Organizing to Strategize in the Face of Interactions: Preventing Premature Lock-in

Motivated by real examples that run contrary to conventional wisdom, we examine how firms organize themselves to strategize well. Interactions among decisions make strategizing difficult. They raise the specter that a firm's strategizing efforts will get stuck in a web of conflicting constraints prematurely, before managers explore a wide enough range of possibilities. A key role of organizing is to free strategizing efforts and encourage broad search. At the same time, organizing must ensure that strategizing efforts stabilize once the firm discovers an effective set of choices. The need to balance search and stability, we argue, is a central challenge of organizing. We explore this challenge with an agent-based simulation of firms that organize to strategize in the face of interactions. The results shed light on our contrary-to-wisdom examples. They show why firms may benefit from unnecessary overlap between departments; how firms can increase firm-wide search by reining in the search efforts of individual managers; and how a change in organizational structure -- e.g., a shift from decentralization to integration -- may reflect not a reversal of early mistakes but an effective sequence of organizing. The disparate examples share an underlying logic. The unnecessary overlap, the reining-in of managers, the period of decentralization -- all can be seen as organizational mechanisms to ensure the broad, early search that a firm needs in order to cope with interactions among decisions.