Steven Darien previously served as the vice president of human resources at Merck. Currently the chairman and CEO of the Bridgewater, New Jersey-based Cabot Advisory Group, Steven Darien consults with companies regarding human resources issues such as business and strategic planning.
How different business executives come up with new strategies varies greatly. To find out the different methods used, a team of researchers from the Harvard Business Review interviewed 92 chief executives, founders, and senior managers on how they came up with their business strategies.
The researchers found four different strategic decision-making methods employed by organizations:
Up to 36 percent of participants used this method. Here, top leaders make decisions alone without the input of employees or stakeholders and without an outlined procedure to follow. While this process results in quicker decision making, it lacks checks and balances and often results in poor decision-making.
2) Ad Hoc
This was used by 18 percent of the polled leaders. Here, when a strategy needs to be developed, management pulls the team together and comes up with one. There is no set process. The people involved and the steps followed change each time. This approach is flexible and can be tailored for any need, but it is difficult to measure its success because its variables are used differently every time.
Used by 15 percent of the executives polled, this method emphasizes process over input. There is a clear process or routine to develop strategy, often involving significant data collection, but the employees do not have a large role in the final decision. Top leaders collate data and subsequently develop strategies. Without input from stakeholders, the data collected stands to mislead.
This method was used by 30 percent of the leaders polled. Here, there is a defined process for developing strategies and stakeholders are very involved in contributing to the final decision. Though inflexible and slow, the process elicits richer discussions and no important factors slip through the cracks.
While researchers could not determine a winner among the four, they were most skeptical of the unilateral decision-making method.