Rational strategy
Change that evolves as a result of the working through a strategic plan
Strategy does not just happen, it requires management by people
The rational view of strategic management is based upon the presumption that the people undertaking the strategic management will always act in a logical, structured and proactive manner
Ansoff (1990) suggested that organisations are purposive, that they have an intent to achieve something. An objective was a means by which success or failure could be identified and he split these objectives into four categories
Economic
The efficient use of available resources to convert inputs into outputs giving the opportunity to measure this quantitiatively
Non-economic
The ability to satisfy the expectations of stakeholders; this can be both quantitative and qualitative
Self-renewal
The building of an organisation through reinvestment
Flexibility
Sufficient latitude in the prescribed plan to enable an organisation to survive and manage different forces
There are a number of core attributes that are normally attached to the thinking behind rational strategy
A rational strategy will be created at the top of an organisation, by the leaders and/or those who have accountability for an organisation
A rational strategy starts with the entirety of an organisation, before it can be broken down into smaller constituent parts
A rational strategy will contain conscious choices that have been made concerning the length of the plan, the levels of risk, opportunities and threats offered by the environment and the realistic availability of resources
Johnson et al. (2017) reported that strategic management needs to include but also differentiate between the day to day operational (shorter term) decisions made by managers and the process often undertaken by the same managers of making strategic (longer term) decisions. They suggest that strategic management has four core aspects
Analysis
The collection and interpretation of appropriate data to enable the understanding of reality, resource and expectations
Choice
The evaluation of the strengths and weaknesses of different potential options arising from the analysis and the ability therefore to establish a method of how to choose a preferred option
Implementation
The ability to out the chosen option into acction
Control
The establishment of a method of monitoring outcomes of each stage of the process of strategic development
Crafting and intuition
Ohmae (1982) discusses the development of strategy in a range of Japanese companies suggesting that human traits of creativity and obsession were as important as a rational and logical approach in the formation of strategy
Handy (1989) suggests that planning is as much based on intitution as on analysis
Competition
Porter (1980) considered the competitive markets within which organisations operated and suggested that the underlying rationality of their strategic development was often geared to enabling an advantage over the various competitive forces
The learning organisation
The organisation is perceived not as some distinct or indistinct entity but as a group of individuals bringing together a range of core competencies
Pedler et al. (1997) developed a set of practical tools for an organisation to determine and understand its learning capabilities. Their starting point was a recognition that any organisation (at its today point) is a combination of the ideas of the people involved, the stage that the organisation (as a collection of people) has reached in its lifecycle and the wider economic and cultural contexts in which both the organisation and its people exist
Senge (1990) considers the development of organisation and the ultimate success or otherwise of its strategic management from a fivefold perspective, each building upon the previous perspective.
Personal mastery
Mental models
Building and shared vision
Team learning
Systems thinking
Limitations (Mintzberg (1994)
Data
It is difficult to gather, control and structure the required level of data to enable the formation of a rational plan in the first pace thus making the starting point impossible to contain
Routine
Rational plans very often form a recurrent part of a planning process often in an annual cycle but an organisation cannot allow itself 12 months before addressing problems
Inertia
Once a rational plan is established people are unwilling to question it; this can also lead to an obsession with performance measured against the plan rather than a readiness to cope with uncertainty
Politics
The rational plan ignores the political environment and power struggles that exist within most organisations