SOME BASIC CONCEPTS

B290 Simon Rodan

Antecedents to strategy

• Strategy requires action…• Action requires understanding…• Understanding requires– Simplification, – Prioritization

• Simplification and prioritization are aided by… – Context switching– Metaphor– Abstraction

Finance and Economics

• Time value of money• Markets

– Efficient Market Hypothesis– Financial Markets– Information asymmetry

• Self interest / ‘individualism’• Agency theory (motivation)• (Stable) Equilibria• Market failure (‘lemons’)• Performance measures• Human capital

Psychology

• Motivation– Extrinsic / intrinsic– Expectation– Procedural justice– Equity

• Biases– Estimation– Attribution– Salience

• Decision making– Logic of consequence or appropriateness– Evoked (action) schemas– The role of emotion

• Mental models– Representations of causality

• Creativity– Knowledge recombination

Sociology

• Institutions– Structure and processes

• Power of Social Networks– Important nodes and Holes– Information flow– ‘Patterns’

• Status– Middle status conformity

• Social capital• “Enacting” environments

– Testing– Shaping

Other ‘sources’

• Variation, Selection, Retention– Liability of contingency– Population ecology

• Interpretive frames– Cuban missile crisis– Levels of analysis / aggregation

• Commonly found relationships– Monotonic – U shaped – S shaped

• These concepts help– Categorize, organize, prioritize things

we encounter– Speed up the buildings of mental

models– Are high levels of abstraction– Aid understanding… – And enable action