Henry Mintzberg, a renowned academic and author on business and management, has provided several influential theories regarding business strategy. One of these theories is Mintzberg’s 5Ps of Strategy, where strategy can be seen as a Plan, Ploy, Pattern, Position, and Perspective.
These five components together help define and shape a holistic understanding of business strategy. They reflect that Strategy is not just about planning for the future, but it’s also about handling competition, learning from past actions, responding to the environment, and adopting a unique perspective.
In Mintzberg’s 5Ps of Strategy, these Ps stand for:
Plan:
“Plan” in Mintzberg’s 5Ps of Strategy refers to a consciously intended course of action. It involves formalized and detailed outlining of how an organization hopes to achieve its goals or objectives. As a strategy, a plan is developed in advance and is designed to guide the organization’s actions in a specific direction.
Here are some of the key aspects that “Plan” involves:
- Goal Orientation: A plan is typically developed to achieve specific objectives or goals. These goals could range from increasing market share, introducing new products, and improving profitability, to expanding into new markets, etc.
- Future Oriented: Plans are made to guide future actions. They are developed based on analyzing the current situation, forecasting future trends, and outlining the actions needed to navigate this anticipated future.
- Resource Allocation: A plan outlines how the organization’s resources—like capital, labor, and time—will be allocated to achieve the intended goals.
- Framework for Decisions: A plan serves as a reference or framework for making decisions. It provides guidelines that help in making consistent and coordinated decisions.
- Mitigation of Risks: A plan can help an organization prepare for potential risks and challenges by anticipating future scenarios. It lays out strategies for mitigating or turning these risks into opportunities.
- Change Management: A plan helps manage organizational changes by outlining how to transition from the current state to the desired state. This includes managing the tasks, activities, and processes to implement the changes.
In summary, “Plan” in Mintzberg’s 5Ps is a deliberate strategy that helps an organization prepare for the future, make coordinated decisions, allocate resources effectively, manage risks, and handle changes.
However, it’s important to note that while plans are made with good intent, Mintzberg himself cautioned that not all plans come to fruition due to various unpredictable factors in the business environment. Thus, being adaptable is just as important.
Example: Toyota’s ‘Just-In-Time’ manufacturing strategy is a great example of a plan. Toyota implemented this Strategy to increase efficiency and decrease waste by receiving goods only as needed in the production process, thereby reducing inventory costs.
Ploy:
“Ploy” in Mintzberg’s 5Ps of Strategy refers to a tactical maneuver or specific action designed to outwit, outmaneuver, or deceive a competitor. A ploy can be seen as a subset of a broader plan and is typically used in situations of direct competition to gain a temporary or strategic advantage.
Here are some aspects that “Ploy” may involve:
- Competitor Disruption: Ploys are often designed to disrupt competitors’ strategies, plans, or operations. For instance, a company might launch a product at a lower price than its competitor to unsettle the competitor’s market share.
- Strategic Surprise: Ploys can also be used to catch competitors off guard, thereby creating opportunities for the company. This could include unexpected product launches, aggressive marketing campaigns, sudden price cuts, or merger and acquisition activities.
- Psychological Maneuvering: Sometimes, ploys involve psychological tactics aimed at intimidating competitors or creating a perception of superiority. An example might be a public announcement of significant investment in research and development, creating the impression that the company is ahead in innovation.
- Deception: Ploys can involve a degree of deception or misinformation, making competitors believe something that isn’t true, thereby causing them to act in ways that might benefit the company using the ploy.
- Diversion: Another type of ploy involves diverting the competitor’s attention away from the company’s real strategic intent. For example, a company may heavily advertise a product, not its main profit source, to divert competitors’ focus.
In summary, “Ploy” in Mintzberg’s 5Ps is a strategic maneuver designed to outwit or disrupt competitors. However, it’s essential to note that while ploys can provide temporary advantages, they are not a substitute for a well-thought-out and sustainable long-term Strategy. Also, some ploys, particularly those involving deception or unethical practices, can harm a company’s reputation and should be used judiciously.
Example: A classic example of a ploy could be when a company feigns interest in acquiring another company, causing the competitor to spend resources on defensive measures or drive up the perceived price. In the 1980s, Porsche used this ploy by buying a significant number of shares in Volkswagen, creating the impression they might take over. Ultimately, this was a ploy to prevent a hostile takeover of Porsche itself.
Pattern:
“Pattern” in Mintzberg’s 5Ps of Strategy refers to an organization’s consistent behavior or actions over time, regardless of their initial intent. Sometimes, an organization may not have a formal strategy in place, but their consistent actions and decisions result in a de facto strategy, forming a pattern that can be observed and recognized.
Here are some aspects that “Pattern” may involve:
- Consistency in Actions: The pattern refers to the consistent actions and decisions made by an organization over a period. These actions may not be part of an initially planned strategy but have become part of the company’s operational behavior.
- Emergent Strategy: This concept plays a big role in the idea of a pattern. An emergent strategy evolves over time, often organically and spontaneously, rather than being pre-determined. It emerges from a series of consistent actions and decisions that, over time, form a recognizable pattern of behavior.
- Learning and Adaptation: A pattern may emerge as an organization learns from its experiences and adapts its actions accordingly. It is often based on what has worked well in the past, indicating an element of learning and adaptation in the organization.
- Implicit Strategy: A pattern of consistent behavior may not always be explicitly recognized or labeled as a ‘strategy’ by the organization. However, from an external perspective, it could still be identified as the organization’s Strategy because it guides the company’s behavior and decisions.
In summary, “Pattern” in Mintzberg’s 5Ps is about recognizing that Strategy is not always pre-planned and can emerge over time from consistent behavior. It underlines the fact that effective strategies can develop organically, adapting to changes in the environment and learning from past experiences. This understanding of Strategy as a pattern complements the other ‘Ps’ by adding an element of emergent, adaptive Strategy to the concept of deliberate, planned Strategy.
Example: McDonald’s Strategy of consistency and replicability across its global outlets shows a pattern. Despite changes in the market and adaptations to local tastes, the fast-food chain maintains a pattern of speedy service and familiar, reliable product offerings. How does McDonald’s make money from the franchise business model?
Position:
“Position” in Mintzberg’s 5Ps of Strategy is about how an organization positions itself within the market or industry. It includes decisions about which markets to compete in, what unique value to offer, and how to differentiate from competitors. It emphasizes understanding the broader competitive and socio-economic context and carving out a unique and advantageous position.
Here are some aspects that “Position” may involve:
- Market Positioning: This refers to how an organization positions itself in the market, which could involve targeting a specific demographic, focusing on a particular geographic region, or specializing in a certain product or service.
- Differentiation: Positioning involves making choices about how to differentiate from competitors. This could be in terms of product features, pricing, customer service, branding, or any other aspect that sets the organization apart in customers’ eyes.
- Value Proposition: An organization’s position reflects its value proposition: the unique value it promises to deliver to its customers. This might be superior quality, lower cost, innovative design, exceptional service, or other factors that customers value.
- Environmental Fit: Positioning also involves finding a ‘fit’ between the organization’s capabilities and the opportunities in the environment. This requires understanding the external environment—including customers, competitors, and broader socio-economic factors—and aligning the organization’s strengths to take advantage of these conditions.
- Sustainable Advantage: Positioning aims to achieve a sustainable competitive advantage, which means finding a position in the market that competitors cannot easily replicate or surpass. This could be through exclusive access to resources, proprietary technology, strong brand reputation, or other factors.
In summary, “Position” in Mintzberg’s 5Ps is about defining the organization’s unique place in the market, setting it apart from competitors, and aligning it with the external environment. It’s about carving out a niche or choosing a market space where the organization can leverage its strengths to deliver unique value and achieve sustainable advantage.
Example: Southwest Airlines positioned itself in the market as a low-cost airline, choosing not to compete with larger airlines on long-haul and international flights, and instead focusing on short-haul, point-to-point flights with low fares, making air travel accessible to a wider customer base. A unique take on Southwest Airlines Strategy
Perspective:
“Perspective” in Mintzberg’s 5Ps of Strategy refers to an organization’s unique way of viewing the world, often rooted in its collective values, beliefs, and culture. It’s about how the organization perceives its environment, relationship with stakeholders, and role within its market or industry.
Here are some aspects that “Perspective” may involve:
- Organizational Culture: The perspective of an organization is deeply tied to its culture – the shared values, beliefs, and assumptions that guide behavior within the organization. For example, a company may have a culture of innovation, always seeking to disrupt the market with new and groundbreaking products.
- Worldview: The perspective also reflects the organization’s worldview or philosophy about conducting business. This could include beliefs about the importance of customer service, ethical business practices, the role of the organization in society, etc.
- Strategic Vision: An organization’s perspective includes its strategic vision or its long-term view of where it wants to go and what it wants to achieve. The organization’s beliefs and values often influence this vision.
- Mindset: The perspective of an organization embodies its mindset. This could be a growth mindset, a customer-centric mindset, a sustainability mindset, or any other prevailing mentality that guides its strategies and actions.
- Identity: The perspective also encompasses the organization’s identity or understanding of what it stands for and how it wants to be perceived by others. This identity often becomes the basis for the organization’s brand and reputation.
In summary, “Perspective” in Mintzberg’s 5Ps is about understanding that Strategy is shaped not only by external market positions or deliberate plans but also by the internal perspective of the organization. It is the lens through which the organization views its world, guiding its interpretation of the environment, its strategic vision, and its approach to doing business. It shapes how the organization defines its identity, culture, and unique way of delivering value.
Example: Apple’s Strategy embodies a perspective of prioritizing design and user experience. This perspective permeates all aspects of their business, from product design and development to marketing and customer service, resulting in products that are not only technologically advanced but also aesthetically pleasing and easy to use. What does Apple do | How does Apple make money | Business Model
