Formal analysis and strategic decision making

Abstract

The extensive use of formal analysis in decisions has often been seen as evidence of the adoption of a “rational”, comprehensive mode of strategic decision making and the rejection of social interactive and political modes of decision making. Based on a study of the role of formal analysis in strategic decisions in three organizations, this article suggests that on the contrary, formal analysis and social interactive decision processes are inextricably linked—in fact, a greater need for social interaction may cause a greater need for formal analysis. The elements of a new framework for describing the strategic decision making process and the role of formal analysis within it are proposed. This framework is based on the idea that organizational decision making is the outcome of interactions between different individuals with different levels of formal authority and expertise and different opinions and motivations. The framework is then used to identify types of situations in which formal analysis may be more or less productive. It is suggested that excessive or insufficient uses of formal analysis in decision making cannot be blamed entirely on decision participants' cognitive styles or analytical competence. Such phenomena may in fact be caused mainly by the structural features of the decision situation in which opportunities for analysis are embedded.