Prescriptive and Emergent Approaches to Strategic Planning: Are they Relevant to Organisations?
There is complexity and uncertainty involved in formulating, developing and implementing an organisation’s strategy. The strategy can be developed following prescriptive/deliberate approach and/or emergent approach. In this article, we will discuss the relevance of the two approaches to strategic planning.
2.0 Prescriptive and Emergent Approaches to Strategic Planning
2.1 Strategy and Strategic Planning
Strategy refers to the long-term direction of an organisation as it attempts to achieve competitive advantage amidst resource constraints, diverse stakeholder expectations, and changing business environment. This implies that managers must analyse the internal environment to identify strengths (S) and weaknesses (W), and external environment in order to identify opportunities (O) to be exploited and threats (T) to be minimised/neutralised. This shows a need for carrying out a SWOT analysis.
Strategic planning refers to a process in which an organisation’s internal and external environment are systematically analysed and explored to develop its strategy. It can be referred to as ‘long-range planning’ and it can cover 3-5 years in most business sectors but 15-20 years in oil sector. Such planning can be done using two approaches which are discussed next.
2.2 Prescriptive Approach to Strategic Planning
Under this approach, mission, vision and core values are stated, and objectives are defined before strategy implementation starts. This implies that the organisation will intentionally plan and formulate a rational deliberate/intended strategy according to priorities and intentions of top management. Therefore, the approach follows a top-down hierarchical structure and authoritative management style. The prescriptive process is linear: from strategic analysis to strategy development and then to strategy implementation. Therefore, strategic planning is seen as an orderly, rational, deterministic and systematic process suitable for stable business environments. This approach has three schools of thought: design, planning and positioning schools. However, discussing each of these schools is not in the scope of this article.
2.2.1 Advantages of Prescriptive Approach
Prescriptive approach is relevant to organisations due to its advantages.
Long-term/strategic thinking. Since overall objectives will be set to achieve the organisation’s mission and vision, managers will be encouraged to consider the impact of their decisions, action and inactions on the organisation’s long-term performance. This discourages short-termism since performance targets will be monitored according to the long-term goals.
Coordinating effort. Since strategy will be clearly stated in strategy statements of vision, mission, goals, objectives and values, it becomes easier to coordinate efforts of managers, strategic business units (SBUs) and employees than if such statements were not available. This will enable the organisation to make strategic decisions that enable it to follow a given strategic direction as stated in the corporate plan and communicated throughout the organisation to achieve consensus as much as possible.
Learning from each other. The process of formulating strategy will involve negotiation and harmonising different views expressed in SBUs’ business plans before they are integrated into a corporate plan. This implies that strategic planning is a learning process.
Suitable organisation. From formal strategic planning, the organisation determines a suitable strategic position to be occupied. This implies that systematic analysis under prescriptive approach will enable the organisation to be better organised to fit in its business environment.
2.2.2 Disadvantages of Prescriptive Approach
Stifling creativity. Prescriptive schools (design, planning and positioning) are usually associated with top-down management style and organisation structure. This implies that even if ideas can come from lower level managers, they have to be packaged according to what top management needs to hear. This stifles individual initiative, imagination and creativity.
Paralysis by analysis. An organisation can be deeply immersed in analysing the internal and external environment and miss exploiting opportunities that come up. This means that unchecked analysis can paralyse an organisation’s operations.
Lack of information. It is not possible to have all the information needed to carry out systematic strategic analysis. For example, information about competitor moves is confidential and what is publically said may not be what is actually done.
Danger of strategic drift. A top-down management style makes strategies tend to be adapted slowly as information slowly and cautiously moves towards the top, and may reach a point when the realised strategy is not fit for the prevailing environment. The organisation will have faced the danger of strategic drift, and will not have benefited from knowledge and skills of frontline staff.
Difficulty of systematic planning. Since the business environment is becoming increasingly volatile, systematic strategic planning has become more difficult. This means that the benefits of prescriptive approach are constrained by volatility and turbulence in the business environment which makes it very unpredictable and forecasting unpractical.
Limited rationality. It is not possible to make rational decisions all the time. Some decisions are taken abruptly depending on prevailing circumstances, and cognitive limits do not allow top management to take rational decisions and follow a linear fashion as expected from prescriptive approach. This makes every deliberate/intended strategy be also a result of some features of emergent approach which is discussed in the next section.
2.3 Emergent Approach to Strategic Planning
Under an emergent approach, strategies emerge as managers make strategic and operational decisions from time to time thus resulting into a certain pattern. This implies that the organisation’s realised strategy will not be out of intentional planning from the top but emerging from: decisions and actions taken; interpretations of events; and complex interactions at lower levels thus emerging bottom-up. Therefore, strategy making is an interactive, incremental and unplanned process which allows flexibility and adaptation as the business environment changes. However, when the strategy emerges from the pattern of decisions, it can be documented, for example, in annual reports and strategic plans. This should not be confused with deliberate strategy obtained from a prescriptive approach. This is because the emerging strategy will have resulted into a strategic plan not vice versa.
Under the emergent approach, planning is short-term and new experiences and knowledge learnt help in adapting strategy. This implies that the emergent approach contains the Learning school of strategy development. This is because strategies emerge/evolve and strategic change occurs as managers at lower levels take risks, acquire new experiences, and learn new ways of doing things. This ability to learn and shift tactics quickly as conditions dictate makes the approach suitable for the rapidly changing, turbulent, unpredictable, and uncertain business environments.
2.3.1 Advantages of an Emergent Approach
Less resistance to change. Since strategy emerges incrementally, different individuals and groups within the organisation can be prepared for strategic changes as strategy is formed and implemented simultaneously. Higher resistance would be met if radical changes were to be implemented.
Ability to exploit opportunities. Since strategy can be readjusted and tactics shifted quickly, an organisation can easily respond to changes in the environment thus exploiting opportunities as they surface.
Higher chances of strategic success. Through experimentation, trial and error, and learning, strategic options are tested as strategy emerges. This implies that the learning that comes from experience can be a source of strategic success and competitive advantage for the organisation. This is especially possible since strategy development is simultaneous with strategy implementation thus allowing flexibility and readjustment as the environment changes.
Motivation of employees. Since ideas can emerge from lower levels of the organisation, employees feel valued and contributing to the overall direction of the organisation. Such feeling can motivate employees to work towards meeting the organisation’s general goals.
Facilitation of strategic innovation. An organisation that follows emergent approach to strategic planning develops features of a learning organisation. A learning organisation can be described as an organisation whose culture facilitates continual capture, sharing and utilisation of knowledge and skills for continuous performance improvement. Emergent approach facilitates such learning since ideas are allowed to emerge from lower levels of the organisation, debated and tried out thus encouraging individual creativity, initiative, and innovation.
2.3.2 Disadvantages of an Emergent Approach
Possibility of short-termism. Without a formal strategic plan, managers are likely to focus on short-term performance not on long-term direction of the organisation. For example, managers may focus on annual earnings growth not where the organisation will be in five years’ time. This can make the organisation fail to compete favourably in future as it pessimistically concentrates on surviving today.
Risk of strategic drift. Since strategy develops incrementally and is influenced by culture, there is a risk of strategic drift. This is because strategy will so much tied to the past ways of doing things yet the environment may be changing rapidly. The emerging strategy may end up not fitting in the prevailing business environment.
Pure emergent approach is impractical. An organisation that follows a purely emergent approach to strategic planning has no clear direction and managers may feel out of control. For example, it becomes difficult for managers to justify their actions and decisions without set objectives. Therefore monitoring performance becomes very difficult without set targets. Similarly, it becomes difficult to raise external funds without a well written strategic plan.
There are two approaches to strategic planning: prescriptive and emergent approaches. Both have advantages and are thus relevant to organisations depending on the business environment of a given organisation. In practice, there is no such a thing as a pure prescriptive or pure emergent approach. This implies that an organisation’s strategy will be an outcome of features of both prescriptive/planned and emergent approaches: there is ‘planned emergence’ of realised strategy. Therefore, prescriptive and emergent approaches are not mutually exclusive, and they reinforce each other in developing an organisation’s strategy.
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By Cleophus Atukwase, iQualify UK Tutor