1 Thinking in Organizations Chapter 9, 10, 11 and 12 Section 3:

2 Introduction Te concept of this section: The role of shared ways of thinking withing the organization in deciding on objectives and rationality. Shared cognitive constructs of the external world among managers are influenced by entrenched schemas. The latter may apply to the past but not necessarily to the future success. Therefore, older and larger organizations may be more likely to be the victim of this phenomena.

3 Strategic Management in an Enacted World By: Linda Smircich and Charles Stubbart Book 1, Chapter 9 Section 3: Thinking in Organization

4 Introduction Organization members actively form (enact) their environment through their social interaction. A pattern of enactment establishes the foundation of organizational reality and future enactment.

5 The model for knowing the environment How organization members know their environment 1. An objective Environment Borrowing from biology researchers assumed a similar analysis to an organization in an environment. This was clear in their (SWOT) strategic analysis. Of course, research continued to find the successful combination between an organization and its environment (real, materials and external).

6 The model for knowing the environment … (continuo) Here you may find theories claiming the ability of an organization to choose while others claim the domination of environmental variables (organizations have only to adapt) or in between then what is it needed for strategist in order to navigate in this environment (e.g. Information management)

7 2) Perceived Environment Do strategists respond to the real, material environment or to what they perceive as environment? The challenge for a strategist is to narrow the gap between the two.

8 3) The Enacted Environment Environment is an imagination of combinations of events, objects and situations a strategist made for himself in order to understand his world. These are meaningless combinations to other people. This enactment is a combination of attention and action on the part of organization members. Therefore the difference between the organization and the environment is attention and action. i.e. environment is not perceived; it is made. It is a symbolic world to organization members.

9 Organization and Environment from an interpretive perspective How to base your understanding of organization interaction with environment on metaphoric and symbolic grounds. In this sense organizations are groups which share beliefs, values and assumptions that make them to mutually reinforce the meaning of their actions and the actions of others. Therefore, an organization can split in more than one while another organization can cross thorugh other organizations.

10 Organization and Environment from an interpretive perspective … (continuo) Here, the environment is a specific set of events and relationships have meaning only to a specific set of strategists. Those strategists social knowledge constitutes their environment.

11 Implications of an interpretive Perspective 1. Abandoning the prescription that organizations should adapt to their environments This is taken for granted in strategic analysis. But this ignores the complexity, ambiguity, and abstractness in strategic management. In everyday management adaptations are not separated from the environment of each company attached an opportunity, this opportunity will disappear. Therefore, adaptation can be explained only by past actions but not for now or future actions. Then, new frameworks are needed to stimulate new environment and then new strategic mores.

12 2) Rethinking constraints, threats, opportunities When facing the complexity of environment managers resort to interactions with organization members to provide an explanation of their social world. But, when holding untested assumptions and stay with the same thinking and actions manager fail to respond properly to their environment. This makes it easy to understand why new interesting strategies come from those who don ’ t know the industry. Therefore, strategic managers need a dual system of focus on reality of inner variables, but open to reassessment in order to test all possibilities.

13 3) Thinking differently about the role of strategic managers While objective and perceived approaches assume the strategist as a decision- formulator, implementer of structure and a controller of events who drives ideas from information, the interpretive approach defines a strategist as a creative artist. In the interpretive world managers make sense of their environmental events through logic and emotion to make meanings that lead to super choices, and to differentiate between reasonable actions and nonsense.

14 3) Thinking differently about the role of strategic managers … (continuo) Strategist then generate the context for meaning on the basis of values and their systolic expression, as well as drama and language. They use language, metaphors and stories to convey their messages. Strategists, instead of confining themselves to technical, intellectual aspects of organizational structure, should learn how to express and elaborate on the social emotional basis of organizational life.

15 Managing in enacted world. What this approach gives as guidelines to managers?

16 1) Managerial Analysis: Enactment means managerial analysis is more important than environmental analysis. Since managerial analysis will allow challenging the assumptions on which managers act and therefore increase their capacity for self reflection (I.e. seeing themselves as enactors of their environment. This dual system of active-reflective role is not easy for managers to maintain. Sometimes they need a consultant just to show them their capacity for critical self-examination.

17 2) Creation of Context: Excellent companies have top management groups to articulate clear value positions i.e. who are we? What do we do? What don ’ t we do?

18 3) Encouraging multiple realities: Reality has multiple interpretation. Therefore, instead of considering this as a problem in strategy it can be the source of new successful choices against conventional assumptions.

19 4) Testing and Experimenting Every industry has long lists of do ’ s and don ’ ts which should be frequently tested, changed and challenged.

20 5) Can any Reality be Enacted People make their own enactments and work with them, but hardly want to change them, while they need to do so frequently (to disbelieve what they believe). New conceivable enactment needs from a manager to imagine what are the resources needed for it. A choice for one enactment against another to go for it needs persuasion rather than objective variable of support. Therefore, prior enactment problems with resources competing new enactments decide the choice of alternatives.