Deliberate and emergent strategies in corporate planning

Organizational Strategies

Deliberate and Emergent Strategies

Companies have a number of different options as they chart their course, seeking to maximize their advantages and limit their liabilities. Two of the major strategies that companies can follow are deliberate strategies, which consist of a systematic course of action that is pursued to allow a company to reach a desired object of goal. Another basic strategy approach is that of the emergent strategy, which involves a company's responding to the particular conditions and dynamics of a particular situation. This paper describes three companies (in three different sectors) that are pursuing a deliberate strategy and three that are pursuing an emergent strategy.

Deliberate Strategy deliberate strategy may be seen as one that is initiated from within a company and that accords with the company's intrinsic goals. Of course, it is unlikely to be the case that any company can ever pursue what might be considered to be a perfectly deliberate strategy given that any new entrant into a market will always be affected by the marketplace as it is currently structured. However, it is certainly true that some companies pursue strategies that are close to being fully deliberate.

An example of an apparel company that is pursuing a deliberate strategy is the women's clothing company CP Shades. While the clothing that this company produces and sells in its stores is relatively expensive it is also relatively casual in look: The company aims its wares at professional women in occupations that allow them to present themselves creatively in the workplace. The company, by selling its clothing only in its own stores and by creating a distinctive and almost unvarying look (with only the palette of the clothing changing) from year to year has created a clothing universe that is entirely separate from all other clothing stores. It does not define itself vis-a-vis other brands or seek to compete with them. Rather, it defines itself vis-a-vis the philosophy and needs of its clients.

A food that has pursued a deliberate strategy is Nutella, which is a hazelnut and chocolate spread used in sandwiches and desserts. The company has only recently begun to market its product in the United States and has gone about this process as if Americans had been waiting all of their lives for a hazelnut and chocolate spread and was simply - until that first taste of Nutella - unaware of this fact. Rather than compare itself to peanut butter and seek to compete within the established market of sandwich spreads (which would have been an emergent strategy) Nutella has presented itself as something entirely (not merely partially) new.

This strategy has proven to be relatively successful:

Although Nutella sales have shown double-digit increases for many years, it's apparent that there still is a lack of awareness for the product and its uses. Generally, Americans consider Nutella a snack or dessert spread on fruits, pretzels, toast and crackers or used in recipes. Marketing studies consistently have found that consumers' purchases of Nutella dramatically increase after trying the product. And, brand adoption takes place after three to four purchases. Therefore, sampling and product demonstrations (in-store and elsewhere) as well as couponing have been critical to marketing efforts (http://www.prssa.org/resources/bateman2003-info.asp).

A health and beauty aid that is being sold through a deliberate strategy is Celestial Seasonings tea. The company has combined a number of different marketing concepts - primarily aromatherapy, hot-drink bonanza started by Starbucks, and the politics of agriculture - to create a product that stands by itself. Celestial Seasonings does not market itself as the "Starbucks" or the "Peet's" of the tea world, however. Rather, it markets itself as the only product that combines sensual pleasures, responsible environmental politics and an ethic of self-care in as effective a way as it does.

The company's own description of its teas refers only to its own virtues, declining to compare them to other beverages:

At Celestial Seasonings, we are committed to providing the highest quality, most environmentally responsible product possible. We know that you are concerned about what you and your family eat and drink, so we want you to know what makes Celestial Seasonings teas so special.

Our teas are all-natural, and we use natural flavors when needed. Our decaffeination process is safe and environmentally friendly, and we never use irradiated botanicals in our teas (http://www.celestialseasonings.com/whoweare/csdifference.php).

Each of these companies presents its products as unique, not merely one choice in a crowded field.

Emergent Strategies

An apparel company that is currently using an emergent strategy is Vans, which is continually shifting its strategy. In the arena of youth fashion in which Vans operates, producing shoes as well a clothes for the segment of the youth market that associates itself with skateboarding, being the "in" label is the most important thing. It is the most important thing for the company but it is also the most important thing for those who wear Vans products. There is actually relatively little that a company can do to guarantee this "in" status: Such a designation as being in is made by the young men (and some very few young women) who identify with this brand. It is consumers who make a company's products "cool" - even as (of course) they are engaging as advertisement for that company, thus necessitating the constant shifts.

A food company that is using an emergent strategy is Coca Cola, which is constantly setting its course not only to match what its consumers want but what its archrival, Pepsi, is coming out with.

Finally a health and beauty company that is pursuing an emergent strategy is INAMED, a firm that manufactures silicone breast implants and that in reintroducing them is responding to the recent legal challenges to their having been banned for use in the United States.

Departmentalization

If there is a single element of human thought that defines us as a species it is the ability to categorize - to put like with like and unlike with unlike. And yet, if there is any defining characteristic of social organizations it is the fact that what one person thinks is a logical category another person will disagree with - a useful reminder that there are always different ways to categorize or departmentalize both work and knowledge, as Griffin (2001) argues.

Anyone who has ever spent time playing with a young child will know this. A great deal of what we do when we interact with children is to teach them conventional ways of categorization. We give a child a collection of wooden blocks and then teach them how to sort them. "See," we say, "we can put all of the red blocks together here and all of the blue blocks together over there." And then we watch as the child ignores our neat divisions and puts all of the cubes together regardless of color.

This lesson - that you can put red blocks together or cubes together - is one of those kindergarten-level lessons that we have been reminded are in fact quite useful in the world of business, as this paper explores with an examination of how departmentalization works in three different situations.

1. In my current job, I manage a small mortgage brokerage company. We organize our loans in terms of how we originate them: Through customer solicitation telephone calls, through customer solicitation telephone mailing, through referrals, through real-estate offices, etc. We then process the loan application, underwrite the files to the lender's specifications and then submit the file for approval with the lender, who then prepares the documents and then closes the loan, at which point the mortgage broker is paid a fee.

This process works well, but it is certainly not the only way in which we might work. Mortgages that we initiate directly with the consumer are more profitable to us, but we tend to squander our efforts in this area by classifying different direct mortgage offers in different categories. We might be better served by beginning the process by concentrating on non-Realtor derived mortgages and those that are based on direct solicitation. This would emphasize to each of the firm's workers that it is not the physical means by which we attract business (i.e. telephone or mail) that matters but rather whether or not we work through a mediator.

2. We might also come up with a new way to departmentalize the fast food restaurants that we go to. Currently I go to Del Taco more often than I go anywhere else, although I feel no great loyalty to it. It is simply convenient. However, my loyalty to this brand name would certainly be increased if the company packaged its goods more thoughtfully. This should not be hard to do given the amount of information that the company has on consumer buying habits (since all transactions are computerized).

For example (and this is of course supposition since I do not have access to the data, but the company could do this on a more scientific basis) it seems likely that customers tend to order the same combinations of goods on a regular basis. But the clerks are told to ask customers if they want the same side order regardless: If I order a burrito I am asked if I want French fries, if I order a quesadilla I am asked if I want French fries, if I order a salad am I asked if I want French fries. I think I might even have been asked if I want French fries when all I've ordered was French fries.

The company has made the choice to treat all food items and all customers as potential French fry matches on the grounds that many people who like French fries and on the ground that they believe it is quicker to offer such simple choices. In doing so, they have created a certain kind of ethos for the chain. This is a type of departmentalization that revolves around a certain way of conceptualizing the ways in which fast-food restaurants work.

However, the company could make different choices with little if any costs being incurred (asking me if I want fries with my shake but a quesadilla with my burrito) and so reconceptualize the process of service in a fast food restaurant. Customers are not looking for cordon bleu service at Del Taco, but a shift to treating them as somewhat more discerning customers would certainly not be amiss.

3. My least favorite class has always been political science. When I tell people this they are often surprised because I am myself actively engaged in politics. I believe that politics matters: I stay informed, always vote, have deeply felt opinions (but am always ready to become better educated) and believe that these are all duties of each citizen.

And yet, I disliked the political science courses I took. Looking back on them with the perspective of departmentalization in mind I can see that these courses could have been organized in a way that would have made them far more appealing to me - as well a having made them in many ways a more incisive avenue of understanding American politics (which is why I would have liked them better).

Political science classes tend to be taught as if the only thing that mattered in terms of politics was the fact that there are political leaders and political parties. Well, of course both of these elements of the American political system are important, but they are only one element of it. One thing that is strikingly absent form the political science classes that I have taken is the American public. There are, from time to time in political science analyses, "voters," but these are not quite the same as people, their appearance tends to be fleeting, and they seem to have little if any free will.

However, politics is very much about people and individuals - and in large measure about those who do not vote and thereby have an important impact on the process. Political science with ordinary people in it would be more accurate as a science - and more fascinating as a discipline.

Virtual Organization

The following is a fairly typical definition of a virtual organization:

Any pattern of organization based around distributed physical, human and knowledge resources, and (most usually) tied together via information technology systems that enable such resources to perform valued-added activities. Today, most virtual organizations will involve people linked by computer and telecommunications networks such as the Internet or an intranet, and which permit them to run groupware and other applications for effective CSCW (http://www.nottingham.ac.uk/cyber/fullglos.html).

By such a definition an organization like a football team would be hard pressed to qualify. But let us consider a definition like the following:

An organization that is not limited by the constraints of legal definition. Virtual organizations may be formed in an informal manner through alliances of independent organizations, or by assembling members of various legally independent organizations into a single virtual organization with specified business goals and powers delegated by their respective legal organizations (http://www.eleccott.com/glossary3.htm).

If we consider a virtual organization along these lines we can see beyond the high-tech and gadgetry elements that are usually used to define the virtual organization to see its underlying structure. And when we look at such a structure we see that it is entirely possible to consider a football team to be a sort of virtual organization.

The key element of a virtual organization is the fact that it is made up of elements that are not present. Of course, in some sense this means that most modern businesses are "virtual" to some degree - with companies depending on parts that are manufactured elsewhere and on a distributor that is separate from the headquarters. It is not surprising that nearly every company should contain such a quasi-virtual structure; today's fully virtual organizations came about in part because of computer technologies that allow ease of communication but they also developed in part a logical successors to models of business that were already being used.

If we consider the defining characteristics of a virtual organization to be those elements of it that are unseen as well as seen, a sports team has a number of visual elements. The fans, for example, may well be seen and heard, but they are not a formal part of the organization. They are not on the payroll, are not required to show up, cannot list "fan" as their occupation on their tax returns.

And yet fans - whether absent or present - are a part of a football team, even as they are not a part of the football team. This indeterminateness of borders between the elements that are a part of an organization and those that are not is one of the defining characteristics of the virtual organization.

There are also a number of other organizations that interact with football teams in a sort of web: The betting industry is one of these, as are manufacturers of sport shoes and clothes, as is the educational establishment in large measure. Colleges are not (or at least not formally) in the business of helping the NFL, but effectively they do so. The bookmakers in Vegas are in business for themselves, but they too help college and pro-football teams. This dependence for its own organizational health on institutions entirely outside of its control is a marker of a virtual organization and is certainly true of football teams.

Virtual organizations occupy a particular temporal space: They are more fleeting than other forms of businesses, and this is certainly true of a football team. Although the franchise name may continue to exist for decades, the team itself is different whenever there are different players on the field, which is almost every day. This element of time-boundedness is more important than a dependence upon email.

Current literature on virtual organizations describes a richness of different aspects that contribute to the emergence of this new organizational form, like customer orientation, the use of information and communication technology (ICT), time-based competition or decentralization. However, there seems to be one common theme in this literature. "Virtual" organizations are frequently (re-) created, sustained to capture the value of a market opportunity and dissolved again to give way for the creation of a next virtual organization (http://portal.cetim.org/file/1/67/Katzy-1998-Design-and-Implementation-of-Virtual-Organizations.pdf.).

In large measure because they are constantly changing (and often changing dramatically and rapidly) virtual organizations are more team-oriented than individualistic:

Successful virtual organizations assume effective managerial competence for design and implementation. Even though all three design processes have distinct characteristics they can all three be simultaneously active. Preparing the proposal for a customer, for example, is at the same time active competitive behavior regarding its contents and it is the restructuring of a virtual operation that is build to deliver it. And the preparation of the proposal is a joint experience of its members, which contributes to the network design (http://portal.cetim.org/file/1/67/Katzy-1998-Design-and-Implementation-of-Virtual-Organizations.pdf.).

Virtual organizations are often based on the latest technology. But they are - like football teams - more importantly defined by their fluidity over time and by their porous organizational borders.