Statistic Literacy

18th EGOS COLLOQUIUM Barcelona, July 4-6, 2002 Sub-Theme 26 : Making and executing strategy
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Strategic Literacy : The great question
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Christophe Torset CREPA University Paris Dauphine Place du Marechal de Lattre de Tassigny 75 775 Paris cedex 16 E-mail : christophe.torset@dauphine .fr ctorset@aol.com
Abstract : The literature on strategy formation has moved from the single rational decisionmaker perspective towards organizational approaches of strategy processes, embedding them into contexts. If the process perspective on strategy allows a more realistic and a more complete view of how strategies emerge in organizations, it may not take enough into account the individual level of analysis. The concept of strategic thinking may help to do so, by highlighting the interrelations between individual and organizational levels of strategy development. Questioning the concept of individual strategic thinking implies to pay attention to individuals ability to think strategically, i.e. their degree of strategic literacy. Defined as the ability to read and write strategy, strategic literacy is here seen as bi-dimensional, incorporating the knowledge individuals have of the strategic orientations of their organization and their consciousness of environmental dynamics. An exploratory analysis of the strategic literacy of 58 managers shows that higher-level managers are globally more literate whereas internal communication on strategy may have perverse effects on the individual ability to think strategically. Eight types of individual strategic literacy emerge, from limited-centred to extensivesystemic, while five organizational configurations of strategic literacy are highlighted, according to the link between the two dimensions of literacy and hierarchical level.
C. Torset Strategic literacy
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STRATEGIC LITERACY : THE GREAT QUESTION
Introduction The title of this paper may appear quite strange. In fact, it is the exact transcription of some managers perception about strategy. Several managers who were interviewed for the study presented here had this spontaneous answer to the question what are the main strategic orientations of your company ? : Our strategy ? What a great question !. This was too much curious not to be investigated
More and more scholars call for integrative approaches of strategic management, especially for the problematics raised by strategy formation (Mintzberg & Lampel 1999, Chakravarthy & White 2002). But what does strategy formation mean ? It is of course linked to decision-making, to strategic analysis, to individual cognitive processes and political/social organizational processes. It is complex and multiform, often centralized, sometimes due to local initiatives, always rationalized by top management. It can be studied through many lenses, from cognitive mapping to change or innovation processes, and all these approaches have brought much to our understanding of this organizational mystery. In fact, strategy development meets a large success in research on organizations because it gives us the opportunity to question fundamental issues : how ideas emerge, how one David (the individual strategist) can change the view of one Goliath (the organization), why and how people do best when they collaborate and, maybe more important, the question asked by Romelaer : what is freedom in a system of constraints ? (2002 : 5). The interrelations between individuals and groups are often at the heart of strategy formation and Chakravarthy & White (2002) or Romelaer & Lambert (2002) show how much individual, organizational and even societal levels of analysis are intertwined and therefore needed for integrative works. This paper aims at questioning these interrelations, by focusing on the ability of individuals to insert themselves in an organizational dynamic of strategic thinking. To do so, they have to be
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able to understand and give sense to the heterogeneous and complex information they are given. This depends on their degree of strategic literacy. In order to explore strategic literacy, we will first briefly review the main limits addressed to the decision-making literature, and the corresponding improvements brought by the process literature. The second part of this first section is intended to explain how the conceptualisation of strategic thinking can enrich the process literature by focusing on the determinants of the bridging between individual and organizational aspects of strategy formation. Individual strategic thinking is strongly linked to the concept of strategic literacy which is then explored and defined. The second section of the paper explains the methodology used to evaluate the strategic literacy of 58 managers in 12 large French firms. Results are then presented and discussed in the third section, regarding several organizational and individual aspects of strategic literacy.
1- Theoretical context
For twenty years now, academics have aimed at developing a holistic and synthetic approach of strategy processes. Numerous articles have tried to summarize, characterize, classify the different perspectives on strategy formation (Langley & al. 1995, Laroche 1995, Mintzberg & al. 1998, Chakravarthy & White 2002). Most of these extensive reviews have concluded that the strategic decision perspective is probably not fully relevant to catch the
multidimensional nature of the strategic process. From a decision-making perspective, literature evolved towards a processual and contextual approach of strategy formation.
1.1. New perspectives on strategy formation. Strategic decision-making and strategy process : these two expressions may appear to be quite similar to many practitioners and to some researches as well. In fact, most of the synthetic works on strategy formation have put the stress on the distinction between these approaches.
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Strategic decision-making : rational, analytical, and individual.
An amazing amount of work has been done on strategic decision-making in organizations and many syntheses have been written about it (Allison 1971 ; March 1981, Nutt 1984 ; Fredrickson 1985 ; Schwenck 1984, 1988 ; Huff & Reger 1987 ; Chaffee 1985 ; Hickson & al. 1986 ; Chakravarthy & Doz 1992 ; Langley & al. 1995, Laroche 1995, Chakravarthy & White 2002). If the decision-making perspective has greatly improved our knowledge of organizational processes (March 1981), many researchers have highlighted the inherent limits of this approach of strategy formation. The first limit lies in the very concept of decision (Allison 1971, Meyer 1990, Butler 1990, Laroche 1995, Chakravarthy & White 2002). Langley et al. (1995) call this reification. It assumes that decision exists and can be clearly analysed. Decisions are then defined as discrete events, characterized by a moment and a place. They are materialized by meeting minutes, announcement by the CEO or top managers. This view of decisions as discrete events has been criticized by many authors. Laroche argues that more and more theorists are reluctant to use the concepts of decision and decision-making or allow them only a minor role in their propositions about organizations (1995 : 62). In fact, many studies have shown the difficulty to establish a direct and causal link between decision and action (Quinn 1980 ; Starbuck 1983, 1985 ; Brunsson 1982, 1985). Strategic actions can be initiated without any decision, and many decisions are not followed by action. Moreover, the use of the concept of decision may be the result of ideological biases (Langley et al. 1995 : 267) and the cause of methodological biases (Chakravarthy & Doz 1992, Laroche 1995). Strategic decision and decision-making process are then a construct of researchers mind (Langley et al. 1995 : 266) and the more accurate problem resides in that this view of strategy formation prevents researchers from taking into account and studying strategic orientations and actions that have not been preceded and characterized by a decision moment (Hickson et al. 1986). The second limit which is often associated with the literature on strategic decision-making is the analytical and rational view of the process. Allison (1971), opposing analytical rational, organizational and political modes of strategy formation, shows the difficulty to observe in organizations processes that match the characteristics of analytical rational models of decision-making. Langley et al. describe works on strategic decision-making as being driven by the view of decision-making as a boundedly rational process converging sequentially from the stage of problem definition towards that of final choice ( 1995 : 262). The strategic decision-making literature indeed built on the sequential choice model of Simon (1960), 3
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enriching it with iterative characteristics (Mintzberg et al. 1976) or more precisely defined steps and routines (Lyles 1981, Nutt 1984). Johnson (1987) considers that most of the integrative works on strategy process have close links with the rational decision-making model, Laroche noticing that the main sponsor of the cognitive perspective on decisionmaking (Schwenck) puts cognitive processes in the category of the rational model, as an enrichment and revitalization of this model (1995 : 65). Langley et al. (1995) call this limit dehumanisation whereas March argues that cutting organizational processes into
successive discrete events called decisions seems to hinder analysis or at least, to introduce a bias (1988 : 4). Moreover, studies of decision processes seem sometimes disconnected from strategy and strategic actions (Maritan & Schendel 1997, Regner 2001, Chakravarthy & White 2002). This emphasis on the rational and sequential characteristics of the process leads to normative analyses which are focused on discrete decisions rather than on a long sequence of decisions and actions that culminates in a strategy (Chakravarthy & White 2002 : 183). The strategy formation approach embedded in the literature on strategic decision-making is then more interested in the description of programmatic steps of decision than in the analysis of the way strategies really develop. It is often far from human and political aspects of the process and adopts a rational, technical view rather than a social perspective, this being potentially explained by the focus on strategic investment decisions observed in this literature. Finally, the last set of criticisms addressed to the decision-making perspective lies in its technocratic and centralized approach of the process. Chakravarthy & White note that it fails to see the process from multiple levels and perspectives (2002 : 183). Indeed, since these works on strategic decisions adopted more or less the rational model of decision-making, they also inherited from one of its underlying assumption : the single decision-maker. Langley et al. note that conventional notions of decision-making have neglected key human faculties and individual characteristics that combine to determine organizational outcomes (1995 : 266). Romelaer & Lambert, constructing a holistic approach of the rationalities of decisionmaking, embed it in complex social cognitive processes : Decisions taken by organizations often have nothing in common with decisions which would have been taken by any of the individuals involved. Nor are they a kind of average of individual decision (2002 : 79). The word strategist is widely used, but often in a quite narrow sense : the strategist is used as an umbrella concept to focus the human actor(s) who could be expected to play a crucial role in strategy processes (if any single human actor really does), such as the CEO, the president, the owner-manager, the managerial elite, the upper echelon top manager(s), the top management
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team, etc. (Ericson et al. 2001). In most of the literature on strategic decisions, decisionmakers are supposed to be the top management team, if not the CEO himself. This is coherent with the focus put on the decision process, but it is far from the strategy formation realities. Many researchers have shown that strategy is not the private domain of top management (Lyles 1981, Floyd & Wooldridge 1994, Dean & Sharfman 1996, Dougherty & Hardy 1996, Quy Nguyen 2001) and that strategic initiatives and bottom-up processes were crucial as well to develop unique strategic positions (Bower 1970 ; Burgelman 1983, 1991 ; Noda & Bower 1996). The strategic decision perspective does not take into account all these emergent processes that enrich the formal strategy process. The process perspective answers some of these conceptual questions.
Strategy process : some renewal from change and innovation
Mintzberg & Waters argue that the process of strategy formation cannot be analysed solely as a decision-making activity (1990 : 8). Indeed, strategy formation needs to be seen as a social activity, which one step is decision-making. As Bartlett & Goshal (1997), Bower (1970) or Burgelman (1983) showed, strategy formation is a complex process, involving multiple organizational levels. Chakravarthy & White propose an integrative definition of the strategy formation process : Strategy process can span long periods of time and traverse multiple levels, bridging the cognitive processes of individual decision makers, the social psychological and /or political processes within groups of individuals, the organizational rules and routines that guide and constrain the decisions and actions of organizational members, and ecological considerations that affect the survival and success of firms (2002 : 183). Works on the strategy process do not use extensively the term decision. The focus is on social processes that build strategies over time, not only on the technical steps leading to an agreement by the board. Strategy process literature has built upon three different problematics : decision-making, innovation, and change. From a view of the lonely rational decisionmaker, literature has come to use the expression organizational decision-making (Langley et. al. 1995) before using terms such as strategy formation or strategy development (Bowman & Kakabadse 1997). These semantic distinctions could appear trivial. Nevertheless, they are important because t hey show the evolution of the perspectives on the strategy process and therefore allow to adopt a shared vocabulary and a global paradigm on strategy over time.
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Strategy process literature has benefited from the sequential aspects of decision-making, the social processes of strategic and organizational change and the bottom-up and emergent perspectives brought by works on innovation and intrapreneurship. Bower (1970)
conceptualised the roles played by operational and middle managers in the strategic investment process. His model, confirmed in other contexts (Bower & Doz 1979) has been enriched by Burgelmans view on internal selection processes (1983a, 1983b, 1991) and Noda & Bower (1996). Strategy process literature institutionalised the existence of bottom-up processes in strategy formulation and formation, rationalizing the idea that middle and operational managers could play a central role by highlighting new perspectives and opportunities or by developing innovations. Strategy process literature avoids limits attributed to the decision-making literature. It does not use the concept of decision as an end in itself, suggesting that implementation and experimentation are fully part of strategy. Observed from an organizational point of view, strategy formation is not analysed on the basis of the single decision process, and methodological biases due to the use of material data (Hickson et al. 1986) are partly avoided. Thinking and acting, decision and action, formation and implementation are not seen as totally distinct aspects of the process. Each of these elements is continuous and iterative, action preceding formal decision in many cases (Burgelman 1983). Decisions and actions need not follow an orderly precedence (Chakravarthy & White 2002 : 193) and the normative distinction between action and decision is not used anymore, allowing an analysis closer to reality : making a decision is only a step towards action Practitioners get things done, act and induce others to act. An action perspective makes it easier and important to observe that both decisions without actions and actions without decisions can exist (Brunsson, 1982 : 32) The second set of criticisms addressed to the decision-making literature may not be totally avoided by the process perspective. Langley et al. consider that Bower or Burgelman have [used the Simons model] to develop some sequential models for some particular types of decisions (1995 : 261). In the same vein, Laroche (1995) argues that the garbage can model (Cohen et al. 1972) still depends on the surroundings of the rational sequential model and Whittington (2001) considers that the Carnegie School leading researchers (Cyert, March and Simon) are the first builders of the process perspective. These views seem reductive : process models of strategy formation do not propose a fundamentally sequential perspective, they emphasize its iterative nature and show that the sequence is totally different according to the
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type of process studied (Burgelman 1983a). Moreover, and it may be the main difference between the decision-making school and the strategy process approach, the subjects studied are different. The decision-making perspective studies the decision process in itself, whereas the strategy process school is interested in the r esult of the process : investment, innovation or any business strategies. The aim is not to build the best rational process, it is to find the process characteristics that lead to successful strategies. Finally, one of the most important contribution of the strategy process literature lies in the recognition of the role of multiple levels in the organization. As Hart & Banbury argue strategy-making is framed as a process involving the total organization (1994 : 253). The lonely strategist is abandoned, which does not mean that strategic decisions are made on a participative basis. The development of strategic orientations owes a lot to operational managers (Bower 1970), R&D departments (Burgelman 1983a), Boundary spanning managers (Floyd & Wooldridge 1997) or functional managers (Bowman & Kakabadse 1997), but the decision still depends on the board or on top management. Ideas are developed throughout the organization, some are tested, many are abandoned, some are championed in an internal selection process and they change the strategic paradigm of the firm. When presenting the firm as a portfolio of processes, Goshal & Bartlett (1997) are attentive to understand the role each hierarchical level plays in each process. Top managers, middle managers and field managers, all have impact on the three processes identified (renewal, integration, entrepreneurial). From a semantic, but purposeful, point of view, we can also note that Burgelman (1983b) does not use the terms top managers or decision-makers, but analyses the roles played by organizational participants in the process. The second important contribution of the strategy process literature is to have put the stress on the contexts in which strategy formation takes place. From the work of Hamel & Prahalad on strategic intent (1989) to the individualized corporation (Goshal & Bartlett 1997) much conceptual and sometimes prescriptive research is about conceiving contexts that facilitate the development of an open-minded, integrative strategy process (Goshal & Bartlett 1997). As Pettigrew noted, the irreducible purpose of a processual analysis remains to account for and explain the what, why and how of links between context, processes and outcomes (1997 : 340). Most of the conceptualisations of the strategy process embed it in two main contexts : the administrative (Williamson 1975, Quinn 1980), organizational or structural (Burgelman
1991, Noda & Bower 1996) context, and the strategic (Burgelman 1991) or business (Chakravarthy & White 2002) context. Organizational context can be defined as the
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structural, but also managerial characteristics which shape communication and interrelations between departments, individuals and hierarchical levels. It includes the structural context of Noda & Bower (various administrative and organizational mechanisms, such as
organizational architecture, information and management systems, and reward and punishing system, 1996 : 160), but in a broader sense, incorporating attributes of what Johnson (1987) calls the organizational paradigm. It is closed to the organizational code (March 1991) and is composed with two dimensions : administrative and cultural systems (Burgelman 1988). The strategic context refers to two elements : the strategic orientations and competitive postures of the firm and the strategic code, which corresponds to the strategic philosophy of top management and decision-makers. The plasticity of the strategic code, as Burgelman (1983a) showed, is a key determinant of strategic renewal. This strategic code can be a sort of strict strategic orthodoxy (as we will never diversify) or, on the contrary, it can evolve according to the circumstances (strategic opportunism).
If the process perspective on strategy formation brings a lot to our understanding of this complex subject, it may seem to remain unachieved. Adopting a strict organizational perspective, it can not take into account the individual aspects of strategy formation. The role played by multiple hierarchical and functional levels of the organization is recognized and conceptualised, but individuals are nearly absent of this approach. Strategic thinking, as an enrichment of the strategy process perspective, may help to establish links between individual and organizational elements and processes of strategy formation.
1.2. Strategic Literacy : a prerequisite for strategic thinking
Strategic management, as an academic field, is in search of integrative conceptualisations (Pettigrew 1992, Laroche & Nioche 1998, Mintzberg et al. 1998, Chakravarthy & White 2002) which could link the different theoretical perspectives that fragment our knowledge. At the same time strategy process literature develops, subjects like knowledge management, learning or cognition become more and more pregnant in the studies of strategy formation. Cognitive perspectives on strategy and studies of the links between individual and
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organizational determinants of strategy can be very helpful to the process literature, by enriching its vision of the way strategies develop. The concept of strategic thinking, though quite recent and poorly developed (Crouch & Basch 1997, Liedtka 1998a, Torset 2001), could satisfy the claim for integrative works on strategy formation.
Strategic thinking : individual and organizational
Liedtka notes that the term strategic thinking is often used so widely and generically today within the field of strategy that it risks becoming almost meaningless. Rarely do those who use the term define it. Most often, it appears that the term strategic thinking is used to denote all thinking about strategy, rather than to denote a particular mode of thinking, with specific characteristics (1998 : 121). In fact, the difficulty to develop the concept lies in its multidimensional and polysemic nature. Strategic thinking can be understood as an individual cognitive activity or as an organizational process. The individual perspective on strategic thinking explores the foundations of strategic thought : what is strategic ? what cares in analysing markets and competitors ? What are the firms core competences ? Which can be used to develop a unique competitive position ? What are the current opportunities on the market(s) ? Individual strategic thinking mostly deals with themes developed by the content literature on strategy. Ohmaes book (1982), The mind of the strategist, enumerates the elements that should compose strategic thinking : strategic analysis, competitive advantages, key factors of success and strategic vision. Individual strategic thinking can be partly approached in terms of internal and external analyses, which are the basis of most analytical tools developed for strategic analysis, from SWOT to last Boston Consulting Group or Arthur D. Little matrixes. It can be assimilated to a sensemaking activity (Weick 1995), individuals building their view of their environment to deduce strategic actions or opportunities to care for. It has to be creative and analytical (Mintzberg 1994, hamel & Prahalad 1994, Heracleous 1998), systemic (Liedtka 1998), intent-focused (Liedtka 1998) and environmentally-oriented (Crouch & Basch 1997). Organizational strategic thinking, on the contrary, borrows to the process literature on strategy. It deals with the way strategic ideas are initiated, communicated and developed in the organization. Therefore, it is not limited to the analysis of decision-making, nor to the 9
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description of formal processes in the organization. The aim is to understand where strategic ideas are born and how they eventually become institutionalised organizational strategies. This perspective owes a lot to the process perspective on strategy formation and to analyses of innovation and change processes. Between individual and organizational strategic thinking, one point deserves attention : how and why do individuals participate in strategic thinking ? The contexts developed by the process literature are then very useful. I proposed (Torset 2001, 2002) an exploratory model of organizational strategic thinking which is synthesized in figure 1 above.
Cognitive stock, Academic and profe ssional background
Individual strategic thinking
Strategic literacy
---------Individual motivation criteria, needs and attempts from work
Individual context
Motivation, reward & punishing systems
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Will
Information circulation, management styles (directive, participative), attention to ideas
Organizational context
Strategic position, environmental complexity
Strategic context
Capacity
---------Plasticity & homogeneity of the strategic code
Organizational strategic thinking
Figure 1 : an organizational model of strategic thinking (from Torset 2001, 2002)
This perspective on the links between individual and organizational aspects of strategic thinking can be promptly explained as follow.
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The ability for individuals to think strategically depends on their degree of strategic literacy which is influenced by the cognitive tools individuals can mobilize to understand and appropriate the strategic orientations and competitive position of their firm. This is of course strongly dependent on the information they are given about strategic orientations and environmental characteristics. For individuals to be proactively involved in organizational strategic thinking, they must have the will to do so. This is linked to individual characteristics (such as their voluntary implication (Schein 1980) or their expectations from work experience (Porter & Lawler 1968)) and to organizational characteristics, as works on managerial creativity or innovation have shown (Amabile 1988, Bleedorn 1993, Drazin 1999, Ford & Gioia 2000, Romelaer 2002). Finally, the organization must give individuals the possibility to be involved and make evolve organizational strategic thinking. This depends on the way top management listens to and cares for ideas and proposals from middle managers (Nonaka 1988, Goshal & Bartlett 1997) and on the degree of plasticity of the strategic context, i.e. the degree to which strategic initiatives can challenge and modify the strategic code of the organization (Burgelman 1983a, 1991).
This
exploratory
conceptualisation
is
empirically-based,
but
has
not
been
tested
quantitatively. Hence, the relations proposed are hypothetical, though observed in 12 large French firms when analysing the formation of 23 strategic orientations. We will now question the concept of strategic literacy which is a fundamental individual characteristic for being able to think strategically.
Strategic literacy : the background for individual strategic thinking
The notion of literacy is mostly used in educational sciences. Organization sciences do not use it, even if the knowledge perspective and works on the cognitive dimensions of strategy have implicitly highlighted its importance in employees implication. In fact, the word literacy is quite rarely used. Its opposite -illiteracy- is probably most known, sometimes as a shame or as a difficulty for individuals, and as a danger for societies.
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For the man in the street, literacy -or being literate- simply means being able to read and to write. This simple but powerful acceptation has been enriched by scholars. The large review of Wagner et al. (1999) on literacy, though more statistical than conceptual, show that the term literacy is not homogeneously defined. Most works on the subject attempt to distinguish different levels of literacy, from the recognition of words to the ability of combining text information with knowledge to produce new information and insights (Kirsch et al. 1993). Nevertheless, one point is worth noticing : all works draw on this fundamental separation between reading and writing. Wallendorf proposes an enriched definition of literacy : More theoretically robust is the conceptualisation of literacy as a continuous, multidimensional indicator of proficiency in using written language, with its higher levels reflecting an ability to draw logical inferences and think critically (2001 : 505). This approach of literacy is useful because it highlights the fact that literacy is not a binary dimension of knowledge and that the aim of literacy is to be able to create new knowledge by increasing reasoning and decoding skills (Kirsch et al. 1993).
Strategic or business literacy has not been fully conceptualised. Hawk & Sheridan (1999), comparing workers involvement and motivation in industrial firms in the US, often use the term business literacy, but do not define it. However, they underline the importance of business literacy : One barrier to improved core worker performance is a lack of real and meaningful information about the business among frontline workers. Most companies do not make information sharing a priority. As a result, many frontline workers have only a vague idea of what drives the company's performance and how their own contributions can help the company do better. (1999 : 44). In fact, literacy in a business environment is best approached with works on workplace literacy. They do not propose a perspective on strategic literacy, but their enumeration of the levels of workplace literacy is useful. Garay & Bernhardt (1998 : 13) propose eight requirements for individuals to be successfully involved in organizational affairs : Solid foundation in reading, writing, and math Strong oral communication skills Ability to learn new skills and subjects Ability to work collaboratively Ability to set goals, allocate resources, measure progress, and complete tasks on schedule
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Ability to think critically, to make decisions, and to solve problems Ability to use technology to manage complex information Possession of good work habits : reliability, self-esteem, independence
If most of these elements are probably needed for developing strategic thinking skills (learning capacity, collaborative aptitudes, ability to prioritise, management of complex information), they do not directly refer to our questions. More specifically, they do not refer to the ability of understanding the environment and comprise behavioural dimensions that do not suit, for now, our aim.
We propose that, to define strategic literacy, we can come back to the beginning : strategic literacy is the ability to read and write strategy. To read strategy means to be able to understand the forces that drive the strategic orientations of the firm. This requires to know and to give sense to the strategic context of the firm. As Burgelman (1983a), Marsh et al. (1988) or Nonaka & Takeushi (1995) have shown, individuals who are implied in the strategy process, especially in the case of autonomous or emergent processes, have to be aware of the strategic context of their organization. Burgelmans perspective on internal development (1983a, 1988) shows that regeneration processes emerge from social learning, based on the interactions between cognition and action, at three organizational levels : operational, middle and corporate. For their perception of a strategic opportunity to be taken into account by middle-level managers, operational managers need to impose it. This concept imposition or justification is based, at the beginning, on the ability of these managers to present their view as being coherent with the strategic field occupied by their firm. Marsh & al. (1988), studying investment processes, showed as well the importance of being able to seduce top managers in charge of resource allocation by adopting their point of view on strategy. Works on cognitive maps and cognition (Hall 1984, Huff & Schwenck 1990, Barr et al. 1992) have also demonstrated the importance of this knowledge of the strategic context. It can lead to numerous biases (Schwenck 1985, 1988) and can prevent the organization from understanding changes (Daft & Weick 1984), but this constitutes the basis on which strategy develops. Kiesler & Sproull (1982) argue that, to improve problem sensing process, organizations should develop planning processes that highlight clear goals and indicators, focusing managers attention on the key elements of the strategic context. For individuals to be able to read (and write) strategy, they need to build their own distinction tree (Von Krogh 13
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et al. 1994), which will help them to isolate relevant information from their environment. This creation-oriented perspective on strategy-making seems to be implicitly built on the assumption that knowing the main strategic orientations of the firm is a prerequisite for people to get involved in the strategic thinking process. Therefore, the first dimension of strategic literacy, the ability to read strategy, depends on two elements : the understanding of the main strategic orientations of the organization, and the individual cognitive stocks and processes which give meaning to this knowledge of the strategic context.
The second dimension of strategic literacy is the ability to write strategy. This dimension relies on the ability of individuals to give sense to t he strategic elements they read, in order to develop their own strategic agenda through their distinction tree (Von krogh et al. 1994). It implies a more accurate cognitive process, using both single loop and double loop learning approaches (Argyris 1992) and corresponds to the functional part of literacy defined by Wallendorf as the use of text and possession of higher-order decoding and reasoning skills (2001 : 505). Literature on knowledge creation or managerial creativity could help to understand how strategists get from the reading of a situation to propositions for improving this state. The constructionist perspective highlighted by Von Krogh (1998) establishes a distinction between tacit and explicit knowledge, arguing that knowledge has to be made explicit to be shared and therefore potentially used in the organization. As strategies do not grow in vitro, but are fully embedded in social and political processes (Allison 1971, Crozier & fridberg 1977, Pettigrew 1985, Romelaer & lambert 2002), we can reasonably assume that communication skills may be as important as analysis skills in writing strategy, and that strategic conversations (Von Krogh & Roos 1995, Liedtka & Rosenblum 1996) could be a central element in the development of strategic literacy.
To define strategic literacy, we can rest on these two main dimensions : being able to read and to write strategy. This can be put together with traditional strategic analysis, which often splits into the analysis of internal and external dimensions of strategy. Doing this, we can assume that reading and writing strategy implies to be able to read both internal and external contexts. In this view, reading strategy means understanding the strategic context of the organization, in
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term of its main strategic orientations and of its strategic paradigm, but also understanding the environmental dynamics that constrain this strategy. Writing strategy implies to be able to connect organizational resources and environmental opportunities in order to create or reveal new strategic issues. This can lead to the following definition : Strategic literacy is the ability to read and to write strategy. It is made up of two main dimensions : the knowledge and understanding of the strategic context of the organization, and the consciousness of the main environmental dynamics that constrain strategy.
2- Methodological elements
Analysing strategic literacy presents many difficulties : how can we measure the appropriation of strategy by managers ? How can we estimate their capacity to think with a systemic approach, linking organizational resources and environmental ones ? How can we evaluate their potential ability to write strategy ? Many researchers have tried to take a picture of individuals cognitive stocks, and the most used methodology is probably cognitive mapping, which consists in analysing individuals perceptions of their environment on the basis of predetermined dimensions, to understand actions. This mapping aims at representing the managers structure of knowledge or mental models (Johnson-Laird 1983, Senge 1992). If Huff (1990) shows that many methods can be used, the basic material is always managerial language, whereas it is written (Huff & Schwenck 1990, Barr et al. 1992, Crouch & Basch 1997) or oral (Cossette & Audet 1994, Calori et al. 1992). The analysis of managerial language, though potentially biased, is now well established as a method for understanding cognitive and social processes (Daft & Wiginton 1979, Daft 1980, Shotter 1993-Crouch).
Our aim in this study is to question the concept of strategic literacy. As we discussed, it can be understood as being structured by the ability to read and the ability to write strategy.
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As Many empirical studies have shown, one point is determinant for the ability of individuals to get involved in a strategic thinking process : they have to know the strategic orientations of their organization. Our goal is then to evaluate the fit between managers perception of the strategic orientations of their firm and the official orientations defined and announced in official statements. The other dimension of strategic literacy -consciousness of the environment- is tested as well.
2.1.Data Collection Data collection was done using two sources : interviews with 58 managers in 12 firms and analysis of the strategic orientations announced in official documents (exclusively board messages and annual reports).
First step : Interviews
58 managers were interviewed in 12 large French firms, employing from 1,500 to 300 000 people with a turnover superior to 200,000 Million Euros. The interviewees were from three hierarchical levels, as proposed by Burgelman (1985) or Bartlett & Goshal (1997) : Level A : CEOs or top managers (i.e. member of the board, as strategy corporate manager or financial corporate director) Level B : Middle-level managers : in charge of a division or a service (sales director, Division or subsidiary Financial Director, Quality management director, etc.) Level C : Operational managers : project managers, etc.
12 level A managers, 24 level B and 22 level C managers were interviewed following, when possible, the same schema in the 12 firms : 1 interview at level A, 2 interviews at level B and 2 interviews at level C.
Table 1 summarizes the main characteristics of data collection 1 :
Companies names have been changed for confidentiality reasons.
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C. Torset Strategic literacy Number of Interviewees B C 2 2 2 1 2 2 2 2 3 2 1 2 2 1 2 2 2 2 2 2 2 2 2 2 24 22
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Firms Inform Energial Distribual Telcom Comtel Credial Transmial Postal Diversal Radial Transportal Transportex
Capital Pu Pr Pr Pr Pr Pr Pu Pu Pr Pu Pu Pu
Activities Press Energy/Transport Retailing Telecom Telecom Finance Data Transfer Mail & Delivery services Media, Military Media Transports Transports A 1 1 1 1 1 1 1 1 1 1 1 1 12
Table 1 : Summary of data collection (Note : Pu = Public-owned company ; Pr = Private-owned company)
All interviewees were asked the two same questions : What are the strategic orientations of your firm ? How does top management communicate internally on strategy ? With which intensity ?.
Second step : official statements analysis
The aim of this study is to evaluate managers strategic literacy through the knowledge they have of the strategy of their organization and their consciousness of the environment. This implies to compare individuals knowledge of the strategic orientations to the effective strategic orientations followed by the firm. We chose to take as a reference the strategic orientations highlighted in the official or internal documents we were given in each firm. These are strategic plans, annual reports and board or CEO speeches when needed. Surprisingly, it was not difficult to list the official strategic orientations. Most of the documents were already organized to focus on 3 to 6 official strategic goals and orientations, such as reinforcement of competitive positions through market shares, focus on high-margin activities, search for profitability (Energial, Annual report 2000). These official statements constitute the referent strategic orientations to which managers knowledge about strategy will be compared.
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2.2. Data Analysis Data were analysed through five steps, broadly using Huberman & Miles methods for organizing qualitative data (1991).
1) The verbatim document All interviews were fully recorded and transcribed. With this raw material, a verbatim document was established to recapitulate, for each of the 12 firms, the core elements of interviewees discourse on strategic orientations and internal communication. For each of the interviewees, a selected part of the discourse, summarizing his or her ideas, was included at the head of the verbatim document. 2) The Strategic literacy coding document For each firm, we established a strategic literacy coding document. This document aims at coding the perception managers have of the strategic context of their firms, through the verbatim document. This is based on the degree of convergence between official strategy and managers discourse about strategy. The coding is made on a scale from 0 to 3, as the coding process let appear that there were 4 different levels of convergence :
0 : The manager did not mention the strategic orientations written in official reports. None aspect of his discourse on strategy is coherent with strategy as described by top management in annual reports. Ex : For Comtel, one level C manager just said that the strategy followed by the firm is not really defined, [] it is really empirical, I dont think there is anything predetermined. In the annual report, strategy was focused on three points : development of high-value services, development of the multimedia offer through UMTS and Improvement of the profitability. Other managers of Comtel did mention these orientations.
1 : The manager only spoke about vague strategic orientations, his general discourse is consistent with the strategic orientations, but he never explains them or focuses on one orientation and does not speak about the others.
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Ex : in Radial, one level B manager only mentioned the development of local radios as a strategic orientation, explaining that it was the main strategic goal. Nevertheless, the annual report exposed 4 strategic axes : digitalisation,
reorganization of the offer around one brand, reinforcement of the market shares and technological innovation.
2 : The manager mentioned the main strategic orientations of his firm, but did not discuss them or forgot some of them. He or she sometimes just spells them without really knowing what is behind the official words. Ex : In Radial, a level A manager mentioned the development of t he market shares, the reorganization of local radios and the development of new products. His discourse on strategy is close to the official strategic orientations presented in the annual report (see above) but he forgot an important one and was vague on the development of a single brand.
3 : The manager mentioned all the strategic orientations of his firm, and explained and discussed them. Ex : Still in Radial, one level B manager mentioned, with his own words, the four strategic orientations presented in the annual report. He discussed them and sometimes even did not agree with them.
Once this coding was done, the other part of strategic literacy, the ability to link strategy and environmental dynamics was tested. This dimension is exploratory because managers were not explicitly asked to speak about their competitive environment. Nevertheless, it seems interesting, for evaluating strategic literacy, to notice whereas managers have spontaneously mentioned the environment or not. This lead to a binary coding (0 : the manager never mentioned the environment ; 1 : he or she mentioned the environment, often to explain or justify his view on the strategy of his organization).
All these elements were summarized in the strategic literacy coding document, which comprises, for each firm : the strategic orientations presented in the annual report;
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for each manager interviewed in the firm : an evaluation of the degree of convergence between his discourse on strategy and official orientations (0 to 3) and the coding of the mention of the environment (0 or 1)
This allowed to get, for each firm, an average strategic literacy coefficient (/2)and the average mention of the environment (/1).
3)
The Strategic literacy synthesis document Firms :
This document aims at synthesizing all the dimensions of the study for the 12 firms. Based on the average knowledge score and enriched with : The coding of the capital structure : 1 for private capital, 2 for public firms. This coding is based on the following rule : is private any firm which capital is 50% owned by private investors. Idem for public firms. The coding of the level of internal communication on strategy. Based on the answers to the questions How does top management communicate internally on strategy ? With which intensity ?, this coding aims at evaluating an average degree of internal communication on strategy. We did not use separately managers answers. For this coding, a core answer was established : in each firm, only similar answers on communication were taken into account with the following rule : on 5 answers, 4 had to be coherent for the coding to be made. This did not pose any problem, since managers seemed to have globally the same perception on how intensive internal communication on strategy is in their organization. This level of the intensity of internal communication on strategy was coded as follows : 1 : Internal communication on strategy does not exist or is very limited (one formal written communication for global tendencies per year for example) Ex : In Comtel, the CEO said we grew very rapidly and we did not follow in terms of communication. The internal osmosis does not exist anymore, whereas a level B manager explained that there is no detailed communication on strategy. Theres an orientation committee, but it is up to each manager to explain it. We only have, once a year, a speech from the big bosses. on the average environment score described above, it is
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2 : Internal communication on strategy exists but is rarely formalized. Ex : in Energial, communication on strategy is mostly let to middle managers, on the basis of a cascade communication as explained by a level B manager : We need to communicate locally, taking into account local characteristics. Therefore, communication on strategy mainly rests on managers shoulders, even if we try to formalize it with the Intranet and internal journals. 3 : Internal communication on strategy is formalized and uses multiple canals : Intranet, internal journals, speeches, cascade, or even video. Ex : at Postal, internal communication on strategy is made through : an annual convention with 5,000 managers, a monthly letter to management exposing environmental changes and strategic goals, a monthly journal to the 300,000 employees with strategic goals on cover, the diffusion of one 50-pages and three 5-pages documents explaining to all employees, with comics and drawings, the main strategic orientations and their justification, and finally a deployment kit sent to all managers to help them explaining strategy to their subordinates.
All these codings are synthesized in the strategic literacy synthesis document - Firms above :
Capital Firms
1 = private 2 = public
Intensity of internal communication on strategy

1 to 3
Average degree of knowledge of the strategic orientations

0 to 3
Average degree of mention of the environment

0 to 1
Inform Energial Distribual Telcom Comtel Credial Transmial Postal Diversal Radial Transportal Transportex
2 1 1 1 1 1 2 2 1 2 2 2
3 2 3 1 1 3 1 3 1 1 3 3
2.4 2 1.6 1.6 2 2.25 1.75 2.8 1.6 2 2.4 2
1 0.5 0.4 0.8 1 0.5 0.75 0.4 0.4 0.6 0.4 0.2
Table 2 : Strategic literacy synthesis document - Firms
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4)
Strategic literacy synthesis document Actors (see appendix A) :
This synthesis document classifies all individuals, independently from their organization, according to : first, their level of knowledge of the strategic orientations, second, the fact that they mentioned or not the environment.
By taking into account the hierarchical level of managers (coded 1 for level C to 3 for level A), this document allows an analysis of correlations between hierarchal level and the dimensions of strategic literacy studied.
5)
Strategic literacy synthesis document intra-firms (see appendix B) :
This document summarizes, for each firm, the degree of knowledge of the strategic orientations and the evocation of the environment for each of the individuals interviewed. It allows to study correlations between hierarchical level and dimensions of strategic literacy inside each of the 12 firms.
Finally, for data analysis, three synthesis documents can be used : Strategic literacy synthesis document Firms which, at a macro level, helps to understand the potential links between knowledge of the strategic orientations, evocation of the environment, type of capital, sector and intensity of internal communication on strategy. Strategic literacy synthesis document Actors which allows, independently from the organizations, to question the links between hierarchical level of individuals and their knowledge of the firm and mention of the environment. Strategic literacy synthesis document Intra-firms which may help to observe, in each firm, the potential links between hierarchical level, knowledge of the strategic orientations and evocation of the environment.
We are now going to investigate these potential links.
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3- Results and discussion We organize this section in four parts : general descriptive results, inter-firms analyses, individual analyses and intra-firms analyses.
3.1. General descriptive elements. The average knowledge of the strategic orientations, which is evaluated here taking into account what managers declared about the strategy of their organization, lets appear nonsurprising results. The average knowledge of the strategic orientations follows hierarchical levels. For the 58 managers interviewed, the convergence between their view of the strategy and official descriptions is as follow : average knowledge-level A : 2.58 / 3 average knowledge-level B : 2.04 / 3 average knowledge-level C : 1.73 / 3
These global results are probably not surprising, following the observations made by Hay & Williamson (1997) for example. Nevertheless, it should be noted that the methodology used introduces a bias since we compared official strategic statements and managers evocation of strategic orientations. Top managers are often largely involved in the writing of official strategic orientations, it is fully part of their job. Therefore, they are likely to have a higher degree of convergence with official strategies.
The other element of strategic literacy we studied may not be very surprising as well : top managers often mention the environment when asked to explain the strategy of their organization, whereas middle managers and operational managers only mention it half time : average environment-level A : 0.83 / 1 average environment-level B : 0.50 / 1 average environment-level C : 0.55 / 1
We can note here a slight difference between middle and operational managers, the latter mentioning a bit more the environment, which is consistent with Floyd & Wooldridges results (1997). This could be explained by more frequent direct relations with external environment. Nevertheless, the relatively small size of the sample (n = 58) and the heterogeneity of the jobs held may not allow to conclude.
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3.2.Inter-firms analyses This macro level of analysis is based on the strategic literacy synthesis document Firms. We can first have an overlook on firms average degree of strategic literacy, before analysing the correlations between strategic literacy and contingency variables, capital and intensity of the communication on strategy.
Using average values of knowledge on strategic orientations and evocation of the environment, the 12 firms can be represented as stated in figure 2 below.
1,25 Comtel Telcom 0,75 Radial Credial 0,5 Distribual 0,25 Transportex Energial Transportal Postal Transmial Inform
Evocation of environment
0 1 1,5 2 2,5 3
Knowledge of strategic orientations
Figure 2 : Mapping of the 12 firms according to average knowledge and environment dimensions of strategic literacy.
This representation is not enough discriminating to gather firms into groups according to their average degree of strategic literacy. Nevertheless, one point is worth noticing : 5 of the 6 public-owned companies have an average degree of strategic literacy superior or equal to 2 (on 3).
Correlations between the two dimensions of strategic literacy and contingency variables can help to investigate the potential reasons of the mapping above. Correlations between these dimensions are stated in table 3 below : 24
C. Torset Strategic literacy Communication 0.262 Knowledge 0.533 0.599 Environment -0.085 -0.439 -0.051
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Capital Communication Knowledge Environment
Table 3 : Inter-firms correlations between strategic literacy dimensions and organizational characteristics
Two main dimensions are highlighted by these correlations. First, the capital structure seems to have an influence on communication (.262) and knowledge of strategic orientations (.533). Public organizations have a higher intens ity of internal communication on strategy. This is not fully surprising, since most studied public companies operate in the public services area and have to deal with declining but still influent union activities. Moreover, and this may be more important in public transports, the European deregulation opens the market to new competitors. This implies to mobilize people through a solid strategic vision. Managers evocation of strategic orientations is more coherent with official strategic statements in public firms than in private ones. The correlation between capital structure and intensity of communication is high (.262) and can explain the first result mentioned above.
The second insightful dimension is communication, which is strongly linked to the knowledge of strategic orientations (.599) and to the evocation of environment (-0.439). The more strategy is internally communicated, the more managers vision of strategic orientations is coherent with official strategic statements . This is not a surprising result, especially given our methodology which leads to compare official written strategies and managers discourse about strategy. The more managers are told which are the main strategic orientations, the more they recall them to answer the questions. T his probably does not mean that managers fully understand or approve these strategic orientations, but they are able to express them. A more interesting point resides in the correlation between the intensity of internal communication on strategy and the evocation of environment by managers (-0.439). The more strategy is communicated, the less managers evoke environment when explaining
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the strategy of their organization. This result seems to show that managers perception on strategy is dominated by what they are told. If communication on strategy is poorly developed, managers will construct their own personal perspective on strategy, and this implies to understand the environmental dynamics which constrain strategic actions. When communication is more organized, managers will be likely to rest on what they are told. Their vision of strategy is less personal and if they can be considered as being able to read strategy, their ability to write it may be less developed. As Aristotle noted, Nature abhors a vacuum (natura abhorret vacuum) and managers mind is either fulfilled with official discourse on strategy, or develops its own perception of strategy, relying on the analysis of environment. This is of course a caricatured point of view, and the inexistent correlation between knowledge and evocation of the environment (-0,051) shows that there is no binary relation between knowing strategic orientations or evocating the environment, but, for managers who mention strategic orientations in compliance with official goals, we can note that they are more likely to take into account the environment when the intensity of internal communication is lower. Moreover, the non-correlation between type of capital structure and evocation of the environment (-0.085) seems to strengthen the relation between
communication and environment. The fact that managers mention or not the environment when explaining the strategy of their organization can not be linked to the public or privateowned dimension.
3.3.Inter-individual analyses When looking at the strategic literacy synthesis document Actors (see appendix A), which classifies individuals according to their knowledge of the strategic orientations and their approach of the environment, we can note that eight distinct groups of managers emerge.
o Limited-centred : this first group encompasses two managers. None of them was able to explain the strategic orientations of his/her firm and they never mentioned the environment in their discourse about strategy. This does not mean that t hese managers are not able to think strategically, but they do not seem to be able to position their eventual strategic ideas in front of official strategic goals. As we argued earlier, this seems to be problematic for their strategic capacity in the organization. All these managers are operational (level C) managers.
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o Limited-systemic strategic literacy : Only one manager on the 58 interviewed was not able to present the strategic orientations of his firm, whereas he often mentioned the environment as a constraint for development. o Focused-centred strategic literacy : the four managers of this group had a vision of the strategic orientations of their firm which is far limited, compared to the official goals. The environment was never mentioned when explaining strategy. All these managers are middle managers (level B). When looking at the discourse of these managers on strategy, one element appears to be common to all : they all focus on the strategic orientations in which they are involved and do not mention the others. o Focused-systemic strategic literacy : the six managers composing this group have also a very personal vision of the strategy, but they did mention the environment. Their explanations on strategy were not complete, compared to annual reports, but when talking about strategy, they naturally evoked the environment. As the preceding group, most of them focused their analysis of strategy on the dimensions in which they were involved. o General-centred strategic literacy : 10 managers compose this group. All of them had a good knowledge of the strategic orientations of their organization, but forgot some important ones or were not able to discuss them. Their discourse on strategy does not include environmental elements. They are operational or middle managers.
Sometimes, some of these managers tried to remember the official strategies presented by top management, but did not always know what to put behind the official words. Like some students, they read what they are given to read but forget it rapidly and are not especially interested in strategy. o General-systemic strategic literacy : this group is the most important one, with 17 managers, from all hierarchical levels. These managers were able to enumerate the main strategic orientations, but vaguely, or they forgot some important ones. They always linked strategic orientations to environmental characteristics. o Extensive-focused strategic literacy : this group gathers 8 managers, from all hierarchical levels. All these managers had an extensive knowledge of the strategic orientations, being able to enumerate, explain and discuss them, but they never mentioned the environment. Their ability to read strategy is high, but we can question
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their ability to write strategy since they do not have a systemic view of their ecosystem (Liedtka 1998a). o Extensive-systemic strategic literacy : With 10 middle-level or top managers, this group is the most literate on strategy. They know and can discuss the strategic orientations of their firm and are able to insert them in the environment. These managers seem able to read and write strategy without any problem, according to our approach of strategic literacy. The main characteristics of the eight groups are listed in table 4 below, where S.L. stands for Strategic Literacy:
Mention of the environment Degree of knowledge of strategic orientations
No
Limited-centred S. L.
Yes
Limited-systemic S. L.
Nb : 1 Hierarchy : operational manager
Null Low
Nb : 2 managers Hierarchy : operational managers
Focused-centred S. L.
Nb : 4 Hierarchy : middle managers
Focused-systemic S. L.
Nb : 6 Hierarchy : operational (4) and middle managers (2)
General-centred S. L.
General-systemic S. L.
Nb : 17 Hierarchy : operational (7), middle (5) and top (5) managers Extensive -systemic S.L. Nb : 10 Hierarchy : middle (5) and top (5) managers
Medium
Nb : 10 Hierarchy : Operational (4) and middle managers (6)
Extensive -centred S. L.
High
Nb : 8 Hierarchy : operational (4), middle (2) and top (2) managers
Table 4 : Synthesis of types of strategic literacy
The repartition of the number of managers along a continuum from limited-centred to extensive-systemic strategic literacy is figured in figure 3.
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18 16 14 12 10 8 6 4 2 0 Limited-Centred S.L. Limited-Systemic S.L. Focused-Centred S.L. Focused-Systemic S.L. General-Centred S.L. General-Systemic S.L. Extensive-Centred S.L. Extensive-Systemic S.L.
Figure 3 : repartition of managers according to the types of strategic literacy
This distribution shows that most managers (45 on 58) have a good knowledge of the strategic orientations of their firm (coded 2 or 3) and that a majority evokes the environment (34 on 58). This seems to be quite encouraging for the overall strategic literacy and hence for the ability of these managers to get involved in the strategic thinking process of their organization.
These descriptive elements cannot explain why some managers are more literate than others. The data we collected do not allow to analyse deeply the determinants of strategic literacy, but one point is worth regarding : the eventual link with hierarchical levels. One could question why the hierarchical level is here considered so important in the analysis. To answer this, we can argue that it is linked to our main concern which is the role an individual can play in the strategy process, and Romelaer & Lambert highlight the importance of such a dimension : organizations are more structured sets of collective d ecision units than spaces where individual rationalities combine freely with each other. Roles, positions and values have profound influences in organizations (2002 : 79). The hierarchical level, because it partly determines roles and power, seems to be one of the most interesting individual dimension to study when investigating the potential determinants of strategic literacy, and therefore strategic thinking.
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Unsurprisingly, the correlation between knowledge of the strategic orientations and hierarchical level is quite significant (.372). This strengthens what we observed with the calculation of means : managers of higher hierarchical levels are more likely to explain the strategic orientations of their firm. The correlation between evocation of the environment and hierarchical level is lower (.181) but interesting as well. It shows that a higher hierarchical level globally leads to a more systemic strategic literacy, but in a less systematic way. This can be explained by operational managers daily activities, which are often more directed towards environment (customers, competitors, etc.) and therefore develop their environmental consciousness.
3.4.Intra-firm analyses This last step aims at analysing firms, but not in terms of average degrees of knowledge or evocation of the environment, as we did in the inter-firms analysis. This time, we are looking at organizations, according to the level of correlations between the two dimensions of strategic literacy and hierarchical level. We use the strategic literacy synthesis document Intra-firms (see Appendix B). This analysis allows to map firms according to their level of correlation between (1) managers knowledge of strategy and hierarchical level and (2) managers evocation of the environment and hierarchical level. This should help to test the homogeneity of strategic literacy in each firm. The figure 4 above maps firms according to the correlations between each dimension of strategic literacy (knowledge and environment) and hierarchical level.
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1 Postal 0,8 0,6 0,4 Radial 0,2 0 -1 -0,8 -0,6 -0,4 -0,2 -0,2 -0,4 -0,6 -0,8 Transmial -1 Transportal 0 Energial 0,2 0,4 Comtel 0,6 Distribual Inform 0,8 Telcom Credial 1 Transportex Diversal
Correlations Hierarchical level / Environment
Correlations Hierarchical level / Knowledge
Figure 4 : Mapping of the 12 firms according to the hierarchical configuration of the strategic literacy of their managers
Due to the very small number of managers interviewed in each firm (4 to 6), this mapping has to be prudently commented. Nevertheless, five groups of firms can be highlighted : o Inversely literate firms : in Postal, lower-levels managers tend to have a higher degree of knowledge of official strategic orientations (correlation = -.802) whereas environment is more evocated by higher-levels managers. This corresponds to a situation in which strategy is so much communicated that it leads to a literal knowledge about strategy, but prevents people from building their own perception of the environment. Moreover, the competitive landscape is fuzzy. High-value
activities face a European tough competition whereas historical activities still beneficiate from a monopolistic situation. Even if they know well strategic orientations, due to their boundary-spanning position (Floyd & Wooldridge 1997), lower-level managers have not integrated the new competitive forces that emerge through deregulation. Higher-level managers have and therefore they focus on environment to the detriment of current official strategic orientations.
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Non-hierarchically literate firms : in Energial, Radial and Transportal, both correlations are inexistent or too small to be significant. In these firms, there is no link between knowledge or environment and hierarchical level. Strategic literacy probably rests on individual characteristics, independently from organizational and strategic contexts.
o Top literate firms : in Transportex and Diversal, both knowledge and environment dimensions of individual strategic literacy are linked to hierarchical level. In these firms, higher-level managers seem globally more literate than lower-level managers. o Top intent-based literate firms : This group is the most important one, with five firms (Comtel, Inform, Telcom, Credial and Distribual). In these organizations, the knowledge of strategic orientations is positively linked to the hierarchical level, whereas the evocation of the environment is not. Higher-level managers are more likely to know official strategic orientations, but environment can be mentioned by all managers, without any link to hierarchical position. This can be linked to the strategic intent of Hamel & Prahalad (1989) because higher-level managers focus on their vision of strategic orientations, but do not take environment into account more than lower-level managers do. This can probably be explained by the type of environment these firms face : they all are in a B to C configuration and evolve in highly complex environments. In such environments, strategy is probably more difficult to decrypt for lower-level managers, but they have to be much attentive to competitors and customers. This can partly explain this structure of strategic literacy. o Bureaucratically literate firms : in Transmial, the knowledge dimension of strategic literacy is positively linked to the hierarchical level of the interviewee (. 853). On the contrary, the environment dimension is negatively linked to the hierarchical level (-0.816). This means that in Inform, lower-level managers, though they have a less extensive knowledge of strategic orientations, do not speak about strategy without mentioning the environment. As attended in bureaucracies, strategic orientations are the reserved area of top management, while environmental interrogations are more likely to come from lower-level managers. This is not surprising as the activity of Transmial (satellite transmissions and global offers to broadcasting firms) is much dependent on the attempts of customers. Strategic thinking is much oriented toward customers, and in this firm, lower-level managers could probably be successfully
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involved in the strategy formulation process. The positive and high correlation between knowledge and hierarchy can be explained as well by the capital structure. Transmial is a subsidiary of a leading telecommunication company, which is still partly public-owned. The strategy of Transmial is hence much influenced by its principal stakeholder and may appear confuse to some operational managers which do not see links and synergies between the two organizations.
The mapping of the firms and the five groups are summarized in table 5, where the first coefficient stands for environment/hierarchical level correlation.
Links between the knowledge dimension of strategic literacy and hierarchical level
Negatively linked Not linked Positively linked Transmial (-0.816 ; 0.853)
Links between the environment dimension of strategic literacy and hierarchical level
Negatively linked
Not linked
Radial (0.327 ; 0) Tansportal (0.218 ; 0.218) Energial (0 ; 0)
Postal (0.764 ; -0.802) Positively linked
Comtel (0 ; 0.485) Telcom (-0.134 ; 0.873) Inform (0 ; 0.764) Credial (-0.302 ; 0.870) Distribual (0.218 ; 0.535) Transportex (0.802 ; 0.423) Diversal (0.764 ; 0.681)
Table 5 : Intra-firms correlations between dimensions of strategic literacy and hierarchical level
This mapping of firms according to their internal homogeneity of strategic literacy among hierarchical levels highlights the roles played by organizational and strategic contexts. In most of these firms (8 on 12), higher-level managers tend to know better the official strategic orientations. This is not surprising and might be due to the methodology used in this study. In three firms, there is no link between strategic literacy and hierarchical level. Transmial, though knowledge of strategic orientations is better in higher-levels, presents a singular profile, since lower-level managers are more likely to evoke environment. This is not
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fully surprising and can be explained by external environment and boundary-spanning positions but is worth noticing. Postal may be the most particular firm. In this organization, lower-level managers have a better knowledge of official strategic orientations (this is even more surprising when we note that one of the top managers met is the strategy VP), but they rarely mention environment, contrary to higher-level managers. This implies that the strategic literacy of lower-level managers is unbalanced : they are able to position themselves and their ideas in front of official strategic goals, but we can wonder if they are able to develop strategic ideas without taking into account the environment.
Conclusion Strategy formation processes have been largely studied in the academic and professional literature. From a decision-perspective, research evolved to a processual and contextual approach. The concept of strategic thinking, which deals with individual and organizational processes and characteristics, can be useful to get a more accurate picture of how strategies emerge and develop inside organizations. But understanding strategic thinking implies to analyse how and why individuals are able to think strategically. Strategic literacy has not been defined as a concept in the strategic management field. However, two main dimensions can be studied : strategic literacy means being able to read and to write strategy. Strategic analysis tools and methods always distinguish between internal and external views of the resources and opportunities. Then, strategic literacy can be approached in terms of knowledge of the strategic orientations of the firm, and sensibility to environmental forces and evolutions. This distinction is not far from the reading/writing one. An individual who knows the strategic orientations of his/her organization is able to read main strategic problematics and this may be the first step to strategic thinking (Marsh et al 1988, Nonaka & Takeuchi 1995). An individual who takes into account environment when discussing strategy may have a greater ability to write strategy, i.e. to decode environmental forces in order to develop strategic initiatives or innovations.
We questioned 58 managers from 12 large French firms to test their level of strategic literacy.
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The methodology used presents some limits. First, to evaluate the knowledge dimension of strategic literacy, we compared managers discourse on strategy to officially-stated strategic orientations. This can introduce a bias at the advantage of higher-level managers which are more likely to have been involved in their formulation. Second, but this may not be a real limit regarding our conception of strategic literacy, we did not explicitly ask managers to express themselves concerning the environment. This point can change the results, but as in cognitive mapping methods (Huff 1990), it is full of insights about the way managers think about strategy. It constitutes an evaluation of managers environmental consciousness. Third, the coding protocol, though tested in other studies (see Torset & Tixier 2002) can be challenged. Finally, and this is why we often use the term exploratory, these results and the correlations associated are based on a small sample (58 managers and 12 firms). This could lead to significant differences if a larger study was conducted.
Despite these limits, some findings seem interesting and should encourage further studies on strategic literacy. Global results show that higher-level managers have a better knowledge of the strategic orientations of their firm. This is not surprising and is coherent with assumptions of many researches. At the inter-firms level, two main conclusions have to be highlighted : o The more an organization communicates on strategy, the more managers know the strategic orientations of their firm. This should satisfy communication managers who can see in this result the evidence that their work is important. o The more an organization communicate internally on strategy, the less its managers evoke environment when explaining their strategy. If confirmed by larger studies, this result may frighten many communication departments in large firms. As Jeminson (1981) or Papadakis et al. (1998) showed, environment is one of the most influent variable in strategy formation processes. Following Liedtka (1998a, 1998b) or Ford & Gioia (2000), it seems difficult for individuals to get involved in the
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strategy process if they do not have a minimum consciousness of the ecosystem in which they evolve. In a prescriptive approach, it would imply for organizations to communicate on environmental forces as well as on strategic orientations, in order to develop managers strategic literacy and so their ability to think strategically. At the inter-individual level of analysis, eight types of strategic literacy emerge, based on the distinction of four degrees of knowledge of the strategic orientations, and a binary environment dimension. Correlations confirm that strategic literacy is linked to hierarchical level, but with differences among the two dimensions. The knowledge dimension of strategic literacy is strongly linked to the hierarchical level of managers, whereas the environment dimension is slightly correlated to the hierarchical level. The intra-firm analysis allows to compare firms in terms of their internal homogeneity concerning strategic literacy. Five groups emerge from the sample, according to the links between hierarchical level and the two dimensions of strategic literacy.
These results are interesting in themselves, they show the importance and the dangers of internal communication on strategy. More important, it is probably the first conceptualisation of strategic literacy, a prerequisite for strategic thinking in organizations, at the individual and organizational levels. Different sorts of strategic thinking are highlighted and we can note that many firms are heterogeneous in term of the strategic literacy of their managers.
We can put the stress on two main research perspectives. First, this exploratory study has to be reproduced on a larger scale, maybe with different methodological tools. This should help to strengthen the bi-dimensional conceptualisation of strategic literacy which is proposed here. Second, a global effort could be made to go deeper in the analysis of strategic literacy and the three contexts of strategic thinking (individual, organizational, strategic). This study uses data collected for a research on strategy processes which are not sufficient to characterize the contexts of each firm. This link with strategy process literature would probably bring a lot to our understanding of the crossing between development. individual and organizational level of strategy
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Appendix A : Strategic Literacy Synthesis Document Actors
Knowledge of Strategic Orientations 0 - 3 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
Mention of the Environment 0 - 1 0 0 1 0 0 0 0 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1
Hierarchical Level 1 - 3 1 1 1 2 2 2 2 2 2 1 1 1 1 2 2 2 2 2 2 1 1 1 1 3 3 3 3 3 2 2 2 2 2 1 1 1 1 1 1 1 3 3 2 2 1 1 1 1 3 3 3 3 3 2 2 2 2 2
Firm Diversal Transportex Comtel Distribual Distribual Radial Transportex Transmial Diversal Distribual Telcom Telcom Transmial Energial Energial Telcom Diversal Transportal Transportal Distribual Credial Diversal Radial Energial Telcom Comtel Postal Radial Inform Telcom Comtel Credial Transmial Inform Inform Energial Comtel Credial Radial Transportal Credial Transmial Postal Transportex Postal Postal Transportal Transportex Inform Distribual Diversal Transportal Transportex Inform Comtel Comtel Postal Radial
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Appendix B : Strategic Literacy Synthesis Document Intra-Firms
Firm
Inform
Energial
Distribual
Telcom
Comtel
Credial
Transmial
Diversal
Postal
Radial
Transportal
Transportex
Hierarchical Level (H) 1-3 3 2 2 1 1 3 2 2 1 3 2 2 1 1 3 2 2 1 1 3 2 2 2 1 1 3 2 1 1 3 2 2 1 3 2 2 1 1 3 2 2 1 1 3 2 2 1 1 3 2 2 1 1 3 2 2 1 1
Knowledge of Strategic Orientations (K) 0-3 3 3 2 2 2 2 2 2 2 3 1 1 2 1 2 2 2 1 1 2 2 3 3 0 2 3 2 2 2 3 1 2 1 3 1 2 2 0 2 3 3 3 3 2 1 3 2 2 3 2 2 3 2 3 1 3 0 3
Mention of the Environment (E) 0-1 1 1 1 1 1 1 0 0 1 1 0 0 0 1 1 1 0 1 1 1 1 1 1 1 1 0 1 1 0 0 1 1 1 1 1 0 0 0 1 1 0 0 0 1 0 1 1 0 1 0 0 0 1 1 0 0 0 0
Correlation Correlation H/K H/E
0,764
0,535
0,218
0,873
-0,134
0,485
0,870
-0,302
0,853
-0,816
0,681
0,764
-0,802
0,764
0,000
0,327
0,218
0,218
0,423
0,802
38
EGOS 2002
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18th EGOS COLLOQUIUM Barcelona, July 4-6, 2002 Sub-Theme 26 : Making and executing strategy

Strategic Literacy : The great question

C. Torset Strategic literacy

STRATEGIC LITERACY : THE GREAT QUESTION

C. Torset Strategic literacy

C. Torset Strategic literacy

Strategic decision-making : rational, analytical, and individual.

C. Torset Strategic literacy

C. Torset Strategic literacy

Strategy process : some renewal from change and innovation

C. Torset Strategic literacy

C. Torset Strategic literacy

C. Torset Strategic literacy

1.2. Strategic Literacy : a prerequisite for strategic thinking

C. Torset Strategic literacy

Strategic thinking : individual and organizational

C. Torset Strategic literacy

Cognitive stock, Academic and profe ssional background

Individual strategic thinking

---------Individual motivation criteria, needs and attempts from work

Motivation, reward & punishing systems

Information circulation, management styles (directive, participative), attention to ideas

Strategic position, environmental complexity

---------Plasticity & homogeneity of the strategic code

Organizational strategic thinking

Figure 1 : an organizational model of strategic thinking (from Torset 2001, 2002)

C. Torset Strategic literacy

Strategic literacy : the background for individual strategic thinking

C. Torset Strategic literacy

C. Torset Strategic literacy

C. Torset Strategic literacy

C. Torset Strategic literacy

C. Torset Strategic literacy

First step : Interviews

Table 1 summarizes the main characteristics of data collection 1 :

Companies names have been changed for confidentiality reasons.

C. Torset Strategic literacy Number of Interviewees B C 2 2 2 1 2 2 2 2 3 2 1 2 2 1 2 2 2 2 2 2 2 2 2 2 24 22

Table 1 : Summary of data collection (Note : Pu = Public-owned company ; Pr = Private-owned company)

Second step : official statements analysis

C. Torset Strategic literacy

C. Torset Strategic literacy

C. Torset Strategic literacy

The Strategic literacy synthesis document Firms :

C. Torset Strategic literacy

Intensity of internal communication on strategy

Average degree of knowledge of the strategic orientations

Average degree of mention of the environment

2.4 2 1.6 1.6 2 2.25 1.75 2.8 1.6 2 2.4 2

Table 2 : Strategic literacy synthesis document - Firms

C. Torset Strategic literacy

Strategic literacy synthesis document Actors (see appendix A) :

Strategic literacy synthesis document intra-firms (see appendix B) :

We are now going to investigate these potential links.

C. Torset Strategic literacy

C. Torset Strategic literacy

Knowledge of strategic orientations

Capital Communication Knowledge Environment

C. Torset Strategic literacy

C. Torset Strategic literacy

C. Torset Strategic literacy

Mention of the environment Degree of knowledge of strategic orientations

Nb : 2 managers Hierarchy : operational managers

Nb : 10 Hierarchy : Operational (4) and middle managers (6)

Nb : 8 Hierarchy : operational (4), middle (2) and top (2) managers