PROSPECTORS:Analyzer, Reactors, Adaptation and Strategic Management

<< ORGANIZATIONAL ADAPTATION:The Entrepreneurial problem, The Administrative Problem

SKELETAL MODEL OF ADAPTATION:Determinants of Adaptive ability, The Process of Adaptation >>

Change Management MGMT625

Lesson # 24

2. PROSPECTORS

The prospector enacts an environment that is more dynamic than other types of organizations. Unlike

the defender, whose success comes primarily from efficiently serving a stable market, the

prospector's prime capability is that of finding and exploiting new product and market opportunities.

For Prospector maintaining a reputation as an innovator in product and market development may be

perhaps more important profitability

Entrepreneurial problem for prospector is how to locate and develop market opportunities? The

systemic addition of new products or markets, combined with retrenchment in other parts of domain

characterizes the prospector. The prospector must have the ability to scan, survey a wide range of

environmental trends and events. So the organization spends heavily on individual and groups who

scan the environment. Change (within industry and to different industry) is major tool of the

Prospector manager to gain edge over competitors. Product and market innovation protect the

organization from a changing environment but the organization risks the low level of profitability and

stretch (over expansion) of it resources.

Engineering problem for prospector is how to avoid long term commitments to a single technological

process? Therefore the solution for this problem from prospector's perspective is to invest in flexible,

proto-type technologies, and also to invest in multiple technologies. Prospectors have low degree of

routinization and mechanization. Prospectors believe in organic organization where technology is

embedded in people. Therefore technological flexibility permits a rapid response to changing

domains but the organization cannot develop economies (or efficiency) in production and distribution

system because of multiple technologies. This type of decentralisation increases cost as economies

are difficult to achieve through this way.

Administrative problem for prospector is how to facilitate and coordinate (rather control) numerous

and diverse operations? Solution for this problem for prospector lies in having organic-structure-

process mechanism. Therefore top management is dominated by R & D and marketing experts,

planning is broader rather than intensive, and oriented towards results not methods. The prospector's

structure is characterised by low degree of formalization, decentralized control, lateral and vertical

communication, etc. Therefore flexibility is the catchword for all three types of problems of

entrepreneurial, engineering and administrative. Administrative system is ideal to maintain flexibility

and effectiveness but may result in underutilization or misdirected utilization of resources.

3. Analyzer

The research shows that the defender and prospector seem to reside at the opposite ends of

continuum of adjustment strategies. Between these two extreme we have analyzer and it is a unique

combination of the two types. A true Analyzer is an organization that attempts to minimize risk while

maximizing the opportunity for profit. It combines the strengths of both the prospector and defender

into a single system. The best word to describe Analyzer's adaptive approach is "balance".

The entrepreneurial problem is how to locate and exploit new products and market opportunities

while simultaneously maintaining a firm base of traditional products and customers. The obvious

solution is to operate in hybrid domain that is both stable and changing. The analyzer move towards

new markets or products only after their viability has been demonstrated. This may be accomplished

though imitation of the prospector once success is demonstrated by the prominent prospector. At the

same time majority of the analyzer's revenue is generated by a fairly set of traditional products or

markets a defenders' attribute. The operational efficiency of defender is to pursue and effectiveness

of prospector in looking for new markets and products. Therefore analyzer can grow through both

market penetration and market development strategies.

The duality of analyzer's domain is reflected in its engineering problem and solution. The main

problem for analyzer is how to be efficient in its technology which a stable portion and to be a

Change Management MGMT625

flexible in changing portion? The organization must learn how to achieve and protect equilibrium

between conflicting demands for technological flexibility and for technological stability.

This equilibrium is accomplished by partitioning production activities to form a dual technological

core. Stable component resembles the defender's technology functionally organized, routinized,

standardized and mechanized while flexible technological component resemble the prospector's

technological orientation functionally decentralized and organic.

Administrative problem is how to differentiate the organization structure and processes to

accommodate both stable and dynamic areas of operation. Therefore analyzer solves this problem

through some version of matrix organization. The head of key functional units, most notably

engineering and production unite with product managers (usually housed in marketing department) to

form a balanced dominant coalition. The product managers' influence is usually greater than the

functional manager since his task is to identify promising product- market innovations and to

supervise their movement through applied engineering and into production in a smooth and timely

manner. The presence of engineering and production in the dominant coalition is to represent the

more stable domain and technology which are the foundations of the Analyzer's overall operations.

4. Reactors

Besides the fourth type of organizations is Reactors. This type of organization exhibits a pattern of

adjustment to its environment that is both inconsistent and unstable. This type lacks a set of response

mechanism which it can consistently apply to a changing environment. The reactors adaptive cycle

usually consists of responding inappropriately to environmental change and uncertainty, performing

poorly as a result, and then reluctant to act aggressively in the future.

Interesting question here would be why organizations become reactors? Three reasons cited by the

authors, Miles & Snow et al, and are as follows:

Top management may not have clearly articulated the organization's strategy. For

example a company founded by one-man (prospector with immense personal skills)

successfully establishes its business but upon his death the firm is in strategic void.

ii)

Management does not fully shape the organization structure and processes to fit to a

chosen strategy. Strategy is a mere statement not a guide to behavior; similarly

functional strategies might not be aligned. This is a typical case with organizations in

LDCs to come forth quick with beautiful written vision and mission statements and other

strategy documents.

iii)

The ultimate cause of instability and failure might be the tendency on the part of

management to maintain the organizations current strategy-structure relationship despite

overwhelming changes in environmental conditions.

Adaptation and Strategic Management

Adaptation in one respect can be identified as strategic management as well. Therefore some scholars

define strategic management as the process of continuously adapting to the changes in a firm's

environment is called strategic management. According to Scott and Greiner too, "strategic

management is not only needed to cope with changes in firm's external environment but also to cope

with changes caused by processes internal to the firm (Scott, Greiner)". While to Ansoff the question

is how do we configure the resources of the firm for effective response to unanticipated surprises?

This leads us to the recently developed perspective of strategic management known as Resource

Based View (RBV).

According Cyert and March, "The successful strategy itself would be a destabilizing influence

(effect) on that strategy because of the surplus or slack" Because as the firm enjoys success generates

Change Management MGMT625

surplus (of profits and resources) as a consequence and can therefore seek new activities and

strategies (expansion in newer areas) which is destabilizing in nature. Nonetheless a distinction has to

be made between strategies of action triggered by "changes in the external environment" and a

"strategy of structure". Hence the bigger question for Ansoff is, "how do we configure the resources

of firm for effective response to unanticipated surprises"

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