Network Challenge (Chapter 11), The: Organizational Design: Balancing Search and Stability in Strategic Decision Making

by Jan W. Rivkin, Nicolaj Siggelkow

Managers often must make decisions that depend on decisions in other parts of the organization. These interactions create a network of interdependent choices and make strategizing difficult. In this chapter, the authors explore the intersection between organizing and strategizing. Motivated by real examples that run contrary to conventional wisdom, the authors examine how firms organize themselves to strategize well. In particular, they examine “premature lock-in”--how a firm’s strategizing efforts can become stuck in a web of conflicting constraints prematurely, before managers have explored a wide enough range of possibilities. A key role of organizing is to free strategizing efforts and encourage broad search. At the same time, organizing must ensure that strategizing efforts stabilize after the firm discovers an effective set of choices. Balancing search and stability, the authors argue, is a central challenge of organizing. They explore this challenge with an agent-based simulation that shows (1) how a change in organizational structure[md]for example, a shift from decentralization to integration[md]may reflect not a reversal of early mistakes but an effective sequence of organizing; and (2) why firms may benefit from unnecessary overlap between departments. They conclude that a period of decentralization and unnecessary overlap can be seen as organizational mechanisms to ensure the broad, early search that a firm needs in order to cope with interactions among strategic decisions.

Genres: Business

31 pages, Kindle Edition

First published May 18, 2009

Reviews

[Andrea James · Rating 3 out of 5]

This is actually a chapter of a book that is sold as a separate entity (as the title implies) and it reads more like the introduction/conclusion sections of an academic paper. It makes some reasonable points such as strategy could be viewed not as a plan along a single line but rather as clusters of best options in particular scenarios that add up to an overarching strategy. And some of those clusters may only be optimal for their scenarios.

An example of the style of writing:
If strategizing stays at the level of individual choices, potential interdependencies are likely to be ignored, and firms may not even make it to “local peaks” on their performance landscapes. By considering underlying interaction patterns as they craft a process to search for a strategy, managers can create an organization that is more likely to find its way onto a high performance peak.

It makes sense and delivers the message in a concise fashion but somehow feels slightly tedious. I think it is perhaps because I haven't come across words like "craft" used in that way since the 'ol days when I worked for large organisations.