From Resource Allocation to Strategy

Is strategy a coherent plan conceived at the top by a visionary leader, or is it formed by a series of individual commitments, not always reflecting what top management has in mind? If it is a series of commitments, how can they be managed? To answer these questions, Joseph L. Bower and Clark G. Gilbert present research that examines how strategy is actually made by company managers across several levels of an organization. The research penetrates the "black box" of strategy formulation and shows that a company's realized strategy emerges less from the formal statements of corporate strategy, but often out of the pattern of resource commitments that originate across every level of the firm. Drawing on over thirty yeas of research on resource allocation, including studies from Harvard Business School, Stanford, London Business School, and INSEAD, the book's five sections detail the structural characteristics of the resource allocation process, how the process can lead to breakdowns in strategic outcomes, and where top management can intervene to shape desired results. And while the organizing authors connect over three decades of research on resource allocation, they have also included assessments of this work by thought leaders in the fields of economics, competitive strategy, organizational behavior, and strategic management. The processes described represent the complex reality of strategy formulation in large organizations, but the ideas are presented in a way that enables the reader to access and understand the implications of these complexities. The findings should inform the research of economists, strategists, and behavioural scientists. Thoughtful executives and those who consult with them will also find the book provocative and instructive.

Table of Contents:
SECTION I: INTRODUCTION TO THE RESOURCE ALLOCATION PROCESS ; 1. Linking Resource Allocation to Strategy ; 2. Modeling the Resource Allocation Process ; 3. The Role of Strategy Making in Organizational Evolution ; 4. Anomaly-Seeking Research: Thirty Years of Theory Development ; SECTION II: WHEN THE BOTTOM-UP PROCESS FAILS ; 5. When the Bottom-up Resource Allocation Process Fails ; 6. Customer Power, Strategic Investment, and the Failure of Leading Firms ; 7. No Exit: The Failure of Bottom-up Strategic Processes and the Role of Top-down Disinvestment ; 8. The Process of International Expansion: Comparing Established Firms and Entrepreneurial Start-ups ; SECTION III: RESTORING THE BOTTOM-UP PROCESS ; 9. Restoring the Bottom-up Process of Resource Allocation ; 10. Strategy Making as an Iterated Process of Resource Allocation ; 11. Resource vs. Routine Rigidity: Toward an Interpretive Model of Response to Discontinuous Change ; SECTION IV: THE NEED FOR TOP-DOWN INTERVENTION ; 12. Corporate Intervention in Resource Allocation ; 13. The Entrepreneurial M-Form: A Case Study of Strategic Integration in a Global Media Company ; 14. Strategic Flexibility: The Value of Corporate-level Real Options as a Response to Uncertainty in the Pursuit of Strategic Integration ; 15. Resource Allocation Process in Multidimensional Organizations: MNCs and Alliances ; SECTION V: OUTSIDE COMMENTARIES ON THE RAP PERSPECTIVE ; 16. Resource Allocation, Strategy, and Organization: An Economist's Thoughts ; 17. Comments on the Resource Allocation Process ; 18. Research Complementarities: A Resource-Based View of the Resource Allocation Process Model (and Visa Versa) ; 19. CEO as Change Agent? ; SECTION VI: CONCLUSION ; 20. A Revised Model of the Resource Allocation Process