Many business professionals are acquainted with Michael Porter and his five forces model for assessing a company’s strategic position. However, what may not be widely known is that there exists a similar model that predates Porter’s. Written by Raymond Miles and Charles Snow in 1978, the paper they published was titled “Organizational Strategy, Structure, and Process,” which lays out a typology of four different organizational types: prospector, defender, analyzer, and reactor. What’s interesting to see is how others who have followed them have built upon the foundation they laid down.
Let’s dig into what they proposed–and what that can teach you about how your own organization is strategically positioned.
As defined by Miles and Snow, prospector organizations are very entrepreneurial. They spend much time, effort, and money identifying new products and solutions. Companies like 3M and Apple come to mind as examples. They prioritize creativity and innovation more than operational efficiency. Typically, these organizations work in dynamic environments where the rules change rapidly. Companies need to stay current, or they’ll get lost. Unsurprisingly, this is typically the kind of market we associate with tech firms where it’s not the big that eats the small but the fast that eats the slow.
An organization that embraces a defender mindset focuses on maintaining its position in the market. Its goals are to grow its share in a relatively stable market steadily. These are typically companies that embrace standardization and systems. They work on maximizing their supply chain and squeezing out every possible cost from their solution–sometimes by vertically integrating other companies. We see this behavior in the airline industry. By and large, the experience of getting on a plane is the same as it was decades ago, with only minor differences. Rather than pursue new ideas or technology, the airlines focus on efficiency by loading the planes to capacity and ensuring their planes are maintained regularly. Look at the example of Southwest Airlines, which has done everything possible to take the cost out of the equation and make flying as affordable and reliable as possible.
Analyzers can be considered tweeners in that they share some characteristics of the prospector and the defender. They are trying to be dynamic and innovative while maintaining their mature core business. To make this strategy work, they need to constantly analyze the conditions in the market to assess what changes they might need to make. Think about the aircraft manufacturers. On one hand, they have older products to maintain for their customers, like Boeing’s 737 workhorse. At the same time, they are trying to innovate by making newer models of plans that can offer more capacity, comfort, and efficiency. As a result, they spend a lot of money on R&D and finding ways to incorporate innovative materials into their plans to offer a product that gives their customers an operational edge.
Reactors are organizations that lack a strategy altogether. All they do is react to whatever is happening around them. They are not forward-thinking about how they can best compete in their market. They shift their offerings as the winds change, meaning they never build competency. This is usually the result of ineffective leadership’s unwillingness to make decisions and stick with them over time. Generally, these kinds of companies don’t prosper and perform well over time. This is the one strategy that you don’t want to attempt. If you feel this represents your organization, you must consciously shift to one of the other three positions.
Which One Are You?
So, which of these strategies sounds most familiar to you? There might not be one right or wrong answer to the best strategy for your organization to embrace. But it might help to understand which one you should pursue given the dynamic of your own market.