In this article the authors discuss how organisations can better strategise for the future by integrating and balancing the three logical approaches to strategy: analytical, institutional and systemic.
In the current context of increasing global hypercompetition and market turmoil, strategy is becoming more and more prominent. Where formally strategic planning was conducted every 3, 5 or even 10 years, today it is reviewed almost annually, and in some cases strategy may even suffer major revisions within a year. As we suggested in a previous article, in practice, three logical approaches to strategy are commonly used.1
The first is analytical logic, based on estimations of the various business variables and establishing causal relations between them. It is based on explicit information (from both the environment and internal resources and capabilities) and is developed deliberately through the conscious analysis of the situation. In general, analytical logic regards the company’s activity as an economic-competitive reality that can be analysed and predicted.
The second is institutional logic, which is based on the development and preservation of the principles and values that govern the company’s activities and stakeholder relationships. It is generally expressed through “statements”, such as the company’s credo, mission, vision, values, purpose, etc., but this statement is only a symbolic representation of the institutional perspective’s true scope. It is primarily developed at a pre-conscious or even subconscious level and is generated through the socialisation and internalisation of beliefs regarding the general principles of the company.
And the third is systemic logic, which, through experience and intuition, focuses on the holistic understanding of the business, without being bound by the barriers of quantifiable data or by the characteristics of the organisational identity. It is developed through a profound knowledge of reality that allows the establishment of hypotheses regarding the fundamental aspects of the market and the company itself. The raw material of the systemic perspective is a mixture of conscious and unconscious knowledge, and is usually presented in a broad or non-specific manner in the form of ideas, models or reality maps.
About the Authors
Joan E. Ricart is the Carl Schrøder Professor of Strategic Management. He has been Chairman of the Strategic Management Department at the IESE Business School for 23 years. He is a Fellow of the SMS and EURAM and he was the Founding president of the European Academy of Management (EURAM) and President of the Strategic Management Society (SMS). He has published several books and articles in leading journals such as Strategic Management Journal, Harvard Business Review, Journal of International Business Studies, Econometrica and Quarterly Journal of Economics.
Carlos Rey is Professor of Strategic Management and Director of the Chair Management by Missions and Corporate Governance at Universitat Internacional de Catalunya (UIC). He is Business Strategy and Change Management Consultant for companies such as Coca-Cola, Sony, Repsol or Bristol Myers Squib. Formerly, he developed managing positions in different countries (India, Mexico, United Kingdom, Germany & Spain). He is co-author of Management by Missions, published in six languages, and several articles of strategy, leadership and change management.
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