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There is a major debate on the issue and it is difficult to say that one extreme is true or the other.  Let us hear the two sides first.

 

In his book, `The Mind of the Strategist', Kenichi Ohmae argues that the mind of the strategist is not dominated by linear, logical thinking.  On the contrary, a strategist's thought processes are `basically creative and intuitive rather than rational.'  In his view, `great strategies . . . originate in insights that are beyond the reach of conscious analysis.'  He does not dismiss logic as unnecessary, but notes that it is not sufficient for arriving at innovative strategies.  Yet, he observes that in most large companies creative strategists ‘are being pushed to the sidelines in favour of rational, by-the-number strategic and financial planners,' leading to a withering of strategic thinking ability.

 

This is because many strategists argue that strategy analysis and formulation should be conducted consciously, explicitly and rationally.  In their view, strategic thinking is a `logical activity,' while subsequent strategy implementation `comprises a series of sub-activities that are primarily administrative.'

 

Another dimension to this debate is added by the introduction of game theory in strategic decision making. For many people, strategy is about behaviour in situations of competitive interaction.  Generals develop strategies to outmanoeuvre their military opponents, sports coaches adopt strategic moves to outwit other teams and politicians use strategic ploys to outfox their rivals.  In other words, strategy is about playing interactive games.  Strategists are engaged in understanding the rules of a game and developing game strategies better than their opponents are.  This is where game theorists come in, who generally argue that strategic thinking should focus on the rational analysis of complex game situations and the selection of the most promising strategy. Games confront strategists with a competitive logic they cannot escape and therefore game theorists propose that strategists rationally figure out their optimal moves and countermoves.  Much of the work on game theory is actually strongly mathematically oriented, supporting strategists in their calculations of the best courses of action. Therefore it has strong emphasis on logical reasoning and calculated decision-making making it lean towards a rational perspective.

 

While we have discussed different forms of reasoning, they only pay indirect attention to the issue of human cognition, i.e. the way the knowledge is developed in a human being. We cannot over-emphasise the role of cognitive biases and rigidities in strategic thinking.  Psychology tells us that once cognitive maps are in place, challenging them is extremely difficult.  People fight to retain their cognitive maps, effectively making themselves captives of their own experiences.

 

Understanding that there are cognitive maps in place is important because the ‘reality' that is important to strategists – e.g. companies, environments, competition, markets, strengths, and opportunities – is not material.  The world of the strategist is enacted – that is, created – by the interaction between people, each one of them have their own interpretation of what is going on. As people who interact with one another will come to share their interpretations of the world, their common understanding of `reality' is said to be socially constructed.  Their cognitive maps will develop in a similar direction.  The social construction of reality makes the strategist's task `an imaginative one, a creative one, an art.'  Strategists must reinterpret the chaos of activities taking place around them, and challenge existing views.  Ultimately, strategists must manage `the subjective process of reality building,' without creating new cognitive rigidities that may burden the company in the future.

 

The debate implies that while the logical analysis process may be important the role of creativity cannot be negated.  Therefore, a mix of the two would give a better result rather than sticking to only one view.

 

Therefore, a strategy that is guided by a clear sense of purpose, is creative in its approach, is arrived at rationally and is emotionally ratified by commitment is more likely to have a successful outcome than a company whose future is left to guesswork and chance. 

 

Having understood the basic concepts, now we turn our attention to the process of strategic management.