Overcoming strategic persistence: Effects of multiple scenario analysis on strategic reorientation

Research Summary To thrive in an unpredictable world, managers must adapt their decision‐making to changing events. However, a major impediment to adaptation is strategic persistence, that is, the tendency to stick with previously successful strategies. We examined whether multiple scenario analysis...

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Vydáno v:Strategic management journal Ročník 45; číslo 8; s. 1423 - 1445
Hlavní autoři: Healey, Mark P., Hodgkinson, Gerard P.
Médium: Journal Article
Jazyk:angličtina
Vydáno: Chichester, UK John Wiley & Sons, Ltd 01.08.2024
Wiley Periodicals Inc
Témata:
Adaptation
Analysis
behavioral strategy
Cognitive ability
Decision makers
Decision making
dynamic managerial capabilities
Intervention
managerial cognitive capabilities
Managers
Occupational psychology
Organizational effectiveness
scenario planning
Simulation
strategic decision‐making
Strategic management
Strategic planning
Strategies
ISSN:0143-2095, 1097-0266
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Shrnutí:Research Summary To thrive in an unpredictable world, managers must adapt their decision‐making to changing events. However, a major impediment to adaptation is strategic persistence, that is, the tendency to stick with previously successful strategies. We examined whether multiple scenario analysis can help to overcome the dysfunctional effects of strategic persistence. In a laboratory study using a multi‐round strategy simulation that required players to change strategies to succeed, we found that multiple scenario analysis alleviated the effects of strategic persistence by stimulating strategic reorientation, that is, adaptive shifts in patterns of strategic choice. Multiple scenario analysis influenced strategic reorientation indirectly, by fostering belief in a new strategy, and its effectiveness depended on prior performance. We discuss implications for research on the cognitive microfoundations of strategic adaptation. Managerial Summary What can managers do when their previously successful strategy stops working? We found that using multiple scenario analysis, a common strategic planning technique can help decision makers switch to a new strategy. In our study, using a business simulation game that required players to change strategies to succeed, we found that those players who imagined different industry futures as part of a multiple scenario analysis exercise were more likely to believe in new strategies and as a result more likely to switch to the winning strategy. However, this intervention was less effective for players who had high levels of success with the old strategy. We discuss how scenario‐based intervention techniques can be used to assist managers with reorientating to a new strategy.
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ISSN:0143-2095
1097-0266
DOI:10.1002/smj.3589