Abstract
The objective of this research is to propose a pattern to achieve a greater understanding of the strategic process in the decentralized structure of service companies. This process goes from operational levels to headquarters through two complementary conversations: an operational conversation between local front line management and regional middle management, and a strategic conversation between middle management and top management. The embeddedness of these two complementary dialogs forms a more consistent strategic process and reduces the tensions between the periphery and the center. Decentralization has been unfolding for the last 20 years (Martinet, 2001) and invites new players to the strategic table (Whittington, 2002). The 1980's marked the starting point in the trend of strategic decentralization. The well known debate concerning the "rise and fall of the strategic planning" with Ansoff and Mintzberg in 1990 and 1991 was an illustration of this trend: the development of the strategic process, less planned, less centralized, created room for emergent strategy (Mintzberg and Waters, 1985), even autonomous strategy (Burgelman, 1983) supported by new players: middle managers. Middle managers are now fully involved in the strategic process (Floyd and Wooldridge, 1990), playing a central role not only in the implementation phase, but in the decision-making processes and the initial diagnosis. We suggest this trend is particularly visible in the service sector, where the network structure, a common organization in service companies (Mills et al., 1983), reinforces the effects of strategic decentralization (Payaud, 2003). The generic characteristics of service companies (Berry, 1980), such as the coproduction of service with the client, give a central role to the contact staff and the operational level. The Flexiform model (Mills et al., 1983) specifies the level of power and the degree of legitimation linked to the operational level: the headquarters is "weak" compared to an autonomous network of field units which implement their own solutions, adapted to the local context. As a consequence, the role of middle management in the definition of the corporate strategy is crucial to observe. The existence of autonomous local strategies in service companies, and the key role played by middle management in such a context, more than justifies the interest in observing the strategic process in service companies: what is the content of local micro-strategies, what is the role of the operational level and of the middle management level in the strategic process (Floyd and Lane, 2000), what are the links in the 'strategic chain' beginning with the contact staff and ending with the corporate center? To address these issues, we interviewed 29 front line and middle managers and processed a content analysis. The first aim of this was to identify the specificity of micro-strategy. The content of micro-strategy is different from corporate strategy: the local manager has different objectives (more commercial and operational), and resources (acquisitions are harder to decide on) and encounters different problems. In this paper, we first propose a canvas for middle managers to organize a local micro-strategy. The second aim was to explore the 'strategic chain' and the contribution of each level (front line and middle management) to the strategic process. We adapt the model of strategic conversation (Westley, 1990) to different levels of management in the service company: -an operational conversation between the operational staff and the middle management, concerning clients and operational process, -a strategic conversation between the middle management and the corporate management, concerning the competition strategy and the development of the structure and resources. We suggest that these two sets of conversations are permanently interacting with each other, which reduces the risk of heterogeneity in the numerous micro-strategies at the field levels, and offers an ideal tool to make the strategy more consistent. This research offers operational, middle and top management a pattern to organize and improve on the design of the strategic process in which they are all involved. It illustrates the strategic conversation between the middle and the top management and proposes to adapt this concept to an operational conversation between local front line management and regional middle management. The operational and middle management should use strategic analysis tools to create more relevant local strategic diagnosis: this common vocabulary should facilitate the dialog between the center and the periphery, and consolidate micro-strategies locally. This research could be useful to headquarters in understanding more the need for autonomy of local service units in a national network and to master relationships when managing the strategic process.