Strategy and Performance Management
Neu-Ulm University of Applied Sciences
July 22, 2025
After this section, you should have a solid understanding of
Good strategy does not pop out of some strategic-management tool, matrix, triangle, or fill-in-the-blanks scheme. Instead, a talented leader has identified the one or two critical issues in a situation—the pivot points that can multiply the effectiveness of the effort—and then focused and concentrated action and resources on them. R. Rumelt (2011)
According to R. P. Rumelt (2012) a good strategy …
Good strategies tend to look simple and obvious in retrospect.
At its core, strategy is always the same: discover the crucial factors in a situation and design a way to coherently coordinate and focus actions to deal with them.
According to R. P. Rumelt (2012) key hallmarks of poor strategy are:
Poor strategy ignores the power of choice and instead tries to reconcile a variety of conflicting demands.
Poor strategy has many roots, but according to R. P. Rumelt (2012) the key ones are:
The inability to choose
and template-style planning
The analysis of good vs. poor strategy reveals critical requirements for effective strategy formation:
If good strategy requires diagnosis, guiding policy, and coherent actions, then strategy formation must enable deep understanding, creative problem-solving, and coordinated implementation.
Traditional planning approaches often lead to poor strategy because they emphasize process over insight and templates over understanding.
Strategy formation refers to the process of crafting strategies that revolve around the interplay of the environment, the organizational operating system, and leadership (Mintzberg 1978).
Given this complex reality of strategy formation, what types of strategies actually emerge from this process?
A strategy is not a fixed plan, nor does it change systematically at pre-arranged times solely at the will of management. Mintzberg (1978)
Intended strategies are plans developed before action;
emergent strategies are patterns that develop without prior intention; and realized strategies combine both deliberate and emergent elements.
The process by which effective strategies are created is better captured by thinking of strategy as a craft, rather than as a planning process (Mintzberg 1987).
The crafting metaphor addresses the limitations identified in poor strategy analysis:
Like potters at the wheel, organizations must make sense of the past if they hope to manage the future. Only by coming to understand the patterns that form in their own behavior do they get to know their capabilities and their potential. Thus crafting strategy, like managing craft, requires a natural synthesis of future, present and past. Mintzberg (1987)
Following capabilities directly enable the diagnosis, guiding policy, and coherent actions required for good strategy:
Knowing the business,
managing stability,
managing patterns,
detecting discontinuity,
and reconciling change and continuity (Mintzberg 1987)
Firms successful in making high-quality strategic decisions frequently have three capabilities: collective intuition, quick conflict, and defusing political behavior (Eisenhardt 1999).
Strategies have a life cycle,
which is coined by waves of change and continuity.
Thus, a strategy cannot be a fixed plan, or being updated at a predetermined time and the dichotomy between formulation and implementation makes little sense (Mintzberg 1978).
Strategy formation insights suggest integration of planning and learning, pattern recognition capabilities, and balanced organizational capabilities.
The following questions are designed to review and consolidate what you have learned and are a good starting point for preparing for the exam.