The Strategy Concept I: Five Ps For Strategyby Filippos

Author: Mintzberg

Year: 1987

Objectives:

This lecture introduces the course and seeks to provide a general understanding of the nature of strategy (Mintzberg, 1987, Grant,1997), the theoretical and practical history of firm strategy (Teece et al., 1997), of the behavioral assumptions underlying strategyanalysis (Grant, 1997; Mintzberg, 1987), and the increasingly important link between strategy and social responsibility (Porter andKramer, 2006). The predominant theoretical lenses applied in this course (especially Industrial Organization theory, resource-basedtheory and transaction cost theory) are shortly presented in a comparative perspective (Teece et al., 1997). We assume thateverybody in the class is familiar with the basic elements in Porter's strategy perspective. If not, you should make yourself familiar with:

M. Porter (1985): Competitive Advantage, The Free Press, New York (chapter 1 and 2), andPorter, M. (1991): Towards a Dynamic Theory of Strategy, Strategic Management Journal, Vol. 12 (21 s.).

Literature:

Grant - The Concept of Strategy, Chapter 1 - BINDERTeece, Pisano and Shuen - Dynamic Capabilities and Strategic Management,Mintzberg - The Strategy Concept I: Five Ps For Strategy,Porter and Kramer - Strategy & Society. The Link between Competitive Advantage and Corporate Social Responsibility

Mintzberg:

The Strategy Concept I: Five Ps for Strategy

The 5 Ps: Plan – Ploy – Pattern – Position – Perspective

- By explicating and using five definitions, we may be able to remove some of the confusion, and thereby enrich our ability tounderstand and manage the processes by which strategies form -

The field of strategic management cannot afford to rely on a single definition of strategy. The word has been used implicitly in differentways even if it has traditionally been defined formally in only one. This article presents five definitions of strategy and considers someof their interrelationships.

Strategy as Plan:

Strategy as a plan is the most common definition of strategy. It implies that strategies are made in advance and that they aredeveloped consciously and purposefully. That definition can be related to military definitions, game theory, management and thedictionary.

Strategy as Ploy:

Strategy can also be a ploy – for example used to threat, send signals into the market, to bargain or to outwit an opponent orcompetitor. Porter has covered some of hose ploys and devoted chapters in his books to: market signals, competitive moves anddefensive strategies.

Strategy as Pattern:

Defining strategy as a plan is not enough. Strategy needs to be realized and made into a pattern. Strategy is consistency in behavior,whether or not intended. People form strategies with their actions. Consistency or pattern in a stream of actions creates a strategy.

Points out the relationship between:

Intended strategy, Deliberate Strategy, Emergent Strategy, Unrealized Strategy and Realized Strategy.

So many things can actually happen and change from the stage where a strategy is formalized and until the point the strategy isrealized.

But what do we form strategies about?According to the author it can basically be about anything. Most commonly referred to usage of resources but also products andprocesses, customers and citizens, social responsibilities and self-interest.

Strategy as Position:

Strategy can also be a means of locating the organization in the competitive environment. In that way the strategy becomes a link or amediating force between the organization and the environment.

Strategy as a position does not address the competitive environment. It can be a head-on competition of two players or it can be an n-player market. The position can also be about avoiding or keeping the competition away (Blue ocean).

The strategy could also be pursued to promote cooperation between organizations, even would-be competitors. These collaborationsrange from informal arrangements to joint ventures and mergers.

Strategy as Perspective:

Strategy viewed as an ingrained way of perceiving the world, a common and shared company perspective. Strategy in this respect isto the organization what personality is to the individual. That could be the character of the organization.

The definition suggests that strategy is a concept. Every strategy is invented and exists only in the minds of interested parties thatpursue them. A collective mind – Individuals united by common thinking and/or behavior. A major issue is therefore how to read thecollective mind and understand how intentions diffuse through the system.

Interrelating the P´s:

There are many different interrelations between the 5 Ps. Strategy viewed as both position and perspective can be compatible withstrategy as plan and/or pattern.

Describes different views of strategy and different clarifications briefly:Most interesting is Majone.Policy core: Basic principles, Commitments, and Norms.Protective belt: Plans, Programs, and Decisions.

Companies should ask themselves what strategic changes influence what definition and what P?- Example: The move into breakfast menu for McDonalds was a change in position but not in perspective.- It all depends on how we define strategy and what part of the definition is most important to our company.

The need for Eclecticism in Definition:

The different definitions do not compete, no one is more important or relates more to strategy than the next one. They arecomplementary, each adds important elements to our understanding of strategy and encourages us to address fundamentalquestions.

Plan: Strategy deals with how leaders try to establish direction for organizations, to set them on predetermined course of action. Butdo people always say what they mean or mean what they say? We must get into the mind of the strategist to find out what is reallyintended.

Ploy: Takes us into direct competition. Where threats and other maneuvers are employed to gain advantage. But strategy is rooted instability, plans and patterns and not change.

Pattern: Focuses on action. Strategy is nothing if we do not take behavior into account. Deals with consistency in behavior. Realizedstrategy most important.

Position: The context and the competitive environment of the organization and the actions of the people forming the organization.Intentions diffuse through a group of people and become norms and values, patterns of behavior become ingrained in the group. –The Organizational mind.