Strategic Leadership and Decision Making

PART FIVE:

Analyzing Organizations

20

ANALYZING ORGANIZATIONS

There is no approved solution to any situation.

George S. Patton, Jr.

War As I Knew It

We have learned that strategic leadership and decision making occurs within environmental contexts, both internal and external, and that strategic leadership and decision making is significantly influenced by the leader who, as an individual, possesses skills, abilities, filters, biases, and "baggage." The importance of a leader's decision making talents within the context of teams and groups also has been analyzed.

THIS CHAPTER

This chapter has two purposes. The first purpose is to tie things together. Second, to provide a practical framework to analyze organizations. One word of caution. What we are offering is only a framework. Your task is to examine the framework and then accept it, reject it, or modify it to suit your purposes. It will be useful for you to have such a framework for analyzing and understanding strategic leadership, decision making, and organizations.

REALITY CHECK

What can strategic leaders do within the context of their organization and its environment? The following text reviews portions of this book related to each section. Questions and points to observe that form an analytical framework for looking at organizations also are outlined.

MOTIVE FORCE FOR CHANGE: THE STRATEGIC ENVIRONMENT

Coping with an environment characterized by volatility, uncertainty, complexity, and ambiguity is the essence of strategic leadership. This applies to the United States and to the organizations that form the United States' industrial base.

Coping with the strategic environment requires under-standing different cultures, different kinds of national objectives, and different means by which other nations aspire to achieve their objectives. And, the logic for working with nations around the globe must include not only competitive advantage for the United States, but "value added" for other nations.

Changes in the strategic environment also reverberate through the organizations which form our industrial base. An example is what has happened to General Dynamics, Lockheed, and Martin Marietta. The challenge to strategic leaders, at the national and organizational levels, is to set the near-term course for coping with the environment so that our decisions are not likely to preclude-by virtue of having already expended available resources-effective courses of action in an unclear future.

Coping with the strategic environment includes the important act of managing key constituencies. Strategic leadership is a process by which those responsible for large organizations, departments of governments, and governments set long-term directions and obtain the energetic support of key constituencies necessary for the commitment of resources. Who are these constituencies? What is their agenda? Another uncertainty is that the support of constituencies may change with changing circumstances. Differences in needs and expectations among the various constituencies have a critical influence on decisions. The differences among constituencies must be continually assessed and balanced.

ORGANIZATIONAL CULTURE: THE INTERNAL ENVIRONMENT

We know what our existing knowledge lets us know and we see from our own perspectives, sometimes dimly. We make assumptions about other organizations and other cultures, often mistakenly, based on what is reasonable in our own culture. We infer intentions based on what our intentions would be in that situation, "if we were they." Strategic leadership must, of necessity, be based on a broader frame of reference.

ESTIMATING THE ORGANIZATION'S SITUATION

In addition to looking at an organization's environment and its culture, we can estimate an organization's strategic situation by taking a good look at its top leaders, its use of teams, its decision making processes, and its use of information technology. Top-level leaders are responsible for the strategic direction of their total organization within the broad context of the strategic environment, now increasingly global. The term "strategic" implies broad scale and scope. It implies forward vision extending over very long time spans, in some cases out to 50 years or more. So, strategic leadership is a process where large scale organizations set long-term directions and obtain through consensus building the energetic support of key constituencies necessary for the commitment of resources.

KEY QUESTIONS ABOUT THE STRATEGIC ENVIRONMENT

KEY QUESTIONS ABOUT STRATEGIC CONSTITUENCIES

KEY QUESTIONS ABOUT ORGANIZATIONAL CULTURE

Strategic leadership is a risky business. Strategic decisions are rarely clear-cut. There will always be uncertainties and often ambiguities. Contributing to the uncertainty is the fact that decisions must be made with some set of presumably valid assumptions in mind. Risk is compounded by the fact that strategic decisions call for major commitment of scarce resources. Opportunity cost is created when commitment of resources to one option precludes the exercise of other options. Strategic decisions-those committing very large resources to very long term courses of action-may preclude subsequent reconsideration of options in the face of the very real possibility that underlying assumptions may change. An additional source of strategic risk is that top-level decisions will have both direct and indirect effects. Where decisions impact globally, even the direct effects may be uncertain. The probable actions of competitors/adversaries may be understood only dimly, when prediction must take into account other cultures.

These uncertainties are nothing compared to those associated with indirect outcomes that involve long-term, irretrievable commitment of mammoth resources. An indirect effect occurs when a decision creates a direct effect which in turn produces ripple effects. In complex systems, second- and third-order effects are common. And, the further removed they are, the harder they are to anticipate or to recognize.

TEAMS AND DECISION MAKING. The higher one goes in large, complex organizations, the more likely it is that decisions will be made by teams, groups, and committees.

First, consequential decisions are very complex, often having more facets than any one individual can grasp. Teams can include a variety of disciplines and expertise. If well led, they also will surface varied perspectives, making possible more in-depth exploration of the problem.

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