The fog of strategy: Some organizational perspectives on strategy and the strategic management challenges in the changing competitive environment

ABSTRACT

The purpose of this article is to discuss some conceptions of strategy (and why it is difficult) and the need for a long-term perspective on strategy (including carefully studying competitors/opponents), and to emphasize the organizational nature of strategy (most strategies are developed by and implemented in organizations). We offer elements of an organizational framework for thinking strategically about national security, and some thoughts about implications for the education of future strategists.

Acknowledgements

This article grew out of discussions (in particular with Jim March and Jim Schlesinger) about the organizational aspects of strategy and on the organizational dynamics of institutions conducive to the development of strategic thinkers. One of our greatest strategic minds, James Schlesinger, passed away recently, and we would like to dedicate this article to him. He always had a very good understanding of strategy, and in particular how organizations could both help and hinder strategy and strategic change, and the inescapable organizational nature of strategy that is easy to overlook in the quest for rational analysis, yet so central to understanding the dynamics of the development of strategy. We are grateful to Steve Lambakis and Ann Schlesinger for comments on an earlier draft.

Notes on contributors

Mie Augier ([email protected]; [email protected]) is associate professor at Naval Postgraduate School. Her research interests include strategy, organizations, the rise (and decline) of innovative organizations, the education of strategists, and the past and future of management education and business schools.

Andrew W. Marshall studied at the University of Chicago before joining RAND in 1949, where he did research in the social science and economics departments for more than twenty years, before becoming the founding director of the Office of Net Assessment during the period when James Schlesinger was the Secretary of Defense. He led the office for more than four decades.

Notes

1. In the article, we use examples and illustrations mostly from the national security area; but with some ideas and concepts also from business strategy/strategic management. There is clearly room for more cross-fertilization of ideas between business and military strategy.

2. James Mattis, “Statement of James N. Mattis before the Senate Armed Services Committee,” January 27, 2015, https://www.armed-services.senate.gov/imo/media/doc/Mattis_01-27-15.pdf

3. This oftentimes, if not always, begins with diagnosis and insight. See an excellent discussion of this is in Scooter Libby's (and collaborators') recent examination of French strategy, and in particular the vision and insight of Duke de Choiseul during a period of French grand strategy (1758–1783). That is a particularly good example of the importance of insight, diagnosis, long-term vision, and broad general strategy. It began with an insight running counter to the general French view (paying attention mostly to continental opponents) that the real challenge in the longer run was the English (who also had reducing French power as a strategic objective). From this insight and diagnosis that the English were the central strategic problem, Choiseul observed that to compete with them in the long run, France needed to build up its navy; upgrade the equipment on its ships; develop an alliance with the Spanish; and remain competitive economically through trade. The French also understood that the American colonies in the longer run wanted to detach themselves from England, and that it would be something the French would want to help encourage as well. The resulting implementation took more than a decade, and as it was pursued, the details of implementations were subject to challenges and changes, but the overall strategic vision remained. (S. Libby, The Art and Practice of American National Security Strategy: Crafting Grand Strategy for a Weary Superpower [Washington, DC: Hudson Institute Report, 2016]). Another example of good diagnosis and strategy is the Gerald of Wales advice on how to conquer Wales, discussed in C. J. Rogers, “Giraldus Cembrensis, Edward I, and the Conquest of Wales,” in Successful Strategies: Triumphing in War and Peace from Antiquity to the Present, edited by W. Murray and Richard H. Sinnreich (Cambridge, UK: Cambridge University Press, 2014), 65–99.

4. Business strategy management scholars and practitioners have developed basic frameworks for strategic management processes involving such steps, aiming to capture the main stages in strategic management to ensure attention to internal and external trends, resources, strengths and weaknesses, and so on. Each of the different stages in the process has its own challenges that need to be understood. For example, when getting a good diagnosis of the situation it is important to not overestimate one's own strengths or underestimate competitors' advantages (given their histories and cultures) in a certain area of competition. And during the steps of implementing strategies, one must think hard to understand the barriers and challenges that organizations and bureaucratic behavior might pose. An application to national security is Thomas Mahnken's discussion of Reagan's strategy formulation and execution, “The Reagan Administration's Strategy toward the Soviet Union, in Murray and Sinnreich, eds. Successful Strategies.

5. James R. Schlesinger, “The Uses and Abuses of Systems Analysis,” testimony to Congress during confirmation hearings of James R. Schlesinger to become Secretary of Defense in “Nomination of James R. Schlesinger to be Secretary of Defense Hearing, Ninety-Third Congress” (Washington, DC: U.S. Government Printing Office, 1967). A good discussion of several of the pitfalls in (systems) analysis is H. Kahn and I Mann, Ten Common Pitfalls, RAND Research Memorandum, RM-1937 (Santa Monica, CA: RAND Corporation, 1957).

6. In other words, many of the central issues relating to strategy and organization do not fit academic or disciplinary perspectives, particular if we really want to understand the complexity of decision making with all its cultural and psychological aspects, as captured, for instance, by the phrase “culture eats strategy for lunch.” Schlesinger himself had a very broad understanding of the factors relevant to strategy (including, for example, the instinctual basis of territorial behaviors and the influence of psychocultural elements; unusual perhaps for someone educated in economics, but needed for real strategic thinking).

7. Mattis “Statement.”

8. A good discussion of some of these problems is Robert Gates, Duty: Memoirs of a Secretary of War (New York: Alfred Knopf, 2014), especially chapter 4 (titled “Waging War within the Pentagon”). Also see R. H. Sinnreich, “Afterword,” in Murray Sinnreich, eds., Successful Strategies, 432–447. The importance of good strategic leaders for the implementation of strategy is clearly an important topic that deserves more discussion.

9. Sinnreich, “Afterword,” 432.

10. Also, “a strategy” in the national security context might mean that it is a policy to defend certain geographical areas, or to strengthen our position in the Far East, in which case a strategy seems to mean a “policy” to follow certain guidelines which our action will follow. Or, a strategy can be a list of broader goals for the future, say, ten to twenty years; a list of key areas of current advantages and weaknesses, accounting for different current opponents or those likely to become so in the future, and so on.

11. As James Schlesinger noted: “A plethora of...[strategic] objectives has been put forward, as if all could be successfully and simultaneously pursued. We are urged to advance democracy and all its procedures, human rights, civil liberties, equality before the law, protection of minorities, self-determination, an orderly world, international law, economic growth, free markets, privatization, free trade, limits on environmental degradation, curtailment of the arms trade, prevention of the spread of advanced weapons, etc. The list is almost endless. What is ignored is that some of these objectives are flatly in conflict and that all require the careful examination of trade-offs….With so many different objectives and with an inability to focus those means appropriate for achieving a limited set of objectives, now foreign policy is likely to be shaped by a capricious flow of events—rather than defined guideposts and a careful plan.” James R. Schlesinger, “Quest for a Post–Cold War Foreign Policy,” Foreign Affairs, 72, no. 1 (1992–1993): 18–19.

12. Mattis, “Statement.”; Aaron Friedberg, Strengthening US Strategic Planning,” Washington Quarterly 31, no. 1 (2008): 47--60.

13. B. Lee, “American Grand Strategy and the Unfolding of the Cold War, 1945–1961,” in Murray and Sinnreich, eds., Successful Strategies.

14. There also were serious efforts during the Second World War (and after) to understand competitor behavior and other cultures at a distance. Some of the efforts (also resulting from closer collaboration with academic institutions at the time) and approaches are captured in Mead's edited book on studying cultures at a distance, featuring psycho-cultural and anthropological approaches that were using in getting insights into the behavior of other cultures (M. Mead and R. Metraux, eds., The Study of Culture at a Distance (Chicago: University of Chicago Press, 1953).

15. There are several limitations, of course, in looking for analogies between business and military strategy and we do not argue that success in the business domain of a given concept, or practice, or strategy necessarily means success in the national security context. Among other things, the nature of the competition is different; in business, companies do not kill each other and the nature of conflict is different. Schlesinger also noted in a recent conversation (September 2007) about the similarities between business and military strategy: “Osama is not Dell,” a point he used to make the argument that the opponents we face are creating competitive advantages based on cultural and religious asymmetries that we cannot compete with. The differences between military and business organizations is an important one, but there are similarities too, both are about competition between organizations and both are shaped by (and can shape) the performance of others; and it is those that form the basis for the arguments we make here.

16. Alfred Chandler, Strategy and Structure: Chapters in the History of American Industrial Enterprise. (Cambridge: MIT Press, 1962), 13.

17. Kenneth Andrews, The Concept of Corporate Strategy (Homewood, IL: Dow Jones–Irvin, 1971), 23. These broad definitions indicate strategy as being about the long term, about key trade-offs, and about deciding what industry the organization is (or should be) in. Also emphasized by later strategic management scholars such as Michael Porter (Strategy is “a combination of the ends (goals) for which the firm is striving and the means policies.” Porter, “What Is Strategy?” Harvard Business Review 74, no. 6 [1996]: 61–78); and Richard Rumelt (“Strategy is the craft of figuring out which purposes are both worth pursuing and capable of being accomplished, and how best to pursue them.” Rumelt: Good Strategy, Bad Strategy (New York: Crown Books, 2011), 66. In a book that became the foundation for much of modern business strategy/strategic management, Michael Porter argued that strategy was mainly about relating the company to its environment by analyzing five basic structural forces (determining the competitive intensity and potential for profit), and assessing competitors. Michael Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980). Despite Porter's competitive forces still being used in strategic management, some business strategy scholars have argued that the (somewhat narrow) analytic focus on (mainly economic) forces came at the expense of empirical insights taught by the earlier strategy scholars. Joseph Bower, “The Teaching of Strategy: From General Manager to Analyst and Back Again?” Journal of Management Inquiry 17, no. 4 (May 2008): 269–275.

18. Robert Burgelman writes: “Strategy has a strong thinking component. Strategic thinking is forward looking and concerned with exploring multiple scenarios, alternatives, and options.…incisive strategic thinking at its best requires considerable intellectual effort.” Burgelman, Strategy Is Destiny: How Strategy-Making Shapes a Company's Future (New York: Free Press, 2002), 4. Henry Mintzberg sees strategy as “a pattern in a stream of decisions” and also notes that strategic planning “often spoils strategic thinking.” Mintzberg, “The Rise and Fall of Strategic Planning,” Harvard Business Review 72, no. 1 (1994): 107–114. Mintzberg's discussion also captures part of what we discussed above: that strategy is not a list of goals, and that it is not about reacting to other's strengths or threats (a “threat based” strategy); it is much more fruitful, from a strategy point of view, to be building on one's own strengths and opponents' weaknesses.

19. There are levels of strategy for nations as well as for firms and other organizations that are developing strategies. At the broadest level, strategy would involve all aspects of the competition (political, military, economic, etc.), with somewhat more confined strategies at lower levels. The fact that there are many levels of strategy (national security policy, the Department of Defense; and military service levels) and the fact that each level has its own systems of organization (and budgets) complicates the process of defining, understanding, and practicing strategy tremendously. One organizational level's strategy may be another organizational level's tactics, and one level's strategies may impose goals for which another level must develop strategies to achieve.

20. Robert Gates's book, Duty, has discussions on many of those political and organizational barriers and how in his experience they proved very destructive to strategic efforts.

21. While this conception of strategy may be more art than science, part of the strategic competition is amenable to scientific reasoning, understanding, and approaches. In particular, our definition opens the door to discussing certain key elements and characteristics of strategy that are familiar to the field of business strategy, including understanding the nature of the external environment and competitors, the organizational nature of strategy and the need for a long-term focus in strategy, the importance of strategic thinking and vision, and some elements of the cultural influences of organizations and of psychocultural elements on decision making. M. Crozier, (Chicago: University of Chicago Press, 1964); Lucien Pye and Nathan Leites, “Nuances in Chinese Political Culture,” RAND Working Paper P-4504 (Santa Monica, CA: RAND Corporation, 1970).

22. James G. March, “Exploration and Exploitation in Organizational Learning. Organization Science, 2, no. 1 (1991), 71–87.

23. Schlesinger followed these developments with interest, but also had a strong interest in the literature around the evolutionary, zoological, and biosocial approaches (early on, in particular Robert Ardrey, The Territorial Imperative [New York, NY: Atheneum, 1966]), in addition to also the psychocultural ideas, later also exemplified with Nathan Leites' work (Nathan Leites, The Operational Code of the Politbureau [New York, NY: McGraw-Hill, 1951]). Marshall and Schlesinger, in their work in trying to establish a department of organizational behavior within RAND, had in mind building on the ideas of Herbert Simon, James March and Richard Cyert and Michel Crozier from Carnegie Mellon University, in addition to work from Harvard Business School, to study organizations and their strategies. The department was not set up but the vision and ideas stayed with Marshall and Schlesinger and became key to their efforts in Washington.

24. Herbert A. Simon, “Human Nature in Politics: The Dialogue of Psychology with Political Science,” The American Political Science Review, 79, no 2, 293–304.

25. James G. March and Herbert A. Simon, Organizations (New York: Blackwell, 1958). Richard Cyert and James G. March, A Behavioral Theory of the Firm (New York: Blackwell, 1963).

26. Andrew W. Marshall, “Improving Intelligence Estimates through the Study of Organizational Behavior,” paper presented to the RAND Board of Trustees, RAND Corporation, Santa Monica, CA 1968. Schlesinger notes in his discussion of organizations also not emphasizing organizations and treating them as individuals can be a serious fallacy: “[T]he instinctively anthropomorphic treatment—in which the large organization appears as simply the (presumably) rational individual or small group writ large—is perhaps the most eminent of the intellectual fallacies that appear in the debates” James Schlesinger, “Organizational Structures and Planning,” in Schlesinger, Selected Papers on National Security, 1964–1968 (Santa Monica, CA: RAND Corporation, 1974), 55.

27. Lionel Tiger and Robin Fox: The Imperial Animal (New York: Holt, Rinehart and Winston, 1971).

28. This makes the thinking about asymmetries and weaknesses more difficult, since it requires us not imposing our own irrationalities on others' behavior. Yet again, not impossible. It was this kind of thinking that motivated Loftus and Marshall thinking of the vulnerabilities of the Soviet Union.

29. Crozier, The Bureaucratic Phenomenon; A. George, “The Operational Code: A Neglected Approach to the Study of Political Leaders and Decision Making,” International Studies Quarterly 13, no. 2 (1969): 190--222. Pye and Leites, “Nuances.”

30. Herbert A. Simon, Administrative Behavior (New York, Free Press, 1947); Cyert and March, A Behavioral Theory of the Firm. James Schlesinger noted this too, e.g., in a 1966 article on “Organizational Structures and Planning,”: “Large organizations suffer from a geometric increase in the difficulty of (a) successfully communicating intentions and procedures, (b) establishing an harmonious system of incentives, and (c) achieving adequate cohesion among numerous individuals and subunits with sharply conflicting wills.” Schlesinger, “Organizational Structures and Planning,” p. 66.

31. Sinnreich, “Afterword.”

32. Steven Jobs refocusing on Apple after he came back is an example from business; eliminating several products/areas and focusing on the few things they did better than other companies and on becoming better innovators based on those core strengths. In a national security context, Sinnreich (cited above) mentions examples from the national security context of “strategic overextension,” and the importance of match between competencies and strategic ambitions (and the dangers of escalating strategic ambitions beyond core competencies). A use of the concept of core competencies to understand changes in the defense industrial base is another example of the applicability of business strategy ideas to national security strategy, found in the discussion in Barry Watts, “Sustaining the US Defense Industrial Base as a Strategic Asset,” Background Paper (Washington, DC: Center for Strategic and Budgetary Assessments, 2013).

33. It is therefore not surprising that Schlesinger made important contributions to both the intellectual and institutional foundations for net assessment. Marshall was the main person behind the intellectual foundations as well as institutional development of net assessment, but has pointed out several times the important role of Schlesinger in both the underlying ideas and the early institutionalization of the ideas—so it is worth detailing their collaboration a bit. In fact, at a conference on the past and future on net assessment, Marshall described Schlesinger as the “real father” of net assessment, a comment to which Schlesinger responded that one would have to take a paternity test for that. Marshall and Schlesinger shared the central ideas and visions that became embedded in net assessment as a framework for thinking about strategy. They also shared a rare ability to not take credit for things, preferring instead to “get the work done.”

34. Schlesinger described his admiration for Leites in an essay from 1989, also noting how Leites was one of the people who added tremendously to the early RAND organization and culture (James Schlesinger, “Nathan Leites: An Old-World Figure in a New World Setting,” in Remembering Nathan Leites: An Appreciation, edited by C. Wolf (Santa Monica, CA: RAND, 1989).

35. Andrew Marshall, “Improving Intelligence Estimates.”

36. Graham Allison and Andrew W. Marshall, Explanation and Prediction of Governmental Action: An Organizational Process Model RAND RM-5897-PR (Santa Monica, CA: RAND Corporation, 1969).

37. Graham Allison and Andrew W. Marshall, Explanation and Prediction, v–vi.

38. Andrew W. Marshall, “Long-Term Competition with the Soviets: A Framework for Strategic Analysis,” RAND R-862-PR (Santa Monica, CA: RAND Corporation, 1972). Written while Marshall was the director of Strategic Studies at RAND, the article was intended to provide a framework for the future directions of RAND's research on U.S.-Soviet behavior, and in particular to argue for the need for a long-term perspective.

39. Andrew Marshall, “Improving Intelligence Estimates”; Allison and Marshall, Explanation and Prediction.

40. Andrew W. Marshall and James G. Roche, “Strategy for Competing with the Soviets in the Military Sector of the Continuing Political-Military Competition,” unpublished paper, July, 1976.

41. Although articulated when the major competition was with the Soviet Union, this way of strategic and organizational thinking is relevant also to the competitive environment today. For example, the players in the strategic competition can still be fruitfully viewed as actors who are limited rationally, and who are influenced by their national and organizational cultures and histories. Several of the chapters in Murray and Sinnreich, Successful Strategies, examine a set of historical examples which illustrates the importance of organizational aspects in the development, implementation, and execution of strategies.

42. We are aware of the fact that there may be certain elements of strategy that are very difficult to teach, and that good strategic thinking may require certain personality traits, and almost certain psychological/temperamental characteristics, e.g., a passion for really wanting to “win,” not just “get through the next four years without too much trouble.” But we also believe that even if some parts of strategy may not be taught (easily), people who don't become brilliant strategists can improve their strategic thinking (and thus help upgrade the organization's capacity for strategy as a whole).

43. Another issue is that there may be opportunity costs; working on long-term big questions may not be career enhancing or “influence” things. Of course, one could hope that the people attracted to working on the big problems are not worried about short-term individual gains. Alain Enthoven recalls that a big motivator for him to go to RAND early on was working on big problems for the country; that was more important than a few publications in economics journals (Enthoven, personal conversation).

44. This is not to say that all great strategists are shaped by their education (Steve Jobs is a famous example). The military also has people who become good strategists through their experience, but who are also often shaped by their reading a lot (and quite broadly). In thinking about strategy as a profession, Marshall noted that a combination of a business-school background and military service can be useful for the ability to think broadly (Andrew Marshall, “Strategy as a Profession for Future Generations,” in On Not Confusing Ourselves: Essays on National Security in Honor of Albert and Roberta Wohlstetter, edited by Andrew Marshall, J. Martin, and Henry Rowen (Boulder, CO : Westview Press, 1991).

45. In national security, that could be different issues, such as: What is the future worldwide maritime balance? What are the demographic and cultural changes of the next fifty years and how is that likely to influence important balances?

46. James R. Schlesinger, The Uses and Abuses of Systems Analysis, 5.

47. Ibid.

48. Herbert A. Simon, An Empirically Driven Microeconomics (Cambridge: MIT Press, 1997).

49. If this sounds like a stretch, consider the importance of understanding the long-term strategic nuclear competition. Given the proliferation (or “globalization”) of nuclear weapons in the last decades, deterring conflicts in that area depends on issues such as the cultural-psychological traits of leaders in charge of nuclear states, the neuro-psychological underpinnings of different cultures (influencing, for instance, what they see as a threat, or fear), and the future economic and demographic features of different nuclear actors.

50. Business schools (along with other professional schools) also have a history of a particular way of teaching strategy through cases, which might be conducive to help nurturing thinking through strategic problems and situations, as it emphasizes broad empirical foundations for strategic decision making. Thus, there may be lessons from both using business strategy examples/cases in a national security context and from rewriting national security examples of good (and bad) strategies in teaching-case format.

51. Some military organizations seem to be quite aware of this, reflected, for instance, in the recent Marine Corps commandant's call for “disruptive thinkers.”

52. A much longer organizational analysis of RAND and its ability to attract strategic minds is in our companion article, Mie Augier, James March, and Andrew Marshall, “The Flaring of Intellectual Outliers,” Organization Science, 26, no. 4 (2015): 1140–1161.

53. See, e.g., Stephen Enke, “Think Tanks for Better Government,” TEMPO Working Paper (Santa Monica, CA: TEMPO, General Electric Company, 1967); Alain Enthoven and Harry Rowen, Defense Planning and Organization (New York: National Bureau of Economic Research, 1961); and Charles Hitch, “Management Problems of Large Organizations,” Operations Research, 44, no. 2: 257–264.

54. H. Kahn and I. Mann, (1957): Ten Common Pitfalls RAND Research Memorandum, RM-1937 (Santa Monica, CA: RAND Corporation, 1957).

55. Augier et al., “The Flaring of Intellectual Outliers”; Robert Gates, Duty.

56. In business, Kodak is an example. In the military, the British Navy did not adapt to the changes in the interwar years.

57. Schlesinger noted how the changes away from the Cold War make it even more important to focus on the long-term, broader objectives and on shaping the long-term competition, rather than narrow goals that may not be realistic: “With the end of the Cold War…the world is becoming more rather than less anarchic. There are many trouble spots in the world; there will be countless more. The United States is not called upon to, nor can it, cure all the world's misery. We represent a small—and now steadily shrinking—percentage of the world's population. Nor are we temperamentally suited to the policeman's unhappy lot” (Schlesinger, “Quest,” 27). R. Betts also warns that conflating strategy with goals (focusing on “nice outcomes”) or with operations (focusing on “how to” manuals) drains strategy of its content: “[s]strategy becomes whatever slogans and unexamined assumptions occur to them [politicians and soldiers] in the moments left over from coping with their main preoccupations.” Richard Betts, “Is Strategy an Illusion?” International Security 25, no. 2:7.

58. James R. Schlesinger, The Political Economy of National Security (New York: Frederick Praeger, 1960), 255.

59. Schlesinger, Nathan Leites, 56.

60. While the literatures is less integrated at present, a good start would be the works of people such as Nathan Leites, Lucian Pye, Ruth Benedict, Margaret Mead, Lionel Tiger, and Robin Fox, which could enrich our understanding of our own and competitor organizational behavior and decision making.

61. To this latter point, Schlesinger would sometimes note that “we need a national strategy; not a democratic strategy or a republican strategy” (personal conversation with James Schlesinger, September 2009), urging us to think about strategy and competitive advantages for us as a country.

62. Herbert A. Simon, Some Strategic Considerations in the Construction of Social Science Models,” in Mathematical Thinking in the Social Sciences, edited by P. Lazarsfeld (Glencoe, IL: Free Press, 1954), 391.