Rethinking the psychological foundations of strategic management: Beyond cold cognition
An obvious truth for anyone who has been at the sharp end of formulating and implementing strategy is that strategy making is a ‘hot’ process, one that is affectively charged and laden with emotion. Stakes are high, egos run at full throttle and feelings are intense. Indeed, emotions, stress, moods and other feelings permeate strategic decisions to such an extent that the strategist’s domain constitutes a melting pot of excitement, anxiety, hopes and fears. However, these characteristics are airbrushed out of traditional theories of strategy, which assume that strategizing is the preserve of rational deliberation. From this viewpoint, feelings are irrational influences to be eradicated or more often simply ignored.
In recent years, however, behavioural strategy researchers have made considerable progress in understanding the role of ‘hot’ processes in strategic decision making and strategizing more generally. While it is often said that being a good strategist requires keeping a cool head, these developments suggest that not only is it practically impossible to eradicate hot influences from the strategy process but that doing so would leave strategists and their businesses lifeless. Evidence suggests that successful firms will attain flexibility not by ignoring such hot influences but by accommodating them in the design of techniques and practices for addressing risk and uncertainty. My central argument, underpinned by evidence accumulated over the past two decades in the cognitive, affective, and social neurosciences, is that ultimately the ability to manage emotional mental processes, rather than purely cognitive ones, renders strategists more able to adapt to dynamic industry and market conditions. Predicated on this logic, in my talk I will adopt a design science perspective to examine how techniques and practices for dealing with uncertainty and overcoming strategic persistence might be adapted for enhancing ‘hot’ cognition.