Gb590 Report.spangaro

October 4, 2000

Spangaro Systems Pty. Ltd. 1

Student: Supervisor:

RMIT BUSINESSThe School of Management

Justin Spangaro B.Eng (comms.)Student No. 8302946RPhone: (03) 9817 3318 / (0427) 087 313

Email: [email protected]

Address: Unit 3/385 Barkers Road,Kew, VIC., Australia 3101

A report submitted in partial fulfilment of the requirements for the award of Master of Business Administration

Master of Business AdministrationGB590 Field Investigation

Tim OShannassyRMIT Business, School of ManagementPhone: (03) 9925 5951

Email: [email protected]

Address: Level 16, 239 Bourke St.,Melbourne, VIC., Australia, 3000.

Final Report

A Study of the Relationship Between Strategic Thinking, Strategic Planning and the High

Technology Industry In Australia


Strategic Thinking, Strategic Planning and High-Technology Industries Justin Spangaro

I declare that

except where due acknowledgement has been made, the work is mine alone the work has not been submitted previously in whole or in part to qualify for

any other academic subject or academic award the work has been carried out since the official commencement date of the

research project and in accordance with the undertakings given in the signed RMIT Business ethics approval

Student Signature................................................Date........................

A STUDY OF THE RELATIONSHIP BETWEEN STRATEGIC PLANNING, STRATEGIC THINKING AND THE HIGH TECHNOLOGY INDUSTRY IN AUSTRALIA.Spangaro Systems Pty. Ltd. 3

Executive Summary ...........................................................................................................7CHAPTER 1: INTRODUCTION

Synopsis...............................................................................................................................9Research Topic: Definition, Background and Rationale ................................................9Research Aims..................................................................................................................11Research Questions ..........................................................................................................12

CHAPTER 2: LITERATURE REVIEWSynopsis.............................................................................................................................13Introduction......................................................................................................................13The Concept of Strategy..................................................................................................14Strategic Planning............................................................................................................18

Characteristics of strategic planning ......................................................................................................... 19Analytic .................................................................................................................................................. 19Formalised ............................................................................................................................................. 19Detached. ............................................................................................................................................... 20Convergent. ............................................................................................................................................ 20Scientific. ............................................................................................................................................... 20Engages left-brain (or right-handed planning). .................................................................................. 20

Strategy formulation .................................................................................................................................. 20Planning Today .......................................................................................................................................... 21

Strategic Thinking ...........................................................................................................22Connecting Planning with Thinking - the Evolution of Strategy ................................25

Single-loop/ double-loop learning ............................................................................................................. 26Analysis versus intuition ........................................................................................................................... 29

Strategy and High Technology Industries......................................................................29Conclusion ........................................................................................................................36

CHAPTER 3: FIELD RESEARCHIntroduction......................................................................................................................39Research Design ...............................................................................................................39Research Methodology ....................................................................................................41

Inductive/Deductive Methodology ............................................................................................................ 41Hypothesis testing/falsification ................................................................................................................. 41Time period of research ............................................................................................................................. 41Quantitative and Qualitative Methods ....................................................................................................... 41Measurement scales ................................................................................................................................... 42Data Collection Methods ........................................................................................................................... 42Sample Design ........................................................................................................................................... 43Fieldwork ................................................................................................................................................... 44Data Analysis Methods .............................................................................................................................. 44Statistical Analysis Methods ..................................................................................................................... 49

Hypotheses ........................................................................................................................51Hypothesis A ............................................................................................................................................. 51Spangaro Systems Pty. Ltd. 4

Hypothesis B ............................................................................................................................................. 51Hypothesis C ............................................................................................................................................. 51Hypothesis D ............................................................................................................................................. 51

Operationalisation ...........................................................................................................53Operationalisation of Primary Constructs ....................................................................53

Operationalisation of Strategic Thinking .................................................................................................. 53A Systems Perspective ........................................................................................................................... 53Intent focused. ........................................................................................................................................ 54Intelligently Opportunistic: .................................................................................................................... 54Thinking in time: ................................................................................................................................... 54Hypothesis-driven .................................................................................................................................. 54

Operationalisation of Assumptions about strategic thinking versus strategic planning ............................ 55Operationalisation of Strategic Planning ................................................................................................... 55Operationalisation of the Criticality of the Impact of Technology on the Organisation ........................... 56Operationalisation of the Interaction between analysis and formulation (iterative or linear) ................... 56

Operationalisation of Secondary Constructs ................................................................56Operationalisation of technological inflexibility ....................................................................................... 56Operationalisation of Management Experience (type of) ......................................................................... 57Operationalisation of Organisational Complexity and Size ...................................................................... 57Secondary Constructs not Operationalised for this survey ........................................................................ 57

CHAPTER 4: ANALYSISResults and Discussion.....................................................................................................59

Hypothesis B ............................................................................................................................................. 61Hypothesis C ............................................................................................................................................. 61Hypothesis A ............................................................................................................................................. 62Hypothesis D ............................................................................................................................................. 62Secondary Constructs and Spearman Rank-Order Analysis ..................................................................... 63Factor Analysis .......................................................................................................................................... 64

Component 1 .......................................................................................................................................... 66Component 2 .......................................................................................................................................... 66Component 3 .......................................................................................................................................... 67

Regression Analysis of Secondary Constructs .......................................................................................... 68Regression Curve Fit of CT versus ST/SP ................................................................................................ 68

Summary of Analysis.......................................................................................................70Research Limitations .......................................................................................................73

Sample Size ............................................................................................................................................... 73Linear Regression ...................................................................................................................................... 73Factor Analysis .......................................................................................................................................... 73Survey Design ........................................................................................................................................... 73Strategic Thinking Elements ..................................................................................................................... 74

CHAPTER 5: RESEARCH IMPLICATIONS 75

CHAPTER 6: CONCLUSION 79

REFERENCES 83Spangaro Systems Pty. Ltd. 5

APPENDIX A: STRATEGIC MANAGEMENT RESEARCH SURVEY QUESTIONNAIRE .............89General Instructions ........................................................................................................89Section 1: Strategic Planning ..........................................................................................89

Comments on Strategic Planning .............................................................................................................. 90Section 2: Strategic Thinking..........................................................................................90The Intelligent Opportunism Scale ............................................................................90The Systems Perspective Scale....................................................................................91The Intent Focused Scale.............................................................................................92The Thinking In Time Scale........................................................................................93The Hypothesis-Driven Scale ......................................................................................94Assumptions about Strategy and the Strategy Process ................................................94

Comments on Strategic Thinking .............................................................................................................. 94Section 3: Criticality of the Impact of Technology........................................................95Section 4: Moderating Factors........................................................................................95

Technological Inflexibility ........................................................................................................................ 95Type of Management experience .............................................................................................................. 96Organisational Complexity ........................................................................................................................ 96

APPENDIX B: INTERVIEW QUESTIONS FOR STRUCTURED INTERVIEWS ............................99APPENDIX C: DETAILED ANALYSIS CALCULATIONS ......................................................101Data Transposition and Interpretation ........................................................................101

Strategic Thinking ................................................................................................................................... 101Strategic Planning .................................................................................................................................... 102Criticality of Technology ........................................................................................................................ 102Formulation/Analysis Relationship ......................................................................................................... 102Inflexibility of Technology ...................................................................................................................... 102Management Orientation ......................................................................................................................... 103Organisational Complexity ...................................................................................................................... 103

Question 30: organisational size .......................................................................................................... 103Question 32: organisational structure .................................................................................................. 104

Spearman Rank-Order Correlation Coefficient .........................................................105APPENDIX D: RESULTS: DATA TABLES ...........................................................................107APPENDIX E: SPEARMAN RANK-ORDER CORRELATION COEFFICIENT CALCULATIONS .111APPENDIX F: SUPPLEMENTARY STATISTICAL ANALYSES ...............................................127APPENDIX G: REGRESSION CURVE FIT FOR CT VS ST/SP ............................................131APPENDIX H: MULTIPLE LINEAR REGRESSION CORRELATION TABLES .........................133 INDEX .............................................................................................................................135

October 3, 2000Spangaro Systems Pty. Ltd. 7

This research measures the emphasis on strategic thinking and strategic planning and the criticality of technology to the organisations studied. The proposition made is that high technology companies will need to place greater emphasis on strategic thinking, according to contemporary management theory on strategic thinking. Also, the research explores the nature of the strategy formulation process and the role of analysis, to attempt to resolve the debate about how new strategies are actually formed.

The study shows that the proposition that high technology industries will need to place a greater emphasis on strategic thinking is valid. Further-A Study of the Relationship between Strategic Planning, Strategic Thinking and the High Technology Industry in Australia.

Justin Spangaro

GB590 Field Investigation, Final Report

Executive Summary

This study investigates the nature of strategic management processes in the high technology industry in Australia. The investigation reveals that the field of strategic management is in a state of confusion over how to find a balance between strategic planning and strategic thinking, and even what is strategic thinking.

Executive Summary


more, this emphasis is found to be at the cost of strategic planning, which tends to be less emphasised. It shows that formulation and analysis in this Spangaro Systems Pty. Ltd. 8

situation are more intertwined and interactive, resolving the debate about the use of analysis in an integrated thinking/planning process. The impli-cation for management in traditional industries is that strategic thinking should be more emphasised when they are subjected to forces of change and increasing complexity similar to high technology industries.

October 3, 2000

used in the literature on strategic management to describe opposite Spangaro Systems Pty. Ltd. 9

extremes of a continuum defining the concept of the strategic manage-ment process (OShannasy 1999a). At the strategic thinking end of the continuum, the strategy process is an intuitive, incremental, informal, emergent, divergent process. Conversely, at the strategic planning end the process is an analytical, planning oriented, formalised, deliberate, con-vergent process. However, the definition of strategic thinking is highly contentious; this research attempts to resolve this confusion.

Debate and controversy in the field about strategic management pro-cesses often centres on the tensions between the strategic thinking and Chapter 1: Introduction

Synopsis

This final report presents the findings of a study of the strategic manage-ment process in the high technology industry in Australia. The research was conducted by Justin Spangaro in 1999/2000 as the final field research dissertation for a Masters of Business Administration award at RMIT University, Melbourne, Australia.

Research Topic: Definition, Background and Rationale

This research project is a study of the relationship between strategic thinking, strategic planning and the high technology industry in Austra-lia.

The terms strategic thinking and strategic planning are commonly

Research Topic: Definition, Background and Rationale


strategic planning perspectives (Heracleous, 1998). Contemporary man-agement literature has been seeking to reconcile and integrate these per-Introduction Spangaro Systems Pty. Ltd. 10

spectives into a more holistic understanding of the strategy process (Heracleous, 1998; Liedtka, 1998a; 1998b; Mintzberg 1994a; Mintzberg, Ahlstrand & Lampel, 1999). Reconciling these opposing perspectives offers the hope of resolving the dilemma apparent for practitioners of strategy, that is, how to create an effective strategic management process that attracts the benefits of both strategic thinking and strategic planning while avoiding their respective shortcomings.

This study makes a constructive contribution to this debate by investigat-ing the relationship between strategic thinking and strategic planning in the high technology industry environment.

High technology industries routinely face turbulent and uncertain envi-ronments, highly complex products and markets, an unpredictable future, widespread dissemination of critical competitive knowledge and high rates of growth, and rely upon constant innovation and creativity to sur-vive. The high-tech environment offers an ideal setting for a study of stra-tegic thinking. Furthermore, many of these problems are the same as those being faced for the first time by organisations faced with unprece-dented forces of technology-driven change.

A competitive local high technology industry has been recognised as crit-ical to the long term economic well-being of Australia (Brain, 2000; Semple, 2000), and effective strategic management is key to this success.

To contribute to resolving the debate over the nature of the strategic man-agement process, this research specifically examines the relative empha-ses on strategic thinking and strategic planning in the high technology sector. The study also explores the nature of the strategy formulation pro-cess, particularly the often contentious role of analysis in strategy formu-

Research Aims


lation (Porter, 1979 pp21-22; Heracleous 1998; Mintzberg 1994a; Mintzberg, Ahlstrand & Lampel 1999, p77).Introduction Spangaro Systems Pty. Ltd. 11

Research Aims

The aim of this project is to explore and examine the nature of the strat-egy process, in the context of the high technology industry in Australia. The relationship between the impact of technology on organisations and the relative emphasis placed on strategic thinking and strategic planning are examined. In doing so, the validity of the definitions of strategic thinking (Liedtka, 1998a) and strategic planning (Boyd & Reuning-Elliott, 1998) are tested and the two concepts contrasted.

In comparing strategic thinking with strategic planning, this research makes a contribution by clarifying an important and contentious issue in the strategy field, that is, how are the apparent incompatibilities between strategic thinking and strategic planning resolved in practice, and what are their respective roles?

In particular, this research uncovers and explains strategic management processes in the Australian high technology sector. These results may provide the basis for further comparative studies with similar sectors in other countries, or with other industries within Australia.

The results presented of an analysis of strategy processes for the high-tech sector could also have implications for the making of strategy in other sectors that are now facing unprecedented technological change, for example the banking and finance sector in an internet-based economy.

Finally, inferences are drawn from this research for the likely evolution of the practice of strategy-making for industrialised economies as the preva-

Research Questions


lence of the knowledge worker increases and internal and external envi-ronments continue to become more complex.Introduction Spangaro Systems Pty. Ltd. 12

Research QuestionsThis research aims to answer the following research questions:

1. How much emphasis is placed on strategic planning in high technol-ogy organisations, relative to other types of organisations?

2. How much emphasis is placed on strategic thinking in high technol-ogy organisations, relative to other types of organisations?

3. Does the criticality of technology to an organisations business influ-ence the balance between strategic planning and strategic thinking in the strategic management process?

4. In high technology industries are analysis, strategy formulation and hypothesis testing through implementation iterative and intertwined processes or do they tend to be linearly and sequentially related pro-cesses.

October 4, 2000

tegic thinking is by no means clear in the literature, which is in a state of confusion over the issue. Strategic planning is often used to refer to a Spangaro Systems Pty. Ltd. 13

programmatic, analytical thought process and strategic thinking to refer to a creative, divergent thought process.

It is argued that strategic planning and strategic thinking both have their place in the strategy process (Mintzberg 1994a; Heracleous 1998; Liedtka 1998a), and that both are necessary for effective strategy (Hera-cleous 1998; Liedtka 1998a).

This literature review explores the relationship between strategic plan-ning and strategic thinking as these two concepts appear in the academic literature on the subject. Attempts to reconcile these seemingly contra-Chapter 2: Literature Review

Synopsis

This chapter examines the academic literature concerning the concepts of Strategic Planning and Strategic Thinking, and their relationship to each other and the strategy process. It also reviews, in this context, strat-egy in the high technology industry.

Introduction

The field of strategy has evolved over the last 35 years or so (OShan-nassy 1999a). Over time, the emphasis has shifted from strategic plan-ning to the more contemporary concept of strategic thinking (Mintzberg 1994a; 1994b). However, as Heracleous (1998) states:

The relationship between the two ideas of strategic planning and stra-

The Concept of Strategy


dictory ideas are examined, revealing a holistic view of strategy that includes both concepts, and that strategic planning can be seen as single-Literature Review Spangaro Systems Pty. Ltd. 14

loop organisational learning and strategic thinking as double-loop learn-ing. In this view, both analysis and intuition are used in a balanced way. Still, contention remains over how strategic planning and strategic think-ing relate to the strategy process, particularly which concept is most rele-vant to the creation of new, innovative and by implication more successful strategies.

Reviewing literature on strategy in the high technology industry, it is sim-ilarly found that there are opposing forces of alignment and disruption, of analysis and intuition and deliberateness versus emergence at work. The nature of the strategy process is found to be dependent on a complex range of contextual factors such as internal and external complexity, envi-ronmental turbulence, organisational size and technological flexibility. Within this contextual framework, there appears to be scope to reconcile strategic thinking with strategic planning by appropriate balancing of the emphasis on each process.

The Concept of StrategyThe historical origin of the concept of strategy is generally based in the use of strategy in the military domain as a means to victory in times of conflict. The writings of Sun Tsus The Art of War (1971) circa 400 B.C. are often quoted in business strategy literature as one of the earliest works on strategy (Mintzberg 1994b, p6).

Turning to more peaceful applications of strategy in the business world, the meaning of strategy can be taken in a variety of contexts.

Ansoff (1965), one of the earlier significant authors on corporate strategy defined strategy as a concept of the firms business that has a common



thread that pervades the business. This common thread is a relationship between present and future product-markets which would enable outsid-Literature Review Spangaro Systems Pty. Ltd. 15

ers to perceive where the firm is heading, and the inside management to give it guidance.

Compare Ansoffs views with Andrews (1980b, pp43-44), who suggests that corporate strategy is the pattern of company purposes and goals - and the major policies for achieving those goals - that defines the busi-ness or businesses the company is to be involved with and the kind of company it is to be. He goes on to then also explain that strategy is an organisation process, which is in many ways inseparable from the struc-ture, and can be distinctly divided into formulation and implementation.

The various views defining strategy are integrated by Mintzberg (1987; 1994b; Mintzberg, Ahlstrand & Lampel 1999, pp9-15) into a five Ps view of strategy, not as components but as five discrete concepts on the nature of strategy. Strategy can be a plan, a consciously intended course of action, or a pattern, seen as consistency in behaviour, intended or not. Strategy can mean an aspect relative to the environment, or a position. Strategy can be the set of views and beliefs held about the organisation and the world around it, providing a perspective. Or, finally, strategy can be a deliberate maneuver intended to outwit an opponent, thus a ploy.

Perhaps in this five Ps representation of strategy, we can recognise the dimensions of strategy identified by Andrews: pattern of . . . purposes and process (pattern), defines the business (perspective), policies for achieving . . . goals (plan).

Ansoffs earlier definition can similarly be reconciled with the five Ps: concept of the firms business (seems like perspective), common thread (pattern), where the firm is heading (plan). Interestingly, Mint-zberg (1994b, p43) describes Ansoffs views of strategy as pattern and plan, but not perspective.



Key to the definition of strategy and particularly strategy formulation is the tension between the incrementalist perspective and the planning per-Literature Review Spangaro Systems Pty. Ltd. 16

spective of strategy. The planning perspective takes the view that strate-gies should be deliberately planned and executed, whereas the incrementalist perspective sees strategy formulation more as a process of experimentation, innovation, learning and organisational development (De Wit and Meyer 1998).

The planning perspective favours the view that a realised strategy can and should be a deliberate strategy, whereas the incrementalist view accepts that a strategy may be emergent, that is, arises from forces and causes outside the control of the would-be planners, and also that some strategies may never be realised (unrealised strategies). Mintzberg and Waters (1985) introduced this concept of emergent strategy, as shown in Figure 1 on page 16.

FIGURE 1. Forms of Strategy (Mintzberg and Waters 1985)

intended strategy

deliberate strategyunrealised

strategy

Emergent Stra

tegy

realised strategy



A further important contribution by Mintzberg, Ahlstrand and Lampel (1999) to the understanding of the many dimensions of strategy has been Literature Review Spangaro Systems Pty. Ltd. 17

the classification of our understanding of strategy into ten schools of thought. The first three schools are prescriptive, about how strategies should be formulated: the Design School, where strategy formation is a process of conception; the Planning School, strategy formation being a formal process; the Positioning School, strategy formation as an analyti-cal process. Another six schools describe how strategies really do get made: the Entrepreneurial School, where strategy formation is a vision-ary process; the Cognitive School - strategy formation as a mental pro-cess; in the Learning School strategy formation is an emergent process; in the Power School strategy formation is a process of negotiation; the Cul-tural School where strategy formation is a collective process; and the Environmental School where strategy formation is a reactive process. Finally the Configuration School stands alone with strategy formation as a process of transformation, somewhat integrating aspects of the other schools into regarding strategy as a process of change of state.

These ten schools provide a valuable framework for managing and under-

standing the complexities of strategy1. The five Ps of strategy are com-plementary to these ten schools in providing an overall structure for making sense of a definition of strategy.

As can be seen, the definition of strategy itself is complex, multidimen-sional and often contentious. To plan strategy, to think about strategy, to understand strategy requires an appreciation of the nature of strategy itself. Any attempt to define strategic planning and strategic thinking must be made within this context.

1. Crouch and Basch (1997) conducted a study examining the lexical and content analysis of the cognitive process of strategic thinking. The results indicated that there was no evidence of rep-resentation of the planning, cultural or environmental schools in the process of strategic think-ing.

Strategic Planning


Strategic PlanningLiterature Review Spangaro Systems Pty. Ltd. 18

Strategic planning in the commercial world evolved since the late 1800s in five principal stages identified by Hax and Majluf (1984) as:1. Budgeting and financial control (1890 - 1930)2. Long range planning (1930 - mid 1950s)3. Business strategic planning (mid 1950s - late 1960s)4. Corporate strategic planning (1970s)5. Strategic management (1980s). (Pfeiffer 1984, pp371-380)

In strategic plannings heyday, centralised strategic planning departments were heavily staffed with armies of planners who developed grand strate-gies for the masses to implement. However, in the mid 1980s, Pfeiffer (1984, p377) noted a strong trend towards reintegrating planning with execution and increasing the involvement of operations in the planning function, a separation between formulation and implementation that had existed since the turn of the century.

Strategic planning, such as it was, gradually fell from favour beginning in the early 1970s. Much of the evidence suggested that planning either was ineffective or did not consistently produce improved performance. In many cases planning was simply not done, as it had been found to pro-duce poor results. In one study by Jacques Sarrazin (1975; 1977/78), planning was found to be an ineffective process for making strategic decisions; output information was not available on time, planning could not handle the complexities of the environment, and it merely served to enhance conflict within the organisation. The main benefit of planning seemed in this study to be for management to attempt to regain control over the decision making process (Mintzberg, 1994b, pp 92-107).

Despite the mixed success of planning sorties, Andrews (1980a) provides insight into the actors involved in the planning process, prescribing the appropriate role for the board in the making of strategy. He sees planning

Strategic Planning


as a formal, centralised process for the benefit of the board, and involving senior management and the board. He suggests conducting the typical Literature Review Spangaro Systems Pty. Ltd. 19

formal annual strategy review as the fabled executive retreat, making only passing reference to the need to encourage creativity. He recom-mends the use of Corporate Strategy Committees, comprised mostly of board members with one-way input from business segments, as a meth-odology to make strategy formulation better informed and relevant.

Prahalad and Hamel (1990) introduced the concept of core competen-cies of the corporation, which should constitute the focus for strategy at the corporate level (p299). This view integrates markets, products and the organisation into a single combined perspective about what the organ-isation does particularly well. In this sense, planning revolves around making sure that you exploit your Strengths and shore up your Weak-nesses to be able to capitalise on Opportunities and defend against Threats. Considering strategy as Position, the planning strategist navi-gates the core competence of the organisation to profitable waters. The responsibility for identifying and developing the required core compe-tence still sits in this view with the top level corporate planners. Mintz-berg, Ahlstrand and Lampel (1999, p218) assign this core competence notion of strategy to the Learning School.

Characteristics of strategic planning

The nature of strategic planning can be described in terms of the follow-ing characteristics:

Analytic. Planning is a process of analysis, number crunching, evaluation. (Porter 1979)

Formalised. Planning is a formal, mechanistic process to which tools may be applied to improve the quality of the result (Ansoff 1965; Porter 1979; 1985; 1990)

Strategic Planning


Detached. Planning separates formulation from implementation, and the planners from those implementing (Andrews 1980a; 1980b) (also Ohmae Literature Review Spangaro Systems Pty. Ltd. 20

(1982, p206) laments this detachment as separation of the brains from the muscle).

Convergent. Planning narrows down, systematically eliminates alternatives (Mintzberg, Ahlstrand & Lampel 1999).

Scientific. Planning can be applied as a scientific method (OShannassy 1999b).

Engages left-brain (or right-handed planning). Planning favours analytic cognitive processes associated with the functioning of the left hemisphere of the brain (Mintzberg 1994b, pp393-396).

Critics of traditional strategic planning (Mintzberg 1994a; 1994b, p60, pp92-97; Mintzberg, Ahlstrand & Lampel 1999; Ohmae 1982; Stacey 1996) claim that strategic planning fails to lead to formulation of winning strategies, and that strategic planning is really best conceived as strate-gic programming (the implementation of already formulated strategies) (Mintzberg 1994b, p415).

Strategy formulation Such criticism generally centres around the lack of opportunity for cre-ativity, innovation, questioning of paradigms or the use of intuition in the planning process. Consider Porters (1979, pp21-22) description of the process under the heading Formulation of Strategy:

Once having assessed the forces affecting competition in an industry and their underlying causes, the corporate strategist can identify the companies strengths and weaknesses . . . Then the strategist can devise a plan of action that may include (1) positioning the company so that its capabilities provide the best defense against the competitive force; and/or (2) influencing the balance of forces through strategic moves, thereby improving the companies position; and/or (3) anticipating shifts in the factors underlying the forces and responding to them with the hope of exploiting change by choosing a strategy appropriate for the new com-petitive balance before opponents recognise it.

Strategic Planning


It may be argued that influencing the balance is the chief aim of cre-ative strategy making (and apparently where planning has failed to Literature Review Spangaro Systems Pty. Ltd. 21

deliver). In this view, analysis clearly precedes strategy formulation.

Mintzberg, Ahlstrand and Lampel (1999, pp 66-79) claim that the con-cept that strategic planning may be used to formulate strategy is falla-cious. They identify these fallacies of strategic planning: the fallacy of predetermination (the environment is sufficiently predictable as is required by planning), the fallacy of detachment (that strategists can purely rely on hard data to remain separate from the objects of their strat-egies to remain detached from operations) and the fallacy of formalisa-tion (that internalisation, comprehension, synthesis, insight and intuition can be systematised and formalised to produce strategic thinking).

The sum of these misconceptions comprises the grand fallacy of strate-gic planning: Because analysis is not synthesis, strategic planning has never been strategy making (p77).

Planning Today Recent evidence (Glaister & Falshaw 1999) suggests that strategic plan-ning is still used by most large companies. The strategies realised are more deliberate rather than emergent, and formulation of strategy stems from a deliberate process. Most plans address a time horizon of less than five years. The tools used in the planning process are predominantly sim-ple spread sheet what if analyses, analysis of critical success factors, financial competitor analysis and SWOT analysis; relatively unsophisti-cated methods. Planning emphasizes closely related markets over totally new markets. Strategic planning is seen as important and an effective way to achieve improved performance.

Despite the chequered history of strategic business planning, the basic premise that good strategy can lead to better outcomes is well rooted in

Strategic Thinking


human history, and strategic planning has been an important feature of business management for over forty years.Literature Review Spangaro Systems Pty. Ltd. 22

Strategic Thinking

The definition of strategic thinking is contentious in the academic liter-ature (OShannassy 1999b; Heracleous 1998). There are schools of thought about strategic thought, if you like.

The strategy paradigm has evolved in the 1990s (OShannassy 1999a); the modern concept of strategy, strategic thinking, sees strategy making itself as a creative, intuitive, non-linear process, not able to be formalised or mechanised by a typical strategic planning approach (OShannassy 1999a; 1999b; Ohmae 1982; Mintzberg 1994b, pp381; Mintzberg, Ahl-strand & Lampel 1999, p72) and that attempting to formalise the process actually critically inhibits the organisations ability to think strategically (Stacey 1996, pp412-414).

Strategic thinking is then central to the strategy process, whereas strate-gic planning applies around the process (Mintzberg 1994b, p331; 1994a, p108).

In another view, Porter (1991) and others see strategic thinking as a con-vergent and analytical process, and consider that such analysis is central to the strategy making process (Heracleous 1998).

Ohmae (1982) integrates analysis ideally as part of the creative strategic thinking process, as shown in Figure 2 on page 23. There are similarities between this view and Mintzbergs (1994b) view that planing and analy-sis support the strategic thinking process (also Mintzberg, Ahlstrand & Lampel 1999). The use of non-linear brain-power remains the essence of strategic thinking (Ohmae 1982, p13).

Strategic Thinking


FIGURE 2. Stages of strategic thinking (Ohmae 1982, p20)Literature Review Spangaro Systems Pty. Ltd. 23

Liedtka (1998a; 1998b) attempts to resolve this analytic/intuitive debate over the nature of strategic thinking, claiming that in fact strategic think-ing is both. She proposes a model of the elements of strategic thinking (see Figure 3 on page 24). Being hypothesis-driven, strategic thinking iterates hypothesis generation (creative) and testing (analytical). Similari-ties are apparent between this conceptualisation of hypothesis-driven strategic thinking and that of Ohmae (1982).

Phenomena

Grouping

Abstraction

Determinationof approach

Provisional formulation of

Validation or rebuttal of hypothetical solutionsby in-depth analysis

hypothetical solutions

Emergence of conclusion

Giving concrete form toconclusions

Draft plan of actionsImplementationby line managers

solv

ing

the

pro

blem

plan

nin

g fo

r im

plem

enta

tion

typicalshortcircuit

Strategic Thinking


FIGURE 3. The elements of strategic thinking (Liedtka 1998b, p122)Literature Review Spangaro Systems Pty. Ltd. 24

This model also recognizes strategic intent (Hamel & Prahalad 1989; Prahalad & Hamel 1990); that strategy creates and depends on tension between current circumstances and a desired future. It integrates the understanding that strategic thinking connects the past, present and future (thinking in time), that strategies can be emergent as well as deliberate (Mintzberg 1987) (intelligent opportunism), and that, as in the traditional planning literature, strategy is about a holistic view of the organisation and its environment (systems perspective).

In contrast to Porters (1979) strategic planning based view, in the strate-gic thinking paradigm analysis supports formulation, but does not strictly precede it. If strategic thinking were observed, analysis would be at least partly driven by attempts at formulation in iterative hypothesis-testing cycles (Ohmae 1982; Liedtka 1998).

Strategic Thinking

systemsperspective

intentfocused

intelligentopportunism

thinkingin time

hypothesis-driven

Connecting Planning with Thinking - the Evolution of Strategy


Connecting Planning with Thinking - the Evolution of StrategyLiterature Review Spangaro Systems Pty. Ltd. 25

Several authors (Heracleous 1998, Mintzberg 1994a; 1994b; Mintzberg, Ahlstrand & Lampel 1999; Liedtka 1998a; 1998b) have attempted to integrate the seemingly opposite concepts of strategic planning with stra-tegic thinking without throwing the (strategic planning) baby out with the bathwater (Liedtka 1998a). Generally these authors agree that both planning and thinking are needed for effective strategy.

Wilson (1994) suggests that strategic planning has evolved to strategic management (or thinking). He states that harnessing the power of oppo-sites is necessary to be able to apply both strategic planning and strate-gic thinking to the problems of management (Wilson 1998), in particular being able to balance analysis with intuition, and between holding to a strategic vision and having flexibility in tactical action. In a similar vein, Butler et al. (1998) describe the need to balance tensions between errors of tightness and errors of looseness in decision making and control of organisations.

Strategic conversations are suggested to be one means of integrating the planning process with thinking activities (also Taylor 1997):

The most valuable role strategic planning processes play is to legiti-mize a developmental dialogue around strategic issues, the outcome of which is both better strategy for an organisation and better developed strategic thinking capabilities in its members (Liedtka, 1998b, p124).

Combining strategic thinking and strategic planning can also be viewed as having complementary impacts on McKinsey 7S alignment/disruption (see Figure 4 on page 26):

A broadened view of the strategy making process . . . would incorpo-rate both strategic thinking and strategic planning as related activities . . . in an ongoing process of creating and disrupting the alignment between an organisations present and its future (Liedtka 1998a, p33)



FIGURE 4. Strategy Making as Creating and Disrupting Alignment (Liedtka, 1998a)Literature Review Spangaro Systems Pty. Ltd. 26

This relationship between strategic thinking and strategic planning may be explained in part by the view of the strategy process on which they focus. Strategic planning focuses on the cross-sectional problem (perfor-mance at a point in time) whereas strategic thinking focuses on the longi-tudinal problem (how strategies are arrived at) (Heracleous 1998).

Single-loop/ double-loop learning

Heracleous (1998) proposes a dialectic view of strategy, where thinking and planning are seen as different forms of organisational learning, based on established learning models (Argyris 1977; Senge 1990; Bateson 1972). Strategic planning can be viewed as simple, or single-loop learn-ing, whereas strategic thinking is complex or double-loop learning.

Similar ideas are presented by Stacey (1996). Single-loop (simple) learning occurs where the organisation uses a fixed mental model (or plan) and adjusts within a given set of action alternatives, as shown in Figure 5 on page 27.

S t r a te g ic T h in k in gD is r u p t in g A l ig n m e n t

S t r a te g ic P la n n in gC r e a t in g

A l ig n m e n t

C u r r e n t R e a l i t y

D e s i r e d F u tu r e



FIGURE 5. Simple single-loop learning model (Stacey 1996, p63)Literature Review Spangaro Systems Pty. Ltd. 27

Double-loop learning, however, is where the mental models, assump-tions and choice of action alternatives themselves are adjusted to adapt to the results, as shown in Figure 6 on page 27. Complex learning is the shifting, breaking and creating of paradigms (Stacey 1996, p65)

FIGURE 6. Complex Double-loop learning model (Stacey 1996, p64)

This single-loop/double-loop representation of strategy captures both the creative and the convergent aspects of strategy. Strategy as organisational learning fits into the learning school, and can be a messy process, but still requires a great deal of sophistication (Mintzberg, Ahlstrand & Lampel 1999, p230).

Consequencesand other changes

Discovering

Choosing

Acting

Consequencesand other changes

Discovering

Choosing

Acting

New MentalModel

Previous MentalModel



In this dialectic view, the strategist uses both synthetic and analytical, divergent and convergent processes for making strategy. This enables the Literature Review Spangaro Systems Pty. Ltd. 28

strategist to go up and down the ladder of abstraction . . . being able to see both the big picture and the operational implications (Heracleous 1998). This process is represented by Figure 7 on page 28.

FIGURE 7. Strategic thinking and strategic planning (Heracleous 1998, p485)

This learning model of strategy is particularly applicable to the high tech-nology organisation in a turbulent environment:

Some organisations face perpetual novelty. . . their environments are dynamic

and unpredictable, which makes it difficult to converge on a clear strategy at all. In this case, the structure tends to take the form of adhocracy, or project organisation, and the learning approach becomes almost mandatory - the means to work things out in a flexible manner. At the very least, it allows the organisation to do something to respond to an evolving reality in individual steps instead of having to wait for a fully determined strategy (Mintzberg, Ahlstrand & Lampel 1999, p229).

strategicmanagement

Strategic Thinking

Strategic Planning

Thought process:

syntheticdivergentcreative

Thought process:

analyticalconvergentconventional

The purpose of strategic thinking is todiscover novel, imaginative strategies which can rewrite the rules of thecompetitive game; and to envisionpotential futures significantly different from the present

The purpose of strategic planningis to operationalise the strategies developedthrough strategic thinking, and to supportthe strategic thinking process.

Strategy and High Technology Industries


Analysis versus intuition An effective balance between the use analysis or intuition is necessary; an excess of either in decision making leads to dysfunction and either Literature Review Spangaro Systems Pty. Ltd. 29

paralysis by analysis or extinction by instinct (Langley 1995).

This tension between analysis and intuition is often recognised: Innova-tive strategies do not emerge from sterile analysis and number-crunching: they come from new insights and intuitive hunches (Wilson 1994). Such comments are reactions to the inability of traditional strategic planning to stimulate creativity in strategy making. Integrative authors (Heracleous 1998; Mintzberg 1994b, p324-330; Mintzberg, Ahlstrand & Lampel 1999; Liedtka 1998) argue that rather than an either/or proposition, both analysis and intuition are necessary, in the right contexts, for successful strategy making.


The contextual focus for an examination of the strategy process for this study is the high technology industry sector.

Strategic planning for technology products is the leading unresolved technology management problem faced by the high technology industry in new product development (Scott, 1999) and high technology industries have unique characteristics that make an examination of strategic think-ing particularly interesting, in particular with respect to environmental turbulence or uncertainty, market dynamism and organisational, product and environmental complexity.

In the high technology sector, the internal and external environments are increasingly complex, and strategies are usually incremental and emer-gent (Lowendahl & Revang 1998). Innovation and organisational learn-ing are critical factors to success (Mintzberg, Ahlstrand & Lampel 1999, Claver et al., 1998 p56). Creative new strategies are required to deal with



significant changes to the competitive landscape and to capitalise on opportunities offered by the emergence of new technologies. The unpre-Literature Review Spangaro Systems Pty. Ltd. 30

dictability of the future may make traditional long range planning diffi-cult and somewhat futile (Franko, 1989 in Diaz and Gomez-Mejia, 1997 p303). The complexity of products, technologies and markets makes it additionally difficult for planners to remain detached from those who must implement.

Specifically, the flexibility of an organisations core technologies impacts the relationship between organisational complexity and the degree of for-malisation of the strategy process (Yasai-Ardekani and Haug, 1997). It was found in their study of contextual determinants of the strategy pro-cess that technological flexibility moderated the impact of organisational complexity on the degree of formalisation of the strategy process. They found that the more complex the organisation, the more formal the plan-ning process became when core technologies were inflexible, but that the process actually became less formal with increasing organisational com-plexity when the core technologies were flexible. They also found that top managements involvement decreased under competitive pressure and when core technologies were inflexible, suggesting that top manage-ment may (consequently) restrict its role in planning to review, choice and authorisation of strategic proposals and plans. (p738).

We may perhaps draw some inferences from Yasai-Ardekani and Haugs (1997) study. More flexible technologies may also produce greater rates of technological change and uncertainty. Strategic moves by (equally flexible) competitors may be harder to predict. There may also be a wider real choice of potential opportunities to choose from that are based on emerging technological and marketplace changes. To cope with this situ-ation, as organisations become more complex planning gives way to less formal strategic thinking, engaging in double-loop organisational learn-ing by relying on proposals from within the organisation to provide



options and ideas rather than relying on their own limited mental models of the competitive landscape.Literature Review Spangaro Systems Pty. Ltd. 31

In another study, Drago (1999) found that different types of organisa-tional complexity affected strategic complexity. He examined product diversity, vertical integration and international scope. Vertical integration increased strategic complexity, while increased product diversity actually led to a simplification of strategic complexity, or a focus on fewer compe-tencies. It is suggested that this simplification is a result of focusing towards areas of synergy.

In high technology industries the competitive environment is characteris-tically turbulent. Hodgekinson (1997) conducted a study that examined cognitive inertia in turbulent markets (in real estate, in his study), revealing that mental models of the competitive landscape can tend to remain stuck in the face of obvious changes (hence cognitive inertia). Such failure to adapt probably leads to poor strategy formulation and strategic failure (p940). Apparent in this image is the single-loop versus double-loop learning discussed previously. He concluded that within volatile business environments changes in mental models of competitive space significantly lag behind the changes in the material conditions of the marketplace implying that actors should periodically engage in a period of individual and collective reflection in order to reconsider anew the extent to which their assumptions and beliefs about the external envi-ronment provide a viable basis on which to build effective strategies for competitive success (Hodgekinson, 1997 p940). If we accept that high technology industries operate in turbulent environments, and that narrow-ing this gap or lag between mental models and the changes in the market-place leads to better strategy formulation, this conclusion adds weight to the argument that strategic thinking as double-loop learning is critical for strategic success.



Examining the prescriptive literature on strategy formation in a high tech-nology environment, much of the literature proposes methods for align-Literature Review Spangaro Systems Pty. Ltd. 32

ment of the technology strategy with the objectives of the corporate strategy (e.g. Barker and Smith 1995; Adler, McDonald and McDonald 1992). Such alignment processes are primarily strategic programming functions.

However, in line with the trend away from top down planning, some authors emphasise the influence technical strategy and technical issues may have on corporate strategy (e.g. Schroederer, Congden and Gopi-nath, 1995; McGrath, 1995). As Schroederer, Congden and Gopinath (1995, p185) state: Although a new technology is generally adopted to support a given strategy, the technologys full capabilities are often unknown prior to their use. Consequently, exploiting the technologys complete competitive advantages requires adjustment in the firms strat-egy.

The tension is apparent between creating alignment of technology strat-egy with the corporate strategy, and the disruptive, misalignment provok-ing effects of the introduction of new technologies and the creation of new possible futures and consequent revision of the original strategy. This process of alignment and misalignment, convergence and diver-gence parallels Heracleous (1998) and Leidtkas (1998a) description of an integrated strategy making process that combines both strategic plan-ning and strategic thinking. This process can also be seen as double-loop organisational learning, redefining understanding of the firms view of the competitive space as new possibilities or realities emerge.

Organisational processes for technology strategic management vary. In a study of 95 large firms worldwide Roberts (1995) noted significant dif-ferences in the role technology played in corporate strategy formulation between U.S., Japanese and European firms. Notably, Japanese compa-



nies have more chief technologists on company boards, more thoroughly link technology strategies to overall corporate strategies and they have a Literature Review Spangaro Systems Pty. Ltd. 33

greater upward influence on overall corporate strategy than their U.S. counterparts, suggesting that Japanese firms are structured to better facil-itate the dialectic alignment/disruption process.

Despite the apparently emergent and unpredictable nature of strategy in the high-tech environment, engaging in appropriate formal planning is effective to improve performance. Covin and Slevin (1998) examined the effects of risk taking and adherence to plans as predictors of firm sales growth, and found that adhering to (formal) plans has a particularly pos-itive effect on firm sales growth in technologically sophisticated environ-ments, and also that minimising unnecessary risk taking was also an effective measure to obtain growth. They suggest that strategic flexibil-ity . . . will most effectively occur within the context of a broadly defined plan (or) umbrella strategy (p231). Suggesting that both formal plan-ning and maintaining strategic intent are important elements of an effec-tive strategy process.

Roberts (1991), one of the most widely published authors on technology management, also found that formal strategic planning and market research correlates with success in high-technology companies, adding to the evidence that traditional strategic planning is an important element of the strategy process.

Berry (1998) conducted a study of the existence of formalised strategic planning in 257 small high technology companies in the U.K. She observed levels of planning formalisation, ranging from non-planners to formal financial, non-strategic planners then formal financial, informal strategic planners and finally formal strategic planners.

She concluded that the degree of formalisation of planning was princi-pally a function of the size and complexity of the firm and the business/



technical experience mix of management. The more complex (larger) the firm the more formal the planning process becomes. She concludes that Literature Review Spangaro Systems Pty. Ltd. 34

formalised strategic planning is unnecessary in the early stages of a high-tech companies life, but is important to long term growth and develop-ment. Interestingly, the formal financial, informal strategic planner type characterises a strategic thinker, whereas the formal strategic plan-ner is more like a strategic planner, suggesting that the relative depen-dence on either strategic thinking or strategic planning varies depending on organisational context and management experience.

In addition, she concludes that whether formal or informal strategic planning is carried out, managers should emphasize the substantive ana-lytical elements of the process (p463), suggesting that strategic thinking alone is not seen as delivering sufficient analytical rigour.

Berrys (1998) conclusions appear to contradict the findings of Lowendahl and Revang (1998). They found that as the internal environ-ment of the organisation becomes more complex (while in a complex external environment), strategy becomes more emergent and incremental and structure becomes more fluid. These views may perhaps be recon-ciled: If the critical dependence on innovation diminishes as companies mature, then the use of more formal systems and structures for strategy development may be feasible (Lowendahl & Revang 1998; Butler et al, 1998).

In high technology companies R&D is often the core function of the firm (Diaz and Gomez-Mejia, 1197 p302). Particularly in firms with less prod-uct diversification, product strategy has elevated significance, and a dis-cussion of high technology strategy would not be complete without some reference to product strategy. McGrath (1995) identifies the elements of product strategy, represented by Figure 8 on page 35). However, he



makes an important distinction between corporate strategy and prod-uct strategy:Literature Review Spangaro Systems Pty. Ltd. 35

Real product strategy differs from other management activities that sometimes masquerade as product strategy (such as annual planning). These activities have a useful purpose in the management of an enter-prise but should not be confused with product strategy . . . in fact it is entirely different than planning. . . Product strategy is not the responsi-bility of strategic planners (McGrath 1995, pp259-261 in ch14 Strate-gic Thinking).

FIGURE 8. Overview of the Product Strategy Process. Illustrates the primary elements along with their relationships

(McGrath 1995, p248).

It can be seen that strategy in high technology industries is both formal and informal, deliberate and emergent, aligning and disruptive. The exact nature of the strategy process varies between organisations, and can

strategicvision

expansionstrategy

innovationstrategy

platformstrategy

product-linestrategy

strategicbalance resources competitive

strategy

differentiationstrategy

price-basedstrategy

supportingstrategies:- time-based strategy- cannibalisation- global product strategy

corecompetencies

Conclusion


depend on a wide range of factors including technological flexibility, organisational, environmental and product complexity, environmental Literature Review Spangaro Systems Pty. Ltd. 36

turbulence, management experience, organisational size and risk orienta-tion. Differences in approach can lead to impacts on organisational per-formance. Both strategic thinking and strategic planning are evident in the literature, and it may be argued that both are necessary for strategic success, although this claim is highly dependent on many contextual fac-tors.

Conclusion

This literature review has examined three principle issues: strategic plan-ning, strategic thinking and strategy in the high-technology industry.

The definitions of strategic thinking and strategic planning are highly contentious, and a range of views on definition have been presented. Stra-tegic planning is generally considered to be an analytical, formal, conver-gent process, whereas strategic thinking is a creative, divergent, intuitive process of strategy development. Both appear to be important for effec-tive strategy. Contention exists around how successful, ground breaking strategies are formulated, with some authors claiming that planning cre-ates strategies, while others insist that strategic thinking does.

Some authors have attempted to resolve this dilemma by integrating the two processes into a dialectic or holistic view, balancing intuition and analysis, and regarding strategic planning as single-loop organisational learning, whereas strategic thinking is double-loop learning.

In literature on strategy in the high technology sector evidence of both strategic thinking and strategic planning may be found. The nature and likely effectiveness of the process employed is dependent on a wide range of contextual factors. Balancing the tensions between strategic

Conclusion


thinking and strategic planning with consideration of these complex con-textual factors is the art of strategic management in high technology Literature Review Spangaro Systems Pty. Ltd. 37

industries.

Conclusion

Strategic Thinking, Strategic Planning and High-Technology Industries Justin SpangaroLiterature Review Spangaro Systems Pty. Ltd. 38

Introduction


Chapter 3: Field ResearchField Research Spangaro Systems Pty. Ltd. 39

Introduction

This chapter describes the design of the research project, the research hypotheses tested and the operationalisation of the research constructs.

Research Design

Two research models were constructed to describe the relationships between phenomena being investigated. Research Model 1 is designed to primarily investigate the relationship between the criticality of technol-ogy on an organisation and the balance between strategic thinking and strategic planning employed in the organisation.

Secondly, moderating factors or control variables are measured to deter-mine the influence that these factors may have on the relationship between the criticality of technology and the strategic thinking/strategic planning balance. Research Model 1 is depicted in Figure 9 on page 39.

FIGURE 9. Research Model 1

criticality ofimpact of technology

balance betweenstrategic thinkingand strategicplanning emphasis

technological inflexibilityorganisational complexity and sizeenvironmental hostilityneed for innovationenvironmental turbulenceproduct diversitymanagement experience

Research Design


Research Model 2 is designed to empirically test the thesis that strategic thinking and strategic planning occur in iterative, hypothesis generation - Field Research Spangaro Systems Pty. Ltd. 40

hypothesis testing cycles as suggested by Mintzberg (1994a, 1994b), Liedtka (1998a; 1998b) and Heracleous (1998), rather than in a linear, single pass of analysis then formulation in line with the views expressed by Porter (1979). Research Model 2 is shown in Figure 10 on page 40.

Research Model 2 evaluates whether there is a relationship between the criticality of technology and the iterative/linear nature of the relationship between formulation and analysis processes. As with Research Model 1, moderating factors or control variables are measured to determine the influence that these factors may have on the relationship between the crit-icality of technology and the relationship between formulation/analysis processes.

FIGURE 10. Research Model 2

criticality ofimpact of technology

technological inflexibilityorganisational complexity and sizeenvironmental hostilityneed for innovationenvironmental turbulenceproduct diversitymanagement experience

formulation andanalysis are iterative or linearprocesses

Research Methodology


Research MethodologyField Research Spangaro Systems Pty. Ltd. 41

This research employed a hypothetico-deductive research methodology.

Inductive/Deductive Methodology

Seth and Zinkhan (1990) identify that approaches anywhere on the con-tinuum of research methods from the inductive to the deductive can be valid for the study of strategy. In this case, a deductive methodology is preferred. It is noted, however, that given the complexity of the phenom-ena being examined, scope remains for inductive analysis particularly in regard to the phenomena of strategic thinking and the nature of the rela-tionship to strategic planning.

Hypothesis testing/falsification

Seth and Zinkhan (1990) further address falsification versus testing in strategy research. In consideration of their view presented that Popperian falsification is an inferior theory validation method than hypothesis test-ing, the research hypotheses are subjected to empirical testing.

Time period of research The study was cross-sectional (taken at a single point in time); no longi-tudinal (over time) research was conducted.

Quantitative and Qualitative Methods

Data was obtained by means of a formal written survey. A combination of quantitative and qualitative methods were used to investigate the phe-nomena being examined by the research questions.

The process of strategic planning, is an overt, typically formalised, exter-nalised and deliberate process. As such, this phenomena lends itself to positivist/quantitative approaches for identification and analysis. A multi-ple indicator measure of strategic planning was used to improve the mea-surement reliability (Boyd & Reuning-Elliott, 1998).

Conversely, strategic thinking, the intuitive, possibly covert, informal, internalised and often emergent process is more difficult to quantify. Arti-facts of strategic thinking are not so readily available. To study this phe-



nomena, five sub-constructs and three underlying assumptions were measured on a quantitative scale, then combined to form an overall mea-Field Research Spangaro Systems Pty. Ltd. 42

sure of strategic thinking. In general the questions required subjective evaluations about the organisation.

Both the planning and thinking measures were supported by qualitative data gathered by written comments volunteered on the survey by partici-pants, and also through a small number of structured and unstructured interviews with participants to add depth and insight to the interpretation of the survey data.

The research also investigated process sequences, that is, whether formu-lation and analysis are sequential and discrete or iterative and intertwined processes. The nature of the process sequence was measured quantita-tively by particpants responses to subjective likert scale survey ques-tions.

Measurement scales Likert scales were generally used to measure survey quantitative data. A combination of five-point and seven-point scales were used. Five-point scales are generally likely to provide the optimum data reliability where the respondent is not highly trained in the area, and seven point scales where the subject is more knowledgeable (Van de Ven & Ferry, 1980, pp63-65). Generally the choice on number of scale points (five or seven) was made based on prior research the operationalisation of the research variable was derived from and for consistency with other items in the construct.

The survey instrument used is provided in Appendix A: on page 89. A brief summary of the questions from this survey is also provided in Table 2 on page 48.

Data Collection Methods The majority of data gathered for this survey research was obtained by means of a written quantitative survey, generally either sent and returned



by post, but occasionally surveys were returned in person. In several of the cases where the surveys were returned, respondents were invited to Field Research Spangaro Systems Pty. Ltd. 43

make any additional comments on the issues raised in the survey. This verbal feedback was useful in general to aid interpretation of the survey results, and to gain more qualitative insights into the matters under study and qualification of the responses. Care was taken to avoid detailed dis-cussion of the survey prior to the participant completing the question-naire to avoid unintentionally biasing the results; all participants were provided exactly the same preliminary information and survey question-naire. Space was also provided for respondents to volunteer additional written comments on the subjects investigated by the survey if they wished. These comments provided valuable qualitative information to assist in interpretation of the results.

Sample Design Thirty-three surveys were sent to participants, from which twenty-one responses were received, giving a response rate of 64%. The initial batch of surveys were targeted specifically at companies in the high technology industry. Later surveys were targeted at senior management in more tra-ditional industries. Lower-tech industries were included in order to increase the reliability of measurement of the association between criti-cality of dependence on technology and dependent planning variables.

The survey included responses from ten different companies, all based in and around Melbourne, Victoria. While surveys were also sent to compa-nies outside Victoria (e.g. Sydney), no responses from interstate were received. However, as it is known that many of the respondents managed operations that spanned both interstate and international borders, it is expected that the results can reasonably be generalised across Australia.

Participants were targeted by a variety of methods. In most cases, partici-pants were identified through the researchers personal business network, and referrals within that network. While not strictly random, this method



was very effective at locating and targeting respondents who were most qualified to respond to the survey and to obtain a high response rate. Gen-Field Research Spangaro Systems Pty. Ltd. 44

erally, the closer to the personal network the invited participant was the more likely that a well considered response would be received. Partici-pants were offered a copy of the research findings to add incentive to complete the survey and to give adequate consideration to their responses.

In other cases, specific companies with a profile of success in the high technology industry in Australia were selected based on general industry knowledge. Contact was made by phone to request participation, and fol-lowed up with a mailed survey package. In some cases this was success-ful in obtaining a response and several participants were kind enough to consent to an interview as well. The structured interview questions used are provided in Appendix B: on page 99.

The types and size of companies surveyed ranged from mid sized local companies to divisions of large multinationals and Australian based pub-lic companies with substantial international operations. Organisational complexity was measured by the survey as an independent variable.

Fieldwork All research activities including participant selection, survey handling, responding to queries, gathering of feedback on the survey, keying of sur-vey data and structured interviews were performed by the principle researcher (Justin Spangaro). A database was maintained of participants and results catalogued to facilitate double-checking of responses for recording accuracy.

Data Analysis Methods From the literature and the research aims, a set of independent variables and a set of dependent variables were identified as shown in Research



Models 1 and 2. The variables used in the research are summarised in Table 2 on page 48.Field Research Spangaro Systems Pty. Ltd. 45

Table 1 on page 45 shows that SP, ST, ST/SP, FAR and CT are primary constructs, that is the research is designed to directly investigate relation-ships between these variables. On the other hand, MO, OC and TI are secondary constructs, that is we are interested in the moderating effects of these variables on relationships between the primary constructs.

Table 1 on page 45 also shows that SP, ST, ST/SP and FAR are dependent variables, while CT, MO, OC and TI are being treated as independent variables. The research principally examines the effects of the indepen-dent variables on the dependent variables, and therefore a cause/effect relationship is assumed. While noted in the literature review as possible moderators, the variables Need for Innovation, Environmental Turbu-lence, Environmental Hostility and Product Diversity were not operation-alised to limit the scope of the research within manageable limits.

The survey was designed and administered to enable the measurement of the constructs described above. Survey responses were tabulated then

TABLE 1. Research Variables/Constructs used in the research analysis

Type of variable dependency Variable Abbreviation

Type of research construct

Dependent variables

Emphasis placed on Strategic Planning SP Primary ConstructsEmphasis placed on Strategic Thinking ST

Relative Emphasis between Strategic Thinking and Strategic Planning

ST/SP or STvSP

Nature of the relationship between formu-lation and analysis (iterative or linear)

FAR

Independent variables

Criticality of Technology to the organisa-tion

CT

Management orientation (business or technology)

MO Secondary Constructs

Organisational Complexity OCTechnological Inflexibility TI



adjusted responses were generated by compensating for reverse scored items by reversing the item score. For example, for question 10, the raw Field Research Spangaro Systems Pty. Ltd. 46

score was subtracted from eight to provide the adjusted score.

Resultant values for the constructs (or indices) above were constructed from the summated measurement of several associated scale items, divided by the number of items (or questions) to normalise the score, effectively giving the arithmetic mean of adjusted responses. A summary of the question items and the constructs they are associated with is pro-vided by Table 2 on page 48.

For example, measurement of the strategic planing construct was formed from the summation of responses to survey questions 1 through 7, then divided by 7, as specified in Appendix C: on page 101. Strictly speaking, each scale item is measured on an ordinal scale, and an appropriate aver-aging method for ordinal scales would usually be calculated from the median (not the arithmetic mean). However, as described by Zikmund (1994, p303, p469), the appropriate method for combining multi-item Likert scales to measure a combination index or construct is the summa-tion of the individual item scores. Dividing the sum by the number of items (or questions) simply scales the response, and effectively produces the arithmetic mean. Finally, missing items are included by counting them as neutral scores (the scale midpoint) to avoid unwanted bias of the construct.

The strategic thinking (ST) construct was derived from the summation of the mean scores for each of the elements or sub-constructs, namely Intelligent Opportunism (IO), Systems Perspective (SYSP), Intent Focused (IF), Thinking in Time (TT) and Hypothesis Driven (HD), plus the mean of responses to the three assumptions measures A1, A2 and A3 (refer Table 2 on page 48). The calculations for the overall strategic thinking (ST) construct are provided in Appendix C: on page 101.



Furthermore, three other independent variables were measured: Techno-logical Inflexibility (TI), Organisational Complexity (OC) and Manage-Field Research Spangaro Systems Pty. Ltd. 47

ment Orientation (MO). These measures were derived from likert scale and some numerical response questions. Calculations are shown in Appendix C: on page 101.


Strategic Thinking, Strategic Planning and High-Technology Industries Justin SpangaroField Research Spangaro Systems Pty. Ltd. 48

TABLE 2. Summary of survey questions and associated constructs

Question Construct Focus of questionreverse scored?

no. of points

1 SP mission statement 52 SP trend analysis 53 SP competitor analysis 54 SP long term plans 55 SP annual goals 56 SP short term action plans 57 SP ongoing evaluation 58 ST:IO adherence to intended plans RS 79 ST:IO modifications to intended plans RS 710 ST:IO effectiveness at implementing intended plans RS 711 ST:IO ability to implement intended plans RS 712 ST:SYSP mental model of value creation system RS 713 ST:SYSP thinking about the external business ecosystem RS 714 ST:SYSP effects of actions on other parts of the business RS 715 ST:IF long term view of direction RS 716 ST:IF competitively unique view of the future RS 717 ST:IF worthwhile organisation goals RS 718 ST:TT past history predicts effectiveness of future actions RS 719 ST:TT concentrating on the gap between the past and a desired future RS 720 ST:HD formulation is an iterative or linear process RS 721 A1 future is unpredictable 722 A2 concurrency of formulation and implementation RS 723 A3 levels of management which are concerned with strategy 724 CT percentage of expenses spent on R&D 525 CT technological sophistication 726 CT industry level of R&D 727 TI time to set up a new facility linear28 TI adaptability of core technology 529 MO management technical-business orientation 530 OC number of employees linear31 OC level of diversification 732 OC divisional structure 6

SP = strategic planning; CT = criticality of technology; TI = technological inflexibility; OC = organisational complexity; A1-A3 = assumptions about strategic thinking; RS = reverse scored.

ST = strategic thinking, with sub-element constructs: IO = intelligent opportunism, SYSP = system perspective, IF = intent focused, TT = thinking in time, HD = hypothesis driven.



Statistical Analysis Methods Four different statistical analysis techniques were used to interpret the survey data: Spearman Rank-Order Correlation Coefficient Analysis; Field Research Spangaro Systems Pty. Ltd. 49

Varimax Rotated Factor Analysis; Multiple Linear Regression Analysis; and Bivariate Regression Curve Fit Analy

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