Strategy Thinking: Different Levels
- Cognitive activities: Application Level, Mental Reasoning
What are the intended mental tasks in order to increase the strategist’s knowledge? - Cognitive Maps: Operating System Level, Mental Models
What are the maps of a person of how the world works?
3.Cognitive Abilities: Hardware Level, Mental Faculties
Till what degree is the human brain limited what it can know?
cognitive activities
- Defining:
- Identifying (recognizing sense-making) What is the problem?
- Diagnosing (Analyzing reflecting) What is the nature of the Problem? - Solving:
- Conceiving (formulating imagining) How should the problem be addressed?
- Realizing (implementing acting) What actions should be taken?
cognitive maps
- knowledge stored in people’s minds
- representations in a person’s mind of how the world works
- map situation: reflects a person’s beliefs about importance of issues and causes and effects relationships between them.
cognitive abilities: limitations
- limited information sensing ability
- limited information processing capacity
- limited information storage capacity
Paradox of Strategic Thinking
Logical Thinking:
the ability of managers to critical reflects on the assumptions they hold and to make their tacit beliefs more explicit
vs
Creative Thinking:
the ability of managers to abandon the rules governing sound argumentation and generates new understanding
What are the risks of strategic decisions?
Demand for logical thinking:
not following an logical order during strategic reasoning process -> the reality can be distorted. Actions could happened before thinking about them which could be really costly
Demand for creative thinking:
we should not only stick to our rigid cognitive map as strategist because we also need new innovative ideas which we receive through creative thinking
perspectives of strategic thinking
rational reasoning:
logic, analytical, formal/fixed rules, deductive thinking, structured, vertical, conscious, recognizing, cold cognition, objective knowable, incomplete information, slow, calculation, strategy as science
generative reasoning:
creativity, intuitive, informal/ variable rules, inductive, unstructured, lateral, unconscious, imagining, hot cognition, subjective creatable, rigid cognitive map, fast, judgement, strategy as an art
Strategy Formation: Strategy formation activities
elements of strategic reasoning process:
- Defining
- Identifying: Mission & agenda setting
- Diagnosing: external & internal assessment - Solving
- Conceiving: Option generation & selection
- Realizing: action taking & performance control
Strategy Formation: Strategy formation roles
How will the strategy formation activities be carried out?
Top vs middle vs bottom roles:
–> how much to empower each of them?
line vs staff
–> which of does should be responsible for strategy formation process?
internal vs external
–> should the strategy. form. proc. be outsourced?
deliberate and emergent strategy
intended strategy (plan of action) + deliberate strategy (unrealized strategy) + emergent strategy –> realized strategy (patterns of action
deliberate strategizing: pressures
the ability of acting intentionally, so thinking before acting.
Advantages of having a plan:
1. Direction: plans and objectives
2. commitment: to a course of action
3. coordination: of all strategic initiatives
4. optimization: optimal resource allocation
5. programming: all organizational activities in advance
strategy emergence: Advantages
the ability of thinking and acting at the same time and letting strategy emerge.
- Opportunism: open mind to grab unforeseen opportunities
- flexibility: keep options open, don’t commit to early
- learning: give it a try
- entrepreneurship: different people with different ideas
- support: understanding political and cultural dynamics
Paradox of Strategy Formation
deliberate strategizing: ability of acting intentionally; so thinking before acting
strategy emergence: ability of thinking and acting at the same time and letting strategy emerge
Perspectives of Strategy Formation
strategic planning:
deliberateness, intentionally designed, figuring out, forecast, commitments, structure, think than act, hierarchical, optimal resource allocation, coordination, programming, implemented top-down
strategic incrementalism:
emergence, gradually shaped, finding out, partially unknown, stay flexible, unstructured, think and act at the same time, dispersed(verstreut), experimentation, learning, requires cultural and cognitive shifts
Strategic Change: the issue of strategic renewal
How can a path strategic changes be followed to constantly renew the firm?
- Areas: Does the strategic change take place in the business or in the organizational system?
- Magnitude: what is the scope and the amplitude of the strategic change?
- Pace: What is the speed and timing of the change?
Paradox of Strategic Change
Revolutionary Change
Change processes that do not built on the status quo, yet overthrow it before acting
Evolutionary Change
Change process whereby a constant stream of moderate changes gradually accumulates over a longer period of time
Perspectives of strategic change/ renewal
discontinuous renewal
revolution, disruptive innovation, creative destruction, radical, abrupt, sudden break with status quo, shock therapy, under pressure things become fluid, stable and unstable states alternatives, punctuated equilibrium
continous renewal
evolution, uninterrupted, organic adaption, moderate, gradual, permanent learning and flexibility, continuous adjustment, in the cold everything freezes, persistent transient state, gradual development
Areas of Strategic Renewal: The Business System and Components of organizational System
Business System (firm’s work)
Organizational Structure (firm’s anatomy)
organ. processes (firm’s physiology)
organ. culture (firm’s psychology)
organ. members (firm’s cells)
