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Strategies Today: The Fiction of Rational Management

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Future Viability, Business Models, and Values

Part of the book series: CSR, Sustainability, Ethics & Governance ((CSEG))

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Abstract

The leading voices in the field, like Porter (1985, 1996) or Hamel and Prahalad (1990, 1995), suggest that strategy development is the silver bullet for competitive success in the future. It is, indeed, the show discipline of executive managers, as it considers all other management tasks secondary to this overriding purpose (Müller-Stevens and Lechner 2003, 20ff). By asking three questions—“What you are deeply passionate about? What you can be the best at in the world? What drives your economic engine?” (Collins 2001, 95f)—strategy development challenges the business model and defines products, markets, target groups, and customers for the company. It is the rational way of doing business in future, with »rational« meaning a process that follows a structure to make success predictable with a measurable input–output calculation. In fact, there are three reasons that should make us wonder whether strategy development is the rational way to plan commercial success. These reasons relate to the inherently opaque nature of reality.

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Notes

  1. 1.

    Two exercises reveal our inability to cope with fixed-step changes and exponential relations. Try to solve the following tasks and write down your answer:

    • Exercise 1) How tall will the pile become if you fold the front page of the Times 30 times?

    • Exercise 2) How many days will it take for a pond to be completely covered with water lilies if every plant reproduces itself once per day and if it took 100 days for the first quarter of the pond to be covered? [You can find the solutions at the book of the book.]

    Nassim Taleb gets his key message in the “The Black Swan” from his insight that and why we cannot cope with fixed-step or exponential change (Taleb 2008). In normal life, we ignore the events whose probability is near zero. This creates unexpected levers for both risk management and speculation to lead to exponential success or catastrophic failure. That is why strategic risk management has to prepare for those events whose probability is near zero, but whose impact would be lethal for the business.

  2. 2.

    “Classic” strategy concepts use strengths/weakness and environmental analyses to produce a segmented portfolio, liking risk, growth, profitability, value creation, cost, process, or innovation strategies and other elements like quality, TQM/EFQM, supply chain, or make-or-buy strategies to get the company into a place where the strategies become more than the sum of their parts (cf. Müller-Stevens and Lechner 2003; Weissman 2006).

  3. 3.

    In the 1980s, Edzard Reuter’s strategy to focus more of the business on arms technology fell flat on its face when it came into contact with actual reality, as did the strategy of Jürgen Schrempp to turn Daimler Benz into a global corporation in direct contrast with his predecessor’s strategy. If Gerald Braunberger is correct about the “building site Deutsche Bank”, the directors and board around Anshu Jain, Jürgen Fitschen, and Paul Achleitner also failed in their attempts to turn the Deutsche Bank into one of the leading full-service banking houses of the world. “The ambition of Fitschen and Jain to turn the Deutsche into a world-leading universal bank, seems disconnected from reality when one looks at the figures: JP Morgan Chase, one of the undisputed leaders of the banking world, has a market value of around 170 billion €. The Deutsche Bank is valued at a mere 35 billion €” (F.A.Z. of 16 January 2015, p. 17).

  4. 4.

    Both describe a set of shared traits, convictions, competences, and approaches which the authors consider important for the success of businesses and which, if other companies ‘copied’ them, would make these companies just as successful.

  5. 5.

    The bursting of the US-American real estate bubble in the subprime crisis of 2007/2008 is only the most recent example of how swarm stupidity can plunge not just banks, but entire markets and nations into outright crisis.

  6. 6.

    “Folklore: The manager is a reflective systematic planner. … Fact: Study after study has shown that managers work at an unrelenting pace, that their activities are characterized by brevity, variety, and discontinuity, and that they are strongly oriented to action and dislike reflective activities” (Mintzberg 1990, 72).

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Authors and Affiliations

  1. Cultural Images Values Management, Grafenaschau, Germany

    Friedrich Glauner

  2. Weltethos Institut/Global Ethic Institute, Eberhard Karls Universität Tübingen, Tübingen, Deutschland

    Friedrich Glauner

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Glauner, F. (2016). Strategies Today: The Fiction of Rational Management. In: Future Viability, Business Models, and Values. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-34030-2_2

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