Strategic Management Journal
Strat. Mgmt. J.
: 737–763 (2009)Published online 26 February 2009 in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/smj.757
Received 11 May 2006
Final revision received 5 January 2009
THINKING STRATEGICALLY ABOUT THINKINGSTRATEGICALLY: THE COMPUTATIONALSTRUCTURE AND DYNAMICS OF MANAGERIALPROBLEM SELECTION AND FORMULATION
Marcel Desautels Centre for Integrative Thinking, Rotman School of Management,University of Toronto, Toronto, Ontario, Canada
A new model of managerial problem formulation is introduced and developed to answer thequestion: ‘What kinds of problems do strategic managers engage in solving and why?’ Thearticle proposes that a key decision metric for choosing among alternative problem statementsis the computational complexity of the solution algorithm of alternative statements. Managerial problem statements are grouped into two classes on the basis of their computational complexity:P-type problems (canonically easy ones) and NP-type problems (hard ones). The new modelof managerial cognitive choice posits that managers prefer to engage with and solve P-type problems over solving NP-type problems. The model explains common patterns of managerialreasoning and decision making, including many documented ‘biases’ and simplifying heuristics,and points the way to new effects and novel empirical investigations of problem solving-oriented thinking in strategic management and types of generic strategies, driven by predictions about thekinds of market- and industry-level changes that managers will or will not respond to.
2009 John Wiley & Sons, Ltd.
What kinds of problems do strategic managersengage with and try to solve, and why those andnot others? How much should and how much
managers think about a strategic decision problem?Under what conditions do they
among dif-ferent problem statements to make sense of a givenpredicament? I introduce a model of strategic prob-lem formulation based on distinctions drawn fromcomputational complexity theory (reviews can be
Keywords: managerial problem solving; strategy formu-lation; complexity
Correspondence to: Mihnea Moldoveanu, Marcel DesautelsCentre for Integrative Thinking, Rotman School of Management,University of Toronto, 105 St. George Street, RSM 473, Toronto,Ontario, Canada, M5S 3E6.E-mail: email@example.com
found in Garey and Johnson, 1979; Cormen, Leis-erson, and Rivest, 1990), and contribute a canon-ical representation and taxonomy of managerialproblems based on their computational complexityto create a framework for addressing such ques-tions. I develop a model of cognitive choices thatmanagers implicitly make among alternative prob-lem complexity classes. The model uses a well-known, established quantization of problem com-plexity measures to build a lexicographic modelof managerial problem formulation.
-hard, orpolynomial-time hard problems, are those withsolution algorithms that require a number of oper-ations that is at most a polynomial function of thenumber of independent variables and constraints.By contrast,
-hard problems, or nondeterminis-tic polynomial-time-hard problems, have solutionalgorithms that require a number of operations thatis a greater than any polynomial (e.g., exponential)function of the problem’s variables and constraints.
2009 John Wiley & Sons, Ltd.