Igor Ansoff - The father of
strategic management
Igor Ansoff (1918 - July 14, 2002) was
an applied mathematician and business manager. Ansoff is known as the
father of Strategic management.
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.[1] Ansoff studied
general engineering at the Stevens Institute of Technology and continued
his education there, receiving his Master of Science degree in the
Dynamics of Rigid Bodies.
Following Stevens Institute,
Ansoff 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, Ansoff 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.
Professionally, Ansoff is known worldwide for his research in three
specific areas:
- The concept of environmental
turbulence;
- The contingent strategic success
paradigm, a concept that has been validated by numerous doctoral
dissertations;
- Real-time strategic management.
Marketing and MBA students are usually
familiar with his
Product-Market Growth Matrix, a tool he created to plot generic
strategies for growing a business via existing or new products, in
existing or new markets.
Igor Ansoff has consulted with hundreds
of multinational corporations including, Philips, General Electric,
Gulf, IBM, Sterling and Westinghouse.
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. The Japan Strategic Management
Society has also established an annual award in his name and Vanderbilt
University has established an Ansoff MBA scholarship.
An applied mathematician, he shifted
his emphasis in the 1950s while employed by the Rand Corporation. In
1956, he was employed as planning specialist for Lockheed Aircraft
Corporation where he gained practical experience in analyzing the
complexities of a business environment. At Lockheed he became Vice
President of Planning and Director of Diversification.
Igor Ansoff served as Professor of
Industrial Administration in the Graduate School at Carnegie Mellon
University (1963-1968); Founding Dean and Professor of Management at
Vanderbilt University, Nashville, Tennessee (1968-1973); Professor at
the European Institute for Advanced Studies in Management, Brussels,
Belgium (1973-1975); Distinguished Justin Potter Professor of Free
American Enterprise, Graduate School of Management, Vanderbilt
University (1973-1976); Professor, Stockholm School of Economics,
Stockholm, Sweden (1976-1983), and Professor, United States
International University, San Diego, California (1984-2001).
Ansoff died of complications from
pneumonia in San Diego, California, on July 14, 2002.
Igor Ansoff (1918-2002) was the
originator of the strategic management concept, and was responsible for
establishing strategic planning as a management activity in its own
right. His landmark book, Corporate Strategy (1965), was the first text
to concentrate entirely on strategy, and although the ideas outlined are
complex, it remains one of the classics of management literature.
Ansoff's Life and career
H. Igor Ansoff was born in Russia in
1918 and his family emigrated to the United States of America in 1936.
His early academic focus was on mathematics, and he obtained a PhD in
applied mathematics from Brown University, Rhode Island. He joined the
Rand Corporation in 1950, and moved on to Lockheed Aircraft Corporation,
where he eventually became Vice-President, Plans and Programmes, and
then Vice-President and General Manager of the Industrial Technology
Division.
In 1963, Ansoff was appointed Professor
of Industrial Administration at the Carnegie Institute of Technology in
Pittsburgh. He went on to hold a number of positions in universities in
both the United States and Europe. He continued to act as a consultant
after retiring from academia in 2000 and, on his retirement, was named
Distinguished Professor Emeritus at the United States International
University.
Ansoff's Key theories
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, Ansoff explored
these issues, and built up a systematic approach to strategy formulation
and strategic decision-making through a framework of theories,
techniques and models.
Strategy decisions
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 Strategy-Structure-Systems, or the 3S
model. (Sumantra Ghoshal has since proposed a 3Ps model--purpose,
process and people--to replace it.)
Components of strategy
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. To establish a link between
past and future corporate activities (the first time such an approach
was undertaken) Ansoff identified four key strategy components:
- 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.
Ansoff Matrix
Variously known as the "product-mission
matrix" or the "2 x 2 growth vector component matrix", the Ansoff Matrix
remains a popular tool for organisations that wish to understand the
risk component of various growth strategies, including product versus
market development, and diversification. The matrix was first published
in a 1957 article called 'Strategies for diversification' and the
example below illustrates what such a matrix may look like:
Present New
Present 1. Market penetration 2. Market expansion
New 3. Product expansion 4. Diversification
Of the four strategies given in the
matrix, market penetration requires increasing existing product market
share in existing markets; market expansion requires the identification
of new customers for existing products; product expansion requires
developing new products for existing customers; and diversification
requires new products to be produced for new markets.
Ansoff's article focused particularly
on diversification as a potentially high-growth but also high-risk
strategy requiring careful prior planning and analysis before any
decision is taken. Diversification was viewed by Ansoff as a
particularly important growth strategy, requiring organisations to "...
break with past patterns and traditions" as they enter onto new, "...
uncharted paths" where, generally, new skills, techniques and resources
will be required. His matrix offered a method of carefully analysing and
evaluating the profit potential of diversification strategies.
Paralysis by analysis
It has sometimes been suggested that the
application of the ideas in Corporate Strategy can lead to an overheavy
emphasis on analysis. Ansoff himself recognised this possibility,
however, and coined the now famous phrase "paralysis by analysis" to
describe the type of procrastination caused by excessive planning.
Turbulence
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. These ideas are discussed in
Implanting Strategic Management, where five levels of environmental
turbulence are outlined as:
- 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.
Igor Ansoff In perspective
Although Ansoff's work is frequently
referred to by other strategists, it has not become more generally
recognised in comparison with that of other theorists. The complexity of
his work, and its reliance on the disciplines of analysis and planning,
are perhaps among the reasons why Ansoff is not popularly viewed as
belonging within the top echelons of management thinkers.
Other theorists were working on similar
themes to Ansoff at similar times. In the 1960s Ansoff's notion of
competence (which was later developed by Hamel and Prahalad) was not
unique, and although Ansoff seems to have been the originator of his 2 x
2 growth vector component matrix, a similar matrix had been published
earlier. During the 1980s and 1990s, it is likely that much work by
other theorists about strategy formation under conditions of uncertainty
or chaos owed something to Ansoff's theory of turbulence, though it is
difficult to evaluate the extent of the debt.
A debate between Ansoff and Henry
Mintzberg over their differing views of strategy was reflected in print
over many years, particularly in the Harvard Business Review. Ansoff has
often been criticised by Mintzberg, who disliked the idea of strategy
being built from planning which is supported by analytical techniques.
This criticism was based on the belief that Ansoff's reliance on
planning suffered from three fallacies: that events can be predicted,
that strategic thinking can be separated from operational management,
and that hard data, analysis and techniques can produce novel
strategies.
Ansoff was one of the earliest writers
on strategy as a management discipline, and laid strong foundations for
several later writers to build upon, including Michael Porter, Gary
Hamel and C K Prahalad. He invented the modern approach to strategy and
his work pulled together various ideas and disparate strands of thought,
giving a new coherence and discipline to the concept he described as
strategic planning. During the 1970s and 1980s, this concept shaped more
ideas about management as other writers took up Ansoff's ideas, such as
core competence or 'sticking to the knitting'.
Key works of Igor Ansoff
Books of Igor Ansoff
- Corporate strategy New York:
McGraw Hill, 1965
- From strategic planning to
strategic management (with Roger P DeClerck and Robert L Hayes) New
York: John Wiley/Interscience, 1975
- Implanting strategic management
Englewood Cliffs, NJ: Prentice Hall, 1984
- The new corporate strategy New
York: Wiley, 1988 (Revised edition of Corporate strategy)
- Strategic management London:
MacMillan, 1979
Journal articles of Igor Ansoff
- Strategies for diversification
Harvard Business Review, Sep/Oct, vol 35 no 5, 1957, pp.113-124
- Igor Ansoff's continuing
contribution to strategic management, David Hussey Strategic Change,
Nov, vol 8 no 7, 1999, pp.375-392
- The firm of the future Harvard
Business Review, Sep/Oct, vol 43 no 5, 1965, pp.162-174
Related thinkers
Alfred D
Chandler, Sumantra Ghoshal,
C K Prahalad,
Gary Hamel,
Michael Porter, Tom Peters
References
http://en.wikipedia.org/wiki/Igor_Ansoff
http://www.thefreelibrary.com/Igor+Ansoff:+father+of+Corporate+Strategy-a0151189055
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