Essec Business School

From the Syntec (ConsultInFrance) “Prix Académique de la Recherche en Management” Award-winning paper: Strategy Dynamics: Agency, Path Dependency, and Self-Organized Emergence, published in the Strategic Management Journal

Previous research has shown that a firm’s ability to act quickly can make the difference between success and failure, and that first-movers tend to benefit from increasing returns. However, while managers need to make fast decisions to keep pace with change, are they always able to act at the time of their choosing?

New research – Strategic Dynamics: Agency, Path Dependency, and Self-Organized Emergence – addresses this issue and raises the question: is the timing of strategic actions under managerial control?

To study the role managers have in timing their strategic actions, this research analyzes a comprehensive and proprietary database covering 42 years of strategic events of Danone, a French multinational. Grounded in a complexity science paradigm and following an abductive research process based on mixed micro- and macro level analyses as well as qualitative and econometrics means, this inquiry uncovers the complex interplays between choice and chance, order and confusion, and deliberation and emergence, that shape a firm’s strategic trajectory.

Tracing a Strategic Journey

This research identified three distinct dynamic regimes in Danone’s strategic journey:

• a random period without structure characterized by a long period of opportunistic search and exploration;
• a phase of self-organized experimentation;
• a stable period characterized by exploitation;

The findings show that although managerial choice influenced strategic content, it seems to have only indirectly influenced how strategic activity evolved over time and how timing of actions was set. Timing always depended on past and chance events, managers couldn’t control. Indeed, only in the stable period did managers have a relative control on the timing of their strategic actions. During periods where dynamics were random, the timing of strategic activity was without control. During period, of experimentation, timing resulted from spontaneous and self-organized interactions.  Managers seem to have acted when it fits, with intelligence but without controlling the tempo. However, while this might challenge our belief in deliberation, the results conform to explanations given by complexity science.

Towards a new understanding of strategy dynamics

These findings stress the indirect role managers can play in timing their strategic actions, suggesting more of a facilitating than controlling exercise. If generalizable, these findings could move the understanding of strategy dynamics away from choice toward a complex combination of history, chance, and self-organized emergence.

The Danone case suggests that we may need to be far more modest in relating choice to consequences, since strategy consists of both content and timing. In Danone’s case, managers could deliberate on content and its sequencing, but could not always choose the timing of their strategic activities. Timing was either imposed, or seemed to have been set in an ad hoc manner. Strategic activities, in a large portion of the covered history, developed a dynamics of their own that escaped managerial fiat.

This leaves strategy with a dilemma: what made the firm so successful in the long run if it couldn’t always act timely at its will?

In addition to the quality of Danone’ strategic vision, strategy content certainly mattered, but so did the choice of its dynamic regimes. Strategic decisions and their sequencing induced, rather than imposed, dynamic regimes. Depending on the degree of strategic actions structuring, the firm moved successfully from an exploration phase to an experimentation phase, before entering a new exploitation order.