Non-receptive organizational contexts and scenario planning interventions: A demonstration of inertia in the strategic decision-making of a CEO, despite strong pressure for a change

Abstract

Publisher's copyright statement:Additional information: Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. IntroductionWriters on strategic management have argued that for continued survival an organization"s strategic decision making must achieve the retention of the organization"s alignment with the external environment [1][2][3]. Failure to achieve this results in strategic drift Johnson [4]. Huff et al. [5] contend that inertia in such (re)alignment, defined as the degree of the level of commitment to the organisation"s current strategy, will grow over time as current ways of operating become deeply embedded in an organization, regardless of, and generally without reference to, developments in the environment. Commitment to the status quo will, they argue, escalate in a smooth, undisturbed fashion over time with incremental adjustments to the current strategy and little conscious attention to strategic choice, so long as organizational performance is satisfactory. However, if and when it becomes evident within the organisation that there is no longer an appropriate alignment between its strategy and the requirements of the environment, "pressure for change" will inevitably develop.Note that the causal mechanisms behind strategic inertia have not been well described or documented in the strategic management literature. Barr and Huff [6] argued that "… strategic change becomes more and more probable as the … pressure for change … resulting from various stimuli exceeds the current level of inertia (pressure to maintain the status quo" (p 342) However, as Huff and Huff [7] have argued, "… there is little guidance from the literature … to suggest when response … will focus an incremental homeostatic adjustments (to strategy) and when more dramatic … change in direction traditionally of interest to strategy researchers is likely to occur" (p 84).In this paper, we document and analyse the strategic views of individual members of a top management team at the time of a scenario planning intervention by the 3 authors. The agreed aim of the scenario intervention was to evaluate the degree of expansion of production that was necessary in light of plausible changes in the future demand for a key product. However, after the standard pre-intervention interviews had been conducted with the top team, and the results circulated within the team, the scenario process stalled and key members of the team dis-engaged. Why was this?We analyse the content of the pre-intervention interviews using two frameworks: (i)that of Janis and Mann [8] who p...

Connecting adaptation and strategy: The role of evolutionary theory in scenario planning

“…The scenarios were also presented periodically to the Committee of Managing Directors, at ''high-level business-and regional-specific meeting,'' and internal approval was then required from the Chairman of Shell prior to presenting the scenarios to a group of 300 Shell leaders [28]. These high-level, powerful audiences would likely have had an impact on how scenarios were developed and presented due to organizational politics and possible bias resulting from stakeholder interests [29]. Therefore, it seems unlikely that complete unrestrainedness would be possible in this type of top-down, consensusoriented environment.…”

“…O'Keefe and Wright's [29] case study on an engine manufacturing organization's attempt to employ scenario planning demonstrated how bias and resistance from stakeholders, in this case the CEO and a few top managers, could prejudice or even derail the objectives of scenario planning. In this case, despite organization-wide consensus that change was necessary in order for the company to survive its attempted expansion, a segment of key stakeholders dropped out of the scenario planning exercise midway through due to their desire to control the strategic course of the organization, which reinforced structural inertia.…”

“…In this case, despite organization-wide consensus that change was necessary in order for the company to survive its attempted expansion, a segment of key stakeholders dropped out of the scenario planning exercise midway through due to their desire to control the strategic course of the organization, which reinforced structural inertia. The author's postscript noted that a year later, the planned expansion was halted, resulting in a multimillion dollar loss for the company, a key customer pulled out of their contract, and the CEO was forced to resign [29]. That case study described how the organization failed to adapt to numerous changes in its environment.…”

Framing adaptive capacity through a history–futures lens: Lessons from the South East Queensland Climate Adaptation Research Initiative

“…However, as Diamond [21] demonstrates, historical analysis indicates that human practice is always culturally and historically determined. Without sufficient reflection, a practical response can be reactive rather than proactive [49]. Such an insight should strike a note of caution for all of us looking for ways to respond to climate change.…”

“…The present simply seems too dominant, too real, for any considerations about an open-ended future to be relevant. Such 'strategic inertia' [49] is a real barrier to effective action in the area of climate change. Historical reflection and the scenarios distilled from this analysis offer powerful evidence that longer-term thinking is very much to the advantage of those locked in a struggle to ensure viable and sustainable social and economic structures into the future [87].…”