MANAGEMENT OF EMERGING STRATEGIC ISSUES

A
RESEARCH

PLAN

SUBMITTED TO THE

NATIONAL TECHNOLOGY AGENCY TEKES

PROJECT COORDINATOR: HELSINKI UNIVERSITY

TECHNOLOGY

PROFESSOR TOMI LAAMANEN Department of Industrial Engineering and Management Helsinki University of Technology P.O. Box 5500, FIN-02015 TKK, Finland Email: [email protected] PROFESSOR MARKKU MAULA Department of Industrial Engineering and Management Helsinki University of Technology P.O. Box 5500, FIN-02015 TKK, Finland Email: [email protected] DR. MATTI KEIJOLA Department of Industrial Engineering and Management Helsinki University of Technology P.O.Box 5500, 02105 TKK, Finland Email: [email protected] PARTICIPATING COMPANIES Nokia Oyj SanomaWSOY Oyj Vaisala Oyj Suomen Posti Oyj

EXECUTIVE SUMMARY
The scope and number of strategic business issues faced today by Finnish companies striving to operate and be successful internationally has increased with the increasing pace and complexity of the increasingly international business environment. This research plan proposes a project that aims at contributing to the practices of technology-based firms for managing emerging strategic issues - be they threats or opportunities. The proposed project is a continuation of a two-year long corporate-funded research project that focused on the strategic issue management practices of a leading Finnish technology-based corporation, Nokia Oyjs Corporate Strategy unit. In this feasibility phase, a detailed understanding emerged on what are Nokias and some of the other world leading technology-based large firms best practices in the area strategic issue management (IBM, HP, and GE). Companies have varying ways of identifying and dealing with their most critical strategic questions. This process is, however, typically an emergent one, not necessarily optimally structured to enable the effective identification of the most critical questions and the appropriate allocation of top management attention and corporate intelligence support to answer the identified strategic questions. The proposed research project is positioned to (1) deepen the knowledge gained from the pre-project phase, (2) contrast it to the experiences of other companies, (3) develop practices that would be applicable for both large and small technology-based firms for managing their businesses so that they would be able to benefit optimally from emerging opportunities and be prepared to counter emerging threats, and (4) leverage these practices to all the participating Finnish firms. The research theme is at the forefront of management research. At the moment, other researchers focusing on similar topics are around 1 to 2 years behind in understanding the dynamism of how emerging strategic issues should be dealt with inside firms. Thus, in addition to the practical contribution, also the academic contribution of this research project can be expected to be novel. The empirical analyses of our research project include (1) company-specific strategic issue management system development (Nokia, SanomaWSOY, Posti), (2) an in-depth analysis of an emerging strategic issue (Vaisala and Posti) and (3) a survey of the broader strategic issue management practices of Finnish technologybased firms. The main research questions to be answered include: What is the state of art in dynamic strategy formation in companies? What are the best practices? What improvements can be considered? How to

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institutionalize them? What results to expect?. The results of the project will include new knowledge and improved practices for Finnish companies to manage their strategy work, thereby increasing their success and viability in dynamic global markets. In nutshell, the proposed project builds on a pre-project feasibility study already financed by and conducted with Nokia. The project will be based on in-depth case studies involving three major Finnish industrial corporations as well as on benchmarking sessions with major international companies (Shell and 3M). Additionally, considerations relevant and applicable to smaller, growth companies will be addressed. The project will thus have a rare access to a unique set of real corporate data of sensitive and confidential nature. The proposed project is planned to last for two years and will be carried out by the Institute of Strategy and International Business together with staff from the participating companies.

TABLE OF CONTENTS
1 INTRODUCTION..............................................................................................................................................1 2 PROJECT MOTIVATION................................................................................................................................3 3 BACKGROUND RESEARCH..........................................................................................................................4 4 THE MESI PROJECT.......................................................................................................................................6 4.1 RESEARCH QUESTIONS............................................................................................................................6 4.2 RESEARCH DESIGN.................................................................................................................................6 4.3 WORK PACKAGES (WP)........................................................................................................................7 4.3.1 Work Package 1 Project Management..................................................................................7 4.3.2 Work Package 2 Company Case Studies...............................................................................7 4.3.3 Work Package 3 Benchmarking............................................................................................8 4.3.4 Work Package 4 Growth Company Considerations...............................................................8 4.3.5 Work Package 5 Integration .................................................................................................9 4.4 PROJECT ORGANIZATION, RESOURCES.......................................................................................................9 4.5 PROJECT SCHEDULE................................................................................................................................9 5 REFERENCES..................................................................................................................................................11 APPENDIX 1, THE CONCEPT OF THE STRATEGIC AGENDA.............................................................14 APPENDIX 2 LIST OF RESEARCH QUESTIONS.....................................................................................16 APPENDIX 3, WP 2, CASE STUDIES.............................................................................................................17 METHODOLOGY........................................................................................................................................18 CONTRIBUTION.........................................................................................................................................18 DELIVERABLES AND DISSEMINATION.............................................................................................................19 APPENDIX 4, WP 3, BENCHMARKING.......................................................................................................20 METHODOLOGY........................................................................................................................................20 CONTRIBUTION.........................................................................................................................................20 DELIVERABLES AND DISSEMINATION.............................................................................................................21 APPENDIX 5, WP 4, GROWTH COMPANY CONSIDERATIONS...........................................................22 METHODOLOGY........................................................................................................................................22 CONTRIBUTION.........................................................................................................................................22 DELIVERABLES AND DISSEMINATION.............................................................................................................23 APPENDIX 6, WP 5, INTEGRATION............................................................................................................24 METHODOLOGY........................................................................................................................................24 CONTRIBUTION.........................................................................................................................................24 DELIVERABLES AND DISSEMINATION.............................................................................................................24

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INTRODUCTION

The scope of strategic business issues faced by Finnish companies striving to operate and be successful internationally has widened due to an increasingly broad geographic scope and the increasing complexity of technology. Strategic issues arise not only through the formal, periodic strategic planning processes in companies. They can, and quite often do arise unpredictably due to new insights, unexpected advances in technology or competitive activities in the market place. The existing research acknowledges this emergence, but does not provide any applicable ways of dealing with this kind of incidents. All companies have their way of identifying and dealing with these, their most critical strategic questions. However, this process of managing emerging strategic issues is typically non-structured, not necessarily optimally suited to enable the effective identification of the most critical questions and the appropriate allocation of top management attention and corporate intelligence support to answer the identified strategic questions. Despite the past research during 1960s, 1970s, and 1980s into the domain of strategic issues (SI), strategic issue management (SIM), and strategic issue management systems (SIMS) there is a scarcity applicable approaches for firms to use in improving their attention focus and distribution in strategic issue management processes. The Institute of Strategy and International Business (ISIB) at Helsinki University of Technology together with Nokias Corporate Strategy Unit have been addressing the challenge described above using Nokias strategy processes as a case. The research project proposed here builds on the work that focused on the Nokia case and extends it to cover other world class companies in Finland and abroad so as to create results that are applicable to a wider set of large and growth companies. The Finnish case companies, in addition to Nokia Oyj, will be Suomen Posti Oyj, SanomaWSOY Oyj, and Vaisala Oyj. On the international side benchmarking sessions have already been scheduled with the corporate strategic planning units of Shell International and the 3M Corporation. The extended empirical data to be collected in the company cases will be rare in that it will be about a critical aspect of a companys business and as such is highly confidential and sensitive in nature. The data will, however, help create and test new theories and practices regarding strategic issue management in companies.

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Evidence about the relevance of the proposed study to the scientific community can be seen in that a paper describing the qualitative results based on the Nokia case was accepted and presented at the Strategic Management Society 2004 Conference (Kajanto et al, 2004) and that a second paper describing the quantitative results of the case has been accepted for presentation at the Strategic Management Society 2005 Conference (Kajanto et al, 2005). This document is structured as follows. Section 2 outlines the rationale for the project. In Section 3, a review of the background research is presented and Section 4 presents the actual research plan for the project and its work packages.

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PROJECT MOTIVATION

Theoretical contribution Strategic planning practices have undergone significant changes from the 1960s and 1970s to the late 1990s. Grant (2003) shows how strategic decision-making in major oil companies in the late 1990s was occurring for the most part outside of companies strategic planning systems. The strategic planning systems were less formal than in the earlier decades and numbers of corporate strategy staffs were greatly reduced. Grant (2003) argues that the effectiveness of the companies strategic planning may have deteriorated in three respects. First, the shortening of the planning horizons may reflect a shift in top management priority from long-term development to short- and medium term performance goals. Second, the transfer of responsibility from staff planners to line managers, while solving the problems of formalization and detachment, also entailed a loss of analytical capability. Third, while breaking down the rigidities of the old formalized planning systems and embracing emergent strategy-making processes, the companies had done little in terms of positive measures to encourage innovation in strategy making. Our project aims to create new insights to the planning practices of companies and strives for innovation in their dynamic strategic management for the benefit of Finnish companies. Cyert and March (1963) noted in their classical book on A Behavioral Theory of the Firm that organizational decision-making is commonly in many ways only boundedly rational, driven by local problem-driven, temporally sequential search processes. Later research, including Ansoffs work (1965; 1984), the subsequent work on strategic issue management (Dutton et al., 1987a, 1987b), and the work on attention-based view of organizational decision making (Ocasio, 1997) has picked up the challenge posed by Cyert and March (1963) and Cohen, March, and Olsen (1972) for improving organizational strategic decision-making practices, but even today, there is still lack of applicable approaches for firms to use in improving their attention focus and distribution in strategic issue management processes. Our project will contribute to research in strategic issue management with new theories based on empirical results.

Practical contribution

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Companies participating in the project will directly benefit from the project by improving their strategy processes. They learn to consider their processes for how best to select, allocate and direct attention to emerging strategic issues depending on the envisaged characteristics of the issues and the resources at their disposal. We expect that Finnish companies applying the results of the project will increase their viability in the increasingly complex and competitive global business environment. By dynamically managing a right set of strategic issues, a company makes efficient use of management resources and thus improves its strategic direction, success and viability. Failure to do so may forebode unsatisfactory performance in the future. Methods and processes to be conceived for growth companies are expected to improve the rates of success for some of the fast growing Finnish companies adopting the methods and processes. 3 BACKGROUND RESEARCH

Extending Grants (2003) work on oil companies strategic planning practices, we have examined the corporate level strategic planning practices of major technology-based firms in the information and communications technology sectors. We have carried out a 18 month long extensive in-depth case study of Nokias corporate strategic planning and issue management practices with managers involved with the development and management of the corporate level strategic planning practices. In addition, we have interviewed representatives of other firms as benchmarks and studied secondary material that is publicly available on the strategy planning practices of Hewlett-Packard and IBM. In 2000 HP developed its strategy process as part of its Reinvention campaign by introducing different schemes to facilitate emergent strategic decisionmaking (Zell et al., 2004). Similarly, starting in 1999 IBM replaced its annual strategy review process with a year-round series of topically focused strategic assessments (CSB, 2000). The goals of IBMs new process were (1) to ensure that strategic issues are addressed quickly, (2) to create a more rigorous decision-making process that would challenge assumptions and broaden their view of available options, and (3) to address cross-unit issues missed in traditional business unit-centered process (CSB, 2000). We have found three archetypical configurations of strategic issue management systems optimized for different purposes and were able to compare the benefits and challenges involved in each of them. The configurations and their characteristics are shown in Figure 1.

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Detailed analysis of strategic issues Basic assumption Main emphasis Issue identification Issue analysis Implementation plan Speed of action Potential challenges Fast, in-depth analysis is the key Analysis Emergent, one-time Detailed analysis practices and tools Part of the analysis recommendations Relatively fast after the analysis results Analysis cannot always imply optimal implementation plan

Facilitated group work on issues Efficiency in team work is the key Implementation Emergent, one-time Utilizing teams analysis intelligence Emerges as a result of the group work Determined at the initiation of work Team self-sufficiency, team member choice, limited time frame

On-going strategic issue management Preserving valuable options is the key Both Emergent and cumulative Varying profiles of resource use Sensemaking result emerging over time Non-determinable, options preservation Saturation of the process and rejection of new issues, speed

Figure 1. Three archetypical strategic issue management configurations

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THE MESI PROJECT

4.1 Research Questions The main questions to be answered in the proposed empirical research are: What is the state of art in dynamic strategy formation in companies? What are the best practices? What improvements can be considered? How to institutionalize them? What results to expect? We structure our detailed research questions according to our model of the corporate strategic agenda. The elements of the agenda schema form the subdomains of research and trigger more detailed research questions. Answers to these questions help understand each of the sub-domains and serve to answer the main questions. The list is shown in Appendix 2. 4.2 Research Design The project builds on a feasibility study, already performed, and on the methods developed during the pre-study phase. The research methods include literature survey, company case study, and quantitative study. A rich and unique set of data will be collected in the project permitting a variety of analyses and triangulation of results. The research work in the project will be divided to five work packages (WP). The first WP involves management of the project. The following three work packages are the major fact finding exercises of the project. They are all designed to provide answers to the basic research questions but take on differing complementary approaches. The second WP comprises case studies related to the participating industrial companies. The third WP is about extending the research to cover major international companies through the process of benchmarking. The fourth WP addresses issue management in growth companies. The fifth WP involves integration of the results of WP2, WP3 and WP4 and the full dissemination of results. The packages are outlined in the following and are described in more detail in Appendices 3,4,5 and 6. Figure 1 highlights the overall research design.

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WP 1 Project management

WP 2 Large company cases

WP 3 Benchmarking

WP 4 Growth firm survey

WP 5 Integration

Figure 2. Design of the MESI research project 4.3 Work Packages (WP) 4.3.1 Work Package 1 Project Management Project management resources the project and keeps track of the project schedule and budget. Additionally and importantly it entails liaison with project partners and benchmarking companies as well as forming contacts with new international companies. 4.3.2 Work Package 2 Company Case Studies This work package consists of three new in-depth company case studies and an extension of the old Nokia case. A new case is formed for Suomen Posti Oyj, SanomaWSOY Oyj and Vaisala Oyj. The cases are designed with two goals in mind They should serve our research in the accumulation of empirical data in the quest to provide answers to our research questions, and They should serve the case companies in understanding and improving their strategic planning and issue processing processes In the case studies we will work on real strategic themes and issues that have been or will be processed within our industrial partner corporations. Two types of cases are planned. In the first case type, the emphasis is on a companys strategic planning process and on the way it processes its strategic issues. In the second type, the emphasis is on how the development of a new strategic theme and its related issues should and will progress.

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In order to answer our research questions, we will collect data on strategic decision-making with respect to the cases, including issue characteristics, planning and decision processes, resource deployment as well as estimates of the impact and correctness of the decisions. The collected data will be analyzed both qualitatively and quantitatively. For example, we will use network plots of individuals involved in the strategic issue work. These networks will show how each theme is participated and by which individuals, thus giving a handle on nature of issue processing and the workload of key people. The accumulation of issue-based data will permit quantitative analysis revealing dependencies between characteristics of issues. The prime deliverables of the case analyses will be reports detailing each case and its findings and the practical recommendations for the companies involved. Each case is scheduled to last six calendar months and will be continuously followed up to the end of the project. 4.3.3 Work Package 3 Benchmarking In addition to the in-depth company cases benchmarking sessions with world-class global companies are sought. These sessions will not be as indepth as the case studies, but will cover the strategic issue management practices and considerations in the companies involved, and will thus add breadth to projects fact finding. Sessions are currently scheduled with the corporate strategic planning staffs of Royal Dutch/Shell Group and the 3M Corporation. Separate reports are produced on each benchmarking session. 4.3.4 Work Package 4 Growth Company Considerations This work package will address the specific nature of strategic issue processing in technology-driven growth companies. Intensive case studies are not warranted in smaller companies due to the limitations of growth firms resources. An alternative, lighter, approach is therefore appropriate. First, a survey of the issue processing practices in a large number of growth companies is conducted. The survey questionnaire will be designed based on our research questions. Based on the results of the survey and the company cases in WP2 and benchmarking in WP3, methods suitable for growth companies are designed and tested. A report of considerations and recommendations for issue processing in growth companies will then be produced. At the end, feedback from a selected set of companies is solicited. The prime deliverable of this WP is a report outlining the considerations and recommendations updated with feedback from the growth companies. This work package is planned to commence in the second year of the project and will last 12 months.

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4.3.5 Work Package 5 Integration This WP will integrate the results from the case studies in WP2, the benchmarking work from WP3 and the growth company considerations in WP4. Quantitative studies based on accumulated data will be conducted. Summary report of the case study work will be produced Results of project will be published in scientific conferences and seminars. Material to be used in university teaching as well for training growth firms will be developed. The work package will commence in 18 months from the beginning of the project and will last six months.

4.4 Project Organization, Resources The project will be carried out by the Institute of Strategy and International Business of Helsinki University of Technology. The persons in charge of the project are Professor Tomi Laamanen and Professor Markku Maula. The project will be managed by Dr Matti Keijola. Institute of Strategy and International Business has extensive experience on similar demanding research projects. The other project resources will include Master of Science and PhD students. Each case will have a dedicated researcher either from the participating companies or from HUT. The two PhD level researchers involved in the project at Nokia and at SanomaWSOY have already been nominated. In addition there will be a full-time researcher working on all sub-projects of MESI and will be the resource for addressing the growth company considerations. The project will have a Steering Group with members from the participating companies and Tekes.

4.5 Project Schedule The project is scheduled for a period of 24 months. The main emphasis during the first 12 months will be on cases and benchmarking sessions. After that the focus shifts on the growth company survey, and leveraging the results of the first part. The last six months represent an integrative phase in the project.

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Month from the start of the project 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 WP0 Project Management Steering Group Meeting WP1 Case studies Case 1 Case 2 Case 3 Case 4 WP2 Benchmarking Benchmarking sessions WP3 Growth companies Survey planning Survey Report, draft Feed-back solicitation Report , final WP4 Integration Case summary report Course material Training and consulting material Summary report Scientific papers x x x x x X X X X X

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REFERENCES

Aguilar FJ. 1967. Scanning the Business Environment. McMillan.: New York, NY Ansoff HI. 1965. Corporate Strategy. McGraw-Hill: New York Ansoff HI. 1984. Implementing Strategic Management. Prentice-Hall: Englewood Cliffs, NJ Ansoff HI. 1991. Critique of Henry Mintzberg's 'The design school: Reconsidering the basic premises of strategic management'. Strategic Management Journal 12(6): 449-461 Chakravarthy B, Mller-Stevens G, Lorange P, Lechner C (Eds.). 2003. Strategy Process: Shaping the Contours of the Field. Blackwell Publishing: Oxford Chakravarthy BS, Doz Y. 1992. Strategy Process Research - Focusing on Corporate Self-Renewal. Strategic Management Journal 13: 5-14 Cohen MD, March JG, Olsen JP. 1972. A garbage can model of organizational choice. Administrative Science Quarterly 17: 1-25 CSB. 2000. IBM's Deep Dive Strategy Process. Corporate Strategy Board CSB, 2004. Changes Since CSBs 2000 Profile of IBMS Deep Dive Strategy Process Cyert RM, March JG. 1963. A behavioral theory of the firm. Prentice Hall: Englewood Cliffs, CA Daft RL, Sormunen J, Parks D. 1988. Chief Executive Scanning, Environmental Characteristics, and Company Performance - an EmpiricalStudy. Strategic Management Journal 9(2): 123-139 Dutton JE. 1986. The Processing of Crisis and Non-Crisis Strategic Issues. Journal of Management Studies 23(5): 501-517 Dutton JE. 1993. Interpretations on Automatic - a Different View of Strategic Issue Diagnosis. Journal of Management Studies 30(3): 339-357 Dutton JE, Ashford SJ. 1993. Selling Issues to Top Management. Academy of Management Review 18(3): 397-428 Dutton JE, Ashford SJ, Oneill RM, Hayes E, Wierba EE. 1997. Reading the wind: How middle managers assess the context for selling issues to top managers. Strategic Management Journal 18(5): 407-423 Dutton JE, Duncan RB. 1987a. The Creation of Momentum for Change through the Process of Strategic Issue Diagnosis. Strategic Management Journal 8(3): 279-295

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12/18 Dutton JE, Duncan RB. 1987b. The Influence of the Strategic-Planning Process on Strategic Change. Strategic Management Journal 8(2): 103116 Dutton JE, Fahey L, Narayanan VK. 1983. Toward Understanding Strategic Issue Diagnosis. Strategic Management Journal 4(4): 307-323 Dutton JE, Jackson SE. 1987c. Categorizing Strategic Issues - Links to Organizational Action. Academy of Management Review 12(1): 76-90 Dutton JE, Ottensmeyer E. 1987d. Strategic Issue Management-Systems Forms, Functions, and Contexts. Academy of Management Review 12(2): 355-365 Dutton JE, Webster J. 1988. Patterns of Interest around Issues - the Role of Uncertainty and Feasibility. Academy of Management Journal 31(3): 663675 Garg VK, Walters BA, Priem RL. 2003. Chief executive scanning emphases, environmental dynamism, and manufacturing firm performance. Strategic Management Journal 24(8): 725-744 Goold M, Campbell A, Alexander M. 1994. Corporate-Level Strategy: Creating Value in the Multibusiness Company. John Wiley & Sons, Inc.: New York Grant RM. 2003. Strategic Planning in a Turbulent Environment: Evidence from the Oil Majors. Strategic Management Journal 24(6): 491-517 Hambrick DC. 1982. Environmental Scanning and Strategy. Strategic Management Journal 3(2): 159-174 Organizational

Haspeslagh PC, Jemison DB. 1991. Managing acquisitions - Creating value through corporate renewal. The Free Press: New York Jackson SE, Dutton JE. 1988. Discerning Threats and Opportunities. Administrative Science Quarterly 33(3): 370-387 Kajanto M, Keijola M, Laamanen T, Maula M. 2004. Strategic Issue Management through Corporate Strategic Agenda. Conference of the Strategic Management Society, Puerto Rico Kajanto M, Keijola M, Kunnas P, Laamanen T, Maula M. 2005. Determinants of Strategic Issue Management System Performance: An Empirical Analysis. Conference of the Strategic Management Society, Puerto Rico Mintzberg H. 1990. The design school: Reconsidering the basic premises of strategic management. Strategic Management Journal 11(3): 171-195 Ocasio W. 1997. Towards an attention-based view of the firm. Strategic Management Journal 18: 187-206

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13/18 Pettigrew AM. 1992. The Character and Significance of Strategy Process Research. Strategic Management Journal 13: 5-16 Prahalad CK, Bettis RA. 1986. The Dominant Logic - a New Linkage between Diversity and Performance. Strategic Management Journal 7(6): 485-501 Simon HA. 1947. Administrative Behavior: A Study of Decision Making Processes in Administrative Organizations. Macmillan: Chicago, IL Tripsas M, Gavetti G. 2000. Capabilities, cognition, and inertia: Evidence from digital imaging. Strategic Management Journal 21: 1147-1161 Zell D, Glassman AM, Duron S. 2004. Accelerating the Strategy Process: One Industry Giant's Attempt, Academy of Management Annual Meeting: New Orleans

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APPENDIX 1, THE CONCEPT

OF THE

STRATEGIC AGENDA

As a synthesis of our case analyses in the feasibility study phase, we have defined a broader framework for corporate level strategic management and named it as the corporate strategic agenda. Corporate strategic agenda can be defined as the set of key issues, decisions and programs that are considered strategically the most important from the corporate perspective. The focus could similarly have been put on a business or divisional level. Our choice of the corporate level of analysis is, however, consistent with our primary focus on the first phases of the strategic issue management processes. On the business level, more emphasis should be placed on the following up of strategic issue implementation. Strategic issue management could also be seen to represent an important function of the corporate parent. As Goold, Campbell, and Alexander (1994) point out, among the key sources of parenting advantage are the parents mental maps. They are rules of thumb or mental models that help a corporate parent interpret and synthesize information and that shape the parents perception of the different business improvement opportunities (Goold et al., 1994). We define the concept of corporate strategic agenda to comprise five elements, as shown in Figure 2: (1) Scanning of agenda items, (2) Item selection, (3) Item structuring, (4) Intelligence support for the strategic agenda, and (5) Agenda management. The purpose of each of these elements is to help explicating the thought processes underlying strategic issue management. In particular, the purpose is to provide a framework that would overcome the challenges in strategic issue identification and implementation discussed earlier.

Scanning for agenda item s Internal and

Itemselection

Structuring

Intelligence support
Intelligence requirem ents O rganization: responsibilities and processes

A genda m anagem ent Priority

E ergent or m analytical Selling and gaining acceptance Potential biases N ber of um item fixed s: or flexible

Itemtype U nderlying assum ptions, O bjectives and constraints Priorities

Potentially
disruptive changes

Update triggers
and frequency

Organization:
responsibilities and processes

Organization:
responsibilities and processes

Figure 2. Elements of corporate strategic agenda

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15/18 The scanning for agenda items is aimed at easing the identification of strategic issues. It helps decision-makers explicate and pool emergent ideas and get them faster to discussions with peer decision-makers. This can be expected to reduce the time lag that it takes for a strategic issue to take shape. The scanning phase also provides an arena to collect emerging weak signals in a more structured fashion. An organizational intelligence function can also help identify emerging issues and bring them to the attention to decision makers in a more concentrated fashion. The biases resulting from existing organizational cognition, as well as structural and social realities, cannot be overcome in the item selection phase. It provides, however, an explicated process for selecting among the emergent strategic issues. Issue and project selection systems exist commonly at more advanced stages when the issues and projects have already feasibility studies supporting them. Advanced item selection helps alleviate internal issue ecology challenges. The issue structuring in our framework helps explicate and study the underlying assumptions and constraints of each of the items on a corporate strategic agenda. Decision-makers are often relatively alone with their ideas when a new strategic issue emerges as a weak signal. In many cases, there are no other ways to take care of the situation than to wait how things develop, discuss the issue with others, and then eventually at some point start taking actions on the issue. The purpose of the intelligence support provided for strategic agenda items is that intelligence support at an earlier stage helps speed up the analysis of emerging issues and prevents that the issues are discarded due to time constraints or due to other similarly emerging issues. Finally, the agenda management aspect contributes to an orderly, explicit processing of strategic issues and their transition to implementation. It helps bridge the gap between strategic issue identification and implementation by tracking the strategic issue implementation. In addition, it addresses explicitly the organizational responsibilities for the structuring of attention and provides continuous support for items on a strategic agenda. A systematic strategic agenda management process may also help alleviate the challenges of adversely escalating commitment.

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APPENDIX 2 LIST

OF

RESEARCH QUESTIONS

1. Scanning for new agenda items What is the emphasis in scanning? What are the types of items are to be scanned for? What is the organization for the scanning process and its responsibilities? 2. Selection of agenda items Is the process emergent or analytical? Are there potential biases? What is the manageable number or size of new items? Is it fixed or flexible? 3. Item structure What types of items can be recognized? What are the underlying assumptions? What are their objectives and constraints? 4. Item implementation and management Intelligence requirements and organization? Item management including 1. how are priorities assigned? 2. how are issues framed: threat vs. opportunity? 3. what is the right forum for an issue? 4. what is the role and significance of the issue driver? 5. what is the impact if the driver changes? 6. what is the impact if the resources change? 7. what should be the role of the senior executive associated with the case? 8. what are the best corporate and business involvements? 9. how are decisions made? 5. Agenda management How are priorities managed? What is the update frequency and what are the triggers? What is the organization (responsibilities and processes)? What is the total number or size of manageable items How is attention allocated? How are decisions made?

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APPENDIX 3, WP 2, CASE

STUDIES

The company cases are designed with two goals in mind They should serve our research in the accumulation of empirical data in the quest to provide answers to our research questions, and They should serve the case companies in understanding and improving their strategic planning and issue processing processes

Two types of cases are planned. In the first type, the emphasis is on a companys strategic planning process and on the way it processes its strategic issues. In the second, the emphasis is to consider how the development of a new strategic theme and its related issues should and will progress. The company cases are briefly outlined in the following. Suomen Posti Oyj is the leading messaging and logistics company in Finland and selected markets in the Baltic Rim, with letter, magazine and direct-mail deliveries including its traditional business operations. Seeking growth, particularly in the Information Logistics and logistics businesses, Finland Post Group is developing its business towards integrated information and materials flow management. The case for the MESI project will center on addressing issues around Information Logistics and the transition of legacy services to the new services. Nokia is a world leader in mobile communications, driving the growth and sustainability of the broader mobility industry. Nokia connects people to each other and the information that matters to them with easy-to-use and innovative products like mobile phones, devices and solutions for imaging, games, media and businesses. Nokia provides equipment, solutions and services for network operators and corporations. The Nokia case will be an extension of the work already performed regarding strategic issue management at the corporate level. SanomaWSOY is Finland's leading media group and the largest media company in the Nordic region. The Group is comprised of five divisions operating in versatile fields of media in 20 European countries. SanomaWSOY is also among the top five European magazine publishers and has a strong position, in addition to Finland, in the Netherlands, Belgium, Bulgaria, the Czech Republic, Hungary, Slovakia and Russia.

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18/18 The SanomaWSOY case will address the corporate level strategic issue management process. Vaisala develops, manufactures and markets products and services for environmental and industrial measurement. Vaisala's markets are global. The goal is to provide basis for better quality of life, environmental protection, safety, efficiency and cost savings. The Vaisala case will center on issues related to the development of its information services business. Methodology Each chosen case is different from the others thus enriching the total set of cases. Without going into too much detail in the confidential nature cases we note the following aspects One case is about refining an already existing scheme for processing strategic issues One case is about creating and formalizing a new process for handling strategic issues One case incorporates issues around a strategic theme involving transition from the physical legacy world to the new e-world One case incorporates issues about building a new aspect of companys business

In order to answer our research questions, we will collect data about strategic decision-making regarding the cases, such as issue characteristics, planning and decision processes, resource deployment as well as estimates of the impact and rightness of the decisions made. Data will be analyzed both qualitatively and quantitatively. For example, we will plot networks of individuals involved in strategic issue work. These networks will show how each theme is participated by which individuals thus giving a handle on the workload of key people. Accumulation of issue-based data will permit quantitative analysis revealing dependencies between characteristics of issues. Contribution The case studies will help companies understand and develop their strategy processes. They will understand what types of issues demand what type of effort and what types of resources. They also learn to

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19/18 observe when rapid results can be demanded and expected and when should caution and option preservation be exercised when making decisions about how issues should be tackled. The case studies serve to accumulate data about strategic issue processing systems. This will help create new insights into the strategic management of companies. Deliverables and dissemination The prime deliverables of the case analyses are reports detailing each case and its findings. A final report summarizing and integrating the results of the individual cases will be produced in WP5. Separate conference papers about the cases will be planned. Each case is scheduled to last approximately six calendar months and will then be continuously followed up to the end of the project. Qualitative results based on the Nokia case have already been reported at the Strategic Management Society 2004 Conference (Kajanto et al, 2004) and quantitative results of the case will be reported at Strategic Management Society 2005 Conference.

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APPENDIX 4, WP 3, BENCHMARKING

In addition to the in-depth company cases, benchmarking sessions with global companies are sought to complement data collection through case studies. These sessions will not be as in-depth as the case studies, but they will cover the strategic issue management practices and considerations in the companies involved and will thus add breadth to projects fact finding. Methodology Benchmarking sessions primarily involve exchange of information between companies. Each session will therefore have a Finnish company counterpart and a foreign company counterpart. A typical schedule for the sessions is 1. The Finnish counterpart presents its strategic planning and strategic issue management practices and experiences 2. The global counterpart presents its strategic planning and strategic issue management practices and experiences 3. Optionally HUT presents results of its research 4. These presentations are followed by discussions about implications, best practices, and possible future cooperation Benchmarking sessions are currently scheduled with the corporate strategic planning staffs of the Royal Dutch/Shell Group and the 3M Corporation. The Finnish counterpart in these sessions will be Nokia. New sessions involving the other Finnish participating companies will be sought. Contribution The Finnish counterpart company benefits by having the option to play and compare its views and considerations against the foreign counterparts views and considerations. The benchmarking sessions will widen the views of the project and serve to trigger new ideas and insights in the strategic management practices in leading global companies.

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21/18 Deliverables and dissemination Working reports are produced about each benchmarking session. Conclusions about the benchmarking sessions will be drawn in the final report to be produced in WP5.

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APPENDIX 5, WP 4, GROWTH

COMPANY CONSIDERATIONS

The case study companies can be considered large, rather established and having at least some dedicated planning personnel. The lessons from these cases might not be applicable in smaller growth companies where dedicated planning personnel are lacking. Growth companies, however, form an important part of the set of all Finnish businesses. This work package will specifically address strategic issue processing considerations in these companies. Methodology In order to cover a large set of companies a survey-based approach complemented with selected feedback solicitation has been chosen for this work package. First, a survey of the issue processing practices in a large number of growth companies is conducted. The survey questionnaire will be designed based on our research questions. The survey also queries whether a company is interested to work closer with the project when feedback from companies will be requested. Based on the results of the survey and the company cases in WP2, methods suitable for growth companies will be designed and then discussed with a selected set of companies (a subset of those that had indicated interest to work closer with the project). A report of considerations and recommendations for issue processing in growth companies will then be produced. Feedback from a selected set of companies is finally solicited in face-to-face meetings with company representatives. Contribution Growth companies participating in the survey are forced to address the fact that they have to and they do make strategic decisions about issues arising over time. This will make them cognizant of the process. By considering the results of the survey and the report to be produced, growth companies, in general, will become better equipped to face and resolve issues as they emerge. They will learn to better allocate the attention of their scarce strategy making resource, their top management, who at the same time most probably also need to attend to many other issues more operational in nature. By addressing the growth

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23/18 company sector, the work package will bring an important extension to the scope of the total scope of the project. New insights, applicable also to larger companies, may be gained. Deliverables and dissemination The prime deliverable of this WP is the report outlining considerations and recommendations for strategic issue processing in growth companies complemented with feedback from the companies. This work package will commence in the second year of the project and will last for 12 months.

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APPENDIX 6, WP 5, INTEGRATION

This WP will integrate the main results of the project by analyzing data accumulated in the case studies in WP2, the benchmarking work from WP3, and the growth company considerations in WP4 and by integrating the results of the work packages. Methodology The cases, the benchmarking sessions, and the growth company study will all yield significant amounts of data that facilitates both quantitative and qualitative studies to answer our basic research questions. Contribution The results of the final work package of this research project will contribute to the strategic decision making capabilities of both large and growing Finnish companies operating in global markets by introducing processes and methods which will direct the companies to optimize the allocation of their scarce strategic decision making resources and by advising them to address the variety of issues in the most appropriate way. The results of the project, being based on rare empirical data, will contribute to the theories of strategic issue management through new insights. Deliverables and dissemination A summary report of the case studies will be produced at the end of the last case study. The final report summarizes the results of work packages in the project. In addition it presents the results of integration work. Results of project will be published in scientific conferences and seminars. Material to be used in university teaching, as well as in training and consulting technology-based growth companies will be developed. This work package will commence in full force 18 months from the beginning of the project and will last six months.