strategy formation, where a realized pattern not expressly intended is sought. Strategy formation varies by the degree of the need for learning.
  • Planning to Learn -- Context determines where learning needs to take place, regardless of how deliberate the approach to strategy.
  • Dynamics and Complexity -- The deliberate approaches to strategy do not fit well with dynamic or complex markets and industries.
  • Context is Shaped -- Context is not just "out there". The most significant task of the CEO is to shape the context of the business with the establishment of the mission, vision, and values.
  • Business Life Cycle -- The stage of life for the business is a key contextual factor in the approach to strategy. Startups need broad leeway, growth requires innovation and investment, and stable businesses require efficiency and early warning mechanisms.
  • Formalization Helps, Formalization Hurts -- Formalization of strategy processes is a two edged sword. The degree of beneficial formalization depends on context. The point where formalization turns from facilitation to control varies by circumstance. When formalization goes beyond facilitative support to be perceived as fascist control, it becomes counterproductive to the organization.
  • Organization Type -- Different types of organizations benefit from different approaches to strategic management. Mature stable bureaucratic businesses benefit from strong controls that would crush an entrepreneurial organization or cause a rebellion in a professional organization.
  • Strategy Competency -- Levels of strategic management competency of the business leadership varies greatly. The strategy process both produces strategy and builds a management competency. Tailoring the process to sync up with both the needs of the business and the competency of the organization is essential to success.