Is Strategy Development a 'Chaotic' Process?

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Strategy > Best Practices > Is Strategy Development a 'Chaotic' Process?

Is Strategy Development a 'Chaotic' Process?
Ken Gordon MBA PMP, Strategy Consultant, United Kingdom, Premium Member
According to Stacey (1993) 'organisations are complex adaptive systems and the patterns in the actions of organisations, which are their strategies, emerge unpredictably in self organising processes.' This accords with the view of 'strategy development' as both predetermined (through strategic planning) AND simultaneously emergent. Is this emergent element influencing change on the predetermined according to the realities experience, therefore 'chaotic'?
Communication of the strategic intent acts as the conduit (delivery) and the narrative (content) of the implementation/manifestation of the strategy (patterns in action) or 'strategic development'.
Is this 'where the rubber meets the road'? Is this the place where effects easily lose their perceivable association with causes (Stacey 1993), 'the edge of equilibrium'?
The use of formal or informal frameworks will only be as effective as management's ability to continuously translate the strategic plans (both business and IT) and their inherent complexities into communicable narrative. If that (strategic) narrative is open to amendment, as a result of environmental shocks would the process be best described as 'chaotic'?

Strategy not a Chaotic Process
Leodegardo M. Pruna, Professor, Philippines, Member
Strategy is not a chaotic process. Rather, it is a logical and systematic approach which may be time consuming but when properly managed would yield into a well prepared plan of activities designed to realize enterprise's goals and objectives.

Strategy not a Chaotic Process
Istvan Szeman, Consultant, Hungary, Member
I would say it is either a process or indeed a chaos (meaning: the strategy of being tactical).
What is true, nevertheless:
The practice of strategic planning and the review of strategic progress is very much a reflection of leadership style at the top.
For example, systematic and well managed approach involving a team of leaders is a sign of institutionalised (team) leadership, while a paperwork/communication based approach is probably a sign of informal, charisma-based, often autocratic leadership.

Strategy and Chaos
Andrew Blaine, Business Consultant, South Africa, Member
For a situation to be defined as "Chaos" it must meet 3 conditions:
1. It must be sensitive to initial conditions;
2. It must exhibit topological mixing; and
3. Its periodic orbits must be dense.
Topographical mixing means that the situation must evolve over time so that eventually all conditions overlap.
Strategy applies to conditions 1 and 2, but in my opinion does not apply to condition 3, in that business strategy involves the development of a process that will lead to a defined state rather than a periodic orbit. In simpler terms, we strategise to realise a defined position or end state, not a repeating situation. Am I thinking improperly? Is strategy not rather a human attempt to regulate a chaotic environment?

The Consequence of Complexity for Strategy Formulation
Jaap de Jonge, Editor, Netherlands
Chaos refers to the issue of whether or not it is possible to make accurate long-term predictions about the behavior of a system, such as an organization and the market it is operating in.
Pointcare and Lorentz have proven that if ( ! ) the beginning situation of any system is (very) complex, even if you would have extremely precise measurements of this begin state (which in reality you never have), tiny imprecisions in the initial conditions will grow in time at an enormous rate.
This means that it is mathematically impossible to predict the future in such a situation of complexity beyond a short time frame.
This does NOT mean that we cannot or should not have a strategy process to deal with such situations. But we should include flexible elements in our strategy and establish a more emergent strategic planning process in such situations.

Strategy is a Planned Process, not Chaotic
Kishan Solanki, Manager, United Arab Emirates, Member
I agree with analysis provided by @Istvan Szeman. Certainly, strategy is a planned process, in the sense that it is systematically followed with a long term view to overcome some chaotic prevailing situations.

Is Strategy Chaotic or Just Haphazard?
Alan Kennedy
My issue with trying to determine whether strategy is logical or chaotic is that, in my experience, I find in most organizations, it is just plain haphazard. Strategy is still very much an art form and sometimes we forget that and think that it is a science. As an art form, the only skill we really need is to be able to "paint the picture". This was Peter Drucker's enormous talent. He could describe a situation so accurately that he could then stand back, look at his "picture", and be able to make predictions about what might happen next. Don't forget, this is a guy who predicted "privatization" long before governments embraced the notion. For me, the apparent chaos arises because we are largely unable or lack the discipline or structure to even describe the current strategies we are implementing, let alone understand how factors in the external environment are going to impact those strategies. It may look like chaos but it is just the result of careless and haphazard management practices, in my opinion.

A Strategy of High Reactivity
Zondervan, Management Consultant, Netherlands, Member
I think we need to separate two things here:
- One being the nature of the ecosystem which, depending in type of industry, may exhibit random, chaotic, periodic, or highly predictable qualities.
- The other is the internal strategy that needs be developed to deal with this ecosystem.
If the ecosystem exhibits fast paced and chaotic behaviour, and therefore is unforgiving to preconceived concepts and plans, the strategy could consist of nothing more than a high internal reactivity and and probing into those fields that seem most promising. Then monitor results. This can be done with discipline and though little preconceived will not be chaotic or haphazard at all.

Developing a Strategy is not Linear
Gabriel Montgomery, Strategy Consultant, Sweden, Member
A good strategy process has a hypothesis that is tested by the participants. It is chaotic in the same way a learning process is chaotic. The more you learn the broader your perspective gets. And in the light of your new learning the strategy will adapt. It is impossible to tell before you start the learning process where it will end. In that perspective the strategic process is chaotic.
This does not mean that the experience has to be chaotic to the participants. It probably will if they are unwilling to learn but if they approach their work has any good scientist they will welcome every twist and turn as an opportunity to test their hypothesis and make their case stronger for the strategy they finally chose.

We Need to Be More Like Weather Forecasters
Grant Robertson
Interesting and timely discussion thread, thanks all. Often strategy is used to convey a sense of determinism (certainty) which, in longer time frames, is just not available in today's complex world.
What we need is to be more like weather forecasters - only confident of their predictions 4 days out (versus say 2 weeks out) - despite the largest use of civil computing!
This idea merges well with recent neuroscience work on goal setting - clarify a few long term focus areas, but only develop short term plans that are reevaluated regularly in terms of contribution to long term focal areas.
So, drawing on complexity thinking, we ought to be setting big and broad goals, but reserving detailed plans and forecasts for much shorter time frames (30-60-90 days maybe).
Make many more less complex moves to adjacent positions, but make them very much more quickly, at regular points considering the space of possibilities.

Strategic Process not Chaotic But Orderly and Systematic
Leodegardo M. Pruna, Professor, Philippines, Member
While issues into the working of a strategic process may be diverse and incoherent, the end result would be one that is non-linear and converging to what an enterprise would like to achieve- sustainability and profitability.

The Strategist as Weather Forecaster
Alan Kennedy
Mr. Robertson's comparison of strategists to weather forecasters is very helpful. My experience tells me that many organizations are not being careful enough with their study of external conditions, whether short or long term in duration and they seem to bring chaos on themselves because of that.
Turning to weather for a moment, we know quite a lot about weather, We know when the major seasons occur and therefore, when there are likely to be tornadoes, hurricanes, snowstorms and such. Those of us who are careful take precautions accordingly. We prepare our home for the oncoming storm, we evacuate our family when advised to do so, and so on. There is no chaos - just appropriate action.
Turning to management, Kodak was in chaos and bankrupted by change in external conditions. Did the change occur overnight? No. Did Kodak change what it was doing because of the oncoming storm? No. Kodak brought chaos itself. Kodak refused to acknowledge or prepare for the coming storm. As a result, Kodak brought chaos on itself.

A Changing Approach to Strategy
Ken Gordon MBA PMP, Strategy Consultant, United Kingdom, Premium Member
It is clear from the literature on strategy and strategic development, that the views of the key authors, relating to the efficacy of strategic choice, ranges from strategy as precise management science applied to long term conditions, to management acting as short term tactical defenders of market position; albeit within a unifying strategic understanding of context i.e. vision and mission.
In my view the approach to strategy must seek encompass both conceptual views of strategy development as a symbiotic process of information flows. In the chaotic view of the environment, 'the want of a nail' (facility of flexibility) may indeed become the critical factor in the success or otherwise of a venture. Perhaps this might be true of Kodak?
Therefore, in my view, strategy and strategic development should be about the development and establishment of flexibility in (strategic) operations under the terms of the broad strategy or vision.This would enable management to steer the organisation through turbulent conditions towards the perceived objective (strategic goal)?

Flexibility in Strategic Planning
Leodegardo M. Pruna, Professor, Philippines, Member
@Ken Gordon MBA: I agree that the strategic process should incorporate a certain degree of flexibility to accommodate disruptive factors which may spontaneously emerge because of changes in the environment where the enterprise is operating. This is one area where management should have the capability not only to adapt but also to strike out counter measures to reduce the disturbance which these emerging factors would cause.

Competing on the Edge
jorge A A Blacutt O, Teacher, Bolivia, Member
Shona L. Brown & Kathleen M. Eisenhardt in "Competing on the edge. Strategy as Structured Chaos:
"In other words, it is about combining the two parts of strategy by simultaneously addressing where you want to go and how you are going to get there. A semicoherent strategic direction is fundamentally different from what is traditionally called strategy. What is unique and even provocative about it? It is...
UNPREDICTABLE, UNCONTROLLED, INEFFICIENT, PROACTIVE, CONTINUOUS and DIVERSE (Pages 7-9, 1998) it is a nice idea at least in less developed countries.

Strategy not a Chaotic Process
Istvan Szeman, Consultant, Hungary, Member
@Ken Gordon MBA: I fully agree that flexibility is a strategic objective.
There are striking examples of this happening in different industries, like in the automotive industry, where the operational strategy of the Japanese car manufacturers went in this direction and then the whole industry followed. The automotive industry might also be a good example of the challenge that investors face when making large long-term investments in a rapidly changing external environment.
Unfortunately, some become busy thinking about controlling the external environment as well (lobby and other market-limiting efforts), in order to protect investments.
Olygopolic markets (Energy, Telco...) are showing such efforts, depending on willingness of policy-makers to collaborate.
Having learned from the comments, I think we have...
- Strategic Analyisis (especially external environment)
- Strategic Planning
- Strategic Controlling (monitor progress towards strategic objectives).

The Time Frame Attached to Strategies
Grant Robertson
Thanks all for some interesting insights.
I note very little commentary on time frames. As we all contribute, are we on the same page with regards timing? To add to the (dare I say) complexity, different sectors will no doubt have different horizons.
One question that interests me is how seldom organizations spend time reviewing previous strategies as they develop the next.
Another concern is how, despite having access to all the theory and plenty of practical expertise, so many large organisations that spend a fortune on outlining their strategies fail anyway! Ultimately, there is an enormous proportion of organisations that meet this fate, even within a couple of decades. Perhaps the real world is a little less linear than the strategy processes they used could accommodate?

Time Frames Attached to Strategies
Ken Gordon MBA PMP, Strategy Consultant, United Kingdom, Premium Member
In my response to the question 'what is strategy' I note that "... Convergence of the results of current actions with a predicted future is the essential aim of strategy regardless of the time-frame." That said, a planning time-frame is necessary to provide a development design and implementation context for the decisions taken and as @Grant states this decision context will be dependent on the nature of the industry or sector. Tactics and Strategy are separated in the minds of many by scale of action and time-frame i.e short time-frame, small-scale impacts equate to a tactic, however this definition is not absolute and perceptions can vary enormously. In my opinion strategic decisions must continually be reviewed against experience and environmental change and the course reset accordingly.

Reducing Chaos in Strategy Development
Ranjeet Menon, Project Manager, India, Member
Strategy development can be simplified if
1. The purpose of strategy and its possible impact at the business and organization level is clearly understood and defined
2. The right stakeholders are identified and their confidence gained
3. It is clearly understood and accepted that reducing financial costs and increasing financial benefits are the most important purposes of any strategy unless the strategy is to stonewall a competitor such as doing a hostile take over of a company to prevent a competitor from buying it.

Chaotic Strategy May Be Better Called Emergent Strategy
Bernhard Keim, Business Consultant, Germany, Premium Member
Strategy is not always as chaotic as it might seem. The most known "chaotic" style is called emergent strategy in the so called Learning School. In this approach ,not deliberate action, but trial and error finds the right strategy over time by continuous learning. But there are many different schools of strategy. To see the differences have a look Mintzberg's 10 Schools of Thought on 12manage.


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