What Are Organizational Black-Box Strategy Models?
Most of the popular strategy models that are still taught at business schools and universities and that are used by management consulting companies and most corporates, dinosaur banks, insurance companies and government organizations are organizational black-box strategy models.
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What are organizational black-box strategy models?
Organizational black-box strategy models treat the organization and all the people in it as a system, as a closed factory. With known inputs (‘resources’ and information, etc.) and outputs (products, services, performance), but how people inside the organization, inside the organizational model, work together is a “black box.”
Key Characteristics:
- The company as a machine: The company is seen as a factory, a ‘machine’ where ‘inputs’ including people & skills are turned into ‘outputs’: products and services. These outputs are ‘put on the market’.
- Focus on external relationships: Emphasizes how the black-box organization interacts with an often limited environment: customers and suppliers.
- Strategic decision-making: Analyzes how strategic choices influence ‘inputs’ and ‘outputs’, which strategic positioning is best and ‘defensible’ for the company in high-competitive red oceans.
- Simplification: Reduces complexity. Often ignoring fast changes in the online and offline business world and the impact on the business model and the people in the current organizational model. And in particular the impact of online trends including in ICT and AI on the internet.
Traditional Applications:
- Industry analysis: Understanding competitive forces and market dynamics.
- Portfolio analysis: Evaluating the performance of different business units.
- Strategic planning: Developing high-level strategies without getting ‘bogged down’ in practical implementation details in especially large bureaucratic organizations.
Limitations:
- Oversimplification: Ignores critical external and internal factors that can impact strategy.
- Limited predictive power: May not accurately forecast outcomes of decisions on any level due to the lack of external, customer-centric focus and external and internal organizational alignment issues.
- Reduced adaptability: Within the context of the fast changing external business environment and especially online and the urgent need to quickly analyse, redesign and change the current organizational model including the business strategy as one of the elements of organization in an aligned way in those strategy models.
Examples of Black-Box Strategy Models:
- Porter’s Five Forces Model: Analyzes industry competitiveness without focusing on internal operations.
- BCG Matrix: Classifies business units based on market share and growth rate, ignoring internal factors.
- GE McKinsey Matrix: Similar to BCG Matrix but considers industry attractiveness in addition to market share.
- Treacy & Wiersema Model: The model primarily concentrates on how an organization delivers value to customers by strategic positioning in one out of 3 value disciplines,again treating the organizational model as a black box.
More: Sacred cows In Management, Breaking Down Bureaucracy & Contact Tony For A Video Consultation
- The Blue Ocean Strategy model: This traditional model is not strictly an organizational black-box model. While it shares some similarities with other strategic models mentioned above in focusing on external factors and market dynamics, it does delve deeper into some aspects of organizational innovation and value creation inside the organizational model: internal processes, capabilities and ‘resources’. But it does not provide any practical tools to transform and change a large bureaucratic organization in an integarted and holistic way.
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