STRATEGIES, DECISIONS AND PLANNING - CED · Strategies, Decisions and Planning – Brief Literature Review 1 STRATEGIES, DECISIONS AND PLANNING ... “the determination of the basic

Strategies, Decisions and Planning – Brief Literature Review 1

STRATEGIES, DECISIONS AND PLANNING - A brief literature review-

VÍCTOR LOBOS G.

Contents Presentation…….……………………………….……………………………...…2 Part I

1. What is strategy?.................................................................................3 2. What is strategy process?...................................................................6 3. What are strategic decisions?...........................................................14

Part II 4. Strategic Decision Making Theory and Planning……….....…….…...16

4.1 Rationalism……………………………………………………………17 4.1.1 Weberian Instrumental and Substantive Rationality…………17 4.1.2 Rational Decision Making Process…………………………….18 4.1.3 Rational Planning……………………………………...………...20 4.1.4 Criticism of Rational Theory…………………………………….21

4.2 Bounded Rationality (or procedural rational)………………………22 4.3 Incrementalism………………………………………………………..22 4.4 Mixed Scanning……………………………………………………….24 4.5 Other (new) types of rationality……………………………..……….24

Part III 5. New Post-positivist Planning Theories………………………………...27

5.1 Pragmatic Planning…………………………………………….……..28 5.2 Postmodern Planning………………………………………….……..28 5.3 Collaborative Planning……………………………………………….32

Bibliography………………….……………………………………………….….34


Presentation The process of strategic decision-making, how decisions are made, it is a key point to understanding the development of political and planning processes. Therefore, studying the process of decision-making is important to understand what determines the process, which are the relevant variables and how these variables influence on the formulation and implementation of strategies. The first part of this paper seeks to systematize through a brief review of the literature, a number of concepts commonly used in strategic management and decision theory, concerning the concepts of strategy, strategy process and strategic decision-making. These concepts have been widely and confusingly used in the literature either from the theoretical and applied perspective, and constitute the basis of such complex issues as planning and management. The purpose is not to achieve precise, universal and unequivocal definitions respect of those concepts, on the contrary, the intention is to show the diversity of understandings and the different schools of thought that have influenced them. Moreover, the idea is to emphasize the complex nature of most of these concepts and therefore the need to adopt an eclectic attitude facing their use. The second part tries to take a step beyond that and show the main thinking trends that have influenced the decision theory over the past 50 years. It is about reviewing the influence of rationalism (instrumental and substantive) in the way of understanding the functioning of organizations, as well as its influence on the political processes and planning. From rationalism, is discussed a range of other schools of thought that arose in response to it, namely bounded rationality, incrementalism and mixed scanning. Finally, in the third part, is briefly presented the post-positivist view of the decision-making and planning process, which is based upon recognition of the complexity and uncertainty of decisions, as well as new ways of understanding the role of power, knowledge and social inclusion. Without claiming to be comprehensive, the aim is to present the three important schools -pragmatism, postmodernism and collaborative- which have emerged forcefully during the last two decades and which represent largely the current trends in planning.


Part I 1. WHAT IS STRATEGY? What is strategy? A seemingly straightforward question perhaps, but as of yet no widely accepted answer is available. Thanks to its multi-dimensional and situational nature, strategy has been defined in a variety of ways, but often –the traditional view of the term– with the common theme of a deliberate and conscious set of guidelines that determine actions into the future.

− Etymologically speaking the term strategy, which derives from the Greek word “strategos”, means "the art of the general".

− The Oxford English Dictionary defines strategy as the "art of war" and hence "the art of so moving and disposing troops as to impose upon the enemy, the place and time and conditions for the fighting preferred by oneself".

− In Wikipedia strategy is defined as “a long term plan of action designed to achieve a particular goal, most often "winning". Strategies are used to make the problem or problems easier to understand and solve”.

The concept of strategy has been borrowed from the military and adapted for use in business. The classical approach to strategy comes from prehistoric times, the military-diplomatic strategies. Classic texts such as Sun Tzu's The Art of War, written in China 2,500 years ago, the political strategy of Machiavelli who wrote The Prince in 1513, or German military strategists such as Clausewitz in the nineteenth century, are still well known and highly influential. In the twentieth century, the subject of strategic management has been particularly applied to organisations, most typically to business firms and corporations. However, the strategy research has been characterized by the persistent controversy between rational decision making frameworks based on economic theory, and various streams of basic critique. While the first invoke the image of strategy as a course of decisions and actions consciously deliberated by management as well as an analytical exercise for rational choice (Chandler, 1962; Andrews, 1971; Ansoff, 1965; Porter, 1980), the second challenges such simplified conceptualizations, insisting on the emergent, distributed, interpretative, mundane character of strategizing (Allison, 1971; Mintzberg, 1978; Quinn, 1980; Mintzberg & Waters, 1985; Mintzberg, 1994). While the first focuses on strategy as the coherent patterns of decisions and actions, the second emphasizes the importance of studying strategizing as the actual process of strategy formation. Box 1 shows those different approaches.

Box 1. Some definitions of organizational strategy

− Chandler (1962): “the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action with the allocation of resources necessary for carrying out these goals”.

− Andrews (1971): “the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal polices and plans for achieving those goals, and defines the range of business”.

− Newman & Logan, 1971: “strategies are forward-looking plans that anticipate change and initiate actions to take advantage of opportunities that are integrated into the concept or mission of the company”


− Miles and Snow (1978): “an organization's strategy typically is thought of as an all-encompassing grand "plan", with intentions of alignment between the organizational external environment and the organizational internal processes and structure”

− Tregoe and Zimmerman (1980): “strategy is as framework which guides those choices that determine the nature and direction of an organization"

− Quinn (1980): “strategy is the pattern or plan that integrates an organization’s major goals, policies and action sequence into a cohesive whole. Thus, a well-formulated strategy helps to marshal and allocate an organization’s resources into a unique and viable posture based on its relative internal competencies and shortcomings, anticipated changes in the environment, and contingent moves by intelligent opponents.

− De Bono (1984) stresses that “strategies” are in fact created by action and almost always on an ad hoc-basis. Suggests that in a corporate setting, you do not make up a strategy and follow it, but do things and then, if these things are successful, claim that they were a strategy. Strategy is more a symbol and cultural artefact within the corporation than the result of rational planning.

− Chaffee (1985) suggests that organisations use strategy to deal with changing environments. Because change brings novel combinations of circumstances to the organisation, the substance of strategy remains “unstructured, un-programmed, non-routine, and non-repetitive.”

Mintzberg1 (1978) affirm that almost all definitions treat strategy as explicit; developed consciously and purposefully; and made in advance of the specific decisions to which it applies, that is, a strategy is a "plan". Mintzberg (1986) focused on various distinct definitions of strategy -as plan, pattern, position and perspective (see box 2-3)- used the first two of theses definitions to take us beyond deliberate strategies to the notion of emergent strategy.

Box 2. Strategy as Plan and Pattern

Strategy as Plan By this definition, strategies have two essential characteristics: they are made in advance of the action to which they apply, and they are developed consciously and purposefully. For instance:

− In the military: strategy is concerned with “draft[ing] the plan of war… shap[ing] the individual campaigns and within these, decid[ing] on the individual engagements” (Von Clausewitz, 1976).

− In the game theory: strategy is “a complete plan: a plan which specifies what choices (the players) will make in every possible situation” (von Newman and Morgenstern, 1944)

− In management: strategy is “unified, comprehensive, and integrated plan… designed to ensure that the basic objectives of the enterprise are achieved” (Glueck, 1980)

As plan, strategies may be general or they can be specific.

Strategy as Pattern

By this definition, strategy is consistency in behaviour, whether or not intended. Thus strategy is a pattern – specifically, a pattern of stream of actions. In other words, when a

1 Henry Mintzberg is perhaps the most prominent author in relation to the concept of strategy. According to his approaches the word strategy has been used in different ways and suggests several definitions to clarify scope for executives to researchers.


sequence of decisions in some area exhibits a consistency over time, a strategy will be considered to have formed. Consider this quotation (in Quinn, 1980) from a business executive:

“Gradually the successful approaches merge into a pattern of action that become our strategy. We certainly don’t have an overall strategy on this”

What this man seems to be saying is that that his fir has strategy as pattern, but not as plan

Source: Mintzberg et al., 2003 Clearly, the definitions of strategy as plan and pattern can be quit independent of each other: plan may go unrealized, while pattern may appear without preconception. In other words, strategies may result from human actions but not human design (Mintzberg, 1987)2. According to Mintzberg, if we label the first definition intended strategy and the second realized strategy (see Figure 1), then we can distinguish deliberate strategies, where intentions that existed previously were realized, from emergent strategies, where patterns developed in the absence of intentions, or despite them (which went unrealized).

Figure 1. Deliberate and emergent strategies (source: Mintzberg, 1987)

Box 3. Strategy as Position and Perspective

Strategy as Position

By this definition, strategy becomes the mediating force between organization and environment, that is, between the internal and external context. In ecological terms, strategy becomes a “niche”; in economic terms, a place that generates “rent”; in management terms, formally, a product-market “domain”, the place in the environment where resource are concentrated.

2 The strategy maker may formulate a strategy through a conscious process, or a strategy may form gradually, perhaps unintentionally.


This definition of strategy can be compatible with either (or all) of the proceeding ones, a position can be pre-selected and aspired to through a plan and/or it can be reached, perhaps even found, through a pattern of behaviour.

This definition looks out, seeking to locate the organization in the external environment, and down to concrete positions.

Strategy as Perspective

This definition looks inside the organization, indeed inside the heads of the collective strategist, but up to a broader view. Its content consisting not just of a chosen position, but also of an ingrained way of perceiving the world.

This definition suggests above all that strategy is a concept. This has an important implication, namely, that all strategies are abstractions that exist only in the minds of interested parties.

What is of key importance about this definition, however, is that the perspective is shared by the members of an organization, thought their intentions and/or by their actions.

Source: Mintzberg et al., 2003

What, then, is strategy? Is it a plan? Does it refer to how we will obtain the ends we seek? Is it a position taken? Probably, strategy is all these -it is perspective, position, plan, and pattern. Mintzberg et al., (2003) suggests that even though various relationships exist among the different definitions, no one relationship, nor any single definition for that matter, takes precedence over the others. In some way, these definitions compete (in that they can substitute for each other), but in perhaps more important ways, they complement.

“Not alls plans becomes pattern nor are all patterns that develop planned; some ploys are less than positions, while other strategies are more than positions yet less than perspectives. Each definition adds important element to the understanding of strategy, indeed encourages us to address fundamental questions about organizations in general” (Mintzberg, et al., 2003).

Thus, strategy is not just a notion of how to deal with an enemy or a set of competitors or market, as it is treated in so much of the literature and its popular use. It also draws us into some of the most fundamental issues about organizations as instruments for collective perceptions and action.

“A good deal of the confusion in this field stems from contradictory and ill-defined uses of the term strategy. By explicating and using various definitions, we may be able to avoid some of this confusion, and thereby enrich our ability to understand and manage the processes by which strategies form“ (Mintzberg, et al., 2003).

2. WHAT IS STRATEGY PROCESS? A large body of literature, under the title of strategy formation in the private sector, and policy making in the public sector, addresses the question of how organizations make and interrelate their significant (that is, strategic) decisions. Mintzberg (1990, 1999) and Mintzberg et al. (1998) reviewed the evolution of the different approaches to the strategy formation processes. In those publications the key issue is whether these perspectives represent fundamentally different processes of strategy making or different parts of the same process. Likewise, it seek to show how some recent work tends to cut across theses historical perspectives –in a sense, how “cross-fertilization” has occurred.


The next section show a brief summary of the ten major schools proposed by Mintzberg (grouped as prescriptive and descriptive schools3) with its mains ideas and premises as well as their strengths and weaknesses. 2.1 Prescriptive schools

2.1.1 The Design School. Strategy formation as a process of conception -“look before you leap”-

Approach

Clear and unique strategies are formulated in a deliberate process. In this process, the internal situation of the organization is matched to the external situation of the environment. Proposes a simple model that views the process as one of design to achieve an essential fit between external threat and opportunity and internal distinctive competence.

Origin Late 50’s (dating back to Selznick (1949), followed by Chandler (1962), and given sharper definition by Andrews (1971))

Premises

− The process should be one of consciously controlled thought, specifically by the chief executive

− The model must be kept simple and informal − The strategies produced should be unique, explicit, and simple − These strategies should appear fully formulated before they are

implemented Basis Architecture as a metaphor In short Fit! "Establish fit!"

Contributions Order. Reduced ambiguity. Simplicity. Useful in relatively stable environments. It supports strong, visionary leadership.

Limitations Simplification may distort reality. Strategy has many variables and is inherently complex. Bypassing learning. Inflexible. Weak in fast changing environment. There is the risk of resistance (not-invented-here behaviour).

Typical / compare SWOT Analysis | Ashridge Mission Model

Critiques Focusing in particular on the problems of the conscious assessment of strengths and weaknesses, of the need to make strategies explicit, and of the separation between formulation and implementation.

2.1.2 The Planning School. Strategy formation as a formal process –“a stitch in time saves nine”

Approach

A rigorous set of steps are taken, from the analysis of the situation to the execution of the strategy. Can be summarized into three steps:

i) Strategies are conceived formally, following a controlled and formal process of thought.

ii) While the CEO (chief executive officer) holds responsibility for the overall strategy process, staff planners are responsible for the execution of this process.

iii) Strategies must be fully conceived before they are implemented, and therefore should be explicit. Then they are accurately formulated with respect to the detailed steps set out in the conception, and to the different areas of the organization.

Origin

Grew in parallel with the design school, predominated by the mid-1970s, faltered in the 1980s and yet continues to be an important branch of the literature today. The contribution of Ansoff (1965, 1988 1990) has been the most prominent in this approach.

3 The distinction between prescriptive and descriptive schools, i.e., those that prescribe how an “ideal” strategy should be formed and those that describe how “actual” strategies are formed.


Premises

Like Design School, except: − Highly formal, detailed, planned executing using multiple, lengthy

checklist − CEO doesn’t design strategies (that’s done by planning staff), just

approves Basis Urban planning, system theory, cybernetics. In short Formalize! "Strategy should be like a machine."

Contributions Gives clear direction. Enables firm resource allocation. Analysts can pre-screen the facts and they can judge the crafted strategies. Control.

Limitations Strategy can become too static. The risk exists of Groupthink. Predicting is difficult. Top managers must create the strategy from an ivory tower. Strategy is partly an art.

Typical / compare

Theory of Mechanistic and Organic Systems | Parenting Styles | Levers of Control | Scenario Planning

Critiques

− No intended strategy can ever be so precisely defined that it covers every eventuality.

− If the company has relied on its strategy to guide it through change, there may be an over reliance on prepared solutions.

− Does not specifically define the way in which the strategies are conceived.

− The CEO is only involved in overseeing the project, there is a danger that top management may become too distant from the workings of the organization and lower level detailed processes that are crucial to maintaining an effective strategy.

2.1.3 The Positioning School. Strategy formation as an analytical process –“ nothing but the facts, madam”

Approach

It places the business within the context its industry, and looks at how the organization can improve its strategic positioning within that industry. As with the design and planning school, strategies coming out of this process are first articulated and then implemented. The main difference being the strong focus on the external environment, especially market structures are believed to drive deliberate positional strategies. Emphasizes the importance of strategies themselves without observing the processes alone that are used to produce them. In addition it brings a focus to the actual content of strategies and a prescriptive method of investigation of options. The positioning school is the basis of much research and an entire strategic management industry in the world today.

Origin

Even though comes from the former military strategy (dating back to Sun Tzu in 400 B.C.), was the dominant view of strategy formation in the 1980s. It was given impetus especially by Michael Porter (1991, 1999), following earlier work on strategic positioning in academe (notably by Hatten (1977, 1999) and in consulting by the Boston Consulting Group and the PIMS project4.

Premises

− Only a few strategies (position in the economic marketplace) are viable in any industries

− Key is analyzing industry and identifying appropriates strategy for its fundamentals

Basis Industrial organization (economics) and military strategy. In short Analyze!

Contributions

This school made Strategic Management into a science, enabling future progress. Provides content in a systematic way to the existing way of looking at strategy. Focus on hard (economic) facts. Particularly useful in early stages of strategy development, when data is analyzed.

Limitations (See Planning School). Neglects power, politics, culture, social elements.

4 Profit Impact of Market Strategy (PIMS)


Is biased towards large firms. Number-oriented. Typical / compare

Competitive Advantage | Five Forces | Value Chain | BCG Matrix | Game Theory | The Art of War (Sun Tzu)

Critiques

− Same as Design and Planning − Narrowed to quantifiable economic, omitting social, political and non

quantifiable economic − Based to big business generation lots of “hard data” − Emphasize thinking and exclude learning − Ignore capacity and necessity for committed people to make a strategy

work 2.2 Descriptive School

2.2.1 The Entrepreneurial School. Strategy formation as a visionary process –“take us to your leader”

Approach

The visionary process takes place within the mind of the charismatic founder or leader of an organization. The school stresses the most innate of mental states and processes – intuition, judgment, wisdom, experience, and insight. The processes of the strategy system are firmly rooted in the experience and intuition of the leader, who actually conceives the strategy or adopts it from others and internalises it in its own behaviour. Entrepreneurial strategy systems tend to be both deliberate and emergent, in the sense that the overall vision and direction is of deliberate nature, whereas it is emergent on how the details of the vision unfold.

Origin The understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter (1950) and the Austrian economists such as Ludwig von Mises and von Hayek.

Premises − Strategy in leader’s mind as perspective − Formation is semiconscious at best

Basis Economics. In short Envision! "The CEO is the architect of the Strategy."

Contributions

A sound vision and a visionary CEO can help organizations to sail cohesively through muddy waters. Especially in early or very difficult years for the organization. Deliberate in the broad lines. Flexible and emergent in the details.

Limitations

Sailing a predefined course can blind someone for potential unexpected dangers or developments. How can you find the right leader, with all of the many needed qualities? Entrepreneurial, visionary leaders have a tendency to go too far. Being CEO is an extremely demanding job in this perspective.

Typical / compare

Entrepreneurial Government | Seven Surprises for New CEO's | Leadership Styles

Critiques

− Highlights proactivity and role of personal leadership and vision − Black box of personal, only response to crisis is to find a new visionary

leader − Strategy relying on a single person – high risk

2.2.2 The Cognitive School. Strategy formation as a mental process – “I’ll see it when I believed”

Approach

If strategy is the work of processes in the minds of people, we need to turn to cognitive psychology to understand thinking It analyzes how people perceive patterns and process information. It concentrates on what is happening in the mind of the strategist, and how it processes the information.


Various forms of cognition have an influence on how strategy systems are said to function, such cognition as confusion, cognition as information processing, cognition as mapping, cognition as concept attainment and cognition as construction.

Origin Particularly in the 1980s and continuing today. Its bases are on the contribution of Hebert Simon.

Premises

− Strategy formation is a cognitive process that takes place in the mind of the strategist.

− Strategies emerge as perspectives –concepts, maps, schemes and frames- that shapes how people deal with inputs from the environments

− Objective wing: inputs flow through distorting filters before they are decoded by the cognitive maps.

− Subjective wing: no external “inputs” only interpretations and perceptions.

− As concepts, strategies are difficult to attain in the first place, considerably less than optimal when actually attained, and subsequently difficult to change when no longer viable

Basis Psychology. In short Frame! "I'll see it when I believe it."

Contributions

Sees strategy as a cognitive process in the mind of the strategist. Strategies emerge as concepts, maps, schemas and frames of reality. Stresses the creative side of the strategy process. Strong at the level of an individual strategist. Very useful to explain why our minds are imperfect.

Limitations Not very practical beyond the conceptual stage. Not very practical to conceive great ideas or strategies. Currently not very useful to guide collective strategy processes.

Typical / compare

Whole Brain Model | Johari Window | Groupthink | Cognitive Bias | Myers-Briggs Type Indicator

Critiques

− School is characterized more by its potential than real contribution − Practitioners not well read enough in cognitive psychology - or cognitive

psychologist have not been able to frame their views in a way that could be adopted by business or strategy research

− Does not recognise strategy formation as a collective effort

2.2.3 The Learning School. Strategy formation as an emergent process –“if at first you don’t succeed, try, try again”

Approach

Strategy systems are described to be processes of learning over time, in which formulation and implementation activities are intertwined and indistinguishable in nature. Logical incrementalism and emergement strategy that can be found throughout the organization. It views, conversely, embodies experience and trial and experience approaches to strategy formulation.

Origin

Dating back to Lindblom's early work (1959) on disjointed incrementalism and running through Quinn's logical incrementalism (1980), Bower's and Burgelman's notions of venturing, Mintzberg et al.'s ideas about emergent strategy, and Weick's notion of retrospective sense making (1979, 1995).

Premises

− Complexity and unpredictability nature excludes deliberate control − Leader must learn, but so must the collective system − Emergent and involve retroactive sense making − Leader manages the process of strategic learning − Strategies appears first as pattern, and only later as plan fro the future

Basis Education, learning theory. In short Learn! "If at first you don't succeed, try again."

Contributions Offers a solution to deal with complexity and unpredictability in strategy formation. More people can learn than just the leader. No need for omnipotent leader. Can be combined with the emergent view. Strong in


complex conditions with continuous change. Strong in professional organizations.

Limitations

This school could lead to having no strategy or just doing some tactical manoeuvring (muddling through). Or to strategic drift. Not useful at all during crises. Not very useful in stable conditions. Taking many sensible small steps does not necessarily add up to a sound total strategy. You should not cross a chasm by taking small steps. There are costs associated with learning.

Typical / compare

Organizational Learning | Forget Borrow Learn framework | Knowledge Management | SECI model

Critiques Criticism of this school originates from the assumption that the success of the strategy can be based with emphasis only on core competencies

2.2.4 The Power School. Strategy formation as a process of negotiation –“look out for number one”

Approach

The strategy is developed as a process of negotiation between power holders within the company, and/or between the company and its external stakeholders. Two separate orientations seem to exist. Micro power sees the development of strategies within the organization as essentially political (a process involving bargaining, persuasion, and confrontation among actors who divide the power). Macro power views the organization as an entity that uses its power over others and among its partners in alliances, joint ventures, and other network relationships to negotiate "collective" strategies in its interest.

Origin Its roots in politicology. Dating back to Allison (1971) (micro) and Astley (1984) (macro)

Premises

− Strategies reflects interests of most powerful groups in the system − Strategy formation is a matter of negotiation, therefore strategies tend to

be emergent −

Basis Political science. In short Grab! "Look out for number one."

Contributions

Can help to let the strongest people survive in the corporate jungle. Can help to ensure that all sides of an issue is fully debated. Can help to break through obstacles to necessary change. Democratic. Can help to decrease resistance after a decision is made. Realistic. Particularly useful to understand Strategic Alliances, Joint-Ventures and to do Stakeholder Analysis.

Limitations

Politics can be divisive, uses a lot of energy, causes wastage and distortion and is costly. Can lead to aberrations. Can lead to having no strategy or just doing some tactical manoeuvring (muddling through). Overstates the role of power in strategy formation.

Typical / compare

Bases of Social Power | Power Distance | Stakeholder Value Perspective | Core Group Theory | Force Field Analysis | Stakeholder Analysis | Stakeholder Mapping

Critiques − Power focus has often meant that all other aspects have been neglected − Biased towards a “power is good”- rhetoric

2.2.5 The Cultural School. Strategy formation as a collective process –“an apple never falls far from the tree”

Approach

Strategy formation is viewed as a fundamentally collective and cooperative process. The strategy that is developed is a reflection of the corporate culture of the organization; therefore strategy systems are described to be processes of


social interaction, based on the beliefs and understandings shared by the members of an enterprise.

Origin Sweden in the 1970s with culture as a central, although hardly exclusive, theme, stimulated by the early work of Rhenman and Normann, and carried out by people such as Hedberg and Jonsson, and others

Premises

− Strategy formation a process of social interaction, based on the beliefs shared within the organisation

− Through socialization a new member learns these beliefs that are largely nonverbal.

− Members of an organisation cannot describe the beliefs that underlie their culture or explain there origins.

− Strategy as a perspective strongly rooted in the organisation. − Changes in strategy not encouraged as they will be hindered by strong

social structures. Basis Anthropology. In short Coalesce! "An apple never falls far from the tree."

Contributions

Emphasizes the crucial role that social processes, beliefs and values are playing in decision-making and in strategy formation. Explains resistance to strategic change and helps to deal with dominant values in organizations or in regions, and helps to deal with mergers and acquisitions.

Limitations Vague, can feed resistance to change and can be misused to justify the status quo. Gives few clues on how things should become.

Typical / compare

Appreciative Inquiry | Cultural Dimensions | Cultural Intelligence | Ashridge Mission Model

Critiques

− Conceptual vagueness − Can encourage stagnation − Too focused on what exists, rather than explaining how new things can

come into being

2.2.6 The Environmental School. Strategy formation as a reactive process –“It all depends”

Approach The strategy is a response to the challenges imposed by the external environment. Where other schools see the environment as a factor, the environmental school sees it as an actor – indeed THE actor.

Origin Its roots are in contingency theory (Pugh et al. (1968) that describe the relationship between environment and organisations) and population ecology (survival of the fittest: e.g. Hannan and Freeman, 1977)

Premises

− The environment as a general force is the central actor in the strategy-making process.

− The organisation must respond to these forces or it will not survive. − Leadership is passive: reads environment and ensure adaptation − Organisations are thus forced to move into niches until the niche

becomes to crowded. Basis Biology. In short Cope! "It all depends." Contributions Gives a central role to the environment in strategy formation.

Limitations The dimensions of the environment are often vague and aggregated. This renders it less useful for strategy formation. Denies real strategic choice for organizations. This is unrealistic.

Typical / compare

Contingency Theory | Situational Leadership

Critiques − “Dimension of environment” are too vague. − No “environment” is hostile, complex, turbulent all the time


2.2.7 The Configuration School. Strategy formation as a process of transformation –“to everything there is a season…”

Approach

Strategy formation is a process of transforming the organization from one type of decision-making structure into another. One side of this school sees organization as configuration - coherent clusters of characteristics and behaviours - and integrates the claims of the other schools - each configuration, in effect, in its own place.

Origin Began in the mid -1990s attempts to integrate strategy by showing how different dimensions of an organization band together under particular condition to define “states, models, or ideal types”.

Premises

− Most of the time an organization can be seen as stable: it adopts a particular form of structure that matches the context and behaves accordingly.

− Stable periods are occasionally interrupted by a process of transformation to another configuration.

− These processes can form patterns − Strategic management is about sustaining stability but recognising the

periodic need of radical transformation. Basis History. In short Integrate, transform! "To everything there is a season."

Contributions

Strategy and organizational shape (organizational development) are closely integrated and should be reconciled. An organization can be described in terms of some stable configuration of its characteristics, which it adopts for a period of time in a particular type of context. This causes it to behave in particular ways, that give rise to a particular set of strategies. The periods of stability are interrupted occasionally by some process of transformation. Key to strategic management is most of the time: to sustain stability, or at least adaptable strategic change. But periodically there is a need for transformation. And to be able to manage that disruptive process without destroying the organization. The way of strategy formation must adapt to its own time and context, while it takes one or more of the 10 mentioned forms. Therefore strategy formation itself has configurations.

Limitations

In reality there are many shades of grey, not just a limited number of valid configurations. Also, pattern is in the eye of the beholder. If you describe the reality by using configurations, you are distorting the reality in order to explain it.

Typical / compare

Organizational Configurations | Chaos Theory | Catastrophe Theory | Disruptive Innovation

Critiques

− Gives a too general picture, tries to include everything and fails to discuss anything well

− Organisations either stable or changing radically. What about incremental change?

According to Mintzberg et al. (1998), some schools are more influential than others in shaping management practice and drawing support from academics however, the standing of the various schools has changed over time. The Planning and Design schools were relatively prevalent in the 1970s, but currently their popularity is waning. Recently, by far the most influential has been the Positioning School established in the 1980s, although it is currently also becoming less fashionable. Most of the remaining seven schools started to attract followers in the late 1980s. The most dynamically growing are the Configuration and the Learning Schools, closely followed by the Power and the Cognitive Schools. This classification is not the only one, and contemporary literature often seeks to bridge gaps between the schools.


3. WHAT ARE STRATEGIC DECISIONS? During the last fifty years, both academic and practitioners have shown increasing interest in the strategic decisions made by organizations. These decisions have been studied from the perspective of strategic management, as well as from the perspectives of organizational behaviour/theory, economics, finance and marketing. However, what is strategic decision? What makes strategic? Why are so important? Box 4 indicates different approaches found in the literature concerning the meaning of “strategic decisions”.

Box 4. Strategic Decisions

− Drucker (1954) emphasizes that strategic decisions are multidimensional decisions, which will have an impact on the future of the organization. From this perspective, the great difficulty lies in finding the right question, not the right answer.

− Mintzberg et al. (1976) stresses that strategic decisions are those fundamental decisions that shapes the cause of an organization, in other words, the decisions which are "important, in terms of actions taken, the resources committed, or the precedents set”. Thus, strategic decision-making (as a process) is a set of actions and dynamic factors that begins with the identification of a stimulus for action and ends with the specific commitment to action.

− Frederickson (1983) points out that while not all organisations have formal plans, they all make strategic decisions (clearly, however, not all decisions are strategic).

− Eisenhardt and Zbaracki (1992) define a strategic decision as one that is important, in terms of the actions taken, the resources committed, and the precedents set.

Generally speaking, strategic decision has been described as a committing substantial resources; setting precedents and creating waves of lesser decisions; ill-structured, non-routine and complex; substantial, unusual and all pervading (Mintzberg et al., 1976; Hickson et al., 1986 and Schwenk 1988). Mintzberg et al. (1976) added some interesting elements. By studying 25 instances of strategic decisions and the accompanying processes concluded that the nature of the strategic decisions is characterized by significant uncertainty, lack of precedents, presence of facts limited by numerous possible alternatives and a high cost of failure, all aspects that determine that the processes are mostly unstructured. Mintzberg and colleagues refer to “unstructured” as a decision process that have not been encountered in quit the same form and for which no predetermined and explicit set of ordered responses exists in the organization. Some of the characteristics of strategic decisions are as follows:

− They are the responsibility of top management. Reflect the interaction between an organization and its environment and show how an organization manages this relationship (Ginsberg, 1988)

− They may be formal or informal and can be both intended and emergent (Pennings, 1985)

− They are embedded in both the inner context (e.g. psychological, structural, cultural and political factors) and the outer context of the organization (e.g. competitive factors) (Pettigrew, 1992)


− They deal with concerns which are essential to the livelihood and survival of the organization and usually involve a large proportion of the organization’s resources; and they typically address issues which are unusual for the organization rather than issues which lend themselves to routine decision-making (Stahl and Grigsby, 1992)

− They are difficult to define or to assess in terms of performance; they are associated with different trade-offs and risk; they are interrelated to other decisions in the organization and set precedents for subsequent ones; they are political and carry high levels of uncertainty; they rarely have one best solution and, once a decision is made, it is difficult to reverse (Wilson, 2003)

Finally, research into strategic decision-making has often been divided into two categories: content research and process research (see Box 5) (Schwenk, 1995; Elbanna, 2006). In this regard, Chandler (1962), Ansoff (1965), Ackoff (1970) and Andrews (1971) are among the first to formally propose the distinction between the process of strategic decision and the content of strategic decision.

Box 5. Categories research into strategic decision-making

− Content research, which deals with issues of strategy content such as portfolio management, diversification, mergers and the alignment of firm strategies with environmental characteristics.

− Process research, that deals with the process by which a strategic decision is made and implemented and the factors which affect it.


Part II 4. STRATEGIC DECISION-MAKING THEORY AND PLANNING Strategic decision-making (SDM) has long been a topic of great interest in both organization theory and strategic management. Systematic studies of decision-making processes are a relatively new discipline, usually named decision science, decision-making theory or decision analysis. Many theorists see the analysis of the decision making processes as the key to understanding how organisations function and/or should be function.

These disciplines and its related methodologies and perspectives can be grouped basically into two categories: 1) the prescriptive theories, that explain how decisions should be made, and 2) the descriptive theories which attempt to explain how decisions are actually being made in practice.

According to several authors (see for example, Goll and Rasheed, 1997; Johnson, 1988) exists two basic types of models pervade the literature on the SDM, the synoptic formalism model and the political incrementalism model. Synoptic formalism is considered an extension of the traditional rational model; and analysis is its basic feature (prescriptive). In contrast to synoptic formalism are incrementalism (Lindblom 1959), logical incrementalism (Quinn 1980) and political incrementalism (Mueller, 1998)5; this clarifies the way in which organizations actually make strategic decisions (descriptive). However, irrespective of the classification of the different paradigms, it is important to understand how these paradigms have influenced (and continue to influence) the way of planning in the public sphere. Thus, concepts like “bounded rationality” (Simon), “incrementalism” (Lindblom) and “mixed scanning” (Etzioni) entered into many planning discussions during the 60s. This resulted in attempts to adjust the rational-positivist approach prevailing in the 50s. A more flexible (and pragmatic) approach was deemed necessary. As a result the “contingency approach” and also the “strategic choice approach” gained popularity. Central to both approaches is the possibility to adapt the strategy chosen to the occurring circumstances; however, these approaches are still strongly linked to a technical rational way of thinking. The ability to separate facts from values was itself a problem with positivist rationalism. Such problems were partly the reason for the search for alternative approaches (post-positivist) that sought not to suppress values but to recognise and expose them. The post-positivist approach sees planners as fallible advisors who operate like everybody else, in a complex world where there are no “answers” only diverse and indeterminate options (Allmendinger, 2002). This principle led to a strong change in planning theory in the 80s and 90s. Over the last two decades, some schools of planning theory draw directly upon post-positivist ideas. Collaborative planning and postmodern planning are two clearest examples, though some forms of pragmatism also entail a post-positivist perspective. The following sections will be analyzed the rational paradigm and its influence on the planning processes as well as the three schools derived from rationalism: bounded

5 These three terms (incrementalism, logical incrementalism and political incrementalism) are not identical. In this regard, Fredrickson and Mitchell’s (1984) discussion of incremental processes does not address the political aspects of decision-making processes, while Eisenhardt and Zbaracki (1992) conclude that the political perspective provides a compelling description of the way in which managers actually make decisions. Quinn’s logical incrementalism differs from Lindblom’s incrementalism in that it combines elements of rational planning with elements of incrementalism (Papadakis and Barwise 1997).


rationality, incrementalism and mixed scanning. Finally, it is briefly discussed three planning schools which represent the “new” post-positivist approach on planning: pragmatic planning, postmodern planning and collaborative planning. 4.1 Rationalism The term rational has an etymological root to the Latin ration meaning reason. A rationalist is normally taken to be someone who emphasises logical capacities and can give reasons for a particular view. This is normally contrasted with more emotive or intuitive reasoning. For a long time, literature on decision theory was dominated by the assumption that decision-making could take place in an entirely rational way. The rationalist perspective, which was developed in the 1950s and 1960s, has its roots in Weber’s sociological theory in which he sees the rationalisation of decision-making within bureaucratic structures as the dominant approach to organisation (Weber, 1947). However, the origin of the modern rationalism lies in the concept of reason as Rene Descartes. The Descartes' concept of reason ("classic" Cartesian reason) is considered the precursor to all the kinds of rationality relevant to planning today, is the classic rationality as pure reason associated with the Age of Enlightenment6 that began in the 17th century. What Descartes set in motion here was the thought that we could understand the world and the processes within it as machines. It was thought that these processes were built up out of separate parts that each performed different task and in this influenced each other. Furthermore, if we could know all the parts and their functions, we would know the complete working of the machine. Something we now call reductionism. The success of this idea (plus the Newtonian dynamics) contributed to the faith that scientists would be able to understand the world and all phenomena and processes within it by means of reductionist analysis. This line of thinking culminated into the technical rational approach that gained such an important status in planning during several decades in the last century. Based on the thinking individual's inner convictions about the external world, supplanting traditional norms of custom and religion (abstract and context-independent). Cartesian reason overrides particular cultures and values. Universalistic and transcendent, it invokes generic rational procedures to validate beliefs and actions (Gellner, 1992). 4.1.1 Weberian instrumental and substantive rationality After a deluge of critiques of pure Cartesian reason, Max Weber revived rationality by introducing a social dimension (Gellner, 1992) and developed sophisticated distinctions between different kinds of rationality. Weber (1947), appreciating that subjective judgment or “sense data” would always influence decisions to greater or lesser degrees, sought to analyse and prescribe a form of bureaucracy and rational decision making that separated facts and values. The proper concern of rational decision-making should be with facts. Values, ends, goals and so on were the realm of politics. This dualism led Weber to make a distinction between instrumental and substantive

6 The Age of Enlightenment was basically an eighteenth-century movement in Western philosophy. It was an age of optimism, tempered by the realistic recognition of the sad state of the human condition and the need for major reforms and advocated reason as the primary basis of authority.


rationality. These kinds of rationalities were defined by Weber as a logical relationship between means and ends based on assessing the impacts of projected actions (see Box 6).

Box 6. Weber’s kinds of rationality

Instrumental rationality (or formal rationality):

− Concerned with means and efficiency (It is not related to ends)

− When give ends or objectives an instrumental rational approach will seek to meet those end in the most efficient and effective way. If the end is to travel between A and B, then a straight line is the formally most rational way of doing it. Such means are based on logic or reason (Weber, 1922).

− Has been formalized as an axiomatic system that includes requirements such as transitivity of preferences (Marschak, 1968), reflecting the computability of appropriate means to attain stipulated ends.

− Is the base for many theoretical models and decision support methods, subsuming utilitarian principles (e.g., Pareto optimality) and behavioural assumptions such as utility maximization.

Substantive rationality

− Concerned with end and their evaluation

− Includes "the actor's own rationally pursued and calculated ends" (Weber, 1922).

− “Action involves rational consideration of alternative means to the end, of the relations of the end to other prospective results of employment of any given means, and finally of the relative importance of different possible ends” (Weber, 1956).

4.1.2 Rational Decision Making Process The normative logic behind Weberian instrumental rationality and its methodological applications is articulated in formal decision theory and derived methods, which all premise a given goal or objective function, such as optimization and benefit-cost analysis. In this sense, the basic principles of rationalism can also be derived from utility theory. This, underlies rationality because it defines rational preferences and the choices one ought to choose. However, rationality theory is only concerned with guidelines of consistency, transparency and transitivity, but not about the underlying preferences and values. According to rationality theory, the decision making process is goal-oriented and rational. At the conceptual level, two propositions underlie this conception. First, people act rationally if their actions make sense with respect to their aims and seem appropriate means for achieving these aims. Second, at the individual level, the individual is purposeful and intentional, i.e., there are goals and ends towards which actions are intended (Nida-Rumelin, 1997). Rationality theory emphasizes the importance of analysis (Ansoff, 1965), the need for systematic scanning (Aguilar, 1967), and methodical planning and unification of strategies (Ansoff, 1965). As Healey (1993) characterise it, rationality typically involve “the clarification of policy goals, systematic analysis, logical generation of policy alternatives, systematic evaluation of these alternatives and monitoring performance”. According to Dean and Sharfman (1993) rationality is the use of information for the


purpose of selecting a sensible alternative in the pursuit of one’s goals. Thus, they defined decision-level rationality as the “extent to which the decision process involves the collection of information relevant to the decision and the reliance upon analysis of this information in making the choice”. The “classic” decision making process is traceable to John Dewey’s formulation of the problem solving process. It is the archetype of the rational-analytic approach to problem solving and decision-making, the kind that featured prominently in Kepner and Tregoe’s book, The Rational Manager (1965) (see Figure 2).


Basically, Dewey problem-solving consists of five consecutive stages: (1) a felt difficulty, (2) the definition of the character of that difficulty, (3) suggestion of possible solutions, (4) evaluation of the suggestion, and (5) further observation and experiment leading to acceptance or rejection of the suggestion. Herbert Simon (1960) modified Dewey's list of five stages to make it suitable for the context of decisions in organizations. According to Simon, decision-making consists of three principal phases: (1) finding occasions for making a decision; (2) finding possible courses of action; and (3) choosing among courses of action. The first of these phases he called intelligence, "borrowing the military meaning of intelligence", the second design and the third choice. Another influential subdivision of the decision process was proposed by Brim et al. (1962). They divided the decision process into the following five steps: (1) identification of the problem, (2) obtaining necessary information, (3) production of possible solutions, (4) evaluation of such solutions, and (5) selection of a strategy for performance. Finally, in a more detailed characterization of rational processes, Fredrickson (1983)

Assess the Situation

Gather Facts and Assess Unknowns

Identify Alternatives

Establish Decision Criteria

Weigh Alternatives

Select Best Alternatives

Review the Decision

Figure 2. The Classic Decision Making Process (Kepner and Tregoe, 1965)


suggests that rationality in organization-level decision-making involves six distinctive behaviours (1) proactively initiating the process, (2) attempting to achieve specified goals, (3) identifying goals prior to evaluating the means for achieving them, (4) objectively choosing among many alternatives based on their ability to achieve the goals, (5) being comprehensive in a variety of activities involved in making individual decisions, and (6) comprehensively integrating decisions into an overall strategy. The proposals by Dewey, Simon, and Brim et al. are all sequential in the sense that they divide decision processes into parts that always come in the same order or sequence. Several authors, notably Witte (1972) has criticized the idea that the decision process can, in a general fashion, be divided into consecutive stages. His empirical material indicates that the "stages" are performed in parallel rather than in sequence.

"I believe that human beings cannot gather information without in some way simultaneously developing alternatives. They cannot avoid evaluating these alternatives immediately, and in doing this they are forced to a decision. This is a package of operations and the succession of these packages over time constitutes the total decision-making process." (Witte, 1972)

4.1.3 Rational Planning Weber’s ideas were (and are) highly influential and were broadly translated into planning. However, these ideas were complemented by Karl Mannheim who argued that planning should be objective and unbiased in the face of inevitably social and personal influences. To minimise such influence planners need to think strategically and interdependently. Thus, Mannheim’s rationalism is less dogmatic and more practice-oriented that Weber’s. One of the main centres that developed and popularised thinking around rationality for planning was to be found in what is called the “Chicago School”7 (Faludi, 1987). Planning, according to the Chicago School, was a generic term. This meant that involved various methods that could be applied to a variety of situations and disciplines. The output from such a rational process was an explicit and objective form of decision making. Meyerson and Banfield (1955) had been involved in the Chicago School and applied its theme of rational decision making to detailed areas of public policy including planning and housing. The two kind of Weberian rationality (instrumental and substantive rationality) were at the core of their argument which saw a rational decision as one where:

1. The decision makers considers all of the alternatives (courses of action) open to them; that is, he considers what courses of action are possible within the conditions of the situation and in the light of the ends he seeks to attain.

2. He identifies and evaluates all of the consequences which would follow from the adoption of each alternative, that is, he predicts how the total situation would be changed by each course of action he might adopt.

3. He selects that alternative the probable consequence of which would be preferable in terms of his valued ends (Meyerson and Banfield, quoted in Faludi, 1987)

7 Program in Education and Research in Planning (University of Chicago)


Thus, in the 1950s and 1960s, planning theory was dominated by the rational planning model, which was concerned primarily with procedural planning issues. It had origins in writings by Meyerson and Banfield (1955), who in turn were operating within a positivist epistemology (Faludi, 1996). Thus, Banfield's (1955) new generic model, the rational planning model, became a guide in the profession and beyond as an approach to problem solving in the public sphere. Banfield's rational planning model had five steps:

1. Ends reduction and elaboration; 2. Design of courses of action; 3. Comparative evaluation of consequences; 4. Choice among alternatives; 5. Implementation of the chosen alternative.

Likewise, Andreas Faludi’s name is closely associated with rational process theories of planning. Clearly, Faludi follows the trajectory set by the Chicago School and work by, among others, Meyerson and Banfiled. Planning according to Faludi, is about the best way of producing result. To achieve this, planners should act much in the same way as research scientist in searching for the best methodology. Like Weber and Mannheim, Faludi views the planner as taking a non-ideological and objective stance:

“The information provided by ideological criticism is a useful signpost to what may underlie a proposal, but it must not paralyse them lest they should become defunct as decision-taker. They are more …judging premises for their acceptability and conclusions for whether proper inferences have been drawn. In short, they will combine particular demands and proposals into one overall rational choice” (Faludi, 1973).

Faludi’s conception of rational decision-making also includes reference to ends or substantive rationality. Planning as a rational process envelops substantive rationality or the vision that drives instrumental rationality. Values, vision or plans become almost secondary to means of getting there 4.1.4 Criticism of Rational Decision Theory The technical rational approach has received strong criticism in recent decennia. Therefore, a variety of critiques to the rationality paradigm have been offered in several contexts and at various levels of analysis. Most of them emphasized the following points:

− Doesn’t reflect the reality of strategic decision making situations; it assumes causal linkages are knowable and known

− Doesn’t reflect the iterative nature of developing clarity, formulating a viable course of action and developing commitment to that course of action

− Doesn’t reflect the political aspects of strategic decision making; it ignores intuition or “gut” instinct

It has also described a series of obstacles to adopting rational decision processes.

− The existence of cognitive limits to the rational model of decision-making − The pursuit by many strategic decision-makers of the basic phases of problem

identification, development and selection, but they cycle and recycle through the various stages of decision-making, frequently repeating, often going deeper, and always following different paths by fits and starts.

− The complexity of the problem and the conflict among the decision makers often


influence the shape of the decision process. Jones et al. (1992) identify three main obstacles to adopting rational decision processes.

− The organization may lack the required resources to search for and analyse the relevant information. For example, it has been argued that the rational model assumes that information will be available when needed but neglects the cost of providing this information (Braybrooke and Lindblom, 1970).

− The decision-makers may have limited cognitive capabilities.

− Executives may be apprehensive about upsetting the organization’s existing political structure and dealing with its consequences.

4.2 Bounded Rationality (or procedural rational) Responding to critics who pointed out the limits of rationality was the recognition of “bounded rationality”. March and Simon (1958) state:

“Because of the limits of human intellective capacities in comparison with the complexities of the problems that individuals and organizations face, rational behavior calls for simplified models that capture the main features of a problem without capturing all its complexities“.

Subsequently, using the term “bounded rationality”, Cyert and March (1963) pointed out that in an established organization, scope for decision-making is limited by prior decisions, either explicit or implicit, as well as being limited by moral commitments to individuals and departments. These authors described how decisions are actually made, rather than how they should be made and indicate that if one considers the cognitive limits of human beings, together with uncertainty and lack of agreement over goals, then the processes are quite different from those previously described by managers and researchers. Cyert and March (1963) presented theory and case studies which demonstrate that goals can be inconsistent across people and time, search behaviour is often local, and Standard operating procedures guide much of organizational behaviour. Eisenhardt and Zbaracki (1992) argue that the debate over whether decision-makers are rational or boundedly rational is no longer very controversial, where empirical research clearly supports two simple but important ideas; the existence of cognitive limits to the rational model of decision-making and the complexity of the problem and the conflict among the decision-makers which often influence the shape of the decision process. These authors conclude that… “people are rational, but that rationality is bounded such that power wins battles of choice, and chance affects the course of strategic decision-making”. 4.3 Incrementalism To overcome some of the problems connected to the classic rationalist approach, other models of decision-making was developed, the incrementalism (also called disjointed incrementalism) critique of rational planning gained wide circulation by the early 1960s. Political scientist Charles Lindblom (1959) suggested that comprehensive (rational) or “synoptic” planning, as he called it, was unachievable and out of step with political realities. Thus, theories of incrementalism emphasise a decision making process largely reactive to the external circumstances, and more or less driven by political


considerations. Lindblom’s incrementalism seeks to adapt decision-making strategies to the limited cognitive capacities of decision makers and to reduce the scope and cost of information collection and computation (see Box 9). Lindblom argued that political leaders cannot agree on goals in advance, as the rational model requires. They prefer to choose policies and goals at the same time. He thought that the rational model's preoccupation with the comparison of all possible alternatives and their comprehensive assessment on all measures of performance exceeds human abilities. Lindblom calls for the simultaneous selection of goals and policies, consideration of alternatives only marginally different from the status quo, examination of simplified, limited comparisons among the alternatives, and the preference for results of social experimentation over theory as the basis of analysis.

"Policy makers and analysis take as their starting point not the whole range of hypothetical possibilities, but only the here and now in which we live, and then move on to consider how alterations might be made at the margin" (Lindblom, 1965).

Consequently, decision-making should proceed on the basis of choice and policies that are only marginally different from each other. In incrementalist models, the decision situation is not assumed to be given, but constructed by the decision maker, who is no longer assumed to be able to oversee all aspects of the decision situation at the same time.

Box 9. The Lindblom’s six primary requirements of the incremental model

1. Rather than attempting a comprehensive survey and assessment of all alternatives, the decision maker focuses only on those policies which differ incrementally from existing policies.

2. Only a relative small number of policy alternatives are considered.

3. For each policy alternative, only a restricted number of “important” consequence are evaluated.

4. The problem confronting the decision makers is continually redefined: Incrementalism allows for countless ends-means and means-end adjustments which, in effects, make the problem more manageable.

5. Thus, there is no one decision or “right” solution, but a “never-ending series of attacks” on the issues at hand trough serial analyses and evaluation.

6. As such, incremental decision-making is described as remedial, geared more to the alleviation of present, concrete social imperfections than to the promotion of future social goals.

Source: Etzioni, 1967

According to Allmendinger (2002) there is no great goal or vision as much as a focus on day-today issues problems. The methods employed are based on trial and error. To help those involved, Lindblom (1977) advanced methods to help promote an incremental decision-making and focus and simplify complex problems:

− The limitations of analysis to a few familiar alternatives − Intertwining values and policy goals with empirical analysis of problems − Focusing on ills to be remedied rather than on goals to be sought − Trial and error learning − Analysing a number of options and their consequences


− Fragmenting of analytical work to many partisan participants in policy-making Lindblom's critique to rationalism was powerful and influenced many planners. The strategic planning movement drew heavily from Lindblom's ideas, arguing for a focus on organizational survival rather than societal benefit, short range time horizons, and the use of impression in the absence of hard data (Bryson and Einsweiler, 1988). According to Stiftel (2000), incrementalism has three dimensions that could be useful for planners, namely:

1. Strategic analysis, or any attempt to simplify complex policy problems

2. Disjointed incrementalism, or analysis carried out without the advance determination of goals, with few alternatives considered, and modest complexity of data

3. Simple incrementalism, where the alternatives considered are only marginally different from the status quo

Finally, according to Allmendinger (2002) exists a clear link between Lindblom’s emphasis on agreement, consensus, and mutual adjustment and the recent developments in collaborative planning theory. However collaborative planning theorist reject Lindblom’s normative or prescriptive approach. The main reason relates to the lack of “critical awareness and power-blindness that such an approach entails” (Forester, 1989). 4.4 Mixed Scanning Considered by its author (Etzioni, 1967, 1986) as “thirth” approach to decision making, mixed scanning is considered a hierarchical mode of decision making that combines higher order, fundamental (rational) decision making with lower order, non-fundamental (incremental) decisions that work out and/or prepare for the higher order ones.

“The term scanning is used to refer to search, collection, processing, and evaluation of information as well as to the drawing of conclusions, all elements in the service of decision making. Mixed scanning also contains rules for allocation of resources among the levels of decision-making and for evaluation, leading to changes in the proportion of higher versus lower levels of scanning based on changes in the situation” (Etzioni, 1986).

Thus, a broad scanning of the problem is complemented with a detailed examination of aspects that arise from the larger scan. Mixed scanning highlights that we do not approach an issue or problem without a picture of what to expect or how to “frame” it. Thus, mixed scanning is a compromise approach to the choosing of a programme of action that is likely to fit in well with how people actually work (Allmendinger, 2002). 4.5 Other (new) Types of Rationality Where the focus of instrumental and substantive rationality is the logical link between belief and action, another set of rationalities has a different orientation. Less concerned with action than with interaction, their subjects are statements and communication. This set of rationalities falls broadly under the heading of argumentation theory (Cox and Willard, 1982). A school of philosophy questioned the basic knowledge premises (epistemology) on


which rationality had been based. To (over) simplify a complex argument, they concluded that knowledge is neither transcendental, empirical, nor individual, but essentially a social construct. Rationality, therefore, rather than being attributed to agents or actions, should be concerned with social interactions (Forester, 1980). Habermas summarized the normative implications of this line of thought in his Theory of Communicative Action, presenting communicative rationality as an alternative to conventional (instrumental) rational action (see Box 7). Communication based on agreed standards of behaviour is one important and currently popular alternative that underpins the communicative or collaborative planning theory approach.

Box 7. Habermas’ Communicative Rationality

Communicative rationality (Habermas, 1984)

− Communication (discursive rules) lead to more rational decision-making.

− Differs radically from previous forms of rationality and appear as an alternative to conventional rational action (confronts the idea of instrumental rationality). He understands something radically different from what normally is understood by rationality (instrumental rationality).

− Believes the communication and interaction mediated according to arrangements of validity that define the expectations of reciprocal behaviour, and that must be understood and acknowledged by interlocutors (what Habermas wants is to base the decision-making process in a communicative rationality, rejecting to the dominant technocratic consciousness).

− It is based on that knowledge is neither transcendental, empirical, nor individual, but essentially a social construct. Rationality, therefore, rather than being attributed to agents or actions, should be concerned with social interactions.

− It does not choose between actions in terms of goals as instrumental and substantive rationality do; rather, communicative rationality evaluates the interaction concerned. Its criteria do not address the consequences of actions: they concern the quality of communication. How honest, sincere, and clear are statements? Are messages manipulative or deceiving? Is misleading communication the result of random, deliberate, or systemic distortion?

Also, other types of rationality have been developed as a way to overcome the problems and limitations of instrumental rationality. Examples of this are the pragmatic rationality and strategic rationality (see Box 8). However, such different conceptions of rationality do not seek to replace instrumental forms of rationality, but compliment and envelop them so as to provide alternative ways of agreeing and implementing means and ends in planning.

Box 8. Pragmatic and Strategic Rationality

Pragmatic rationality (Blanco, 1994; Verma, 1996)

− Attempt to surmount the problems of formal rationality.

− Based on pragmatism, a logic of validation and decision developed by American philosophers, its practical orientation makes pragmatic rationality particularly useful for planners.

− Contrary to fundamentalist rationality, pragmatism sees the meaning of an idea or an action as manifested in its consequences.


− The popularized version of this pragmatic maxim is evaluating actions according to what works.

− Like incrementalism and strategic rationality also bridges between deliberative and interactive rationalities.

− Indeed, pragmatism and incrementalism have many traits in common: their rejection of foundationalism, their reliance on shared knowledge, their consistency with liberal-democratic ideals, and their avoidance of radical change (Stein and Harper 1997).

Strategic rationality (in its ideal form, expressed in game theory) (Bridge, 1997)

− Is more contextual than simple "classic" rationality.

− Where instrumentally rational homo economicus is playing in a non-intentional environment, the strategic actor is a rationally conscious agent cognizant of the local context and the specific situation with all their social and cultural conventions. In this sense, strategic rationality interacts with communicative forms of rationality.

Figure 2 shows a diagram that represents different forms of rationality that are relevant to planning according to Alexander (2000). The evolution from Weberian instrumental, substantive, and value rationality to another set of rationalities, located in the domain of argumentation theory, more concerned with statements (communicative rationality, dialectic rationality, and ethical rationality). All of these forms of rationality have in common the association between reason and beliefs or actions. However, the first group (top of the figure) emphasizes having reasons; in contrast the second group (bottom of the figure), of communicative types of rationality, focuses on giving reasons for actions. Obviously these are related, in Alexander’s word “one of the points of having reasons for actions is to be able to justify them, and an agent cannot give reasons for beliefs or actions without having them”.


Figure 2. Types of rationality (source: Alexander, 2000).


Part III 5. NEW POSTPOSITIVIST PLANNING THEORIES Nowadays, planning practice continues to be dominated by instrumental rationality, born of the Enlightenment and modernity and typified by the systems or synoptic approach to planning of McLughlin (1969) and Faludi (1973). Planners routinely describe plans as rational. This way of thinking presupposes that a high degree of certainty is attainable. Firstly this certainty was related to describing and understanding the actual problems that faced planners. With “objective” observations, often accompanied by scientific knowledge, planners would know the exact problem with certainty. Based on this understanding, planners would secondly be able to choose the best possible strategy that resulted in the solution that was deemed best. Such planning’s paradigm involves separating means (procedures or process) from “given” ends and systematically identifying, evaluating and choosing means in a technical and “apolitical” way. This perspective saw planners as technocrats who focused upon means while politician and others set the ends. This inevitably led to a paternalistic idea of “them” (the public) and “us” (the planners).

“The employment of reason in planning aided by the best possible scientific understanding of the world we are seeking to plan, remains as relevant and important now as it has ever been” (Allmendinger, 2002).

As soon as the 1960’s the murmurs surrounding these unrealistic expectations gained momentum. Concepts like “bounded rationality” (Simon), “incrementalism” (Lindblom) and “mixed scanning” (Etzioni) entered into many planning discussions. This resulted in attempts to adjust the technical rational approach. A more flexible approach was deemed necessary. As a result the “contingency approach” (e.g. Lawrence and Lorsch, 1969) and also the “strategic choice approach” (Friend and Jessop, 1969) gained popularity. Central to both approaches is the possibility to adapt the strategy chosen to the occurring circumstances. These approaches are however still strongly linked to a technical rational way of thinking. They are therefore still not quite adjusted to many complex issues that planners faced. In other words, the uncertainties that planners were faced with in these more complex situations are just too big to be dealt with by means of these approaches (see also Christensen, 1985). However, since the mid-decade of the 80s has been a meaningful shift in planning theory. The confidence and arrogance of the rational approach has been replaced by uncertainty and introspection. According to Allmendinger (2002), this situation has come about for two reasons. The first is the perceived failure of the technocratic approaches to address the problems that planners and others were attempting to address. The second reason is less specific and relates to broad changes in understanding and theory that have been on going in the past two decades or so. Such changes are related Khun’s paradigms, the relativist views of Feyerabend, the rejection of “master narratives” and overarching theories by Lyotard and the role of power and discourse in the formation, interpretation and application theory. In place of this we have a Post-positivist recognition of indeterminacy, incommensurability, variance, diversity, complexity and intentionality in some. A post positivist approach requires “shifting from causal reasoning as a basis for plan-making to discovering and confirming meaning” (Moore-Milroy, 1991).


Thus, over the past two decades or so planning theory has been influenced by the post-positivist approach on planning. According to Allmendinger (2001) it has been part of a wider shift in understanding and sensibilities in social theory and the philosophy of science that emanated from a number of different directions. Theses changes involved a rejection of the logic of positivism and the basis to scientific knowledge which sought “the discovery of a set of general methodological rules or forms of inference which would be the same in all sciences, natural and social” (Bohman, 1991). Thus post-positivism emphasises:

− A rejection of positivist understandings and methodologies and embraces, instead, approaches that contextualise theories and disciplines in larger social and historical contexts;

− Normative criteria for deciding between competing theories;

− The ubiquity of variance in explanations and theories; and

− An understanding of individuals as self-interpreting, autonomous subjects. (Bohman et al., 1991; Hacking, 1983; Hesse, 1980)

The post-positivist influence of planning theory in recent years has rightly highlighted the social and political context of theories. Its impact through various guises including pragmatic, postmodern and collaborative approaches has been significant. 5.1 Pragmatic Planning The works of Charles Lindblom and his theme of incrementalism are considered the precursor of pragmatic approach in planning theory. Lindblom (1959) takes a pragmatic (or incremental) approach to policy analysis and the normative description of how planners and others should approach policy question. Central Lindblom’s approach is the argument that policy makers cannot and do not “think Big”. A further step is taken by Lindblom is also adding that they should not do so (Allmendinger, 2002). The most important reason for this as far as we are concerned centres on agreement or consensus. Like pragmatism he argues that within democratic system societies bargaining and “mutual adjustment” are democratic and open. It also leads to the situation where implementation of a particular policy is more likely because more are “on-board” (Lindblom and Woodhouse, 1993). From a philosophical8 point of view, pragmatists argue that we have an incremental and pragmatic view of the world devoid of a priori theorising. We decide what to believe not because it corresponds to the reality of the world, but because an idea or belief makes sense to us and helps us act. We change our beliefs not because we have been given a new or privileged view of the world, but because new beliefs make more sense of it or resolve inconsistencies (Festenstein, 2001). Pragmatism (and neo-pragmatism) is highly practical approach to planning. Pragmatism emphasises direct action at specific problems –what works best in a given situation or circumstance. Charles Hoch (1984, 1995, 1996) has been the foremost advocate and interpreter of pragmatic ideas (for planning theory) from the American philosophers. Jhon Dewey (1927) imagined how liberalism might best facilitate pragmatism and practical democracy. In Hoch’s (1996) word such a society would be

8 See to American philosophers, particularly John Dewey, Richard Rorty, Charles Peirce or William James.


comprised of, “a cluster of communities held together by a diverse assortment of agreement, traditions and conventions, arrived at through democratic deliberation”. According to Allmendinger (2001) at the heart of Hoch’ interpretation of pragmatism are three core themes of Dewey’s work, namely:

1. The role of experience in providing truth and as the motor of progress. 2. The idea of contingent truth focuses on the search for practical answers to real

problems. 3. The emphasis on practical activity or inquiry through socially shared and agreed

means achieved through democratic association. Hoch (1984) goes on to argue that such a perspective and the ideas of pragmatism have close conceptual ties with different theories of planning. His theories of planning includes elements of pragmatic thinking but also includes a selection of mainstream American planning theories including “middle range planning” (Meyerson), “incrementalism” (Lindblom), “advocacy planning” (Davidoff), “transactive planning” (Friedman) and “radical planning” (Grabow and Henski). 5.2 Postmodern Planning Both postmodern thinking as epoch and social theory have direct relevance for planning (see Box 10). According to Healey (1993) -the proponent of this theory- the implications is of a potential and real mismatch between planning as a modern project and the needs and demands of the postmodern (or new times), that explains the lack of participation and democratic content, failed and unrealised results and expectations, urban decay and a host of other outcomes intended or not that characterise “planning”.

Box 10. Modern and Postmodern Theory

What is the modern?

Modernism is closely linked to a period generally termed The Enlightenment which is a complex mix of ideas, attitudes, sensibilities and so forth that broadly emerged at the beginning of the eighteenth century. In Harvey’s (1990) word “the Enlightenment sought a rational for of social organization and rational modes of thought which promised liberation from the irrationalities of myth, religion, superstition, release from the arbitrary use of power as well as from the dark side our human natures”. One central aim of the Enlightenment was the idea of liberty through knowledge. The human condition could be improved through the certain principles including: reason, empiricism, science, universalism, progress, individualism, tolerance, freedom, uniformity of human nature and secularism. Essential to the idea of modernity was the belief that everything is destined to be speeded up, dissolved, displaced, transformed and/or reshaped (Hall, 1992). The modern view, based on instrumental rationality, is that there are such things as absolute truth and rational planning of ideal social orders.

What is the postmodern?

The porstmodern is part of a long tradition of questioning the basis and impacts of modernity. One of the main criticisms of modernity has been the central role it ascribes to instrumental rationality. For critics the world had been reduced to one form of reasoning that excludes all others. Everything that could be is transformed into mathematical abstractions and everything that cannot is ignored or suppressed.

• Postmodern as epoch (or historical phenomenon)


The idea the postmodern as epoch is often no more than a feeling or sensibility that things are “different”. However, there are other more concrete analyses of the postmodern as epoch concerning the changing nature of economic production and organization as well as shift away from a society based on producing “things” to one based increasingly upon information.

• Postmodern as social theory

The postmodern as attitude school sees it more in ahistorical terms. The most influential contribution to this how undoubtedly had been the so-called “French school” of thinkers including Foucault, Derriba, Baudrillard and Lyotard. Despite the wide range of current and existing emphasis, Allmendinger (2001) argue that there are three themes of analysis:

− The break-down of transcendental meaning. Lyotard wrote of the death master narratives (those all pervading explanations and prescriptions that are used to “frame” situations), particularly, the way in which science defined what was and was not was valid knowledge.

− Fragmentation and dispersal. Postmodern thinkers argue that the world is not a place of over-arching laws. Instead it is increasingly fragmented and ruptured by private and local interpretations and ·languages”.

− The role of power. The various ways in which society controls and reproduces itself vary under the different interpretations of postmodern thinkers. One common dimension is some concern with power. Foucault and Budrillard develop this theme best through their analyses of the subtle ways in which power has been and is used to affect societal control.

Several authors assert that Postmodern social theory has provided new way of understanding the role of planning in society vis-à-vis societal control and power. According to postmodernist theorist, planning is part of modernity and needs to change, to be more aware of power relations and more sensitive to local needs and demands, i.e., planning is a modern institution in a postmodern world.

“Planning [that] seeks to regulate or control the activity of individuals and groups in such a way as to minimise the bad effects which may arise, and to promote better “performance” of the physical environment in accordance with a set of broad aims and more specific objectives in the plan” (McLaughlin, 1969)

Sandercock (1998) argues that the mismatch between modern institutions such as planning and fragmented and pluralistic times is crowding out the possibility and desirability of multi-ethnic, multi-racial diverse societies and cities. In Sandercock’s word “current planning is anti-democratic (socially exclusive), race and gender-blind and culturally homogeneous” Sandercock goes on to identify five pillars of modernist planning wisdom:

− Planning –meaning city and regional planning- is concerned with making public/political decisions more rational. Te focus, therefore, is predominantly on advanced visions of the future; and on an instrumental rationality that carefully considers and evaluates options and alternatives.

− Planning is most effective when it is comprehensive. Comprehensiveness is written into planning legislation and refers to multifunctional/multisectoral spatial plans as well as to the intersection of economic, social and environmental and physical planning. The planning function is therefore said to be integrative, coordinative, and hierarchical.


− Planning is both a science and an art, based on experience, but the emphasis is usually placed on the science. Planner’s authority derives in large measure from mastery of theory and methods in the social science, with its propensity for quantitative modelling and analysis.

− Planning, as part of the modernisation project, is a part of state-directed futures, with the state seen as possessing progressive, reformist tendencies, and as being separate from economy.

− Planning operates in “the public interest” and planner’s education privileges them in being able to identify what interest is. Planners present a public image of neutrality, and planning policies, based on positivist science, are gender and race-neutral.

These pillars need to be “demolished” according to Sandercock because of the recent processes of change that point to a more diverse composition of the urban and increasing demand for a more heterogeneous planning approach. Other authors have tried to develop ideas of how a postmodern planning might actually look or work. Beauregard (1996), for example, argues that planning in a postmodern form should involve key themes such as openness and fluidity: “the texts of a postmodern planner, in fact, should be consciously fragmented and contingent, nonlinear, without aspiration to comprehensiveness, singularity or even compelling authority”. Similarly, Soja (1997) goes on to advance some more specific principles that would underpin a more postmodern planning.

− Must build upon openness and flexibility and be “suspicious of any attempt to formalise a single totalising way of knowing, no matter how progressive it may appear to be”.

− Such openness should be used as a basis for understanding and encouraging social reality including fragmentation, multiplicity and difference.

Sandercock (1998) attempting develops a more prescriptive or detailed approach for a postmodern planning. She stresses that planning should work towards a more plural and diverse society. For planning to work towards a postmodern and pluralistic form, Sandercock identifies five principles that are, “the minimum foundation necessary to create a new order of urban civility out of the current new world, and link these to debates about urban governance and planning”.

− Social justice. The problem of current conceptions of social justice is that they are equated with market outcomes.

− The politics of difference. Sandercock proposes lies in an improved politics of difference based on an inclusionary commitment through discussion. Such a discursive commitment would emphasise the positive aspects of difference.

− Citizenship. “Building on the inclusionary ethic the next principle of postmodern city concern the question of citizenship”. The “auslander” status of many citizens in increasingly fragmented societies would require a more fluid conception of citizenship that constantly reinterprets and refines what is meant by the term, rejecting homogenising interpretations.

− The ideal of community. Building on the individually-oriented concept of citizenship, Sandercock goes on to argue for a reformed conception of community.


− From public interest to a civic culture. Sandercock’s propose is unified public interest becomes a heterogeneous public interest. Argues that it is not the fragmentation of politics that would pit groups or individuals against each other, but power and domination.

Clearly, Sandercock’s approach embodies some elements of postmodern thought through its emphasis on diversity and difference. Finally, according to Allmendinger (2002) these principles have significant implications for the practice of any planning, and planners would be encouraged to take more eclectic approaches to processes such as plan-making as well as the ideas and goals within them.

“Planning would also go well beyond our current understanding of its form to embrace and encourage civil disobedience and strikes. As opposed to instrumental rationality of modernity there would be rationality based on communication much as the collaborative schools advocates. Such process would seem to be only fit for the micro-level politics of planning, however, as there will need to be some more formal level that provides the frameworks and boundaries” (Allmendinger, 2002)

5.3 Collaborative Planning One approach that is gained increasing theoretical popularity is to see planning as communicative or collaborative process. As Healey (1996) points out, there have been three main influences upon this approach. First and most important is the work of Habermas (communicative action) who has sought to reconstruct the unfinished project of modernity. He has questioned the dominance of instrumental rationality and sought instead to re-emphasise other ways of knowing and thinking. Second, is the work of Foucault who has begun to look behind language and meaning and its potentially dominatory nature in hiding existing power relations. Finally, there I the work of Giddens and the institutionalist school which examines ways in which we interrelate through webs of social relations as well as ways in which we can coexist in society. Healey (1997) provides a backdrop of the current challenges for spatial planning. Among them are:

− The connections between what happen in particular places and global economic, social and natural environmental relations.

− Bringing together on territorial basis relations which have been separated off in many cases into institutionally distinct functional sectors.

− The challenge for the collective management of local environmental change

− New lifestyle ideas and new financial situations that make people demand new housing forms in different locations, shop at different times, travel along new routes etc.

According to Healey, the challenge now is discover and develop approaches which are more appropriate for contemporary conditions. These challenges should be approached in a planning way “defined as an approach to governance which embodies a policy-driven approach, a long-term and strategic orientation and which interrelates economic, social and environmental dimensions in ways which recognise their complex space-time dimensions” Healey (1993) proposed hints of what planning could look like:


1. Planning should use other types of analysis techniques and presentations

forms

2. No common language can be attained between discourse communities; planning should therefore focus on search for achievable levels of mutual understanding

3. Planning should facilitate respectful discussion within and between discursive communities

4. It should involve the construction of arenas within which processes are formulated and conflicts identified

5. All kind of knowledge and rationality are allowed

6. A reflective and critical and critical capacity must be maintained by the use of “ideal speech”

7. All those with a stake are included(or not excluded at least). Dilemmas need to addressed “interdiscursively”.

8. Interests are not fixed. People will alter interest through interaction and a process of mutual learning

9. There is a potential to challenge existing power relations through critique and highlight oppression and dominatory forces.

The Healey’s purpose is to help planners begin to proceed in mutually agreeable ways based on interdiscursive understanding. The point is that nobody really knows what a communicative process or institution would look like for fear of dominanting possible alternatives. Hoch (1984) talks of a “radical pragmatism” where a planner recognises the unequal distribution of power and seeks to work towards alternatives. Albrecht and Lim (1986) believe that planners should have a high degree of self-awareness, should not presume to “know” more than others and should follow the ideal speech rules of Habermas.


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