Editing Strategic management (section)

==Historical development==

===Origins===
The strategic management discipline originated in the 1950s and 1960s. Among the numerous early contributors, the most influential were [[Peter Drucker]], [[Philip Selznick]], Alfred Chandler, [[Igor Ansoff]],<ref>{{Cite book|url=https://www.francoangeli.it/ricerca/Scheda_libro.aspx?ID=2297&Tipo=Libro|title=Strategia sì, ma non troppo. Guidare l'azienda tra metodo e intuito|last=Camporesi|first=Alberto|publisher=Franco Angeli|year=1989|isbn=9788820430191|location=Italy}}</ref> and Bruce Henderson.<ref name="Ghemawat1">{{cite journal| last = Ghemawat| first = Pankaj| title = Competition and Business Strategy in Historical Perspective| journal = Business History Review| volume = 76| issue = 1| pages = 37–74| date = Spring 2002| ssrn = 264528| doi = 10.2307/4127751| jstor = 4127751| doi-access = free
}}</ref> The discipline draws from earlier thinking and texts on '[[strategy]]' dating back thousands of years. Prior to 1960, the term "strategy" was primarily used regarding war and politics, not business.<ref name="LOS2010"/> Many companies built [[strategic planning]] functions to develop and execute the formulation and implementation processes during the 1960s.<ref name="hbr.org">[http://hbr.org/1994/01/the-fall-and-rise-of-strategic-planning/ar/1 Henry Mintzberg-The Fall and Rise of Strategic Planning-Harvard Business Review-January 1994]</ref>

[[Peter Drucker]] was a prolific management theorist and author of dozens of management books, with a career spanning five decades. He addressed fundamental strategic questions in a 1954 book ''The Practice of Management'' writing: "... the first responsibility of top management is to ask the question 'what is our business?' and to make sure it is carefully studied and correctly answered." He wrote that the answer was determined by the customer. He recommended eight areas where objectives should be set, such as market standing, innovation, productivity, physical and financial resources, worker performance and attitude, profitability, manager performance and development, and public responsibility.<ref>Drucker, Peter ''The Practice of Management'', Harper and Row, New York, 1954.</ref>

In 1957, [[Philip Selznick]] initially used the term "distinctive competence" in referring to how the Navy was attempting to differentiate itself from the other services.<ref name="Ghemawat1"/> He also formalized the idea of matching the organization's internal factors with external environmental circumstances.<ref>Selznick, Philip ''[https://books.google.com/books?id=pP6ndnDdOBcC Leadership in Administration: A Sociological Interpretation]'', Row, Peterson, Evanston Il. 1957.</ref> This core idea was developed further by [[Kenneth R. Andrews]] in 1963 into what we now call [[SWOT analysis]], in which the strengths and weaknesses of the firm are assessed in light of the opportunities and threats in the business environment.<ref name="Ghemawat1"/>

[[Alfred D. Chandler Jr.|Alfred Chandler]] recognized the importance of coordinating management activity under an all-encompassing strategy. Interactions between functions were typically handled by managers who relayed information back and forth between departments. Chandler stressed the importance of taking a long-term perspective when looking to the future. In his 1962 ground breaking work ''Strategy and Structure'', Chandler showed that a long-term coordinated strategy was necessary to give a company structure, direction and focus. He says it concisely, "[[Structure follows Strategy]]." Chandler wrote that: <blockquote>"''Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals''."<ref name="Chandler, Alfred 1962"/></blockquote>

[[Igor Ansoff]] built on Chandler's work by adding concepts and inventing a vocabulary. He developed a grid that compared strategies for market penetration, product development, market development and [[horizontal integration|horizontal]] and [[vertical integration]] and diversification. He felt that management could use the grid to systematically prepare for the future. In his 1965 classic ''Corporate Strategy'', he developed [[gap analysis]] to clarify the gap between the current reality and the goals and to develop what he called "gap reducing actions".<ref>Ansoff, Igor ''Corporate Strategy'', McGraw Hill, New York, 1965.</ref> Ansoff wrote that strategic management had three parts: [[strategic planning]]; the skill of a firm in converting its plans into reality; and the skill of a firm in managing its own internal resistance to change.<ref>[http://www.economist.com/node/13311148 The Economist-Strategic Planning-March 2009]</ref>

[[Bruce Henderson]], founder of the [[Boston Consulting Group]], wrote about the concept of the [[experience curve]] in 1968, following initial work begun in 1965. The experience curve refers to a hypothesis that unit production costs decline by 20–30% every time cumulative production doubles. This supported the argument for achieving higher market share and [[economies of scale]].<ref name="BCG1968">{{cite book
| last = Henderson
| first = Bruce
| year = 1970
| title = Perspectives on Experience
| publisher = Boston Consulting Group
| isbn = 978-0-684-84148-9
}}</ref>

Porter wrote in 1980 that companies have to make choices about their scope and the type of competitive advantage they seek to achieve, whether lower cost or differentiation. The idea of strategy targeting particular industries and customers (i.e., competitive positions) with a differentiated offering was a departure from the experience-curve influenced strategy paradigm, which was focused on larger scale and lower cost.<ref name="Porter1980">{{cite book| last = Porter| first = Michael E.| year = 1980| title = Competitive Strategy | publisher = Free Press| isbn = 978-0-684-84148-9| title-link = Competitive Strategy
}}</ref> Porter revised the strategy paradigm again in 1985, writing that superior performance of the processes and activities performed by organizations as part of their [[value chain]] is the foundation of competitive advantage, thereby outlining a process view of strategy.<ref name="Porter1985"/>

===Change in focus from production to marketing===
The direction of strategic research also paralleled a major paradigm shift in how companies competed, specifically a shift from the production focus to market focus.  The prevailing concept in strategy up to the 1950s was to create a [[product (business)|product]] of high technical quality. If you created a product that worked well and was durable, it was assumed you would have no difficulty profiting. This was called the [[production orientation]]. [[Henry Ford]] famously said of the Model T car: "Any customer can have a car painted any color that he wants, so long as it is black."<ref>[[q:Henry Ford|Wikiquote-Henry Ford]]</ref>

Management theorist [[Peter F Drucker]] wrote in 1954 that it was the customer who defined what business the organization was in.<ref name="Drucker1954"/> In 1960 [[Theodore Levitt]] argued that instead of producing products then trying to sell them to the customer, businesses should start with the customer, find out what they wanted, and then produce it for them. The fallacy of the production orientation was also referred to as [[marketing myopia]] in an article of the same name by Levitt.<ref>[http://hbr.org/2004/07/marketing-myopia/ar/1 Theodore Levitt-Marketing Myopia-HBR-1960]</ref>

Over time, the customer became the driving force behind all strategic business decisions. This [[marketing]] concept, in the decades since its introduction, has been reformulated and repackaged under names including market orientation, customer orientation, customer intimacy, customer focus, customer-driven and market focus.

===Nature of strategy===
In 1985, Ellen Earle Chaffee summarized what she thought were the main elements of strategic management theory where consensus generally existed as of the 1970s, writing that strategic management:<ref name="Chaffee1985"/>
* involves adapting the organization to its business environment;
* is fluid and complex. Change creates novel combinations of circumstances requiring unstructured non-repetitive responses;
* affects the entire organization by providing direction;
* involves both strategy formulation processes and also implementation of the content of the strategy;
* may be planned (intended) or unplanned (emergent); these may differ from each other and also from the realized strategy which results from them (Chaffee, p. 89)
* is done at several levels: overall corporate-level strategy, and individual business-level strategies; and
* involves both conceptual and analytical thought processes.

Chaffee further wrote that research up to that point covered three models of strategy, which were not mutually exclusive: 
#Linear strategy: a planned determination of goals, initiatives, and allocation of resources, along the lines of the Chandler definition above. This is most consistent with [[strategic planning]] approaches and may have a long planning horizon. The strategist "deals with" the environment but it is not the central concern.
#Adaptive strategy: in this model, the organization's goals and activities are primarily concerned with adaptation to its environment, analogous to a biological organism. The need for continuous adaption reduces or eliminates the planning window. There is more focus on means (resource mobilization to address the environment) rather than ends (goals). Strategy is less centralized than in the linear model.
#Interpretive strategy: as a less developed model than the linear and adaptive models, dating from the 1970s, interpretive strategy is concerned with "orienting metaphors constructed for the purpose of conceptualizing and guiding individual attitudes or organizational participants". The aim of interpretive strategy is legitimacy or credibility in the mind of stakeholders. It places emphasis on symbols and language to influence the minds of customers, rather than the physical product of the organization.<ref name="Chaffee1985"/>

J I Moore identifies four related levels at which strategies can be devised: enterprise, corporate, business and functional Levels. The functional level applies to specific functional areas within an organisation such as its finance department, HR team or IT section.<ref>Moore, J. I., [https://www.google.co.uk/books/edition/Writers_on_Strategy_and_Strategic_Manage/T9uNtP8K23QC?hl=en&gbpv=0 Writers on Strategy and Strategic Management: Theory and Practice at Enterprise, Corporate, Business and Functional Levels], published on 5 April 2001, accessed on 7 February 2025</ref>

In 2004, George Stalk, a [[Boston Consulting Group]] writer, distinguished between two extremes of business strategy using [[list of baseball metaphors|baseball metaphors]]:
*Softball: relying on weak competitive tactics which appear to be "strategic" but in fact "do little more than keep the company in the game for the short term";
*Hardball: engaging with tough competitive strategies, "relentlessly" aiming for success.<ref>Stalk, G., [https://iveybusinessjournal.com/publication/playing-hardball-why-strategy-still-matters/ Playing Hardball: Why Strategy Matters], ''[[Ivey Business Journal]]'', November/December 2004, accessed on 29 January 2025</ref>