DETERMINANTS OF SATURATION IN A STRATEGIC ISSUE
MANAGEMENT SYSTEM: A LONGITUDINAL ANALYSIS
26th Annual International Conference of Strategic Management Society
November 1, 2006
Vienna, Austria
Peter Kunnas, Nokia Corporation
Markus Kajanto, Nokia Corporation
Matti Keijola, Helsinki University of Technology
Tomi Laamanen, Helsinki University of Technology
Markku Maula, Helsinki University of Technology
DETERMINANTS OF SATURATION IN A STRATEGIC ISSUE
DETERMINANTS
OF SATURATION
IN A STRATEGIC
ISSUE
MANAGEMENT SYSTEM:
A LONGITUDINAL
ANALYSIS
MANAGEMENT SYSTEM: A LONGITUDINAL ANALYSIS
Introduction and motivation
Methodology and approach
Results of empirical analysis
Discussion and conclusions
FAILING TO ANTICIPATE AND RESPOND TO EMERGING
STRATEGIC ISSUES CAN BE DETRIMENTAL TO A COMPANY…
[Compaq] won its spurs (---) as
an IBM-killer, but then its sales
fell after it failed to react quickly
to a (---) changing market
Pope et al., 1993
AT&T (---) understood that the
convergence of telecommunications
and computing would transform (---)
much of business life. (---) But the
company failed to see (---) that the
internet was the specific vehicle through
which the vision would be realised
Financial Times, 1999
…WHEREAS A CORRECT INTERPRETATION AND
RESPONSE CAN PROVIDE MARKED RESULTS
What we thought would be a complete threat, a destroyer of
value, resulted in being a value creator. You should never come
to conclusions about competition, partnerships, [or] alliances
before really looking into them. When this issue came up we
thought we knew what it was all about. As people monitored its
progress and researched additional issues surrounding it, we
began to see other aspects that led to our implementation
strategy and in the long-term served us well.
VP, Regulatory Issues, BellSouth Corporation
in CSB, 1999
THE PRESENT UNDERSTANDING OF THE TOPIC IS LIMITED
•
Research on issue management has addressed multiple viewpoints
•
Organisational decision-making and information processing (e.g. Cohen et al., 1972;
Cyert et al., 1963/1992; March et al., 1958/1993; Eisenhardt, 1989, 1990; Eisenhardt et al.,
1992; Miller et al., 1999; Nutt, 1993; Rajagopalan et al., 1993; Schweiger et al., 1986)
•
Strategic issue management and interpretation (e.g., Ansoff, 1980; Bansal, 2003; Barr et
al., 2004; Dutton, 1986, 1993; Dutton et al., 1993; Dutton et al., 2002; Dutton et al., 2001;
Dutton et al., 1987a; Dutton et al., 1983; Dutton et al., 1987b; Dutton et al., 1987c; Dutton
et al., 1989; Dutton et al., 1988; Schneider et al., 1991; Thomas et al., 1990)
•
Organisational attention allocation (Ocasio, 1997)
•
However, there has been little research to understand how limited
cognitive resources of top management in particular are allocated to
the portfolio of issues competing for management’s time.
•
This paper contributes to this emerging research area by
•
Examining determinants affecting the issue processing capacity of a firm
•
Extending the existing research from individual issues to a portfolio context
•
Providing a conceptual framework to facilitate the management of issues
THE WHOLE PROCESS RELIES EXTENSIVELY ON THE WIDERANGING PARTICIPATION OF THE ORGANISATION
• Much of the activity
focuses around a few
key individuals
• Both members and
visiting (internal) experts
have played a significant
role
DETERMINANTS OF SATURATION IN A STRATEGIC ISSUE
MANAGEMENT SYSTEM: A LONGITUDINAL ANALYSIS
Introduction and motivation
Methodology and approach
Results of empirical analysis
Discussion and conclusions
METHODOLOGY AND APPROACH
•
We examined all the corporate level strategic issues of a world-leading
technology company over a three-year period
•
Our analysis covered
•
•
•
How the issue was interpreted and how this interpretation changed over time
•
Which persons participated in the process
•
How the issue progressed in the decision-making and attention allocation system of the company
In addition, the analyses have produced a coding of each issue with
•
A number of descriptive statistics
•
An analysis of the networked decision-making structures
•
A quantitative analysis of the results of individual decisions made
To complement our analyses, we interviewed representatives of other firms’ as
benchmarks and studied the secondary material that is publicly available on the
strategic planning practices of Hewlett-Packard and IBM
DETERMINANTS OF SATURATION IN A STRATEGIC ISSUE
MANAGEMENT SYSTEM: A LONGITUDINAL ANALYSIS
Introduction and motivation
Methodology and approach
Results of empirical analysis
Discussion and conclusions
ISSUE MANAGEMENT PROCESS APPEARS TO RUN
WITH A STEADY NUMBER OF ISSUES OVER TIME
Number of issues
Number of concurrently active issues
Moving average
7
6
• Dealing with an issue
may be affected by other
issues being processed.
5
4
• Introducing new issues
may lead to saturation
• Sensitivity to new
issues can be
reduced
• Capacity to process
issues can be
impaired
3
2
1
0
1
3
5
7
9
11 13 15 17 19 21 23 25 27 29
Period
ISSUES EXHIBITED FUNDAMENTAL DIFFERENCES IN
THEIR RESOURCE REQUIREMENTS
Value-at-stake
Average resourcing
Full-time equivalents
16
14
• “Messy” issues with high valueat-stake needing a long
duration and high resourcing
form the base load and may
cause saturation
12
10
8
• “Crash efforts” with short
duration and high resourcing
emerge sporadically
6
4
2
0
0
10
20
30
40
Duration
Months
• “Quick-and-easy” issue can be
addressed depending on overall
workload
WHILE MULTIPLE ISSUES WERE ACTIVE CONCURRENTLY,
ATTENTION FOCUSES ON FEW MOST SIGNIFICANT ISSUES
Share of Top 3
Moving average
Share of resourcing for top three issues
Percent
100
90
80
• Top3 issues commanded
c. 60% of resourcing on
average
70
60
50
• In most periods, Top 3
issues represented the
majority share of
resourcing
40
30
20
10
0
1
3
5
7
9
11 13 15 17 19 21 23 25 27 29
Period
MOST HEAVILY RESOURCED ISSUES ALSO
GENERATED MOST DISCUSSION IN MEETINGS
Total resourcing
Full-time equivalents
R 2 = 0,7953
More messy issues
(requiring more
resources) are likely
to lead to more
discussions in the
issue processing
meetings
Word count
DETERMINANTS OF SATURATION IN A STRATEGIC ISSUE
MANAGEMENT SYSTEM: A LONGITUDINAL ANALYSIS
Introduction and motivation
Methodology and approach
Results of empirical analysis
Discussion and conclusions
Uncertainty of the issue
ISSUE CHARACTERISTICS INFLUENCE THE
CHOICE OF THE APPROPRIATE PROCESS …
High
External
Sensemaking
Strategic
Agenda
Low
Calculated
Response
Internal
Sensemaking
Low
High
Uncertainty of the response
…THEREBY MAXIMISING THE EFFECTIVENSS AND MITIGATING THE
RISK OF SATURATION OF THE ISSUE MANAGEMENT PROCESS
Calculated
Strategic
Response
External
Sensemaking
“Deep Dives”
Internal
Sensemaking
”War Room”
Strategic Agenda
”Portfolio of
Strategic Issues”
Timely identification
of issues is the key
Fast, in-depth
analysis is the key
Efficiency of team
work is the key
Observing issues
over time is the key
Main emphasis
Response
Analysis
Implementation
Analysis and
implementation
Issue identification
Emergent,
one-time
Emergent,
one-time
Emergent,
one-time
Emergent and
cumulative
Immediate
implications
Detailed analysis
practices and tools
Utilizing team’s
analysis intelligence
Varying profiles
of resource use
Clear-cut
implementation
Part of the analysis
recommendations
Emerges as a result
of the group work
Sensemaking result
emerging over time
Immediate
decision
Relatively fast after
the analysis results
Determined at the
initiation of work
Non-determinable,
options preservation
Basic assumption
Issue analysis
Implementation plan
Speed of action
Potential challenges
Underestimation
of uncertainties,
too fast decisions
Analysis cannot
Team self-sufficiency,
always imply optimal team member choice,
implementation plan
limited time frame
Saturation of the
process and rejection
of new issues, speed
DISCUSSION AND CONCLUSIONS
•
This paper represents one of the first longitudinal, in-depth analyses
of strategic issue management processes based on unique data.
•
The paper puts forward a novel concept: the saturation of a strategic
issue processing system.
•
The primary determinants affecting the issue processing capacity of
the company include the networked operating mode of the issue
processing staff and the resource consumption intensity of the
strategic issues.
•
Based on these determinants, we propose a conceptual framework of
portfolio of approaches for addressing strategic issues.
•
The nature of work involved in solving the issue is an important
determinant of the resource consumption. Future research should
examine the linking of issues and initiatives in an analysis of the
saturation of a firm’s management capacity and how the transition
from strategic issues to strategic initiatives takes place.