Whittington's four generic approaches to strategy and paradoxes in business

Whittington's Four generic approaches to STRATEGY AND PARADOXES RELATIONG TO THE Business WORLD.

Description of Whittington's four generic approaches to strategy

In 1993, Richard Whittington proposed four generic approaches to strategy, applicable in business, synthesizing thus the different strategy schools that created the management literature.

The two variables Whittington uses to describe and differentiate the strategic concepts and trends are the strategic goals and the strategic processes, in other words, what the company wants to achieve and how it goes about to obtain it. The two variables are placed on two orthogonal axes, with the strategic goals on the vertical and the strategic outcomes on the horizontal one.

In this sense, the vertical axis will represent "the degree to which strategy stresses the single outcome of profit-maximization or deviates to allow other possibilities to intrude." In other words, this axes shows whether or not the company is solely interested in obtaining profit maximization or whether it has other strategic targets in site as well.

The horizontal axis represents "the process by which strategy is developed." This may obviously be a rational, thought out process or may simply occur due to accident or chance. According to the four quadrants that are formed, Whittington divides strategy into classical, evolutionary, processual and systemic. We will have a look at all four in turn.

Classical definition of the classical approach refers to theoreticians who "regard profit maximization as the supreme goal of business, with this to be achieved through deliberate planning." Placed in the left-hand quadrant, the classical approach encompasses, thus, a realistic and rational approach to business strategy. All classical economic textbooks argue that profit maximization is primary goal of any business. Additionally, in order to achieve this goal, the company's management has an organized plan of action, with specific controls and feedback from all levels of the company.

The company has a mission statement that is well-defined, together with a set of strategic, tactic and operational objectives that it strives to achieve. Analysis and planning is, in this case, a "logical and rational analysis" and the company is keen to adopt a pro-active approach to the market's forces. Even more so, the classical approach turns to a symbiotic relationship between the planning process, the company's objectives and the resources that the company has available.

Evolutionary

The evolutionary approach states that "environmental changes are too fast to be predicted in advance." In this sense, the long-term strategic planning, the main element in the classical case, is futile, because the market factors are constantly changing and decisions need to be adapted to the new conditions set by the market.

On the scheme, the evolutionary school is situated in the right-hand quadrant, with the same goal of profit maximization, but with a different approach from the classical one. Instead, the evolutionists propose day-to-day planning and a short-term perspective on things. In this sense, as I have mentioned, there are no long-term decisions and the management process is characterized by issues like "discretionary production, replication, and optimization of strategic fit with the environment in the short-term."

The current global business environment seems to fit the main characteristics of evolutionism, in the sense that economic changes and other factors occur so fast that it is hard to make a long-term plan. Additionally, a long-term strategy can easily be copied and adapted by different other competitors in the industry.

Processual

The processual school refuses both a rational strategic approach and the profit maximization objective. In this sense, authors from this school sustain the fact that "strategies and change are greatly influenced by, and are the result of wide ranging political activities within the organization."

In term of the means used to achieve the company's objectives, the processual theoreticians characterize the company's strategy as the sum of individual ideas, thoughts or individual efforts. Putting together all these different reactions to the market factors or to the generic conditions means creating the company's strategy.

In terms of the objective to be reached, processual theoreticians believe that the company's objective is not always the same (profit maximization), but that it is influenced itself by the specific situation the company finds itself in at a certain period of time. As such, the goal may simply be improving quality or extending the company's market share, goals which do not necessarily lead, at least in the short run, to an increase in profits.

Systemic

The systemic school identifies with the classical approach in terms of the processes by which a company can reach its strategic goals. As such, "forward planning and working efficiently to achieve results" is at the core of their ideas. On the other hand, the systemic theorists see "economic action as imbedded in social relations."

Systemic strategy is closely related to the concept of the nation state and to the role that the mother nation plays in every company's existence. Daimler will always be a German company, despite globalization and global economic thinking, just as much as Toshiba will remain Japan's largest electronics producer.

In this sense, we may gain a larger grasp of why systemic theoreticians link the strategic goals to social responsibilities for the company and why social relations play their part here.

Evaluation of Whittington's four approaches to strategy

There is no doubt that Whittington's description of strategy and his four approaches, consistent with the strategic goals and strategic processes, synthesizes a great deal of theoretic ideas on business strategy as they appeared in the 20th and 21st century. On the other hand, we need to ask ourselves whether this synthesis is complete and whether it covers the entire strategic spectrum we may find in the 21st century global business environment.

In my opinion, it only does so from a theoretical perspective. If we refer to practical cases, we are deemed to always find situations where the strategic decisions taken and the short-term strategic option may find itself in-between two different schools of strategy. In this sense, it may be the case that a certain company, faithful before to the classical approach, for example, will find that, for the time being, it needs to change its primary strategic goal from profit maximization to increasing customer or employee satisfaction or improving human resources.

Of course, following the example presented previously, this does not necessarily mean that the strategic long-term goal is changed, but it shows that it may take different forms and that it varies across different categories. In the same manner, we may agree on the fact that a certain strategic process is not necessarily to be included strictly into one category, but that, according to the specific situation, it may lend several characteristics from each quadrant.

Another evaluating observation we may make is related to the fact that many of t he traditional large first adopt the classical methodology. There are some examples to this and General Electrics seems to be the best. Indeed, if we refer to the period jack Welch was CEO, from 1980 to 2001, the strategic concepts and processes he used, such as Six Sigma, e-business or "boundaryless" all targeted strategic goals that implied, but did not address directly profit maximization.

In this sense, Six Sigma referred to increasing the quality of the products and increasing customer satisfaction, boundaryless targeted a better circulation of information in the company, between employees and management, while e-business implied entering and benefiting from the informational revolution that was taking place. All these, even if complementary to the rational profit maximization strategic objective, were in the lower part of the graph.

In my opinion, the 21st century almost automatically implies that businesses fid themselves adapting to the evolutionary school of strategic management. It seems to me that this is the theory presents the most plausible solution for the ever changing variables with which a company is faced.

If we look for example at the evolution of the euro-dollar and yen-dollar currency exchange rates over the last couple of moths, we will see that the market presented impossible conditions for a long-term strategic decision that may have implied planning and an organized conception to be taken. Much too volatile, the currency markets turned upside down any kind of strategic processes that the managers may have conceived. The currency example can be easily extended over other variables to exemplify the difficult constraints in which strategic decisions are made in today; business environment.

Paradoxes

The first observation that we can make when referring to the statements described by De Wit and Meyer is that they tend to become less of a paradox if we consider large companies. I have again, in mind the General Electric example. Breaking with the past meant closing down some factories, while restructuring others and making acquisitions from fields that would prove very profitable in the future. On the other hand, Breaking with the past did not mean breaking with traditions, especially those on which the hundred years business was build on.