What makes strategic thinking successful?
A series of innovative research projects at Saïd Business School, Oxford University is providing valuable insights into how strategy happens in practice within organisations
Professor Richard Whittington is working with colleagues within the School and beyond to explore how managers perform strategy day-to-day, and to gain increased understanding of the key success factors associated with its formulation.
‘We tend to think that directors’ contribution to strategic discussions in the boardroom - including those of non-execs - are largely dependent upon their business expertise. It is emerging that at least equally significant, is their ability to manage the process so that their individual voice can be heard. It is surprising that seemingly trivial things can have unintended consequences upon both the process and outcomes of strategic decision making’ explains Professor Whittington.
‘Most strategic conversations are inefficient. In the last 10 years we have increasingly seen strategy-making pushed down the hierarchy within organisations, but we are not enabling participants to make an effective contribution in many instances. It is oppressive for managers if they cannot make a real contribution and equally it is wasteful for organisations if they are failing to capitalise upon the intellectual capital represented by these managers.’
A project with Professor Saku Manterre of Hanken School of Economics in Helsinki is examining how managers make the transition to participating in strategic decision making within the organisation. ‘Becoming a strategist involves a change in social identity,’ says Professor Whittington. ‘Managers who want to join strategic dialogues must demonstrate functional competence, of course, and confidence in the role, and as a result of the first two things, must be viewed as a credible and legitimate contributor to the strategy process. In examining strategy, a great deal of attention has been given to matters of competence, but it is credibility which is the key factor here.’
Credibility is influenced by many factors – some of them unexpected – as a second study with Dr Curtis LeBaron of Brigham Young University, Utah reveals. ‘We are using video to watch in great detail how strategists conduct themselves in the boardroom’ explains Richard Whittington. ‘Seemingly trivial matters such as the use of technology, the physical set-up of the room and how the individuals use body language and props such as whiteboards are actually much more significant that we previously thought, and can make a huge difference to who achieves what in the strategic process. Those who succeed in the formulation of strategy are not relying upon clever analysis or debating techniques alone, but are skilfully manipulating the props available to them to increase their influence upon the decisions that emerge.’
Although participants in the strategic process may have been subliminally aware that some colleagues perform the role of strategist better than others, this has been an under-researched area which may yield potentially very significant insights. ‘The choice of technology used in presentations, for instance, has implications for who can access information and contribute to strategy making’ says Professor Whittington. ‘Even the simple choice between whiteboard and flip chart can make a difference. To advance a conversation on a whiteboard, earlier discussions have to be erased, whereas a flip chart can record the progression of a debate. This may not seem to matter, but when there are divergent opinions and access to considerable resources are keenly contested, it might be strategically advantageous either to wipe out or retain whole chunks of the debate. Whilst some people no doubt manage such things cleverly and to their own advantage, many others are not even aware of the potential impact of such decisions.’
Once the significance of such factors is appreciated, it is easy for CEOs and their support teams, including HR professionals, to manage such influential elements as room design, availability of technology and training in its use, to establish a transparent and open environment in which all the appropriate people are equally well equipped to contribute to strategic discussions. Without such initiatives organisations are potentially foregoing the contribution of some of the team, including non-executive directors who would be expected to participate at the highest level in such discussions.
‘We have been working closely with one organisation,’ explains Professor Whittington ‘watching the boardroom interplay around strategy in fine detail. There are clear decisive moments, sometimes of high drama, when key players redirect the conversation, skilfully terminating certain options, including or excluding colleagues as necessary to advance their cause. It has been a small scale study but one which we will expand now within other organisations.’
A third project explores how strategy is communicated by the CEO to investors and analysts. ‘It is clear that the effectiveness of this communication has as much impact upon share prices as do formal earnings announcements, so this really is critical for CEOs,’ comments Professor Whittington. The performance of such strategy presentations, as much as the content, are seen as decisive by analysts. It is the opportunity for a CEO to demonstrate both his commitment to the organisation and to reinforce his credibility. ‘It is a moment of truth for CEOs’ says Professor Whittington ‘and with online media the performance is available permanently and globally, shoring up or eroding personal reputation both internally and externally.’
‘We neglect the theatrical performance skills of CEOs at our peril’ says Whittington. ‘Organisations need to pay more attention not just to building these skills in the individual but in all those who work closely with him or her. The physical setting of both the conduct and communication of strategy are also critical and proactive management of the scene should not be overlooked.’
The research has implications for the sorts of skills we want from those directing our organisations and the training they receive. Non-executive directors and others often find it difficult to contribute effectively to the boards on which they sit and this represents a wasted opportunity for many organisations. Greater awareness of the drivers of strategic decision making could help address this and encourage a more inclusive and participatory environment at the top.
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