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Inertia in strategic decision making 361
cognitive inertia takes us away from simple paper-and-pencil problems
to real-world decision making in organizations.
Inertia in strategic decision making
Many writers on strategic management have argued that, for survival,
an organization must retain or improve its alignment with the external
world. However, often companies can find themselves continuing to
use a frame that becomes outdated as the world outside the company
changes. These companies exhibit strategic inertia as the current frame
becomes more and more deeply embedded in the organization and
commitment to an inappropriate strategy increases. The UK and US
auto industries again provide a good example of this. As we have
seen, up to the late 1970s they adopted a production-oriented frame.
This focus on production was characterized by a desire for optimum
manufacturing efficiency, long product runs and few models. Henry
Ford famously said, ‘we’ll give the consumer whatever color he wants,
as long as it is black’. In contrast, other countries’ frames were more
customer oriented – responsiveness to changes in customer demand
was the focus. In the UK and the US, the high level of commitment
to a – previously successful – production-oriented strategy was slow to
adapt to a world where changes in customer preferences mean that past
demand was no longer predictive of the future demand.
Managers’ mental models of the world, exemplified by the use of a
single frame, are analogous to single visual perspectives on a scene. One
viewpoint through a window frame maymeanthatonlypartoftheexternal
world is in view while another observer, looking through a different
window frame, may see more (or less) of the external environment. Additionally,
the past experience of the observer shapes (mis)interpretation of
events that occur. Hodgkinson and Johnson 6 studied the variability
between individual managers’ mental models of competitive structures
in the UK grocery retailing industry. They found considerable variation
in the nature and complexity of industry views from managers
both within and between companies. The nature of this diversity was
associated with the functional roles that individual managers held.
Barr et al. 7 argue that inappropriate mental models may ‘prevent
managers from sensing problems, delay changes in strategy, and lead
to action that is ineffective in a new environment’. For example, Porac
et al. 8 studied competitive models of senior managers in the Scottish