Understanding business is crucial to improving it. How do we study organizations? Phin Upham discusses a seminal work in the field of Strategy
Defining and Developing Competence: A Strategic Process Paradigm by McGrath, MacMillan, and Venkataraman attempts to provide a more rigorous level of methodological testability and explication to the antecedents and nature of competence. To do this the authors decompose and analyze some antecedents to competence in 160 new initiatives in 40 organizations from 16 counties. Based on their reading of the literature, they test for comprehension of the problem/issues, deftness or how smoothly (without excess communication or wasted effort) the team works together and finally emerging competence or the teams’ ability to meet goals and expectations. The authors emphasize that they are attempting to do a study which will be a standard upon which other literature can build. They seem to believe that strategic work on competence has been lacking in the carefulness, explication, and simplicity which they work hard to achieve. They take special care to say that their study is reproducible and based on previous literature.
This essay raises the question: How should strategic research be approached? What methodologies should be used to study it? How much testability is necessary? And what methodological approach will result in the most long-term gains in understanding? McGrath, MacMillan and Venkataraman seem to believe that the best (or perhaps a very good) approach is one which is significantly more hypothesis driven and testable than most research in strategy at their time. In order to address this belief, they take the unit of analysis down to the project and develop measures and questionnaires to put to the team members. They also ask the respondents to measure the team I terms of “competence” or fulfilling objectives under financial and temporal constraints.
There are numerous potential problems with approaching strategic issues from this methodological perspective, and also some real advantages. On the plus side, such an approach leads to results that are disprovable, explicit, and usually relatively clear. The body of literature that would result from such projects could be mutually supportable, mutually reinforcing, and, potentially, could build on each other to reach some well established truths about the makeup, antecedents, and nature of sound strategic behavior. The approach the authors advocate seems to me to be very much like the approach currently favored in organizational behavior and, indeed, the authors seem to use the same scope, methodologies, and precautions that a good OB researcher would use.
On the other hand, I can foresee numerous disadvantages to such a methodology, especially such a methodology used as the dominant one in strategic research. Firstly, such a pursuit will tend to discover components, elements and antecedents to capabilities, strategic advantage, and such concepts. It will tend to atomize research and split it into highly specialized camps studying very specific phenomena closely, making very general theorizing difficult. But one of the most interesting and innovative areas of strategy is the general theoretical and conceptual frameworks for thinking about strategy that have arisen in such authors as Prahalad, Doz, Porter, Winter, and Hamel. Many of these insights could not be quantified or tested in any easily conceivable way. Despite the authors claim early in the article, testing such atomistic phenomena would tend to deemphasize the firm-level and industry level sort of approaches that can result in very interesting and fruitful insight.
Secondly, such an approach has, I would argue, a knowledge accumulation curve associated with it which is seductive and in some ways dangerous. By studying groups and the antecedents to competence, I argue that a high learning curve will be initially reached. Some core truths will emerge from this methodology that will excite researchers and make significant leaps in understanding. But as these truths are discovered a reduction of the rate of learning follows. Many concepts in strategy are not suitable to this sort of analysis since they are very complex, dynamic, and multidimensional (perhaps even resulting from different characteristics in different times and places).
Thirdly, strategy is a phenomenon that lives in a very rich and multi-faceted context. Firms compete against each and groups compete against each other. It is very hard to capture or measure such complexity. Perhaps the best way to approach such complexity is to look at results rather than processes.
Fourthly, there is an implicit assumption in the essay that this sort of analysis, applied here to groups, can be eventually broadened to generate insights in firm level analysis. I do not think this will be as easy or as fruitful as it appears. The very nature of competence is such that no individual member may be aware of the nature of the competence or where it resides. Thus, I believe such an approach, for all its promise, has a circumscribed area of fruitfulness.
In conclusion, this paper is good demonstration of what the authors believe is an important new methodology in strategy research. It advocates this methodology and attempts, through an empirical study of the antecedents of group level competence to demonstrate its value. I have discussed the advantages and promises of such an approach, which are many, and I have hypothesized about some potential disadvantages if the mainstream of the strategy field were to get caught up in this approach. Thus, while I think researchers should pursue this approach, and valuable results will be derived from it, I believe that mainstream strategic research would be benefited in maintaining it’s eclectic, sometimes undisciplined, and meandering ways.
Phin Upham has a PhD in Applied Economics from the Wharton School (University of Pennsylvania). Phin is a Term Member of the Council on Foreign Relations. He can be reached at firstname.lastname@example.org.