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  • 8/10/2019 Contemporary or MS in Strategy Development and Policy-making Some Reflections


    Contemporary OR/MS in strategy developmentand policy-making: some reflectionsM Pidd1,2*1Advanced Institute of Management Research, UK; and 2Lancaster University, Lancaster, UK

    It is now widely accepted that strategy-making and policy development require both rational analysis and an ability to

    work with insights that are sometimes hard to pin down. Can operational research (OR) contribute to this process in

    which soft and hard are interwoven? Simons longstanding distinction between substantive and procedural rationality is

    helpful in addressing this question. Undoubtedly, OR has made major contributions to strategy development, although

    there has been a marked tendency to argue for even greater use of substantive rationality. In addition, some soft OR

    methods are also successfully used in strategy development as ways to provide procedural rationality. Add to this the

    suggestion of Sagasti that metaphor and language are powerful tools in strategizing, then there is a powerful case for the

    greater use of OR/management science is strategy development and policy-making.

    Journal of the Operational Research Society (2004) 55, 791800. doi:10.1057/palgrave.jors.2601748

    Published online 5 May 2004

    Keywords: strategic planning; soft OR; methodology


    Todays organizations are urged to operate faster, better and

    cheaper than in the past and to do so, their managers must

    constantly develop and operate strategies that enable them

    to prosper. Many different disciplines can offer support,

    including operational research and management science

    (OR/MS). Over the last three decades, various authors have

    suggested how OR/MS might improve strategy developmentand policy. Ackoff1,2 wrote extensively about this and

    proposed a radically different view of OR/MS, based on an

    explicit systems approach to strategic planning. Dyson and

    OBrien3 and, earlier, Dyson4 bring together a number of

    contributions that demonstrate ways in which analytical

    approaches, based on a control system perspective, can

    benefit strategy and policy development. Dyson and Eden5 is

    a special edition of the Journal of the Operational Research

    Society devoted to OR/MS contributions to strategy. Eden

    and Ackermann6 show how some soft OR methods, most

    notably cognitive mapping, are used in supporting people as

    they develop strategies and policies. Bells text on strategicOR/MS7 brings together a set of cases that clearly

    demonstrate the strategic impact of traditional OR/MS.

    This paper aims to move this debate forward by

    summarizing some of the important features of strategy

    and policy-making and relating these to proposals made by

    writers on OR/MS in recent years. This synthesis leads to

    suggested contributions that the OR/MS community might

    make to corporate development and to policy-making in the

    public sector.

    What is strategy and policy?

    For this paper, the terms strategy and policy, whether in the

    private or public sectors, are taken to be the same and, for

    simplicity, the term strategy is usually used hereon. There are

    many definitions of strategy: for example, Mintzberg8

    summarizes the many definitions of strategy as the five Ps.

    A strategy as aplanor guide for future action. This carries

    with it the idea of careful preparation, a husbanding of

    resources and a deliberate preference for some action in

    the future.

    A strategy as a ploy, involving scheming and plotting to

    achieve some end, often to fool competitors. Some would

    argue that this is part of the implementation of a plan.

    A strategy as a pattern of behaviour of ways of

    operating that may be deliberately chosen, or may emerge

    almost unseen over some time period.

    A strategy as aposition, a notion that stresses goal setting

    and ambitions.

    A strategy as a perspective: that is, a set of concerns and

    opinions that may be unspoken but that define how an

    organization does what it does.

    These definitions are not exclusive, and a particular

    strategy or policy will often contain elements of more than

    one. For example, a drinks company may have a strategy to

    enter, develop and dominate a new geographical market. Its

    managers willplan the resources that they think are needed

    *Correspondence: M Pidd, Department of Management Science, TheManagement School, Lancaster University, Lancaster LA1 4YX, UK.E-mail:

    Journal of the Operational Research Society (2004) 55, 791800 r 2004 Operational Research Society Ltd. All rights reserved. 0160-5682/04 $30.00

  • 8/10/2019 Contemporary or MS in Strategy Development and Policy-making Some Reflections


    for this. Their wishes and intent for this market reflect a

    position. As time goes on and competitors react, the

    managers will develop ploys that may be based around

    pricing, promotion or distribution, which in turn stem from

    the patterns of behaviour that are normal within the

    business. The strategy itself may be based on an ambitious

    perspective in which seeking growth opportunities is funda-

    mental. It seems likely that any successful strategy will,

    deliberately or not, involve several of the five Ps.

    Whether strategy is always deliberately developed has

    long been a point of contention in the strategy literature.

    Cummings9 points out a broad historical division into the

    design school and the emergent strategizing school. Both

    schools have their leading advocates: Porter10,11 and Ans-

    off12,13 in the case of the design school, which stresses the

    development of careful plans with specific features to meet

    particular situations. Some of this literature is highly

    prescriptive, for example Porter10 argues that successful

    strategies have particular attributes that offer competitive

    advantage. Johnson and Scholes,14

    although taking a muchwider view of strategy than design, expand Porters three

    generic business strategies into their Strategic Clock with

    eight positions. Taking a different tack within the same

    school, writers such as Ansoff13 are more associated with

    schemes that propose how such strategies should be

    designed, rather than advocating particular designs. In the

    design school, the main stress is on the careful development

    of a strategy as a plan. This does not mean that the other

    four Ps are ignored, but they are accorded less importance.

    By contrast, the emergent strategizing school, of which

    Mintzberg8,15 is the best-known advocate, stresses the

    development of plans rather than the plan itself. This school

    emphasizes that planning is an activity that should be part of

    every managers job and that plans need to be constantly

    revised to meet changing circumstances. It also recognizes

    that some plans may emerge through informal processes in

    which opportunities are spotted and exploited. That is,

    strategies may emerge, possibly informally, as a new

    opportunity appears or a new threat is perceived. The

    emergent strategizing school tends to stress a combination of

    pattern, perspective and ploy: a plan being what emerges

    from these considerations.

    Recent writers, such as Cummings,9 point out that this is a

    false polarization into two schools since, as noted above,

    elements of both are found in successful strategy and policy-making. Strategy development is neither an irrational nor a

    wholly rational process, but one in which people engage to

    set out a desirable future. Mintzberget al16 makes much the

    same point, producing numerous examples in which intui-

    tion and opportunity play a part, as does careful thought

    and deliberation. In addition, elements of any plan or of any

    strategizing are rarely wholly within the control of those who

    are planning. Other actors, such as competitors, legislators

    and customers will also affect what happens. That is, some

    elements of the future cannot be controlled by the actions of

    those who are planning and, instead, the organization must

    find ways to roll with that future so as to achieve some goal.

    Some characteristics of strategy and policy

    Why is careful strategizing and policy-making hard to do

    and why are writers such as Mintzberg15 so critical of therole of analysis? In an unpublished conference paper, Eden

    suggested several reasons for this, including the following.

    The first is that strategic decision-making is, by definition,

    potentially crucial to an organizations survival. What is

    strategic for a small software company may be just a small

    decision to a software giant. Deciding whether to develop for

    a prospective hardware platform may put the entire future of

    a small software business at risk, but this may not be true for

    a software giant. Owing to its importance, the temperature

    of debate can be very high in strategic decision-making. The

    stakes are high, as are the corresponding risks, which places

    great pressure on participants. Although the notion of asmooth, annual planning cycle is comforting, not all

    strategic issues can fit into a neat loop of this type. Rather,

    when opportunities arise, they must be considered and then

    grasped or left alone, as appropriate, which may require a



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