Strategy is Structure. A Systems Theory-Based Definition of Strategy

Abstract

Hardly any other management concept sounds as hackneyed as strategy, and at the same time hardly any other concept in organizational science is as vaguely defined. As a means of escaping the conceptual tangle, this article suggests a systems theory-based definition which allows us to sort out the various threads of the strategy discussion. Strategy, according to this interpretation, entails programs that search for the means to achieve previously defined goals. This makes it possible to systematically link classical notions of strategy to discussions concerning organizational theory. Casting the concept of strategy in terms of systems theory enables us to resolve the artificial contradiction between strategy and structure, clarify the relationship between end and means, determine the relationship between a plan and its practical implementation, relativize the importance of strategies, and explain the surprising limitation of the strategy discussion to businesses.

Full text

Stefan Kühl*
Strategy is Structure. A Systems Theory-
Based Definition of Strategy
https://doi.org/10.1515/joso-2023-0014
Received March 30, 2023; accepted November 27, 2023
Abstract: Hardly any other management concept sounds as hackneyed as strategy,
and at the same time hardly any other concept in organizational science is as vaguely
defined. As a means of escaping the conceptual tangle, this article suggests a systems
theory-based definition which allows us to sort out the various threads of the strategy
discussion. Strategy, according to this interpretation, entails programs that search for
the means to achieve previously defined goals. This makes it possible to systematically
link classical notions of strategy to discussions concerning organizational theory.
Casting the concept of strategy in terms of systems theory enables us to resolve the
artificial contradiction between strategy and structure, clarify the relationship be-
tween end and means, determine the relationship between a plan and its practical
implementation, relativize the importance of strategies, and explain the surprising
limitation of the strategy discussion to businesses.
Keywords: strategy; means; ends; systems theory; strategy as practice
1 Introduction. The Imprecise Definition of
Strategy
Hardly any other management term is used as carelessly as “strategy”(see Hambrick
and Fredrickson 2001; Hambrick and Chen 2008). We hear strategy referred to as
“the determination of the long-term goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of resources necessary for carrying
out these goals”(Chandler 1962, 14), a choice of “adifferent set of activities to deliver a
unique mix of value”(Porter 1996, 64), a “pattern, consistent behavior over a period
of time”(Mintzberg 1978, 934) or a “unique, new position that a company is striving to
achieve”(Kolbusa 2012, 7). Strategy is defined as a “pattern in a stream of decisions”
*Corresponding author: Stefan Kühl, Department of Sociology, Bielefeld University, Universitätsstraße
25, Bielefeld 33501, Germany, E-mail: stefan.kuehl@uni-bielefeld.de. https://orcid.org/0000-0001-6117-
212X
J. Organ. Sociol. 2023; 1(3): 251–286
Open Access. © 2023 the author(s), published by De Gruyter. This work is licensed under the
Creative Commons Attribution 4.0 International License.

(Mintzberg and Waters 1985, 257), as the “planned evolution”of a company (Kirsch
1997, 654) or a “plan that integrates an organization’s major goals, policies, and action
sequences into a cohesive whole”(James B. Quinn 2014, 9).
Considering the confusing usage of the word, it is understandable that organi-
zational science has attempted to approach the concept using the parable of the
blind men and the elephant (first mentioned in Mintzberg 1987). Repeatedly cited
in the discussion of strategy, it tells of a group of blind men who try to describe what
an elephant is like after simply touching it. Since each of them touches only one part
of the elephant’s body, their interpretations differ. Depending on which part they
touched, they claim that an elephant is like a tree, a fan, a wall, a rope, a spear, or a
snake. The same applies to the debate about strategy: very different aspects emerge
according to one’s perspective. To one person, strategy appears as a plan to master
the challenges faced by an organization, to another it is a pattern of behavior, and yet
a third sees it primarily as the position of an organization within its environment.
Someone else might use strategy to mean a lens an organization uses to focus on the
world.
Consequently, the great majority of monographs and articles on strategy forget
to give a precise definition of the term. Even in a book with the title “What is Strategy?
”(Whittington 1993) the concept is not defined and therefore not demarcated from
other concepts in organizational research either. From the practitioner’s perspec-
tive, the vagueness of the idea may not be a problem. Generating catchy phrases
that can be interpreted almost at will by the members of an organization is part of
everyday practice. Communications in organizations are so heavily laden with terms
that can be interpreted almost entirely at the user’s discretion –“synergy effects,”
“proactive leadership,”“win-win situations,”“paradigm shifts,”–that “strategic
orientation”and “strategic management”attract no attention at all. For a scientific
examination of strategy in greater depth, however, such random definition is
problematic (for a discussion of the problem, see Hirsch and Levin 1999, 209;
Alvesson and Blom 2022, 73ff.). If the concept of strategy remains poorly defined or
altogether undefined, it cannot be placed in relationship to other concepts that are
used to describe organizational phenomena (see, in this regard, Rasche and Seidl
2020, 4; Grothe-Hammer, Berkowitz, and Berthod 2022, 30ff.).
1.1 The Reasons Behind the Weak Definition
The vagueness of the definition of the concept of strategy can be traced to the fact that
scholarly discussion of strategies, with a few exceptions, has remained strangely
disconnected from the debate in organizational theory over the relationship
between ends and means in organizations (see Greve 2021). Early discussions of
252 S. Kühl

strategies in the central texts of Alfred Chandler (1962), Igor Ansoff(1965), and
Kenneth R. Andrews (1971) were characterized by a strong orientation toward a
purposive-rational model of organizations and, interestingly, began at almost
the same time as the erosion of Max Weber’s purposive-rational concept of organi-
zations in organizational theory (see P. S. Adler and Heckscher 2018, 82ff.). In contrast
to Weber, organizational science discovered that “not all ends”were “instructive”
in the sense that “real means”could be derived from them (see, e.g., Perrow 1961b);
that, in addition to end–means orientations in organizations, other forms of
rationalization played an important role (see, e.g., Nokes 1960); that organizations
often featured “contradictory goals”(e.g., Merton 1957); that internal conflicts
between departments allowed one to recognize that, in spite of the end–means
model, contradictions repeatedly arose in the way that organizations were oriented
(see, e.g., Firey 1948); and that serving an end could not guarantee the preservation of
an organized system (see, e.g., Perrow 1961a).
The reason for the extensive decoupling of the academic discussion of strategies
on the one hand and the limitations of purposive-rational perspectives in organiza-
tions on the other, is that the two debates were split into two different disciplines
(for the background, see Parker 2000, 124ff.; Ruef 2003, 244ff.; Grothe-Hammer and
Kohl 2020, 420ff.; for the general problem, see Abbott 2001).
1
The researchers who laid a
claim to strategy primarily viewed themselves as anchored in the field of management
studies or business administration. The main concern of practice-oriented scholars
was applicability and relevance to managers—they showed only minor concern for
organization theory. (See, e.g., the critiques by Shrivastava 1986; Knights and Morgan
1991, and Whipp 2006). Conversely, in the 1960s, the organizational theory-based
critique of Max Weber’s purpose-rational view of organizations was primarily
driven by sociologists, for whom the discussion of strategy played no role at all, or only
a subordinate one, because it primarily involved solving problems pertaining to
organizational practice rather than distanced, scholarly analyses (see Lounsbury
and Carberry 2005).
Granted, the evolution of Management Studies with its interdisciplinary
orientation –and in particular the development of Organization Studies, which
serves as its scholarly framework, particularly in US business schools –has resulted
in a closer relationship between organizational theory, which is primarily anchored
in scientific research, and strategy approaches, which for a long time were oriented
towards practice (see Augier, March, and Sullivan 2005; for greater detail see
Augier and March 2011). In terms of decoupling, however, nothing has changed in
a fundamental sense. In the field of organizational sociology, there are still no
1For sociological research into strategy, partly limited itself to non-market actors, see King and
Jasper 2022.
Strategy is structure 253

systematic attempts being made to arrive at a precise definition of the concept of
strategy. For sociology, it does not represent a basic concept, and is consequently
not defined in key sociological dictionaries. In the fields of management studies
and business administration, there have been various attempts to link the discussion
of strategy to organizational theory (see Williamson 1991; Simon 1993). In the
scientifically oriented mainstream discussion of strategy, however, positioning
one’s approaches within general organizational theory has not been a primary
concern (see Dess and Lumpkin 2001, 5). And when the relationship between strategy
discussion and organizational theory is examined, it is often limited to theories such
as contingency theory or population ecology, which can be easily linked to the
strategy discussion thanks to their purposive-rational orientation (e.g., see Keats and
O’Neill 2001, 521; Donaldson 2001, 11ff.; for an exception, the strategy-as-practice
approach, see e.g. Whittington 2007).
1.2 The Aim of the Article in the State of Research
The aim of this article is to contextualize the relevant scientific discussions of
strategy from a systems-theory perspective (see, for the approach in this article,
Locke and Golden-Biddle 1997, 1033f.).
2
From this perspective it is possible to define
strategy as programs that search for the means to achieve previously determined
goals, a definition that makes it possible to link classical notions of strategy to dis-
cussions concerning organizational theory. Drawing on systems theory to concep-
tualize strategy thus enables us to resolve the artificial contradiction between
strategy and structure, clarify the relationship between end and means, determine
the relationship between a plan and its practical implementation, and reconsider
the importance of strategies within organizations.
In systems theory, an organization is defined as a specificsocialsystemin
which decisions regarding the entry and exit of individuals –the determination
of membership –are a central instrument for establishing compliant behavior
on the part of members. An organizations can decide who belongs to it and,
more importantly, who should no longer belong to it because they no longer
follows its rules (Luhmann 1979, 205; see also Luhmann 1982b, 75). Through the
possibility of conditioning membership, organizations can develop decision
communication as a system-specific form (see Luhmann 2002, 160). This does not
2A presentation of Luhmann’s general understanding of organizations would go beyond the scope
of the article. For a short introduction see Kühl 2021. For insights into central ideas of his concept, I
refer in particular to Luhmann 1976, Luhmann 1982a, Luhmann 1982b, Luhmann 1996, Luhmann
2003; Luhmann 2020.
254 S. Kühl

mean, however, that all communication within organizations takes the form of
decision communication. The peculiarity is that the conditioning of the
membership can turn any communication into a decision communication (see
Kühl 2020a, 500).
Discussions about strategies are one prominent example of communication that
can be turned into decision communication. The article addresses scholars trying to
link strategy research with a comprehensive organizational theory. Naturally, in the
framework of this article I can only address the central theoretically ambitious
threads of the strategy discussion (for an overview see Duhaime, Hitt, and Lyles
2021). It is not my intention in any sense to address the strategy discussion in
comprehensive terms. However, I do intend to offer an alternative approach to
the three strands of research that have recently striven for a stronger connection
between strategy research and organizational theory.
The first of these, the strategy-as-practice approach, considers “strategy as
something people do rather than simply something organizations have”(Cloutier
and Whittington 2013, 803). Inspired by the “practice turn”in the social sciences,
the approach investigates the forms in which “practitioners”of strategy create
concrete “strategizing”practices (see Chia and Holt 2006; Jarzabkowski 2005;
Jarzabkowski, Balogun, and Seidl 2007; Whittington 1996; Whittington 2003, 2006).
3
An important contribution of this approach has been to initiate more realistic
and richly detailed descriptions of strategic practices in organizations (see, for
overviews, Golsorkhi et al. 2015a, b; Jarzabkowski, Seidl, and Balogun 2022; Johnson
et al. 2007). Nevertheless, it is often difficult to ascertain what precisely is meant
by the concepts subsumed under strategy as practice, for example, “practices,”
“practice,”“actions,”or “strategizing”(Ortmann 2010, 15; similarly Blom and
Alvesson 2015, 410f.; Jarzabkowski, Kavas, and Krull 2021, 3ff.; Rouleau and Cloutier
2022, 722ff.). As the label “strategy as practice”already indicates, in this approach,
much as in the classical subject-and-actor theories in sociology, practical actions
are placed at the center of attention, thereby obscuring the relationship between
plan and practice (see Langley and Maria 2015). A systems-theory approach seems
better fitted to clarify the relationship between strategic plans and strategic
practices.
The second, the approach of communication as constitutive of organization,
allows us to address how strategies are formed within a communicational context
(for an overview, see Spee 2022). The general idea is that organizations are “invoked
and maintained in and through communicative practices”(e.g. Schoeneborn and
3For criticism of the theoretical outcome of the practice turn in management studies e.g. Chia and
Holt 2006; see Tourish 2020, 101.
Strategy is structure 255

Blaschke 2014, 286).
4
This approach has stimulated a wealth of empirical studies
about communicative practices in organizations (see, e.g. Cooren 2004a, 377; Cooren
2004b, 520ff.). However, from a sociological standpoint the approach lacks a
clear understanding of how decisions constitute a specific kind of communication
(Luhmann 2018, 44ff.; Nassehi 2005, 185ff.).
5
By conceptualizing “organizations as
systems of decisions”(Grothe-Hammer 2022, 93), we are able to define strategy as a
type of decision premises.
The third strand, the systems-theory perspective, has so far had only a minor
impact in the area of strategy (Rasche and Seidl 2020, 2; Baralou, Wolf, and Meissner
2012, 290ff.; Sohn 2020, 471ff.; Hernes and Bakken 2003, 1511f.). Still, a few manage-
ment studies scholars have used systems theory in their approach to strategy (for an
overview, see Ortmann and Seidl 2010, 360ff.).
6
They argue that strategy takes place
in economic, scientific, and educational systems and that the adaption of a general
strategy concept can lead to “productive misunderstandings”(Seidl 2007, 206). Us-
ing the concept of organizations as self-referential systems, they have shown that
organizations do not so much react to objective markets as construct their own
competitive environments (Vos 2003, 5ff.; Vos 2006, 367ff.; Rasche and Seidl 2020, 4).
In line with systems-theory considerations about decision making (Luhmann 2006,
85ff.; Luhmann 2018, 98ff.), they contend that strategy is a way to deal with the
paradox that we can only decide questions that are in principle undecidable (Rasche
2008, 182ff.; Rasche and Seidl 2020, 6f.). However, due to the focus on systems theory
after the so-called autopoietic turn, they missed the chance to link the conceptuali-
zation of strategy to the discussion about end–means relation.
7
From an organiza-
tional sociological standpoint, this connection is essential for an understanding of
strategy based on systems theory (see, as central reference, Luhmann 1973).
8
4I focus on the so called “Montreal School”which is fundamental for the understanding of the
approach (see Schoeneborn and Vásquez 2017, 372ff.). In my opinion, it does not make sense to treat
the “four-flows-model”and especially the “theory of social systems”as part of the approach.
5However, see the attempt by Cooren and Seidl 2020.
6See for this strategy of “theory borrowing”in organization studies and management studies,
Whetten, Felin, and King 2009; Kenworthy and Verbeke 2015.
7Niklas Luhmann himself did not consider it necessary to provide a detailed definition of the
concept of strategy, which originated in the field of business economics. In Luhmann’s writing 2005,
423, 446 there is merely an observation that premises that have been determined as the basis for a
multitude of other decisions are referred to as “strategic decisions,”in which respect he follows John
Child (1972). For these “decisions about decision premises”, however, Luhmann (2018, 186ff.) intro-
duced the concept of “planning”–and with good reason. The notion of planning captures much more
adeptly than the idea of strategy that decisions about decision premises are about more than (goal
and conditional) programs, they are about communication channels and personnel as well.
8Because of language barriers, the central text by Luhmann outlining a systems-theory under-
standing of strategy (Luhmann 1973) is not discussed nor even mentioned by the scholars working in
256 S. Kühl

1.3 The Structure of the Article
Building on the definition of strategies as “programs that search for means”to
accomplish previously defined ends, the second section shows how strategies can
be integrated into an overarching understanding of organizations. The classical
understanding of strategies views organizations from a perspective referred to
as “goal fetishism,”the idea being that the entire organization is geared to a
superordinate goal. In contrast, this section uses the concept of decision premises –
introduced by Herbert Simon and further developed by Niklas Luhmann –to
demonstrate that strategies can be understood as only part of an organization’s
structure. If, following Luhmann, one distinguishes between communication
channels, programs, and personnel as three types of decision premises in the
structure of an organization, then strategies can be understood as a search for
the means to accomplish a particular type of program, namely, a goal program.
The third section shows the gain in understanding associated with such a precise
definition of strategies. The heated debate about whether structures follow strategy
or strategies follow structure can be resolved because strategy can be understood as
part of structure and, with the help of the concept of decision premises, the position
of strategy within structure can be determined systematically. The question, already
posed by Chandler, as to whether strategies are to be understood more as searches
for ends or searches for means can be resolved by linking it to organizational theory
discussions about ends –means chains. It can be shown that what constitute means
on one level of an organization represent ends on the level below. Furthermore,
limiting the concept of strategy to a search for the means to achieve “important
goals”can be overcome by demonstrating that what is understood as strategy
depends on the perspective of the specific unit of the organization. For “strategy as
practice”the gain is that by defining strategy as a structure the relationship between
plan and reality or target and practice is defined.
As the fourth section demonstrates, the particular gain offered by the systems-
theory concepts presented here is that it enables a connection to be established
between critical approaches in the strategy discussion (from incrementalism to
emergent strategies and effectuation) and the older critique of a purpose-rational
understanding of organizations. Explanations can be provided for the problems that
the development of strategies encounters in the presence of goal conflicts; why
strategy can be used as legitimation; why it frequently acts not as the means for ends
the field of management studies with a systems-theory approach (see, e.g., Vos 2002; Rasche 2008;
Seidl 2016. The general idea is accessible in English in a very short version through Luhmann 1982a.
For the devastating effects of “Englishization”in management studies, see Boussebaa and Tienari
2021.
Strategy is structure 257

that are sought but rather as the ends for existing means; and why strategies are
often only formulated officially once a course of practical action has already been
established.
Building on these considerations, the systematic location of the strategy
discussion in organizational theory is defined in the concluding fifth section. In
contrast to the idea of “strategy as the showcase of management activity,”we show
that thinking in terms of goal programs represents only one approach to change.
From a systems-theory perspective, it may just as well happen that changes
are conceived on the basis of communication channels or personnel as decision
premises. A systems-theory perspective offers no support for the idea of conceiving
organizations simply from the standpoint of strategy.
9
2 Strategy –aDefinition of a Systems-Theory
Attempt
From a systems-theory perspective, then, strategy denotes the process of defining the
appropriate means to achieve a previously defined end.Strategy formulation, from
this perspective, is the process of searching for appropriate means.
10
Strategy
implementation refers to the process of applying the means that have been identified
as appropriate for achieving the previously defined end. Strategy formation refers to
means that develop around and underneath the official process of a search geared to
an end.
11
It is only by using these precise definitions that one can associate the strategy
debate with the discussion of the relationship between ends and means that is highly
relevant for organizational science (see the early contributions by Georgiu 1973;
Gross 1969; Luhmann 1982a; Perrow 1961b; Thompson and McEwen 1958). In
organizational science, an end or, synonymously, a goal refers to a precisely defined
9For a version of the general argument for practitioners see Kühl 2017.
10 See Georg Schreyögg’s (1984, 246) early suggestion that strategy should be viewed as a means to
achieve a (long-term) business goal. Schreyögg’s attempt to understand “strategy theory”as a
“rational model of selecting means”enabled him to position strategy within the context of theoretical
considerations on the relationship of ends and means. Thus, strategy is interpreted as an attempt to
create a decision-making situation such that an optimal selection of means can take place. In this way,
strategy theory offers rules for discovering and comparing alternatives. Using this narrow definition
of strategy, it became possible to integrate discussion of strategy with a circumscribed purpose-
rational view of organizations by assuming that a business acts rationally as long as it succeeds in
finding the means to accomplish its long-term goals.
11 On the concept of strategy formation –and the contrast with strategy formulation –see the
detailed discussion in Mintzberg 1987.
258 S. Kühl

state that is to be achieved. Means are the potential ways this state can be achieved.
If ends are supposed to guide the search for means, which is to say, are to have
a structuring effect in an organization, then they must be specified sufficiently
precisely for one to be able to ascertain whether the goal has been met or not. For
that purpose, the following must be established: the nature of the end (what is to
be achieved?); the scope of the end (how much is to be achieved?); the time frame
(by when is the end to be achieved?); the personnel aspect (who is responsible for the
end being achieved?); and the location (where is the end to be achieved?).
2.1 Goals –the “Blinders”Principle in Organizations
Setting goals always represents a remarkable narrowing of an organization’s
horizons. It focuses an organization on a small number of things that appear
important, while screening out everything else. All goal setting emphasizes one
particular factor, but always at the cost of neglecting, even damaging, a multitude of
other possible aspects. In that sense, goals –or ends, to use the other term –can be
referred to as an organization’s“blinders”(Luhmann 1973, 46). Just as horses have a
very wide field of vision due to the lateral placement of their eyes, organizations too,
at least in principle, have the ability to expand their horizons almost at will. And
just as blinders shield horses from distractions coming at them from the side or
from behind, goal setting prevents organizations from being sidetracked by a host
of other options.
By setting goals, that is, by putting on blinders, organizations create a very
simplified picture of their environment on their “goal screen”(Luhmann 1973, 192).
12
The narrowing of the organization’s horizon through goal setting has an additional
important function: it focuses energy on achieving the goal and mobilizes creative
thinking on the best means of doing so. If a company has adopted the goal of
becoming one of the three global market leaders in agricultural utility vehicles, it will
use a so-called benchmarking process to compare itself with other companies in the
sector, to find out whether there may not be even more appropriate means for
producing tractors.
In search logic, the saying “The end justifies the means”(Luhmann 1973, 46)
applies here. After all, the function of ends is to mobilize as much creative thinking
as possible for the selection of suitable means. As a rule, however, the spectrum
of means that can be utilized to achieve an end is always limited. When the
management of a hydroelectric plant manufacturer announces the goal of capturing
12 See for a similar perspective on the strategy discussion van Assche et al. 2020.
Strategy is structure 259

the markets in Greece or Turkey, then it is at least questionable whether bribery can
be accepted as a legitimate means of achieving that goal.
In organizational science, this search for the best means of achieving a goal is
referred to by the special term purposive rationality. This rationality does not refer to
the selection of the goal, as that has already been determined. Rather, it is a question
of searching for suitable means to achieve the end. The goals of an organization
may in themselves appear highly questionable to an observer, for example, the
creation of prison camps for political dissidents, the training of suicide assassins, or
the production of hairspray. Nevertheless, if an organization were to proceed as
efficiently and effectively as possible in the selection of the means to achieve its goals,
it would deserve to be credited with a high degree of purposive rationality. As Max
Weber put it, acting in an purposive-rational way entails first weighing various goals
against one another, then selecting the most effective means of achieving the goals
that have been defined, while taking the possibility of undesirable ancillary effects
into consideration during the selection process (Weber 1976, 13). Classical strategy
theory is firmly ensconced in the tradition of this purposive-rational approach.
2.2 The Purposive-Rational Orientation of Classical Strategy
Theory
In the classical understanding of strategy, a strategy process begins with the
specification of a mission –the long-term goal of an organization. Based on
an analysis of the organization’s environment, its internal capacities, and the
available resources, the object is then to determine the various means to achieve
the overarching goal. Following that, the various strategy alternatives are analyzed
in detail with respect to their potential and risks, and the strategy that guarantees
the accomplishment of the overarching, long-term goal is selected. Next, the chosen
strategy is operationalized. Quantitative targets are formulated, milestones
defined, and action plans prepared, while management monitors achievements
at regular intervals (for examples of this approach see Hussey 1998, 71; for a concise
presentation see Mintzberg 1994, 36).
This classical understanding of strategy is advocated by the so-called “Design
School”or “Planning School”and reflects an understanding of organizations which is
called goal fetishism in organizational science. The organization is seen as revolving
from A to Z around its top-level goal. Its leadership sets an overarching goal to be
accomplished. The resources are then defined by which the top-level goal is to be
achieved. The means defined in this manner are then identified as subgoals, and, in
260 S. Kühl

turn, resources must be sought to achieve them. A pyramid-shaped concatenation
of superordinate and subordinate goals is thus formed that allows every action
within the organization to be examined for its utility. In short, what eventuates is the
structure of a “strategy-focused organization”(Kaplan and Norton 2001, 2).
The organizational reasoning behind this end–means thinking has existed for
a long time. As early as 1932, Fritz Nordsieck, a founder of the discipline of
business economics, expressed the view that the task an organization had to fulfill
should be the “point of departure”for defining its structure (Nordsieck 1932, 10).
According to Nordsieck, an analysis of the organization would systematically
break down its overall task into subtasks, which were to be assigned to specific
units or, better still, to specific positions. The meshing that occurred during
the fulfillment of the subtasks would then result in the achievement of the
overarching objective.
This requires that the strategy process does not contain any contradictory goals
or subgoals. If goals or subgoals were to conflict with one another, then fulfilling
the subtasks would not result in the completion of the overarching task. The
contradictions would already create confusion while a strategy was under devel-
opment and ultimately block the process of formulating a coherent strategy.
The purposive-rational approach distinguishes strictly between the develop-
ment and the implementation of strategies. According to this line of thinking, a
strategy must first be properly and completely formulated before one can begin to
think about deploying it in practice. The idea evokes a military strategist who confers
with his general staffto devise a strategy and then passes it on in the form of an order
to the soldiers at the front. After that, the execution of the order is ensured through
military discipline and is therefore comparatively unproblematic (on this analogy,
see Whittington 1993, 17).
This method often finds expression in strategic master plans that run to
several hundred pages and lay out precisely defined targets, schedules, and
budget allocations. The master plan includes detailed descriptions of subgoals, all of
which are supposedly “smart,”in other words, specific, measurable, accepted,
realistic, and [already] scheduled (see Doran 1981). The timetables sometimes
state the day, and not infrequently even the exact hour, when hundreds of these
individual subgoals are to be achieved. And the budget for achieving each of the
subgoals is precisely set out in dollars, euros, or renminbi. Then, all that remains is
for the plans to be made accessible to the relevant employees and their compliance
monitored by management (see Goold and Campbell 1987, 74).
What position does strategy, when conceived in this way, occupy within a basic
understanding of organizational structures?
Strategy is structure 261

2.3 Integration of the Strategy Discourse in a Comprehensive
Understanding of Organizational Structure
According to Herbert A. Simon (1957, 34), organizational structures are decisions
that serve as premises that are prerequisites for other decisions. Organizational
structures therefore always involve the kind of decisions that are not exhausted in a
single event but influence a multitude of future decisions. When a maintenance
worker decides to repair a malfunctioning machine on the shop floor, the decision
does not qualify as a decision premise because its relevance applies only to this
specific event. However, when the CEO decides that a member of the maintenance
team must be on location within 10 minutes to address any machine malfunctions in
the production area, then that does constitute a decision premise (see Luhmann 2003,
38ff.; Luhmann 2018, 181ff.).
On this basis, it has become accepted in organizational science to differentiate
between three fundamentally different types of structure (see also Martens 2006,
90ff.; Seidl and Mormann 2014, 140ff.; Kühl 2021, 102ff.). The first type consists of
the decision programs, including, for instance, economic goal systems, work
instructions, IT programs, and policies. They determine which actions are to be
viewed as right or wrong. The second type is made up of communication channels,
which include such things as rules of operation, the division of labor, information
channels, co-signing authority, hierarchical structure, or signature regulation, that
determine the manner in which communication has to flow and the pathways it
has to follow. The third type of structure or decision premises can be understood
as involving personnel. The underlying idea is that it makes a difference for
future decisions which person (or type of person) is chosen to fill a position (for
greater detail, see Luhmann 2018, 230ff.).
Programs –the first type of structure –bundle the criteria that must be used
in reaching decisions. They determine which actions are permitted and which are
not. In that respect, programs have the function of allowing accountability to be
established when errors are made, thereby distributing blame in the organization.
If an employee does not meet the goal of increasing revenues by 10 percent, as
specified by the program, he or she may try to find excuses but ultimately the
program allows the fault to be laid primarily at their door. In principle, there are
two different kinds of programs: conditional programs and goal programs (for a
concise summary, see Luhmann 2018, 212ff.).
Conditional programs determine which actions must be undertaken when
an organization registers a certain event. For example, when a pre-assembled
component arrives at a workstation on an assembly line, then, according to a
company-determined conditional program, a certain action must be imitated.
262 S. Kühl

Consequently, in conditional programs there is a strong link between the prereq-
uisite for an action, the if, and the execution of a decision, the then. The procedure is
precisely defined. The program determines what must be done, and in conditional
programs what is not expressly permitted is forbidden.
Goal programs, on the other hand, determine which targets or objectives are to
be achieved. Goal programming is found at the top of an organization, for example,
when a company sets itself the goal of attaining the leadership position in the
washing machine market, but it also takes place in the activities of middle and lower
management when the so-called “management by objectives”approach to achieving
goals is taken. In fact, even simple activities can be governed by goal programs. In
goal programs, the choice of means is left open. The object is to reach the stated
goal, no matter how –within certain limits. And this is the point where the concept
of strategy enters in. Ultimately, formulating a strategy describes the process of
searching for suitable means to achieve an objective; strategy implementation re-
fers to the process of putting those means into effect once they have been identified
as optimal.
Communication channels account for the second basic type of organizational
decision premises. Initially, establishing legitimate points of contact, proper
channels, and domains of responsibility massively limits the opportunities for
communication. In reaching its decisions, the organization forgoes a large number of
possible contacts as well as participation by the entire range of potentially helpful
and interested parties. Only a limited number of legitimized contacts and authorized
decision-makers are allowed, and the members must respect this if they do not wish
to put their membership at risk (see Kühl 2021, 105f.).
For the members of an organization, establishing communication channels has
an unburdening effect, as do all the other types of structure. Those who are
responsible for a particular decision may assume that it will be considered correct
within the system and not be questioned. Conversely, if a problem arises, they also
have to assume responsibility and be held accountable for potential errors or the
negative consequences of their decisions. This not only takes the onus offmanagers,
who can assume that their subordinates will follow instructions or at least officially
act as if they were doing so. It also removes a burden from their subordinates
because they know whom they may and may not speak with. Well-defined
communication channels also take pressure offcooperative efforts between people
at the same level because, to cite an example, one department does not have to verify
the correctness or usefulness of information received from another.
There are a wide variety of ways to regulate communications within an
organization. The most prominent method of putting firm communication channels
in place is through a hierarchy. On the one hand, hierarchies define who is
subordinate or superior to whom and therefore establish inequality. Yet, at the same
Strategy is structure 263

time, they also produce equality because they specify which departments are
situated on the same hierarchical level. A further important method of establishing
communications channels is co-signing authority. Co-signing authority is based
on equality of rank among participating organizational units. It is therefore
correspondingly sensitive because there are no simple ways to resolve conflicts
when they arise (see Luhmann 2003). Another increasingly important way to define
communications channels is to view them in terms of project structures. To this
end, members of different departments are assembled to work on a project –which is
to say, a goal program –over a specific period of time.
Hierarchies, co-signing authority, and project structures can be combined with
one another to produce highly specific forms and networks of communication
channels, for which highly simplified terms such as a functional organization,
divisional organization, or matrix organization are employed. Depending on the
combination of hierarchies, co-signing authority, and project structures chosen,
there will be corresponding changes in the likelihood of cooperation, competition, or
conflict in the organization. In the context of strategy processes, a high degree of
creativity is mobilized to develop and implement such networked communication
channels as a means of achieving a goal.
Whereas it is common practice in organizational science to classify programs
and communication channels as organizational structures, the suggestion that
personnel should be viewed as a third and coequal type of structure is somewhat
surprising. The reason personnel has been widely ignored in this context can be
found in a blind spot that crept into organizational research via classical economics.
Due to its orientation on the classic ends–means model, managerial organizational
research often views personnel merely as a means to an end, not as something that
represents a structure.
It will be clear to any observer, however, that organizations do not merely reach
decisions about personnel; personnel decisions also represent important premises
for further organizational decisions: it makes a difference who occupies the position
in charge of making them. Given the same position, a lawyer will often reach
different decisions than an economist who, in turn, will arrive at different decisions
than a sociologist. People with upper-class socialization tend to reach different
decisions than those from the lower social strata. It is also said that decision behavior
in women tends to differ from that in men.
Organizations have different options when it comes to turning the personnel
adjustment screw (Luhmann 1971, 208). The hiring process determines which type of
person will make future decisions. The firing of individuals can be used to signal
which kind of decisions are no longer desirable in the future. Particularly when
positions at the highest levels are involved, this option is frequently used to send an
internal and external message that different forms of decisions are to be expected.
264 S. Kühl

Internal transfers can be made in several directions: upward –in the form of a
promotion, or to put someone on ice as a figurehead; downward –in the form of a
demotion; or laterally. Personnel development represents an attempt to change
people’s behavior, so that while remaining in the same position they will reach
different decisions in the future. Here, one often has the impression that personnel
represents the organization’s software, so to speak, and can be reprogrammed in any
way one desires through coaching and training seminars. In contrast, programs,
technologies, and official procedures constitute the organization’s hardware. Yet, the
opposite seems to be more plausible. Whereas an organization’s plans and task
descriptions can be easily changed, practically with the stroke of a pen, people can
only be changed with difficulty, if at all (Luhmann 2018, 231).
Having established this kind of understanding of organizational structure, we
will recognize the position of strategies within the system. From a systems-theory
point of view, communication channels, programs, and personnel are, in principle,
equally ranking forms of structuring organizations. As a search for the means
to accomplish a previously defined goal program, strategies are ultimately only
one possible form of organizational structure.
3 The Strengths of a Systems-Theory Definition of
Strategy
It is understandable that such a precise attempt at defining strategy has drawn a
significant amount of criticism. The trend within the strategy debate is to establish an
eclectic theory that can accommodate very different paradigms. For those who
advocate a narrow definition, the burden of proof is high. They must explain how
their definition relates to other definitions of strategy and demonstrate why it
is superior. It has to be proven that relevant strategy discussions can not only be
replicated with help of their definition, but will be better understood as a result of it.
They must delineate what kind of new scientific approaches their definition will
open up for the understanding of strategy. And finally, because of the practical
implications typical for the discussion of strategy, they have to demonstrate what
defining strategy with the help of the end–means model represents for the practice of
developing strategies.
13
13 The discussion that follows will point to areas where empirical research could begin. Thus, this
article also views itself as part of a broad tradition of studies that endeavor to show how systems
theory can be utilized for empirical research (see Besio and Pronzini 2010).
Strategy is structure 265

3.1 The Resolution of the Artificial Contradiction Between
Strategy and Structure
An initial benefit of a narrow definition of strategy is that it helps to resolve the
controversy over the relationship between strategy and structure in the Hegelian
sense. In other words: to overcome the contradiction between two concepts while at
the same time preserving the distinction between them and ultimately synthesizing
them at a higher level. Ever since the 1960s, when the first studies on strategy were
written that claimed to be scientific, a contentious debate has been taking place about
whether the formation of organizational structure follows from managerial strategy
decisions or the reverse –strategy decisions are direct results of the structure of an
organization (see Galan and Sanchez-Bueno 2009).
Under the axiom “structure follows strategy,”Alfred Chandler (1962), a
forefather of the discussion of strategy in management, promulgated the idea that
organizations respond to changes in environmental conditions by adjusting their
strategies and that their structures are subsequently adapted to fit the strategies
(see Fligstein 2008). In contrast to Chandler, David Hall and Maurice A. Saias (1980)
coined the catchy formula “strategy follows structure”to point out that strategies
are instead the outcome of an organization’s structure. Hall und Saias argue that
information about the environment can only be processed through a lens created
by the structure of the organization itself. In their opinion, the strategy process can
only result from the structure of the organization.
Following this comparatively simple juxtaposition, a multitude of research
papers were published claiming to demonstrate the degree to which strategy
decisions shape the structure of an organization or, on the other hand, the extent
to which structure influences strategies. Rather than simply contrasting structure
and strategy, it became popular to assume recursive relationships between the two.
A strategy, the assumption ran, influenced the structure of an organization, which
in turn had an impact on the formulation of a strategy, which then influenced
the structure (for examples, see Mintzberg 1990b, 171; Amburgey and Dacin
1994, 1427).
While the recursive explanatory model is certainly not wrong, it is inadequate
because it too fails to specify what structure and strategies are actually supposed to
be and how they relate to one another. The debate over whether “structure follows
strategy”or “strategy follows structure,”like the recursive, Solomonic formula
“structure follows strategy and strategy follows structure,”is misleading because
it treats the concepts of strategy and structure as coequal.
14
If strategy is the process
14 Only see as examples for the attempts Jauch and Osborn 1981; Venkatraman and Camillus 1984;
Amburgey and Dacin 1994; Farjoun 2002; Siggelkow 2002; Yin and Zajac 2004.
266 S. Kühl

through which the means to achieve an end are sought and implemented, then
strategy can be nothing other than an aspect of organizational structure. If one
wishes to express this in the language of the controversy, one would have to say
that “strategy is structure”or, more precisely, “strategy is part of structure.”
This specification now puts us in a far better position to describe the relationship
between decisions about goal programs and the choice of means to achieve goals on
one the one hand, and additional structural decisions on the other. When decisions
about the structure of an organization are involved, there is always the possibility
that one of the types of structure will “take the lead.”It can happen that hierarchical
communication channels are viewed as fixed, and an attempt is made to formulate
program and personnel requirements for existing departments. Yet, it can also
happen that structural decisions are conceived in terms of goal programs, in other
words, an attempt is made to find suitable communication channels and the
appropriate personnel for goals that have already been set. Particularly when
personnel is immobile as a decision premise, it is beneficial for the organization to
define suitable programs and appropriate communication channels.
Instead of always equating an organization with its goal program, as in classical
approaches to strategy, the object now becomes to determine for each individual
organization which type of structure is taking the lead and why. In some cases, the
thinking in terms of goal programs may be the reason, although it can equally well be
that an organization is conceived with the personnel as its decision premise, or that
communication channels, perceived as immutable, are used as a starting point for a
process of change.
3.2 The Solution to the End–Means Confusion
In Chandler’s eyes, strategy represents both the definition of goals and the
determination of the means to achieve them. This dual definition has led to chaos in
the discussion of strategy. Sometimes the concept is used with the emphasis on
formulating a goal program, leading to statements like “the company’s strategy is to
increase revenues by two percent this year.”In other formulations, the concept
underscores the choice of resources, In which case, the wording reflects the idea that
the object of a strategy process is to “identify the appropriate means to increase
revenue by two percent this year.”Sometimes the job of strategies is seen as
establishing goals as well as making decisions about resources (see D. E. Schendel and
Hofer 1979, 15).
According to Henry Mintzberg, Bruce Ahlstrand and Joseph Lampel (1999, 66)
there is “considerable confusion.”For a deeper understanding of strategies, it is
problematic if the concept is used arbitrarily: in one instance to designate the
Strategy is structure 267

formulation of goals, in another the identification of resources, and in a third the two
together. The cause of the confusion lies in the early phase of strategy research when
opinions were expressed offthe cuff, as it were, without systematically referencing
the discussion in organizational research over end–means relationships, which, in
turn, originated with Max Weber.
From the perspective of systems theory, the relationship between ends and
means becomes clear when one focuses on a distinctive feature of organizations –
namely that, as a rule, they result in the formation of ends–means chains. In a
business or a government administration it is not simply that a goal is defined for
which various resources are then sought. Rather, when a means that appears to be
suitable has been identified, it is itself treated as a (sub)goal for which other suitable
means are sought. Those means are subsequently treated in the same way again,
leading to a further search for suitable means to achieve this (sub-sub)goal.
It now becomes clear why strategy processes sometimes emphasize goal
identification and sometimes the search for means. For example, if management
decides that the reject rate in the production process has to be cut from one percent
to 0.5 percent, then, from an executive viewpoint, that is a means –a strategy –to
achieve the goal of reducing costs. From the point of view of the production manager
who has been instructed to reach this target, however, it presents itself as a goal
for which he or she must develop the appropriate means, in other words, a strategy
or strategies. In the strategy process, therefore, the question of whether something
is seen as an end or a means is substantially determined by a person’s position in
the organization.
3.3 Differentiating Between Programmed and Unprogrammed
Decision Making
In strategy literature, a great deal of creative energy is expended on defining a
strategy merely as a search for a means to accomplish a particular type of goal
program. For example, the case is made that a search for the means to achieve an
organization’s overall goal (for example, maximizing profit in businesses) should not
be defined as a strategy. Instead, the concept of strategy should be limited to the
search for resources to accomplish more strongly operationalized goal programs
(on this discussion see Hofer and D. Schendel 1978, 18). Goal programs are sorted
hierarchically in order to assign the respective strategies to the organization’s
objectives on the one hand or its policies and programs on the other (Hunger and
Wheelen 1996, 10). The object is not to apply the concept of strategy as a matter
of principle to any search for the means to implement any goal program, but to use
it only for searches for the means to achieve special forms of goal programs.
268 S. Kühl

Yet one notices uncertainty in the discussion when it comes to defining precisely
what is special about the goal programs for which suitable means of realization
are sought in a strategy process. Strategy is always invoked in somewhat vague
formulations where the goals are “fundamental”to the organization or where a
search is on for the means to achieve “long-term”goals. But who defines “funda-
mental,”and who defines “long-term”?
The most convincing and, from a systems-theory standpoint, best-informed
suggestion is to single out the phenomenon of “unprogrammed decision-making”
as a characteristic criterion of strategies, taking up an idea already laid out by
Herbert A. Simon (1957), namely, to differentiate between “programmed”and
“unprogrammed”decision-making. A large number of organizational decisions
are programmed in the sense that they have been stipulated by if–then rules or
the ends determined by the organization for which means are being sought.
Yet, particularly at the top of the organizations, many of the decisions taken are
unprogrammed in the sense that they are not guided by programs.
The strength of this approach lies in its ability to explain why organizations
are especially inclined to designate as strategies their attempts to (re)position
themselves in their environment. One need only think of Igor Ansoff’s(1965)
Product/Market Matrix which urges businesses to distinguish between market
penetration, market development, product development, and diversification as
a growth strategy. The same holds true for Michael E. Porter’s (1980) idea that
the positioning of an enterprise depends on the threat posed by new participants
in the market, the negotiating strength of suppliers, the negotiating strength of
customers, the threat of substitute products, and the intensity of rivalry
from competitors. All of these strategy tools begin with a new definition of a
company’ssystem–environment boundary, in other words, with decisions that
are comparatively unprogrammed.
Nevertheless, it goes without saying that even “unprogrammed decision-
making”does not occur in an unstructured environment. The strategy decisions
taken by top management are, after all, geared to criteria such as maintaining
short-term solvency, maximizing profit, and safeguarding the company’smar-
ket position over the long term. Granted, because a principle such as profit
maximization is so abstract, it does not meet the classic criterion of a goal
program, which –in order to be effective –must specify precisely whether a goal
has been achieved or not. But it still structures the space in which organizations
make “unprogrammed decisions.”In this sense, one can paradoxically state
that strategies often entail the search for means to accomplish a goal which is
undefined in the broadest sense.
Strategy is structure 269

3.4 The Overall Position of Strategy Processes in the
Organization
If one examines the way the concept of strategy is used in organizations, it becomes
clear that strategy cannot be restricted to “unprogrammed decision-making.”If the
head of a division receives an order from the CEO to develop a strategy that will
increase revenues by 15 percent in a specified regional market during the coming
year, then that constitutes a goal program. It is equally a goal program when the
trustees of a university demand that the amount of third-party funding must be
doubled over the next five years and that an appropriate strategy be developed
to achieve that goal.
Goal programs can be found at all levels of an organization. The target of
achieving market leadership in Eastern Europe for drill sets is just as much a goal
program as when an executive instructs her assistant to serve her a latte macchiato
prepared with hand-foamed milk at the beginning of the workday. Targeting an
annual return on investment of 15 percent is every bit as much a goal program that
mobilizes a search for resources as the order issued to a Mafia debt collector to exact
weekly protection money from restaurants in a certain part of town. Now, does it
make sense to apply the concept of strategy to the search for the resources required
in order to achieve such widely differing goal programs?
The attempt to chase down a latte macchiato, even in a remote region, may not
deserve to be designated as a strategy from the perspective of the caffeine-craving
executive, but it could very well appear as a strategic project to the executive
assistant who is charged with the task. If one assumes that strategies are set not only
at the top echelons for the purpose of achieving major goals, but are defined
throughout the organization, then there is no reason to reserve the concept of
strategy for special cases of searching for means to implement specific goal
programs.
3.5 The Clarification of the Relationship Between Plan and
Reality
One criticism that has been leveled against the discussion of strategy is that it focuses
too much on strategy in the sense of planning considerations and not enough on
strategy as concrete work, that is, “strategizing.”However, it would be a conceptual
mistake to focus only on the practice of strategizing. Instead, it is necessary to
define the relationship between “strategies as a framework for action”and “strategic
270 S. Kühl

maneuvers”or –to put it in different terms –between a set of strategically relevant
procedures and resources, and strategic action. If one wishes to define this
relationship as more than merely a recursive mutual relationship between structure
and action, as is the case in subject-oriented sociology or Gidden’s structuration
theory, then one can draw on sociological systems theory.
Nevertheless, it is this very strategy-as-practice approach that raises the
question of the relationship between strategic practices and strategic plans, even
though the approach seems to focus primarily on what people “do”in strategy
processes (Cloutier and Whittington 2013, 803). And this is exactly the point where the
praxeological approach comes up against its limitations (Langley and Maria 2015). As
the label “strategy-as-practice”already indicates, in this approach, much as in clas-
sical subject-and-actor theories in sociology, practical actions are placed at the center
of attention, thereby obscuring the relationship between plan and practice (see,
however, Seidl 2007).
It is this very relationship between plan and practice, however, which must be
defined through an understanding of strategy that is founded in organizational
science. It is a question of defining the relationship between “strategies as a
framework for action”and “strategic maneuvers”(Knyphausen-Aufseß 1995, 359)
or –to put it differently –the relationship between strategies as a set of strategically
relevant procedures and resources and strategic action (Ortmann 2010, 14). If
one wishes to define this relationship as more than merely a recursive mutual
connection between structure and action as is the case in subject-oriented sociology
or in Anthony Giddens’s structuration theory, then one can draw on sociological
systems theory.
15
Systems theory allows us to address the relationship between plan and practice
because the concept of structure is not built on the regularity of actions but rather on
expectations (see Hendry and Seidl 2003). Structures, according to Luhmann (1995,
267), represent expectations that do not determine actions but rather burden those
who deviate from those expectations with the obligation to explain why they have
done so. And it is precisely this perspective that puts systems theory in a position to
examine the difference between expectations in the form of formalized programs
and concrete practices in organizations.
15 The problem with both subject-oriented theory and structuration theory is that they do not have
an elaborated expectation concept. Despite the similarities, the relationship between subject-
oriented sociology (see, e.g., Voβand Pongratz 1997) and structuration theory (see, e.g., Giddens 1984,
Barley and Tolbert 1997, or Pozzebon 2013) has received remarkably little theoretical attention from
either side.
Strategy is structure 271

4 The Limitations of a Purposive-Rational
Approach
Complaints about the “implementation gap”clearly indicate that classical strategy
management has its limitations. The point is made that organizations do not so much
lack good visions, ideas, or strategies as much as the corresponding ability to realize
them. It is lamented that while organizations have little difficulty in creating plans,
they lack “implementation excellence,”the ability to swiftly translate their plans into
practical actions (e.g. Rho, Park, and Yu 2001; Riccò and Guerci 2014).
In the classical approaches to strategy management, the implementation gap is
not taken as a reason to reconsider methods for developing strategies. Instead,
organizations are called upon to develop greater implementation competence. This
suggests that there is no need to change anything in the purposive-rational approach;
one simply has to place management under an obligation to implement the adopted
strategies through the use of professional project management. This position does
not require executives, consultants, and professors to change their strategy devel-
opment methods, while at the same time allowing them to open up “implementation
management”as a new field of activity.
There is a different explanation for the implementation gap which we consider
more plausible. The implementation gap following a strategy process should not be
attributed to a lack of commitment in top executives, a lack of professionalism in
implementation management at middle-management level, or inferior consultants.
Rather, it is the unavoidable result of a purposive-rational perspective during
the strategy process. In organizational research, meanwhile, there is extensive
agreement that the notion of organizations as harmonious derivations of subgoals
from a distributed superordinate goal is nothing more than a figment of the imagi-
nation among senior executives. In fact, organizations are characterized by
competing goals, regularly occurring ends–means reversals, goals as pure window
dressing, arbitrary and unnoticed goal switching, and subgoals taking on the life
of their own. In the development of strategies, this should not be understood as
organizational pathology; instead, the method of developing strategies should be
adapted to such characteristics.
From this perspective, it is understandable why suggestions have been developed
for a fundamentally different approach to strategy processes over recent decades.
While different in their details, methods suchas “logical incrementalism”(JamesBrian
Quinn 1978), the “grass-roots model of strategy development”(Mintzberg and McHugh
1985) or “effectuation”(Sarasvathy 2001) are all, at their core, based on a departure
from the purposive-rational understanding of organizations proposed by classical
strategy theory. For that reason, they can ultimately be understood and classified only
against the backdrop of a critique of purposive rationality in organizational theory.
272 S. Kühl

4.1 Developing Strategies when Goals Conflict
Organizations often endorse a whole array of goals, thereby implying that the ends
are compatible with, or even support. one another. As an example, some companies
define their goals in terms of having profitable business operations, tapping new
markets, developing fundamentally innovative products, treating their employees
extremely well, and additionally serving their community.
As soon as such goals are operationalized, however, it becomes clear that they
generally conflict. The development of new and innovative products lowers profit
in the short term and thereby reduces a firm’s ability to pay higher dividends,
wages, or taxes. Raising the dividend for shareholders can often only be achieved
by decreasing investment in the development of new products, cutting salaries,
or reducing tax payments (vgl. Luhmann 1981, 405).
Classical strategy management admits that such goal conflicts exist but then
advocates solving them through “conscious prioritization,”According to this line of
reasoning, prioritizing can be used to produce “goal rankings.”It assigns greater
weight to specific goals so that goal conflicts can be diffused. In the end, the dominant
idea is that if there are “multiple conflicting objectives”in an organization, rational
decisions can be reached with the help of “goal weighting.”Confronted with the
organizational reality of goal conflicts, the normative model of an organization
consisting of unequivocal “goal rankings”rather than being abandoned actually
receives additional emphasis.
From the perspective of systems-theory-based organizational research, one
cannot dispute that there are successful attempts at forming “goal rankings.”Yet,
according to Niklas Luhmann’s criticism, if the entire organization were structured
that way it would be focused on a much too simplistic view of its environment. Down
to the technical details of its work, the organization would be subject to bias with
respect to the simplicity of its environment. As a result, a great many problems would
have to be glossed over and some of the experiences created through collaboration
would remain unacquired, at the very least, undiscussed (Luhmann 1973, 76).
For these reasons, the reality of organizations is often more complex than
the end–means models of classical strategy processes suggest. Organizations can
withstand goal conflicts for decades and derive their autonomy from precisely this
source. One need only think of universities with their conflicting goals of teaching
and research, or the goal conflict in prisons between resocializing inmates and
the need to keep them in custody for security. Or, in addition to their dominant
formal goals, organizations develop informal ones that enable them to react to the
complexity of their environment.
Strategy is structure 273

4.2 Strategy Development as Legitimation. Goals as Window
Dressing for the External World
One form of criticism directed at strategy formulations is that they are too vague.
According to Richard Rumelt (2011, 34), for example, the sign of a “bad strategy”is
that the goals are fuzzy. In his view, this often results when people from different
departments and units attempt to assert their interests during a planning meeting.
Frequently, the outcome is either a wish list with a multitude of potential strategies,
or a set of formulaic compromises that are so abstract that everybody can agree on
them. While it is correct to describe such abstract formulations as the result of
strategy processes, the fact is overlooked that they, too, fulfill a function in the
organization.
As Luhmann recognized early on, not all goals are instructive enough to allow
one to deduce the right means, let alone the only right means to achieve them
(see Luhmann 1973, 94). Slogans such as “the customer is king,”the “humanization of
the workplace,”“profit maximization,”or “environmental protection”represent
abstract behavioral expectations at best. The question of which behaviors are
expected in a concrete situation is left unaddressed. If we are simply told, “Simul-
taneously maximize everything that’s good,”we will have difficulty inferring
instructions for how to act under specific circumstances. How far should we take
the idea of “protecting our environment”? Would it be permissible to kill somebody
in an emergency? What are we expected to do if our actions line up with “the
customer is king,”but hurt employees, the “company’s most important capital
resource”(Kühl 2021, 58)?
The formulation of somewhat abstract goals –one might also call them values –
is often not at all intended to serve as a set of instructions for concrete actions but
aims instead at gaining acceptance for the organization in its surroundings (see
Luhmann 1964, 108ff.). If business executives in a capitalist economy do not
aggressively affirm the goal of profit maximization, they will presumably raise the
hackles of their shareholders, just as labor union functionaries will run afoul of labor
activists if they do not strive to represent union members as effectively as possible, or
at least communicate that they are doing so.
As a result, organizations often turn into veritable “affirmation machines,”
regularly embracing every conceivable social value that is en vogue. In the meantime,
not only businesses but also hospitals, universities, schools, public administrations,
the military, law enforcement agencies, and associations pledge their commitment to
extensive catalogs of values. Although these values have a “high consensus potential”
(Luhmann 1972, 88f.) because they are so abstract, they contradict all of the demands
that are classically placed on strategies.
274 S. Kühl

Nevertheless, as Henry Mintzberg (1990b, 184) was not the only one to point out,
abstract formulations of strategies have their advantages. Granted, the more clearly
a strategy is expressed and formalized, the more firmly it will anchor itself in the
thinking of the members of the organization and the more difficult it will become
to deviate from it. But, when an organization works primarily with abstract
value formulations that are subject to interpretation, it can at least adapt to concrete
changes more quickly.
4.3 Unplanned Goal Changes
Changes in strategy often take place unnoticed by customers, employees, or suppliers
and occasionally even by those at the top levels of the organization (see Inkpen and
Choudhury 1995). For this reason, Henry Mintzberg and James A. Waters differen-
tiate between “intended”and “emergent”strategies (Mintzberg and Waters 1985).
From a systems-theory perspective, intended strategies would be spoken of as
already determined premises for organizational decision making or, more precisely,
as means that have been decided upon for a previously defined goal program.
Emergent strategies, on the other hand, would be seen as decision premises that are
not the result of a previous decision, that is, as decision premises that have separated
out from a multitude of decisions without a prior formal decision having been
reached about them.
Naturally, organizations do not enjoy unlimited freedom to change their goals, if
only because companies, public administrations, or hospitals invest large sums of
money to purchase machinery, provide training and professional development for
their staff, or develop procedures –in other words, in things that cannot be readily
retooled for a different organizational goal. It may be possible to beat swords into
plowshares, but not into computers. With some effort, engineers can be retrained as
call-center workers, but they can’t be transformed into an elite combat unit. In this
context, economists speak of “sunk costs”–resources that have already been spent
on certain things and are simply no longer available for other purposes. Nonetheless,
in spite of the commitments that organizations have entered into through previous
decisions, the speed at which they revamp their goals is fascinating.
4.4 End –Means Reversal
The discussion of core competencies in the strategy debate drew attention to an
important factor, namely, that organizations are not entirely free in the choice of
their goals but are strongly dependent on the resources at their disposal. The
available resources that enable an organization to reach its goal better than the
Strategy is structure 275

competition, are understood as core competencies (Prahalad and Hamel 1990).
These considerations stem from a resource-dependence approach developed by
Jeffrey Pfeffer and Gerald R. Salancik (1978), according to which an organization
is to be understood primarily in terms of the skills and abilities at its disposal.
Core competencies can therefore be understood as the resources that ensure an
organization’s survival because its competitors cannot readily duplicate them or
because they provide quick access to new products.
That concept draws attention to an important point. Means not only serve to
achieve the goal of an organization. In practice, means often take on a quality of
their own that no longer has anything to do with the original goal. The ends for
which the means were originally developed are forgotten, and the means themselves
are retained with such enthusiasm one might think that they now represent the
organization’s goal. Accordingly, school testing no longer functions as a means of
allowing pupils to monitor their progress in learning, but instead becomes the
very reason for their learning. Getting together in church-sponsored youth groups,
at senior citizen meetings in the parish hall, and for après-church service coffee
klatches at some point no longer amounts to praising the Lord as “where two or
three are gathered together in my name,”rather the primary focus of parish work
has now shifted to socializing.
The problem with the idea of core competencies has to do with the observation
that many goals defined solely on the basis of available resources –which is
convincing from a systems-theory perspective –are translated too quickly into a
purposive-rational understanding of organizations. When core competencies are
understood as a harmonious relation of the diverse resources and abilities through
which a firm can stand out in the market (Schilling 2013, 117), then one is acting as if
an organization were using a strategy process to clarify which resources it has at its
disposal and then, from there, deriving corresponding goals. Although such planned
searches for goals to suit the available means do exist, these processes generally
tend to be unplanned. As a rule, end–means reversals happen incrementally, with
the result that the organization barely notices.
4.5 Goals are Sought after Action
Research on organizational decision-making processes has further radicalized
criticism of the purposive-rational model. A company, public administration, or
university will portray its decision making to the outside world as if its defining
goals came first –through elaborate strategizing processes, goal-setting workshops,
or by virtue of a lone decision by the CEO –and all subsequent decisions were geared
to achieving those goals. The suggestion is that goals come first, then actions.
276 S. Kühl

While such cases no doubt occur, many times strategy is explicated only after
action has been taken and its effects can be observed. When Mintzberg (1990a, 105)
defines strategy as a “pattern in a stream of action,”he then points out that often such
patterns only emerge later, namely, after the actions have taken place. Gary Hamel
(1998, 10) underscores this point when he emphasizes that the “strategy industry”–
the strategy consulting firms, business school professors, planners in organizations,
authors of management books –always only recognizes a strategy after a develop-
ment has proven successful. While the post hoc explanations produced for an
organization’s success may be breathtakingly beautiful, no one would have dared
to predict the success beforehand.
A large body of research on decision making shows that organizations constantly
make decisions without always being clear about the basis or reason for them. Once a
decision has produced an effect, the search begins for potential goals that might serve
as justification for it. According to James G. March, organizational decision-making
behavior involves not only the members’goal-oriented activity, but also a continual
process of finding goals to legitimize activities that they have already been engaged
in. In brief, “action often precedes the goal”and the “announcement of the goal is
often a justification of steps that have already been taken”(March 1976, 72).
Karl Weick refers to this process of seeking goals after the fact as “sense making,”
in other words, the process of “making heads or tails out of something.”In that
respect, according to Weick (1987, 221), who references the thinking of Edward de
Bono (1984, 143), strategy is best understood as luck that is rationalized after the
event. In his view, the sense of an action or decision is frequently constructed
retrospectively because one generally doesn’t discover what purpose an activity
actually serves until it has been carried out. The classic, fundamental idea –and this
infuriates purposive-rationalists –could be formulated as, “How can I know what its
goals are, as long as I can’t see what decisions are being made inside the organiza-
tion?”Weick concludes that the task of management lies not so much in defining
appropriate goals and deducing the means to reach them, but rather in creating a
framework within which the many diverse decisions made in the organization can
be interpreted and ordered (Weick 1995, 9ff.).
5 Concerning the Classification of the Strategy
Discussion –Conclusion
Adherents of the purposive-rational perspective on strategy processes do not need
to be disturbed by such “contaminations”of their goal optimization-oriented view
of organizations. If end–means reversals are observed in an organization, a strategy
Strategy is structure 277

retreat can be used to call for reflection on its original goals. If focusing on two
contradictory goals is preventing a streamlined rationalization of processes, then
one can demand a clear strategy of splitting into two different organizations, each
with its own distinct purpose.
In this manner, the organization’s day-to-day operations can be used to immu-
nize oneself against the various insecurities entailed by the classical purpose model.
The motto could be: if reality does not correspond to my PowerPoint slides with their
straightforward end–means model, then too bad for practical reality. Managers,
consultants, and researchers use this divergence as an occasion to call for “clearer
goals,”“precise goal definition,”and “the resolution of goal conflicts.”In strategy
processes, the goal becomes a kind of fetish which is adhered to in organizational
analysis. As an observer, one is reminded of a Sisyphus trying time and again to roll
the stone of a new strategy process up the hill of purposive-rationality, even though
the stone rolls back down again every time. Yet, a heretic might note that it is
precisely this eternal failure, caused by a general demand for rationality, that keeps
Sisyphus going and the strategists among managers and consultants busy (see Kühl
2020b). And to a certain degree that is probably a good thing too; think of the concept
of organizational blinders!
The picture that classical strategy theory paints of the purposive-rational
organization based on an end–means relationship is, however, no more than
a simplified caricature of organizational reality. Simple, neatly arranged, and
understandable. it makes analyzing organizations relatively easy. Depending on
the complexity of the problem, one simply requires a greater or lesser amount of
computing capacity and a larger or smaller number of strategy experts or research
assistants to “calculate”the proper strategic solution for an organization. Unfortu-
nately, this picture has very little to do with reality.
It is more productive to inquire into the logic behind all of these “contamina-
tions”of the classical, goal-focused picture. Why do shifts in goals, the continuing
existence of an organization irrespective of its success or failure in goal attainment,
and end–means reversals make sense? What is the rationale behind focusing on
several competing goals? Why are organizations unable to do without formulations
that are as attractive as possible, but do little to inform decision making?
Imagine if the dream of purposive rationalists, namely, alignment of the
organization with a single goal, actually became reality. The problem can be
illustrated by imagining a human being in the same situation. The staunch and
exclusive pursuit of a single goal would likely drive a person insane. A researcher
who saw the sole meaning of their life in solving one of the world’s scientific
mysteries would end up at some point having to be fed artificially because an
occupation as banal as taking nutrition would seem entirely unimportant to them.
More likely, though, they would be externally forced to take other goals seriously.
278 S. Kühl

Nevertheless –and this point is important for the discussion of strategy –people
cannot treat goals in a completely erratic fashion either. Goal rigidity can ruin a
person, but you can also founder because you lack the ability to concentrate on one
goal, and one goal only, for at least a short period of time. An employee who finds
themselves in a meeting devoted to positioning a new electric toothbrush will
encounter acceptance problems if their attention continually, not just occasionally,
wanders to other interesting thoughts such as the romantic experiences of the night
before, beating a new video game record, or the dishwasher that remains unloaded.
Conversely, an executive having a romantic dinner with a new love interest will
encounter acceptance problems if telephone calls, text messages, and e-mails
continually remind them of other responsibilities, and they are no longer certain
which goal to actually pursue.
In practical terms, opportunistic goal setting –in other words, more or less
abruptly adjusting goals to suit existing opportunities and constraints –pre-
dominates (see Cyert and March 1963, 35f. and 118). Depending on which pressures or
opportunities present themselves, one switches back and forth between different
goals. If people happen to be in love, they might let work slide a little. By the same
token, it’s a well-known fact that the best books are written during phases when one
is not distracted by the day-to-day chaos of a romance. Sometimes it’s business before
pleasure, and sometimes just the reverse.
Goals represent one of the possible ways to program an organization, but only
one of them. Goals can also function as guiding parameters, for example, in the
search for suitable personnel or for assigning them meaningful positions. Yet, it can
also happen that one already has the employee and is looking for suitable tasks, a
goal, for them –or that the number of available positions is simply considered a
symbol of the size and importance of an organizational unit and tasks and personnel
are being sought for them (Luhmann 2018, 189f.).
From this vantage point, the many deviations from a single-purpose orientation
no longer appear to be pathological, as they do in the classic purposive-rational
model, but rather as expressions of organizational adaptability. Conscious or
unconscious switching of goals, the continuing existence of organizations regardless
of their success or failure in reaching their goals, the reversal of ends and means,
as well as the use of goals to justify decisions after the fact, are all –to use a big word –
expressions of an organization’s“intelligence.”
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