Change Management MGMT625
Lesson # 24
The prospector enacts an environment that is more dynamic than other types of organizations. Unlike
the defender, whose success comes primarily from efficiently serving a stable market, the
prospector's prime capability is that of finding and exploiting new product and market opportunities.
For Prospector maintaining a reputation as an innovator in product and market development may be
perhaps more important profitability
Entrepreneurial problem for prospector is how to locate and develop market opportunities? The
systemic addition of new products or markets, combined with retrenchment in other parts of domain
characterizes the prospector. The prospector must have the ability to scan, survey a wide range of
environmental trends and events. So the organization spends heavily on individual and groups who
scan the environment. Change (within industry and to different industry) is major tool of the
Prospector manager to gain edge over competitors. Product and market innovation protect the
organization from a changing environment but the organization risks the low level of profitability and
stretch (over expansion) of it resources.
Engineering problem for prospector is how to avoid long term commitments to a single technological
process? Therefore the solution for this problem from prospector's perspective is to invest in flexible,
proto-type technologies, and also to invest in multiple technologies. Prospectors have low degree of
routinization and mechanization. Prospectors believe in organic organization where technology is
embedded in people. Therefore technological flexibility permits a rapid response to changing
domains but the organization cannot develop economies (or efficiency) in production and distribution
system because of multiple technologies. This type of decentralisation increases cost as economies
are difficult to achieve through this way.
Administrative problem for prospector is how to facilitate and coordinate (rather control) numerous
and diverse operations? Solution for this problem for prospector lies in having organic-structure-
process mechanism. Therefore top management is dominated by R & D and marketing experts,
planning is broader rather than intensive, and oriented towards results not methods. The prospector's
structure is characterised by low degree of formalization, decentralized control, lateral and vertical
communication, etc. Therefore flexibility is the catchword for all three types of problems of
entrepreneurial, engineering and administrative. Administrative system is ideal to maintain flexibility
and effectiveness but may result in underutilization or misdirected utilization of resources.
The research shows that the defender and prospector seem to reside at the opposite ends of
continuum of adjustment strategies. Between these two extreme we have analyzer and it is a unique
combination of the two types. A true Analyzer is an organization that attempts to minimize risk while
maximizing the opportunity for profit. It combines the strengths of both the prospector and defender
into a single system. The best word to describe Analyzer's adaptive approach is "balance".
The entrepreneurial problem is how to locate and exploit new products and market opportunities
while simultaneously maintaining a firm base of traditional products and customers. The obvious
solution is to operate in hybrid domain that is both stable and changing. The analyzer move towards
new markets or products only after their viability has been demonstrated. This may be accomplished
though imitation of the prospector once success is demonstrated by the prominent prospector. At the
same time majority of the analyzer's revenue is generated by a fairly set of traditional products or
markets a defenders' attribute. The operational efficiency of defender is to pursue and effectiveness
of prospector in looking for new markets and products. Therefore analyzer can grow through both
market penetration and market development strategies.
The duality of analyzer's domain is reflected in its engineering problem and solution. The main
problem for analyzer is how to be efficient in its technology which a stable portion and to be a
Change Management MGMT625
flexible in changing portion? The organization must learn how to achieve and protect equilibrium
between conflicting demands for technological flexibility and for technological stability.
This equilibrium is accomplished by partitioning production activities to form a dual technological
core. Stable component resembles the defender's technology functionally organized, routinized,
standardized and mechanized while flexible technological component resemble the prospector's
technological orientation functionally decentralized and organic.
Administrative problem is how to differentiate the organization structure and processes to
accommodate both stable and dynamic areas of operation. Therefore analyzer solves this problem
through some version of matrix organization. The head of key functional units, most notably
engineering and production unite with product managers (usually housed in marketing department) to
form a balanced dominant coalition. The product managers' influence is usually greater than the
functional manager since his task is to identify promising product- market innovations and to
supervise their movement through applied engineering and into production in a smooth and timely
manner. The presence of engineering and production in the dominant coalition is to represent the
more stable domain and technology which are the foundations of the Analyzer's overall operations.
Besides the fourth type of organizations is Reactors. This type of organization exhibits a pattern of
adjustment to its environment that is both inconsistent and unstable. This type lacks a set of response
mechanism which it can consistently apply to a changing environment. The reactors adaptive cycle
usually consists of responding inappropriately to environmental change and uncertainty, performing
poorly as a result, and then reluctant to act aggressively in the future.
Interesting question here would be why organizations become reactors? Three reasons cited by the
authors, Miles & Snow et al, and are as follows:
Top management may not have clearly articulated the organization's strategy. For
example a company founded by one-man (prospector with immense personal skills)
successfully establishes its business but upon his death the firm is in strategic void.
Management does not fully shape the organization structure and processes to fit to a
chosen strategy. Strategy is a mere statement not a guide to behavior; similarly
functional strategies might not be aligned. This is a typical case with organizations in
LDCs to come forth quick with beautiful written vision and mission statements and other
The ultimate cause of instability and failure might be the tendency on the part of
management to maintain the organizations current strategy-structure relationship despite
overwhelming changes in environmental conditions.
Adaptation and Strategic Management
Adaptation in one respect can be identified as strategic management as well. Therefore some scholars
define strategic management as the process of continuously adapting to the changes in a firm's
environment is called strategic management. According to Scott and Greiner too, "strategic
management is not only needed to cope with changes in firm's external environment but also to cope
with changes caused by processes internal to the firm (Scott, Greiner)". While to Ansoff the question
is how do we configure the resources of the firm for effective response to unanticipated surprises?
This leads us to the recently developed perspective of strategic management known as Resource
Based View (RBV).
According Cyert and March, "The successful strategy itself would be a destabilizing influence
(effect) on that strategy because of the surplus or slack" Because as the firm enjoys success generates
Change Management MGMT625
surplus (of profits and resources) as a consequence and can therefore seek new activities and
strategies (expansion in newer areas) which is destabilizing in nature. Nonetheless a distinction has to
be made between strategies of action triggered by "changes in the external environment" and a
"strategy of structure". Hence the bigger question for Ansoff is, "how do we configure the resources
of firm for effective response to unanticipated surprises"
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