The Promise of Management Control Systems for Innovation and Strategic Change

4021 WordsApr 6, 201217 Pages
10 The Promise of Management Control Systems for Innovation and Strategic Change TONY DAVILA M anagement control systems (MCS) have traditionally been viewed as tools to reduce variety and implement standardization (Anthony 1965). They are associated with extrinsic motivation, command and control management styles, and hierarchical structures. Because their objective is to minimize deviations from pre-established objectives, they are designed to block change for the sake of efficiency. Learning comes from planning ahead of time, not from adapting to surprises. The functioning of a thermostat, in which a control mechanism intervenes when the temperature deviates from the preset standard, has been a frequent metaphor for this model…show more content…
Strategy was shaped from the top but also from every person in the company as she adapted the deliberate strategy to her work. The existence of an emergent strategy led to the question of how top management could influence it (through, among other tools, MCS). The concepts of interactive and boundary systems (Simons 1995)—with the purpose of managing these ‘‘unexpected’’ decisions—captured this new role for MCS. If day-to-day actions modify top management deliberate strategy, then why should top management go all the way to formulating it? The answer to this question led to the next step in the evolution of our understanding of the strategic process. Research suggested that top management does not formulate a deliberate strategy that is then randomly mixed with the emergent strategy. Rather, top management knows that the deliberate strategy is never implemented; instead of trying to force it, top management focuses on defining the guidelines that shape the emergent strategy (Burgelman 2002). The process of setting up these guidelines to induce certain strategic behavior is captured in the idea of intended strategic actions (lower left quadrant). These guidelines reflect top management’s objectives rather than prescribe what the organization should do. This idea was further refined through the observation that emergent strategy included two very different types of outcomes. Often emergent strategy evolved
Open Document