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Decision weaving: Forming novel, complex strategy in entrepreneurial settings
Author(s) -
Ott Timothy E.,
Eisenhardt Kathleen M.
Publication year - 2020
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.3189
Subject(s) - strategist , leaps , dilemma , microfoundations , computer science , ambidexterity , weaving , domain (mathematical analysis) , strategic management , modular design , process management , artificial intelligence , knowledge management , business , marketing , economics , engineering , epistemology , mechanical engineering , mathematical analysis , philosophy , mathematics , finance , macroeconomics , operating system
Abstract Research Summary Strategy formation is central to why some firms seize novel opportunities while others fail. We explore a core dilemma of strategy formation in entrepreneurial settings—whether to learn a novel strategy one domain at a time (modular) versus assemble a complex strategy of coherent activities across all domains at once (integrative). By studying six ventures, we develop a theoretical framework for how entrepreneurs effectively form novel, complex strategy: Decision weaving . They (a) employ sequential focus (not parallel), (b) pause at plateaus (not optima), and (c) deploy stepping stones (not leaps) in background domains. These behaviors enable both fast, effective learning and evolving yet holistic understanding of an emerging strategy. Overall, we contribute to the microfoundations of strategy by proposing a cognitively sophisticated, yet realistic strategist. Managerial Summary Strategy formation is central to why firms seize novel opportunities while others fail. By comparing three venture‐pairs, we develop a fresh framework for strategy formation in nascent markets where strategy is both novel and complex: Decision weaving. Effective strategists: (a) use sequential focus (not parallel) to learn about successive focal strategic domains, (b) pause at learning plateaus to consolidate that knowledge about a focal domain, and (c) use stepping stones to make progress in background domains without losing focus. These behaviors enable both fast, effective learning, and evolving yet holistic understanding of an emerging strategy. More importantly, these behaviors set the stage for rapid and profitable scaling (i.e., growth).