FATHER OF STRATEGIC MANAGEMENT

IGOR ANSOFF (1918-JULY 14, 2002) WAS

AN APPLIED MATHEMATICIAN AND BUSINESS MANAGER. HE IS KNOWN AS THE FATHER OF STRATEGIC MANAGEMENT. IGOR ANSOFF WAS BORN IN VLADIVOSTOK, RUSSIA, IN 1918.

HE EMIGRATED TO THE UNITED STATES WITH

HIS FAMILY AND GRADUATED FROM NEW YORK CITY'S STUYVESANT HIGH SCHOOL IN 1937. FOLLOWING STEVENS INSTITUTE, HE STUDIED AT BROWN UNIVERSITY WHERE HE RECEIVED A DOCTORATE IN APPLIED MATHEMATICS WITH A MAJOR IN MATHEMATICAL THEORY OF ELASTICITY AND PLASTICITY AND A MINOR IN VIBRATION.

 AFTER COMING TO CALIFORNIA HE JOINED UCLA IN

THE SENIOR EXECUTIVE PROGRAM. HE WAS A DISTINGUISHED PROFESSOR AT UNITED STATES INTERNATIONAL UNIVERSITY (NOW ALLIANT INTERNATIONAL UNIVERSITY) FOR 17 YEARS, WHERE SEVERAL INSTITUTES CONTINUE HIS WORK IN STRATEGIC MANAGEMENT RESEARCH. DURING WORLD WAR II, HE WAS A MEMBER OF THE U.S. NAVAL RESERVE, AND SERVED AS A LIAISON WITH THE RUSSIAN NAVY AND AS AN INSTRUCTOR IN PHYSICS AT THE U.S. NAVAL ACADEMY.

 THE CONCEPT OF

ENVIRONMENTAL TURBULENCE; THE CONTINGENT STRATEGIC SUCCESS PARADIGM, A CONCEPT THAT HAS BEEN VALIDATED BY NUMEROUS DOCTORAL DISSERTATIONS; REAL-TIME STRATEGIC MANAGEMENT.

TO HONOR HIS BODY

OF WORK, THE PRESTIGIOUS IGOR ANSOFF AWARD WAS ESTABLISHED IN 1981 IN THE NETHERLANDS. THE AWARD IS GIVEN FOR RESEARCH AND MANAGEMENT IN THE STUDY OF STRATEGIC PLANNING AND MANAGEMENT.

UNTIL THE PUBLICATION OF CORPORATE

STRATEGY, COMPANIES HAD LITTLE GUIDANCE ON HOW TO PLAN FOR, OR MAKE DECISIONS ABOUT, THE FUTURE. TRADITIONAL METHODS OF PLANNING WERE BASED ON AN EXTENDED BUDGETING SYSTEM WHICH USED THE ANNUAL BUDGET, PROJECTING IT A FEW YEARS INTO THE FUTURE. BY ITS NATURE, THIS SYSTEM PAID LITTLE OR NO ATTENTION TO STRATEGIC ISSUES.

 WITH THE ADVENT OF

GREATER COMPETITION, HIGHER INTEREST IN ACQUISITIONS, MERGERS AND DIVERSIFICATION, AND GREATER TURBULENCE IN THE BUSINESS ENVIRONMENT, HOWEVER, STRATEGIC ISSUES COULD NO LONGER BE IGNORED.

ANSOFF FELT THAT, IN DEVELOPING STRATEGY,

IT WAS ESSENTIAL TO SYSTEMATICALLY ANTICIPATE FUTURE ENVIRONMENTAL CHALLENGES TO AN ORGANISATION, AND DRAW UP APPROPRIATE STRATEGIC PLANS FOR RESPONDING TO THESE CHALLENGES. IN CORPORATE STRATEGY, IGOR ANSOFF EXPLORED THESE ISSUES, AND BUILT UP A SYSTEMATIC APPROACH TO STRATEGY FORMULATION AND STRATEGIC DECISIONMAKING THROUGH A FRAMEWORK OF THEORIES, TECHNIQUES AND MODELS.

 ANSOFF IDENTIFIED FOUR STANDARD TYPES OF

ORGANISATIONAL DECISIONS AS RELATED TO STRATEGY, POLICY, PROGRAMMES, AND STANDARD OPERATING PROCEDURES. THE LAST THREE OF THESE, HE ARGUED, ARE DESIGNED TO RESOLVE RECURRING PROBLEMS OR ISSUES AND, ONCE FORMULATED, DO NOT REQUIRE AN ORIGINAL DECISION EACH TIME. THIS MEANS THAT THE DECISION PROCESS CAN EASILY BE DELEGATED. STRATEGY DECISIONS ARE DIFFERENT, HOWEVER, BECAUSE THEY ALWAYS APPLY TO NEW SITUATIONS AND SO NEED TO BE MADE ANEW EVERY TIME.

ANSOFF DEVELOPED A NEW CLASSIFICATION OF

DECISION-MAKING, PARTIALLY BASED ON ALFRED CHANDLER'S WORK, ,STRATEGY AND STRUCTURE (CAMBRIDGE, MASS., MIT PRESS, 1962). THIS DISTINGUISHED DECISIONS AS EITHER: STRATEGIC (FOCUSED ON THE AREAS OF PRODUCTS AND MARKETS); ADMINISTRATIVE (ORGANISATIONAL AND RESOURCE ALLOCATING), OR OPERATING (BUDGETING AND DIRECTLY MANAGING).

 ANSOFF'S DECISION

CLASSIFICATION BECAME KNOWN AS STRATEGYSTRUCTURE-SYSTEMS, OR THE 3S MODEL. (SUMANTRA GHOSHAL HAS SINCE PROPOSED A 3PS MODEL--PURPOSE, PROCESS AND PEOPLE-TO REPLACE IT.)

 ANSOFF ARGUED

THAT WITHIN A COMPANY'S ACTIVITIES THERE SHOULD BE AN ELEMENT OF CORE CAPABILITY, AN IDEA LATER ADOPTED AND EXPANDED BY HAMEL AND PRAHALAD.

 PRODUCT-MARKET SCOPE--A CLEAR IDEA

OF WHAT BUSINESS OR PRODUCTS A COMPANY WAS RESPONSIBLE FOR (PREDATING THE EXHORTATIONS OF PETERS AND WATERMAN TO "STICK TO THE KNITTING") GROWTH VECTOR--AS EXPLAINED IN THE SECTION BELOW ON THE ANSOFF MATRIX, THIS OFFERS A WAY OF EXPLORING HOW GROWTH MAY BE ATTEMPTED

 COMPETITIVE ADVANTAGE--THOSE ADVANTAGES

AN ORGANISATION POSSESSES THAT WILL ENABLE IT TO COMPETE EFFECTIVELY--A CONCEPT LATER CHAMPIONED BY MICHAEL PORTER. SYNERGY--ANSOFF EXPLAINED SYNERGY AS "2+2=5", OR HOW THE WHOLE IS GREATER THAN THE MERE SUM OF THE PARTS, AND IT REQUIRES AN EXAMINATION OF HOW OPPORTUNITIES FIT THE CORE CAPABILITIES OF THE ORGANISATION.

 THE ISSUE OF TURBULENCE UNDERLIES ALL OF

ANSOFF'S WORK ON STRATEGY. ONE OF HIS KEY AIMS IN ESTABLISHING A BETTER FRAMEWORK FOR STRATEGY FORMULATION WAS TO IMPROVE THE EXISTING PLANNING PROCESSES OF THE STABLE, POSTWAR ECONOMY OF THE USA, SINCE HE REALISED THESE WOULD NOT BE SUFFICIENT TO COPE WITH PRESSURES THAT RAPID AND DISCONTINUOUS CHANGE WOULD PLACE ON THEM. BY THE 1980S CHANGE, AND THE PACE OF CHANGE, HAD BECOME A KEY ISSUE FOR MANAGEMENT IN MOST ORGANISATIONS.

 ANSOFF RECOGNISED, HOWEVER,

THAT IF SOME ORGANISATIONS WERE FACED WITH CONDITIONS OF GREAT TURBULENCE, OTHERS STILL OPERATED IN RELATIVELY STABLE CONDITIONS. CONSEQUENTLY, ALTHOUGH STRATEGY FORMULATION HAD TO TAKE ENVIRONMENTAL TURBULENCE INTO ACCOUNT, ONE STRATEGY COULD CERTAINLY NOT BE MADE TO FIT EVERY INDUSTRY.

 REPETITIVE--CHANGE IS AT A SLOW PACE, AND IS

PREDICTABLE EXPANDING--A STABLE MARKETPLACE, GROWING GRADUALLY CHANGING--INCREMENTAL GROWTH, WITH CUSTOMER REQUIREMENTS ALTERING FAIRLY QUICKLY DISCONTINUOUS--CHARACTERISED BY SOME PREDICTABLE CHANGE AND SOME MORE COMPLEX CHANGE SURPRISING--CHANGE WHICH CANNOT BE PREDICTED AND WHICH BOTH DEVELOPS, AND DEVELOPS FROM, NEW PRODUCTS OR SERVICES.

BY
DEEPAK CHACHAN

AMAN VERMA
SHAKTI SIKHAR TEJAS PUGALIA