Certain strategic decisions are only undertaken by the sole authority with far-sightedness and persuasive power, like an influential CEO or a dynamic entrepreneur. Other than this, sonic strategic decisions are formed based on incremental choices, which drive the organization more toward one direction than the other after some time. Mintzberg’s modes of strategic decision making are the three modes of strategic decision-making are adaptive, entrepreneurial, and planning. The fourth mode, i.e., logical incrementalism, was later added by Quinn.
Modes of Strategic Decision Making
These four modes are discussed below in detail:
1) Entrepreneurial Mode
In this approach, the strategy is formulated by a single person. This mainly focuses on the opportunities directed by the founder’s vision and are held by decisive decisions. Here, opportunities are considered first, and problems are kept secondary. The most important goal is the growth and development of the organization. The real-world examples of this strategy formulation are Wipro and Infotech. It is one of the modes of strategic decision making.
2) Adaptive Mode
This approach is also known as “muddling through”. Unlike entrepreneurial mode, here, the search for opportunities is ignored, and the main focus is on reactive solutions. For example, Wipro and HCL became responsive by selling customized Personal Computers only after Dell Computers were introduced in the markets of India. A lot of bargaining occurs concerned with the organizational objectives’ priorities. It is one of the modes of strategic decision making.
As a result, the prevailing strategy is fragmented, and the most suitable strategy is developed, which would take the organization ahead incrementally. Generally, this mode is adopted by many hospitals, government agencies, universities, and various organizations—for example, Encyclopedia’s Britannica. Inc. successfully incorporated this mode of strategic decision-making. It continued the sale of its books through door-to-door selling. But the dual-earning families made this approach obsolete. Later, when it was acquired, the company changed its marketing strategy and adopted television and internet marketing. Now, it also offers an online and printed version of the Encyclopedia.
3) Planning Mode
The planning mode includes systematically collecting information for situational analysis, developing alternative strategies, and selecting appropriate strategies. This mode is both proactive and reactive to the current problems. It is one of the modes of strategic decision making. For example, Maruti Suzuki started introducing new models and abandoned the production of non-moving and old models when MNCs entered into the Indian automotive market.
4) Logical Incrementalism Mode
This is the fourth mode of strategic decision-making that combines all the other three modes. According to Quinn, “Logical incrementalism is an interactive process in which the organization probes the future, experiments, and learns from a series of partial (incremental) commitments rather than through global formulation of total strategies
Broadly, it is an added mode of decision-making, which can be described as combining other modes mentioned above. Here, the mission and objectives of an organization are crystal clear to the top management. Here, you will know the modes of strategic decision making. But while formulating the strategies, it selects “an interactive process where the organization explores the future, experiments and learns from a series of partial (incremental) commitments rather than through global creation of overall strategies” Even though the mission and objectives are pre-defined, the strategy can be formed out of several discussions, debates, and experiments.
1. What is Strategic Selection Making?
Strategic selection means identifying and selecting the first-class direction of movement to achieve long-term dreams and targets for an organization. It entails reading internal and outside factors, considering numerous alternatives, and making knowledgeable alternatives that align with the enterprise’s usual method. Three critical points about strategic selection-making:
i) Involves lengthy-term dreams: Strategic choice making specializes in the organization’s lengthy-term vision and objectives in place of short-term profits.
ii) Consider inner and external elements: Strategic selections consider each internal element consisting of sources, capabilities, and organizational tradition, in addition to outside elements like market developments, competition, and client desires.
iii) Informed picks: Strategic decisions are based on thorough evaluation, evaluation of alternatives, and consideration of potential risks and rewards.
2. How does Strategic Choice Making Affect Organizational Overall Performance?
Strategic decision making has a sizable effect on organizational overall performance. Here’s how:
i) Alignment with desires: Effective strategic selections ensure that movements and projects align with the company’s dreams and strategic route. This alignment complements attention, coordination, and proper resource allocation, leading to stepped-forward universal overall performance.
ii) Competitive gain: Strategic decision making enables companies to perceive and leverage possibilities, adapt to market changes, and benefit from an aggressive edge. Companies can differentiate themselves from the competition by making knowledgeable selections and strategically allocating resources and reap sustainable increases.
iii) Risk control: Strategic decision making includes assessing capability dangers and rewards associated with distinct alternatives. By thinking about and mitigating risks, organizations could make informed decisions that minimize potential bad influences and maximize fantastic effects.
3. What are the Challenges of Strategic Decision Making?
Strategic selection making may be complex and challenging due to different factors. Here are some everyday demanding situations:
i) Uncertainty and ambiguity: Strategic selections frequently cope with uncertainty and ambiguity, specifically in dynamic and unpredictable environments. The loss of whole facts could make it challenging to assess alternatives and expect consequences appropriately.
ii) Cognitive biases: Decision makers are susceptible to cognitive biases, including confirmation bias or overconfidence, that can affect the assessment of options and cause suboptimal decisions. Being aware of those biases and actively mitigating them is vital.
iii) Resistance to alternate: Strategic selections regularly require techniques, systems, or culture changes that could face resistance from employees or other stakeholders. Managing change successfully and gaining buy-in from key stakeholders can be a huge undertaking.