MANAGING STRATEGIC TENSIONSTurning Worrisome Tensions into Winning Thinking

Slide Set Outline

• The concept of tension• The concept of tension in strategy• The reality of tension in business• The causes of tension in business

TENSION – the Concept

• The act or action of stretching or the condition or degree of being stretched to the limits of a material or object

• To be taunt or stressed • Either of two balancing forces causing or tending to cause

an object or person to be stretched• Inner striving, unrest, or imbalance often with physiological

indication of emotion• A state of latent hostility or opposition between individuals or

groups• a balance between and interplay of opposing elements or

tendencies (especially in art or literature)

TENSION – the Concept

• Tension is what keeps a piano in tune. A piano goes out of tune when it “relaxes.” A piano tuner restores the needed tension that allows a piano to be harmonious. The same is true for all other stringed instruments. They constantly “want to relax.” Tuning a stringed instrument requires restoring the tension necessary to produce the desired sound.

• In the marketplace, tension helps maintain the “harmony” between supply and demand, revenues and costs and customer needs and company desires.

• In strategy, the focus should be on managing, not relaxing, the tension. Organizations, like musical instruments, naturally seek to reduce tension. The strategic manager’s task is to retune the organization and restore its harmony.

TENSION – the Reality

• Tensions in business organizations arise naturally out of the fundamental nature of organizational-marketplace interaction.

The Marketplace The Organization

Creates uncertainty Desires predictability

Is fluid and dynamic Seeks stability

Tends to individuality Tends to uniformity

Provides risky opportunities

Gravitates toward security

• Strategic management is not the search to “remove” the tensions inherent in the marketplace (and inside the organization itself). Rather, what is sought is how to “resolve” the tensions constructively.

TENSION – its Causes

• The TIME TENSION. Business strategy navigates an organization’s and a marketplace’s past, present and future, none of which are “fixed.” – The past is not simply an “established” historical record. It exists as

an interpreted or understood phenomena that reflects as much perspective and interpretation as it does “the facts.” And, overtime, our understanding and interpretation of an organization’s past changes over time.

– The present is not merely a “given.” Our understanding of even an apparently simple question such as “We are we now,” differs from person to person depending on what we determine to observe and how we process those observations into understandings.

– The future is always a judgment – its reflects our expectations and aspirations, our perceptual filters, the numbers we give priority to, etc.

TENSION – its Causes

• The TIME TENSION. Business strategy navigates an organization’s and a marketplace’s past, present and future, none of which are “fixed.” – Beyond the tensions associated with the individual and

variable nature of the past, present and future, lies the tension of developing a deliberate and constructive fit between all three time dimensions• Fitting resources and capabilities built on past successes with• Present strengths and limitations while moving into a• Future of both opportunities and threats

TENSION – its Causes

• The ENTROPY TENSION. ALL manmade systems (both organizations and marketplaces) gradually loose energy and direction and evolve into something different.

• This means that everything is changing all the time making accurate PREDICTION (how things will or may be) and accurate POSITIONING (how we can best take advantage of possible opportunities and protect against possible threats) very challenging.

TENSION – its Causes

• The ENTROPY TENSION. ALL manmade systems (both organizations and marketplaces) gradually loose energy and direction and evolve into something different.

• The entropy tension also means that our own internal efforts are hampered by the forces of – Momentum (the tendency to continue doing what we have always

done even after such becomes ineffective)– Inertia (the tendency to resist doing something new even after it has

proven to be more effective)

• The entropy tension also means that the external markets (customers) we serve are continually loosing the characteristics that made them attractive in the first place

TENSION – its Causes

• The MULTIDIMENSIONALITY TENSION. Organizations and their marketplaces never exist as single-dimension phenomena. They act and react along a variety of levels and with a variety of elements (parts).

• There are several impacts of multidimensionality:– An intended impact on one level/part can lead to

unintended (and possibly unwanted) effects– The interaction between various levels/parts can blunt

and/or amplify the power of out initiatives– The interaction among levels/parts can make accurately

discerning causes-and-effects challenging

TENSION – its Expression

Strategy as ideation Strategy as execution

Strategy as inventing the future Strategy as investing in the present

Strategy that emphasizes technology Strategy that emphasizes humanity

Strategy as economically focused Strategy as ethically focused

Strategy as visionary Strategy as practical

Strategy as marching into the future Strategy as dancing into the future

Strategy that focuses on the virtual Strategy that focuses on the physical

Strategy that emphasizes the rational Strategy that emphasizes the intuitive

Strategy that is primarily offensive Strategy that is primarily defensive

Strategy that is aggressively risky Strategy that is risk aversive

Strategy that builds the new Strategy that sustains the existing

Strategy that develops Strategy that deconstructs

Strategy that emphasizes flexibility Strategy that emphasizes stability

TENSION – its Expression

Strategy as simplicity Strategy as complexity

Strategy that emphasizes evolution Strategy that emphasizes revolution

Strategy that emphasizes near-term results and returns

Strategy that emphasizes far-term results and returns

Strategy that emphasizes brand extension

Strategy that emphasizes brand creation