PHILOSOPHY OF SCIENCE AND STRATEGY - JC Spender

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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’ (<strong>Spender</strong>, 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. 4
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 5
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PHILOSOPHY OF SCIENCE AND STRATEGY - JC Spender

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