Strategic Reasoning

In this article we will identify differences in assumptions and conclusions for the following three contributions:

“The concept of corporate strategy” By Kenneth Andrews.
“The mind of the strategist” By Kenichi Ohmae.
“Decision making: It’s not what you think” By H. Mintzberg en F. Westley.

“The concept of corporate strategy” By Kenneth Andrews.

Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and noneconomic contribution it intends to make to its shareholders, employees, customers, and communities. Corporate strategy is an organizational process, we may abstract from the process two important aspect. The first of these we may call formulation, the second implementation.

Deciding what strategy should be may be approached as a rational undertaking, even if emotional attachments may complicate choice among future alternatives. The principle sub activities of strategy formulation as a logical activity include identifying opportunities and threats in the company’s environment and attaching some estimate of risk to the discernible alternatives. The strategic alternative that results form matching opportunity and corporate capability at an acceptable level of risk is what we may call economic strategy. This process assumes that strategists are analytically objective in estimating the relative capacity of their company and the opportunity they see or anticipate in developing markets. So far we have described the intellectual processes of ascertaining what a company might do [market opportunity] in terms of environmental opportunity, of deciding what it can do [corporate competence and resources] in terms of ability and power, and of bringing these two considerations together in optimal equilibrium.

The determination of strategy also requires consideration of personal value, aspirations, and ideals do, influence the final choice of purposes. Thus what the executive of a company want to do. [personal values and aspirations] Finally strategic choice has an ethical aspect, what a company should do [acknowledged obligations to segments of society other than stockholders] appears as a fourth element of strategic decision.

Of all the components of strategic choice, the combination of resources and competence is most crucial to success. If we compare this pattern of decisions with the rational reasoning perspective it show remarkable similarities. To deal with strategic problems the strategist must first consciously and thoroughly analyze the problem situation. The organization must be appraised, to uncover its strengths and weaknesses and to establish which recourses are available. Once the problem has been defined, a number of alternative strategies can be identified by matching external opportunities to internal strengths. Then the strategic options must be extensively screened, by evaluating them on a number of criteria, such as: internal consistency, external consonance, competitive advantage, organizational feasibility, potential return and risks.

“The mind of the strategist” By Kenichi Ohmae.

Ohmae (1982) claims that the creative element in plans, and the drive and will of the mind gives strategies their extraordinary competitive impact. This way natural and instinctive thinking is dying out in favor of rational thinking. Today’s giant institutions are by and large not organized for innovation. Their systems and processes are all oriented toward incremental improvement. Ohmae [1982] engages differently in strategic reasoning than Andrews [1987] his message is that successful business strategies result not form rigorous analysis but from a particular state of mind, In what he call’s the mind of the strategist, insight and a consequent drive for achievement, often amounting to a sense of mission, fuel a thought process which is basically creative and intuitive rather than rational. Strategists do not reject analysis. But they use it only to stimulate the creative process, to test the ideas that emerge, to work out their strategic implications, or to ensure successful execution of high potential “wild” ideas that might otherwise never be implemented properly. This is consistent with the generative reasoning perspective [de Wit & Meyer, 2010]. “They agree that logic is important, but stress that it is often more a hindrance than a help”. Strategic successes cannot be reduced to a formula, nor can anyone become a strategic thinker merely by reading a book. Nevertheless, there are habits of mind and modes of thinking that can be acquired through practice to help you free the creative power of your subconscious and improve your odds of coming up with winning strategic concepts.

“Decision-making: It’s not what you think” By H. Mintzberg en F. Westley.

Mintzberg and Westley state that sometimes decisions defy purely step-by-step logic. To be effective, companies also should embrace intuitive or action-oriented forms of decision-making. Their approach is therefore more pragmatic. They propose that rational or “thinking first”, model of decision-making should be supplemented with two very different models a “seeing first” and a “doing first” model. When practicing managers use all three models, they can improve the quality of their decisions.

“Thinking first”, rational decision-making has a clearly identified process: Define – Diagnose –Design –Decide.
“Seeing first”, suggests that decisions, or at least actions, may be driven as much by what is seen as by what is thought. Preparation – Incubation – Illumination – Verification.
“Doing first”, that is how pragmatic people function when stymied: They get on with it, believing that if they do something the necessary thinking could follow. Enactment – Selection – Retention.

They thee approaches to decision-making correlate with conventional views of science, art and craft. The first is mainly verbal (comprising words in linear order), the second is visual, and the third is visceral. Each approach has its own strengths and weakenesses that suggests the advantages of combining all three approaches.

Conclusion:

Andrews advocates a demand for logical thinking. When employing logic, each step in an argumentation follows from previous, based on valid principles. He argues that strategic reasoning is predominantly a logical activity emphasizing on the rational reasoning perspective.

Ohmae advocates a demand for creative thinking. Creativity in effect creates a new understanding, with little attention paid to supportive evidence. Often logic is used afterwards to justify an idea that was actually generated by creative means. He argues that strategic reasoning is predominantly a creative activity emphasizing on the generative reasoning perspective.

Mintzberg and Westley try to find a synthesis, combining above opposite poles, in a way that suits each manager’s specific circumstances. By combining above poles they managed the paradox for this moment.