Strategic responses to changes in the Umwelt
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Strategic responses to changes in the ›Umwelt‹
Organisations are sometimes faced with dramatic changes in external conditions, dynamically changing sales and procurement markets, unexpected process innovations, disruptions. These have an impact on the existence and security of the organisation. Thus, a very essential and comprehensible attempt of organisations results in meeting the structural linkage to externally given changes: Thus, everything that constitutes the relevant external diversity is internally included as far as possible into the organisation’s own structure and literally mapped there in the organisation chart. Accordingly, roles are redefined and these are filled with people who, professionally, but not least also in their outward appearance, their habitus and their life story – at first glance, so to speak – truly and visibly embody the competence that appears to be necessary and are able to radiate it through further characteristic features. Thus, modern organisations and their top management teams are increasingly exposed to a multidimensional – a multiple – heterogeneity, which increases the coordination task of a previously rather functional diversity. This adds yet another, particularly complex dimension to the task in so‐called »alpha teams«.
The superficial advantages of diversity are, of course, quickly obvious: diversity leads to a richer cognitive pool of ideas, experiences, knowledge and ways of experiencing that are linked to relevant environmental aspects of the organisation. The benefits are fundamentally in the richness and diversity of information that can be expected as a function of heterogeneous perspectives, to the extent that these can feed into the organisation’s business model or core processes:
»Functional backgrounds are the lens through which top management team members view, interpret, and make sense of the business environment. Therefore, greater functional diversity should prevent myopic thinking and enhance broader problem‐solving skills. Moreover, as functional diversity increases, we should expect the band of cognitive and mental maps of the top management teams to expand which can prompt more creative, innovative, and cutting‐edge solutions. In essence, we anticipate that top management teams‹ functional diversity will satisfy the need to consider top management and comprehensiveness in developing a strategic orientation.« (Menguc & Auh, 2005, p.6).
Dierke & Houben (2013, 44pp.), however, basically assume that members of top management teams – at least in their self‐perception – each see themselves as »general managers« who believe they can judge the content of the other departments at any time. However, they would usually refrain from expressing this openly within their dysfunctional routines in the context of implicit ›truces‹ in order not to endanger the fragile coherence within the top management team. (Dierke & Houben, 2013, p. 49). ›In doing so, they reduce the number of visible victims – at the expense of an invisible victim: the best solution.‹(ibid).
In addition, ›the members of the top team often see themselves primarily as representatives of their own area … Where divisional thinking dominates, joint responsibility cannot emerge – and even less so a practice in which the members of a top team hold each other accountable‹ for this. (Dierke & Houben, 2013, 48pp.). – In view of the increasingly multiple characteristic‐based compositions of top teams, their representatives no longer see themselves solely as representatives of their professionally defined area. They also derive part of their intra‐organisational justification from the representation of the relevant environment linkage for the organisation, which they are supposed to embody within the organisation.
»Furthermore, in addition to functional diversity, other diversities exist, such as race, gender, experience (tenure), and education. … From a practical standpoint, however, multiple diversities can interact and be combined. A particular diversity may mesh better with some than with others; a particular mix of diversity may be well suited for strategic orientation formation while another combination may be more effective for execution.«(Menguc & Auh, 2005, p. 15)
In principle, therefore, a higher degree of diversity and heterogeneity increases the potential of an organisation’s problem‐solving capabilities in the face of a more diverse environment. In this sense, functional and cultural diversity in top management teams and within boards meets the need to take into account their universality of experience and (e.g. also cultural) perspectives, for example in the development of strategic direction. This means that heterogeneity can be used to formulate an exhaustive and complete strategy development that is adequate to the changed environmental conditions and, if implemented effectively (see Ely & Thomas, 2020), might also be successful in the market.
