Learning points

1.  Introduce the integrative strategy-making approach

2.  Explicate the dynamic of central and decentralized processes

3.  Outline the premises for strategic response capabilities and adaptation

4.  Link interactive control systems to strategy making

The strategic path pursued by a firm over time is the consequence of decisions and initiatives taken by managers at all levels with different functional responsibilities in various parts of the organization. Based on a general mission and overarching aims, top management typically induces an annual planning exercise where the intended developments in the official strategy are analyzed and discussed, which serves as a yardstick for ongoing business activities within the firm. In some cases this will stimulate concrete resource-committing proposals that are handled together with other investment projects included as part of the formal capital budgeting procedures. At the same time, organizations provide some leeway, although to different degrees, for individuals to pursue entrepreneurial initiatives related to operational conditions within their functional areas, such as pursuing new market opportunities, improving internal processes, inventing new technologies, etc. Some of these initiatives may eventually become successful ventures in their own right that will require significant investments as they expand to become general business activities for the firm. This way the strategic business portfolio evolves as the outcome of resource-committing investments made throughout the organization, influenced by a general mission, corporate values, a common understanding of the competitive situation, the decision structure, information systems, communication processes, the organizational setting, and individual behaviors. Hence, by integrative strategy making we mean the amalgam of all these activities and structural elements in the organization that leads to strategic outcomes over time. More specifically, we refer to the interaction dynamic between the central planning activities and decentralized responsive initiatives taken by many individuals throughout the organization.