PHILOSOPHY OF SCIENCE AND STRATEGY - JC Spender

For the Academy of Management 2007 Program Session 496
Philosophy of Science and Strategic Organization
JC Spender – www.jcspender.com
ESADE, Lund, Cranfield, Leeds and Open Universities
Strategy is clearly a problem for the philosophy of science. The bulk of the philosophy of science
takes a realist approach – naïve, critical, positivist, fallibilist, verificationist, or whatever. Authors such as
Popper, Lakatos, Quine, and Feyerabend have shaped our current understanding of the natural sciences
(Curd & Cover, 1998; Rosenberg, 2000), and Durkheim, Weber and Rorty that of the social science
(Baert, 2005; Phillips, 1987). The difference between these discourses, of course, is that the natural
sciences are largely conceived as about our ‘understanding’ or anticipating the ‘real world out there’
objectively, as it exists independent of us and our thinking and doing, while the social sciences are
focused on the meanings we attach to our sense data, i.e. the focus is internal and subjective. No doubt
the external and objective ‘epistemological attitude’ has produced substantial dividends for us as
environment altering and energy consuming inhabitants of that world. Our ability to transform Nature
makes airplanes fly, things go bang, cultivation prosperous, and the power to cure many diseases.
But what is this to do with strategy? Come to that, what is strategy? In spite of its centrality to
our discourse, and institutionalization in the Academy’s largest division (BPS), we remain without a useful
or even unambiguous definition. Talking about Ancient Greek ships and the need to steer them does not
help, nor does talking about the Athenian army and the need to lead them (Heracleous, 2003, p.3),
though there is something absolutely right about the necessity of the ‘strategoi’ to know the business
proposed, and to commit to personal involvement and exposure (Cummings, 1993). How sharply this
contrasts with the case-study based classroom discussion in which students make decisions for and
about others (Mintzberg, 2004).
One of the most influential and widely cited strategy theory papers was Child’s on ‘strategic
choice’ (Child, 1972). Indeed it more or less introduced the term strategic into the UK literature, and to
sociologists. But what makes a choice ‘strategic’? Strategic compared with what? Being tactical,
analytic, emotional, irrational or un-informed? Child was suggestive without being definitive, that strategic

choice was reflective of those making the choice, therefore somewhat subjective and certainly not wholly
‘objective’. Nonetheless there are legions of strategy writers and researchers, and especially of strategy
text writers, who seem to believe we can proceed on the basis of examining ‘the facts’ of the firm’s
environment and determining ‘the best way’ for us to proceed, i.e. observing, analyzing, planning and
executing within a rigorous and logical framework. Their philosophical commitments are evident in
neologism-packed books and papers pouring forth along these lines.
It is easy to forget this goal-oriented decision-making paradigm is relatively new and was ushered
in during the 1960s by the folks at Carnegie Mellon University who thought, given World War II and its
apparent Operations Research successes, that rigorous modeling was the way to go. Yet even then
there was a struggle between causal analysis and the older strategic paradigm presented in those blue
Learned, Christensen, Andrews and Guth volumes (Learned, Christensen, Andrews, & Guth, 1965). The
Harvard approach argued ‘strategy’ was less a matter of rational planning than of choosing, in Child’s
sense, and that it called for executive imagination and leadership rather than quantitative analysis.
Indeed strategy only mattered when rational analysis was not definitive. Thus strategy complemented
rational decision-making and was neither a qualifying term to describe the decision-making of senior
people nor that about serious long-term matters.
Taking their cue from John Commons (Commons, 1924), L, C, A, & G assumed the strategic
process was less one of observing and analyzing than of reconciling the often contradictory pulls of what
the executives – as the agents of the owners – ‘wanted to do, might do, could do, and ought to do’. With
this notion of strategy, the objective function underpinning the ‘rigorous’ model – say, maximizing
shareholder wealth – is modified or mediated by other concerns, such as the executives’ own objectives,
the employees’ interests, or the host society’s expectations. These additional objectives hugely
complicate the strategy process, introducing principal-agent issues and taking the process well beyond
the tangible and bounded limits of managerial rationality.
This complexity, and the difficulty of dealing with it, was one of several drivers behind the
popularity of Porter’s 1980 work. He re-framed the strategy problem, transforming it from the planning
and reconciling process within LCAG’s multi-dimensional universe into that of protecting a monopoly
position already established. No longer was strategy about the whole process, rather it was narrowed to
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address the specific attack being mounted by suppliers or new entrants. Were these attacks on the rent
stream to occur simultaneously, of course, the framework became little more than descriptive. But given
the Porter framework managers could argue that ‘doing strategy’ meant spending less time worrying
about how the firm acquired the rent streams it possessed, and more time worrying about how to protect
them against those others with the economic power to dislodge them. The ‘facts’ of the context were redefined
in terms of the economic power to disturb the firm’s rents. Paradoxically, the extension of Porter’s
work into the RBV exposes the fruitlessness of reframing strategy as the process of searching and
securing these rents streams, for the rent-sourcing complexities suppressed in Porter’s analysis are
surfaced into plain view. In a similar move the proponents of stakeholder theory have become aware
there are no obvious ways of dealing with the stakeholders’ multiple and, at times, contradictory,
objectives within a coherent deterministic model of the type demanded in most of our journals.
Ironically our discipline’s philosophical challenge is to make a strategic choice about strategy
itself, to find ways of re-framing the executive problem in ways that are tractable rather than intractable,
that open up rather than collapse the discourse into its own contradictions. So I see no purpose
pretending strategy is a form of rational planning. Strategy has always implied human actors securing
advantages over their competitors by leveraging the non-rational, that which falls outside the rational
analysis. After all, our competitors can surely plan as well as we. So long as we do not disrespect our
competitors and define them as not competent enough to do their own planning we seem stuck. In short,
I see no way to locate the term ‘strategy’ within the planning discourse in which it is so often popped.
When 35 years ago I began studying to become a strategy theorist, driven by my managerial
experience, and with John Child as one of my examiners, I took up a different paradigm, arguing that
strategy-making was mostly about sense-making in difficult-to-comprehend situations. My military service
in submarines, where diagnosing what is happening can mean the difference between tranquility and
disaster, helped me to appreciate confusion and disorientation, and its deadly consequences. So to me
strategy is about being attacked by the ‘unk-unks’, the unknown unknowns which occur in practice in spite
of the most meticulous planning. Thus strategy is at its most meaningful in circumstances of bounded
rationality. This obviously stands over and against a planning paradigm that emphasizes the processing
of the data about the situation rather than its selection and acquisition. I was interested in how managers
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come to pay attention to this feature of the world rather than that, assuming their attention – and
rationality – is limited and, as Barnard suggested, the ‘limiting’ resource. Some theorists, especially those
brought up on game theory, would disagree and see strategy as perfectly compatible with a positivist
frame, defining it as the route chosen through a series of decisions with an objective function in mind.
Strategy is then a game to be played against one’s own ignorance and indecision, of not having decided
the route. But when played against another, the game surely comes down to information differences and
asymmetries, and so to whatever notions of ‘bounded rationality’ can be admitted into the game-theorist’s
analysis.
I wanted none of this, adopting instead a more subjectivist, phenomenological stance. Schutz
became my guide (Schutz, 1944, 1945). Though it was not precisely what I intended, many people saw
this as introducing ‘framing’ and ‘perception’ into the analysis of strategy. Had ‘behavioral economics’
been more widely known at the time, we would have introduced it into the discourse, suggesting
managers pay attention on the basis of ‘recency’ and so forth (Kahneman & Tversky, 1979). I was less
focused on explaining the particular conclusions of the sense-making process than on its dynamics. In
introducing the term ‘industry recipe’ (Spender, 1989), drawn from Schutz, I was proposing the sensemaking
that shaped the firm’s strategic process was not, in fact, peculiar to the firm in question, as was
universally presumed. The literature suggests each entrepreneur is unique, as is the resulting firm. The
notion of industry recipe contradicts this, suggesting the underlying strategic process is at the level of the
industry, or what we might now call the ‘community of practice’ which we sense as the group of actors
comprising ‘the industry’ in a Marshallian sense rather than the SIC sense.
The point here is not to rehearse these arguments, merely to show how the epistemological
underpinnings shift as one moves from a goal-oriented planning paradigm into the active sense-making
model that I was exploring. The philosophical underpinnings have switched from realism – in the sense
that the data gathered and processed is about a objective ‘real world’ beyond the firm or its industry – and
towards a subjectivist view in which the strategist, whether individual or collective, is constructively
defining ‘the world’, and its relevant data, as s/he/it chooses or arrives at a particular strategic view of the
firm. This follows necessarily as the possibility of gathering complete or comprehensive information about
the situation retreats behind the veil of bounded rationality, in Simon’s sense.
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The risk inherent in this approach is that the whole discourse slides off into anarchic relativism. It
seems the firm and its world can ultimately be defined in any way the strategist chooses. The planning
metaphor seems designed precisely to stop this and prevent every firm considering itself unique and
bound up by the irrationalities of its entrepreneurial founder/s. Absent some theoretical or methodological
‘scientific’ or objective constraints standing outside and over those framing the situation ‘the way we do
things around here’ is simply that, and it needs neither historical explanation nor warrant.
Aside from our epistemic horror at such relativism, we have practical problems presenting this as
either interesting or useful to ‘real managers’ who have a payroll to meet, customers and shareholders to
serve, and so forth. Such real managers, tightly constrained in a world of consumable resources,
intangible knowledge assets, and competition for the minds and wallets of their customers, do not have a
free choice over the commercially viable ways of viewing of the world. Thus realism, critical, naïve or
otherwise, seems a more practical philosophy than any variety of subjectivism – such as radical
subjectivism or phenomenology. But at the same time realism cannot deal with the central feature of
strategy or entrepreneurship, that of the observable process of creating a new world by creating new
products, services, needs, and customers, as well as new uses for old resources. Paradoxically, as the
natural sciences have revealed more of the way ‘the real world’ operates, so they have reminded us how
the social world in which business actually happens is mediated and shaped by entrepreneurial choices
about how to transform resources into services and how to create new demand for them.
Where then can we find a useful and practical philosophical basis for an idea of strategy that is
respectful of both the entrepreneurial manager’s ability to innovate - as Penrose’s work has illustrated
supremely well - and of the constraints the ‘real world’ exerts over her/his imaginings? Resources matter,
clearly. We may think the question new, something to do with today’s drift towards trust and respect
within organizations and networks, or the Information Age, or Globalization, or whatever. This is too bad,
because the question has been with us for centuries, often articulated through the notion of ‘human
agency’, one of the oldest philosophical chestnuts. Once we assume we can change the world, that we
are active participants in its construction rather than the passive victims of its state, we immediately
confront that limits to our powers. At the same time we present the positivist view of the world as ‘out
there to be analyzed and responded to’ with a grave philosophical challenge. Rather than existing
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objectively, independent of us and our doings, we posit our world rather than THE world as something we
and others, and Mother Nature herself, are constantly creating. In this sense agentic activity is strategic,
and to be strategic is to be agentic. To act rationally within a fully determined system, as implied in our
scientific models, is to be non-strategic, tactical perhaps. At the same time, given the assumption of
human agency there is no way of fully forecasting others’ reactions to our actions, for they cannot ever
have full knowledge of our intentions and interpretations. Indeed we do not have such full knowledge of
our own intentions and actions ourselves.
As we wander through the philosophers’ supermarket various forms of constructivism seem
relevant to the analysis of human agency or, as we now call it, our strategic choices. Again, there is
tendency to think these epistemologies new, or post-modern, or in some way philosophically cuttingedge.
This is not so. As von Glasersfeld points out (von Glasersfeld, 2002), it all goes back to
Giambattista Vico, at least the European discourse does. Vico’s thinking has been an undercurrent of
European thought for centuries and may well be one of phenomenology’s parents.
But to make good use of constructivism rather than simply trumpet it we must find a mid-point,
albeit tentative and shifting, between the power of the imagination – such as the entrepreneur’s – and the
constraints the world exerts upon it. Our ability to be agentic ultimately springs from our ability to imagine
what we cannot see before us. Thus strategy then becomes ‘the art of the possible’, framed somewhat
like political theory. At the same time the horizon comes closer. No longer are we focused on the
ultimate objective of our activity, establishing it as the basis for our rationality and testing everything
against whether it moves us closer to that goal. The emphasis is on the here and now, on ‘local hillclimbing’,
on Peircian indexicality, on what can be done right now with the resources to hand in the face
of the difficulties and risks already identified.
Whenever these risks arise from the activities of others, who are, after all, just like us, applying
their imaginations within their constraints, it obviously serves us well to imagine ourselves into the mind of
the enemy – as both Sun Tzu and von Clausewitz suggested. This established a different idea of the
reality out there, no longer in as Mother Nature, rather as of the Other. Constructivism is thus always
uneasily poised between subjectivism and realism. Its attraction is that it admits both. But its challenge is
that it can only be made useful by de-universalizing it, grounding it in local situations and contexts which
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are inevitably incompletely comprehended. Such knowledge we now call ‘situated’ and it is in the manner
in which our contexts of action are comprehended ‘situationally’ that we reach the real stuff of strategic
choices.
REFERENCES
Baert, P. (2005). Philosophy of the Social Sciences. Cambridge: Polity.
Child, J. (1972). Organisation Structure, Environment and Performance. Sociology, 6, 1-21.
Commons, J. R. (1924). The Legal Foundations of Capitalism. New York: Macmillan.
Cummings, S. (1993). The First Strategists. Long Range Planning, 26, 133-135.
Curd, M., & Cover, J. A. (Eds.). (1998). Philosophy of Science: The Central Issues. New York: W. W.
Norton & Co.
Heracleous, L. (2003). Strategy and Organization: Realizing Strategic Management. Cambridge:
Cambridge University Press.
Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decisions Under Risk.
Econometrica, 47, 262-291.
Learned, E., Christensen, R., Andrews, K., & Guth, W. (1965). Business Policy: Text and Cases.
Homewood IL: Richard D. Irwin.
Mintzberg, H. (2004). Managers not MBAs: A Hard Look at the Soft Practice of Managing and
Management Development. San Francisco CA: Berrett-Koehler Publishers.
Phillips, D. C. (1987). Philosophy, Science and Social Inquiry: Contemporary Methodological
Controversies in Social Science and Related Applied Fields of Research. Oxford: Pergamon
Press.
Rosenberg, A. (2000). The Philosophy of Science: A Contemporary Introduction. London: Routledge.
Schutz, A. (1944). The Stranger: An Essay in Social Psychology. American Journal of Sociology, 49, 499-
507.
Schutz, A. (1945). On Multiple Realities. Philosophy and Phenomenological Research, 5, 533-576.
Spender, J.-C. (1989). Industry Recipes: The Nature and Sources of Managerial Judgement. Oxford:
Blackwell.
von Glasersfeld, E. (2002). Radical Constructivism. London: Routledge.
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