CH1 Introduction
Identifying the strategy issues
Two ways of learning: tool-driven and problem-driven.
Strategy dimensions: Content, process and context
Most strategy research is more atomistic than holistic, focusing on just a few variables at once.
Structuring the strategy debates
Strategy tensions as both/and problems
In general there are two fundamentally different kinds of problems, 'either/or problems' and
'both/and problems'.
Either/or problems are for Both/and problems are for example:
example: • Trade-offs (the balance is unstable and
• Puzzles temporal)
• Dilemmas • Paradoxes
Taking a dialectical approach
A dialectical enquiry means using two opposite point of view to get a better understanding of the
issue.
Managing strategy paradoxes
Dealing with paradoxes
,Navigating = to focus on one contrary demand at a time.
Parallel processing = to separate the contrary demands in different internal or external
organizational units.
Balancing = to manage opposite demands by trading off elements of the opposing demands and
blending the most appropriate balance.
Juxta posing= to simultaneously manage opposite demands on a permanent basis.
Resolving = to arrive at a higher level equilibrium, by developing a new synthesis between competing
demands or by exploiting the tension.
Embracing = to embrace and actively use the tension as a source of creativity and opportunity.
The short case in this chapter is about Disney. Disney had some glamorous years but after the death
of the two Walt brothers there were no new movies made. After a while they hired a new
management team (Paramount Studios). After that huge investments were made and new animation
movies were produced. They also opened Euro Disney, which was quite a challenge. It turned out
that Europeans had a different preference than Japanese customers. In 1996 Eisner, the CEO of
Disney bought ABC, but that project failed. After that the only success movies were in collaboration
with Pixar, from Steve Jobs. The new CEO gave all departments more autonomy. He succeeds in
buying Pixar and collaborate with Apple. ABC was doing well and Disney Channel was raising. Things
are going well these days but there are still some strategic challenges. One key strategic challenge is
to continue to reap the synergies between the divisions, by taking movie characters to television, the
Internet, theme parks, merchandise and Disney stores. Another issue is internationalization. Disney's
future in interactive media is another issue. Probably the biggest challenge, however, is to keep
Disney's heart and soul fresh - its film business.
Introduction to the readings
Mason and Mitroff's main argument is that most strategic problems facing organizations are not
tame. Mason and Mitroff call on strategists to systematically doubt the value of all available solutions
and to employ dialectics. The most important message that Mason and Mitroff have is that the
variety of opinions might make things more complex, but is also a useful resource for finding better
quality solutions.
Reading 1.1 Complexity: Thee nature of real world problems (Mason and Mitroff)
Three factors – separability reducibility, and one-dimensional goal structure - mean that simple
problems can be bounded, managed, and tamed. Ironically, problems of the utmost complexity can
also be tamed as long as the complexity is 'disorganized'. Disorganized complexity can generally be
tamed by statistical means.
The great difficulty with connected systems of organized complexity is that deviations in one element
can be transmitted to other elements. In turn, these deviations can be magnified, modified and
reverberated so that the system takes on a kind of unpredictable life of its own. Emery and Trist
(1965) refer to this condition as 'environmental connectedness' and have labelled this type of
environment the 'turbulent environment'.
In the reading there is a case about a foodcanner. The foodcanner suffered organized complexity.
They made a decision which was not relevant anymore due to decisions other companies made. This
is an example of a 'wicked' problem. The more you attempt to tame them, the more complicated
they become.
Rittel (1972) has identified several characteristic properties of wicked problems that distinguish them
from tame problems:
• Ability to formulate the problem
, • Relationship between problem and solution
• Testability
• Finality
• Tractability
• Explanatory characteristics
• Level of analysis
• Reproducibility
• Replicability
• Responsibility
Characteristics of wicked problems:
• Interconnectedness
• Complicatedness
• Uncertainty
• Ambiguity
• Conflict
• Societal constraints
The wicked problems of organized complexity have two major implications for designing processes
for making policy:
• There must be a broader participation of affected parties, directly and indirectly, in the policy
making process
• Policy making must be based on a wider spectrum of information gathered from a larger
number of diverse sources.
Descartes rule: The first precept was never to accept a thing as true until I knew it was such without a
simple doubt.
Dialectics and argumentation are methods of systematizing doubt. They entail the processes of:
• Making information and its underlying assumptions explicit
• Raising questions and issues toward which different positions can be taken
• Gathering evidence and building arguments for and against each position
• Attempting to arrive at some final conclusion
Wicked problems must be dealt with in a holistic or synthetic way as well as in an analytic way. Two
processes are necessary: to subdivide a complex problem into its elements and to determine the
nature of the linkages that give organization to its complexity. A second characteristic of these
problems is that there is some form of latent structure within them.
Some new criteria for the design of real world problem-solving:
• Participative
• Adversarial
• Integrative
• Managerial mind supporting
Reading 1.2 Managing strategic contradictions (Smith, Tushmann)
We define balanced strategic decisions based on two criteria:
• Their distributive nature, which we define as making balanced trade-offs over time
• Their integrative nature, which we define as identifying synergies
, The distributive aspect of a decision involves the division of resources between the existing product
and the innovation. this is also called "claiming value," as managers identify resources for each
individual product.
Decisions can also be defined by their integrative nature - the recognition of opportunities, linkages
and synergies that might arise. This is also called creating value, in which the negotiated value
increases when teams identify creative solutions from which both parties benefit.
When structure, strategies and competencies all reinforce one another, managers are psychologically
more resistant to changing them. Levinthal and March suggest that managers are myopic - privileging
short term over long term. Bazerman and Watkins (2004) observe that historical success is associated
with a set of fundamental individual cognitive biases that drive predictable organizational (and social)
pathology.
Belief in unitary truth means inconsistencies cannot fundamentally coexist. There must be a
contingency that mediates between inconsistent ideas. Mythical fixed pie is: by focusing on solving
the conflict, negotiators focus on distributing resources between them, rather than finding
cooperative means for expanding the value of resources.
Paradoxical cognition - paradoxical frames and cognitive processes of differentiating and integrating -
enable balanced strategic decisions. Cognitive frames are stable constructs that provide a lens to
understand a situation. These cognitive frames, in turn, create a context for complex behavioral
responses. Cognitive processes are behavioral routines and ways that managers use to think about
and respond to information.
Walsh (1995) defines a cognitive frame as "a mental template that individuals impose on an
environment to give it form".
Paradoxes involve both a situation (oppositional tendencies) and an actor's cognition (reflection or
interaction). Specifically, a paradox is created when
• Tensions in a situations are
• juxtaposed through actor's cognition
We can identify cognitive frames of managers through their words and actions.
How might paradoxical frames increase organizational performance? First, these frames create a
context that demands the articulation of distinct goals for the existing product and for the
innovation. Paradoxical frames are also associated with reduced threat and fear, which enables
positive conflict.
Identifying the strategy issues
Two ways of learning: tool-driven and problem-driven.
Strategy dimensions: Content, process and context
Most strategy research is more atomistic than holistic, focusing on just a few variables at once.
Structuring the strategy debates
Strategy tensions as both/and problems
In general there are two fundamentally different kinds of problems, 'either/or problems' and
'both/and problems'.
Either/or problems are for Both/and problems are for example:
example: • Trade-offs (the balance is unstable and
• Puzzles temporal)
• Dilemmas • Paradoxes
Taking a dialectical approach
A dialectical enquiry means using two opposite point of view to get a better understanding of the
issue.
Managing strategy paradoxes
Dealing with paradoxes
,Navigating = to focus on one contrary demand at a time.
Parallel processing = to separate the contrary demands in different internal or external
organizational units.
Balancing = to manage opposite demands by trading off elements of the opposing demands and
blending the most appropriate balance.
Juxta posing= to simultaneously manage opposite demands on a permanent basis.
Resolving = to arrive at a higher level equilibrium, by developing a new synthesis between competing
demands or by exploiting the tension.
Embracing = to embrace and actively use the tension as a source of creativity and opportunity.
The short case in this chapter is about Disney. Disney had some glamorous years but after the death
of the two Walt brothers there were no new movies made. After a while they hired a new
management team (Paramount Studios). After that huge investments were made and new animation
movies were produced. They also opened Euro Disney, which was quite a challenge. It turned out
that Europeans had a different preference than Japanese customers. In 1996 Eisner, the CEO of
Disney bought ABC, but that project failed. After that the only success movies were in collaboration
with Pixar, from Steve Jobs. The new CEO gave all departments more autonomy. He succeeds in
buying Pixar and collaborate with Apple. ABC was doing well and Disney Channel was raising. Things
are going well these days but there are still some strategic challenges. One key strategic challenge is
to continue to reap the synergies between the divisions, by taking movie characters to television, the
Internet, theme parks, merchandise and Disney stores. Another issue is internationalization. Disney's
future in interactive media is another issue. Probably the biggest challenge, however, is to keep
Disney's heart and soul fresh - its film business.
Introduction to the readings
Mason and Mitroff's main argument is that most strategic problems facing organizations are not
tame. Mason and Mitroff call on strategists to systematically doubt the value of all available solutions
and to employ dialectics. The most important message that Mason and Mitroff have is that the
variety of opinions might make things more complex, but is also a useful resource for finding better
quality solutions.
Reading 1.1 Complexity: Thee nature of real world problems (Mason and Mitroff)
Three factors – separability reducibility, and one-dimensional goal structure - mean that simple
problems can be bounded, managed, and tamed. Ironically, problems of the utmost complexity can
also be tamed as long as the complexity is 'disorganized'. Disorganized complexity can generally be
tamed by statistical means.
The great difficulty with connected systems of organized complexity is that deviations in one element
can be transmitted to other elements. In turn, these deviations can be magnified, modified and
reverberated so that the system takes on a kind of unpredictable life of its own. Emery and Trist
(1965) refer to this condition as 'environmental connectedness' and have labelled this type of
environment the 'turbulent environment'.
In the reading there is a case about a foodcanner. The foodcanner suffered organized complexity.
They made a decision which was not relevant anymore due to decisions other companies made. This
is an example of a 'wicked' problem. The more you attempt to tame them, the more complicated
they become.
Rittel (1972) has identified several characteristic properties of wicked problems that distinguish them
from tame problems:
• Ability to formulate the problem
, • Relationship between problem and solution
• Testability
• Finality
• Tractability
• Explanatory characteristics
• Level of analysis
• Reproducibility
• Replicability
• Responsibility
Characteristics of wicked problems:
• Interconnectedness
• Complicatedness
• Uncertainty
• Ambiguity
• Conflict
• Societal constraints
The wicked problems of organized complexity have two major implications for designing processes
for making policy:
• There must be a broader participation of affected parties, directly and indirectly, in the policy
making process
• Policy making must be based on a wider spectrum of information gathered from a larger
number of diverse sources.
Descartes rule: The first precept was never to accept a thing as true until I knew it was such without a
simple doubt.
Dialectics and argumentation are methods of systematizing doubt. They entail the processes of:
• Making information and its underlying assumptions explicit
• Raising questions and issues toward which different positions can be taken
• Gathering evidence and building arguments for and against each position
• Attempting to arrive at some final conclusion
Wicked problems must be dealt with in a holistic or synthetic way as well as in an analytic way. Two
processes are necessary: to subdivide a complex problem into its elements and to determine the
nature of the linkages that give organization to its complexity. A second characteristic of these
problems is that there is some form of latent structure within them.
Some new criteria for the design of real world problem-solving:
• Participative
• Adversarial
• Integrative
• Managerial mind supporting
Reading 1.2 Managing strategic contradictions (Smith, Tushmann)
We define balanced strategic decisions based on two criteria:
• Their distributive nature, which we define as making balanced trade-offs over time
• Their integrative nature, which we define as identifying synergies
, The distributive aspect of a decision involves the division of resources between the existing product
and the innovation. this is also called "claiming value," as managers identify resources for each
individual product.
Decisions can also be defined by their integrative nature - the recognition of opportunities, linkages
and synergies that might arise. This is also called creating value, in which the negotiated value
increases when teams identify creative solutions from which both parties benefit.
When structure, strategies and competencies all reinforce one another, managers are psychologically
more resistant to changing them. Levinthal and March suggest that managers are myopic - privileging
short term over long term. Bazerman and Watkins (2004) observe that historical success is associated
with a set of fundamental individual cognitive biases that drive predictable organizational (and social)
pathology.
Belief in unitary truth means inconsistencies cannot fundamentally coexist. There must be a
contingency that mediates between inconsistent ideas. Mythical fixed pie is: by focusing on solving
the conflict, negotiators focus on distributing resources between them, rather than finding
cooperative means for expanding the value of resources.
Paradoxical cognition - paradoxical frames and cognitive processes of differentiating and integrating -
enable balanced strategic decisions. Cognitive frames are stable constructs that provide a lens to
understand a situation. These cognitive frames, in turn, create a context for complex behavioral
responses. Cognitive processes are behavioral routines and ways that managers use to think about
and respond to information.
Walsh (1995) defines a cognitive frame as "a mental template that individuals impose on an
environment to give it form".
Paradoxes involve both a situation (oppositional tendencies) and an actor's cognition (reflection or
interaction). Specifically, a paradox is created when
• Tensions in a situations are
• juxtaposed through actor's cognition
We can identify cognitive frames of managers through their words and actions.
How might paradoxical frames increase organizational performance? First, these frames create a
context that demands the articulation of distinct goals for the existing product and for the
innovation. Paradoxical frames are also associated with reduced threat and fear, which enables
positive conflict.
