On the Origin of Strategy: Action and Cognition over Time

Abstract

We develop a perspective on how managers search for a strategy. In the spirit of Cyert and March (1963), we aim for a perspective that reflects the reality of managerial behavior, that respects both the reasoning power of managers and the bounds on their rationality, and that permits organizations to change but within realistic limits. Our perspective employs the variable time to frame the question of strategy’s origins in a distinctive way. Over time, the cognitive and physical elements that make up a strategy become less plastic, while mechanisms to search rationally for a strategy become more available. This generates a fundamental tension in the origin of strategy: Managers struggle to understand their environment well enough to search rationally for an effective strategy before their firms lose the plasticity necessary to exploit that understanding. A focus on time allows us to synthesize and extend the evolutionary and positioning models of strategic search. Toward this end, we couple induction and deduction. The inductive part of the paper uses detailed observation of the search for a strategy at one firm to identify constructs that play a crucial role in strategic search. The deductive part steps beyond our focal firm and uses these constructs to derive theoretical propositions about the typical path of strategic search and the mortality associated with different approaches to search.

Learning while (re-)configuring: Business model innovation processes in established firms

“…Cognitive search can be enabled by analogical reasoning (Gavetti et al, 2005;Martins et al, 2015) and imitation of others (Rivkin, 2000). Yet, cognitive representations are always simplified (Gavetti and Levinthal, 2000;Gavetti and Rivkin, 2007). Especially in uncertain conditions, the effectiveness of strategic search and planning is limited by unforeseen contingencies and changes, both within the firm and in its external environment (Gruber, 2007;McGrath, 2010;Mintzberg and Waters, 1985).…”

Modern Resource-Based Theory(ies)

“…Nickerson & Zenger, 2004;Gavetti, 2005;Gavetti & Rivkin, 2007). In a simulation model, Gavetti and Levinthal (2000) show how the effectiveness of organizational search may be substantially enhanced by cognitive representations of the resource space.…”

“…Scientific understanding leads entrepreneurs more directly to useful resource combinations, eliminates fruitless paths of research, and motivates them to press on even in the face of negative feedback (Fleming & Sorenson, 2004: 911-912). Likewise, a cognitive representation of the resource space may also be informed by analogies (Gavetti, Levinthal & Rivkin, 2005;Gavetti & Rivkin, 2007;Gavetti & Warglien, 2007). Analogies allow human agents to take insights developed in one context and apply it to a new setting.…”

Melhoria da eficiência energética em sistemas motrizes industriais

“…As decisões são tomadas por meio de heurísticas dos decisores e as estratégias das empresas são definidas a partir dessas decisões (Gavetti & Rivkin, 2007). No que diz respeito a projetos para melhoria da eficiência energética, a grande preocupação dos gestores têm sido informações sobre investimentos e o decisor, normalmente, apresenta um perfil de grande aversão ao risco (Sandberg & Söderström, 2003).…”