Breaking out of strategy vectors: reintroducing culture

Abstract

There is considerable evidence that long periods of success in organisations can lead to ossification of strategy and strategic inertia. Burgelman (2002) shows how co-evolutionary lock-in occurs through the creation of a strategy vector. He demonstrates that the internal selection environment can become configured to create sources of inertia that dampen the autonomous strategy process, driving out unrelated exploration and creating a dominance of the induced, top-down strategy process. While this study shows how lock-in occurs, it does not address how a company breaks out of co-evolutionary lock-in. This is the focus of this paper. We argue that to understand how an organisation breaks out of a strategy vector a more complete conceptualisation of the structural context, and in particular the under specified cultural mechanisms, is required. It also requires an understanding of the linkages between the structural context and the new core capabilities required for breakout. Thus we first expand on what is known about strategy vectors and review research from the strategy process tradition that explores the linkages between strategy, culture and strategic change, to build a more comprehensive picture of the structural context. Our model demonstrates the extent of interconnectedness between the ‘hard’ (e.g., control systems and organisation structure) and ‘soft’ (e.g. beliefs, symbols and stories) components, and that development of new required capabilities is dependent on a holistic shift in all these aspects of the structural context, including, therefore, change in the organisation's culture. We then illustrate the link between lock-in, capability development and culture change through the case of the famous Formula One team, Ferrari. We finish with a discussion of the implications of our findings for strategic change.