Strategic Leadership in a Changing World

Introduction

In this dynamic business environment, it is important for the firms to develop better strategies to run their operations efficiently and achieve the business objectives. The strategy is the scope or direction of the organization that helps to achieve the competitive advantage through the better configuration of resources within the changing business conditions to meet stakeholders’ expectations. For developing and implementing the strategy, two types of approaches named as emergent and planned approaches are used (Armstrong & Taylor, 2014). The emergent approach is not formally planned, and it emerges out of the course of business due to raising opportunities and threats. On the other hand, planned approach is prescribed in advance based on the analysis of the business environment. Both approaches are considered by the businesses as per the situation. In concern of this aspect, this report critically evaluates the emergent approach to strategy development and provides the comparison of emergent approach with the planned approach to strategy development. In addition, this report also assesses the impact of these approaches on the strategic change and strategic leadership.

Emergent approach to strategy development

According to Mintzberg, the strategy can be developed without any prior planning as it can be developed incrementally over the time along with the changes in business environment.  Rather than the fulfilment of a premeditated plan, the strategy evolves by passing through a course of learning, modification and experimentation. In this approach, the strategy is formulated parallel to execution and managers provide insights at different levels to pursue the actual strategies (Eden & Ackermann, 2013). This approach is based on the learning aspects as it focuses on the significance of knowledge to gain competitive advantage. An emergent approach to strategy development is helpful to integrate creativity and responsiveness in this recent highly competitive and changing business environment. The needs and requirements of the customers change at the regular level that also raises the needs for the firms to make changes in their strategies accordingly. Due to changes in the business environment, the firms also need to focus on the integration of those changes in their business strategies. Therefore, this approach is advantageous for the organizations to make changes in and develop their strategies to achieve the competitive advantages (Johnston & Bate, 2013). The use of this approach helps them to make changes and meet the current needs and requirements of the customers efficiently. For example, many retail firms have integrated the internet into their business to meet the changing needs of the customers related to online business. They have adopted social media strategies to conduct the online business successfully.

Emergent approach is based on the complexity theory that puts the question on the future certainty and advance planning. According to this approach, it is not possible to forecast the future and make planning for it in advance. Strategy can be evolved and executed simultaneously. According to the CEO of Virgin, “opportunities are like vehicles as they come and go continuously. All the theoretical aspects related to emergent approach to strategy development support the notion of uncertainty and unpredictability of the business environment, a firm cannot sustain by following a pre-planned strategy in this dynamic business environment (Wiesner, & Millett, 2012). It is because it is difficult to assess the future as the strategy development depends on the feedback mechanism and considers the uncertainty. In the views of Evans et al., (2012), environment is a key source of the uncertainty that enforces the firms to adopt emergent approach to strategy development. For instance, due to changes in business environment related to technology development of the European telecom sector, many firms found themselves in threat from mobile firms. In order to respond these changes, these firms adopted this situation through learning and considered to new technologies. At the same time, the survival based theories of emergent strategic management also hold that it is essential for the firms to adapt the environment which is ever changing. Eden & Ackermann, (2013) opine that emergent approach is significant to respond directly to market forces. These decisions related to changes reflect in the competitive practices, customer tastes and order sizes. It is also advantageous for the firms to adopt emergent approach to offer the products and services as per the market demand. Apart from this, the use of emergent approach is also helpful to consider flexibility to hold the new strategy. In addition, this approach is also quite effective to consider the outcomes of interaction between the stakeholders, environment and business. It is not rigid framework as there is freedom for the employees to think and act creatively. Evans et al., (2012) characterised the emergent approach to the learning by do process means the firms learn new things by doing something. It helps to develop learning of the organizations after executing something that creates a learning environment and develop innovation in their products and services. For instance, many firms like Microsoft, Apple, etc. are not rigid to their stated goals and strategies as they learn through the changes in the business environment and also make changes in their stated strategies and goals. In the emergent approach, the strategy formulation depends on the learning (Hitt et al., 2010). It can be noticed in the example of Singapore Airline as this firm predicted the future and planned for it but they failed because of some uncertain events. This approach focuses on organisational structure, organizational culture, pattern of power and politics, management behaviour and organizational learning. It is suitable approach for the firms which focus on transformational organizational changes like restructuring or diversification. Apart from this, the adoption of this approach is also valuable to reduce resistance to changes because it allows time to get the support from the employees during the strategy implementation. In the views of Dranove et al., (2015), in emergent approach, there is no use of single approach means there is need to make changes in organizational skill, style and culture over the time in increasingly turbulent world.

However, the findings of Bodwell & Chermack, (2010) provide the contradictory views that emergent strategy approach is adopted as a part of the regular organizational activity by nature. It is more focused on the change readiness and change facilitation by using pre-determined steps for making any change. At the same time, David & David, (2016) also argued that emergent approach may cause lack of purpose in strategy and create difficulty for the management to evaluate the performance. It results in lack of pre-fixed standards due to regular changes in the strategies and goals that make it difficult for the organizations to evaluate the performance and bring improvements. In the absence of real basis for evaluating performance, it is challenging for the firms to make improvements in the firms that causes the reduction in efficiency and effectiveness of the organizational operations.

Also, Wiesner, & Millett, (2012) also stated that emergent approach is considered as the afterthought means the significant opportunities may be missed along the way. It is because this approach may cause a risk related to slow moving and jumbled process in formulation and execution of strategy simultaneously. Moreover, the focus on emergent approach can result in conflicting objectives from different departments that can restrict the strategy development especially in power shifts when a major strategic change takes place. For example, when the firms enter the merger or acquisition, there may be conflicts in objective between different departments that may affect the business growth (Swayne et al., 2012). It may be difficult for the firms to get synergy without conducting in-depth analysis and setting identifiable targets.

Survival based view based on the emergent approach is a pessimistic view towards the strategy development. However, this approach rejects the insights mentioned by planned approach but it also does not explain the alternative solutions to the issue. At the same time, the complexity theory also causes limitations for this approach regarding choices available for an organization (Magretta, 2013). Both these aspects cause limitations for the organization to innovate and force the firms to emphasize the short-term goals.

Compare and contrast emergent and planning approach

The planning approach is also known as a prescriptive approach in the strategy development. It is considered as a systematic process where various activities are undertaken in order to reach towards strategy development. It includes the analysis of the organization, its performances, and analysis of external environment. Thus, on the basis of this, company develops the strategy for the achieving objectives of business. On the flip side, the emergent approach is based on the idea that strategies can be developed in an unplanned manner. Likewise, the frequently changing environment and growing people needs tend to force the companies to adopt the emergent approach. In this, strategy is developed instantly on the basis of the changing environment. It means that business actions are not planned but they are developed as per the changing scenario of the business competitive environment (Bodwell & Chermack, 2010). Thus, both the approach is total contrary to each other as one is based on the planning approach and another one is based on the time/ changing environment basis.

Table 1: Differences between Emergent and Planned Approach

On the other hand, different techniques and methods are adopted by the management under these two mentioned approaches. Likewise, planning approach involves the Porter’s five forces model for analyzing the industry. At the same time, businesses also use the value chain analysis to understand their capabilities for achieving the competitive advantage against their key competitors. Thus, these techniques are used by the business to develop the future strategy. While, the emergent approach is totally based on the Mintzberg perspective so in such case, strategy formation depends upon the judgments, perceptions, market trends, intuitive visioning and emergent learning (Haines, 2016). Thus, such area guides the business in terms to develop the successful strategy. Therefore, comprehensible world and analytical methods are considered most in this approach.

At the same time, planning strategy consists of programmatic prediction and preparation, scenario development, financial assessment, checklists and formal techniques, and implementation with detail to objectives, budgets, initiatives and operating plans. On the other hand, judgments, market research, survey methods are used in the emergent approach. Hence, these differences indicate the approaches concepts and features. In the context of the organization, both play a significant role regarding achieving the goals and objectives. Likewise, planned approach is proved to be crucial for the larger projects and task (Hitt et al., 2010). While emergent approach is used for staying the company into the competition. Therefore, both the approaches contribute highly for the company regardin ofg achieving the objectives.

The emergent approach is a system of rapidly creating and sending working highlights and upgrades. The planned approach is a technique of arranging and executing long-haul systems that may include multi-year projects and tasks. Emergent approach rushes to react to industry drivers, for example, markets, client inclinations, innovation, risk factors and competition. The planned approach takes into consideration thorough strategic planning, project management, and risk management processes (Dranove et al., 2015). The decision between the two relies on the nature of an initiative. For the most part, emergent approach delivers a need to advance and arranged change tends to a requirement for scale, structure and risk management.

Emergent change is the change which is driven by small and the frequent releases whereas planned change is the implementation of a robust plan that is based on months or years (Agrawal, 2016). The planned strategy is the strategy which a business enterprise hopes to execute in future whereas the emergent strategy is one which is implemented by identifying the unpredicted outcomes by the execution of the strategy. The planned approach follows a top-down approach on the other hand emergent strategy follows a bottom-up approach.  The planned strategy adopts a rigid approach in context of management while the emergent strategy is favored by many business practitioners due to its high flexibility. The planned approach is less responsive to change whereas the emergent approach is responsive to the changing strategic drivers.  The planned approach allows the business for diligent architecture, and designs whereas the emergent approach result in an ad hoc architecture and design (Belleflamme & Peitz, 2015). In planed approach it is very difficult to gain a competitive advantage while the emergent approach is more flexible by which the business can learn more and can grow in the dynamic business environment.

Impact on Strategic Change and Strategic Leadership

The planned change to change is very effective and is long developed. This approach focuses on small-scale changes and it is not suited to the circumstances where instant change is needed. It is also based on the assumption that the business enterprises are working in constant circumstances where they move in the already planned manner from a particular stable position to another. But, the current business environment is dynamic and uncertain it keeps changing and doesn’t remain constant. It is observed that strategic change is the continuous change that is open-ended rather than moving on already developed pre-planned events. If the senior managers will already develop the strategies well in advance so they might not work in future as future is not certain or constant and the process of change will become dependent on the managers (David & David, 2016). This approach doesn’t give due consideration to the circumstances where direct approaches are needed to follow-up. For example, a situation arises suddenly and then quick or instant change is required by the management then this approach might not be able to work in such circumstances.

In case of emergent approach, rather than the top-down approach in the context of change, this sees it from the bottom-up approach. This approach in return helps the senior managers to adopt quick and instant changes whenever needed according to the situations. It becomes next to impossible for the managers to ignore, identify, and implement the changes required as the change is so instantly required. According to emergent approach, change is not seen as a set of events during a particular period but they are seen as a continuous and open-minded process which helps the management to adapt to the dynamic environment and situations. Strategic Change is also seen as a way of learning in the emergent approach. The uncertainty of the external and internal environment makes this approach more pertinent than planned approach (Dranove et al., 2015). As the environment and circumstances are not certain and are even complex in nature, so the organizations are suggested to adopt the open learning systems where the strategic development and changes from the way the organization gathers and processes the information regarding the environment. The emergent approach is hence more relied on facilitating strategic change in the organization rather than relying on the pre-planned change steps. This approach allows the employees to participate in decision-making and share their views and opinions that help to develop trust and commitment towards the organization and related changes. This approach is quite effective in changing the attitude of the employees towards the change and reduces their resistance level. Due to employee resistance, it is difficult for the organizations to implement the changes (Enz, 2009). But emergent approach is used to make changes easily due to reducing the employee resistance level through improvement in the employee commitment and trust for the organization and related changed leading to achievement of organizational objectives.

The planning approach follows the top-down approach to change management. In this the changes which are imposed in the organization comes from the top. Here, in this the decision-making process is centralized at the higher levels of the business organization. They ignore the lower-level employees in the change process. Making decisions from this top-down approach helps the leader to be more focused on the goals and objectives. It gives the employees more time to shift their focus on the duties. On the other hand, in bottom-up leadership in emergent approach, all the employees are invited to become a part of the process and make feel everyone that they are a part of the goal-setting process in the organization (Evans et al., 2012). Everyone is hence allowed to be a part of the strategic change process which will help to gather more sources of information. Emergent approach observes the change as the unpredictable process which aligns the organization with the changing environment. It views change as the continuous learning process and is a bottom-up activity. It allows the individuals within the team to come and bring changes through involvement and participation and further avoid the shortcomings of imposed change. The planned approach is one which relies on assumptions that the organization can plan for the changes in advance to move from one state to another (Hitt et al., 2010). The main limitation of this change is only that it doesn’t respond to the sudden changes instead it moves from a state to another by a series of planned steps. The importance of strategic change management is to faster the speed by which individual move through the change process successfully so benefits are attained quickly.

In the context of emergent approach, there is a significant impact on the strategic leadership that mainly focus on individual and group learning that is important for the organizational development. The theory of organizational learning developed by Senge (1990) mentioned in Johnston & Bate (2013) holds that it is important for the firms to facilitate the commitment and the ability of the employees to learn to be successful. Apart from this, Lync (2010) also stated that the learning aspect of the emergent approach is crucial for making strategic changes. It is because this provides insights on the complex organizational problems and flexibility to integrate the changes to solve these problems effectively. Over the time, the learning aspect is important to determine the available opportunities and challenges in the existing business environment that also helps to set the changes accordingly to grab the opportunities and overcome the challenges. In the views of Magretta (2013), the learning process is double loop process that is related to changes in the mental model, mindset and frame of reference. For example, if a university does not adopt advanced teaching methods and modern techniques, then it can be difficult for it to maintain the current state of knowledge and improve the quality of education.  A good example of the impact of emergent approach on strategic change is the Honda entry to the US market. When Honda entered the US market, it was not successful. But it identified a niche market to cater the needs of the customers; it started to develop its strategy on trial and error basis by making changes as per the business environment in the country. There was no single strategy for execution in the business as it became a leading brand in the US motorcycle market. The use of emergent approach allows the firms to adopt the participative leadership. It is because this approach has a significant impact on strategic leadership by facilitating the participation of employees in the decision making even changes also (Bodwell & Chermack, 2010). It encourages the use of bottom-up management style means views and opinions of the employees are considered by the management while making strategies and introducing the changes. This approach also facilitates the learning environment within the organization allowing the employees learn consistently that is effective to make changes according to business environment. Apart from this, the emergent approach is also quite significant in facilitating the decentralized organizational structure. It means the firms distribute the decision-making authority throughout a larger group (Swayne et al., 2012). In this, a higher authority is given to lower level workers including executives and functionaries to make decisions and contribute to the formulation of the strategies. It empowers the employees due to providing the autonomy to make their own decisions. This emergent approach facilitates the leadership that allows to the employees to make better use of the knowledge and experience. It also reduces the burden on the top management because of the decentralized process in decision making and strategy formulation. This approach is also effective for the leaders to be prepared for emergencies and maintain self-sufficiency by developing autonomous structure within the organization (Eden & Ackermann, 2013). It is also efficient for the leaders to improve the quality f the decision making due to the inclusion of the bottom workers in decision-making and strategy formulation. Allowance for changes anytime and decentralization is also significant in making expansion in a different geographic area. It is because this is effective for the organizations to react more easily to the specific needs of the area. In addition, this approach is also quite effective to facilitate the transformational leadership that encourages the changes within the organization (Wiesner, & Millett, 2012). This style of leadership allows the leader to work with subordinates for identifying the required changes and creating the vision to guide the change through inspiration. This leadership also shows the high level of job satisfaction and organizational commitment and engagement in achieving organizational objectives.

On the other hand, the planning approach is based on the top-down perspective of change management means the top management provides instructions and low management follows the instructions. From this, it can be determined that the firms adopt authoritarian or autocratic leadership in which the firms adopt the top-down approach to provide instructions to the low-level management employees and they follow these instructions (Armstrong & Taylor, 2014). In planned approach, authoritarian leadership style is applied that allows the leader to dictate policies and procedures and determine the goals to be achieved and provide direction and control the activities without any participation of the subordinates. In this, the leader has full control on the subordinates providing low autonomy within the group members. There is complete supervision of the employees to the leader. Apart from this, there is centralized organization structure in the adoption of planning approach as the leaders have authority to make decisions.

A centralized structure keeps decision-making firmly at the top of the hierarchy that provides better coordination and control from the center. It is also effective to make quick decisions showing strong leadership (Haines, 2016). There is less concern towards the employees as they are not allowed to make participation in the decision-making and strategy formulation.

Conclusion

On the basis of the above discussion, it can be concluded that strategy is an important part of the firms to get proper direction and achieve the business objectives successfully. For this, firms adopt different types of approaches namely emergent and planned approaches that are crucial to making effective strategies in different ways. At the same time, it is also summarized that there are several differences between both approaches as emergent approach is significant to make changes in the existing strategies as per the market requirements, but planned approach is used to develop strategies in advance with no possibility of making changes. In addition, it is also concluded that both approaches have a significant impact on strategic change and strategic leadership within the organization. It is easy for the firms to make changes in the strategies on adoption of emergent approach but the planned approach does not allow for any change. Similarly, the use of emergent approach facilitates the participative or democratic leadership that focus on decentralized organizational structure and bottom-up decision making. On the other hand, the use of planed approach is suitable with the authoritative or autocratic leadership that focuses on centralized organizational structure and top-down decision making within the organizations.

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