The Decline of Strategic Decision Making

Fear of failure, by both executives and consultants, has diminished the possibility for many organizations to make major advances and to achieve stellar growth, especially for those with external “evaluators”, e.g. Boards, voters, stockholders, funders. That’s the implication of an article in the April issue of Atlantic Monthly, “Peak Intel: How So-Called Strategic Intelligence Actually Makes Us Dumber”, by Eric Garland, a strategic analyst. He laments the fact that those in his profession now take the safer course in their reports to management because that’s what their clients want to hear. Their reports, used as the background for major organizational decision-making, today are mostly short term focused although they purport to be strategic.  Conclusions and recommendations are based on current situations and the most likely effects in the near future, not based on strategic research and predictions.

Garland lists three major causes for the short term focus:

    1. The availability of huge amounts of cheap capital has led to large scale, rampant consolidations across many major industries. The sheer size – “too big to fail”, smaller number of players, and very different behavior of oligopolies totally changes the approach and tools historically used for analyzing firms in free markets.
    2. In giant organizations it is almost impossible to trace the source of independent decisions since the tendency is towards pushing responsibilities down while moving credit up. The safe position, unless the entire organization is behind you, is making decisions from a conventional wisdom and risk avoidance perspective, i.e. short term.
    3. The world economy is driven more by policy makers than at any other time in recent history. Industries are protected, subsidized, and exempted from the results of their actions. So basic free market principles no longer prevail.

Although Garland writes from the perspective of a strategic analyst, I believe that his conclusions have a wider application. His basic admonition is for all of us – planners and consultants, within organizations and outside – to have the courage again to tell the hard truth to leaders. In an era of fear of reprisals and short term, safe decisions, leaders and consultants need to use our analytical skills and organizational knowledge to provide information and directions for long term, greater benefit rather than from the safer, perhaps more secure perspective. It is the only way for us to provide the spur to major organizational growth, competitive advantage and advancement of organizational knowledge.

To read Eric Garland’s entire article click here.

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