Strategic decision making
Lecture 1
What are strategic decisions?
→ Let go of military strategy
→ Structure & regulation is important
→ Organization and management plays role
→ Rapidly
→ For the group your individual decision is not important
→ All topics above are important, but all strategic?
→ 10 recurrent topics, who include in decision making?
→ Input e.g. zonnebloemolie (Ukraine), is it replace able? Production problem
→ Boundaries, energy company from US sees opportunity for Europe because of war
Russia-Ukraine. Infra-structure etc.
We make decisions all day:
• Some need additional information
• We ask advice for some decisions
• Some are made on the basis of pre-existing heuristics
• We try to narrow down the number of alternatives
• Organizations are also confronted with decision-situations
• The key challenge to any decision is the reduction of uncertainty (for series, not just one
decision)
What are strategic decisions?
→ E.g. buying Harry Potter, bought it because of quality, didn’t think it would make any
money
→ Being rational in decision making, not having all info, risk taking, non predictable
,Fundamental characteristics of strategic decisions
• Complexity: large number of aspects (many things to take into account)
• Uncertainty : unknown number of alternatives/solutions (opening for other book?)
• Rationality: try to reach a goal (try to see strategy to a goal, help family in Ukraine)
• Control: intentionality
Strategic decisions = decisions committing substantial resources, setting precedents, and
creating waves of lesser decisions; as ill-structured, non-routine and complex; and
as substantial, unusual and all-pervading
Three perspectives (Leiblein et al.: 2018)
I. Strategy as important decisions
II. Strategy as critical tensions
III. Strategy as decision interdependence along three dimensions
III. > I.
III. > II.
I. equally bad as II., or worse?
Decision interdependence
- Inter-decisional, take other decisions into account as well (E.g. google glasses,
professional instead of personal use)
- Inter-actor, other actors in organization include/influence decision, ty to anticipate
(E.g. MOL in BMW gearboxes)
- Inter-temporal, towards future, sub-decisions (E.g. gas field Groningen, prices are low
but real price is in environment, but a possibility for backup gas)
, → Do/practitioner: think of future and does it right away
→ Thinker: sees it all together in the middle
Lecture 2
→ Every company goes through a cycle
→ Top: formulate where to go, what to achieve
→ Bottom: implementation
→ Steps are for bigger companies
→ Big decisions, long term goes via approved by board
→ When to adapt and how to adapt is not in this cycle but needed when rapid
E.g. XEROX
→ Their inventions are still our standards
→ They had a vision, a paperless office
→ They had the products, the computers
→ Why failed? Many factors, you have it but no one wants it
, → Understand what’s around the decision, a lot of aspects
→ Context: certain situation, decide on that and you get the process
→ CPO-IPO
Definition of strategic decision-making process
The SDM process is the process by which a strategic decision is made and implemented and
the factors which affect it, i.e. the process that leads to the choice of goals and means and
the way in which means are effectively deployed
Key assumptions of SDM
Departure point of SDM thinking, research & theorizing:
So, why spend more time and resources on these decisions and processes?
Reasons for this lie in a myriad of factors, amongst which analytical and organizational
complexity. To deal with this:
• Professionals develop tools based on decision analysis and/or evidence-based approaches
• Researchers identify the factors that increase or decrease the quality of strategic decisions
from a multidisciplinary viewpoint
