Igor Ansoff developed a unique strategic management school of thought that is a synthesis of his years in industry, the work of several significant predecessors, his own keen insight into the significant variables that are related to successful strategic behavior, and empirical research that supports his theories and prescriptions.
The Ansoff school of thought is environment driven. The foundational pieces of his approach are introduced here in a unique format.
Specialists in the field present their views as to how the material relates peppering it with their own views and personal contact with Igor Ansoff.
There are a series of tools that have been developed to assess the complexity of the business environment and the organization's response to it. The only emprirically validated approach to date.
Who is Igor Ansoff
Igor Ansoff (1918-July 14, 2002) was an applied mathematician and business manager. He is known as the father of Strategic management.
Igor Ansoff was born in Vladivostok, Russia, in 1918.
He emigrated to the United States with his family and graduated from New York City's Stuyvesant High School in 1937.
Ansoff studied General Engineering at the Stevens Institute of Technology and continued his education there, receiving his Master of Science degree in the Dynamics of Rigid Bodies.
Following Stevens Institute, he studied at Brown University where he received a Doctorate in applied mathematics with a major in Mathematical Theory of Elasticity and Plasticity and a minor in Vibration.
After coming to California he joined UCLA in the Senior Executive Program. He was a distinguished professor at United States International University (now Alliant International University) for 17 years, where several institutes continue his work in strategic management research.
During World War II, he was a member of the U.S. Naval Reserve, and served as a liaison with the Russian Navy and as an instructor in physics at the U.S. Naval Academy.
Professionally, Igor Ansoff is known worldwide for his research in three specific areas:
- The concept of environmental turbulence;
- The contingent strategic success paradigm, a concept that has been validated by numerous doctoral dissertations;
- Real-time strategic management.
To honor his body of work, the prestigious Igor Ansoff Award was established in 1981 in The Netherlands. The award is given for research and management in the study of Strategic Planning and Management. The Japan Strategic Management Society has also established an annual award in his name and Vanderbilt University has established an Ansoff MBA scholarship.
Igor Ansoff Contribution to Strategy
Until the publication of Corporate Strategy, companies had little guidance on how to plan for, or make decisions about, the future.
Traditional methods of planning were based on an extended budgeting system which used the annual budget, projecting it a few years into the future. By its nature, this system paid little or no attention to strategic issues.
With the advent of greater competition, higher interest in acquisitions, mergers and diversification, and greater turbulence in the business environment, however, strategic issues could no longer be ignored.
Ansoff felt that, in developing strategy, it was essential to systematically anticipate future environmental challenges to an organisation, and draw up appropriate strategic plans for responding to these challenges.
In Corporate Strategy, Igor Ansoff explored these issues, and built up a systematic approach to strategy formulation and strategic decision-making through a framework of theories, techniques and models.
Strategy decisions
Ansoff identified four standard types of organisational decisions as related to strategy, policy, programmes, and standard operating procedures. The last three of these, he argued, are designed to resolve recurring problems or issues and, once formulated, do not require an original decision each time.
This means that the decision process can easily be delegated. Strategy decisions are different, however, because they always apply to new situations and so need to be made anew every time.
Ansoff developed a new classification of decision-making, partially based on Alfred Chandler's work
, Strategy and Structure (Cambridge, Mass., MIT Press, 1962). This distinguished decisions as either: strategic (focused on the areas of products and markets); administrative (organisational and resource allocating), or operating (budgeting and directly managing).
Ansoff's decision classification became known as Strategy-Structure-Systems, or the 3S model. (Sumantra Ghoshal has since proposed a 3Ps model--purpose, process and people--to replace it.)
Components of strategy
Ansoff argued that within a company's activities there should be an element of core capability, an idea later adopted and expanded by Hamel and Prahalad.
To establish a link between past and future corporate activities (the first time such an approach was undertaken) Ansoff identified four key strategy components:
- product-market scope--a clear idea of what business or products a company was responsible for (predating the exhortations of Peters and Waterman to "stick to the knitting")
- growth vector--as explained in the section below on the Ansoff matrix, this offers a way of exploring how growth may be attempted
- competitive advantage--those advantages an organisation possesses that will enable it to compete effectively--a concept later championed by Michael Porter.
- synergy--Ansoff explained synergy as "2+2=5", or how the whole is greater than the mere sum of the parts, and it requires an examination of how opportunities fit the core capabilities of the organisation.
Ansoff Matrix
Variously known as the "product-mission matrix" or the "2 x 2 growth vector component matrix", the Ansoff Matrix remains a popular tool for organisations that wish to understand the risk component of various growth strategies, including product versus market development, and diversification.
The matrix was first published in a 1957 article called 'Strategies for diversification' and the example below illustrates what such a matrix may look like:
Present New Present 1. Market penetration 2. Market expansion New 3. Product expansion 4. Diversification
Of the four strategies given in the matrix, market penetration requires increasing existing product market share in existing markets; market expansion requires the identification of new customers for existing products; product expansion requires developing new products for existing customers; and diversification requires new products to be produced for new markets.
Paralysis by analysis
It has sometimes been suggested that the application of the ideas in Corporate Strategy can lead to an overheavy emphasis on analysis. Ansoff himself recognised this possibility, however, and coined the now famous phrase "paralysis by analysis" to describe the type of procrastination caused by excessive planning.
Turbulence
The issue of turbulence underlies all of Ansoff's work on strategy. One of his key aims in establishing a better framework for strategy formulation was to improve the existing planning processes of the stable, postwar economy of the USA, since he realised these would not be sufficient to cope with pressures that rapid and discontinuous change would place on them.
By the 1980s change, and the pace of change, had become a key issue for management in most organisations.
Ansoff recognised, however, that if some organisations were faced with conditions of great turbulence, others still operated in relatively stable conditions. Consequently, although strategy formulation had to take environmental turbulence into account, one strategy could certainly not be made to fit every industry. These ideas are discussed in Implanting Strategic Management, where five levels of environmental turbulence are outlined as:
- Repetitive--change is at a slow pace, and is predictable
- Expanding--a stable marketplace, growing gradually
- Changing--incremental growth, with customer requirements altering fairly quickly
- Discontinuous--characterised by some predictable change and some more complex change
- Surprising--change which cannot be predicted and which both develops, and develops from, new products or services.
In perspective
Although Ansoff's work is frequently referred to by other strategists, it has not become more generally recognised in comparison with that of other theorists.
The complexity of his work, and its reliance on the disciplines of analysis and planning, are perhaps among the reasons why Ansoff is not popularly viewed as belonging within the top echelons of management thinkers.
Other theorists were working on similar themes to Ansoff at similar times.
In the 1960s Ansoff's notion of competence (which was later developed by Hamel and Prahalad) was not unique, and although Ansoff seems to have been the originator of his 2 x 2 growth vector component matrix, a similar matrix had been published earlier.
During the 1980s and 1990s, it is likely that much work by other theorists about strategy formation under conditions of uncertainty or chaos owed something to Ansoff's theory of turbulence, though it is difficult to evaluate the extent of the debt.
A debate between Ansoff and Henry Mintzberg over their differing views of strategy was reflected in print over many years, particularly in the Harvard Business Review. Ansoff has often been criticised by Mintzberg, who disliked the idea of strategy being built from planning which is supported by analytical techniques.
This criticism was based on the belief that Ansoff's reliance on planning suffered from three fallacies: that events can be predicted, that strategic thinking can be separated from operational management, and that hard data, analysis and techniques can produce novel strategies.
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