Week 21

WEEK 21

LEARNING JOURNAL

What are the benefits and drawbacks of taking an ‘emergent’ approach to strategy making?

Every business conducts a plan before taking a step ahead towards their goal. Sometimes those plans execute well and enable the business to achieve their goals whereas sometimes those plans do not execute as they are supposed to hence they produce unexpected results. Emergent strategy can be defined as a process in which unexpected outcomes are identified from executed corporate strategy as well as learning to combine the unexpected outcomes for corporate plans in future. For instance, a business may use social websites to improve the marketing plan which could complete their marketing program and if that plan becomes tremendously successful then the business could consider that plan as an emergent strategy. (H. Mintzberg, 1985)

The pattern of actions or plans might not be clearly related to the missions or goals of the business. The pattern becomes noticeable to everyone only after it is successfully executed once after which it is known as the new business strategy. Like any other business strategy emergent strategy also has their benefits as well as drawbacks. Here, we are going to discuss their benefits and drawbacks.

Benefits of Emergent Strategy.

•       Emergent strategy is comprised of innovative and creative ideas. 
•         Each individuals of the organization can give their ideas and opinions so informal communication exists so the organization have chance to access more beneficial ideas and suggestions.
•      It helps the individuals of the organization to share their visions and values without which they will not be able to cooperate with each other. 
•      It leads the business to facilitate market by providing their wants rather than facilitating the market with what the owner thinks the market wants. 
•       It use approaches that are more practical in nature in order to solve the problems so new strategies could be formed.

Drawbacks of Emergent Strategy

•     Emergent strategy cannot be planned for long term as once it fails immediately other strategy needs to be developed. 
•      The amount of risk involved is high in this strategy because business requires different strategies in different stages and no one can be sure whether the implemented strategy will be a successful one or failure. 
•           New businesses with narrow margins cannot be cannot conduct this strategy because there is a chance of failure and it will be difficult for new businesses to recover the loss. 
•     Emergent strategies are not pre planned instead it is known through mistakes and experiences which might or might not occur in future.

CASE STUDY: HONDA

1.      Was Honda’s entry strategy in the US more deliberate or emergent?

Honda’s entry strategy in the US was combination of both the strategies, deliberate as well as emergent. In the beginning Honda observed the shifts of US motorcycle competitors as well as all the bikes sold before 1960 in US. After world war motorcycles sold had a bad image as they were named ‘Hell’s Angels’ and ‘Satan’s Slave’. Honda bikes were easy to use and light weighted and had planned a policy to sell their bikes not only to motorcyclists but also to general public. Then Honda started with a deliberate plan in which their basic philosophy was that high volume in every model provided high productivity potential due to capital intensive and highly automated techniques which increased their market share. They produced at lower price and were the market leaders in Japan. They forced their entrance in the US market by using deliberate strategy in which they redefined the segment of leisure class and utilized their competitive advantage of aggressive pricing and advertising strategy.

Afterwards Honda struggled a lot due to leakage which had hampered their brand image. The company went through a lot of ups and downs still they were able to manage their stock which made look like that their entry was emergent. They visited US market and started testing their product in that market for which they implemented various strategies. Eventually in 1963, a student did an assignment on Honda Advertisement after which they were able to enter the market and since then they have been successfully operating in that market. Here the strategy they used was emergent because they were themselves not sure whether they could establish themselves in US market or not.

2.      Which of the accounts seems more accurate and why? Why do you think the two accounts differ so much?

In my opinion emergent strategy or the second account seems more accurate. In the interview of Pascale with executives of Honda, they have explained about the emergent strategy in detail and step by step they have conducted. They clearly showed their emotional attachment as well as the important information they had collected. It seems more accurate because they showed how travelling across US they tried to grab the opportunity which was situational and also observed facts and figures about their industry. To enter into US market was a risky decision since in US people drove automobiles even Ministry of Finance was concerned about their decision in entering US market. Honda struggled and introduced new bikes yet there were problems like oil leakage and failure of clutch. Thought they had limited cash still they were successful in solving those problems. They didn’t plan out deliberatively instead used their mind. They made necessary changes and used appropriate campaign for advertisement for which the perspective towards motorbike in US changed.

These two accounts differ so much because of the logical explanations regarding the events which occurred while entering and making a position in the US market. In the beginning it seems like the plan to enter US market was more deliberate but afterwards it seems like that it was a coincidence that they noticed the market which was not thought by Japanese Honda Company. In the beginning they intentionally planned of high volumes and productivity but afterwards they have said that it was a failure. They have two different strategic methods used and mentioned. The company adapted strategies as per the requirements and took risks and struggled and in the end reached where they are today. First strategy is based on hard facts whereas second on emotional attachment.

3.      Did Honda’s entry strategy demonstrate the characteristics of ‘logical incrementalism’?

Yes, Honda has demonstrated the characteristics of ‘logical incrementalism’. Honda has been able to establish the management philosophy in which they are able to achieve extraordinary goals by taking baby steps and by making proper thoughtful and adaptive decisions in short time period. The decision they took were smaller but logical one which was based on the evaluation of their learning and experiences in the process of their growth and establishment because in the beginning they did not have any idea regarding the existence of such market. They took risk and tried to enter the market and took a step ahead through their failures and remedies. They were successful in changing the mindset of many people towards their bikes through their campaigns. Even in situations of failure like oil leakages and clutch failures for the customer satisfaction they redesigned their bikes in spite of the capital limitations. As logical incrementalism was reflected in their product they were capable of introducing Supercurbs. It happened since they then were able to understand the market and demands and undertook small logical decision which was able to generate a huge difference in the company.

4.      Do you think Honda would have been more or less successful if they had adopted a more formalized strategic planning approach to the launch?

In my opinion I do not think that Honda would have been successful if they had adopted a more formalized strategic planning approach to the launch. If they had adopted formalized strategic plan then they would have to suffer a lot because if everything was supposed to happen according to the plan then while their image was hampered due to leakage and failure then they would have given up and moved out of the US market. If they had planned the strategy then they would have made plan for some certain years and would carry out that plan until the end of the period despite of all the high cost factors. Even in case of sales if they had planned to sell certain numbers of bike then they would have to suffer the loss since there were problems in their designs and functioning and people would not purchase it but they would have already manufactured their products in large amount. They would have destroyed their brand image due to their technical failures and could not even introduce other products under their brand name. They took risk and adapted according to the market situation and customer expectations which made them successful not the formalized strategic planning approach.

References:

1.  Planning Skills. (2013). Emergent Strategy. Available: http://planningskills.com/glossary/154.php. Last accessed 09 December 2013.

2. Anderson, A. (2010). Advantage & Disadvantage of Emergent Strategy.Available: http://smallbusiness.chron.com/advantage-disadvantage-emergent-strategy-10070.html. Last accessed 09 December 2013.

3. The America Heritage. (2010). logical incrementalism business definition. Available: http://business.yourdictionary.com/logical-incrementalism. Last accessed 02 December 2013.

4. Innovaders. (2005). STRATEGIES, DELIBERATE AND EMERGENT.Available: http://www.innovaders.com/strategy/general.htm. Last accessed 02 December 2013.