A Historical Pattern of Management Behavior

Table 1 is appended to illustrate the differences among the three decision classes. While distinctive, each is related to the other two. In many ways strategic decisions are the basic determinants in the success of the firm for, unless the firm's products are addressed to market areas in which demand exists and in which the competitive climate is favorable, even the very best organizational form, or the most brilliant control of operations, will fail to produce profit. One would, therefore, expect strategic decisions to receive at all times the highest priority from top management. Observation and history both show that this is not the case.

Historical analysis (3) shows that top managements have attended to problem of strategy periodically, rather than continuously. Relatively brief periods of change in the firm's products and market had been followed by equally brief changes in administrative structure and then by relatively long periods of exploitation of the new position. During these periods the focus of management attention remained on the operating problems of the firm.

Recent history (4) also suggests that many managements exhibit what may be called a lag response' to strategic changes. Such firms characteristically fail to anticipate environmental changes which call for a modification in strategy. When deterioration of strategy results in a decline or loss of profit, the firm typically seeks remedies, first through changes in operations, secondly through reorganization, and only lastly is the true cause of trouble diagnosed and management focus shifts to strategy.

An explanation for such behavior is offered by the fact that the responsibility for attending to all three classes of decisions resides in a level of top management usually called general management. Thus the three classes must compete for the resources of the firm as well as for top management time and attention.

Of the three, operating decisions tend to receive priority for several reasons: first, because they are routine and repetitive; second, because they are automatically brought to top manager's attention by lower level managers; third, because they are frequent and large in volume; fourth, because many top managers find them familiar by virtue of their previous training at lower levels in the firm at which operating decisions are the sole management responsibility.

The lag response to strategy can be represented through a modification of Figure 1 which is shown in Figure 2. Figure 2 has two key features. First, the environment changes are perceived indirectly through the impact they have on the logistic process. Second, decision needs signaled by the logistic process are analyzed serially, initially as operating deficiencies, secondly as administrative, and only thirdly as strategic.