Miles and Snow, based on an in-depth cross-industry study of a relatively small sample or large corporations, developed a theory that there are three superior performing business types and all others are average or less than average. Their theory holds that in order to be superior, there must be a clear and direct match between the organization's mission/values (their definition), the organization's strategies (their basic strategy set), and the organization's functional strategies (their characteristics and behavior).

"Defenders are organizations

1. which have narrow product-market domains.
2. Top managers in this type organization are highly expert in their organization’s limited area of operation
3. but do not tend to search outside their narrow domains for new opportunities." (Miles and Snow, 1978, p. 29)

Basic strategy set:

• Aggressively maintain prominence within its chosen market segment
• Ignore developments outside of this domain
• Penetrate deeper into current markets
• Normally, growth occurs cautiously and incrementally

Characteristics & behavior:

• Single core technology, often vertically integrated, updates current technology to maintain efficiency
• Stable structure and process
• Dominant coalitions are finance and production
• Planning is intensive, not extensive
• Promote from within
• Functional structure
• Extensive division of labor and high degree of formalization
• Centralized control
• Vertical information flows
• Simple and inexpensive coordination
• Managers evaluated on efficiency versus the past

 "Prospectors are organizations

1. which almost continually search for market opportunities, and
2. they regularly experiment with potential responses to emerging environmental trends.
3. Thus, these organizations often are the creators of change and uncertainty to which their competitors must respond." (Miles and Snow, 1978, p. 29)

Basic strategy set:

• Broad domain, in a continuous state of development
• Monitors a wide range of environmental conditions, trends, and events
• Creators of change in their industries
• Growth primarily from new markets and new products
• Uneven, spurt-like growth

Characteristics & behavior:

• Not efficient
• Changing structure and technology
• Frequent prototype production, multiple technologies
• Technologies in people not machines
• Dominant coalitions are marketing and research and development
• Key executives as likely to come from outside as inside
• Executive tenure is shorter than defender’s
• Planning is broad, not intensive
• Product based structure
• Less division of labor, low formalization
• Control is results-oriented
• Info flow to decentralized decision-makers
• Complex and expensive coordination
• Conflict directly confronted and resolved
• Managerial appraisal versus similar organizations

"Analyzers are organizations

1. which operate in two types of product-market domains, one relatively stable, the other changing.
2. In their stable areas, these organizations operate routinely and efficiently through use of formalized structures and processes.
3. In their more turbulent areas, top managers watch their competitors closely for new ideas, and then rapidly adopt those which appear to be the most promising." (Miles and Snow, 1978, p. 29)

Basic strategy set:

• A mixture of products and markets, some stable, others changing
• Successful imitation through extensive marketing surveillance
• Avid follower of change
• Growth normally occurs through market penetration
• Growth may also occur through product and market development

Characteristics & behavior:

• Dual technology core, moderate efficiency
• Dominant coalition is marketing, applied research, and production
• Planning is both intensive and comprehensive
• Structure is matrix, functional and product
• Control difficult; must be able to trade off efficiency and effectiveness
• Coordination is both simple and complex
• Managerial is dual efficiency versus past, effectiveness versus similar organizations

"Reactors are organizations

1. in which top mangers frequently perceive change and uncertainty occurring in their organizational environments
2. but are unable to respond effectively.
3. Because this type of organization lacks a consistent strategy-structure relationship, it seldom makes adjustments of any sort until forced to do so by environmental pressures." (Miles and Snow, 1978, p. 29)

Basic strategy set (1 of 3):

• Management fails to articulate a viable organizational strategy
• Management articulates an appropriate strategy, but technology, structure, and process are not linked to strategy appropriately
• Management adheres to a particular strategy-structure relationship that is not relevant to the environment

Source: Miles, Raymond E. and Snow, Charles C. (1978). Organizational strategy, structure, and process. New York: McGraw-Hill Book Co.