The domain of strategy has competing schools of thought. Each school of thought has its own advantages and disadvantages. Design School of strategy is one of the broader categorizations of this domain. On the other hand, another school in strategy is the learning school. In this article, we shall look at the design school and its characteristics.
What is the design school of strategy?
The design school of the strategy was initiated by Ansoff in 1965. However, it was formalized by Andrews in 1971. The design school assumes strategy to an interplay between the bifurcation of the firm and its environment. In other words, it seeks to connect the organizational goals to this bifurcation. Henry Mintzberg suggested two activities:
- An internal assessment of the organizations competences strengths and its weaknesses.
- Assessment of the external environment.
Thereby we can define the design school as one that tries to develop the internal competencies and strengths in order to answer the external threats and opportunities. Additionally, the focus is there on the appraisal of the situation. One of the methods to look at this assessment is the strength weakness opportunity and threat analysis or the SWOT analysis.
Important aspects of the design school
- The strategy is looked at as a deliberate process in the design school. This is quite different from the learning school their strategies looked like an evolutionary project.
- The design school takes a top-down approach to management.
- Therefore, we can see that the control resides in the hands of the chief executive officer. Important decisions are taken at the top, which trickles down to the lower management cadres.
- The design school also prescribes a unique strategic stand. This ensures a competitive advantage over other firms.
Key external factors
Some of the important factors that we can Evaluate during the external analysis for an organization are:
- Macroeconomic factors
- Social factors
- Technological landscape
- Geopolitical issues
The macroeconomic factors are governed by a number of external variables that the firm has little to no control over. However, a firm needs to have an understanding of what is going on in the environment. The internal strategies of a firm must reflect the changes in the macroeconomic environment. When the market has an upward trend, it suggests that people have better access to money. It also suggests that people are ready to spend money on discretionary products. On the other hand, a firm that targets autonomous consumption need not worry about an economic downturn.
The social factors can also have a huge impact on a firm’s strategy. The changes in people’s lifestyles their buying habits and the overall consciousness affects the types of products that people buy. In a society where people are health conscious, it is easier to sell preventive medicines. Also, factors such as the religious beliefs of a place will dictate the kind of product placement in that geography.
Thirdly, we look at the technological landscape. Technology is constantly changing and that affects the strategy of a firm. the design school of thought proposes that a firm needs to leverage these changes to extract maximum benefits. Firms are constantly in competition with one another. Even a slight technological advantage can give a competitive edge to a firm.
Finally, we look at the geopolitical issues. The geopolitical issues should not be overlooked when we are designing the strategy of a firm. Some of the key geopolitical factors that affect a firm are:
- Government policies
- Environmental regulations
- Wars and political unrests
- Natural calamities
- Pandemics and famines
Key internal factors
The design school of strategy talks about designing our internal environment in response to the external environment. We have already talked about the importance of capability building and developing internal resources. Apart from these, there are also other aspects that need to be planned. Also, a firm’s internal values must be aligned with the organizational vision. Its belief system should help it position itself securely.
We can use tools like the Ansoff Matrix. It can help us understand what customers want and develop products. We also parallelly look at the organization’s capability when we are developing these products. The deficit of any competency or resources to meet the organizational needs can be highlighted. The next step would be to chalk out a plan to develop these competencies. The internal competencies are developed as generic competencies or distinctive competencies. The generic competencies are those which are similar to other organizations in the same industry. On the other hand, the distinctive competencies are those that are unique to the firm.
The benefits of the design school
The design school of strategy comes from a more rational viewpoint. It can help us in formulating generic strategies. At the same time, it is easier to understand and to implement. The kind of strategy proposed by the design school is most useful for larger organizations. It is also useful for centralized organizations. We can also leverage data to understand the situation better using this school of thought. Firms that achieve a good fit between the internal opportunities and the external situations benefit from higher performance.
Some drawbacks of the design school
One of the criticisms of the design school of strategy is that it takes a more prescriptive form. What this means is that the design school assumes that there is a perfect solution to every problem. Firms need to adopt A particular strategy to be successful. This kind of prescriptive approach is looked down upon by certain academicians as well as practitioners, specifically those who belong to the other school of thought. The other school of thought is the learning school of strategy.