I
f we are really serious about understanding strategic vision as well as
how strategies form under other circumstances, then we had better
probe into the mind of the strategist. That is the job of the cognitive
school: to get at what this process means in the sphere of human cognition,
drawing especially on the field of cognitive psychology.
This school has attracted a number of prominent researchers in the
past ten or fifteen years, sometimes working in association with other
schools (for example, positioning, on cognition related to strategic
groups [Reger and Huff, 1993; Bogner and Thomas, 1993] and to
strategies of divestment [Duhaime and Schwenk, 1985]). Lyles's survey
of 1990 suggested such work was by then one of the most popular areas
of research in strategic management.
The body of work that we shall be discussing forms not so much a
tight school of thought as a loose collection of research, which seems,
nonetheless, to be growing into such a school. If it can deliver on its
intentions, it could very well transform the teaching and practice of
strategy as we know it today.
Prior to this surge of work, what took place in the minds of managers
was largely terra incognita. Investigators were more concerned
with the requisites for thinking rather than with thinking itself—for
example with what a strategist needs to know. Now the questions are
more direct. But we remain far from understanding the complex and
creative acts that give rise to strategies.
Hence, strategists are largely self-taught: they develop their knowledge
structures and thinking processes mainly through direct experience.
That experience shapes what they know, which in turn shapes
what they do, thereby shaping their subsequent experience. This duality
plays a central role in the cognitive school, giving rise to two rather
different wings.
One wing, more positivistic, treats the processing and structuring of
knowledge as an effort to produce some kind of objective motion picture
of the world. The mind's eye is thus seen as a kind of camera: it
scans the world, zooming in and out in response to its owner's will, although
the pictures it takes are considered in this school to be rather
distorted.
The other wing sees all of this as subjective: strategy is some kind of
interpretation of the world. Here the mind's eye turns inward, on how
the mind does its "take" on what it sees out there—the events, the
symbols, the behavior of customers, and so on. So while the other wing
seeks to understand cognition as some kind of re'creation of the world,
this wing drops the prefix and instead believes that cognition creates
the world.
Notice where this chapter sits in this book: as a kind of bridge between
the more objective schools of design, planning, positioning,
and entrepreneurial, and the more subjective schools of learning, culture,
power, environment, and configuration. In line with this, we
begin with the objectivist wing, first the work on cognitive bias,
namely what research tells us about the mental limitations of the
strategist, then on an information-processing view of strategic cognition,
and finally on how the mind maps the structures of knowledge.
Then we turn to the subjectivist wing, of strategic cognition as a
process of construction. We conclude with observations about the
limits of the cognitive approach as a framework for explaining strategic
thinking.
Cognition as Confusion
Scholars have long been fascinated by the peculiarities of how individuals
process information to make decisions, especially the biases and
distortions that they exhibit. Management researchers have been especially
stimulated by the brilliant work of Herbert Simon (1947, 1957;
see also March and Simon, 1958), a political scientist who spent most
of his career at the business school and then the psychology department
of Carnegie Mellon University, and in 1978 was awarded the
Swedish Prize in Economics named for Alfred Nobel. Simon popularized
the notion that the world is large and complex, while human
brains and their information-processing capacities are highly limited
in comparison. Decision making thus becomes not so much rational as
a vain effort to be rational.
152 STRATEGY SAFARI
A large research literature on judgmental biases followed (see especially
Tversky and Khaneman, 1974), some of the results of which
have been summarized in a book by Makridakis (1990), as reproduced
in Table 6-1. All have obvious consequences for strategy making.
These include the search for evidence that supports rather than denies
beliefs, the favoring of more easily remembered recent information
over earlier information, the tendency to see a causal effect between
two variables that may simply be correlated, the power of wishful
thinking, and so on. Makridakis also devoted considerable attention to
what he called "unfounded beliefs or conventional wisdom," commenting,
for example:
We have grown up in a culture where we accept certain statements as true,
though they may no