Confronting strategic inertia in a top management team: learning from failure

Organization Studies, Nov-Dec, 2002 by Gerard P. Hodgkinson, George Wright

Abstract

Recently there has been a growing interest in the use of scenario-planning techniques and related procedures such as cognitive mapping as a basis for facilitating organizational learning and strategic renewal. The overwhelming impression conveyed within the popular management literature is that the application of these techniques invariably leads to successful outcomes. To the extent that this is not the case, the absence of documented accounts of instances where these techniques have failed may mislead would-be users into embarking on inappropriate courses of action, unaware of their fundamental limitations. In keeping with a number of recent calls to make organizational research and management theory more relevant to the world of practice, we present a reflective account of our own (largely unsuccessful) attempt to apply these potentially powerful methods of intervention in the context of a private sector organization. Drawing on the rich seam of qualitative data gathered over the course of our work with th e senior management team of the organization concerned, we explore the reasons why our attempts to utilize these methods did not yield the benefits anticipated. The data are analyzed using Janis and Mann's (1977) Conflict Theory of Decision Making. It is argued that the primary reason why our process intervention failed is that the participants adopted a series of defensive avoidance strategies, amplified by a series of psychodynamic processes initiated by the Chief Executive Officer (CEO). We contend that these defensive avoidance strategies served as a means of coping with the unacceptably high levels of decisional stress, which arose as a result of having to confront a variety of alternatives, each with potentially threatening consequences for the long-term well-being of the organization.

Descriptors: cognitive inertia, decisional stress, organizational development and change, organizational learning, psychodynamic theory, scenario planning

Introduction

One of the most important concepts to have emerged from the burgeoning literature on strategic cognition in recent years is the notion of 'cognitive inertia'. Once established, there is a danger that actors may become overly dependent on their mental models of strategic phenomena, to the extent that they fail to notice changes in the material conditions of their business environments until these changes have become so widespread, or significant in other ways, that their organization's capacity for successful adaptation has been seriously undermined. (For empirical demonstrations of this phenomenon, see Barr and Huff 1997; Barr et al. 1992; Hodgkinson 1997; Reger and Palmer 1996.) To the extent that this concept is valid, it has important normative/prescriptive implications, namely, that strategists should periodically engage in processes of reflection and dialogue, in order to challenge their otherwise taken-for-granted beliefs and assumptions regarding the strategic imperatives confronting their organization s, with a view to broadening their perceptions. The aim of such an exercise is to attain the requisite variety in mental models necessary in order to anticipate the future and develop a strategically responsive organization, thus mediating the potentially deleterious impact of cognition on action (cf. Baden-Fuller and Stopford 1992; Mitroff 1988; Morecroft 1994; Senge 1990).

In this paper, we confront theory with practice. We reflect critically on our own attempts to implement this prescriptive advice in the course of a recently completed scenario-planning assignment which we undertook as paid consultants in a business organization operating within the global publishing industry (broadly conceived). (2) The model underpinning our intervention was one of 'process consultation':

'[Process consultation] is a set of activities on the part of the consultant that help the client to perceive, understand, and act upon the process events that occur in the client's environment in order to improve the situation as defined by the client.' (Schein 1988: 11)

In adopting this approach, the primary purpose of the consultant is to ensure that the client is sufficiently equipped to identify the nature of the problem and arrive at his or her own solutions. Hence, the underlying ethos of process consultation is to vest ownership of the entire process (including problem definition and the identification and implementation of the proposed solution/solutions) with the client, as opposed to the 'expert' consultant. Facilitation skills are thus paramount throughout the whole intervention. (For further discussion of the underlying aims and philosophy of process consultation, see Schein 1987, 1988.)

The organization in question is facing a highly uncertain future, with a very real possibility that its current offerings, and those of its clients, might be displaced by foreseeable changes in the practices of firms in the wider industry in which it operates. Mindful of the rapid pace with which innovations are taking place, we were hired as external consultants by the chief executive officer (CEO), with the expressed intention that we should facilitate a 'strategy process workshop', the explicit purpose of which was to surface managerial understandings of the company's current strategy and competitive position, with a view to fostering a debate within the senior management team regarding its medium-to-long-term strategic priorities and direction.