Strategic Flexibility | Management Optional Notes for UPSC PDF Download

Introduction

Strategic flexibility is explained by management scholars as the capability of firms to respond and successively adjust to environmental change (Evans, 1991). The phase has also been applied to strategic decision making, as it is the extent to which new and alternative options in strategic decision making are generated and considered (Greenley and Oktemgil, 1998).
Strategic flexibility enable a firm to gain unique competitive advantage, because the capabilities to generate decision making options, and different forms of strategic flexibility to deal with dynamic and changing environments, is perhaps difficult for competitors to reproduce (Sanchez, 1995). Successful adaptation through strategic flexibility is likely generate superior performance, exacerbating the imitation problem for rivals. Subsequently, it is important for decision makers to possess the capabilities for strategic flexibility in its various forms.
Nevertheless, currently, there is no passable theoretical framework to study the capabilities for strategic flexibility.

Two Levels of Application

• Firm Level: It's about how companies can adapt to changes around them. Think of it like a business being flexible to cope with different situations.
• Decision Makers Level: This is when the people making decisions in a company create and think about new options. It's like brainstorming different ideas for the best decisions.

Interconnected Applications: Both levels are connected. When decision makers come up with new options, it helps the company adjust to changes.

Necessity for Decision Makers: For the company to be flexible, the people making decisions must have skills for strategic flexibility. It's like saying the captain of a ship needs to know how to navigate through different waters.

Theoretical Insight: Strategic flexibility helps organizations get ready for changes in their surroundings. It involves doing things like studying different scenarios, creating plans for each situation, getting the resources needed, and being ready to change plans quickly.

Elements of Strategic Flexibility: It's like a mix of many things, such as doing studies to understand what might happen, planning strategies for different situations, and getting the things needed to carry out those plans.

Definition of Flexibility: Flexibility is how well a company can adapt to big, uncertain, and fast changes in its surroundings. Imagine a company being like a gymnast, able to bend and twist to handle unexpected challenges.

Skills Needed: To manage unpredictable situations and be strategically flexible, people need skills like dealing with uncertainty, understanding things that might not match, and focusing on activities that help the company quickly respond to changes. It's a bit like being good at handling surprises and being quick on your feet.

Elements of Strategic Flexibility (Kessler, 2013)

• Attention: This refers to an organization's ability to be aware of and pay attention to changes happening in the external environment. It's about staying informed and not overlooking crucial shifts.
• Assessment: Involves quickly allocating resources based on the information gathered. It's the organization's prompt response to identified changes or opportunities.
• Action: The capability to recognize when current strategic decisions are not yielding desired results and taking necessary actions to adapt or change course.

Developing Strategic Flexibility

• Monitor and Measure: Keep a close eye on how current strategies are performing by regularly checking and evaluating results.
• Open Communication: Encourage employees to openly share negative information and concerns, fostering a culture of transparency.
• External Input: Seek new ideas and perspectives from outside the organization to bring in fresh insights.
• Multiple Alternatives: Have various options available when making strategic decisions to be flexible in approach.
• Learning from Mistakes: Emphasize the importance of learning from mistakes to continuously improve and adapt strategies.

Role of Strategic Flexibility

• Overcoming Organizational Lethargy: Strategic flexibility is crucial for breaking down rigid institutional procedures, allowing organizations to embrace explorative innovations.
• Dynamic Capability: It involves the flexible use of resources and the reconfiguration of processes, representing a dynamic capability that helps organizations gain a competitive advantage in unpredictable markets.
• Cultural Support: Developing flexibility in organizational forms, resource management, and manufacturing processes contributes to creating a culture supportive of explorative innovation. 
• Enhancing Technological Competence: Strategic flexibility can enhance the positive impact of technological competence on exploration, fostering more innovative activities.

Summary

• Strategic flexibility is a set of skills used by companies to handle changes and opportunities in a dynamic and uncertain environment.
• It involves dealing with uncertainty and taking risks.
• Companies work on developing strategic flexibility in all aspects of their operations.