Algorithmic
Foundations for Business Strategy
by Mihnea Moldoveanu
OVERVIEW — This paper uses tools and models
from computational complexity theory and the algorithmics of hard problems that
are new to the strategy field in order to address how strategic process and
structure adapt to the complex strategic scenarios and predicaments. The
paper’s model of strategic problem-solving allows researchers and strategists
to distinguish between different levels and kinds of adaptations to complexity
of the problem solving scenario. It also allows them to explore and optimize
the fit between the canonical strategy problems a firm faces, its stock of
problem solving procedures, and its architectural and procedural adaptations to
complexity.
ABSTRACT
I introduce algorithmic and meta-algorithmic models
for the study of strategic problem solving, aimed at illuminating the processes
and procedures by which strategic managers and firms deal with complex
problems. These models allow us to explore the relationship between the
complexity of an environment, the sophistication of the problem-solving
processes and procedures used to optimally map problem statements into
strategic actions, and the organizational structures that are best suited to
implementing solutions. This approach allows us to distinguish among levels of
sophistication in the strategic management of complex predicaments,
specifically among rational, irrational, quasi-rational and super-rational
problem-solving processes and responses of strategic managers and
organizations. It highlights a set of dynamic search and adaptation
capabilities that can be studied via the algorithmic and computational
properties of the problems they are meant to solve and the efficiency and reliability
by which they search a solution space. It points to several new components of
competitive advantage that are linked to the complexity adaptation of a firm:
“offline problem solving” and “simulation advantage” emerge as key strategic
differentiators for firms facing complex problems.
Source | http://www.hbs.edu/faculty/Publication%20Files/17-036_82a869c8-7398-46f2-b372-acfe46cadeea.pdf
Regards!
Librarian
Rizvi
Institute of Management
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