Theories of Organizational Behaviour and Strategic Management
Do not go where the path may lead, go instead where there is no path and leave a trail.
Ralph Waldo Emerson (1803-1882).
Essayist, philosopher, poet.
In the early 21st Century a strange paradox had emerged in the strategic management domain and its subsidiary subjects. After more than five decades of ‘formal’ academic research into all branches of the discipline, many of its core principles were widely accepted. Strategic Management textbooks were voluminous, to say the least. Despite this huge knowledge base of principles, methodologies, frameworks, processes and tools, however, former corporate icons such as GE, VW, Toshiba, Sony and even Intel demonstrated the symptoms of what appeared to be ‘commercial bankruptcy’, i.e. they had run out of ideas for profitable growth. Others, including Kodak, Blackberry, Nokia and Toys ‘R’ Us were financially bankrupt, i.e. they had run out of cash (see ‘Ringtone’ by Doz and Wilson, 2017, for an extraordinary account of the rise and calamitous collapse of Nokia in the mobile phone industry).
The FAANGs and the Uber’s, meanwhile, along with emerging Chinese super-competitors such as Alibaba, Lenovo, Tencent and Huawei were the new new new things, a phrase shamelessly stolen and adapted by this author from the impeccable Michael Lewis and his prescient “map of free enterprise in the 21st Century” which he wrote during the .com boom (Lewis, 2000).
The legendary German Mittelstand (small and medium-sized companies), along with the ‘no-name’ “Hidden Champions” of Central and Eastern Europe and Turkey (McKiernan and Purg, 2013) continued to thrive over multiple decades by abiding by the basic laws relating to the three Cs of Customer, Competitor and Capabilities associated with success in free-market economies (Ohmae, 1982). Once again, we come across the core paradox afflicting managerial science: strategy, marketing and innovation are beautifully logical and easy to talk about but involve business processes that are tremendously difficult to do within a context of organizational complexity. Two consequences arise:
- An external strategic management orientation is essential to underpin competitive success in today’s turbulent global business environment.
- Internal challenges, particularly organizational barriers to customer focus and competitive differentiation, must be identified and addressed if a company is to become truly market-driven.
Market Dictators and Organizational Constraints: The Global Strategic Management Challenge
Creating and leading a customer-centric intelligent company is of prime importance to secure sustainable commercial success in today’s ultra-competitive markets. The three elements of Figure 91 broadly reflect the structure of this book on global strategic management as the discipline develops in the context of the inexorable forces of globalization in the world economy.
Broadly, Part Two of the book focused on the industrial economics of supply, the nature of demand (buyer behaviour) and the interactions between them. In this part of the book, we focus primarily on issues traditionally associated with the subjects, topics and methodologies which constitute the discipline of organizational behaviour. While this book structure has the sequential logic of firstly assessing those fundamental external factors which companies must address (as dictated by the ‘invisible hand of the market’), followed by an evaluation of internal organizational enablers and constraints regarding strategy design and implementation, the double-headed arrows in Figure 91 indicate that the interconnections between the components paint a more complex picture.
The previous sections have outlined the need for flexibility in organizational response to ensure ongoing success in turbulent business environments. This ‘survival of the fittest’ notion is powerful but does tend towards a reification of organizational form. At the end of the day ‘organization’ is an abstract concept; an organization is simply a collection of human and capital assets with a stated purpose. Remove this rationale and the organization will cease to exist. The challenge of organizational change is, as Peter Drucker (1974) convincingly argued, a challenge of management.
A variety of contemporary environmental factors have raised the importance of the change dimension as a significant factor impacting organizational survival. These, in turn, have led managers to re-evaluate the entire range of business processes and to seek ways of ‘re-engineering’ them but with only varying degrees of success and many transformational failures. In the next chapter, we present a more detailed discussion of the strategic priorities and organizational inertias associated with management change programmes.
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All content © Colin Edward Egan, 2021