Introduction
In this new era in the world of business, organisational structures are complex such that decisions taken by managers has to be strategic which have to blend with the understanding of the business environment in accordance with the vision and mission of these organisation. An organisation such as absa bank Ghana limited is one of the organisations which have variety of external and internal environmental factors affecting it management due to its complexity.
Therefore, managers need to understand both internal and external forces and factors of the business environment in order to make decisions that may affect the progress of the profitability of the organisation and for effective management of these organisations. In other words, managers need to have strategic decision that may have positive effect and be successful in their business environment. According to Stacey (2011), Systems thinking essentially seeks to understand phenomena as a whole formed by the interaction of parts.
To understand the changing ideas of strategic thinking, the aim of this essay is to critically examine strategy, strategic thinking, system thinking, and approaches to strategic thinking, complexity perspective, complex adaptive system, practice perspective.
Strategy
Strategy is defined as establishment of an exceptional and valuable position, linking a different set of events (Porter, 1996). Additionally, Chandler (1963) defines strategy as the reflection of the long-run goals and purposes of an enterprise and the adoption of courses of action and the allocation of resource necessary for carrying out these goals.
Also, Johnson Scholes (2011) defines corporate strategy as “the direction and scope of an organisation over long term which achieves advantages for the organisation through its configuration of resources within a changing environment to meet the needs of market and to fulfil stakeholder expectations”. (Barry and Elmes, 1997; Knights and Morgan 1991; Hendry 2000) strategy is a particular type of activity that is connected with particular practices, such as strategic planning, annual reviews, strategy workshops and their associated discourses. Competitive strategy is about being unique. It means purposely selecting a different set of activities to provide exclusive blend of results (Michael Porter 1996, p. 60). Strategic management is the process of contributing in the discussions around essential evolving concerns (Stacy 2000).
Therefore strategy is referred to as a well-developed approaches that organisations has to undertake so as identify both external and internal strength, weaknesses, opportunities, and also threats so that firms can maximize profit and which has to be in line with the focus of the organisations vision and mission.
Intended/deliberate and emergent strategy
In studying strategic management, Henry Mintzberg (1978) first debated that a strategy can be both emergent and deliberate. Hence a deliberate strategy is a strategy that is organised through thoughts, planned over a period of time by organisation. This plan is carefully thought, developed and communicated to attain some action or results. On the other hand, emergent strategy is defined as strategies that developed as part of “pattern in a stream of action” and are divorced from any preconceive plan (Mintzberg, 1987; Hamel and Prahalad, 2005). Mariotto (2003) argued that emergent strategy is “unplanned strategy” meaning this strategic is considered by the organisation only when it takes place or even afterwards.
For example, working as a sales officer (lead generator) at absa bank Ghana limited, every month leads are generated from head office and then given to sales officers at various branches together with sales trackers. These generated leads are given to sales officer to call and as a result, to also augment already generated leads by sales officers themselves. All lead calls are updated by the sales trackers to head office for feedback. This strategy is to maintain current customer base, increase customer’s satisfaction, reducing crowded customers within the banking hall and above all increase and maintain the profitability of absa and shareholders. These strategies are deliberates and are routine from head office every month so that sales officers at various branches can achieve their sale targets. This explains Henry Mintzberg (1978) argument that some strategies are emergent and deliberate.
Therefore I use both emergent strategy and deliberate strategy to execute my daily activities at work and my personal daily life. To achieve my daily target, I use deliberate strategies but in the course of my daily activities there are various unplanned strategies that take place within my planned strategies. This planned and unplanned strategies help me achieve targets and in line with the organisations strategies.
Strategic thinking
Strategic thinking is defined by Stacey (1992) as using analogies and qualitative similarities to develop new ideas and designing actions based on new learning which is the basics for system thinking and problem solving. Wilson (1994) also defined strategic thinking as a way of thinking about strategy. Strategic advantage is most commonly found in idiosyncratic routines and people’s behaviour (Balogun et al, 2003). Strategic thinking entails thinking regarding the purpose, values, along with processes and individuals and other resources (Leonidas, 2011).
Therefore strategic thinking is the process where managers in an organisation develop and strategize the future (long term) uncertainty, opportunity and threat within the business environment. With strategic thinking in the long term, managers have to make sure that these strategies are in line with the organisations vision.
System Thinking
A system is defined a set of resources that is personnel, materials, facilities, and/or information organized to perform designated functions, in order to achieve desired results (Reisman 1979, p. 2). To add, a system is also as an entity which maintains its existence through the mutual interaction of its parts (Von Bertalanffy, 1954). Furthermore, thinking about the world is through established views or paradigms (Khun, 1970). Hence thinking is the process of considering or reasoning about something. In Professor Ackoff speech and video on system thinking, he defined three characteristics of a system and that is (a) a system is a whole that contain two or more parts, each of which can affect the properties or behaviour of a whole. (b) None of these properties has an independent effect on the whole. How any parts affect the whole depends on how other parts are behaving. (c) No matter how you sub group these properties; each sub group will have effect on the properties and the behaviour of the whole and none will have independent effect.
According to professor Ackoff, system is a whole that cannot be divided into independent parts. System thinking is the process of studying and understanding the relation between various components and how they influence these components in a system. Ackoff and Addison ( 2010) defined system thinking as an approach to solving complex problems by addressing every issue as a component of a larger system, rather than as an independent aspect with unrelated consequences. Thinking is the process of considering or reasoning about something.
Therefore, system thinking is a way of tackling difficult issues by taking into considering all aspect of the issues as part of the whole problem which are interrelated and interacting systems rather than solving such complex issue independently with separate concerns. Also, Richard (1994) defined system thinking as the art and science of creating consistent interpretation about behaviours by developing and understanding of underlying structure. This means system thinking is the process of thinking about the system and taking a critical look at the changing aspects and interactions of allocation of resources and the environment in which the system functions (Reisman 2005). According to waters foundation, system thinking does not have any defined methods, but it rather demonstrates itself as a set of tools, habits, and practices (Waters Foundation 2012)
Complexity perspective: New ways of thinking about strategy
Riesman (1979, p. 2) stated that system is a set of resources that is personnel, materials, facilities, and/or information organized to perform designated functions, in order to achieve desired results. Additionally, system consist of elements and relations which work together to get the emergence of new organisational results. Complex systems consist of many parts of elements that are distributed without centralized control. Complexity is defined as the interrelationship, views and effect of communication within an organization and between an organization and its setting (Mitleton-Kelly, 1998). (Mitleton-Kelly, 2000) argued that even though there are several theories arising from various natural sciences studying complex system such biology, chemistry, computer stimulation, evolution, mathematics and physics but there is no single integrated theory of complexity. An example of complexity theory is far-from-equilibrium theory. ‘A profitable way of studying complexity is by looking at dissipative structures, which are open systems exchanging energy, matter or information with their environment and which when pushed far-from-equilibrium create new structures and order’ (Mitleton-kelly, 2000 p.10).
In an organisations or firms, there are combination of different components of elements which come together to form a system. Therefore managers require both strategic thinking and strategic decision making so as to improve their strategies in the long run of the organisation. Mitleton-kelly (1998) stated that, theories of complexity offer a way of thinking, a way of ‘seeing’ the world.
Complex Adaptive System
Complex Adaptive systems (CAS) are the system that explore and determine how elements operate within the complex system. “Whether, knowingly using the principles of complexity the industrial partners can create organisations, which can co-evolve with their changing environment and recreate themselves as they grow, thus reducing the need for constant imposed restructuring” (Mittleton-Kelly, 2000). In our organization for example are usually the banking hall gets crowded during the last week of every month and during this pick weeks there is pressure on the sales officers. So during these last weeks, managers dedicate an extra colleague to assist sales officers. This reduces pressure on sales officers work with efficiency and meet the branch monthly targets. This practice has been adapted by the branch and very helpful in efficiency and productivity. Also as a sales officer (lead generator) of the bank, at the end of every quarter we are taken through product knowledge and also write refresher courses concerning some internal policies. With this activity done every quarter, I and colleagues have adapted and this improves our sales knowledge and consistent with company policy. Another example of adaptive behaviour is that, my duty and responsibility is to increase customer base and also profitability of the company through the sale of the company’s products. Therefore I make sure I call all leads sent from head office and everyday check and visit them most especially customers having challenges and cannot come to the banking hall. Additionally, I attend ceremonies of customers who invite me to their ceremonies. This gives them some confident and bond between them and the company.
Strategy as practise
Jarrat and Stiles (2010), in their article wrote that, strategy development has been presented in two academic models. That is process-based, organized and implemented, and developed through the consultation within the organisation, with various stakeholders and through examining of the environmental data. According to Jarrat and Stiles (2010), emergent models are model which adjust to current organisational strategy depending on business environment. This emergent model is describe by (Quinn, 1980) as logical incremental, adaptive (Chaffee, 1985) and/or processual (Whittington, 2001). Whiles the formal model involves the application of strategy which is guided by some traditional structure and analysis such as SWOT, PEST and BCG (Gunn and Williams, 2007; Mintzberg, Ahlstrand and Lampel, 1998; Pickton and Wright, 1998).
However, this was criticised by (Calori 1998). Calori (1998, p. 284) argues that these frameworks create ‘a bias towards thinking as opposed to other forms of knowledge, a bias towards binary logic and a disregard of feelings’ (emotions and morals) in understanding, reasoning and decision-making. Also Clark and Kulviwat, (2005) argued that the rational method was oversimplified, lack of explanatory or predictive value, insufficient description and prioritization of factors recognized for interrogation, recurrent difference on which factors should be included, re-enforcing of entrenched mental models, and confining deliberations to ‘elaborations and extensions of what is already known.
According to Jarrat and Stiles (2010), there are no standard approaches to strategy practice by managers. Jarrat and Stiles examine how managers strategize depending on the situational strategy business environment. Therefore Jarrat and Stile (2010) briefly described three strategic practices. Firstly, Routinized practice is generally observed where the operating context is viewed as predictable and the strategy perspective is centred on alignment and/or resource reconfiguration. Secondly, Reflective practice is generally observed where leaders view the environment as complex and dynamic and strategy as a lived experience or challenging the dominant model and lastly, Imposed practice is observed when leaders assess the environment as stable and strategy as incremental.
In the 21st century, organisations which are established in a good business environment are faced with competition with either existing competitors or emerging competitors. Therefore managers of these organisations need to have strategic in decision making tools which will enable them to take strategic decision towards the achievement of the organisations profitability. Their strategies must be in line with the company’s vision within the business environment. Managers must also be trained on the use of various strategic tools.
Jarrat and Stiles (2010) stated that there are several strategic tools to be used in management and these tools are the SWOT analysis, the PEST analysis and BCG. The SWOT analysis which in full terms and meaning is Strengths, Weaknesses, Opportunities and Threats, these are mostly used strategic tools that organisations and mangers use to determine the internal strengths and weaknesses as compared to external opportunities and threats. SWOT analysis enables managers to increase the strengths and opportunities of the organisation whiles they decrease the weaknesses and threats of their organisation within the business environment. Secondly PEST analysis is Political, Economic, Social and Technological (PEST) and Bolton Consulting Group (BCG). These are the strategic tools available for managers and leaders in any organisation can use to increase the profitability of the firm within the business environment and also considering situational strategy of the organisation.
Conclusion
Reisman (1979, p. 2) defined system as a set of resources that is personnel, materials, facilities, and/or information organized to perform designated functions, in order to achieve desired result. Whiles thinking is the process of considering or reading about something. System thinking is important because managers and organisations form the system. Therefore system thinking is studying organisation as a whole. That is system thinking as studying of the organisation, the human activities and the structure of the system.
To understand the complex system and strategic thinking, organisations need to have a well understanding of the system and the elements that form the system. A well plan strategy must have a clear vision and that can help the firm adjust to change in current situation without affecting both stakeholders and shareholders of the firm badly. This means that most organisational system is complex and therefore needs mangers with a good strategic thinking to understand such complex system.
Also according to Jarrat and Stiles (2010), there are no standard approaches to strategy as practice but managers can apply three strategic practices namely: Routine practise, Reflective practices and Imposed practices. Managers or leaders can adapt any of these strategies as practice depending on the situation/condition and the environment. Lastly, Jarrat and Stiles stated that, as a strategic tool for analysing business environment, managers should adopt the SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), PEST analysis and BCG. Effective use of these strategies will improve organisation profitability and minimize the firm’s risks of operating. Therefore, for an organisation to function, it consist of element and we need to understand to activities of those element and as define by professor Ackoff that system is a whole that contain two or more parts and also none of these properties has an independent effect on the whole. This means that in an organisation any decision been taken will have a significant influence on other part and sub-system of the organisation.
The examples provided in this easy are in relation to the daily activities I undertake in my organisation. I relate these activities to the understanding of system thinking, strategic thinking and strategy as practise.
References
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Https://www.youtube.com/watch?v=EbLh7rZ3rhU
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