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4 Cognitivist and humanistic psychology: the rational and the emotional individual

4 Cognitivist and humanistic psychology: the rational and the emotional individual

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Chapter 4  Thinking in terms of strategic choice   83







psychology and they have enormous implications for how human agency, groups

and organisations are understood.

About the same time as the developments described above, Shannon and Weaver

(1949) published an important paper on the science of human communication. What

they proposed was a model of communication derived from telephony in which one

individual formulates an idea in the mind, translates it into language and then sends

it to another individual who receives the words and translates them back into the

idea. If the translation processes are accurate and there is no ‘noise’ in the transmission, the communication will be effective. If there is any failure of communication,

then the receiving individual sends a message or signal to the sender indicating a gap,

which the sender must then try to remove. This sender–receiver model is clearly a

cybernetic theory of communication and it has come to be the one underlying the

dominant discourse on organisations. Strategic choice theory, then, is built upon the

assumptions of cognitivist psychology and the accompanying sender–receiver model

of communication.

Human beings are regarded, in strategic choice theory, as living cybernetic systems that can understand, design, control and change other cybernetic systems,

including their own minds. The implication is that an individual human can stand

alone as a system. Implicit in a cybernetic approach to human affairs, then, is the

assumption that humans are monads, that is, autonomous individuals who can exist

outside relationships with others, as we explored in Chapter 3, following the theories of Descartes and Leibniz. The individual is prior and primary to the group.

Again, there is the assumption, dominant in Western thinking, of the primacy of the

masterful, rational, autonomous individual. Box 4.2 summarises the main assumptions of cognitivism.



Humanistic psychology

Humanistic psychology was developed mainly in the United States as a reaction to

what was felt to be the pessimism and conservatism of psychoanalysis. Humanistic

psychology takes a basically optimistic view of human nature and its perfectibility. One of its roots was in inspirational religious revivalism, and it saw the main

problem of human existence as the alienation of an individual from his or her true

self. From this perspective people can be motivated by providing experiences for

them in which they can experience more of their true selves. You see the influence

of these ideas in the theories of motivation of Maslow and Herzberg, mentioned

subsequently. The prescriptions for establishing visions and missions that inspire

people also arise from this kind of thinking about human nature.

So far, this chapter has reviewed the stages of formulation, evaluation and implementation of long-term strategic plans, which is the centrepiece of the theory of

strategic choice. However, those writing in this tradition also recognise that the factors of human motivation and leadership affect how an organisation’s strategy is

implemented. For example, Peters and Waterman (1982) questioned the rational

techniques of decision making and control reviewed in this chapter, pointing to their

limitations in conditions of turbulence. Instead, they emphasised human motivation,

values, beliefs and the importance of leadership. They stressed the importance of

working harmoniously together, and strongly sharing the same culture, values, beliefs

and vision of the future. Their prescriptions were to choose a vision of the whole



84  Part 1  Systemic ways of thinking about strategy and organisational dynamics



Box 4.2



Cognitivism: main points on human knowing and

communicating



• The brain processes symbols (electrochemical pulses) in a sequential manner to form representations or internal templates that are more or less accurate pictures of the world. This means that the

brain is assumed to act as a passive mirror of reality.

• The world so pictured by the brain can be specified prior to any cognitive activity. This means that

the world being perceived would have particular properties, such as light waves, and it would be

these already existing real properties that would be directly registered by the brain. The world into

which humans act is found, not created.

• The templates formed are the basis upon which a human being knows and acts. Repeated exposure to the same light wave would strengthen connections along a specific neuronal pathway, so

making a perception a more and more accurate representation of reality. This would form the template, stored in a particular part of the brain, against which other light wave perceptions could be

compared and categorised, forming the basis of the body’s response. Representing and storing are,

thus, essentially cybernetic processes. There is a fixed point of reference, external reality, and negative feedback of the gap between the internal picture and this external reality forms a self-regulating

process that closes this gap. Knowing, knowledge creation and learning are essentially adaptive

feedback processes, as is communication between people.

• The biological individual is at the centre of the whole process of knowing and acting.

• Since all normal individuals have much the same biologically determined brain structures and all

their brains are processing symbolic representations of the same pre-given reality, there is no fundamental problem in individuals sharing the same perceptions. They share perceptions by communicating in what is essentially an engineering process of transmission.



organisation’s future, convert people to believing in it, promote internal harmony by

encouraging the strong sharing of a few cultural values, and empower people.

However, although critical of rational techniques, Peters and Waterman did not

depart in any way from cognitivist assumptions about human nature, or in any

essential way from the assumption that an organisation is a cybernetic system. This

is evident when they talk about charismatic leaders who choose a vision of the future

and certain core values that they then inspire others with, converting them into

believing the vision and the values. If anything, the autonomous individual becomes

even more heroic in their view of organisational change. The system is still cybernetic because it is controlled by referring to the vision and the values and damping

down any deviations from them. This way of thinking about organisations has persisted to the present day and can still be found in the work of prominent scholars,

particularly from US business schools (Schein, 2010).

A number of similar theories of motivation have been put forward in the management literature on how to secure consensus, co-operation and commitment.

For example, Herzberg (1966) pointed out that people are motivated to work in

co-operation with others by both extrinsic motivators such as monetary rewards

and intrinsic motivators such as recognition for achievement, achievement itself,

responsibility, growth and advancement. Intrinsic motivation is the more powerful

of the motivators and is increased when jobs are enriched – that is, when they are

brought up to the skill levels of those performing them.







Chapter 4  Thinking in terms of strategic choice   85



Maslow (1954) distinguished between: basic physiological needs, such as food

and shelter; intermediate social needs, such as safety and esteem; and higher self-­

actualisation needs, such as self-fulfilment. Maslow held that, when the conditions

are created in which people can satisfy their self-actualisation needs, those people

are then powerfully motivated to strive for the good of their organisation.

Schein (1988) and Etzioni (1961) distinguished three categories of relationship

between the individual and the organisation. First, the relationship may be coercive, in which case the individual will do only the bare minimum required to escape

punishment. Second, the relationship may be a utilitarian one where the individual

does only enough to earn the required level of reward. Third, the relationship may

take a normative form where individuals value what they are doing for its own sake,

because they believe in it and identify with it. In other words, the individual’s ideology coincides with an organisation’s ideology. This provides the strongest motivator

of all for the individual to work for the good of an organisation.

Pascale and Athos (1981) stressed organisational culture as a result of their study

of Japanese management. They recognised that people yearn for meaning in their

lives and transcendence over mundane things. Cultures that provide this meaning

create powerfully motivated employees and managers.

What all these studies suggest is that an organisation succeeds when its people, as individuals, are emotionally engaged in some way, when they believe in

what their group and their organisation are doing, and when the contribution

they make to this organisational activity brings psychological satisfaction of some

kind, something more than simple basic rewards. Others have argued that people

believe and are emotionally engaged when their organisation has a mission or

set of values and when their own personal values match those of the organisation (Collins and Porras, 2002). Organisational missions develop because people

search for meaning and purpose and this search includes their work lives (Campbell and Tawady, 1990). To win commitment and loyalty and to secure consensus

around performing tasks it becomes necessary to promote a sense of mission. The

development of a sense of mission is seen as a central leadership task and a vitally

important way of gaining commitment to, loyalty for and consensus around the

nature and purpose of the existing business. An organisation with a sense of mission captures the emotional support of its people, even if only temporarily. A sense

of mission is more than a definition of the business: that is, the area in which an

organisation is to operate. A sense of mission is also to be distinguished from the

ideas behind the word ‘vision’ or ‘strategic intent’. The word ‘vision’ is usually

taken to mean a picture of a future state for an organisation, a mental image of

a possible and desirable future that is realistic, credible and attractive. The term

‘mission’ differs in that it refers not to the future but to the present. A mission is

a way of behaving.

The underlying assumption is that organisations succeed when individuals are

motivated to perform, as individuals. The humanistic psychology on which the

above writers draw accords the same primacy to the individual as cognitivism does.

The difference is that the former places much more emphasis on emotional factors,

predominantly of a positive inspirational kind. Note how leaders are supposed to

choose appropriate motivators.

Box 4.3 summarises the key assumptions upon which are built humanistic views

of knowing and communicating.



86  Part 1  Systemic ways of thinking about strategy and organisational dynamics



Box 4.3



Humanistic psychology: main points on human

knowing and communicating



• The biological individual is at the centre of human experience and emotion and spirituality are fundamental to this experience.

• Each individual has a true self and is most motivated to act when such action realises the true self.

• Emotions, values and beliefs are fundamental and people work most effectively when they are in

harmony with each other. Rational choice is a limited aspect of human experience.

• People yearn for meaning and transcendence of the mundane.

• Organisations will be successful when people are emotionally engaged and inspired by visions and

a sense of mission and it is the role of leaders to choose these.



4.5  Leadership and the role of groups

From a strategic choice theory perspective, the primary focus is on the leader as one

who translates the directives of those higher up in the hierarchy into the goals and tasks

of the group. Leaders monitor the performance of the task in terms of goal achievement

and ensure that a cohesive team is built and motivated to perform the task. Leaders

supply any skills or efforts that are missing in the team and, most important of all, they

articulate purpose and culture, so reducing the uncertainty that team members face.

When leadership is defined in these terms, the concern is with the qualities leaders

must possess and the styles they must employ in order to fulfil these functions effectively

and efficiently. Those who have put forward explanations of this kind on the nature of

leadership have differed from each other over whether the effective leader is one who

focuses on the task, or one who focuses on relationships with and between people. A

related area of concern is whether the effective leader is one who is autocratic, or one

who delegates, consults and invites full participation. The question is which style of

leadership motivates people more and thus gets the task done better. Consider three

prominent theories: those of Fiedler (1967), Hersey and Blanchard (1988) and Vroom

and Yetton (1973). According to these theories, leadership styles are to be chosen by

the individual manager and, to be successful, a style that matches certain pre-given

situations must be chosen. The leader should arrive at the group with particular skills

developed beforehand. The required personality, skills and styles (or, as they are sometimes called, competences) are supposed to be identified in advance to suit a foreseeable situation. Here, leadership is about motivating people and the concern is with the

appropriate role of the leader in securing efficient performance of known tasks. Typologies of styles of leadership and management which are conducive to strategic change are

still prevalent in orthodox theories of management (Balogun and Hope Hailey, 2008).



The relevance of the group

A group is understood to be any number of people who interact with each other,

who are psychologically aware of each other and perceive themselves to be a group.

Formal groups in an organisation may be permanent – for example, the sales

department; or they may be temporary, as is the case when special task forces or



Chapter 4  Thinking in terms of strategic choice   87







multidisciplinary teams are appointed to deal with a particular task. Whether they

are temporary or permanent, formal groups have clear goals and tasks; it is the purpose of formal groups to find solutions to structured problems. They usually have

appointed leaders – leaders and managers have power given to them. However, they

may also be autonomous, self-managing or democratic work groups that elect their

own leader and design their own approach to a given structured task.

Within, alongside and across the formal groups, there is a strong tendency for

informal groups to develop. These may be horizontal cliques amongst colleagues on

the same hierarchical level, vertical cliques that include people from different hierarchical levels, or random cliques. Informal groups develop primarily because of proximity (Festinger et al., 1950): through the contacts people make with each other given

their physical location in relation to each other, the nature of their work and the

time pressures they are under. The immediate concern about these informal groups

is whether they will support or counter the operation of formal groups. The concern

is with motivating people to cohere into functional teams that will focus on clearly

defined tasks, not dissipate energies in destructive informal groups. The concern is

primarily with the authority, responsibility and performance of individual managers

in carrying out their pre-assigned tasks. From this perspective, the interest in groups

relates to the circumstances in which groups may be more effective than individuals.

The underlying assumption about the relationship between individuals and groups

in the notions reviewed in this section is that of the objective observer standing outside the system of groups and teams. The explicit or implicit prescription is that leaders and managers should take this position too, identify the nature of the situation

and select leadership styles and motivational factors that are appropriate in the sense

that they fit the situation. In essence, this amounts to installing appropriate feedback

loops in the organisation so that it operates like a cybernetic system.

As far as the relationship between individuals and groups is concerned, again it is

clear how the primacy of the individual is assumed. Groups are made up of individuals and these groups then affect those individuals, meeting some of their needs but

deskilling them in other ways. In order to prevent adverse effects of groups on individuals, leaders need to pay attention to factors to do with the environment of the

group, its composition in terms of members and their sensitivity to group dynamics.

Formal groups are to be preferred over informal ones. It is recognised that informal

groups are inevitable but the mainstream view seems to be that they threaten control. This attitude towards groups reflects cognitivist and humanistic assumptions.



4.6  Key debates

Previous sections of this chapter have provided a very brief description of key

aspects of strategic choice theory in order to bring out its underpinning way of

thinking. This section explores some of the key debates that have arisen in the development of the theory. These debates, which have not questioned the underlying way

of thinking with its taken-for-granted assumptions about organisations and human

interaction, have had to do with:

• whether strategy determines organisational structure or whether it is structure

that determines strategy;



88  Part 1  Systemic ways of thinking about strategy and organisational dynamics



• whether market position or the resource base of an organisation determines its

competitive advantage;

• what the limitations of strategic choice are, particularly when it comes to uncertainty and the impact of cognitive frames in interpreting situations, leading to

questioning the very possibility of strategic choice;

• process versus content leading to an emphasis on learning rather than simple

choice.

A brief indication of some of these debates is provided in this section.



Market position and the resource-based view of strategy

Previous sections have described strategic choice as the choice of the overall direction and shape of a whole organisation and its parts for some long time period into

the future. The central purpose of the choice is to secure sustainable competitive

advantage for the whole organisation and this choice was thought to be the single

most important cause of successful performance. Furthermore, it was held that

the choice of market position was the single most important cause of competitive

advantage. This view was based on neo-classical economic theory, particularly theories to do with industry structure. The idea was that managers needed to analyse

and understand the structure of their industry or market and select strategies that

were appropriate to that structure.

Others, however, also drawing on neo-classical economics, argued that market

position alone was not the cause of competitive advantage and took a resourcebased view of strategy. Here a firm is viewed as a blend of resources that enable

certain capabilities, options and accomplishments (Wernerfelt, 1984), which determine competitive advantage far more than market position. One firm outperforms

another if it has superior ability to develop, use and protect core competences and

resources, which are the foundations for creating the future (Hamel and Prahalad,

1990, 1994). Internal capabilities are what enable a firm to exploit external opportunities, and competitiveness is a function of the exploitation and leveraging of these

internal resources. Strategies are designed to capitalise on core competences and distinctive assets form the basis of creating a sustainable competitive advantage. Complementary interdependence makes a firm’s capabilities difficult to imitate. Resource

and competence are built up historically, evolving in a continuous way with cumulative effects. Capabilities are building blocks that can be combined in mutually

reinforcing ways into unique capacities and the different unique combinations lead

to different unique futures. To prevent imitation, attention is focused on intellectual

capital, firm-specific practices, relationships with customers and other intangible

ways of working together. Strategic intent relates to choices about competences to

secure a desired future and success comes from focusing attention on a few primary

success factors.

Hamel and Prahalad (1989) also stress the role of organisations in creating

their own environments instead of simply adapting to them. They have studied

a number of global companies in North America, Europe and Japan, and they

suggest that what distinguishes the noticeably successful (Honda, Komatsu and

Canon, for example) from the noticeably less so (General Motors, Caterpillar

and Xerox, for example) are the different mental models of strategy guiding their







Chapter 4  Thinking in terms of strategic choice   89



respective actions. This research questions one of the basic tenets of strategic

choice: namely, the notion that successful organisations are those that fit, or adapt

to, their environments.

Hamel and Prahalad found that the less successful companies follow strategic

choice prescriptions and so seek to maintain strategic fit. This leads them to trim

their ambitions to those that can be met with available resources. Such companies

are concerned mainly with product market units rather than core competences. They

preserve consistency through requiring conformity in behaviour, and they focus on

achieving financial objectives. These companies attempt to achieve their financial

objectives by using generic strategies, selected according to criteria of strategic fit, in

order to secure sustainable competitive advantage. Hamel and Prahalad report that

this approach leads to repetition and imitation.

By contrast, Hamel and Prahalad found that successful companies focus on leveraging resources – that is, using what they have in innovative ways to reach seemingly

unattainable goals. The main concern of these companies is to use their resources

in challenging and stretching ways to build up a number of core competences. Consistency is maintained by all sharing a central strategic intent, and the route to this

successful state is accelerated organisational learning, recognising that no competitive advantages are inherently sustainable. Here, managers are not simply matching their resources to the requirements of the environment, leaving to others those

requirements their resources are incapable of delivering. Instead, managers use the

resources they have creatively, they create requirements of the environment that

they can then meet, they push to achieve stretching goals and so they continually

renew and transform their organisation. They question the idea of adapting to the

environment, proposing instead creative interaction and stressing the importance of

local learning, so suggesting a shift from classical strategic choice theory towards

the perspective of strategy as a learning process, a theme which will be taken up in

Chapter 5.

While these authors question some assumptions of strategic choice theory, they

preserve others. In particular, they continue to see organisational success as flowing

from clear, prior, organisation-wide intention. They stress what they call strategic

intent, a challenging, shared vision of a future leadership position for the company.

This strategic intent is stable over time. It is clear as to outcome but flexible as to the

means of achieving that outcome. It is an obsession with winning, and winning on a

global scale cannot be secured either through long-term plans or through some undirected process of intrapreneurship or autonomous small task forces. Instead, success

is secured by discovering how to achieve a broad, stretching, challenging intention to

build core competences. However, in stressing intention, harmony and consistency,

the resource-based view falls within strategic choice theory.



Uncertainty and the limitations to strategic choice

It has already been pointed out that cybernetic control depends on the possibility

of making reasonably reliable forecasts of action outcomes and time lags involved

at the required level of detail and over the required time span. When this is not

possible, cybernetic control may still be effective if small and essentially random

actions by the organisation can be relied upon to cancel out small and essentially

random changes in the environment – the law of requisite variety. In other words,



90  Part 1  Systemic ways of thinking about strategy and organisational dynamics



cybernetic systems require a fairly high degree of certainty about environmental

change, either in the sense that a specific cause can be related to a specific effect or

in the p

­ robabilistic sense of small changes cancelling out. This is the same as saying

that cybernetic systems function effectively when they operate in rather repetitive

environments.

Many writers on strategic management have, of course, been well aware of the

uncertainty, ambiguity and conflicting goals that managers have to deal with and

have developed different ways of understanding the nature of strategic choice.

One influential example is the notion of logical incrementalism, which will be

discussed in Chapter 7. Logical incrementalism represents a move from the more

mechanistic view of classical strategic choice theory towards an understanding of

strategy as a continual process of small incremental changes within an overall,

chosen logic.

The view that competitive advantage could be sustained for long time periods

was criticised by some who pointed to the rapid change in competitive conditions.

They held that hyper-competition made it impossible to sustain competitive advantage for any length of time. Those taking this view argue that hyper-competition

requires a new view of strategy (D’Aveni, 1995). From this perspective, one firm

outperforms another if it is adept at rapidly and repeatedly disrupting the current situation to create a novel basis for competing. Hyper-competition requires

a discontinuously redefined competitive advantage and radical changes in market

relationships. Success is built not on existing strengths as in the resource-based

view, but on repeated disruptions. This enables a firm to continuously establish

new but temporary competitive advantages. Tactical actions keep competitors

off-balance. Competitive advantage is temporary and firms destroy their own and

others’ competitive advantage. Organisation units and actions are loosely coupled

and competition requires aggressive action unconstrained by loyalty and compassion. Successful strategies rely on surveillance, interpretation, initiative, opportunism and improvisation.

The writers in the organisational evolution tradition (Hannan and Freeman,

1989) went even further and questioned the ability of managers to choose the state

of their organisation in any way. They took a neo-Darwinian view and held that

organisations changed through random events that were then selected for survival

by competitive selection.



Process versus content

Another debate arose between those who argued that strategy research focused

too much on the content of generic strategies required to produce successful performance. Arising from the discussion of the limits to rationality, some argued

for looking at how managers actually made strategy. They called for a focus on

how strategies were constructed, the process, rather than what they consisted of,

the content. The whole question of process will be considered in Chapter 7. This

emphasis on process was taken up by some as a move from simple choice to a view

of strategy as a learning process. For example, Mintzberg (1994) made a direct call

for a move from strategic choice and long-term planning to an understanding of

strategic management as a process of learning. This perspective will be explored in

Chapter 5.







Chapter 4  Thinking in terms of strategic choice   91



4.7  How strategic choice theory deals with the four key questions

The purpose of this section is to reflect upon the underlying assumptions and reasoning processes of strategic choice theory, including the debates it has led to, in

order to identify what it focuses attention on and the extent to which it helps to

make sense of one’s experience of life in organisations.

In Chapter 2 we indicated that we would evaluate each perspective of strategy

according to four key questions:

1.What theory of human psychology – that is ways of knowing and behaving – does

strategic choice theory assume (including the relationship between individual and

group and the extent to which they are concerned with questions of emotion and

power)?

2.How does the theory understand the nature of human action and interaction?

3.What methodology does strategic choice theory assume (the spectrum of realist

through to social constructionist)?

4.How does strategic choice theory deal with contradictions?



Q1  The nature of human knowing and behaving

This chapter has indicated how strategic choice theory is built on a particular view

of human nature. It is assumed that individuals are essentially cybernetic entities.

They make representations of a pre-given reality taking the form of regularities

built up from previous experience and mentally stored in the form of sets of rules,

or schemas, cognitive maps or mental models. Through experience they make more

and more accurate representations, more and more reliable cognitive maps. This

process is essentially one of negative feedback in which discrepancies between the

cognitive map and external reality are fed back into the map to change it, closing

the gap between it and reality. Strategic choice theory pays very little attention to

emotion and the impact that this might have on how an organisation functions. To

the extent that this theory does pay attention to emotion, it does so from a humanistic psychology perspective in which individuals are motivated by opportunities

to actualise their true selves. Little attention is paid to the notion that unconscious

processes might influence how people perceive and know anything.

So, when it comes to the micro level, strategic choice theory alternates between

two views of human nature, the cognitivist and the humanistic. The former tends to

be predominant when the theory focuses on control systems and the latter when it

focuses on motivation, leadership and culture. The way both are used, however, has

an element in common. It is implicitly assumed that the individual members of an

organisation are all the same and that interactions between them are all the same.

It is assumed that everyone responds in the same way to the same motivational factor, for example. Another example is the implicit assumption, when talking about

leadership styles, that everyone will respond in the same way to a given leadership

style. Differences between individuals, and deviant and eccentric behaviour, have

no role to play in how an organisation evolves. Indeed, they are seen as dangerous

disruptions to be removed by more controls or additional motivators. The emphasis



92  Part 1  Systemic ways of thinking about strategy and organisational dynamics



is on everyone sharing the same values to produce uniformity and conformity. The

very way members of an organisation are referred to as ‘the staff’, or ‘the management’, indicates how differences within the categories are obliterated while differences between them are highlighted.

There is an important consequence of this ignoring of individual differences and

deviant behaviour that will be taken up in Part 3. Systems in which the entities and

their interactions are all the same cannot spontaneously generate anything new. For

strategic choice theory this means that the only possible explanation of creativity is

located in the individual’s intention to do something creative. How individuals do

this is not explained in strategic choice theory. It is simply assumed.

Individuals feature in strategic choice theory primarily in terms of how they affect

the organisation as a whole. Individuals make the choices and do the controlling.

Individuals appoint people to roles and they put them into teams. They set targets

for those teams and motivate, reward or punish people according to performance.

An individual forms a vision and individuals articulate missions for others. Power

is not a nuanced concept but is simply possessed by individuals who exert it over

other individuals, who presumably have less or no power. In this way the individual

is consistently held to be prior and primary to the group. While the organisation

as a system is understood to be driven by formative causality, a different theory of

causality applies to the humans who design it. This is the rationalist causality of the

autonomous individual choosing goals and actions.

The point we are making here is that strategic choice theory implicitly makes

a number of important assumptions about human beings that should not be mistaken for the ‘truth’. They are all assumptions that can quite properly be contested and, when they are, the whole of strategic choice theory is questioned too

(see Part 3).



Q2  The nature of action and interaction: theories of causality

In strategic choice theory, interaction is understood in systemic terms, where the

entities comprising the system are organisations that interact with each other in

industry groupings, or markets. An organisation is also thought of as a system that

consists of people grouped into divisions, subsidiary companies, departments, project teams and so on, all of which interact with each other to form the organisational

system. The immediate consequence is a tendency to reify: that is, to think of an

organisation and a system as a thing.

The concept of a system in strategic choice theory is a very specific one. It is a

cybernetic system: that is, a goal-driven, self-regulating system. The self-regulation

takes the form of a negative feedback process through which an organisation adapts

to its environment, that is, its markets. Negative feedback is a process of referring

back to a fixed point of reference established outside the organisation. The market

demand to which the organisation must adapt provides the fixed point of reference.

The negative feedback works through the system, taking account of the difference

between its offering and that demanded by the market, so as to remove the difference. The organisation is itself also a cybernetic system consisting of groups of

people. The fixed points of reference for these groups are the goals and targets

set for them by their manager. Negative feedback operates by taking account of

the difference between performance and targets, so as to remove the difference.







Chapter 4  Thinking in terms of strategic choice   93



Uncertainty, ambiguity and conflict are supposed to be dealt with largely by more

elaborate negative feedback loops. Thinking about motivation, political activity and

culture change is all in terms of negative feedback loops. Note how strategic choice

theory takes no account of the effect of positive or amplifying feedback loops in

human affairs.

The result is a theory that focuses primarily on the macro level with very little attention to micro-interactions or micro diversity. In other words, differences

amongst the system entities are averaged out. Interactions between the entities are

assumed to be average, or at least normally distributed around the average. This

allows the cyberneticist to disregard the dynamics of interaction between the entities

of which the system is composed and concentrate on the system as a whole. The focus

is then on the regularities in the system’s responses to changes in its environment.

The system responds to differences between externally imposed goals and its actual

behaviour. Or, it responds to differences between an expectation, or prediction, of

some state it should achieve and what it actually does. In organisational terms, the

focus of attention is on how the whole organisation responds to the actions of other

whole organisations that constitute its environment. Little attention is paid to the

differences in the people that belong to the organisation or the nature of their interactions with each other.

A single, whole organisation is the primary unit of analysis. Intention, or choice,

is related to this whole. By focusing attention on a single organisation, ‘the organisation’, strategic choice theory tends to ignore the fact that other organisations are

making choices too. What happens to one depends not only on what it chooses but

also on what all the others are choosing too. You can see the importance attached

to a single organisation making choices for the whole in the emphasis placed on:

strategic intent, choosing a vision, choosing financial targets, choosing a culture,

choosing strategic management styles and so on. The possibility of making such

choices successfully depends heavily on the ability to predict at rather fine levels of

detail and over rather long time spans. That in turn depends upon the possibility of

identifying causal links between action and outcome at a rather fine level of detail

over rather long time spans.

For example, to achieve financial targets, investments must be chosen to deliver

those targets. The discounted cash flow method prescribed for choosing between

alternative investments requires the forecasting of detailed cash flows over periods

as long as 25 years. Whether an investment is a success or not depends on the fine

detail of what it costs and what revenues it generates over many years, once it is in

operation. Forecasts at a coarse level of detail, or for short time periods, will not

capture the factors upon which success depends. The choice cannot then be made as

prescribed, which is to make the choice in a rational way that takes account of the

actual factors that lead to success. Success will not be the result of rational choice

but will depend on the chance capturing of the most important factors in the coarse

forecasts.

Strategic choice theory takes a particular view of organisational dynamics. Since

it is a cybernetic theory, the dynamics are those of a move to stable equilibrium.

Success is equated with stability, consistency and harmony. Instabilities arise largely

in the organisation’s environment.

Strategic choice theory is usually formulated in a way that focuses on the interaction between components and so ignores the richness of human relationships.



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4 Cognitivist and humanistic psychology: the rational and the emotional individual

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