Strategic Problem Engagement: A Multi-Level Perspective on Strategic Planning and Redirection Toward Discovery

Area: Strategy

Host: Assistant Professor Luke Rhee

Speaker: Laura Poppo, Professor of Management, University of Nebraska-Lincoln, Nebraska College of Business

Description: Over the decades, strategic management has evolved from an emphasis on simply adaptation – modifying the organization to better fit, or close the gap, between the organization and the changes in the environment – to that of finding and seizing of opportunities that have the potential to create value. How organizations go about this remains undertheorized. The most rigorously theorized is problem-solving, problematic search.  Left largely unaddressed is how do managers go about ‘formulating’ a problem when the external environment is changing in novel and unsettled ways and the decision-making process is both unstructured and ambiguous.  To explore this gap, we question: what process supports the discovery and formulation of problems as well as enables the generation of useful and novel (e.g. creative) solutions? To ground this research, one co-author spent several years exploring broadly and then narrowly, through interviews and several organizational sites, the practice of strategic planning and corporate entrepreneurship. Based on themes identified in this qualitative work, we developed a multi-level perspective, strategic problem engagement.  A service organization volunteered to participate in our academic, empirical study.  Critical to its selection was that the top management (CEO, corporate staff) was currently undertaking a system-wide strategic planning initiative focused on adapting the organization to novel, unsettled changes in the external environment and generating novel solutions.

Our results follow. First, we illustrate a multi-level approach to strategic problem engagement, as both the TMT as well as teams of knowledge-diverse lower-level employees can be integral to strategic formulation process and the generation of creative solutions.  This multi-level approach helps overcome the cognitive limitations of bounded rationality that impedes decision makers’ abilities to identify and construct the right problem.

Second, we empirically demonstrate formulation as a process of strategic problem engagement, involving simultaneously two activities:  1) problem engagement, the process of discovering the problem through exploring, identifying, defining, and reconstructing it, and 2) strategic engagement, the process of recognizing the factors that create organizational value and using them to further explore the problem. This extends prior conceptualizations of formulation as a sensing or an awareness of a potential problem followed by the second stage, formulating a causal logic for how the issue in the environment relates to organization.

Third, our results show that strategic engagement, not problem engagement, leads to the generation of more novel and useful solutions. This finding helps to uncover the black box of creative synthesis. Finally, we examine additional factors that impact the cognitive and motivation challenges associated with complex problem solving.