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The Subject within the Field of Management Science: Concepts and Issues
Management science aims to help managers in making decisions. Such decisions include information of a strategic nature, and they are the basis of āstrategic managementā. Decision-making relies, notably, on the use of relevant information. This information is itself produced by an information system (or several such systems). Hence, strategic management of an organization and the management of the information systems are highly interdependent. The interplay between these two fields is illustrated in Figure 1.1.
Figure 1.1. Field of investigation
A number of authors have looked into the characteristics of information systems for strategic management. One such author is D.C. Bernhardt, who expresses what managers want thus: āI want it fast, factual, actionableā [BER 94].
More recently, Xu et al. [XU 11] conducted a survey of UK executives. āThree focus group sessions were conducted with a total of 31 middle and top-level executives [ā¦] Most of the participants are at strategic (48%) level and tactical level (39%) and involved in some forms of executive intelligence activities. Each session began with a brief statement on the rationale and objectives, the confidentiality and ground rules for the discussion (e.g. role of moderator, one participant talks at a time and disagreement is welcomed), and the demonstration of the visualization model. Focus group sessions took about an hour to complete. The focus group discussion allows taping [sic.] into human tendenciesā [XU 11, p. 192].
What information about the organizationās environment do executives want when making a strategic decision? The following results give us a clue:
ā āExecutives are busy with other activities and have limited time and capacity to scan all possible information, thus an automated information scanning agent may be perceived useful by executives.
ā Scanning without filtering could lead to over-abundance of irrelevant information that exacerbates the problem of data overloadā¦ On the other hand, executives raised concerns on the possibility of screening out potentially relevant information.
ā It is assumed that alerting as a result of intelligent scanning is vital to keep executive instantly informed about strategic issues, thus, is essential to turn the agent system into a vigilant system for executives. Executives may perceive this function usefulā [XU 11, p. 193].
1.1. Strategic management and strategic decision-making
Organizational strategy is of prime importance in management science. The word āstrategicā may refer to one of two things: the decision-making process whereby a strategic plan is drawn up as a guide to action or the actual implementation of the strategic plan on the ground (the āroadmapā). In both cases, time is of the essence: it takes time to draw up a strategic plan, and the action may take place in future years and, therefore, over the course of several or even many years. Anticipation is therefore a prerequisite.
Figure 1.2. Strategic decision-making is at the heart of strategic management
One of the main questions that managers (likely) ask themselves is: āWhat is the strength of my organization today? What will it be tomorrow?ā. The answer to this question sheds light on the area in which the manager needs to make the decisions that are vital for the success of the organization both at present and in the future.
A strategic strength for today may well no longer be as strategically important tomorrow. It is therefore vital to detect, as early as possible, any drivers of change that might emerge in the organizationās environment, and the signs that herald these changes, in order to be able to take account of them in strategic decision-making. Exaggerating somewhat, we might say: āTell me the ādriving forcesā behind your organization and I will tell you what the key information is which your organization absolutely must research on the subject of the (internal and external) changes for which it needs to be prepared if you want sustainable competitivenessā. Such information is gleaned from an information system for strategic management.
In preparing this book, we conducted interviews with numerous managers; verbatim quotes are given throughout the book. Some managers stated that they were not overly concerned by environmental scanning as such: the environment is, in their eyes, too fuzzy a notion to be truly motivating. On the other hand, those same managers appeared more motivated by the notion of a project.
EXAMPLE 1.1.ā (Petrobras)
āThere are many, many challenges at the momentā¦ but we are beginning to see the effects of a completely pragmatic, project-based policyā [THE 13].
As soon as the desire to conduct a project emerges, such managers seek to gather the useful information to facilitate the implementation of that project. The concept of a project is therefore important in terms of triggering and structuring environmental scanning. Nevertheless, it gives us only a partial answer to the question at hand. Indeed, when a project surfaces, it becomes easier to see what information needs to be gathered, but in order to get to this point, environmental scanning needs to be performed first, so as to detect opportunities for projects. Two cases must therefore be distinguished:
ā it is the desire to conduct a project that triggers the act of environmental scanning;
ā it is the discovery of opportunities that triggers the desire to conduct a project.
The delimitation of the field of environmental scanning is not obvious; it arises from a choice rather than from a prerequisite. Each organization needs to reflect on what it deems important to scan in order to feed into its strategic thinking, and that choice is, in itself, a strategic decision. Yet this choice may not always be made in a methodical manner.
In fact, there are two dangers which the organization needs to consider:
ā the organization collects too little information because it is scanning too limited an environment: it is blind to possible opportunities or risks;
ā the organization collects too much information about its environment. Thus, it is paralyzed by information overload, with potentially useless information; this information overload can, itself, give rise to blindness and paralysis.
VERBATIM 1.1.ā (industrial sectors)
āWe do not go looking for information. We content ourselves with the information that comes to us.ā
āWe do not have any sort of organized system with regard to anticipative environmental scanning. Certainly, pieces of information are given by one person or another, but without a specific goal, on a case-by-case basis, depending on each individualās perception of matters.ā
āWe have a great deal of information, but it always reaches us too late. Iām constantly running to catch up with things that have already happened.ā
āWe have a great many information circuits, but for day-to-day information. If a piece of information which acts as an early warning signal for a genuine change in the environment is channeled along one of those circuits, there is a high chance of it being lost.ā
1.2. Strategic decision-making and anticipation
Strategic decision-making and anticipation should, logically, be very closely bound together: ā[ā¦] environmental scanning is integrally linked to organizational and strategic planning and plans for unexpected changes that will affect the organization" [ALB 04, p. 41].
Figure 1.3. Anticipation is at the heart of strategic decision-making
1.2.1. Knowing and anticipating
A condition sine qua non, when initiating a new strategy, is knowing the relevant environment and anticipating evolution of that environment. This involves anticipating in order to:
ā trigger the desire to make a strategic decision;
ā develop a plan of the process whereby the chosen decision is implemented.
The external environment in which the strategic decision needs to be made and implemented is:
ā complex, comprising numerous elements;
ā rapidly changing [EIS 88];
ā equivocal [DAF 86];
ā nonlinear [WAL 92].
Ultimately, we speak of turbulence and uncertainty.
VERBATIM 1.2.ā (AXA Insurance)
āIncreasingly, we are having to anticipate in terms of our competitors, new banking technology, lobby groups, associations, federations, and even the new national and international regulations, etc.ā
āOrganizations today face unprecedented challenges in maintaining commercial survival and success. Success requires a keen strategic understanding of external influences in order to respond in ways that will ensure the organizationās survival and success" [ALB 04, p. 39]. On this point, the managerās attitude is of crucial importance.
EXAMPLE 1.2.ā (survey put to 309 managers in the United States) [QIU 08]
The survey shows that scanning of the organizationās relevant environment depends primarily on the attitude of the managers. The organizationās competitive intelligence is greater when the managers have a proactive attitude, driven by the will to find a representation that clarifies the opportunities and threats in the environment in order to be able to respond to them quickly.
What marks the difference between the attitudes of two managers with regard to managerial scanning behavior? Two major aspects are held up in the literature:
ā the scope of the field observed;
ā the frequency of observation.
We will come back to these concepts later on.
These three periods, anticipating, deciding and implementing, are of different durations. The third period, which is generally the longest, may be carried out over several or even many years.
1.2.2. Anticipating and deciding
With regard to the total lifetime of a strategic decision, we can distinguish three periods:
ā The first is the period where the decision has not yet been made, but the decision-making project is in the pipeline, and it will ultimately trigger the decision-making process. The exploitation of weak signals may be useful in envisioning a future strategy. This weak signal may be useful in designing a future strategy. This initial exploitation is generally ignored in the existing literature.
ā The second is the period where the decision is elaborated and the plan of action is established.
ā The third is the period where the decision is implemented. It may be useful to exploit weak signals to drive forward the application of the strategy to a fruitful end.
1.2.2.1. Triggering
Triggering is the arousal of the desire to move toward a new strategy. In general, the act of environmental scanning and anticipation of any evolution in the environment will trigger the perception that it is opportune to make a decision: āThe prerequisite for dynamic business planning is to capture this unknownā [ILM 06, p. 909].
Anticipation is a necessary condition, depending on the case, for reactivity or proactivity: ā[ā¦] then distinguish between two types of early warning systems (EWSs): (1) proactive, in which an organisation first determines which issues it finds important and then goes about monitoring those issues; (2) reactive, in which an organisation uses the EWS as a radar looking for unexpected changesā [BOT 10, p. 457].
āThe term āagileā is commonly used to describe firms that are able to adapt and to perform well in rapidly changing environmentsā¦ enterprise agility, that is, the ability of firms to sense environmental change and respond readily, is an important determinant of firm successā¦ As a result, enterprise agility is best viewed as applying to episodic events precipitated by environmental change, whereas absorptive capacity operates on a more continuous basisā [OVE 06, p. 120].
EXAMPLE 1.3.ā
In Germany in 2013, more than 180 universities and 120 research centers and institutes were engaged in research regarding Energiewende, Germanyās transition to a more sustainable form of energy supply. The Federal Ministry of Education and Research, on 4 March 2013, announced the creation of a national research platform on Energiewende. The aims were, notably, to bring together existing activities and new projects, to make knowledge available to all, and thereby āidentifyā new important topics in time and be able to react quickly [BUL 13].
1.2.2.2. Planning
Planning entails preparing the plan of action that will facilitate the new strategyās implementation.
The development of the plan of action varies depending on the intended strategic objective: to adapt or to create.
1.2.2.2.1. Adapting to the anticipated future
It is necessary to procure anticipative information as the basis upon which to construct an image of the future, resulting from the processing of the gathered data. The approach then involves revealing (in the photographic sense of the word) the image of the future in order to prepare the organization to be able to adapt to it. The organization must prove itself to be reactive and adaptable and, in order to do so, scan its environment.
EXAMPLE 1.4.ā (justice sector) [BOT 10]
In this particular case, the strategic decisions in question are those taken by the Dutch Ministry of Justice. The objectives envisioned are long-term objectives (over 20 years or so), and the environment will undoubtedly change over the years, but it is impossible to predict in exactly what way. āLooking to the future is not just a matter of exploring future trends (i.e. changes over time) but also of detecting current signals or events that may announce a change or shift in existing trends. Early warning systems (EWS) are used to detect and identify these seeds of change that can even develop into discontinuitiesā [BOT 10, p. 457].
EWS denotes a device that is able to detect any differences between the evolution of the environment and the implementation of the strategy and trigger a warning signal to take corrective action. A warning signal lies in a difference between an aspect āmeasuredā at a given point in time and the situation that was predicted in the ātrendā (or strategic plan or roadmap) for the same date. This difference may signify a possible shift in circumstances, liable to lead to the failure of the policy desired and implemented by the strategic decisions made by the Ministry. In such a case, the difference is referred to as a weak signal [BOT 10, p. 458].
Once detected, the signal needs to be interpreted: āHow do we know to which signals we need to pay attention?ā The interpretation arrived at becomes the trigger for āincrementalā corrective measures, in order to remain on the path leading from the initial situation to the final situation intended by the Ministry. āThis creates a path to the future with which the sustainability of (new) policies can be tested periodicallyā [BOT 10, p. 454].
1.2.2.2.2. Shaping oneās own future
To create the future as the organization wants it to be, it is necessary to obtain the anticipative information that will help to envisage the probable environment wherein the organization needs to...
