PROSPECTORS

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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 flexible in changing

Change Management MGMT625

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 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

Change Management MGMT625

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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