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Concept
Strategy dynamics
Summary
The word ‘dynamics’ appears frequently in discussions and writing about strategy, and is used in two distinct, though equally important senses.
The dynamics of strategy and performance concerns the ‘content’ of strategy – initiatives, choices, policies and decisions adopted in an attempt to improve performance, and the results that arise from these managerial behaviors.
The dynamic model of the strategy process is a way of understanding how strategic actions occur. It recognizes that strategic planning is dynamic, that is, strategy-making involves a complex pattern of actions and reactions. It is partially planned and partially unplanned.
A literature search shows the first of these senses to be both the earliest and most widely used meaning of ‘strategy dynamics’, though that is not to diminish the importance of the dynamic view of the strategy process.
The static assessment of strategy and performance, and its tools and frameworks dominate research,
textbooks and practice in the field. They stem from a presumption dating back to before the 1980s that market and industry conditions determine how firms in a sector perform on average, and the scope for any firm to do better or worse than that average. E.g. the airline industry is notoriously unprofitable, but some firms are spectacularly profitable exceptions.
The ‘industry forces’ paradigm was established most firmly by Michael Porter, (1980) in his seminal book ‘Competitive Strategy’, the ideas of which still form the basis of strategy analysis in many consulting firms and investment companies.
Richard Rumelt (1991) was amongst the first to challenge this presumption of the power of ‘industry forces’, and it has since become well understood that business factors are more important drivers of performance than are industry factors – in essence, this means you can do well in difficult industries, and struggle in industries where others do well. Although the relative importance of industry factors and firm-specific factors continues to be researched, the debate is now essentially over – management of strategy matters.
Official source
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