Practising Strategy 3rd Edition PDF

=Aig edition 0Liaw, q, ae : Hai BONN  Practising Strategy A southern African context Third edition Editors Tersia Botha and Peet Venter CT juta Practising Strategy: A southern African co...

=Aig edition 0Liaw, q, ae : Hai BONN  Practising Strategy A southern African context Third edition Editors Tersia Botha and Peet Venter CT juta Practising Strategy: A southern African context 3e First Edition 2014 Second Edition 2019 Third Edition 2022 Juta and Company (Pty) Ltd First Floor, Sunclare Building, 21 Dreyer Street, Claremont, 7708 Cape Town, South Africa © 2022 Juta and Company (Pty) Ltd ISBN (print): 978 1 48513 264 6 ISBN (webPDF): 978 1 48513 265 3 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publisher. Subject to any applicable licensing terms and conditions in the case of electronically supplied publications, a person may engage in fair dealing with a copy of this publication for his or her personal or private use, or his or her research or private study. See Section 12(1)(a) of the Copyright Act 98 of 1978. Project Specialist: Samantha Simmons Editor: Elisma Roets Proofreader: James P Ryan Cover designer: Drag and Drop Indexer: Language Mechanics Typesetter: Elinye [thuba DTP Solutions Typeset in 10pt Rotis Serif Std The authors and the publisher believe on the strength of due diligence exercised that this work does not contain any material that is the subject of copyright held by another person. In the alternative, they believe that any protected pre-existing material that may be comprised in it has been used with appropriate authority or has been used in circumstances that make such use permissible under the law. CONTENTS PREFACE.... 0... ccc ec cece eee eee eee eee cence eee tenet tee eee tenn teens ix ABOUT THE AUTHORS 55 0:0:cse:ecnie-siereceresosarosareacase mreserecevererereraseceuarnjaceiaieces ere pracereraseinecarese xi ACKNOWLEDGEMENTS i5:.0-.:e:0:5:sresersieciarereieawcetoiarsinsessiete stare wieraeiarsininneeenemeteineiers xiii CHAPTER 1: = THE EVOLUTION OF MANAGEMENT THEORIES 2. sccaccssaeneceaw caper eect ons eit seeweeaeees 1 1.1 The traditional theories of management.............. 0. cece eee eee ee eee es 7 1.2 Responsible management.........-..2. 2-222 e cece eee cee eter eee eeeees 15 1.3. The drivers of responsible management.............0.. 0 cece eee eee eee ee eee 29 1.4 Strategy and responsible management.................. 2.2 cece ee eee eee 36 METAR EIN ESL agence peer a esarecec as erates erates scutes aiereseyeisrornigpeesieecsinte roman eneRnaied 38 Summary of learning outcomes...........-.. 2022-2 e eee cece ee ee eee eee eee 38 DISCUSSION QUO@SHIONS sccxctsesscs coun rene as Re ET ea 39 LEA MING ACUVIVIES: cscs ccramerenescanneesecneenmase teaenamaeEmameEete 40 Endnotes............ 0... c cece cece ee cece ee cee eee eect eee eee e eee eeeeeeees 40 CHAPTER 2: INTRODUCING THE PRACTICE OF STRATEGY...........-...---.- 43 2.1 FRE Origins OF Strategic MANAGEMMOHE a. 5:e oe wiereisrerccassrerwiararacereeicerenteasatererente 45 2.2. The universal principles of strategic management...........-...0--e ee eee 46 23° Defining strategy :ciescoss coeees ess Se SSS ESE 52 24. ‘Strategic: decsionsissews ccc ssccacescuaniawerwuwecomeaswans 55 2.5 How do we measure the success of strategy?......... eee eee eee eee ees 56 2.6 Acontemporary strategic management framework...........e eee eee eee es 57 The Dig: pictre ssa SES BNR EA SES OTE OREO TAT IOIO TSS 61 Summary of learning GUCOMES :ssisscscces ss aicecia Seana saasne MaMa Taw ema Es 61 DISCUSSION GUESHONS seciirawearesverinerererateereniaratenraineteteeietertenenearen arma memaeeete 63 Learning ACtIVILIES J... cick cece cece eee eee e ence eee e eens een ene tte eee ea eeees 64 Err nents isis aise Sei ASU WREST Ca 5 Gee NAIU TCs ial Rg SEDER UN Ue Walele 64 CHAPTER 3: A PROCESS PERSPECTIVE OF STRATEGIC MANAGEMENT........ 65 3.1. A process perspective of strategic ManageMeNt........ cece eee eee e eens 69 3.2. The new competitive realities - criticising the process perspective of Strategie managemeRnteorsas GasicwcceiscnAyig ieee Rea ae nE Nea 74 3.3. The management levels involved in strategic management..............005 75 34 «| Strategic: PlahMliG sscisccsw scenes cameaaaseamwmenenamecuenmmecwaaien 75 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT 3.5 Strategy implementation......... 0. ccc cece cece cece eee e tence ee en en eeee 87 36 ‘Strategy review and controls ouscccccesans caeeh asa wiaianipe eee ses 89 TRELDIG, PCC ace criscraracarscorare sreauaratranrerataretaatanmiararmnaaMN alien ar NER NEO TMA 90 Summary of learning OUTCOMES.............. 0c. seeeeeeeseeenenseeeeeeveneeeenoeone 91 Boeseesssitorn seq usest ry 5025s 54a asada cie sia wien aa ngs G's oa eta MGR Nees ees 92 Learning SCtivities ia:ssiicicscnccncsmeacase uaa ataie sais wa atta aata te da eUET als 92 ENGNGtES. csicisccimresrinnewaraininen ameenescuniv eminem atom aauEe alee eS 93 CHAPTER 4: STRATEGISING AND STRATEGISTS................2---.-2-000-5 95 4.1. The process and practice perspectives of strategic management.............. 100 43: ‘SUAtCGISING tee: csseceonnersossswemewes eames esesmeeaenNenememenen 102 4.3 Deliberate, emergent and emergent responsible strategising................ 103 44 Strategists........ 2.0.2 eee eee eee eee eee eee cece ee ee eee eees 107 Th@ Dig PIQUE iceenccer eee sess 114 Practising Strategy: MUNICHGIGE.n:cc:cc2eeweccconecamiecrcaaaseusece wewenecee 114 SiMMALY OF (CATING! GUTCOITIOS, —..-arncee:cseernce-oieresosere nieinreteieretneserecerereunteremreereriemreiece 115 Discussion questions........... 2.0.2 e cece ee cee ee cece eee eee e ene ee 115 Leaming aciivitieswcccccaiscoens sete ea ee 116 ER ORGS asses crsecemare cor aeaineensce ren neimaeemnee Rama ENN AN onsen 116 CHAPTER 5: —s THE EXTERNAL CONTEXT OF STRATEGIC PLANNING............ 119 5.1 The implications of corporate citizenship for managing and governing GIGANISALONS crore eee aNd Fade Da E Ue TREN RET UTeise 126 52 ‘The'strategic analysis process s:sc0 ces caresses iswessieremewenwemess 129 5.3 The levels and related analytical tools of the external context............... 134 5.4 Analysis of the external context at global and regional levels................ 135 5.5 Analysts of the external context at national and local levels..............--- 138 5.6 Analysis of the external context at industry level............ cc eee cence ees 140 5.7 Analysis of the external context at functional level of an organisation........ 145 5.8 — Integrated external analysis of an OrganisatiOn..........cese eee ee en ence es 147 Me Dig PICKUP essai cow arsiaunieaee rR euMVe TSIEN WINES NOUR wees 149 Summary of learning GUtCOMES::aicscccveiccwaacaimancwaw casas naweeeumnrts 149 PSCUSSIGHC OSE OFS a: ccisaca-ossennsararcerererecorsiacarare:ecexeras s:inscsonezetery, ata etaco cnewunieierezernerinseiete 151 Learning activities... 6... ccc ccc cece cece nee e eee eee eee e nee eeeenenenes 151 ENON ORGS ois vais ss cieraneea weaves te aie rare emis aNG alae am URINE Witte WleaieraelaNs HENS MiNeiNe ml 151  CONTENTS CHAPTER 6: STRATEGIC RESOURCES, CAPABILITIES AND CORE ONS PET EINES a 5:n pose ace cererecssasaresasormiese eserererasermarespernresenee'gtesaienanaten 159 6.1. The importance of resources, capabilities and core competencies in Strategic: ManageMent si. s..636 cc eisawsese te seers Tee Meats 165 6.2 Appraising the value of resources and capabilities..........-.-2... eee ee eee 173 6.3 The resource-based view of internal analysis..............-- 22 ee eee ee eee 176 6.4 The identification of capabilities and core competencies to create value....... 179 6.5 The contribution of resources, capabilities and core competencies towards competitive advantage, sustainable competitive advantage and sesponsible competitiveness cic cis. sea WS Gees ease Sneeaie RN Meee ans 185 6.6 Capturing the value generated by resources, capabilities and core CONDE ENC S 5 5058s cis OSS SERS assis Baie Osea eR ESSE Se 191 RO DIG POU cscs sci coricescemewacmmcaeNwaeaweersasatamane cece wees 193 Sieitiary OF leading OUTCOME iis ia:6:6:0::csecce sec ecasnie se eceesmasainiorene senate 194 Discussion questions............ 0 cece cece eee eee eee eee een eee e et eeeeeeenaeaee 195 learning: activities sci ce cscs 26 Gis SSeS SASSER SUR No aS aS Cee 195 ERONGEOS 'sso-aissiw sisrategsesstersie siacarees win aia te ataracrai wists aT Sma areia loins a RURRRNERLE TRANS 196 CHAPTER 7: DEVELOPING AND CHOOSING APPROPRIATE STRATEGIES....... 199 7.1 Strategic goals and strategic ChOICES.........-- ee eee cece cece ete e ee eeeee 203 7.2 Corporate-level strategic options: creating corporate value and synergy...... 206 7.3 Managing the multi-business organisation..............0.0e cece ween enone 215 7.4 Business-level strategic options: creating and sustaining competitive FOVGRTAGR. oy o:ee:nesesaiecese:aisiereisiaieceraenieinieiernie viaieie gieieyeiaieiaieiniounernieisicimesrnavetniepis 217 75 Evaluating strategic choices’.................cccsceeceeedscieudescscsecacepe 221 The: big picture ssc ccciiiara erasers eees os Wcaweasl alneeaeeE ee ea 222 Summary Of learning OUICOMES.:. i:ci:cccwescwseescceewseweweaaeai esas eewereawes 223 EPSON ISI OFT FRCS 1c 05:50 cessspcesese asasesnreinieiererare mene eee we W RENCE RE erTENERSeEER 224 LEDTNING BREVILES:. 00:5. 0.0:5 85.55 425 36s aererene. neces senna naomi and eiee esses 224 bndnotes acre escscsinem er sie siv see sawew oneeeedccWeeealvere tiene 224 CHAPTER 8: STRATEGY IMPLEMENTATION AS CHANGE MANAGEMENT...... 227 8.1. What is strategy implementation and how does it differ from strategy formation?......... 0. cee cece eee een eee eee e eee nee e erent ee eeeneeees 231 8.2 Barriers to successful strategy implementation...............eeeeee eee e eee 234 8.3 Principles of strategy implementation............. 2... cece eee ee cece eeeee 235 8.4 Change - a fundamental strategy implementation element................- 239 8.5 — Types of strategic change..... 2.2.2.2. eee eee e cece cee cece cence eeees 241 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT 8.6 Models of planned change........... ccc cece cece eee een e teen enone eens 244 8.7 Barriers to successful strategic change and ways to overcome them......... 251 True Lg) pittaCe ccasssssaracarsccrerarassveseravasosanasavavarataata asia esata wate te atalaeravatacciatane aiatete apatele Tamanna 254 Summary of learning OutcOMeS.... 2.0... 0.6 eee cece cece enn eee e eee e nee eeeneees 254 Boisecsssieora eq uses tN 5065 56048 asd Ge Sia ea aaa la Ti Gia oie aiaete WAGGA OU NN eae ES 255 Learning activities ssi: ciccccnccime cca amaeasacare aan UR Rae TNT 256 ENGNOES 5. csicieccresieesanwene nena aes asaireansrim aro meseeuuaeleme meatal 256 CHAPTER 9: THE LEARNING ORGANISATION..................2---2-02020es 259 9.1. What is a learning organisation and why is organisational learning important? cscwcersscersssar seer eee esse ue i eeareoes Nei taeeee 262 92: Barriers to organisational leaning -cc:-cce2cccsseencsawew cre cesses 264 SB MIEN TNG wae, oes rece rmescesereemecerpereresmnere mesaceienere emma puerereremuereemmsreenearee 266 9.4 Transferring knowledge to others........--.---. 22-2. cece eee eee ee eee ee eee 267 $5 ‘Becoming a learning organisation.2c22c2csec secre soreeee e 269 TG! iG DIGHNS orcs erasers amen sexe meossnenemuasesenueunemumanmeasiioeee 276 Summary of learning outcomes.........-.. 2... 02 eee eee cece eee eee eee ee eeeee 276 Discussion questions..........2. 2.02. cece eee eee cece eee ee eee eee eeeteees 277 Leaning activities s.cscsases sceoenenrcane reset ner 278 ERONORGS is accecserccennsnaersarcsniineeinredinnesh wae cawleeniaae ere eae weetenanete 278 CHAPTER 10: RESOURCE ALLOCATION FOR STRATEGY IMPLEMENTATION..... 279 10.1 Resource allocation for strategy implementation....................000005 282 10.2. A project-based strategic execution framework............. 2 cece eee eee 290 10.3. Managing Strategic nitictiVes........0.sccernedaeeeneincecwnsnesinae sneer 294 10.4 Creating an environment for effective resource allocation..........eeeee ees 299 TRAG Wig) FNCUCase: sar aia es ges iis ino tsanw Sib aleve rNA asi Wt beso AUN gg nLaN ARTE lp MUR So WistwNS NS 299 SuMMMISry Or lear iG OUtCO MOS ie iesissceisseiase son acszeceis levers oiarcininvereiiaveis sasesannia wi aceetecareietatele 300 BRFSS N HT CES CUI Bois oc rssensssseconarersisroveconeoonensnevaresessanse cr eiesnsetervaravetelenmerarerernrainarenternstnete 300 Learning activities.... 0... ccc cece cece e eee eee renee eee e eee eee etna eee 301 ENGT OCS is iaaisis's owe eae awaits sans Ws UTA TE A NS NN RST Ale aN URS NRE NER 301 CHAPTER 11: ORGANISATIONAL CULTURE AND STRATEGY................... 303 WA ‘Organtsationalieutture ss sssccceee sire ca OSes SNE INE 307 11.2. The layers of organisational culture... 0.0... cece eee cece cence eee eens 307 TES! (QUINCE SSSOSSINENE weiss: eisscorcersareererracarisiesaramumieainnna abremmueenaetnes 313 11.4 Instilling an organisational culture that supports responsible strategy AUP LEIIC CA RIOM os::n one seisicrarerererereiarame eu es inininnsrsierars tere ear ceetneninreeremenmeimareici« 316 11.5 Culture indicators..... 0... cece cece eee cece eee eee e tenn e nen en ee eaes 320 11.6 Key considerations in organisational culture and strategy..............0.005 321 TRE DIG, Pile asccsscririrarccoraranwietraccimaareraaaraaa te araiiauntanuits careaRneaneaimante 322 Summary of learning OUtCOMES......... 0. cece cece cece een eens eee een eneeeeeees 323 Discussion questlonys 63575564: 8 a FG Saiat saa Sala i Gia ie ciate WGC ORT aise es 324 Learning activities csisicicscnccieaecuamatcats tas eeeei aaa alae eae 325 ENONORES 5. csisisacomestiessaaecrene eae mas awaireanstsamrmmesemuuareleme meee 325 CHAPTER 12: RESPONSIBLE STRATEGIC LEADERSHIP....................-.-- 329 12:1 ‘Leadership versus management.iceeccscccssmarwersaont eee es 333 12.2 The role of strategic leadership in strategy implementation.................. 335 12.3. Responsible strategic leadership........... 2.2.22 eee eee eee eee ee eee eee 337 The big picture... 2... ee eee een eee een e eee eee eeeee 347 Summary of leaming GUutcOmMeSs.2csicccierwsewses wearer are 347 DISCUSSION QUOSHONS sess:ccsec:2crecn eccrine cememacurememaricemcnnamenm wewimeratere 348 CEA GA CUI TE OS eos a en spes ere eyecesete serene gs eomicm eres ate mre rete ecanere te tecornyeneereeerersimremion 348 Endnotes.......... 2.0.2 e cece eee eee eee eee ee eee eee tent ee eee eee eeees 349 CHAPTER 13: ORGANISATIONAL STRUCTURE AND STRATEGY................ 351 13.1. Organisational structure and the role of top management in OPGANISAtOAl GESIGN..... erm esioreceinece eieimerneleanie sigiattinelaiernie inne meereremisieieet 354 13.2. Creating a responsible organisational structure.............. eee eee ee eee 356 The big pictuie essere geese ies anda paar REESE eR 370 Summary of learning OUtCOMES.::css:ccwes sneer esmensiawan serenmesanieees 370 DISCUSSION UESHONS «cc semarreneanensisicewenwneaeemmnanremewn ms remsmrcimmmeniwere 371 Learning ACtivitics...... cece eee e cece cece eee e eee eee e eee sent ete ene teeeees 371 31 112)SAS SRO ODOC RTICUR CSR OC OCISCCCCCUCEETOn CROC one OM TOC acc 372 CHAPTER 14: STRATEGIC CONTROL AND RISK MANAGEMENT................ 373 14:1, Defining strategic:control sisi eS NAIR N IR 376 14.2 Strategic control and the strategic management process............eee eee 377 TGS WVPES OF StHALEGIECOMIIO!..ocs:corcisrscreiars.sierers a piernsimainareiteaceuinwieaiesmarn arene 379 14.4 Stakeholder accountability and a sustainable accounting process............ 380 14.5 Risk, strategic risk and strategic risk management........ 0. cece even cece eens 390 14.6 ‘Corporate Governance :siisiicciornaaiwcananasnwa iia 395 TREDIG PIQtUte ois siescioseiecassiaren ort aie areroraperaraaiaeiarcia sia a aniairemiwatawis a alerelaiaia neces areeteinta 398 Summary of learning outcomes........... 02.2 cece cece een tee cnet beeen ee eneees 398 vii PRACTISING STRATEGY; A SOUTHERN AFRICAN CONTEXT Discussion QUESTIONS......... ce cece cece cece e cence eee eee e eee e een eeneeeneeeees 400 Learning Activites ss :siaiais asics) seicieieieiaeia’a ia tiare eM wale eRe Misia dialene dig owe Neca 400 EUAN i isisssisccrscavetaraiava ce tereuaersteietasetenaiateansiw is rae Sra WRN Ra cia a aii UT esata I STONERS LORE 400 GLOSSARY OF REY VERS 5 0:0: s:creie:sracese sie aiarence sinpieiereiereshawseleraiy niece warner 403 WINDER so. e:e50:59: 5 sisca ecerorcieieararviere me weenie ier eiane wierecea ee a ieretererneceieit enna ntieoreneleneees 417 viii Preface Why another strategy book? There are, after all, quite a number of books, international and local, already available on the South African market. We had to position this book definitively to make a unique contribution to the extant body of knowledge. So how, then, is this book different? We believe that there are five key aspects: m A cursory review of strategic management books shows that the focus is very strongly on the process of strategy formulation, i.e., the thinking and analytical aspects of strategic management, as opposed to the ‘doing’ part of strategy, which is often dealt with in one or two chapters towards the end. Given that it is the greatest challenge to managers in the 21st century and the greatest reason for strategy failure, we decided to focus on strategy implementation instead. = Most strategic management books portray strategic management as a neat, analytical and rational process that flows from top to bottom in the organisation. Rather than promoting the unrealistic idea of strategy as a purely rational and deliberate outcome, we acknowledge and explore the idea that strategy is often emergent, messy and experimental, and above all a human activity. = Top management has long been regarded as the custodians of strategy. The idea that there are other strategists (human and non-human actors) such as middle managers and consultants that influence the strategic direction of the organisation and distribution of resources emerged only relatively recently, and we include this factor. m We focus on strategy as something that people ‘do’ rather than something that an organisation ‘possesses: Since people are the building blocks of strategy, we recognise that strategy is both a cognitive and political activity. @ It integrates the three domains of responsible management - sustainability, responsibility towards all stakeholders and ethics - into the strategic management process that serves to create responsible competitiveness. We trust that you will find value in the contemporary and different perspectives we present in this book. Peet Venter Tersia Botha About the authors Peet Venter Peet Venter is a Professor of Strategy at the University of South Africa's Graduate School of Business Leadership (the SBL). He holds an MBA from the University of Pretoria and a Doctor of Commerce in Business Management from the University of South Africa. In addition to his more than 20 years’ experience in teaching and supervising postgraduate students in management and strategy, Prof Venter has considerable practical experience in the telecommunications industry, and has worked on many strategic projects in various private and public organisations. He has published widely in the areas of strategy and strategic marketing. Tersia Botha Professor Tersia Botha has taught strategy, general management, finance and entre- preneurship for the past 27 years at the University of South Africa. She authored, co- authored and acted as editor of numerous academic books in the field of leadership, corporate citizenship, general management, strategy, business management by portfolio and strategy. She published articles in accredited peer-reviewed academic journals and presented papers at international and national conferences. Prof Botha has been involved in many community engagement projects for the past 25 years, most notably the partnership with Education Africa and the Davis and Dean Youth Development Programme. Cecile Nieuwenhuizen Cecile Nieuwenhuizen, MBL (Unisa), PhD (North-West University, Potchefstroom), is a Professor and DHET-NRF SARChI Chair in Entrepreneurship Education, at the University of Johannesburg. She was head of Departments Business Management at Unisa and UJ, respectively, from 2004 to 2016. Prof Nieuwenhuizen co-authored and/or acted as editor of 42 books and 26 articles in accredited peer-reviewed academic journals. She presented papers at 34 international and 16 national accredited conferences with three Best Paper Awards, of which two were international and one national (total citations are 1022 and h-index of 17). She supervised six doctorates and 18 masters to graduation. Prof Nieuwenhuizen has been involved in various family businesses since 1981, culminating in a medium-sized business with 500 employees, including professional business services, retirement villages and care centres. Annemarie Davis Annemarie Davis, MBL (Unisa), DCom (Unisa), is an associate professor in strategic management at the University of South Africa. She has more than 18 years’ experience in higher education. She has participated in the teaching and development of courses in strategic management over a period of 10 years, and has supervised several postgraduate research projects in strategic management. xi PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT Mari Jansen van Rensburg Professor Mari Jansen van Rensburg is the Mauritius Campus Director of Middlesex University. As Campus Director, Mari leads the Mauritius campus of this renowned UK university and is responsible for shaping and delivering the strategic plan for the campus. Mari has extensive experience in multicultural and multidisciplinary settings with in- depth knowledge of higher education in Africa. Mari’s formal qualifications include a BCom (Marketing Management), BCom (Hons), MCom and DCom (Business Management). Mari specialises and publishes in the fields of strategic and relationship marketing as well as change and strategic management. Trevor Amos Trevor Amos is an academic in the Department of Management at Rhodes University and a registered Master HR Professional with the South African Board for People Practices (SABPP). He has experience in consulting and people development in both the public and private sectors. Noel Pearse Noel Pearse is a professor at the Rhodes Business School and a registered Industrial Psychologist with the Professianal Board of Psychology of the Health Professions Council of South Africa. He has consulted to, and conducted training on behalf of National Parliament, government departments, NGOs and private companies. He has also done extensive work in the automotive industry. xii Acknowledgements Chapter 1 case study page 3: https://cdn-s3.sappi.com/s3fs-public/Diagram-Sappi- corporate-structure-Landscape-Standalone.pdf Chapter 2 case study page 51: https://www.mckinsey.com/industries/healthcare- systems-and-services/our-insights/how-discovery-keeps-innovating?msclkid=18cb5 ae6d10311ecaf3520f0799334aa El Chapter 3 case study page: 71: https://businesstech.co.za/news/banking/525074/ capitec-reports-continued-recovery-on-expanded-digital-offerings-and-strong- customer-growth/#:~:text=Headline%20earnings%20increased%20ta%20R3,93- 6%20billion Chapter 4 case study page 97: By permission of Aspen Holdings Figure 4.2: ‘A conceptual framework of the strategy-as-practice. Jarzabkowski, P., Balogun, J. & Seidl, D. 2007. ‘Strategizing: the challenges of a practice perspective’ Human Relations, 60 (1): 5 © 2007 The Tavistock Institute. SAGE Publications Chapter 4 practising strategy page 92: Adapted from: http://ethekwinilivinglegends. com/portfolio-items/sizwe-nxasana/http://www.sowetanlive.co.za/news/2015/04/04/ you-need-discipline-to-succeed-nxasana Chapter 4 practising strategy page 109: By permission of Woolwoths Holdings Limited Chapter 6 case study page 161: By permission of Discovery Limited Chapter 6 practising strategy page 167: By permission of Discovery Limited Chapter 6 practising strategy page 170: By permission of Discovery Limited Chapter 6 practising strategy page 172: By permission of Discovery Limited Chapter 7 case study page 200: https://www.mrpricegroup.com/mr-price-group- investor-relations.aspx Chapter 8 case study page: 229: https://www.naspers.com/about [accessed 5 May 2022]; https://www.naspers.com/about-us/ strategy Chapter 10 case study page 281: Adapted from: BusinessTech. 5 June 2022. South Africa's municipalities on the brink of collapse: Chapter 10 practising strategy page 285: By permission of Discovery Limited Chapter 11 page 305 The Vodacom Way: Vodacom Lesotho. 2017. The Vodacome Way’. Available online at: http://www.vodacom.co.|s/ls-about-us/about-us/the- vodacom-way © and permission of Vodacom Lesotho Figure 11.3: ‘Strategy through a cultural lens: Learning from manager's experience’ Johnson, Gerry. Management Learning, 31, Iss. (4), (Dec 2000): 403-426. Copyright © 2000 Sage Publications xiii PRACTISING STRATEGY; A SOUTHERN AFRICAN CONTEXT = Chapter 13 case study page 352: https://www.starbucks.ca/responsibility/planet/: © SAA. Used by permission of SAA 2019 m Chapter 13 case study page 361: https://stories.starbucks.com/uploads/2020 xiv  The evolution of management theories Tersia Botha LEARNING After studying this chapter, you should be able to: OU TCO MIS §=6101: Present an overview of the traditional theories of management. LO 2: Explain how the traditional theories of management evolve to responsible management. LO 3: Debate the drivers of responsible management. LO 4: Explain the relationship between strategy and responsible management. SA eek] =o Administrative = Responsibility management = Responsible = Bureaucratic approach to competitiveness management = Responsible management mt! Bilsiness ethics @ Scientific approach to = Competitive advantage management = Contingency approach to = Stakeholders RSG TEAGEIFICHE = Sustainability = Corporate social cas = Sustainable competitive responsibility advantage =: Ethles = Sustainable development = Human relations approach = Sustainable development to management goals = Information management & Systems approach to = Operations management management ™ Quality management @ United Nations Global Compact  Na fats) Why do business organisations exist? Take a few moments to ponder ORIENTATION this question. Business organisations exist for various reasons. Entrepreneurs generate new business ideas, determine the feasibility and viability of these ideas and start new business ventures, in which resources are transformed into need-satisfying products and services, which are then sold to customers. The entrepreneur hopefully realises a profit, of which a part thereof is reinvested in the business organisation in order to grow and develop the business, ensure its long-term survival, create jobs, contribute to the wealth and wellbeing of society and remunerate the owners for the investment made in the organisation. As the business grows, the role of the entrepreneur changes from being the inventor of new ideas, to the manager of the business organisation. The bigger the organisation becomes, the more complicated the management process becomes, which brings us to the next fundamental question - what is the best way to manage an organisation? When we study the evolution of management theory, this is the one recurring theme that management theorists attempt to answer. Do a quick Google search for the best way to manage an organisation. You will find thousands of views on this topic - ranging from ‘be consistent’ to ‘manage by numbers. The reason for the numerous views on this topic is to enable us to see the proposed ‘best’ way to manage a business organisation in the context of the social, political, economic, technological, international, and ecological forces that affect organisations and society at a specific time. As these forces change (and they constantly change and at an accelerating pace), business managers need to change and adapt to changing circumstances in the management environment. Changing circumstances lead to great uncertainties for businesses, particularly in respect of their sustainability and management. The purpose of this book is to provide the reader with the necessary background and information to be able to practise strategy successfully in the contemporary business environment. Essentially this means to: develop a long-term and coherent strategic plan within the opportunities and constraints of the business environment, that leads to the development of strategic actions that need to be implemented and controlled, that will put the organisation in a position of responsible competitiveness and enable it to survive over the long term and realise its long-term vision, goals and plans. Before we can focus on practising strategy, we first need to address the evolution of management theories. Why? Most of the ideas 2  and practices that contemporary managers use to solve problems, make decisions, practise strategy, have their roots in the history of management theory. This chapter will commence with a brief overview of the most prominent traditional theories of management. We will then proceed to explain how the traditional theories of management evolve into the contemporary theory of responsible management. Next, we will debate the drivers of responsible management. We will conclude the chapter with an explanation of the relationship between strategy and responsible management. The following opening case will be used for illustrative purposes throughout the chapter. Case study Sappi Limited’ Sappi is a global diversified woodfibre company focusing on providing dissolving pulp, packaging and speciality papers, graphic papers as well as biomaterials and biochemicals to their direct and indirect customer base across more than 150 countries. Their vision is ‘Intentional evolution of the business - changing to meet market needs and take advantage of growth opportunities.” Sappi’s mission is ‘Through the power of One Sappi - committed to collaborating and partnering with stakeholders - we aim to be a trusted and sustainable organisation with an exciting future in woodfibre.3 The company’s values can be summarised as acting with integrity, being courageous, making smart decisions and executing decisions with speed. Background Sappi was founded in 1936 in South Africa to serve South African consumers with locally produced paper. They have a tradition of innovating and developing new products to meet local demand for newsprint, graphic papers (paper used for communication purposes that includes printing and writing papers), packaging papers used to protect their customers’ products (especially in the agricultural sector) and speciality papers used in the convenience food, confectionery, cosmetic and luxury markets, and tissue paper for household, medical and industrial use in the Southern Africa region. Sappi is also the world’s largest manufacturer of dissolving pulp (DP). DP is bleached wood pulp that has a high cellulose content. DP is so named since it is not made into paper but dissolved either in a solvent or by derivatisation into a homogeneous solution, which makes it completely chemically accessible and removes any remaining fibrous structure, Once dissolved, it can be spun into textile fibres (such as viscose, rayon or Lyocell), or chemically reacted to produce derivatised celluloses, such as cellulose triacetate, a plastic- like material formed into fibres or films, or cellulose ethers such as methyl cellulose, used as a thickener. DP is used worldwide by converters to create viscose fibre for fashionable clothing and textiles, acetate tow (which is used, for example, to keep the quality and aroma of cigarettes), pharmaceutical products as well as a wide range of consumer and household products. PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT Strategic vision for dissolving pulp In 2013, Sappi shifted its South African timber resources into the production of dissolving wood pulp to meet the growing demand for viscose fibre in the Far East, as traditional paper markets declined. With the recent completion of major expansion and conversion projects at its Ngodwana and Cloquet mills and the ramp-up of production of dissolving wood pulp, Sappi has repositioned itself to take advantage of growing markets for this versatile product. This strategy is a response to weakening demand around the world for fine paper. ‘The group has invested substantial money in South Africa and North America into the production of specialised cellulose; said Alex Thiel, Sappi SA‘s CEO at the time. ‘We need to move Sappi's traditional paper business into areas of more long-term, sustainable growth! He pointed out that this does not mean that Sappi is walking away from its traditional business of producing paper pulp and fine paper. There's limited growth potential for graphics paper, so we are adjusting our capacity; said Alex. ‘We supply according to the market demand but there is no huge growth. We will optimise our production and sustain our market share: Alex also sees a bright future for the packaging business and Sappi is ramping up production for packaging grades, which are manufactured at the Tugela and Ngodwana mills, utilising softwood fibre. Sappi is the world’s biggest producer of dissolving wood pulp, which is marketed under the name ‘Specialised Cellulose’, and enjoys several competitive advantages in this market. Sappi’s Saiccor mill has been manufacturing dissolving wood pulp since 1955 — it was bought by Sappi in 1989 — so there is a wealth of expertise and experience at the individual level, both in terms of production and marketing. Sappi owns extensive plantations in South Africa that are well suited to growing the hardwood fibre required to supply the mills. Sappi plantations in KwaZulu-Natal and Mpumalanga are already being converted from softwood to hardwood to meet the growing demand. The company does not own plantations in North America but has access to sufficient hardwood timber resources to supply the Cloquet mill with its raw material requirements. Sappi's specialised cellulose product is marketed mainly in the East, where it is used to produce viscose fibre used in the clothing and textile industries. Sappi SA has a competitive advantage through technical expertise as well as economies of scale in that Saiccor is the biggest single-site producer in the world and the timber supply is close to both the Saiccor and Ngodwana Mills. There is also a logistical advantage in exporting to the East from South Africa. Once it has reached full production, Ngodwana will require two million tons of timber a year, 900,000 tons of which will be hardwoods. Sappi-Saiccor requires 2.8 million tons a year, all hardwood. Wattle makes up 10 per cent of this raw material, with Eucalyptus makes up the rest. Sappi's total timber requirements in South Africa are 5.5 million tons a year, 70 per cent of which comes from its own plantations and the balance from private timber growers, small growers and community forestry projects. Sappi has sufficient resources in the ground in KwaZulu-Natal to provide for the Saiccor expansion, and a surplus of hardwoods for Ngodwana. Softwood plantations in both regions are being converted to hardwoods to ensure a sustainable supply of raw material to the mills.  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES Sappi is also investing significant resources in research and development to improve planting stock. The company is significantly expanding its clonal programme with the development of the Clan nursery, so that they can get more of the right trees in the ground, improving productivity and providing an opportunity to bring costs down. Thus, there will be a big shift in planting stock over the next few years. Sappi has strong links with numerous small growers through its Project Grow Programme, which supplies 2 per cent of its overall fibre requirements. Sappi has also engaged with several community forestry projects in the Eastern Cape, located within the Saiccor catchment, where they have established themselves as strategic partners and play a developmental role. They are already involved with communities with access to 14,000 to 16,000ha and are targeting 30,000ha in this region over the next 10 to 15 years. Around 20 per cent of Sappi's plantation land in South Africa is subject to land claims, which is a potential threat to the company’s access to fibre. However, the company have made a lot of progress with land claims, especially in KwaZulu-Natal, where 38 out of 40 claims have been settled. Sappi is strategic and technical partners with the claimant communities but ownership of the land stays with the communities, with whom they have timber supply agreements. However, Mpumalanga remains problematic and progress in settling claims has been slow. Increasing production of specialised cellulose is a first step into the development of exciting new markets for Sappi. There's growing value in timber resources for packaging materials, while its chemical properties can be used in many different applications. Cellulose is a sustainable, renewable raw material alternative for a wide range of products. In addition, there is the potential to produce by-products for energy. The company is constantly looking for ways to get more value from the trees. Their timber resource is already making a huge impact on the company's energy efficiency. Ngodwana is energy self-sufficient, and is selling energy back into the grid, while Saiccor is 55 per cent self-sufficient. Shift in strategy paying off In 2017, Sappi's shift to place more emphasis on dissolving pulp and speciality packaging was starting to pay off. They managed to improve their European and US businesses. In South Africa, the paper business experienced a strong recovery in sales volumes. In a move to reposition the business, CEO at the time, Steve Binnie, said Sappi would undertake some measures to keep the business going in a rapidly changing global market. Their traditional glossy-paper business represented only one-third of the company while two-thirds consisted of dissolving wood pulp and speciality packaging. Sustainability and impact Sappi is unlocking the power of renewable resources to meet the needs of the planet and people while seeding prosperity for all. That's why they have made the United Nations Sustainable Development Goals (SDGs) an integral part of their business. The goals define 17 global priorities that challenge all at Sappi to lean in and apply their creativity and innovation to contribute solutions to challenges - from climate change to poverty. 5 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT Globally, Sappi has identified seven priority SDGs where they believe they can make the biggest impact. These are the following: 1. Clean water and sanitation. Water is vital to all life, and especially to Sappi's business. Water not only nourishes trees but is used to make pulp and paper, generate steam power and so much more in their mills. That's why Sappi takes their role as responsible water stewards in the regions where they operate so seriously. Sappi’s water-reduction target (to reduce specific water use in water-stressed locations by 18 per cent) focuses especially on their mills in South Africa where they have some of their largest operations. Affordable and clean energy. As an energy-intensive industry, Sappi's fuel choices have a major impact on air emissions. They focus on increasing the share of renewable and clean energy within their energy consumption, while also continually improving their energy efficiency. Their target is to increase their share of renewable and clean energy by 9 per cent and decrease specific total energy by 5 per cent. Decent work and economic growth. As a responsible business operating in many locations around the world, this broad goal aligns with their focus on being a responsible corporate citizen and providing a safe working environment in which their employees can reach their full potential. Sappi's targets are, inter alia, to achieve zero injuries and to increase the proportion of women in management roles by 3.7 per cent. Responsible consumption and production. Manufacturing products from renewable resources is the core of Sappi’s business and central to its commitment to the circular economy. Through Research & Development, practical innovation and new product development, they continually create new products, solutions and value from natural resources. Their target is to launch 25 products with defined sustainability benefits and to reduce specific landfilled solid waste by 14 per cent. Climate action. Taking urgent and appropriate actions to combat climate change and its impacts is a shared responsibility. Sappi is focused on the continued reduction of its greenhouse gas emissions. Their target is to reduce specific GHG emissions by 17 per cent. Life on land. With Sappi's excellence in sustainable forest management and commitment to stewardship, they want to continue to increase their positive contribution to healthy landscapes. They practise and promote sustainable forestry because it ensures clean air and water, protects biodiversity, and defends against climate change, among many other critical benefits. Forest certification validates their forest management practices and those of their suppliers in the well-managed forests and plantations from which they source woodfibre. They strive to continually increase the share of certified woodfibre supplied to their mills. Their target is to have a share of certified fibre of more than 75 per cent and to increase the enhancement of biodiversity in conservation areas by 10 per cent.  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES 7. Partnership for goals. While Sappi is already engaged in, and has been contributing to many partnerships and collaborations, they are looking forward to working more deeply with others to scale their ambition in pursuit of achieving the Sustainable Development Goals by 2030. In South Africa, home to Sappi’s global headquarters, they have selected an additional priority SDG that reflect the socio-economic development priorities that reinforce their unique and longstanding investments in people and local communities in the country. Their target is to advance their Broad-based Black Economic Empowerment to Level 1. LO 1: Present an overview of the traditional theories of management. 1.1. The traditional theories of management Management theories all have one thing in common - to find an answer to the question “What is the best way to manage a business?’ The theories of management can be categorised in the traditional and contemporary theories of management. In this section, we will focus on the traditional theories, starting from the early 1800s, even though examples of management thought and practice can be found throughout history. For example, the earliest recorded instance of information management dates to Sumer (modern Iraq), 8000-3000 BC, when Sumerian businessmen used small clay tokens to calculate quantities of grain and livestock, and later value-added goods, like perfume and pottery, that they owned and traded at city gates. Different shapes and sizes of the tokens represented different types and quantities of goods. The tokens were used to store data. They were kept in clay envelopes and the token shapes were impressed on the outside of the envelopes to indicate what was inside. What a tedious process, Eventually, someone figured out that it was easier to just write these symbols with a stylus on a tablet rather than using tokens. Eventually, the new technology of writing led to more efficient management of the business of Sumerian temples. Another example is the building of the great pyramids in Egypt (4000 BC to 2000 BC), which was bound to present many problems that would lead to the development of managerial ideas and theories. When building the pyramids, the Egyptians recognised the need for planning, organising and controlling. Furthermore, requests for materials were submitted in writing and decisions were made after consultation with staff for advice. There are numerous other examples of management thought and practice - in 1800 BC Hammurabi established controls by using witnesses and writing to document transactions, in 600 BC Nebuchadnezzar used wage incentives and production control, and in 1525, Machiavelli promoted cohesiveness, power and leadership in organisations. Then came the first Industrial Revolution (1750-1900), and jobs and organi- sations changed dramatically. PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT The traditional theories of management that we will peruse in more detail dates to the mid-1800s and include the scientific approach; bureaucratic management; administrative management; the human relations approach to management; and the operations, quality, information, systems and contingency approaches to management. 1.1.1 Scientific approach to management The First Industrial Revolution occurred from the mid-18th to the early 19th century in certain areas of Europe and North America. An Industrial Revolution can be defined as the process of change from an agrarian and handicraft economy to one dominated by industry and machine manufacturing. Mass production of goods took place, with a focus on increased efficiency, higher productivity, and reduced average costs. Rapid industrialisation and scientific discoveries had a cost in terms of pollution and poor working conditions for labour during this time. Company owners hired ‘bosses’, and they were used to make decisions haphazardly, without any systematic study, thought, or collection of information. If bosses decided workers should work harder, no thought was given to worker motivation. Moreover, each worker did the same job in his or her own way with different methods and different tools. In short, there were no procedures to standardise operations, no standards to judge whether performance was good or bad, and no follow-up to determine whether quality and productivity improved when certain changes were made. This all changed with the development of the scientific approach to management. The scientific approach to management involved a thorough study and testing of different work methods to identify the best, most efficient way to complete a job. Four individuals contributed tremendously to the development of scientific management, namely Frederick W Taylor, often referred to as the father of scientific management, Frank and Lillian Gilbreth, and Henry Gantt. m= = F W Taylor (1856-1915). According to F W Taylor, scientific management is to find the ‘one best way’ to perform each task. To do that, each manager must follow four principles developed by Taylor. The first principle is to develop a science for each element of the work - study each element, analyse it, and determine the one best way to perform the job. The second principle is to scientifically select, train, teach and develop workers to help them reach their full potential. The third principle is the cooperation of managers with employees to ensure that the scientific principles are implemented. The fourth and last principle entails the division of the work and the responsibility equally between managers and workers. Taylor's principles can be used to determine a fair day's work, that is, what an average worker could produce at a reasonable pace, day in and day out. Once that was determined, it was management's responsibility to pay workers fairly for that day's work. Taylor was trying to align management and employees so that what was good for employees was also good for management and the business. @ Frank (1868-1924) and Lillian Gilbreth (1878-1972). They are best known for their use of motion studies to simplify work, but they also made significant contributions to the employment of disabled workers and industrial psychology. Motion studies were not only used to simplify work, but also to improve  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES productivity and to reduce the level of effort required to safely perform a job. They believed that the greatest waste in the world comes from needless, ill-directed and ineffective motions. Their motion studies broke each task or job into separate motions and eliminated unnecessary or repetitive ones. Because many motions were completed very quickly, they used motion-picture films, then a relatively new technology, to analyse jobs. Time studies worked by timing how long it took for a ‘first-class worker’ to complete each part of his or her job. A standard time was established allowing for rest periods, and a worker's pay would increase depending on whether the worker exceeded or fell below that standard. = Henry Gantt (1861-1919). Henry Gantt is best known for the Gantt chart, but he also made significant contributions to management with respect to pay- for-performance plans and the training and development of workers. A Gantt chart visually indicates what tasks must be completed at which times in order to complete a project. Gantt charts were revolutionary because of the detailed planning information that they provided to management. Gantt, along with Taylor, was one of the first management scientists who strongly recommended that companies train and develop their workers. 1.1.2 Bureaucratic management When we hear the term ‘bureaucracy’ today, we immediately think about things such as inefficiency, a lot of red tape, incompetence, ineffectiveness and rigid administration. When the bureaucratic approach to management was first proposed, these problems were associated with monarchies and patriarchies rather than bureaucracies. In monarchies, where kings and queens ruled, and patriarchies, where a council of elders, wise men, or male heads of extended families ruled, the top leaders typically achieved their positions by virtue of birth right. For example, when the king died, his oldest son became king regardless of his abilities. Likewise, promotion to prominent positions in monarchies and patriarchies was based upon whom you knew, who you were or ancient rules and traditions. It was against this historical background that Max Weber proposed the idea of bureaucratic management. = Max Weber (1864-1920). German sociologist Max Weber viewed bureaucracy as the exercise of control based on knowledge, experience or expertise rather than ruling by favouritism or personal or family connections. People in a bureaucracy would lead by virtue of their knowledge, experience and expertise. Furthermore, the aim of bureaucracy (according to Weber) is not to protect authority, but to achieve an organisation's goals in the most efficient way possible. Weber identified seven elements that he believed characterise bureaucracies. Element 1: People should be hired because their technical training or qualification qualifies them to do the job well. Element 2: Promotion within a business should no longer be based on whom you know or who you are, but your own experience and achievements. Managers rather than business owners should decide who is promoted. PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT Element 3: Each position or job is part of a chain of command that clarifies who reports to whom throughout the business. Element 4: To increase efficiency and effectiveness, tasks and responsibilities should be separated and assigned to those best qualified to complete them, Authority is vested in these task-defined positions rather than in people, and the authority of each position is clearly defined in order to reduce confusion and conflict. Element 5: A business's rules apply to all its members, regardless of their position and status. Element 6: All rules, procedures and decisions should be recorded in writing. Element 7: Professional managers rather than business owners should manage or supervise the business. Based on these seven elements, bureaucratic management can be defined as the structuring of a business into a hierarchy. Secondly, the business and its members are governed by clearly defined rational decision-making rules. Weber's contribution to the development of management theory represents a tremendous improvement in how businesses should be managed. Fairness supplanted favouritism, the goal of efficiency replaced the goal of personal gain, and logical rules and procedures took the place of traditions and arbitrary decision-making. Today, however, after many years of experience, we recognise that bureaucracy also has many limitations. The biggest limitation is probably too much emphasis on rule- and policy-driven decision- making, which makes businesses too hesitant to change and slowly responding to customers and competitors. 1.1.3 Administrative management Henri Fayo! developed the administrative approach to management. It laid the foundation of the approach to management that many management courses and books today still adopt. Why? It is a simple model of how management interacts with employees. It covers managerial tasks in a broad way. Therefore, almost any kind of business can apply this theory of management. m@ Henri Fayo!l (1841-1925). As in the case of other management scientists, Fayol had an interest in those actions that had an impact on the productivity of businesses. Fayol argued that the success of a business generally depends much more on the administrative ability of its leaders than on their technical ability. Furthermore, Fayol stated that managers need to perform five managerial functions if they are to be successful, namely planning, organising coordinating, commanding and control. Many management textbooks have dropped the coordination function and now refer to Fayol's commanding function as ‘leading’. Therefore, the managerial functions are widely known as: ¢ Planning (determining organisational goals and a means for achieving them), 10  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES ¢ Organising (deciding where decisions will be made, who will do what jobs and tasks and who will work for whom), @ Leading (inspiring and motivating workers to work hard to achieve organi- sational goals), and ¢ Controlling (monitoring progress towards goal achievement and taking cor- rective action when needed). In addition, this approach also identified 14 principles of management, namely the division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interest to general interest, remuneration, centralisation, scalar chain, order, equity, stability of tenure of personnel, initiative and esprit de corps. Apart from identifying the managerial functions and the 14 principles of management, Fayol also was one of the first to argue that management could and should be taught to others. He believed that the principles of management could be taught at universities and colleges, and that managers are not born, but that they can be made successful through a combination of education and experience. 1.1.4 The human relations approach to management The human relations approach to management focuses on people, particularly the psychological and social aspects of work. This approach to management views people not as extensions of the machinery and equipment that are used in organisations, but as valuable organisational resources. In this section, we will briefly explore the contributions of Mary Parker Follett and Elton Mayo to the human relations approach to management. = = = Mary Parker Follett (1868-1933). Mary Parker Follett is known as the ‘mother of modern management. Unlike most people who view conflict as bad, she believed that conflict could be a good thing and that conflict could be embraced rather than avoided. She also identified ways of dealing and managing conflict. Follett also made important contributions in terms of the role of coordination in businesses. She believed that the best overall outcomes are achieved when leaders and workers at different levels and in different parts of organisations directly coordinate their efforts to solve problems in an integrative way. @ Elton Mayo (1880-1948). Elton Mayo is best known for his role in the famous Hawthorne studies at the Western Electric Company in the United States (US). During the early 20th century, the US, Europe and Asia experienced problems relating to labour unrest, dissatisfaction and violent protests. Working conditions were horrible and contributed to the unrest. Millions of factory workers had to endure boring and repetitive jobs in unsafe conditions with low salaries and wages. Employee turnover and absenteeism were very high. For example, Henry Ford of the Ford Motor Company in the US, had an employee turnover of 380 per cent in his automobile factories and needed to double their daily wages from US$2.50 to US$5.00 to keep enough workers at their jobs to meet the demand for their automobiles. In 1913, Ford hired more than 52,000 workers 1 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT to keep a workforce of only 14,000. The Hawthorne studies were conducted in two stages between 1924 and 1932 at a Western Electric plant in Chicago. In the first stage, two groups of experienced female workers were separated from other workers in a factory. Over a period of five years, researchers introduced various levels of and combinations of lighting, financial incentives and work breaks to study the effect thereof on the women's productivity. Contrary to their expectations, the productivity of the women increased whether the researchers increased or decreased the lighting, paid workers based on individual production or group production, or increased or decreased the number of work breaks. Mayo and his colleagues concluded that two things accounted for these results. First, substantially more attention was paid to these workers than to others in the factory. Second, a cohesive work group developed that led to significantly higher levels of job satisfaction and productivity. For the first time, human factors related to work were found to be more important than the physical conditions of the work. The Hawthome studies found that workers’ feelings and attitudes affected their work and their productivity in the workplace. The second stage of the studies was conducted in a bank wiring room by making use of a group that consisted of nine wiremen, three solderers and two inspectors. Each performed a specific task and collaborated with the others to complete a specific unit of equipment. No matter what the researchers did in this case, the productivity of the group decreased. Mayo and his colleagues found that group effects were again responsible for productivity in this stage of their study. However, the difference between the first stage of the study in the factory and the second stage in the bank wiring room was that the group in the bank wiring room was already established for some time and had already developed strong negative norms that governed their behaviour. Despite any changes the researchers made in terms of financial incentives and work breaks, the group members decided that they would wire only 6,000 to 6,600 connections per day, which was way below the objective of 7,300 of the bank. Individuals exceeding the group goal were disliked. Mayo's research made important contributions to the best way to the management ofa business. It provided new insights that the workplace was more complex than previously thought and the point that financial incentives were not necessarily the most important motivator for employees. Furthermore, it demonstrates the important role of groups and group behaviour. It also underscores Mary Parker Follett's contributions in terms of coordination in a business that we explored in the previous section. 1.1.5 Operations management Operations management is concerned with the transformation or conversion of inputs into goods and services as efficiently as possible. Operations management involves the daily production of goods and services. Operations management uses quantitative or mathematical approaches to find ways to increase an organisation's productivity 12  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES and profitability and to improve the quality of its products and services (quality management will be discussed in the next section). Quantitative approaches are also used to manage and reduce costly inventories. The most commonly used tools and techniques in operations management are quality control, forecasting techniques, capacity planning, measures of productivity, linear programming, scheduling systems, work measurement techniques, project management and cost-benefit analysis. 1.1.6 Quality management Quality management can be described as the act of overseeing all activities and tasks needed to maintain a desired level of excellence. In business, quality management will include four components, namely planning for quality, quality assurance, quality control and continuous quality improvement. Deming is often regarded as the father of quality management. m W Edwards Deming (1900-1993). The quality revolution was led by the Japanese post World War II in their adoption of W Edwards Deming's teachings in quality management. The quality revolution, started by Deming in Japan, was followed by a number of quality philosophers who influenced quality management to what it has become in contemporary businesses. Much later in the 1980s, under pressure and in response to the Japanese quality revolution, America (through the efforts of its Navy) finally adopted Deming’s teachings and developed and branded what is known today as Total Quality Management. = Total quality management (TQM). The concept of TOM seeks to improve produc- tivity, through customer satisfaction and employee involvement. In a TQM effort, all members of a business participate in improving processes, products, services and the culture in which they work. TQM is based on the following four pillars: @ Systems approach: A systems approach requires the organisation to be defined as an open system that takes input from the environment it functions in and adds value through its assets and internal systems to produce outputs to the environment. @ Customer focus: A customer focus recognises internal and external stake- holders as customers in terms of being recipients of value-adding products or services. @ People involvement: People involvement is a tactic to engage people specifically in the business management initiating and planning processes, in order to get them to take ownership and embrace business plans, goals, structures, systems and processes as their own. It centres on teamwork and requires management to play a facilitative role in guiding, coaching and managing team efforts. ¢@ Process of continuous improvement. The process of continuous improvement, promoted by Deming, assumes that proper planning establishes and approves business goals. Furthermore, it assumes that business assessments are used 13 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT to establish the current business status in terms of the business being able to fully support the work to be performed to achieve the planned strategic goals, and that the appropriate business drivers have been identified that will facilitate the process. 1.1.7. Information management Information management is a broad concept that refers to the acquisition of infor- mation from one or more sources, the storage and/or manipulation of the information and the distribution thereof to those who need it, and the ultimate disposition thereof through storage. The first technologies that truly revolutionised the use of information by organisations were paper and the printing press during the 14th century, when water-powered machines were created to pulverise rags into pulp to make paper. Less than a half-century later, the printing press was invented, which greatly reduced the cost and time needed to copy written information. By the 1870s, manual typewriters were used, which were replaced by personal computers and word processing software in the 1980s. The Fourth Industrial Revolution is upon us, enabling organisations to technology such as Cloud, Big Data Analytics and the Industrial Internet of Things. 1.1.8 Systems approach to management A system can be defined as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Systems can be either closed or open. Closed systems do not interact with their environment, whereas open systems recognise the dynamic interaction of the system with its environment. The organisation, which is a system, is in constant interaction with its environment and is influenced by both the industry-specific and general environments. Therefore, organisations are viewed as open systems. Rather than viewing one part of the organisation as an open system, as separate from the other parts, a systems approach encourages managers to complicate their thinking by looking for connections between the different parts of the organisation. The systems approach to management views the organisation as a system, comprising of various subsystems, which are simply smaller systems within larger systems. It is a line of thought that stresses the interactive nature and interdependence of external and internal factors in an organisation. Subsystems and their connections with each other in systems theory, since managers can aim to create synergy. Synergy occurs when two or more subsystems working together can produce more than when they are working apart. Synergy therefore occurs when 1 + 1 = 3. Successful interaction and adaptation of the organisation to its changing environment are crucial, because open systems tend towards entropy, which is the inevitable and steady deterioration of a system. 1.1.9 Contingency approach to management In our introductory remarks on the evolution of management theory, you learned that the goal of all management theories is to find the best way to manage an organisation. 14  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES From reading about the various approaches to management, you may have gathered that we have a problem - researchers in management seem to all have different ideas and conclusions in terms of what that one best way is! Furthermore, more than 100 years of management research indicate clear boundaries and limitations to most management theories and practices. That brings us to the next vital question - how does a manager decide which approach to adopt to manage his or her business successfully? The answer lies in the situation that the manager faces. The contingency approach to management states that the application of management principles depends on the specific situation that managers face at a given point in time in the business. The contingency approach acknowledges that every business, even every department or unit within the same business, is unique. Every business exists in a unique environment (micro-, market and macro-environment) with unique goals and strategies. Managers therefore need to adapt their management approaches to suit the unique situation of the business. The contingency approach to management emphasises that there is no universal management theory or approach. The most effective theory will depend on the kind of problem or situation that the manager or business faces at a specific point in time. In this section, we addressed various traditional approaches to management, where only the most prominent approaches were highlighted. The next section will explain how the traditional theories of management evolve into responsible management, a contemporary approach to management. LO 2: Explain how the traditional theories of management evolve to responsible management. 1.2 Responsible management The traditional management approaches explained in the previous section have been blamed for many of the world’s current ailments, issues and crises, such as the social injustices and environmental destructions that we are so aware of and being made aware of daily by the media. The traditional management approaches have also been criticised from a variety and different perspectives for their contribution to the global financial crisis of 2008/2009 (from which many countries, including South Africa, are still experiencing detrimental effects), followed by another crisis in the form of COVID-19 on 1 December 2019, with devastating effects on global health, global economies and global financial systems. Criticism levelled against management and managerial approaches without alternatives will not benefit anybody or anything. Therefore, the underlying belief should rather be that management and its influence on business can and should move from being a source of problems to being a source of solutions. Responsible management, a contemporary approach to management, provides us with a solution, beautifully illustrated in the opening case of this chapter by Sappi. 15 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT Various causes define the environment ofa responsible approach to management. In Africa specifically, causes to be addressed by responsible management are, for example, global warming, the water crises, global health crises, overpopulation, poverty and hunger, severe draught in some African countries and floods in others, workplace diversity, transformation, the wellbeing of communities, corruption in politics, government and the business sector, human rights and income inequality — the list is endless. These causes are grouped by Laasch and Conaway’ into three main domains of responsible management, which provides us with a framework for responsible management, namely sustainability, responsibility and ethics. Based on this framework, we can define responsible management as the management of an organisation built on the principles of sustainability, responsibility and ethics. These three concepts are explained below. 1.2.1 Sustainability To have a thorough understanding of the first domain of responsible management, an explanation of sustainability, sustainable development, and sustainable development goals is necessary. Sustainability Sustainability focuses on the organisation's triple bottom line, related to the systematic social, environmental and economic issues that threaten the wellbeing and survival of current and future generations. Systemic issues include, for example, global warming, the global health crises, the global financial crises and the global water crises. On a business level, these issues are translated to the so-called triple bottom line, which means that the organisation needs to focus and commit to social and environmental concerns just as they do on their profits; in other words, social, environmental and economic performance. The idea is that organisations need to be managed in a way that not only earn profits but also improves people's lives and the planet (the so-called ‘people, planet and profit’ adage). Management practice should embrace triple bottom line optimisation. Sustainable development Sustainable development is the idea that human societies must live and meet their needs without compromising the ability of future generations to meet their own needs. The official definition of sustainable development was developed for the first time in the Brundtland Report in 1987.° Specifically, sustainable development is a way of organising society so that it can exist over the long term. Sustainable development is also applicable to smaller units such as small communities, micro, small, medium and large-sized organisations. This means considering both the imperatives present and those of the future, such as the preservation of the environment and natural resources, as well as social and economic equity. Let us take a historical look at how the idea of sustainable development got relevant. 16  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES The First Industrial Revolution is connected to the rise of the idea of sustainable development. From the second half of the 19th century, Western societies started to discover that their economic and industrial activities had a significant impact on the environment and the social balance. Several ecological and social crises took place in the world and gave rise to an awareness that a more sustainable model was needed. Examples of economic crises were the American banking crisis in 1907, the oil shocks in 1973 and 1979 and the debt shock in developing countries in 1982. Examples of ecological crises were the 1986 Chernoby! nuclear disaster (you might have watched the television series with the same name), and the Exron Valdez oil spill in 1989, to name only a couple. In 1968, the ecologist and philosopher Garret Hardin' wrote an essay entitled ‘The tragedy of the commons’ in which he argued that if individuals act independently, rationally and focused on pursuing only their individual interests, they will end up going against the common interests of their communities and exhaust the planet's natural resources. He believed that since human beings are compelled to procreate unlimitedly, the Earth’s resources would eventually get overexploited. Furthermore, mankind needed to radically change its way of using common resources to avoid a disaster in the future — this would be the way to keep on a sustainable development track. A few years after Hardin's essay, in 1972, Meadows et al.,° commissioned by the Club of Rome, ran a computer simulation that aimed to predict the consequences of what could happen on a planet with limited resources. The researchers analysed the interactions between five different dimensions — world population growth, industrialisation, pollution generation, food production, and non-renewable resource depletion — considering a scenario where these variables grew exponentially and technology's ability to increase resources was linear. The strongest ending scenario was that an economic and social collapse would happen by the end of the 21st century if humans were to impose no limits on growth. After more than four decades, these predictions seem to have been right when it comes to pollution and its consequences — threatening sustainable development.’ As the world's knowledge of global politics evolved, the first historical sustainable development conferences started to be organised. In 1972, the first of these took place in Stockholm, where the first big world leaders’ conference was organised by the United Nations to discuss the human impact on the environment and how it was related to economic development. One of the main goals of this conference was to find a common outlook and common principles to inspire and guide the world's population to preserve the ‘human environment’. The outcome was a call upon governments and people to exert common efforts for the preservation and improvement of the human environment, for the benefit of all the people and for ' Hardin, G. 2001. The tragedy of the Commons. Available online https://www.garretthard insociety.org/articles_pdf/tragedy_of_the_commons.pdf [accessed 8 February 2021). 17 PRACTISING STRATEGY: A SOUTHERN AFRICAN CONTEXT their posterity. The meeting also provided 26 principles that governments and people can employ to attain this call.® Once the idea that our planet had limits that needed to be respected grew, together with the idea that progress is not only about economic growth, integrated solutions started to develop. For example, the Human Development Index (HDI) was developed to emphasise that people and their capabilities should be the ultimate criteria for assessing the development ofa country and not economic growth alone.? Today, the HDI is used as a statistical tool that measures a country's economic and social achievements. In order to do so, it uses various dimensions such as health, education, financial flows, mobility or human security. Ideally, humankind should reach a point where at least the minimum HDI is achieved and live below the maximum ecological footprint per capita. Living above the minimum HDI will guarantee that human needs such as education or health are satisfied. Note that an ecological footprint represents the maximum limit of consumption per person according to the Earth's ecological capacity. Living below this level would not compromise future generations, as the planet would be able to regenerate itself. IF we could manage to keep above the minimum HDI and below the maximum ecological footprint per capita (a number that is decreasing as the human population increases) we would be on track for a sustainable future. We may now ask the question ‘What is the reality?’ The reality is that every year the Earth's overshoot day comes earlier. The overshoot day represents the date when humankind gets into debt with the Earth. The reason is that our demand for ecological resources each year has been exceeding what the planet can regenerate in that same year. We are keeping this deficit because we are using more ecological resources than the planet can handle losing. At the same time, we are also not taking proper care of our waste. We are dealing with it in a linear way, in opposition to nature, where everything follows a circular approach. Today's consumption habits are a big threat to sustainable development. In 1987, the World Commission on Environment and Development was asked by the General Assembly of the United Nations to formulate ‘A global agenda for change’ The Brundtland Report,’ also known as ‘Our Common Future’, proposed, among other contributions, long-term environmental strategies for achieving sustainable development by the year 2000 and beyond and also gave the most recognised and widely accepted definition of the term ‘sustainable development’. ‘The human ability to ensure that the current development meets the needs of the present without compromising the ability of future generations to meet their own needs’ was the first widely accepted definition of sustainable development and it is also the definition that we will adopt in this book. As the consciousness about the impact that climate change could have on the planet and on human life grew, the International Panel on Climate Change was created by the United Nations Development Programme and the World Meteorological Organisation. Its purpose was (and still is) to develop and share knowledge about the impact of human activities on climate change. It also aims to explore the causes,  CHAPTER 1; THE EVOLUTION OF MANAGEMENT THEORIES consequences, and ways of fighting climate change. CO, and methane are gases that exist to help the Earth keep its ideal temperature and guarantee life as we know it. Nonetheless, the excessive production of these gases leads to an increase in the planet's temperature. This happens because they keep part of the heat the Earth radiates trapped in the atmosphere - heat that would otherwise escape into space. In 2001, the Millennium Ecosystem Assessment, which assessed the consequences of ecosystem change for human wellbeing, was conducted. It was a four-year- long investigation that started in 2001 at the request of the United Nations and it included 1,360 researchers worldwide. Another goal of the assessment was to find a scientific basis for action needed to improve the conservation and sustainable use of ecosystems. The main findings of the assessment were the following:" = Humans have changed ecosystems more quickly and widely than ever before. This resulted in a substantial and largely irreversible biodiversity loss. m= The changes made to ecosystems improved human wellbeing and the economy but have harmed the planet and society. It was not only biodiversity decreasing at a high rate. Poverty was also still affecting many communities and climate change increased the risk of nonlinear changes. m= The degradation of ecosystems services would probably get worse over the 21st century. = ©The changes needed to preserve the ecosystem's degradation and meet the increasing demand for services could still be met. Nonetheless, it would involve significant changes in policies across the public and private sectors. Sustainable Development Goals In 2015, the United Nations, governments, institutions, businesses, and citizens came together to embark on a path to improve the lives of people everywhere, where decisions made ‘will determine the global course of action to en