“WHOSE STRATEGY IS IT, ANYWAY?” - UNDERSTANDING THE STRATEGIC ORIENTATION OF TOP MANAGEMENT TEAMS IN FAMILY AND ENTREPRENEURIAL FIRMS: A HERMENEUTIC PHENOMENOLOGICAL PERSPECTIVE William (Bill) Hovey Macquarie Graduate School Of Management Doctoral Scholar Macquarie University, NSW 2109 AUSTRALIA Tel: +61 2 9844 5460 Mobile: +61 2 412 670 110 Email:
[email protected] SUMMARY This research develops an understanding of Top Management Teams’ (“TMT”) strategic orientation in family and entrepreneurial firms. Creation of a firm’s strategy, and its implementation through strategic management, are key elements framing TMTs’ strategic orientation, and are also phenomena which are “lived” by TMT members. This paper explores the meaning of the “lived experience” of seven TMT members in 2 firms, and its contribution to understanding strategic orientation. The data of “lived experience” are disclosed in the text and language of conversation. Hermeneutic phenomenology is used to discover layers of meaning in seven conversations from which an understanding of the phenomenon might be developed. Hermeneutic phenomenology is not often used in management research, it is a useful method for practitioners and researchers unlocking possibilities hidden within a phenomenon. The paper offers suggestions to researchers about further research and to practitioners about the ways in which an understanding of the “lived experience” can introduce phronesis (“practical knowledge”) to practice. Key words: Top Management Team, strategic orientation, hermeneutic phenomenology, phronesis
We spend an enormous amount of our time and resources planning and then reporting on execution of ‘our’ strategy. We are judged and paid on our performance. But, we cannot make the decisions which really count and make a difference to this business. We are not the Owners. So, you do have to ask yourself, ‘Whose strategy is it anyway?’ - Top Management Team Member INTRODUCTION In the first issue of the Journal of Family Business Strategy, Joseph Astrachan (2010, p. 6) observed that “strategy in family business (is) a woefully understudied aspect of family business.” Astrachan noted that the literature reflects the notion that strategy is a phenomenon which is better described and understood in large, non-family businesses (Aragón-Sánchez & Sánchez-Marín, 2005; Furrer, et al., 2008; Hoskisson, et al., 1999; Tengblad, 2012). The focus is largely on strategy as a route to performance and primarily focuses on competitive strategies (Furrer, et al., 2008). Garengo et al (2011) argue that today’s competitive environment demands adoption of an effective management system linked to implementation whilst respecting the characteristics of the small organization. This follows a growing trend in SME research which has been increasingly emphasising the importance of strategy and its execution in SMEs (Nilsson, et al., 2012). That research has stimulated interest in a broad range of research areas and has generated a number of interesting propositions in relation to strategic management and the execution of strategy in SMEs (Chrisman, et al., 2005). In entrepreneurial and family business, the creation of a firm’s strategy, its setting of strategic direction, and its implementation through a process of strategic management, is often situated within a framework that is abstracted from the lived reality of practice. In abstraction, strategy is created through strategic planning marked by iterative steps (Vision, Mission, Goals, SWOT, Risk, Competitive Analysis, Strategic Imperatives, etc). As Ireland et al (2003) have noted, the end-foci of these iterative steps are on resource allocation, the creation of competitive advantage, and the growth of firm and shareholder wealth. However, I suggest that an unintended consequence of such an approach to strategy creation is the appearance of a gap between the abstracted way in which a firm’s strategy is formulated and the reality of the firm’s cultural, operational and competitive environments (the context). A further consequence, I suggest, is that a gap is opened up between the firm’s 1
strategy (or strategic intent) and the orientation to strategy of the firm’s Top Management Team (TMT). This gap may constrain the execution of a firm’s strategy. An image by Michel de Certau is useful in developing an appreciation of this gap. He makes a distinction between seeing the traffic from the top of a tall building and being involved in the hustle and bustle of the traffic: To be lifted to the summit of the world trade center is to be lifted out of the city’s grasp. One’s body is no longer clasped by the city’s streets that turn and return it according to anonymous law; nor is it possessed, whether as player or played, by the rumble of so many differences and by the nervousness of New York traffic. When one goes up there he leaves behind the mass that carries off and mixes up in itself any identity of authors or spectators. An Icarus flying above these waters, he can ignore the devices of Daedalus in mobile and endless labyrinths far below. His elevation transfigures him into a voyeur. It puts him at a distance. It transforms the bewitching world into by which one “was possessed” into a text that lies before one’s eyes. It allows one to read it, to be a solar eye, looking down like a god. The exaltation of a scopic and gnostic drive: the fiction of knowledge is related to this lust to be a viewpoint and nothing more. (De Certeau, 1998, p. 92) This image can be used to describe the relationship between the frameworks in which strategy is created and executed. Standing at the top of the world trade center lifts one “out of the city’s grasp” in such a way that one is “no longer clasped by the streets that turn
and return it,” losing a sense of direction in “the rumble of so many differences and by the nervousness of New York traffic.” Similarly, strategy creation (and strategic planning) that take place in abstraction from the contingencies of the day to day reality in which strategy is to be executed, is devoid of an appreciation of the “rumble” and “nervousness” of the competitive “traffic” in which strategy is executed. The Danish philosopher Søren Kierkegaard provides a theoretical framework through which to describe the differences between the view from the top and the view from the ground. He makes a distinction between what he calls objective and subjective truth. Thus, Kierkegaard notes
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"When the question about truth is asked objectively, truth is reflected upon objectively as an object to which the knower relates himself…. When the question about truth is asked subjectively, the individual’s relation is reflected upon subjectively. If only the how of this relation is in truth, the individual is in truth, even if he in this way were to relate himself to untruth.” (Kierkegaard, 1978,1980, p. 208) By way of expanding on the meaning I take from this quotation, Argyris and Schön (1974) said that objective truth is formed under ideal time conditions while subjective reality occurs under real time conditions. Mintzberg (2004) makes a useful addition by saying that in objective terms, we look at only the facts and the figures but not at the subjective experience in which people executing the strategy are involved. In objective terms, we follow a scientific or logical method but do not necessarily have an appreciation of the feel of the context in which the decisions will be executed. Thus the objective way in which strategy is formulated and the subjective way in which it is executed hints at a gap, at a gap between two different realities, and a gap that is perhaps incommensurable. Or is it that, once having named this gap in terms of a Kierkegaardian distinction between objective and subjective truth, we can move towards overcoming it? The idea is that once we can see something, we can work on it but if we cannot even see what the issue is, we cannot work on it. Figure 1 perhaps makes some visual sense of the gap we have suggested here:
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Strategy Creation (SC)
• Objective • Abstract
Orientation to Strategy
TMT
Strategy Execution (SE)
Once we can “see” the gap between SE and SC we can do something about it
• Subjective • Concrete
Figure 1: The Gap Between Strategy Creation (SC) and Strategy Execution (SE) Leaves Orientation to Strategy Uncertain Strategy and TMTs in SMEs have, of course, attracted interest in the literature. This includes a focus on the effectiveness of TMT members and their contribution to firm performance, growth, and strategy. The literature extends its interest to the areas of TMT dynamics, their role in governance, their leadership and functional performance, and their relationship (in family firms) with family owners. However, there is an absence of discussion on what, for TMT members, is the meaning of their “living” through the experience of strategy creation and execution in their firm, and what is the meaning for them of strategic decision-making and its impact on their capacity and interest to execute. This paper makes an important contribution to developing an understanding both of the meaning of this “lived experience” and what, in turn, that means for firm performance. It extends the way in which we might view an important though undisclosed dimension of strategic management by drawing on philosophy - a discipline which is not well known in management – to provide us with a framework for understanding what might create disruption to strategic orientation. The introduction of other disciplines into the study of entrepreneurship is not uncommon. For example, Ireland et al (2003) have described the emergence of strategic entrepreneurship which the authors argue is the integration of “theory and research from multiple disciplines but especially from entrepreneurship and strategic management”. The literature review later
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in this paper acknowledges other examples where cross-disciplinary interest is welcomed and the contribution that it makes. This paper prompts discussion about philosophy as a discipline which might capture the interests and attention of researchers and practitioners working in the domain/s of entrepreneurial and family-business management, and help them admit insights and analysis which complements those from disciplines which are already in place. Philosophy, in particular the philosophy of hermeneutic phenomenology, means that the subjective truth which is disclosed within the firm provides contextual reasons for different levels of TMT engagement with and orientation to the firm’s strategy. By looking closely at this subjective truth we can find the sources of disruption for TMTs and the obstacles to their strategic orientation. And it is in the texts and language of TMTs that we will find clues and cues about the nature and impact of those obstacles. We will also discover the extent of disruption to strategic orientation experienced by TMT members. (For the purposes of this paper, the texts and language of the TMT members have been situated in conversations with the author.) The objective-subjective gap causes disruption to TMT members’ strategic orientation and creates a concern for a firm’s stakeholders because of its potential to hinder, even stall, strategic execution. It follows that such an impact on firm strategy should be mitigated, the risk of execution failure should be managed appropriately, and the gap closed (or, at east, narrowed.) I suggest that a firm’s stakeholders (CEO, Board, owners) can open up the possibility of discovering through conversation its TMTs’ strategic orientation. It is in the text and language and meaning of these conversations that TMT members will disclose those gaps in strategic orientation which make the most sense to them at an individual level, at least. Disclosure by TMTs needs to take place in a way that best informs strategy creation. This means that the potential for disruption to strategic orientation is known in advance of the strategy being created – or finalized. That means that, ideally, disruption is minimized, if not removed, and that the created strategy will have a better chance of full implementation. The TMT’s “lived experience” of three key elements (strategy creation, strategic decisionmaking, and strategic orientation) provides the source for the disclosure of disruption to, and the gap in, their strategic orientation. By achieving disclosure early, the relationship between a TMT and those three key elements (see Figure 2) will become clear, and the size of the gap 5
between objective truth and subjective reality in the firm’s strategic context will be seen. Following Kierkegaard, once it is seen, it is then something that can be dealt with. Our understanding of the “lived experience” of the SE-SC gap can be unlocked by looking at the text and language and meaning of TMT members through the lens of hermeneutic phenomenology. The interpretation of these will allow stakeholders to recognize the possibilities to create the space necessary for making any desirable adjustments. I propose that those adjustments, if made, will enhance TMTs’ orientation to strategy.
Strategic Decision Making
Hermeneutic Phenomenology and the "lived experience" of strategy Creation of Strategy
Strategic Orientation
Figure 2: Using Hermeneutic Phenomenology to Understand the Relationship between Strategy Creation, Strategic
Decision-Making, and Strategic
Orientation
CONCEPTUAL BACKGROUND Hermeneutic phenomenology is used to develop a framework from which practitioners and researchers might more clearly understand the influences on the strategic orientation of Top Management Teams (“TMT”) in family and entrepreneurial firms. Such a framework of understanding extends to the causes and implications of the “objective-subjective” gap. My
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analysis will lead to recommendations which practitioners will be invited to bring into their own practice. Hermeneutic Phenomenology I propose at this stage to introduce the central concepts captured by the phrase “hermeneutic phenomenology” in an accessible, lay description. This will be expanded later in the paper where hermeneutic phenomenology as a research methodology is given more in-depth consideration. Simply, hermeneutic phenomenology brings together two key elements: hermeneutics and phenomenology. Hermeneutics is the practice of interpretation and study of the meaning of spoken and written language. Phenomenology is the interpretation of the meaning given by a number of participants to their “lived experience” of a phenomenon or a concept. In short, hermeneutic phenomenology might be described as the interpretation of, and the study of meaning in, the language of participants of their shared “lived experience” of a phenomenon or a concept. The purpose of hermeneutic phenomenology as a research methodology is to derive a “universal” from the shared experience. As a research method, hermeneutic phenomenology enjoys broad currency in the social sciences and is especially prominent in the domains of nursing and education research. It is less common , though not unknown, in management literature. An important parameter for research behaviour by those of us using a hermeneutic phenomenological approach is disclosure of our own assumptions and predispositions. This means that as researchers we have an obligation to make clear to the reader what baggage we bring to the research in terms of our own history, bias, and contextual understanding of the phenomenon. The disclosure of my own hermeneutic dispositions is offered later in this paper. My central interest in this paper is situated in the strategic orientation of TMTs. My purpose in bringing hermeneutic phenomenology into this sub-domain of the management literature is threefold: firstly, to derive deeper understanding of the phenomenon of strategic orientation of TMTs;
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secondly, to open up for researchers the possibilities within hermeneutic phenomenology to explore phenomena in the fields of family and entrepreneurial business, and to expand disciplinary boundaries; thirdly, to provide practitioners with a useful framework for (i) reaching an understanding of a phenomenon - such understanding being perhaps beyond their current reach, and (ii) imagining a range of possibilities from which they might design and manage appropriate intervention strategies. I imagine that for practitioners, the emergent framework might be useful in the following ways: by introducing them to the phronesis (“practical wisdom”) discovered in conversations with TMT members, practitioners will enjoy the freedom to follow the theory-building principles established by Argyris and Schön (1974). Practitioners will be able to extend their espoused theories of strategy-creation to theories-ofpractice which will equip them for designing and implementing interventions for their clients (if consultants) or their firms (if stakeholders). According to Argyris and Schön (1974, p. 6) “theories-of-practice usually contain theories-of-intervention – that is, theories of action aimed at enhancing effectiveness; these may be differentiated according to the roles in which intervention is attempted – for example, consulting…” by providing them with sufficient additional data to help them achieve enhancements to practice which help narrow the gap between abstracted strategy creation and TMTs’ lived reality of practice by giving them the language and conversation tools to create meaning for TMTs and underpin their orientation to strategy. I do not seek to replace either quantitative or qualitative methodologies (such as ethnography) in entrepreneurship research or in the research of leadership in family and entrepreneurial firms. Rather, I seek to move hermeneutic phenomenology further into the space of legitimate management research methodology. I will situate hermeneutic phenomenology at the centre of research into a range of phenomena including the “lived experience” of strategic orientation. I suggest that the legitimacy of hermeneutic phenomenology will be affirmed through its co-existence with extant
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methodologies used in the entrepreneurship and family business domains. And, its legitimacy will be enhanced by the rich insight it brings to developing a more complete, intimate understanding to practitioners and to researchers of the phenomena being researched. Strategic orientation Miles and Snow (1978) established a typology of firms’ strategic orientation which has been described as unique (Aragón-Sánchez & Sánchez-Marín, 2005). The phrase (though not the typology) is also suitable for the purposes of this paper whose focus is on the behaviours of TMTs and their engagement with and execution of firm strategy. It is therefore in the context of TMTs that I propose a further definition of strategic orientation: strategic orientation is the Top Management Team’s disposition towards the integration of strategy creation, strategic planning, and strategy execution. In practice, this comes together in a cohesive, functional sense as strategic management which has been described as: the process through which organizations analyse and learn from their internal and external environments, establish strategic direction, create strategies that are intended to help achieve established goals, and execute those strategies, all in an effort to satisfy key organizational stakeholders (Harrison & St John, 2010, 2008, p. 4). Strategic management is a TMT’s key function and is critical to firm growth and performance (Carmeli, 2008; Daily, et al., 2002; Elenkov, et al., 2005; Ensley, et al., 2006; Ireland. & Hitt, 1999; Nicholls-Nixon, 2005; Rowe, 2001). I argue that the efficacy of its strategic management and the successful navigation of a firm’s created strategy is dependent on the strength of its TMT’s strategic orientation . I explore the “lived experience” of TMTs’ strategic orientation in family and entrepreneurial firms. By using hermeneutic phenomenology, I can hear the “voice” of TMT members speak about their discovery of meaning in, and possibilities for, strategic orientation in their business. In particular, their ”voice” describes their experience of the inter-relationship between strategic decision-making - a key element of strategic practice – and their strategic orientation.
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Gudmundson et al, (1999) found no difference between family and non-family firms in their approach to strategic orientation. This followed Daily and Thompson’s (1994) finding that the ownership structures of firms were not related to their strategic postures. However, Daily and Thompson (1994) found that there was a difference between family and non-family firms in relation to strategic decisions, and this might be explained by the influence of family (in family firms) and of the founder (in entrepreneurial firms). Family/founder influence on the “lived experience” of strategic orientation is discussed as a part of this paper. A TMT’s effective leverage of a firm’s strategic orientation derives from the firm’s strategic decisions. We provide two case studies to illustrate the impact of the strategic decisionmaking environment and the influence of the family/founder upon TMTs’ strategic orientation. Strategic decisions are critically important in family and entrepreneurial firms (EscribáEsteve, et al., 2009; Lyon, et al., 2000). The quality of TMTs’ strategic decision-making influences a firm’s engagement in strategic entrepreneurship – the combination of strategy and entrepreneurship which are critical elements working together to promote sustained wealth creation (Webb, et al., 2010). I suggest that a measure of that quality is the loudness of the TMT’s ““voice” “ in decision-making and strategy creation. I hear the TMTs’ “voice”s as they explore the possibilities and implications of strategic decisions about firm growth, budgets, capital investment, marketing, and succession. I also hear their description of the impact of this influence on TMTs’ engagement with, and their orientation to, strategy in the firm. I consider whether TMTs’ strategic orientation is potentially compromised by family or entrepreneurial influence on a firm’s strategic decision-making. LITERATURE REVIEW I briefly review the literature of five areas of theory and epistemology of TMTs in entrepreneurial and family-owned business: definitional issues of entrepreneurial and family-owned business top management teams and strategic decision making creating strategy in entrepreneurial and family-owned business extending the boundaries of entrepreneurship and family business research hermeneutic phenomenology.
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Entrepreneurial and Family-Owned Business – Definitional Issues Cerrato and Piva (2010) argue that ownership/management is not enough to define a firm unambiguously as a family business. The authors observe that One can point out that a precise definition of family business would require identification of threshold values, in terms of quota of ownership of the family or number of managers belonging to the family. The difficulty of assessing the family versus nonfamily nature of a business is widely acknowledged in the literature (Daily and Dollinger 1993). Klein et al. (2005) emphasize the drawbacks associated with artificially categorising firms as either family or nonfamily. Similarly, Chua et al. (2004) suggest the need to focus on the extent of family influence on a business, rather than just distinguishing family and nonfamily firms as discrete types of businesses. (Cerrato & Piva, 2010) Following the lead of Daily et al (2002) and Sharma and Chrisman (1999) I define entrepreneurial and family-owned businesses as those which, though different by virtue of ownership structure, involve an individual or group of individuals participating in independent entrepreneurship. For the purposes of this research, the definition is confined to small-to-medium enterprises (SMEs) whose shares are which are not publicly traded. Top Management Teams and Strategic Decision Making The nature and role of TMTs in entrepreneurial and family-owned business has been described by van Gils (2005) in a study of 110 Dutch small-to-medium enterprises. These firms shared many characteristics. They had successfully passed the start-up stage; the CEO is the main decision-taker, although sixty per cent of them established top-management teams to strengthen the strategic decision-making process; the TMTs are small (on average 1.32 members), but the executives strengthen the know-how of the company. Amongst the important selection criteria for new TMT members are knowledge/experience in strategic decision making and knowledge/experience of the business/industry. The study also illustrates the rather static composition of the SMEs’ TMT (Van Gils, 2005). Carmeli et al (2009) affirm the position established by Finkelstein and Hambrick (1996) and Hambrick and Mason (1984) the role played by TMTs in running organizations and creating 11
and sustaining a competitive position in their respective industries. Hambrick (1994) suggests TMTs differ from other small groups because their members have more significant, higherlevel, organizational responsibilities both as individual executives and as members of the executive team which is accountable for key decision-making processes. Strategic decisions aim to provide competitive advantage; they are usually complex in nature and seek to change the overall scope and direction of a firm (Johnson, et al., 2008). Making effective strategic decisions is of critical importance to both large and small firms, as strategic decisions significantly influence organizational performance (Brouthers, et al., 1998). It is important, however, to note the limitations on strategic decision-making in smaller firms which do not have the resources of larger firms (Liberman-Yaconi, et al., 2010). The complexity of strategic decision making of TMTs has been described as playing a major role in the organizational capacity to effectively manage opposing demands such as exploration and exploitation. (Carmeli & Halevi, 2009) Carmeli et al (2009) further note the daily routine of TMTs includes placing a focus on issues and resolving a range of strategy, structure, and work flow problems. Of particular importance are those strategic decisions which Carmeli et al (2009) point to the work Ireland and Miller (2004) and Nutt, (2004) in describing TMTs strategic decisions as “big bet” choices which involve a host of variables and hence are highly complex. Ireland and Miller (2004) have described the internal dynamics of TMTs and their relationship with strategic decision making which they note typically involves a team of individuals working together. Important factors related to strategic decision-making include the presence of divergent views and the way TMT members handle them (Nugent, 2002). Ireland and Miller (2004) also raise the possibility divergent views existing between TMT members and question how they handle such views and their assumptions about factors related to the making of decisions (Thompson, 2003). A further important element is the existence of dialectical inquiry and devil’s advocacy as two commonly recognized methods for formally structuring debate over different views, (Schweiger, et al., 1989) and these techniques can channel conflict in ways that avoid distrust and suspicion. I suggest that the strategic orientation of TMTs is significantly influenced by their capacity to participate in strategic decision making of the sort described above. The picture painted by
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Carmeli et al (2009), by Ireland and Miller (2004), and by Nutt (2004) is of an important, dynamic, and somewhat optimistic approach to strategic decision-making. I argue that the subjective reality of strategic decision making is potentially somewhat less attractive. This is because of the role and influence of the entrepreneurial owner/founder/founder’s family on the firm’s strategic decision making. I propose that this influence can exert a negative impact on the strategic orientation of TMTs. Of interest here is the work of Fauchart and Gruber (2011) on three pure types of founder identities which they demonstrate systematically shape key decisions in the creation of new firms, thereby “imprinting” the start-ups with the founders’ distinct self-concepts. That “imprint” can operate as a source of constraint if, as observed by Buyl et al (2011), CEO founders are probably not aware of the less obvious implications of their formal power on TMT functioning. This means that although such CEOs are generally highly committed to the organizations they established, their very position and status might refrain subordinate executives from freely sharing information and opinions. Whilst the literature has positioned the CEO/entrepreneur as the main decision-maker in small-to-medium businesses, Gartner et al (1994) argues that it is a shared effort in an environment marked by complexity, unpredictability and instability (Sadler-Smith, 2004). In such an environment, the CEO’s decision-making process seems to be characterized by intuitive decision making (Sadler-Smith, 2004), overconfidence and representativeness (Busenitz & Barney, 1997). One positive impact of a CEO’s ”imprint” is that whilst CEO dominance inside the organization, and especially within the TMT, is likely to be higher for family CEOs than for external appointees (Minichilli, et al., 2010), family CEOs undertake fewer short-sighted acquisitions and downsizing decisions, and commit to more long-term R&D and capital expenditures, and thus develop more distinctive capabilities that produce higher financial results (Le Breton-Miller & Miller, 2006). We discuss the implications of the founders’ “imprint” and decision making in the context of our consideration of TMT members’ “voice”.
Creating Strategy in Entrepreneurial and Family-owned Firms
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Strategic planning is thought to be one of the factors which contributes to the performance of small-to-medium enterprises (Kraus, et al., 2006). Creating strategy in entrepreneurial and family-owned firms is often an outcome of a planning process (Tapinos, et al., 2005). Storey (2010) defines strategy as the actions which are taken up by the small business owner once in business. Storey (2010) also argues that formal planning is a characteristic of both larger firms and of faster-growing firms, but claims that the evidence is ambivalent as “to whether planning is a factor which encourages growth or whether it is merely associated with a movement towards greater size and formality” (Storey, 2010, p. 149). The notion of strategy creation in smaller businesses has been taken up by Lee (1995) and by Wiesner and Millett (2012). Lee (1995) argued that whilst formal strategic planning, as advocated in the classical mode as a means of arriving at decisions, does not take place in smaller organizations, they have clear goals and have thought through their strategy for achieving them. Kotey (2005) discovered that only a minority of small- or medium-sized family businesses had a strategic or business plan and that family businesses were far less likely to have these than non-family businesses. Peters and Buhalis (2004) reported that family businesses often exhibit informal business practices and a lack of planning. Garcia et al. (2007) assert that the use of strategic planning in family firms is uncommon. The latter finding was also observed by Smith (2007). This might be explained by small family businesses having a tendency to concentrate on tactics rather than strategy (Allio, 2004), although the same author observed that the healthiest family firms committed to strategy development in a formal, systematic way. Ibrahim et al (2004) offer a different explanation of this phenomenon and suggest that the strategic decision-making process in family firms is different from non-family firms as a result of the dual identity of these firms and the alignment of both ownership and management. Wiesner and Millett found that a high number of small-to-medium businesses view strategic planning as important but that medium-size firms were significantly more likely than their smaller counterparts to engage in strategic/business planning, establish a business/operational plan, and ensure resulting plans are either all written or some are written (Wiesner & Millett, 2012).
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Astrachan suggests that whilst there is much strategy research occurring amongst larger companies, there is the open question as to the applicability of research results from large, primarily non-family businesses to family business, private business, and smaller business (Astrachan, 2010). This means that the possibilities for classic strategy creation and the achievement of TMT strategic orientation in the sort of business described by Astrachan may be significantly constrained. The objective truth of strategy appears from the literature to be something which is formal, deliberate, performance focused, and documented. The subjective truth of strategy creation, experienced in real-time conditions, is represented in Jack Welch’s memoir, Jack - Straight From the Gut (Welch & Byrne, 2001). Welch says “strategy is less a function of grandiose predictions than it is of being able to respond rapidly to real changes as they occur. That’s why strategy has to be dynamic and anticipatory” (ibid, p. 390). Later, Welch compares classic business strategy creation to classic military strategy. Welch refers to “a letter written by a Bendix planning manager to the editor of Fortune magazine. The letter reads: Through your excellent series on the current practice of strategic planning runs a common thread: the endless quest for a paint-by-numbers approach, which automatically gives answers. Yet that pursuit continually fails. Von Clausewitz summed up what it had all been about in his classic On War. Men could not reduce strategy to a formula. Detailed planning necessarily failed, due to the inevitable frictions encountered: chance events, imperfections in execution, and the independent will of the opposition. Instead, the human elements were paramount: leadership, morale, and the almost instinctive savvy of the best generals. The Prussian general staff, under the elder Von Moltke, perfected these concepts in practice. They did not expect a plan of operations to survive beyond the first contact with the enemy. They set only the broadest of objectives and emphasized seizing unforseen opportunities as they arose. . . Strategy was not a length action plan. It was the evolution of a central idea through continually changing circumstances. Business and war may differ in objectives and codes of conduct. But, both involve facing the independent will of other parties. Any cookbook approach is powerless to cope with independent will, or with the unfolding situations of the real world. 15
(Welch & Byrne, 2001, p. 448) As noted above, Welch’s military analogy and definition have emerged from the subjective truth of everyday reality. The result is a level of clarity and meaning which, it is argued, is more likely to underpin TMTs’ strategic orientation than any objective, abstracted definition. And, I suggest that SME owners/founders and TMTs will be drawn to the uncluttered simplicity of Welch’s definition. Equally simple – and also attractive to practitioners, entrepreneurial and family-business owners and TMT members – is Jim Collins’ notion that strategy sits inside the “Hedgehog Concept”. Collins showed that “the good-to-great companies…founded their strategies on deep understanding along three key dimensions…and they translated that understanding into a simple crystalline concept that guided all their efforts…” (Collins, 2001, p. 95). “More precisely, a Hedgehog Concept is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles: what you can be the best in the world at what drives your economic engine what you are deeply passionate about (Collins, 2001, p. 95). Collins’ more extended argument reveals a strong feel for strategy as action when he describes “a cumulative process – step by step, action by action, decision by decision, turn by turn of the flywheel” (Collins, 2001, p. 165). Welch’s definition is far more immediately explicit. Both Welch and Collins offer clear frameworks on which a TMT might create strategy and support become oriented to it. Each approach is embedded in instrumental rationality. But, I suggest, neither Collins’ nor Welch’s framework will prepare TMTs well enough for the everyday subjective reality which will disrupt even the most fluid strategy. This means that the instrumental rationality of strategy as action (Storey, 2010) (objective truth) stands opposite the existential and subjective dimensions of TMTs’ experience of strategic actions. Andy Grove, the one-time CEO of Intel, said that strategic actions were “underpinned by the belief that our way of thinking changes when the practices and habits in which we engaged are changed.” (Grove, 1996, p. 147) This expresses an important concept that notion that strategic action creates disruption and anxiety for managers who are challenged by strategy which demands a change of mindset (Segal, 2004). This also emerges in my conversations with TMTs.
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I propose that whilst there is some merit in underpinning the creation of strategy with formality and process (the instrumental rationality of objectivism) my TMT conversations and subsequent interpretation indicates their preference for simple and unambiguous strategy, which is fluid enough to allow the business to respond quickly to environmental changes. This suggests that TMTs’ orientation to strategy may be best suited to a hybrid drawn from the Collins and Welch models. Entrepreneurship and Family Business Research – Extending the Boundaries For Gartner (2007), theory development in entrepreneurship can admit many methods, but critical insights might be lost when researchers depend on certain ones (Gartner, 2010). Gartner thus opens up entrepreneurship research to the possibilities of different methodological approaches. I accept Sharma’s invitation (2010) to build boundaries across disciplines and to engage in scholarship at the “undeveloped interfaces which exist between disciplines”. This creates an opportunity to stretch the boundaries of family business and entrepreneurship research by reaching across to the methods of other domains: for example, in anthropology (Miner 2010; Rutherford, 2010), kinship and gender (Rutherford, 2010; Scheffler, 2010), and social capital (Sorenson et al, 2010). Gartner (2010) sees boundary-stretching as a response to “the limitations of the paradigmatic mode of thought” in entrepreneurship research. This is also questioned by Cope who proposes
hermeneutic
phenomenological
inquiry
as
a
methodological
basis
for
entrepreneurship research (Cope, 2005, 2011) The outcome, according to Cope, is that “interpretative phenomenological analysis (adds) empirical weight to predominant conceptual discussions” (Cope, 2011). Heck at al (2008) invite boundary stretching when calling for the use of alternative research methodologies (for example, case study research and ethnography,) the possibilities of which are opened up by Czarniawska (2007). Others who make “stretch” suggestions include Frank et al who suggest that objective hermeneutics assists in understanding behaviours and social structure, and Nilsson et al (2012) who point to Flybjerg’s (2001) framework for social science research which has a focus on phenomena that are particular, concrete, and holistic. Jones and Spicer (2009) present a recent example of boundary-stretching in an interesting contribution to the development of a critical theory of entrepreneurship as they rely on 17
philosophical and ethical positioning of their arguments about the different roles entrepreneurs play and the processes which engage them Hermeneutics, existentialism, and ontology, as branches of philosophy, all find a place inside stretched boundaries. This is because they all deal with the “human-ness” of “being”. Their extension to entrepreneurial and family-business seems logical since neither entrepreneurship nor family business is separated from those concepts. This is evident in the argument of Brundin and Melin (2012) who suggest an extension of the research into family business (and other SMEs) to include research on emotions which, in the family business context, provide the glue in human interactions. Philosophy can open up new possibilities of understanding the phenomena of entrepreneurial and family-owned business, the strength of the glue, and the phenomena which occur within those businesses – such as TMTs’ strategic orientation. Hermeneutic Phenomenology – An Extended Discussion This paper draws on the canon of hermeneutic phenomenology established by Heidegger (most particularly in Being and Time (1953, 2010) and refined in Gadamer’s Truth and Method (1989, 2004). Seymour (2006) offers a useful premise (accepted in this paper) for the use of hermeneutic phenomenology in entrepreneurial research: It is not uncommon for entrepreneurship researchers to avoid the mire of philosophy of science and to ‘skip’ straight to discussion of methodology or method…and that a dichotomy between objective and subjective meaning is manifestly inadequate for the study of (many)…problems of international entrepreneurship research. In response, hermeneutic phenomenology …is an underutilized, misunderstood, yet highly relevant research paradigm. Hermeneutic phenomenology provides a key to unlocking the experience of TMTs and “the fullness of living” (van Manen, 1990) the phenomena of strategic orientation and strategic decision-making. By giving “voice” to TMTs about their “fullness of living” these phenomena, hermeneutic phenomenology enables TMT members and researchers to interpret, take meaning from, and reach an understanding of the subjective reality of the world in which they live. This happens by allowing the TMTs’ “voice”s to provide, and the
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researcher, to interpret, take meaning from, and reach an understanding of the world in which they live. Hermeneutic phenomenology allows for an exploration of the “lived experience” of the place at which strategy creation, strategic orientation, and strategic decision-making intersect. Giving “voice” to the TMTs in my conversations with them prompted my awareness of what Heidegger (2010) described as “listening being constitutive for discourse”. And “discourse has a strong connection with understanding and intelligibility which becomes clear through an existential possibility which belongs to discourse itself, listening”. In other words, the conversations with them needed to be built on the principles of mutual exchange into which I brought a commitment to listen as well as ask. Without listening, the interpretation is likely to be flawed. The notion that the “lived experience” of entrepreneurship might create a basis for research is relatively new in western, non-European management and entrepreneurship literature. So, too, is the premise that hermeneutic phenomenology might have a place as an epistemological building block in management and entrepreneurial research. Interdisciplinary boundary-stretching opens the door to a range of possibilities: firstly, to admit the use of hermeneutic phenomenology to entrepreneurship and family business research; secondly, to allow those domains to join nursing, health, teaching, and educational administration where hermeneutic phenomenology is well accepted as a legitimate research methodology. Like the “lived experience” of entrepreneurship and family business, these are domains where understanding emerges though the researcher’s interpretation of the text and language of the participants. Further, a rich meaning of the phenomena being researched is created by reaching an understanding of the subjective reality of the everyday existence of those experiencing the phenomena. Morris et al (2012) have more recently established the claim of researchers to discovering the possibilities for understanding which can be found by approaching the phenomenon of entrepreneurship
as
a
“lived
experience”.
They
argue
that
experience
in
a
entrepreneurial/family firm context is temporal and that “business decisions are outgrowths of the highs and lows, negative and positive affect, and engagement levels woven into the fabric of temporal experiences” (Morris, et al., 2012, pp. 1079-1080). The philosophical
19
approach used by the authors here is situated in pragmatism – but the experiences they are researching as just as open to a hermeneutic phenomenological method. Further, hermeneutic phenomenology might help remove both the ambiguity and the mask of family business described by Irava and Moores (2010) in their discussion of the dimensions of famliness. Hermeneutic phenomenology sits outside the positivist traditions of family and entrepreneurial business theory. However, I do not suggest that it displaces extant epistemology. Rather, hermeneutic phenomenology sits alongside that epistemology and takes its place nicely within the theory-building possibilities described by Oxford quantum physicist, David Deutsch: …in reality, scientific theories are not ‘derived’ from anything... Experience is indeed essential to science, but its role is different from that supposed by empiricism. It is not the source from which theories are derived. Its main use is to choose between theories that have already been guessed. That is what ‘learning from experience’ is. (2011, p. 4) This means that hermeneutic phenomenology can co-exist with the positivist traditions whilst adding a further dimension of understanding. Reaching a hermeneutic phenomenological understanding of a problem or issue requires the adoption of method and rigor. There are at least three dimensions that are central to hermeneutic phenomenology. The first is that it is concerned with the relationship between the parts and the whole such that the parts can only be understood through the whole; yet it is only by working through the parts that the whole emerges. It is like a jig saw puzzle but one in which one is imagining the whole through the parts and only as one begins to connect the parts does the whole emerge
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Interpretation
Owner
Explanation
Pre-understanding Figure 3: The interplay between the main elements in hermeneutics (Ödman, 2007) . Figure 3 provides an image of the jigsaw puzzle and the interplay between all of the parts. Originally hermeneutics was practiced in terms of biblical interpretation in which the parts made sense through the whole, and the whole through the parts. However, Heidegger took hermeneutics out of a biblical context and applied it to everyday life which is concerned with the relationship between the parts and the whole of a lived experience. Central to hermeneutic methodology is the relationship between the parts and the whole: how do the parts of the narrative that emerges from a participant’s discourse bind together such that they form a whole? It is the rigour of binding the parts together to form a whole that underpins the hermeneutic methodology. It is this that is forms the basis of a hermeneutic account of explanation.
Figure 4: The hermeneutic circle (Ödman, 2007)
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This also means that hermeneutic phenomenological methodology is a circular process. For the researcher is continuously spiralling from the whole to the parts. Ödman (2007) draws on Radnitzky (1970) who suggested that this spiral is situated in a helix which suggestively catches interpretation and understanding as a process:
Figure 5: The hermeneutic helix (Ödman, 2007) The circularity (whether in a circle or in a helix) is circular in another, more crucial way. Whereas positivism operates in terms of a distinction between the subject and object such that the subject focuses on the object of research, in hermeneutic phenomenology, the researcher is always themselves part of the researched. As Moran paraphrasing Gadamer says: “Understanding understanding requires coming to self-understanding, shedding light on assumptions that otherwise work behind our backs.” (Moran, 2000, p. 252). The second dimension of hermeneutics is that we understand and interpret the world in terms of assumptions that operate from behind our back. Part of hermeneutic phenomenology is to make these assumptions explicit so that we can challenge and explore them. Moustakas calls this process of making our assumptions explicit, the epoche by (1994). Moustakas notes that “the challenge of the epoche is to be transparent to ourselves” (1994, p. 86) Horizons of the researcher are expanded not simply by collecting, analyzing, synthesizing and interpreting data out there in the world but by questioning one’s own research prejudgments or assumptions in the context of active participation in the unfamiliar cultural context.
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The more that we can explore our own assumptions, the greater becomes the scope of our horizon. Hermeneutics includes the exploring of our assumptions as an essential part of its methodology. Gadamer (2004) sees hermeneutics as essentially a conversational method. Whilst exploring the interpretations of the researcher’s subject matter, the researcher simultaneously explores and elaborates the preconceptions in terms of which they are doing research. Instead of suspending preconceptions, as is the case in positivist research, the topic of research becomes more clearly refined and defined as the investigation of the research subject takes place. The third point to note is a response to the question: how does one break into the hermeneutic circle? It is through disruptions, or in the context of this paper where there are gaps in the circle that the researcher breaks into the circle. Thus the hermeneutic researcher is always looking for the gaps: where are the parts not fitting together to form a whole? It is by following the gaps that the researcher seeks to relate the parts to the whole. In this sense it is a paradoxical method: for many methods are trying to iron out the gaps whereas hermeneutics is always looking for the gaps, like a detective looking for clues; for where things are not quite right. RESEARCH METHOD Two TMTs were chosen for this study. One TMT (6 Members) works in a family-owned manufacturing firm. The other (4 Members) works in an entrepreneur-owned professional services consulting firm. Each firm is of similar size in terms of staff head-count and revenue. Profitability is far greater in the consulting firm. This is a function of the sectors in which they operate, and this is a reflection that the consulting firm has been able to position itself at the “premium” end of its market where high margins can be achieved. In the manufacturing firm, each TMT member was interviewed. In the case of the professional services consulting firm, only 3 members of the TMT were interviewed – the fourth being overseas on vacation at the time the interviews were scheduled. The Questions can be found in the right-hand column of Figure 6..
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There were 16 questions asked. All participants received a copy of the questions 3 business days prior to their interview. Preceding the Questions which were sent to participants was the following quotation which appears elsewhere in this paper at page 9: (Strategic Management is) the process through which organizations analyse and learn from their internal and external environments, establish strategic direction, create strategies that are intended to help achieve established goals, and execute those strategies, all in an effort to satisfy key organizational stakeholders” (Harrison & St John, 2010, 2008, p. 4). The questions asked of Owners/majority shareholders differed from those asked of TMT members in one minor respect. Four questions were changed syntactically. This was to allow for the fact that Owners/majority shareholders were asked to reflect on and self asesthat their own behaviour at questions 3, 11, 12, and 13. The interviews were conducted as conversations with each participant. The questions provided general guidance and structure. Whilst each question was asked of each participant, room was made for interviewer and participants to go beyond the questions in order to pick up on nuances. The average duration of the interviews was 45-minutes. This meant that there was just over 6.5 hours of conversation. The interviews were recorded and 120 pages of transcript were produced. NVivo 9 initially was used as an aid to coding the data and in preparing it for analysis. Each question formed one of 16 categories or sub-categories. As I became more familiar with the data, I further separated the categories into eight emergent themes. These themes and their relationship to the questions are detailed in Figure 6: Figure 6: Emergent Themes and their Relationship to the Interview Questions Theme Theme #
Description
Questions Question Questions Clustered
#
by Theme 1
Making sense from theory
1
1
In what ways does this theoretical description (Harrison and St John) of
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Theme Theme #
Questions Question Questions
Description
Clustered
#
by Theme strategic management “speak “ to you? 2
The practice
2
2
How would you describe strategic management as it is practiced in this firm?
of strategic management 3
Owner
and
3, 4
3
What is the picture that emerges for you
TMT attitudes
about the attitude and behavior of the
to
founder/Owner of the business to strategic
strategic
management? (Owners were asked to self-
management
reflect.) 4
What observations would you make about the attitude and behavior of the TMT to strategic management? How do you feel about that?
4
Theory
and
5
5
If there is a gap between the theoretical
practice
description of strategic management and
divide
its practice in this business, can you describe the main factors which have created that gap?
5
The meaning
10
of strategy creation the firm
6, 7, 8, 9,
in
6
The process of strategy development most often draws on a theoretical framework informed by the reality of the business’s current (and future) context. This usually occurs within some sort of strategic planning process which often involves a planning workshop or retreat. a. Can you say why this outline fits (or does not fit) your understanding of the steps taken in this business to develop strategy?
25
Theme Theme #
Description
Questions Question Questions Clustered
#
by Theme b. Can you describe the most recent strategic planning event in this business? c. How did you feel about that process? Can you now describe in what ways the process of strategic planning and the emergence of strategy creates meaning for you as (i) an executive and (ii) as a person in the business? 7
How do you “feel” about the emergence of strategy? Can you build on your answer?
8
You have painted a picture of the steps to develop the business’s strategy. Can you describe how engaged you are with the process?
9
In what ways do you sense – or feel – that you are aligned with the business’s strategy? What is it that permits you to have (or not have) that sense of alignment?
10
In what ways do you sense – or feel – that the top management team is aligned with the business’s strategy? What is it that permits you to have (or not have) that sense of the TMTs alignment?
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Theme Theme #
Questions Question Questions
Description
Clustered
#
by Theme 6
The Owner’s
11,12,13
11
founder/Owner/family shareholder/s in
role and influence
What is the role of the
setting the strategic direction of the
on
strategy
business – including the allocation of
creation
resources? (Owners were asked to selfassess.) 12
Can you describe the influence the founder/Owner/family shareholder/s has on setting the strategic direction of the business – including the allocation of resources?
13
What do you feel is the impact of the Owner’s strategic influence (including the allocation of resources)on the TMTs a. alignment with strategy, b. performance and effectiveness, c. morale and behavior? (Owners were asked to self-assess)
7
TMT
14, 15
14
““voice””
How much of a ““voice”” do you feel the TMT has in the process of setting the strategic direction of the business?
15
How much of a ““voice”” do you feel you have in the process of setting the strategic direction for the business?
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Theme Theme #
Description
Questions Question Questions Clustered
#
by Theme 8
Succession
16
16
Do management and Ownership
and
succession currently have a place in the
Strategic
business’s strategy? What does the
Orientation
business’s strategic approach to succession mean to your sense of alignment with the business’s strategy?
The research findings are introduced by two short profiles of the businesses in which the research was conducted. My intention was to present my findings and analysis in two sequentially linked case studies. However, it became clear as I moved in and out of the data and was exposed to the fluidity of the hermeneutic helix (Ödman, 2007) that the themes were unifying factors for both businesses. This meant that a separation of the analysis and discussion by business would lead to unnecessary duplication and to confusion. I had supposed that the separation of the data by business would allow me to look over my research horizon to see where patterns might be emerging and where differences might be occurring in businesses representing different sectors. The deeper became my relationship with the data, the more my understanding developed that the “lived experience” of strategic orientation was fundamentally similar in each business even if the shape of the jigsaw part was different. This gave me a sense of the parts of the parts, from which I could form a view of the whole of the parts. The “voices” of the participants are heard, key words and phrases are drawn from the data, and I make my own observations of the meaning of the words and language we are hearing. In all of this, it is important that I retained a distance from the data (Lowes & Prowse, 2001). I could do that by remaining clear about the hermeneutic dispositions (my preunderstandings) which I brought to the research. This meant that I could isolate those predispositions from the data and yet question them when I was synthesising my arguments.
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This means that, in relationship with the conversations I am having, I will be looking to create a whole from the parts so that I can answer the key purpose of our paper: how can we understand the strategic orientation of TMTs? HERMENEUTIC DISPOSITIONS OF THE RESEARCHER As author of this paper, I bring my own background, history, and dispositions to this research. I have been a consultant in private practice for fifteen years. A significant part of my work involves family business succession. Equally significant is the work I facilitate with client firms on their strategy creation – to which I bring significant knowledge, expertise and experience. I have facilitated strategy creation with over 300 client firms (85% of which are private family- entrepreneurially –owned). My strategy practice has a strong theoretical foundation (drawing on the work Drucker, Porter, Prahalad, Hammer and Champy, Kaplan and Norton, and Reichheld). It is informed by my own phronesis gathered from client interaction and my own in-field exposure (as a client in my corporate life) to strategy creation by the world’s leading strategy consultancies (e.g., Bain and Co, McKinsey, Boston Consulting Group, Booz Allen and Hamilton). This significant exposure to theory and practice has provided me with a set of understandings and beliefs about: the theory which informs strategy the importance of strategy and planning the way in which strategy can be created the possibilities for strategy creation in a variety of settings the value and importance of strategy creation the importance of “cutting-the-cloth” of strategy creation to suit the size and sophistication of the family- or entrepreneurial business almost “universal” anticipatory understandings of the challenges, obstacles, prejudices, and hurdles which are likely to be met whilst creating strategy. I have a consulting/client relationship with each of the firms whose Owners and TMTs participated in the interviews.
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As the director of another company (not my own) I am also a current client of the professional services consulting firm. Each of these relationships contains their own bundle of dispositions – which potentially could influence my interpretation of the data and taint my narrative unless the necessary checks and balances are in place. So, the understandings and beliefs about strategy, and the relationship I have with the participant firms, together form the dispositions which I bring to this research must be kept at a distance – well outside the hermeneutic circle – so that I am free of influence when I am undertaking my data analysis, embarking on interpretation, deriving meaning, and writing my narrative. It has been important to (i) undertake a reflective audit (epoche) of my dispositions to ensure that they did not influence the direction or substance of the interviews (Moustakas, 1994) or my analysis, and (ii) have Dr Steven Segal – my doctoral supervisor – check the transcribed interviews for accuracy and ensure that by his acting as an “expert on the experience or the method, to check analytic steps, such as the reduction of categories to themes…(and) to identify and reduce investigator bias” (Cohen, et al., 2000, pp. 90-91) then I am “opening up inquiry”. This is an important step. As Cohen et al have observed, “Opening up inquiry in the hermeneutic phenomenological approach refers to efforts that are made to conform to an understanding of science as a systematic and human activity” (2000, p. 90) INTERPRETATIVE ANALYSIS AND FINDINGS Business 1 – Manufacturing Business The firm is a manufacturer and distributor of premium products to dentists. It is one of the few remaining Australian-owned product manufacturing businesses. It was founded 65 years ago by the father of the current Managing Director. The Managing Director has been employed in the business for over 40 years. He is nearing retirement. Whilst he is tertiary-educated in his own discipline of engineering, he does not have any formal business discipline (e.g., an MBA). Two sons, representing the third generation of the family, work in the firm and are being groomed for senior management roles.
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The members of the Top Management Team are non-family members and are led by a General Manager. The TMT is a stable group with long tenure. There are currently six members of the TMT – including the Managing Director. The business employs over 30 people. Its culture is marked by a sense of “famliness” – which makes it a pleasant place to work. This is reflected in the average staff tenure of nearly eight years. The General Manager has been in their role for three years – having been in the business for a total of eight years. He enjoys a very high level of trust from his peers, the 3rd generation family members in the business, and the Managing Director. The General Manager has been innovative in the introduction of a range of policies, technologies, and process improvements. A recent round of strategy creation through a fiveday strategic planning retreat was initiated by the General Manager who is searching for ways in which the business can compete in, survive, and prosper in a fluid and complex competitive environment. The General Manager is currently completing an MBA. The business is currently under some stress. Its traditional market is now being eroded with multi-national competitors meeting the market with predatory pricing. In addition, the business has traditionally won government and private tenders. However, decision-making in the tender government and private tender market has slowed, and the business’s pricing strategy is under threat because the strength of the Australian dollar is brining another layer of complexity to the marketplace. Business 2 – Professional Services Consulting Firm The firm is one of Australia’s leading public relations and corporate communications agencies. The firm was founded over 12 years ago – and the founder is still the CEO. There are currently 4 members of the TMT – including the CEO/founder. The CEO/founder has TMT-level experience running complex business units for multinational public relations firms. She enjoys a broad and deep reputation for the quality of her work and that of her team. She is generous and well-known for support of and contribution to her profession.
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The CEO/founder also enjoys an excellent reputation for her skills as a negotiator and as a business person. Whilst she is tertiary-educated in her own discipline of communications and public relations, she does not have any formal business discipline (e.g., an MBA). The firm’s client list is populated by blue-chip corporations, and is the envy of many in the PR profession. Five years ago, the founder moved to secure her three key staff by providing them with a tranche of equity. One of the three has since left the firm. Their place as a shareholder is likely to be taken by an Associate Director who was one of the TMT members interviewed for this research. The firm employs just over 20 people – has grown every year since it started, with a noticeable uplift in revenue and in profit since CEO/founder divested of some of her equity in favour of her key people. The firm’s continued growth was undisturbed by the global financial crisis. This firm has a professional, balanced and happy culture whose employees describe as creating a very nice place to be. Emergent Themes and Interpretative Analysis The verbatims in this section are unattributed because attribution brings little value or insight to this analysis. An exception is made where attributions are made of the Owners’ comments. Theme 1: Making sense from theory Harrison and St John’s definition of strategic management was put to each participant because so as to test the sense of meaning each took from it – an introduction to hermeneutic discovery. The definition “speaks” to the participants in a way that shows a connectedness to their subjective truth. That support comes from a number of different perspectives. The conversations revealed engagement with the definition which was described as “wordy”; “a reasonable statement”; “very common sense”; “academic”; “really comprehensive”, “an accurate expression”. The definition was positioned as theory – a fact which drew approval: “it speaks volumes to have theory behind it”. But the use of theory also prompted a caution (“sometimes theory is difficult to bring to businesses because other people don’t understand the basis behind that”)
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as did the use of language which might be ”one of those catch-all sort of terms that gets so used so often [that] you know, [tend to lose its] sort of meaning”. This indicates that TMT members will pay their respects to theory – but the subjective truth of these businesses suggests that if theory is to be admitted into the TMTs’ circle, then it should perhaps find that space alongside the phronesis of the TMT. This is prompted by the observation that “you’ve got to learn from the environment in which we work”. The prospect of introducing the objective truth of strategy management to those in the business can prompt the sort of anxiety and disruption that emerges in Owner 1 who observes that “…the business has just grown at a very slow, steady pace for some number of years and there hasn't been a lot of academics, …, in the business to analyse these bits and pieces or the direction in which we're going”. Here, Owner 1 is implicitly defending the disciplines inside his business and is questioning the need for “academics and analysis” when phronesis has served it so well for 65 years. ( Owner 2 draws a dynamic picture of her own theory-in-practice: “a living and breathing document and thought process … adapting the strategy if you need to….(and) be able to adapt to different business and economic realities if you need to. How did the Owners acquire the knowledge to form and express their own strategic management theory-in-practice? Phronesis is a hidden contributor to Owner 2’s theory-inpractice. If it was not there at all, then, what is it that has brought Owner 2 to such a clear understanding of what are the elements of strategic management? Each Owner acknowledges important influences in the formation of their theory-in-practice. For Owner 1, it was the presence of his father (and mother) who worked for over 50 years in the business. Owner 1’s theory-in-practice was influenced by his father, who did not spend “an awful lot of time sitting down working out key performance indicators” instead passing on the practical wisdom of a business whose foundations were quality manufacturing and high-value service. Owner 2’s theory-in-practice has been informed by her experience and by “significant mentors”. She noted that experience before her own business influences her theory-inpractice a “huge amount. … including 12 years at a multinational, [where} I had two incredible mentors…. my own experiences on the job and the learnings from my mentors are
33
what mostly drives my strategic thinking. And then overlaid with that, something I read in BRW or the Harvard Business Review or the Booz & Company Strategy in Business”. By creating space to reflect, Owner 2 sometimes “hears” her mentors and allows herself to “receive” their counsel. “It’s when I really get to crunch time…a crunch decision. His “voice” - his American-Chicago accent will be there to guide me”. Participants fashioned their own meaning of strategic management and strategic orientation by reflecting on Harrison and St John’s definition. The language of management emerges with participants emphasizing the process of strategic management: “a very essential process”, “a process of setting and achieving goals”; “a process of joining up the dots and … seeing patterns”; “a planning process”; “a process to uncover accountabilities and measurements such as kpi’s”. Their language also revealed an interest in goals and direction. I heard that strategy creation with/for the TMT might“come up with better goals or to refine what has already been established”, help understand more clearly “where we come from, [and] … where we’re going to” and clarify “our purpose”. Theme 2: The experience of strategic management in practice The approach taken by each business to strategic management differs markedly. These differences speak loudly and directly to the TMTs’ “lived experience” of strategic management. Strategic management creates anxiety for Business 1’s TMT. The language of anxiety speaks of “rudderless ships”, “powerlessness”, and “barriers” that “no matter how many times you push, push, push, the same result keeps coming back”. The business once had a three-year operating plan, which was abandoned, stunted, shortly after starting. The TMT observed that “it wasn’t really a strategy to manage; it was just day-by-day”. Owner 1 remains scarred from an earlier exercise which “rather unpleasant … a little bit too fast, too high-powered … It wasn't achievable and just wasn't going to work”. Therefore, it was not surprising to hear that “probably the strategic management just happened by itself”. The TMT criticises the business for a “lack of leadership”, “ad hoc strategic plans”, “many gaps to be filled” and involving “bits and pieces of data and advice”.
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The practical wisdom (phronesis) of the Owner means that strategic management in the early days of the business happened “almost intuitively” with no KPIs (“Didn't know what it was in those days. No, we were more interested in doing”). Business 2 presents a relatively unsophisticated strategic management framework. The CEO/founder’s approach is informal and instinctive: “it was all in my head and my gut feel”. Business 2’s TMT describes strategic management in their business as “opportunistic” whose approach is “less structured and more fluid” and which enables the firm to be “nimble and responsive”. Its informality is acknowledged by the CEO/founder who notes: “It’s very much needs driven. I have the big strategic plan in my head”. The CEO/founder’s centrality to strategic management is seen by the TMT as key to leading “an ongoing process that involves her setting the framework [where] her views count for quite a lot, but the TMT also contributes to the process”. The CEO/founder has not shifted far from her early approach when “I didn’t invite a lot of input to it, because at that stage I was the sole Owner of the company. Owner centrality does not obscure the TMT’s view of “obvious strategy,and very clear direction”. Business 2’s informal approach becomes more formal when the CEO/founder presents her strategy, results, and direction, at an annual staff conference. She describes this as “the only discipline which forced me to sit down and write a business plan”. There are two risks to the business, here: firstly, having the “big strategic plan” in the Owner’s head, and secondly, the longer-term risk that a lack of significant input by the key people could result in their becoming disenfranchised, disengaged, and strategically inert. Business 2’s TMT is confident in the CEO, in the firm’s future, and in their own direction . I heard them say that that the CEO/founder is “rarely wrong in strategic decisions because she makes decisions based on her instincts, her experience, and her feeling of what’s required”, TMT members are “quite happy to defer to her”. Theme 3: Owner and TMT attitudes to strategic management Owners and TMTs bring individual and collective attitudes to strategic management which influence the objective-subjective gap in strategic orientation. Each Owner was asked to self-
35
assess their attitude, and all participants in this research were asked to assess the TMTs’ attitude. This attitude is their “strategic demeanour”. Owner 1 was anxious about the meaning for him of a more disciplined approach to strategic management. This was expressed in his view that “we have to be very, very careful that we're not over-managing”. Over-management is not a managerial substitute for poor communication even if he agrees that “there has to be a certain amount [of communication] and I know that I'm a very bad communicator, but it's not going to change now”. Owner 1 admits to visible signs of discomfort: “I suppose I wear it on my sleeve,… But they've got to understand that I'm on the way out, not on the way in … they should have a bit of compassion for me … [I’m saying] hey, be careful you're not going too far…. we can't afford to spend too much time, too many people, getting involved in something that is really quite simple”. The simplicity he describes indicates that he is relying on his phronesis which says that, historically, the business has coped without managerial complexity and strategy. TMT 1 sees Owner 1 having “a very soft nature” without “an emphasis on strategy [and] happy just to tinker in what he loves. He's an engineer”. Owner 1 explains he is “on the way out [to retirement]” and has asked for “compassion”. His strategic demeanour has been described as ambivalent – he’ll “see how it goes but is still not sold on the idea”. This creates a mixed image for the TMT who see that he “loves the business but he doesn't have the interest in how to get [it] to another level” and, “he’s not really proactive”. Compassion comes to Owner 1 from his TMT who saw that his commitment to the business changed with “the death of his mother after which there was a sudden change in [him], on the downward spiral, because [his] general attitude was I really don’t care about this anymore; I just want to move on”. Empathy also emerges when the TMT observes that “[he’s] at the stage of his life where he just wants to slide into semi-retirement but still have a finger in the mix”. Owner 1’s strategic demeanour had clearly shifted. It was informed by his phronesis and influenced by his stage of life and the loss of the two founders. Together, these brought disruption to the TMT and a constraint on its effectiveness. The language of disruption and
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constraint is apparent: “de-motivating”, “no challenge”, and “frustrated”. Images emerged of “brick walls [which] keep on coming”, a history of resistance to change (“it hasn’t changed for 20 years”), and a lack of will on the part of the Owner and his family (“they won’t stick with this because it takes them to accountability they don’t want”). An important consequence is the creation of “uncertainties”. These can escalate because “when things get tough people look to the Owner and touch him to feel the temperature of what’s happening. If he doesn’t display the right temperature, there’s a little bit of panicky feeling in the business”. Unchecked, uncertainty and panic amongst the TMT undermines strategic orientation, impedes implementation, and constrains firm performance. This is evident in the firm’s performance over the past two or three years. The consequences of this disturbance for the TMT 1 is that failure to “implement some strategies and some clear thinking and direction, means probably [the business] will just go along and one day go away”. The sort of issues and gaps arising from the strategic demeanour of Owner 1, are almost nonexistent in Business 2. Owner 2’s self-assessed strategic demeanour reflects a self-effacing confidence in her approach and in her capacity to achieve her strategic goals:
“I don’t know that I’m
particularly good at it … I don’t have a highly disciplined approach to it [but] … I guess I’ve just been incredibly lucky. But I don’t think it can all be luck. There’s got to be a lot of good management there, and I think also that I am naturally entrepreneurial”. Her strategic demeanour is accompanied by self-awareness: “I’m usually pretty sure of what I want, and I’m really getting their input to reaffirm that I’m on the right path”. Owner 2’s self-assessment is synchronous with her TMT 2’s view: “entrepreneurial and opportunistic…taking a real risk to grasp an opportunity… and willing to make a strategic decision”. The TMT sees her leadership as strong, determined and inclusive and complementing her strategic demeanour. This allows her to “take our opinions on board. She has the final say…but she is open to our opinions, preferences, and what we think”. She listens. She uses a thermometer to test the temperature of the TMT. Members like the fact that “she is genuinely 37
consultative, but also decisive”. The TMT enjoys its engagement with her approach: “I’m quite comfortable with her, actually”. The strategic demeanour of each TMT is also key to their strategic orientation. Of his own TMT, Owner 1 observed that its strategic demeanour now reveals “a much better idea now of how all the pieces fit together”. An outcome of its recent exercise into strategy creation has been the emergence of a “new” language for TMT 1. They are now speaking about a sense of “enjoyment [balanced by] a sense of risk” to them as they become more accountable. They recognize their having set in train “a significant culture change [full of] complexities and challenges”. The mood of the TMT is positive and its members are “craving for some good changes and directions and strategies”, and are “enjoying the move forward” with “everyone keen to implement”. However, their optimism is offset by the feeling that the team’s operational “busyness” might mean that “sometimes they’re a bit reluctant to get on with any changes” and they are disturbed by the question of “whether the family is going to stick with the strategic plan at all”. The TMT see Owner 1’s strategic demeanour placing a brake on its execution and strategic orientation. However, the generally optimistic view of itself, and Owner 1’s positive view of the TMT’s strategic demeanour, opens up some hope for a positive shift to disciplined strategic management. The uncertainty and mixed views in Business 1 contrast with the overall experience of strategic demeanour in Business 2. Thus, Owner 2 described a TMT in which “we’re all pretty much aligned with our thinking”. She observes that the TMT comprises a mix of “emotive” and “logical and analytical” members “[which brings] a great balance because I think you need both - the heart and the mind in deciding strategy”. Agreement and alignment are never far apart for Owner 2: “I can’t think of a situation where someone would have gone out of the room thinking, I wasn’t heard, or I’m not happy with that decision”. TMT 2 said of itself “we’re all open to new thinking and new opportunities which [the Owner] explores for the company. Most of the time we’re all pretty much on the same page.”.
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This sense of strong TMT-Owner alignment is supported by the TMT’s great faith in the Owner who “is rarely wrong in those [strategic] decisions”. This expression of alignment and faith do much to prepare the way for enhancing the TMT’s strategic orientation in Business 2. Theme 4: Theory and practice divide The gap between the theory and practice of strategic management is linked to the centrality of the Owner and is best illustrated in Business 1 where its TMT members explained: “the gap is the Owner… the Owner and his two sons weren’t engaged, just do what they like pretty much, how they like”. This hides behind the firm’s history where it “worked for so long - it's like historical stuff. It's worked now for so long…why would it change?”. The discomfort which accompanies change is the disruptive source of the gap between theory and practice in Business 1. Its TMT believes that the Owner is disturbed by the introduction of new levels of accountability. The TMT is wary that the Owner’s “discomfort which comes from being dragged kicking and screaming into something that’s making us all accountable” may be the cause of disruption to their own strategic execution and a diminution in TMT strategic orientation. Owner 2 observes that the definition wasn’t “dynamic enough [and[ felt very static, but she would have just felt more comfortable if there was one phrase in there indicating adaptability and flexibility”. Theme 5: The meaning of strategy creation in the firm The experience of strategy creation in Business 1 prompted a sense of wonder for the Owner who “started to understand the people more… some of the guys have some more potential than I had seen previously”. Owner 2’s experience evokes a sense of achievement and excitement. She feels “really proud… developing your strategy and sharing it is an exciting thing to do, because it’s focusing your mind on the long-term aspects of your business, and we don’t do enough of that”.
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She takes a sense of balance and perspective from strategy creation by “looking at the big picture and at your place in the world” through a process that is “inclusive and outwardlooking”. Earlier it was noted that she wanted nimbleness in her firm’s strategy. However, “sometimes strategy is imposed upon us”which creates some discomfort for Owner 2. That discomfort comes from reacting to strategic shifts: “ when you’re driving the strategy, you’re calling the shots … when strategy is forced on you, you’re feeling anxious, uncertain, under the gun; [when you’re in control] you’re feeling confident, and positive, and excited, and proud - very different. For TMT 1, strategy creation is challenging for each individual because it delivers both disruption and satisfaction to them:“it’s been difficult; … a difficult process”. Conversely, meaning and satisfaction came from a sense of contribution: “How lucky am I? How many people get the opportunity to either build a company from scratch or rebuild a company that’s been around for a long, long time? How fortunate am I? I can look back - when I do look back, I can say hey shit, you’ve done well”. Individual meaning is drawn from a number of experiences. For example, one TMT member said: “What do I enjoy? The uncertainty - the uncertainty of where we’re going to get”. For another, it was the chance to be creative, to draw on his own phronesis and to learn: “Where do I find the creative - from my past. I’m bringing in what I did before. Each day, wherever you work or wherever you live, you learn something new, so that’s yours.”. The subjective reality of everyday life in the business prompts a sense of potential tension between the objective truth of their strategy and the competing operational interests within the business. After all, “The be all and end all of the business is to get the job done”. Individual engagement with strategy creation has a rich language marked by metaphors. Strategy creation is “a rebirth” and a process of “creating something [based on] … the truth”. An evocative description was offered: “it was like taking a block of granite and the strategy was always inside that granite so when I got the chisel to it, I didn’t create the strategy, it was there waiting for me to knock all the rough edges off and find it”. Strength of alignment to the strategy sits underneath the view that “I don't want this place to be in a weak position on my watch”.
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Some of the TMT’s caution arises from a sense that their strategy may be “too big” – risking failure. This is reflected in language which describes their plans as: “very ambitious”, “trying to bite too much off”, “and doing too much too quickly”, at the risk of losing “interest because we won’t achieve it”. If too much is attempted too quickly, then “You’ll destroy everything you’re working towards”. The TMT’s sense of caution comes from the owning-family’s commitment to it. The TMT doubts “their willingness actually to carry it out”. This is reinforced by the sense of the TMT that the family “don't want to be here”. Strategy creation in Business 2 follows a different path. For the Owner, “90 per cent of the strategy is driven and led by me, and the other 10 per cent would be shared.” Having an equity position in the business is an indicator of stronger alignment with strategy. One TMT member, who is about to be offered equity in their business, thought “it would probably make me feel a little stronger in my alignment or more forthright”. A colleague, already an equity shareholder, said that alignment with strategy was linked to having equity: “Yes, I think shareholding’s a big thing. You feel much more personally aligned”. Strategy creation is both a learning experience and a satisfying intellectual journey for TMT 2 who find a lot of the “patterns of leadership and strategic thinking, [and this] helps me learn how the business operates”. Strategy emerges in different ways. In Business 1, it has emerged from a recently held strategic planning retreat. In Business 2, strategy creation was described by a TMT member as “sometimes it’s a case of revelation. It’s fluid, evolving, adapting, it is quite pragmatic and kind of adaptive and a malleable sort of thing.” The question of alignment seems simple: “if you aren’t aligned you just feel that you aren’t engaged and you feel like a shag on a rock. But so as long I feel like it’s going in the general direction that I’m comfortable with, then I’m happy”. Theme 6: The Owner’s role and influence on strategy creation Owner 1 sees his role and influence revolving around the fact that “There’s lots of capital required…. the company has to stand on its own two feet. …I just want it to be a nice, happy little business that turns a bit of a profit”.
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The TMT’s assessment of his role and influence reflect a pragmatic position which respects the financial risk that he takes: “He is really influential if he wanted to be. He is the Owner, he carries the risks. He needs to be able to have enough capital or retain earnings to be able to allocate the financial resources into the business”. The TMT’s broader view of the Owner’s influence on strategy creation is somewhat mixed. Whilst I heard that “I know the money becomes available when it’s required”, this view was balanced by less optimistic outlooks: “I'm disappointed that they're not investing in the business”, or that “business cases for more money and more expenditure is a no go zone” The knock-on effect of the tight, if not disinterested budgetary control is a negative impact on the management team’s alignment and orientation to strategy: “I'm not enjoying it now”. Further, “Some of them have come to a point now where they know just not to ask. So their self-motivation has now stopped because they know it's going to go nowhere”. This also impacts on the performance or capability of the business: “We spend an enormous amount of our time and resources planning and then reporting on execution of ‘our’ strategy. We are judged and paid on our performance. But, we cannot make the decisions which really count and make a difference to this business. We are not the Owners. So, you do have to ask yourself, ‘Whose strategy is it anyway?’” This is a particularly significant comment. The decisions referred to are primarily financial one with a direct bearing on the creation and execution of strategy. It highlights the mood of a TMT when financial and other commitments which are made by the Owner are then not kept, and illustrates the impact on the capability and performance of the business. There is an underlying despair which is likely to surprise Owner 1. Once again, we see a contrast between Owner 1 and Owner 2 when the latter acknowledges her impact and the outcome: “Hundred per cent - 100 per cent influence, yeah…Look, my sense is that they’re very comfortable with it. I could be wrong, but I don’t think so”. This represents another example of Owner 2’s self confidence in her leadership and her capacity to shape strategy. Her TMT agrees that her role is “[Pivotal] central. Like, she’ll have a pretty strong opinion about where she thinks things should be allocated and she’ll canvass it with us.”
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Theme 7: TMT “voice” Of the opportunity for his TMT to have a “voice” during the strategy creation process, Owner 1 was clear: “I think everybody got a really fair chance”. His affirmation was then thrown off-balance by his next observation that “Again, a lot of this stuff's not my cup of tea, so there are other things I want to do” Whilst on the one hand this may seem curious, it reflects that fact that Owner 1 has a GM and a Management Team to ensure that “voice” is listened to appropriately. This is in contrast to the lack of any overall strong sense of alignment \which has emerged for TMT 1 as the other themes have been developed. Suddenly, we see the removal of barriers and the appearance of a sense of optimism and respect. So, I heard that “if you’re on the outside looking in, we’ve got a very big “voice”; I’ve got a very big “voice”. My “voice” is as loud as I want to put it”, and “I’ve got as much scope as I want”. This strong sense of “voice” in TMT 1 reflects the growing maturity of the management team and the way it conducts itself at its monthly management meetings. It is also an outcome of the recent strategy creation workshop which saw the key people of the business engaged in a five-day strategy creation retreat at which they all had a “voice”. The Owner 2’s self- assessment of the “voice” which she gave to her TMT is consistent with her confidence and self-belief, and with her self-awareness: “I pretty much know the direction I want to take the business strategically, but I do highly value their opinion, and I want to be sure that they are comfortable with things”. This is generally consistent with the way that TMT 2 sees and senses their relationship with the Owner. Thus, it is no surprise to hear members of her TMT say of their ”voice” I think we have a good “voice” actually. I think she does value our input …. So yes, I think we actually are an important sounding board for her and source of ideas and strategic input”. And, “Yes, … actually, on reflection I wouldn’t have a problem going back and saying yes, look, I’ve had a chance to think about it further… my opinion is valid; I don’t feel that it’s any more or less valuable This disclosure by the TMT displays a level of comfort that is consistent throughout – that the TMT feels comfortable with and aligned to the strategy, and that the strategic and operational
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environments in the business seem to reflect team confidence in their goals and a consistent level of harmony. Theme 8: Succession The question of succession as a part of the firm’s strategy received predictable responses. Owner 1who elsewhere has described himself as being on the “way out” is impatient for a transition into semi-retirement (where he will shift from the CEO’s role into a R&D function): “I think everybody understands that what I want to do is get on with my R and D department and go and play with the toys and give them something to sell. But that's my only frustration really” Owner 2 commenced her won succession process in 2007 by selling down portions of the equity in her firm to key people: “not only did I gift the five per cent equity, but I’m now selling some…what we’re doing is we’re starting to sell equity to the three senior people,”. For both Owners, the succession arrangements they have (or think they have) in place are well-known to themselves. But, the interest here is whether their plans should be a part of the firm strategy and, therefore, accessible and known to the TMT. TMT 1 thought that there should be some level of connection with the strategy: ”it needs to be connected but also disconnected …. It needs to sit above. We need to give the business and the management some direction as to what we're going to do and how we're going to do it from a family's perspective.”. The risk of not sharing the succession plan as a part of firm strategy is that “the business is being held back… we need a little bit of young blood and some more influence to lead the business”. Further, there is an air of expectancy and uncertainty: “If it's not clear, then your hands are going to be tied because you'll be wondering, or “that if you knew what was happening moving forward, that makes sense”. Finally, it was suggested that “This does have an impact on the TMT because I think nothing is forever - indefinite. We have to have Plan A, Plan B, sometimes Plan C as well….and if we had that, I would feel closer to the strategy”.
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There is an eagerness to know and an anxiety about what the succession might mean to the business, its strategy, and by implication, to the TMT. Those things when taken together will not enhance the TMT’s orientation to strategy . For the TMT in Business 2, the matter is all but settled – it is already underway with the equity sharing plan – and may be an implied part of the firm’s strategy but there is no formality about it from that point of view – and that matches the approach which I have discussed throughout this paper in relation to Business 2. That is, it is informal. It may not be totally clear in the minds of the TMT – “the long term succession is kind of linked, I guess, in a way with the holdings we have in that it’s kind of like the next step is to increase those [unclear] buy her out” - but it is there. And, the fact that it is linked to the performance of the business, and the beneficiaries are the members of the TMT, it will underpin, no doubt through a mix of altruism and self-interest) a stronger sense of alignment with strategy. DISCUSSION The literature suggests that small-to-medium enterprises do not engage all that readily with the sense of a formalised approach to strategy creation. Our paper commenced with the proposition that there was a gap between the objective truth of strategy creation and the subjective truth of strategy execution. We suggested that the existence of that gap was significant enough to disrupt the strategic orientation of TMT members. We defined strategic orientation as “management’s disposition towards the integration of strategy creation, strategic planning, and strategy execution”. We then examined the state of the entrepreneurial and family business literature in the following contexts: entrepreneurial and family-owned business – definitional issues top management teams and strategic decision making creating strategy in entrepreneurial and family-owned business extending the boundaries of entrepreneurship and family business research. We have written an extended discussion of hermeneutic phenomenology and its suitability as a methodological orientation for researchers in the domain of entrepreneurial and familyowned business. As a part of the methodological and scientific rigor attached to hermeneutic phenomenology, we disclosed our hermeneutic dispositions – or the baggage which might
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otherwise get in the way of our interpretive analysis of the phenomenon of strategic orientation. We believe that we have been faithful to good hermeneutic practice of “staying outside” the interviews. The data collected through seven interviews of TMT members within two firms has provided the foundations for looking at the jigsaw of the “lived experience” of the phenomenon. We identified a number of themes within which we have identified from the data analysis a number of issues key to understanding strategic orientation. These key issues are the parts, and the missing parts of the whole – which, when put together, create a whole understanding of our phenomenon. These parts provide strong clues and cues to practitioners in relation to creation of strategy in firms and to the ways in strategic orientation can be established, maintained, leveraged, and optimised. The parts which might then make up the whole of strategic orientation of TMTs include: 1. there is a gap between the objective truth of abstracted theory and strategy creation and the subjective reality of everyday experience in which strategy execution takes place 2. the gap is almost closed in Business 2 whose approach to strategy creation is informal, fluid and adaptive; yet, a significant gap exists in Business 1which, for the first time in a number of years is creating its strategy in the form of a strategic plan 3. a key difference between TMT 1 and TMT 2 is that the latter hold equity in their business – alignment and strategic orientation appears to be stronger in TMT 2 4. the strategic demeanour of the owner has an important and influential role – TMT 1 works with an owner ready for retirement; TMT 2 works with an owner who is more entrepreneurial and who is still in growth phase 5. strategic orientation is enhanced by strategy creation which derives greater meaning for its participants and where creativity and learning can take place 6. strategic orientation is enhanced when TMT members have a “voice” which is heard. CONTRIBUTION OF THIS RESEARCH TO PRACTICE AND TO RESEARCH I have attempted in this paper to develop an understanding of the strategic orientation of TMTs in family and entrepreneur-owned businesses. I have examined their strategic orientation through the lens of hermeneutic phenomenology. In doing so, I have also attempted to extend a bridge between theory and practice – between the objective truth of the 46
epistemology of TMTs and their strategic contribution to their firms, and the subjective reality of everyday life in their firms. This paper brings out the collective “voice” of TMT members, and makes a contribution to the literature by developing a clearer understanding of the strategic orientation of TMTs in family and entrepreneurial firms. In particular, this paper allows that “voice” to describe the effect of strategic decision-making on TMTs’ strategic orientation. This paper makes a contribution to practice by proposing a framework for managing the inter-relationship between TMTs’ strategic orientation and strategic decision-making. It does so by opening up the possibilities for TMTs to interpret their “lived experience”, make sense of their being in the TMT, and learn how to work effectively within the possibilities and constraints set by strategic decision-making in their firm. It provides a way in which TMTs and practitioners might, in hermeneutic terms extend the horizons of their strategic situation (Gadamer, 2004) so that they can “see” and then “close” the gap between the objective truth of abstracted strategy and the subjective truth of everyday reality in which their strategy is to be executed. This means that from the hermeneutic understandings and interpretations which appear in this paper, the following list of suggestions is offered to practitioners about the sorts of interventions and approaches they might take to close the gap between strategy creation and strategy execution. This will help them to minimize disruption to the strategic orientation of their TMTs: 1. Strategy in SMEs need not be formalized to match an abstracted theoretical model 2. Strategy creation might occur within a context of conversation which provides opportunity for creativity and learning 3. Strategy execution takes place in the context of the subjective reality of everyday experience – which means that participants should be prepared to experience a certain amount of fluidity 4. Strategy creation and strategic orientation are often accompanied by existential disturbance which occurs when changes of behaviour are called for as a part of strategic action – which means that organizational change principles, mediation, and socratic conversation might be introduced into the TMT in order to facilitate and manage sustainable change
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5. Undertaking interviews with TMT members, taping and transcribing them, using the questions which appear in Figure 6 will, if then examined through a hermeneutic lens, provide practitioners with a rich store of cues and clues with which they might be able to solve the jigsaw puzzle 6. Hear the “voices” in your interviews and draw on the phronesis (i.e., “practical knowledge”) which they disclose. This paper makes a contribution to research by accessing hermeneutic phenomenology – a methodology which has not been widely embraced by researchers because it sits outside the discipline’s boundaries. Two following papers will open up further the possibilities that a firm’s holistic strategy and Owner/founder control in family and entrepreneurial-owned businesses are discrete, though perhaps inter-related, phenomena. These are elements in the current study which prompt further attention as they add to the complexities and possibilities of TMTs’ strategic orientation. This paper adds further strength to the call for researchers to cross those boundaries. The answer to that call means that future research into family and entrepreneurial business can be “Leading from the Edge”, creatively extending its epistemological boundaries, admitting into the research “tent” collaborators and methodologies from other disciplines, and bringing richer insight to the domain’s theory and practice. REFERENCES: Allio, M. K. (2004). Family businesses: their virtues, vices, and strategic path. Strategy & Leadership, 32(4), 24-33. Aragón-Sánchez, A., & Sánchez-Marín, G. (2005). Strategic Orientation, Management Characteristics, and Performance: A Study of Spanish SMEs. Journal of Small Business Management, 43(3), 287-308. Argyris, C., & Schön, D. (1974). Theory in Practice: Increasing Personal Effectiveness. San Francisco: Jossey-Bass. Astrachan, J. H. (2010). Strategy in family business: Toward a multidimensional research agenda. Journal of Family Business Strategy, 1(1), 6-14. Brouthers, K. D., Andriessen, F., & Nicolaes, I. (1998). Driving blind: Strategic decisionmaking in small companies. Long Range Planning, 31(1), 130-138. Brundin, E., & Melin, L. (2012). Managerial practices in family-owned firms: Strategizing actors, their arenas, and their emotions. In S. Tengblad (Ed.), The Work of Managers Towards a Practice Theory oif Management. Oxford: Oxford University Press.
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