high velocity

8/2/2019 High Velocity

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Academy of Managemenl Journal1989, Vol. 32. No. 3. 543-576.

MAKING FAST STRATEGIC DECISIONSIN HIGH-VELOCITY ENVIRONMENTSKATHLEEN M. EISENHARDTStanford University

How do executive teams make rapid decisions in the high-velocity mi-crocomputer industry? This inductive study of eight microcomputerfirms led lo propositions exploring that question. Fast decision makersuse more, not less, information than do slow decision makers. Theformer also develop more, not fewer, alternatives, and use a two-tieredadvice process. Conflict resolution and integration among strategic de-cisions and tactical plans are also critical to the pace of decision m ak-ing. Finally, fast decisions hased on this pattem of hehaviors lead tosuperior performance.

In October 1984, Gavilan Computer filed for bankruptcy protection un-der Chapter 11. Despite a $31 million stake from venture capitalists, Gavilanexperienced delays and indecision that ultimately cost the firm its earlytechnical and market advantages. The firm's leading-edge technology he-came a "me too " one and com petitors flooded its empty m arket niche. As thefirm died, one executive mourned: "We missed the window" (Hof, 1984).This story is not unusual in fast-paced settings like the microcomputerindustry. The tumult of technical change places a premium on rapid deci-sion mak ing. Yet, although decision spe ed seem s to affect firm perform ancein such environments (Bourgeois & Eisenhardt, 1988) and is a key charac-teristic differentiating strategic decisions [Hickson, Butler, Cray, Mallory, &Wilson, 1986), there has been little research on fast strategic decision mak-ing. Th is article explores the speed of strategic dec ision making. In an earlierstudy (Bourgeois & Eisenhardt, 1988), my colleague and I linked fast strate-gic decision making to effective firm performance. In a second study onpolitics (Eisenha rdt & Bourgeois, 1988], we n oted that po litics seem ed to

I would like to give special thanks and acknowledgment to my friend and colleague. JayBourgeois, especially for his instrument design and data collection efforts. Also. I would like tothank my graduate assistants. Theresa Lant, Mike Boehm, Anita Callahan. Dave Ellison, andPaul McCright. Finally, 1 have benefited from the insightful comments of the following: PaulAdler, Phil Bromiley. Jim Dean. Greg Dess. Connie Gersick. |im Jucker, Bob Keeley. Jim March.Kaye Schoonhov en, Bob Sutton: my excellent reviewers; and participants in the 1988 A silomar.University of California, Berkeley. Organizations, and Stanford Department of Industrial Engi-neering and Engineering Management seminars.This research was supported by a grant from tbe Decision, Risk, and Management Sciences


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54i Academy of Management Journal Septemberslow decision making. However, neither study addressed how executivesdecide quickly. The present study extends the previous work hy exploringhow executive teams actually make fast decisions.This article is organized aroun d tw o research q uestio ns: (1) How are faststrategic decisions made? and (2) How does decision speed link to perfor-mance? The setting is the high-velocity microcomputer industry. In a high-velocity environment, changes in demand, competition, and technology areso rapid and discontinuous that information is often inaccurate, unavailahle,or ohsolete (Bourgeois & Eisenhardt, 1988). During this research (1984-85),the microcomputer industry underwent suhstantial technological changes,such as the introduction of the UNIX operating system, 64K RAM memory,and RISC computer architecture, as well as substantial competitive change,such as the entry of IBM, the de cline of Texas Instru m ents, and douh le-digitdemand growth (Bell, 1984).The results reported here are a set of propositions challenging tradi-tional views of strategic decision making. The evidence suggests that fastdecision makers use more, not less, information, than do slow decisionmakers. They also develop more, not fewer, alternatives. In contrast to cur-rent literature, this study found that centralized decision making is not nec-essarily fast, hut a layered advice process, emphasizing input from experi-enced coun selors, is fast. The findings also indica te that conflict resolutio nis critical to decision speed, hut conflict per se is not. Finally, integrationamong strategic decisions and hetween decisions and tactical plans speeds,not slows, decision making. Such integration helps decision makers copewith the anxiety of high-stakes decision making. Overall, fast dec ision mak-ing allows decision makers to keep pace with change and is linked to strongperformance. A pattern of emotional, political, and cognitive processes thatare related to rapid closure of major decisions emerged from this research.The empirical grounding of those ideas is the subject of this article.

BACKGROUNDThere are several perspectives on how rapid strategic decisions areachieved. One research stream emphasizes the idea that a high level ofcomprehensiveness^ slows the strategic decision process. According to thisperspective, consideration of few alternatives, ohtaining input from fewsources, and limited analysis lead to quick dec isions (M intzberg, 1973; Nu tt,1976). For example, Fredrickson and Mitchell (1984) argued that a processthat is less comprehensive speeds decisions. Similarly, Schweiger, Sand-berg, and Ragan (1986) noted that extensive analysis in dialectical inquiry is

' "Comprehensiveness is a measure of rationality and refers to the extent to which orga-


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1989 Eisen hardt 545likely to slow the pace of decision making. Janis (1982) indicated that, al-though a rational process may be superior, it also lengthens decision ma king.A second view has emp hasized that limited participa tion and central-ized power speed decision making. For example, Vroom and Yetton (1973)advocated autocratic decision making when speed is essential. Powerfulleaders can make rapid, unilateral choices. Similarly, March and Olsen(1976) argued that involvement by many decision makers lengthens the de-cision process. Finally, Staw, Sandelands, and Dutton (1981) indicated thatpower centralization is the most natural response to highly uncertain situ-ations like high-velocity environments.A third view is that limited conflict speeds decisions. The argumenthere is that conflict triggers interruptions in the decision process, whichthen slow the pace. For example, Mintzberg, Raisinghani, and Theoret[1976] found that disagreements created decision interruptions, which inturn d elayed the decision process in a study of 25 major de cisions. Sim ilarly,another study (Hickson et al.. 1986) found that opposition, especially bypowerful factions, slowed the pace of decision in a study of British organi-zations.Although these views vary in detail, none deals with two key realities.First, how do decision makers overcome anxiety and gain the confidence todecide? As George (1980) noted, many individuals find it difficult to makebig decisions in the face of high uncertainty. Yet such uncertainty is typicalof strategic decisions, especially in high-velocity environments. So how dodecision makers overcome their natural proclivity to procrastinate, espe-cially when information is limited? Second, how do decision makers main-tain decision quality while moving quickly? The existing views rest on theassum ption that fast decision s are achieved throug h a less thorough strategicdecision-making process involving limited information, analysis, participa-tion, and conflict. How ever, as Bourgeois and Eisenhard t (1988) no ted, the reis pressure for both a rapid and high-quality decision process, especially inhigh-velocity environments. Is the snap decision process descrihed by ex-isting views realistic?

These questions suggest that extant views may inaccurately describehow executives make rapid decisions. This ohservation, coupled with thelimited research base on fast strategic decision making, led to the inductiveresearch descrihed in this paper.METHODS

The study used a multiple case design that allowed a replication logic,that is, a series of cases is treated as a series of experiments, each caseserving to confirm or disconfirm the inferences drawn from the others (Yin,1984). Table 1 describes the eight microcomputer firms studied.


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546 Academy of Management journal SeptemberTABLE 1Descriptions of Microcomputer Firms

Firm Number ofEmployees Number ofInformantsZapForefrontPromiseTriumpbOmicronNeutronAlphaPresidential

5009018515019220050

462

Strategic decision, an d (3) firm performance. Altho ugh an em bed ded designis complex, it permits induction of rich and reliahie models (Yin, 1984).Data Sources

Members of the research group conducted interviews with every mem-ber of the top management team of each firm, including CEOs and theirimmediate suhordinates. The teams typically included the CEO and theheads of such major functions as sales, finance, and engineering.There were four data sources: (1) initial CEO interviews, (2) semistruc-tured interviews with each member of a firm's top management team, (3)questionnaires completed by each member of the team, and (4) secondarysources.

CEO interviews. An entry interview, using a sem istructured format, w asconducted with the CEO of each firm. The interview hegan hy asking theCEO to describe the firm's competitive strategy. The CEO was then asked todescribe the distinctive competencies of the firm, major competitors, andtheir performance. Each CEO then identified several recent or ongoing majordecisions. The decision or decisions to study in depth in subsequent inter-views with each member of the top management team were then chosen. Thechoices were based on criteria similar to those other researchers have usedfor defining strategic decisions (Hickson et al., 1986; Mintzherg et al., 1976).^To he chosen, a decision had to (1) involve strategic positioning, (2) havehigh stakes, (3) involve as many of the functions of the firm as possible, and

^ Ideally, many strategic decisions would have been studied in each firm. However, doingso was almost impossible because strategic decisions are infrequent events. The app roach herewas to triangulate insights from one or two decisions with evidence on the overall approach to


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1989 Eisenh ardt 547(4) be considered representative of the process by whic h major decisio ns aremade at the firm.^Top manager interviews. After the initial CEO interview, semistruc-tured interviews with every executive in the top management team, includ-ing the CEO, were conducted. The interview consisted of 16 open-endedquestions. Following the methods of inductive research, these questionswere supplemented with ones that seemed fruitful to pursue during theinterview. The interviews were typically from 90 minutes to two hours longbut occasionally took as long as four hours.The interview began with a request for a description of the firm's com-petitive strategy. Each executive then described the functional strategy of hisor her area, other members of the top management team, the frequency andnature of interaction with each other member of the team, and routine de-cision-making meetings. Thus, a general view of the strategic decision pro-cess within the firm emerged.In the second portion of the interview, the story of each strategic deci-sion identified in the CEO entry interview was traced. This yield ed a view ofspecific decision processes within the firm. The perspective of every mem-her of the top management team was traced using standard interview ques-tions. The questions concentrated on facts and events, rather than on re-spondents' interpretations, through the use of courtroom procedure (e.g.,When did this first hecome an issue? What did you do? When?).

Two investigators conducted each interview with one responsible forthe interview a nd the other for taking notes. Imm ediately after the interview ,the investigators cross-checked facts and impressions. Several rules werefollowed. The "24-hour rule" required that detailed interview notes andimpressions be completed within one day of the interview. A second rulewas to include all data, regardless of their apparent importance at the timeof the interview. A third rule was to end the interview notes with ongoingimpressions of each company.The combination of multiple informants, courtroom-style questioning,and tandem interviewing addresses some previous criticisms of researchrelying on executives' recollections (Schwenk, 1985). Moreover, previousresearch (Huber, 1985; Mintzberg et al., 1976) has indicated high temporalstability in executives' recollection of important decisions, especially formajor recent decisions.Questionnaires. Quantitative data were gathered from questionnaires.The question s focused on variables, such as conflict an d pow er, suggested byprio r research on dec ision ma king (e.g., M intzberg et al., 1976: Pfeffer, 1981).The Appendix describes the questions and their administration.Secondary source and other data. Industry reports and internal docu-


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548 Academy of Management Joumal Septemberments were examined as available. Informal observations were made, anddata were collected on office locations, team demographics, and financialperformance before and after the study. Finally, observations of a day-longstrategy-making session in one firm and a weekly executive staff meeting inanother were conducted.Data Analysis

The data were analyzed as follows. For the quantitative data, team levelscores of conflict and power were calculated and analyzed for patterns. Thequalitative responses were combined using profiles of tbe decision climatesand of each executive from tbe descriptions each member of the top man-agement teams had given. Traits mentioned by more than one executivewere included in the profiles. For example, three of his four colleaguesdescribed tbe president of Alpha as "impatient.""* This trait was included inhis profile, but other traits mentioned by only one person were dropped.

Decision stories were developed by combining the accounts of eachexecutive into a time line that included all events. There was typically highagreement among respondents around the critical issues of when a decisionbegan, when the decision was made, and how it was made. Again usingAlpha as an example, the executives all agreed that the impetus for thedecision studied was a specific board meeting, tbat the CEO made the de-cision alone, and that he did so just before tbe annual planning conference.Although they were few, conflicting reports were preserved in the stories.These usually concerned one person's assumptions about anotber's motivesor opinions, not observable actions and events.

Once preliminary analyses had been developed from the respective datasets, i combined the analyses and induced propositions using methods forbuilding theory from case studies [Eisenhardt, 1989; Glaser & Strauss, 1967).The search for propositions was assisted by selecting pairs of firms andlisting similarities and differences between each pair and by categorizingfirms according to variables of interest, such as the presen ce or absence of acoun selor to the CEO. From these lists and com pariso ns, I indu ced tentativepropositions. After the development of these tentative propositions, eachcase was revisited to see if the data confirmed the prop osed rela tion ship , andif they did, to use the cases to improve understanding of the underlyingdyn am ics. After man y iterations between data and pro pos itions, I used ex-isting literature to sharpen the insights yielded by the inductive process.What emerged were propositions linking information, alternatives, advice,conflict resolution, and integration with decision speed and performance.As in deductive research, the propositions fit the evidence but did not per-fectly explain the cases (Sutton & Callahan, 1987).


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1989 Eisenha rdt 549HOW ARE FAST STRATEGIC DECISIONS MADE?

Speed, Planning, and Real-Time InformationPrior research has suggested that comprehensiveness slows the strategicdecision-m aking process (Fredrickson & M itchell, 1984). Co nsideration offew alternative s, ohtaining in pu ts from few sources of expertise, and limitedanalysis shorten the strategic decision process (Janis, 1982; Mintzberg et al.,1976; Nutt, 1976). This perspective implies that the greater the use of infor-mation, the slower the strategic decision process.The data from this research indicate a different view. Executive teamsmaking fast decisions used extensive information often mo re inform ationthan the slower decision makers used. However, that information was notforecasted information. Rather, it was real-fime information, especially on a

firm's competitive environment and operations. Real-time information isdefined as information ahout a firm's operations or environment for whichthere is little or no time lag between occurrence and reporting. In formalterms, Proposition 1: The greater the use of real-time informa-tion, the greater the speed of the strategic decision pro-

cess.Table 2 summarizes this study's evidence on the speed of decision mak-ing. I assessed the overall speed of decision m aking from interview and storydata. These qualitative assessments were corroborated with measurement ofthe duration of each strategic decision studied. Following prior research(Hickson et al., 1986; Mintzherg et al., 1976), I me asured du ration using thebeginning and end times for each decision, with starting time indicated bythe first reference to a deliberate action such as scheduling a meeting orseeking information and ending time indicated by the time at which a com-mitment to act was made.As Table 2 indicates, there was high variation in the speed of decisionmaking. The first four firms listedZap, Forefront, Promise, and Tri-umphmade the decisions that were studied in less than 4 months, andsubstantial evidence from the interviews and stories corroborated that sucha fast pace was typical. For example, most Promise executives mentionedwithout prompting that they made decisions "quickly," and their making adecision on strategic direction in 4 months is consistent with the data.Throughout this article, those four firms are referred to as fast. The secondfour firmsOmicron, Neutron, Alpha, and Presidentialspent at least 6mo nths, and typically more than 12 mo nths, making the decisions that w erestudied, and the qualitative evidence (see Table 2) corroborated that thisslower pace was typical. Thus, I refer to those firms as slow.

Table 3 summarizes the evidence for the use of real-time information,which was assessed by (1) executive responses to interview questions re-


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55 0 Academy of Management journal September

TABLE 2Speed of Strategic Decision Making

Firm Examples" Decisions andKey QuestionsDecisionDurationsin Months

Zap "We try to be the first." (VP,engineering)"If we get bogged down, he[CEO| kicks ass." (VP,marketing)"The worst decision is nodecision at all." (CEO)Forefront "W e're aggressive. We maketbings happen." (director ofmarketing)

"Big opportunities go by ifyou don't act quickly."(VP, sales)Promise "I like quick dec isions."(CEO)"We make decisions fast."(VP, systems development)Trium ph "Decision making at Trium phis much faster." (VP,finance)"He |CEO] listens, makes uphis mind, and does it. He'smade the decision processshorter." (VP, sales)"Do something, don't just sitaround worrying." (CEO)Om icron "Slow mov ing." (VP,manufacturing)"There was a frustratingamount of decorum.Consensus was veryimp ortant." (VP, sales)"We did what we intended,but took longer than weshould have," (CEO]Neutron "We were late." (VP, finance)

Alpha "We never did anythingconcentrated ... noparticular dedicated time. . . things kind ofevolved." (VP, sales)"We were kind of castingaround." (VP. finance)

Alliance: Should we form astrategic alliance or gopublic?

New product: Should wedevelop a new product?

Strategy; Do we need a newstrategic direction?

Strategy: Do we need a new 1.5strategic direction?New product: What shou ld 1.5our next product be?

Strategy: Do we need a new 12strategic direction?Strategy: Wbat should our 6new strategy be?

Alliance: Should we form a 12strategic alliance?New product: Should we 12develop an IBM-compatibleproduct?


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1989 Eisenhardt 551TABLE 2 (continued)

FirmPresidential

Examples""Presidetitial was unfocused.We w eren' t concentrated."

(EVP)"Lots of arguments nodecisions." (VP.manufacturing)"There was no structure .. .nothing got accom plished."(VP. R&D]"Nothing happened . . . I twas so hard to get ideasthrou gh." (EVP)

Decisions an dKey Que stionsNew product: Should wedevelop a new product?

DecisionDurationsin Months

18

' VP = vice presid ent; EVP = execu tive vice presid ent.

(3) the presence of a vice president [VP] of financetypically the key pro-vider of real-time information in firms like those studiedand (4) the ori-entation of a firm's CEO toward information. Executives' preferences forvarious communication media and the use of real-time information in themaking of the strategic decisions studied in each firm were also noted.The data shown in Tahles 2 and 3 indicate that fast strategic decisionm aking is associated with extensive use of real-tim e inform ation. Executivesmaking fast decisions routinely paid close attention to quantitative indica-tors such as daily and weekly tracking of bookings, scrap, inventory, cashflow, engineering milestones, and competitors' moves. They preferred theseoperational indicators to more refined accounting data such as profit. Theseexecutives averaged 2.5 regularly scheduled operations meetings per weekand indicated a preference for real-time co m m unicatio n via face-to-face con-versation or electronic mail rather than through time-delayed media likememos.The Zap case illustrates the linkage between the use of real-time infor-ma t ion a nd de c i s ion s pe e d . Z a p e xe c u t i ve s c l a ime d to " me a s u reeverything." Without prompting, the CEO described exact targets for grossm argin and expe nses for R&D, sales, and a dm inistra tion. Executives re-viewed bookings daily. Engineering schedules were reviewed weekly. TheVP of finance ran a com puter m odel of firm ope rations wee kly. The VP ofmarketing monitored the environm ent continuously. As she told us, "I keepan eye on the market [and] funnel the inform ation bac k." The R&D VP toldus that he monitored the technology "grapevine" through his extensive net-work of friends. Monthly, the executive team reviewed a wide range of


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552 Academy of Management Journal September

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554 Academy of Management Journal September"We have very strong controls. We over M.B.A. it." Zap executives alsoreported interacting continually through face-to-face communication andelectronic mail. They avoided m emo s. For exam ple, one exec utive describe dher communication with the CEO and several other VPs as "constant." Fi-nally, the de cision to forge a strategic alliance that was stud ied was triggeredby the team's cash projection model, which predicted an upcoming cashshortfall. Zap executives made this decision in three months. A Zap execu-tive claimed: "The worst decision is no decision at all."

The Triumph case also indicates the link between use of real-time in-formation and rapid strategic decisions. For example, the first employeehired by the current CEO was a data-base manager whose job was to tracknew product development projects, the lifeblood of microcomputer firms.Firm members described the CEO as "quan titative," and he claimed to "ha velists for everything." Interviewees described the weekly staff meetings atTrium ph as "a m ust." One executive said, "No one travels on Mo nda ys." Myown visit revealed that the Monday meetings were intense. The day beganwith a four-hour meeting that "Icovered] what's happening this weekwhat's happening with sales, engineering schedules, and releases." In theafternoon, Trium ph executives attended quality assurance and new -prod uctprogress meetings. The executives also conducted regular "round tahle"forums at which lower-level employees gave feedback to senior executives.Triumph executives made the decision on whether to redirect their strategyin six weeks and also made a major product decision in six weeks. Oneexecutive advised: "Do something, don't just worry about decisions."

In contrast, there was little mention of real-time information from theteams making the slower decisions. What was mentioned suggested thatsuch information was not particularly germane to their decision processes.For exam ple, the Omicron CEO was asked to descrihe any qu antified targetsthat he used to track performance. He answered that he did not use quanti-fied targets, saying "M y own goals are subjective . . . . Integrity is key for m e. "The VP of finance was an engineer, described as weak in financial matters.Omicron executives pondered whether to change their strategic direction fora year and then spent six more months deciding what their new strategicdirection would be. The VP of manufacturing summarized: "We're slow-moving."The evidence on real-time information use for the other teams makingslow decisions is consistent with that at Omicron. For example. Alpha hadno weekly operations meetings until several VPs insisted that they werenecessary. Presiden tial had neither w eekly operations meetings nor a VP offinance. Firm members described the CEO of Presidential as a "visionary"and as "a little detached from day-to-day operations," and descrihed his keyVP as "unfocused ." At Neutron, no one me ntioned real-time data, althoughthe re were stories of largesse such as trips to Hawa ii for star design eng inee rs


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^989 Eisenha rdt 555slow, and the durations of the strategic decision processes studied averaged14 months, compared with 2.8 months at the fast firms.Why does the use of real-time information quicken the pace of the stra-tegic decision process? One reason may he that such information speedsissue identification, allowing executives to spot problems and opportunitiessooner (Dutton & Jackson, 1988). For example, the rationale for the roundtable forums with lower-level staff at Triumph was "to avoid sudden, sur-prising, and bad information."A second reason is more subtle. The literature on artificial intelligenceindicates that intuition relies on patterns developed through continual ex-posure to actual situations (Hayes, 1981; Simon , 1987). If so. executives wh oattend to real-time information are actually developing their intuition.Aided by intuition, they can react quickly and accu rately to chang ing stim uliin their firm or its environ me nt. Although the data are limited, the CEOs whorelied most heavily on real-time information were also most frequently de-scribed as being intuitive. For example, the CEO at Zap was known as a"n um be rs" person and claimed to "over-M.B.A. it," yet he was also the CEOmost strongly described as "intuitive," as "a lateral thinker," and as having"the best sense of everything in business"despite his being the least ex-perienced CEO in the study.Finally, constant attention to real-time information may allow execu tiveteams to gain experience in responding as a group. The frequent review ofreal-time information may develop the social routines people need to re-spond rapidly when pressing situations arise.Why do the present results fail to support the view that informationslows strategic decision mak ing (Fredrickson & M itchell, 1984; George,1980; Nutt, 1976)? One reason is that this view does not distingu ish pla nn inginformation from real-time information on competitive environments andfirm performance. How ever, executives do make that dis tinctio n. The CEO atPromise said: "I'm a numbers guy, but I'm not heavy on analysis." Zapexecutives used computer models but called them "pretty elementary." Onthe other hand, several teams making slow decisions fit the image of infor-mation-users as bureaucratic planners (Quinn, 1980). For example, Omicronexecutives spent about six months developing a forecast of technical trends.Thus, it appears that real-time information, which gives executives intimateknowledge of their business, may speed decision making, hut planning in-formation, which attempts to predict the future, does not.Speed, Timing, and Number of Alternatives

Fredrickson and Mitchell described a com prehensive decision-makingprocess as one that includes being "exhaustive in the generation and eval-uation of altern ativ es" (1984: 402). How ever, as they and others (Janis, 1982;Vroom & Yetton, 1973) have noted, multiple alternatives are likely to slow


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556 Academy of Managem ent Journal Septemberciated with more, not fewer, alternatives. Moreover, the sequencing of alter-natives was crucial to the pace. Rapid decisions were characterized by si-mu ltaneous co nsideration of multiple alternatives, and th e slower decisionswere characterized by sequential consideration of fewer alternatives. In for-mal terms.

Proposition 2: The greater the number o/ai(ernatives con-sidered simuitaneousiy, the greater the speed of the stra-tegic decision process.The overall propensity of a team to use multiple simultaneous alterna-tives was assessed from the interview and story data. The numher of alter-natives was quantitatively measured in each decision hy recording eachunique alternative mentioned by every respondent. I also determined the

timing of initiation and discarding of alternatives. Simultaneous alternativeswere options that executives considered during at least partially overlappingtime periods. Sequential alternatives were considered at times that did notoverlap.As Table 4 indicates, the data suggest that considering multiple simul-taneous alternatives was associated with fast decisions. For example, Zapexecutives typically generated "multiple scenarios." The alliance decision,in which Zap executives considered bank loans, going public, and addi-tional venture capital, in addition to the strategic alliance option, corrobo-rates that finding. Within the strategic alliance option. Zap executives alsonegotiated simultaneously with several potential alliance partners.Another example is the decision on strategic redirection at Triumph.The decision makers maintained multiple options, including sale of thefirm's proprietary technology, liquidation, a new strategic direction, andtactical changes in the existing strategy, dur ing the decision-m aking process.Moreover, firm informants described Harry, the CEO of Triumph, as typi-cally retaining multiple options. One executive said, "Harry can live with alot of am biguity, a w ide range of op tion s Harry likes to hav e a larger setof options than most people do. He can carry many in his head at once. He

thinks it 's better if you can work a multiple array of possibilities instead ofjust a couple."Several Promise executives claimed that team members usually gener-ated multiple alternatives. One VP described the tactics as follows: [1) pro-posing a sincere alternative, (2] supporting someone else's alternative evenwhen actually opposing it, and (3) proposing an insincere alternative, onethat the proposer did not actually support. The purpose of these tactics wasto "aerate" different options.In contrast, the slower teams usually considered few alternatives andsearched for a new alternative only when an old one was no longer feasihle.For example, the Alpha top management team considered only one newproduct option for almost a year. During that time, the CEO worked alone.


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1989

FirmZ ap

Forefront

Promise

Triumph

Omicron

NeutronAlphaPresidential

DecisionAlliance

New product

Strategy

Strategy

New product

Strategy

Strategy

AllianceNew productNew product

EisenhardtTABLE 4Alternatives

Number ofAlternatives Alternatives4

3

3

4

2

2

2

222

AlliancePublic offeringBank loansVenture capitalNew productExtension of existingproductStatus quoStatus quoMajor strategic shift intonew markets andproductsMinor strategic shift tocapitalize on salesopportunitiesRefine current strategySell firm's technologyLiquidate firmMajor strategic shiftLow-end productModerate tobigb-end productMajor strategic shiftBetter management ofsales andmanufacturingMajor strategic shift indistributionMajor strategic shift inproduct and marketIn-house developmentAllianceIBM-compatible productInterface productVLSr product with U.S.partnerLicensed product withJapanese partner

5 57

TimingSimultaneous

Simultaneous

Simultaneous

Simultaneous

Simultaneous

Simultaneous

Simultaneous

SequentialSequentialSequential

" VLSI = very large scale integrated circuit.

in-house product development plans were so delayed as to require an ex-ternal product source.Why do the results fail to support the view that consideration of mul-


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558 Academ y o/Man agem ent /ournal SeptemberAs studies of dialectical inquiry and multiple options have indicated (e.g.,Anderson, 1983; Schweiger et al., 1986; Schweni, 1983), the reason is thatthe process of comparing alternatives helps decision makers to ascertain thealternatives' strengths and weaknesses and builds decision makers' confi-dence that the most viable alternatives have been considered. As one Prom-ise executive stated, "This [considering multiple alternatives] forces us intohypothesis-testing mode."

Second, having simultaneous alternatives reduces the escalation ofcommitment to any one option (Staw, 1981). Decision makers who pursuem ultip le options have a lower psychological stake in any one alternativ e an dthus can quickly shift between options if they receive negative informationon any alternative. Thus, decision makers who pursue multiple options areless likely to become psychologically trapped and can quickly act on nega-tive information.

Third, simultaneous alternatives provide a fallback position. If one al-ternative fails, executives can quickly shift to a new one. For example, Zapexecutives simultaneously pursued negotiation with multiple possible stra-tegic alliance partners, going public, and obtaining bank loans and venturecapital. When the "first-choice" alliance partner left the negotiations, thepresident quickly cut a deal with the second choice. If that deal had failed,the firm had a backup line of credit and was poised to go puhlic. The entiredecision process was consumm ated in three mo nths. In contrast, sequen tialconsideration of alternatives provides no such ready fallback positions. Forexample, Presidential executives explored one product option for ninemonths. When that option collapsed, the team had nothing to fall back on,and the decision was delayed another five months while the team searchedfor a new option.

Finally, the view that multiple alternatives are time-consuming does notdistinguish between the number of alternatives considered and the depth ofanalysis. The slow teams spent a great deal of timebut often on only onealternative. For example. Alpha and Presidential executives spent ninemonths working on single alternatives. In contrast, the fast teams pursuedseveral alternatives, analyzed quickly. According to laboratory studies (e.g.,Payn e, Bettman, & Johnson, 1988), such a breadth -not-d epth dec ision -making strategy is highly efficient in situations in which time pressure ishigh.Speed, Power, and the Role of the Counselor

In addition to the cognitive factors discussed above, political factorsmay also influence the pace of dec isions (M intzberg et al., 1976; Vroom &Yetton, 1973). For example, Hickson and bis colleagues (1986) found thatresistance by influential people was a leading cause of delay in making


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1989 Eisen hardt 559in w hich speed is essential. From that perspective, centralized pow er shou ldquicken decision making.In contrast, the data indicated no pattern linking decision speed to ei-ther qualitative or quantitative indicators of power centralization. Some au-tocrats were fast, but others were slow.^ However, the proc ess w hereby CEOsgathered advice was important. The teams making faster decisions had atwo-tier advice p rocess. Their CEOs sought counse l from all me mb ers of th etop managem ent team , but they focused on obtaining advice from one or twoof the firm's most expe rienced ex ecutives, wh om I termed "co un sel or s." Incontrast, the CEOs whose teams made slow decisions either had no coun-selor or had a less experienced executive in the counselor role. In formalterms, Proposition 3: The greater th e use of experienced counse-

lors, the greater the speed of the strategic decision pro-cess.Table 5 summarizes the data on counselors. An executive was desig-nated a counselor when (1) team executives explicitly identified tbe indi-vidual as a counselor, a dviser, or confidante to the CEO, (2) tbe desc riptionof tbe interaction between the CEO and the focal exec utive in dicate d a com-pany-wide, rather than a functional, range of topics, and (3) there was storyevidence of the CEO's seeking the counsel of the focal executive in thestrategic decision s tud ied. Table 5 also deline ates each cou nselor in terms ofage, experience, and personality descriptions provided by otber executives.Every team making rapid strategic decisions had at least one experi-ence d couns elor. For exam ple, tbe CEO at Forefront describ ed the VP of salesas his "confidante." He described their interaction as "more general thanjust sales," adding "When I talk with Joe it's often about company issues."In the d ecision stud ied, this VP triggered the dec ision by alerting tb e CEO toa major c om petitor's entry into the market. He tben a dvised the CEO regard-ing competitive responses and served as a sounding board for the CEO'sideas.

Frequently, tbe oldest and most experienced executives filled the coun-selor role. For example, the cou nselors at Zap were 10 to 20 years older tha nmost other team members. One counselor, the sales VP, had worked in themicrocom puter ind ustry since its inception and h ad top-level experience attwo prominent firms. The other, the VP of engineering, had worked for 15years at a major co mp uter firm, w here he had b een a senior general m anager.Zap's CEO said: "I seek the advice of Bob [sales], tbe most knowledgeableabout tbe market, and Jim [engineering], tbe best ma nager." Often, cou nselo rswere well known to the CEO. For example, at Forefront, Promise, and Tri-umph, the CEO and counselor had previously worked together. Finally, thecounselors frequently were on a career plateau, with their aspirations cen-


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560 Academy of Management /ournaJ September

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1989 Eisenha rdt 561tering on pers ona l intere st. As the VP for sales at Forefront claim ed, " I'm notin it for tbe money. It's fun to build an organization again."Triumph is a particularly telling illustration. When the CEO joined thefirm, no one on the existing team fit the profile of an older, experiencedexecutive. What did the CEO do? He hired a consultant, whom he hadknown for about 15 years, to fill tbe counselor role. The 55-year-old con-sultant had been a CEO, bad extensive industry contacts, and bad served onseveral boards. His colleagues described bim as "very experienced" and "afirst-class manager." Firm informants credited tbe individual with playing acritical role in developing alternatives in tbe new product decision that wasstudied and with being a sounding board for several executives besides tbeCEO.In contrast, the slow teams either did not have counselors (Alpha, Neu-tron, and Presidential) or had less experienced executives filling the role(Omicron). For example, one counselor at Omicron was the VP of strategicplanning. At 32, he was tbe youngest executive on the team. His colleaguesdescribed bim as "bright," but "young." The otber counselor, VP for corpo-rate development, was described as "afraid of managing."Why does an experienced counselor speed decision making? One reasonis tbat tbe counselor hastens tbe development of alternatives, providing aquick sounding board for ideas. Also, since counselors are often long-timeassociates of a CEO and are people w hose career aspiratio ns have been met,tbey are likely to be particularly trustwortby, enabling executives to be veryopen. Finally, experienced counselors are likely to provide very useful ad-vice.Second, an experienced counselor can belp a team deal with the am bi-guity of high-stakes d ecision m aking in fast-paced env iron m ents. As Ceorgenoted, "In the face of uncertainty embedded in complex issues executivesoften find it difficult to act" (1980: 37). An experienced confidante can helpovercome such barriers by sharing the decision-making effort and relatingthe decision to past experience. Confidence in a choice is likely to improvewhen the issues have been discussed with an experienced confidante.

Overall, tbe results fail to support tbe view tbat centralized power ac-celerates the pace of decision making (Vroom & Yetton, 1973). One reason isthat this view neglects the effects of procrastination. People delay because ofanxiety, inad equa te information, and lack of time. Tbese barriers to decisionafflict autocrats as much as coUegial executives. In fact, power centralizationmay exacerbate such b arriers by isolating a CEO and creating an information-restrictive political culture (Eisenhardt & Bourgeois, 1988). For e xam ple.Alpha's autocratic CEO characteristically worked alone on tbe new productdecision. Since be worked without belp, was burdened with his other du-ties, and was functioning in tbe context of a highly political team (Eisen-bardt & Bourgeois, 1988], the decision process dragged on for a year. Tbus,


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1M2 ' Ac adem y of M a n a g e m e n t / o u m a J S e p t e m b e r

Speed, Conflict, and ResolutionSeveral authors (Hickson et al., 1986; Mintzberg et al., 1976) have ar-gued that conflict influences the length of a decision process. For example,

Mintzherg and his colleagues found that conflict created interruptions in theprocess. Therefore, from this pe rspective, increasing conflict slows the paceof strategic decisions.The data indicated no pattern linking decision speed to either the gen-eral level of conflict within a team or conflict on the decision studied.^However, conflict resolution was crucial. The fast teams actively dealt withconflict, with decision makers resolving it on their own. In contrast, conflictresolution was problematic for the teams making slow decisions. Theytended to delay until external events forced a choice. In formal terms,

Proposition 4: The greater the use of active conflict reso-lution, the greater the speed of the strategic decision pro-cess.Table 6 summarizes the teams* approaches to conflict resolution. I as-sessed conflict resolution from interview responses indicating each team'susual approach and story data indicating the specific approach taken in thedecision studied. Close attention was paid to whether the process was anactive one in which decision makers resolved the conflict on their own or apassive one in which decision makers delayed the resolution of conflictuntil deadlines approached, opponents of an alternative left the team, orexternal events eliminated competing alternatives.Every team making fast decisions took an active approach to conflict. Infact, all the fast teams used the same process, termed "consensus withqualification" by a Promise VP. Consensus with qualification is a two-stepprocess. First, a team a ttemp ts to reach con sensu s by involving every one . Ifagreement occurs, the choice is made. However, if consensus is not forth-coming, the CEO and, often, the relevant VP make the choice, guided byinp ut from the entire team. Zap 's VP for engineering described the process asfollows: "Most of the time we reach consensus, but if not. Randy [the CEO]

makes the choice."Forefront's new product decision illustrates consensus with qualifica-tion. The decision generated significant disagreement. Several executivesargued that a new product would divert engineering resources from a moreinnovative one currently in design. Others argued that a new product wasnecessary to counter the moves of an important competitor. Still othersargued that a simple extension of an existing product was the appropriatechoice. The team h eld a series of meetings, and th e final d ecision w as m adeat one such m eeting. One VP described the decision as a pus h for co nse nsu s,followed hy the CEO's decision. Not all the VPs agreed with the choice.However, as the CEO told us: "The functional head s do the talking . . . I pu llthe trigger."


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1989 Eisenhardf 563TABLE 6

Conflict Resolution'Active

FirmConsensuswilhQualification

PassiveDeadlines Consensus Examples

Z ap I. S

Forefront

Promise

Triumph

I, S

I ,S2

Omicron

NeutronAlpha

Presidential

S2 l.Sl

"It's very open. . , . We'resuccessful most of the timein building consensus.Otherwise Randy |CEO]makes the choice." (VP,engineering)"The functional heads do thetalking . . . then I pull thetrigger." (CEO)"Quick decisions involving asmany people as possible."(CEOJ"Harry [CEO) just saidsomething like 'this is whatI've heard and it makessense.' "" 'We will do. . . .' Harrysensed when everyone hadsaid enough and all thepoints were out."[consultant]"Snap decisions whereconsensus is appropriateand vice versa." (VP.finance)

"Don |CEO] will bring uptopics over and over tilldecisions go his way." (VP,manufacturing)"We found that operating byconsensus essentially gaveeveryone veto power, . . .Nothing got accomplished."(VP. R&D)

" I = Strong support from interviews, based on evidence from m ultiple ind ividua ls. S =Strong support from stories. ba.sed on evidence from multiple individuals. 1 = the first decisionstudied in a firm and 2 = the second decision.

In contrast, conflict resolution was problematic in the slow teams.Sometimes, the teams waited for consensus. That bebavior was typical at


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564 Academy c/M anage me nt /ournal Septemberover whether they should develop the product with a U.S. partner. A deci-sion was finally reached when several VPs who opposed that proposal leftthe firm, and that option was the only one still available.

Sometimes, the slow teams waited for deadlines. For example, a dead-linethe annual meeting^triggered the Alpha decision. With the meetingless than a month away, the top management team rejected the CEO's firstalternative of developing an IBM-compatihle product. Team members be-lieved that such a produ ct w ould stretch R&D and sales resourc es too th in.Frustrated hy this rejection and facing an imp end ing d ead line , the CEO cameup with a new alternative. Without consultation, he made the choice him-self. As he stated, "I said 'to hell with it ' and shoved it down their throats."

Omicron executives oscillated between consensus and snap decisionsin the face of dead lines. For examp le, in the first O micron decisio n, the teamwaited for about a year for consensus to emerge. It did emerge only after theVP of marketing, the main opponent of the decision that was finally made,left the firm. The second Omicron decision was triggered hy a deadline. Thehoard of directors pressured the team to articulate a strategic direction. TheCEO stopped consensus-style meetings, and then met alone with severalVPs. Soon after this, he chose a strategic direction on his own. As he de-scribed: "On e night, I went h om e after A ndy [VP for strategic plann ing] hadbeen really high on his idea. I slept on it and c ann ed it. I pu rsue d my ide a."The CEO's choice was a recent idea that he had never discussed within thefirm. One VP claimed: "[We] make snap decisions where developing con-sensus over time is appropriate and vice versa."

Why is consensus with qualification rapid? One reason is that it copesactively with the conflict comm on to strategic dec isions. It does not inv olvewaiting for outside events, such as executives leaving or deadlines arriving,to trigger decision. Second, it is popular with executives. Most executiveswa nt to be involved, but are not anxio us to make ch oices, except in their ow nareas. For example, one VP at Zap claimed: "I'm happy just to bring it [herviews on the alliance] up." This satisfaction limits time-consuming politicalactivity (Eisenhardt & Bourgeois, 1988).In contrast, other approa ches to conflict resolution are often slow . Con-sensus takes time to develop and may never be achieved since many strate-gic decisions involve executives who hold honest differences of opinion.Although on occasion a team may reach consensus rapidly, more frequentlyconsensual conflict resolution results in the situation described by a Presi-dential executive: "We found that operating by consensus essentially gaveeveryon e veto pow er. There was no structure. No prod uct wo uld ever get outthat way. Nothing got accomplished." In fact, many executives dislike theconsensual approach. Typical were the comments of an Omicron VP: "Iwanted Bill [the CEO] to dictate and not to waste time in meetings to hringconsensus. I had more pressing prohiems to worry about." Waiting for dead-


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1989 Eisen hardt 565The results have similarities with extant literature. As Gersick's (1988)work would predict, the slow teams accelerated their decision processes inthe face of deadlines. However, they did not shift to the process used hy fast

decision-making teams. Rather, they shifted to the noncomprehensive deci-sion p rocess many a utho rs have described [e.g., Fredrickson & M itchell,1984; Lindhlom , 1959). For exam ple, the CEO at Alpha m ade a snap decisionto develop an interface product that no one had seriously analyzed. Simi-larly, the CEO at Omicron chose a strategy that involved major shifts inengineering and marketing but never discussed it within the firm. In thosecases, the executives speeded up the process by making snap choices. Al-though others have described such a noncomprehensive process as fast [Fre-drickson & M itchell, 1984), the evidence here suggests that the app roac h wasembedded in a slow decision process. Thus, noncomprebensive describesthe way that slow teams accelerate.Speed, Fragments, and Decision Integration

The final critical difference between teams making fast and slow stra-tegic decisions lies in the web of relationships among those decisions. Theevidence indicates that fast teams attempted to integrate strategic decisionswith one another and with tactical plans. In contrast, the teams makingslower decisions treated decisions as discrete and even disconnected events.In formal terms.Proposition 5: The greater the integration among deci-sions, the greater the speed of the strategic decision pro-cess.Decision integration was assessed using qualitative evidence for teams'usual approaches to decision integration and stories of the specific deci-sions. Decisions were examined in relation to their integration w ith past a ndcurrent strategic decisions and tactical plans like budgets and engineeringschedules.The teams making fast decisions more completely integrated those de-

cisions with other major decisions and with tactical plans. For example,Triumph executives claimed that when they made a major decision, theyalso develope d plans to manage the worst case outco me . On e VP terme d thispractice "knowing your way out of each decision." During the time of thestrategic redirection decision studied, the team members integrated theirchoice of strategy with a new product decision, tactical plans for execution,and a worst-case plan to sell firm technology.The decision began with the arrival of a new CEO. According to firmexecutives, the CEO spent ahout two weeks conferring with people through-out the firm. Gradually, he shifted the team's attention to articulation ofalternative paths for the firm, including the sale of technology, liquidation,a new strategic d irection, and tactical changes to the existing strategy. In the


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566 Academy of Management /ournaJ Septemberyear. At the end of six weeks, a new strategic direction was set, a new pro du ctchoice was made, and tactical plans in the form of detailed budgets andengineering schedules were complete.

Similarly, the Zap alliance decision was integrated w ith other d ecisio ns.Although Zap executives chose an alliance to solve their short-term cashproblems, they simultaneously addressed future cash needs by planning aninitial public offering. The executives made tactical plans for each func-tional area and set milestones whose arrival would trigger the public offer-ing. Thus, after three months. Zap executives emerged with a plan thatcoordinated the short-term decision to form an alliance with the long-termdec ision to make a public offering, tactical pl ans to execu te a pu bli c offering,and contingency plans to obtain backup bank credit.In contrast, the slow teams made decisions in fragments, with littleconcem for how decisions related to each other or to tactical plans. Forexample. Presidential executives struggled for over a year deciding whetherto develop a new product. Only after the product decision was made didthey consider how to integrate the product into their existing product lines.Presiden tial exec utives were still trying to decid e after a year of delib eration .As one executive said, "We don't have a strategy of what to do with the[product) yet." Because of the delay, the new pro duc t still had n ot pro du cedrevenue.Similarly, Omicron executives reported that they enjoyed thinking

ahout strategic decisions in the abstract, "on a blank sheet of paper." Theirapproach to the strategic redirection decisions corroborates this view. Omi-cron executives spent about a year deciding whether to change strategywithout any serious consideration of what the new strategy should be. Hav-ing made the decision to switch, they then spent another six months choos-ing the new strategic direction. Specific pro duc t cho ices still had to be m ad e,and as tbis research concluded, tactical plans, such as changes in engineer-ing priorities and bu dgets, had not been m ade. It is striking that, as describedabove. Trium ph executives made a similar decision and chose a new prod-uct, scheduled three product releases, and rehudgeted the firmin sixweeks, compared to the eighteen months spent at Omicron on the initialdecision.Why is greater decision integration associated w ith faster decision mak-ing? One reason is that decision integration helps executives to analyze theviahility of an alternative more quickly. Second, it helps them to cope withthe amhiguity of high-stakes decision making. As the literature on activecoping suggests [Gal & Lazarus, 1975), dev elop m ent of conc rete ties w ithother major dec isions and d ecision details may alleviate the anx iety that canplague executives as they face high-stakes decisions. The process of devel-oping specific plans may give executives a better understanding of alterna-tives and provide feelings of competence and control (Langer, 1975). Tbese


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1989 Eisenh ardl 567The data, especially those from the slow teams, support this interpre-tation. For example, one Omicron executive said, "We don't have the con-fidence to know how to do it [set strategic direction]." Another summarized

the prevailing view: "Maybe we saw too much mystery. Maybe we neededmore gut. You don't know any more even though you wait."Why do the results fail to support previous view s of decision integrationas slow (Fredrickson & M itchell, 1984; Qu inn, 1980)? One reaso n is thatprior research has neglected the effects of concrete planning on activelycoping with uncertainty. Second, the prior views were predicated on theidea that executives achieve integration through complex formal planningsystems. For example, Quinn noted: "The planning activity often tended tobecome a bureaucratized, rigid, and costly paper-shuffling exercise" (1980:2). However, the fast decision teams did not integrate decisions using com-plex systems involving a wide range of integration techniques, consultationw itb o utside rs, or large expen ses (Fredrickson & M itchell, 1984). Rather,tbey maintained mental maps of how decisions fit together and supple-mented those maps with brief plans and action-oriented, operational docu-ments such as budgets and engineering schedules. For example, Promiseexecutives summarized their strategic direction with a three-page statement.Overall, the fast decision-making teams simultaneously kept in mind mul-tiple decisions. In contrast, the slow teams were linear thinkers, treatingeacb decision as a discrete event.HOW DOES STRATEGIC DECISION SPEED LINK TO PERFORMANCE?

The second research question was: How does the speed of strategicdecision relate to performance? Firm performan ce was assessed by (1) CEOs'nu m eric al self-reports of com pan y effectiveness (0 to 10 scale), (2) a com-parison of that rating to ratings CEOs gave to competitors, and (3) salesgrowth and profitability figures before and after the study. At the decisionlevel, I assessed performance by whether team executives supported a de-cision after the fact, made similar decisions later, and implemented thedecision. Table 7 summarizes these data.Tbe data support the proposition that faster decision making is associ-ated with better performance. Admittedly, the evidence is tenuous, becauseperformance can depend upon many factors, including those described inearlier studies (Bourgeois & Eisenhardt, 1988; Eisenbard t & Bourgeois, 1988).Also, fast decision making using a different style than shown in tbese casesmight lead to different results. For example, snap decision making by animpulsive CEO might lead to fatal errors. However, tbe proposition is pre-sented because the performance differences were substantial and tbe datastrongly suggested underlying dynamics that support the relationship. Informal terms.


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568 Academy of Management Journal September

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1989 Eisenha rdt 569For example, Zap's performance has been spectacular, with sales grow-ing at 25 to 100 percent per quarter. Zap executives considered the alliancedecision to have been successful and have since executed other similardecisions. Forefront's executives also positively evaluated their decision.One stated: "So far, I like what I see." Another said: "The verdict so far isfavorable." Forefront has been a strong performer, with sales tripling andafter-tax profits running at 9 percent during the year after the study. Simi-larly, the Triumph and Promise executives assessed their decisions posi-tively. For example, one VP at Promise said, "Yes, I'm happy with the de-cision. Our strategy is now better articulated." Another at Triumph said,"Sure, I'm happy with the decision. It worked well." At the time of thestudy, both firms were struggling. Promise was an early venture just getting

started, and Trium ph had recently replaced its CEO. Since the stud y, sales atPromise have soared 500 percent, and Triumph has become one of only twosurvivors in its niche and has announced plans to go public.By contrast, slow decision making was associated with poor perfor-mance. For example, Presidential executives viewed their new product de-cision as good, but too slow. As one VP told us: "Th e o nly problem was thatit took too long to make the de cision ." Another said: "Ou r pro duc ts w ere toolate and they were too expensive." As the firm fell behind its competitors,sales tumb led 30 percent in the year after this study , and th e firm co ntin uedto lose money. The delay at Neutron proved costly as well. The marketopportunity was missed, and the firm went bankrupt a year after the study.At Alpha, the executives expressed relief that the CEO's original alternativewas shelved. However, the firm continued to drift, with stagnant sales andprofits.Omicron is an interesting case because there was a performance turn-around. During this study, the firm experienced flat sales and mountinglosses. Omicron executives attributed much of the problem to the slow de-cision making of the CEO. As one VP said: "Bill's p rocrastination caused theproblem." But Bill was replaced and, although the data are limited, the new

CEO appeared to change the decision process. One VP reported: "Jim [thenew CEO] has a different style, he pays more attention to the numbers."Another claimed: "He is not caught in analysis paralysis." Jim was alsodescrihed by the same adjectives that were used to describe the CEOs of thefast decision teams"decisive," "operations-focused," "hands-on," and"instinctive." He descrihed others as either fast, indicating approval, orslow, indicating disapproval. Although Jim made several changes thatseemed to impro ve firm performance (Eisenhardt & Bourgeois, 1988), theteam agreed that he was "accelerating the decision pro cess ." Con sistent w iththe proposition linking decision speed and performance, Omicron attaineda 50 percent sales increase and became profitahle during Jim's first year as


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8 ^ Academy of Management /ournaJ Septembermistakes. A second reason is that, in fast-paced environments, opportunitiesmove quickly, and once a firm is bebind, it is difficult to catcb up. Thequalitative data were particularly supportive of this point. For example, aPreside ntial VP said: "We tried to use consen sus, but it gave everybo dy vetopower and we ended up doing a random walk. Our products were too lateand they were too expensive." Presidential still has not caught its compet-itors. Neutron executives echoed this view. For example, the VP of financeobserved: "Tbe big players [customers and distributors] were already cor-ralled by tbe competition. We were late." Tbe firm never regained its earlymomentum and went bankrupt.

In contrast, the strong performers reiterated the importance of keepingpace with tbe environm ent. A Promise VP said: "You have to keep u p w itbtbe train." Zap executives claimed: "If you don't innovate, someone elsewill." Their CEO argued that the best management training was playingvideo games, to bone fast d ecision-making skills. The sales VP at Forefrontsaid: "You've got to catch the big oppo rtunities." An executive at T rium phadvised: "Do something, don't just sit around worrying about decisions."This quote may summarize such ideas best; "No advantage is long-termbecause our industry isn't static. The only competitive advantage is in mov-ing quickly" (VP of finance. Promise).

TOWARD A MODEL OF THE SPEED OF STRATEGICDECISION MAKINGThis research explored th e speed of strategic decision mak ing in a higb -velocity environment. Such environments are particularly challenging be-cause information is poor, mistakes are costly, and recovery from missedopportunities is difficult. The findings are a set of propositions, depictedin Figure 1. They are organized around three mediating processes.Several of the propositions focus on how executives making fast deci-sions accelerate tbeir cognitive processing. For example, these executives

immerse themselves in real-time information on their environment and firmoperations (Proposition 1). Tbe result is a deep personal knowledge of theenterprise that allows them to access and interpret information rapidly whenmajor decisions arise. In contrast, the slow executives have a less firm graspon tbeir business. So, wben strategic decisions occur, they grope about, tryto plan, and have trouble focusing on key information. The executives mak-ing fast decisions also use tactics to accelerate analysis of information andalternatives during the decision process. For example, they examine severalalternatives simultaneo usly (Propo sition 2). The comp arison proc ess spe edstheir analysis of the strengths and weaknesses of the options. They alsogather advice from everyone but focus tbeir attention on tbe most experi-


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1989 Eisenhardt 57 1FIGURE 1A Model of Strategic Decision Speed in High-Velocity Environments*

Real-TitneInformation

MultipleSimultaneousAlternatives

Two-tier AdviceProcess

Consensus withQualification

DecisionIntegration

KEY MEDIATINGPROCESSES1.2,3,5

AcceleratedCognitiveProcessing1,3,4

Smootfi GroupProcess2.3.5

Confidenceto Act

DecisionSpeed

+ 6 Perfonnance

"Numbers correspond to propositions in the text.

accelerate their cognitive processing by usin g efficient prob lem -solvin gstrategies that maximize information and analysis within time constraints(Hayes, 1981; Payne et al., 1988). These strategies are neither com pre hen sivenor noncomprehensive, but rather a mix of botb.Second, several of tbe propositions describe how executives making faststrategic decisions create a smooth group process. For example, constantperusal of real-time information allows executives to rehearse their perfor-mance routin es w ith one anoth er (Propo sition 1). The result is a team con-ditioned to work together successfully in turbulent situations. Similarly,although the consensus-with-qualification approach emp hasizes the roles ofexecu tives in tbeir own areas, it also rests on particip ation by the entire team(Proposition 4). The data suggest that executives favor this approacb. Theywant a voice but do not necessarily want to make cboices, except in tbeirown arenas . Finally, the fast team s use a two-tier advice proc ess (Proposition3). This advice process emphasizes the role of counselors, but all are con-sulted and can participate if they choose. In sum, the fast decision makers


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S72 Academy of Management foumal SeptemberSeveral propositions also converge on the importance of confidence inhigh-stakes decision making. Anxiety can cripple decision makers in suchsituations (George, 1980). The teams making fast decisions engage in behav-

iors to cope witb this anxiety and build confidence. One tactic is to rely onthe counsel of experienced executives, wb o imp art confidence and a sense ofstability (Proposition 3). A second tactic is to seek multiple alternatives(Proposition 2]. Doing so gives decision m akers the confiden ce that theyhave surveyed most of tbe likely options, leaving "no stone unturned." Mostimportant, the fast executives tie together strategic decisions and concreteoperating plan s [Proposition 5). This attention to day-to-day detail and link-age across major decisions gives a sense of mastery and control tbat impartsthe confidence to act and creates a structure within which action is possible(Gal & Lazarus, 1975: Langer, 1975).Finally, the findings corroborate an earlier study by Bourgeois andEise nha rdt (1988) linking fast decision mak ing w itb effective perfo rm ance(Proposition 6). The findings suggest a configuration of cog nitive , polit ical,and emotional processes that is associated with rapid closure on major de-cisions.Tbis article began by describing tbe extant views of fast strategic deci-sion making: that is, strategic decision making is fast when it is more cen-tralized, less com prehen sive, and less confUctual. T be results fail to supp orttbese views. Rather, tbe findings he re suggest tbat com preh ensiv eness is not

a single construct. Consistent with laboratory studies of decision makingun de r time pres sure (Payne et al., 1988), tbe resu lts suggest that fast de cisionmakers try to be efficient in their use of time. So, they are comprehensive insome ways, but not in others. For example, they seek advice from the bestsources but not from everyone, and tbey develop multiple alternatives butanalyze them quickly in comparison. "Noncomprehensive" better describeshow slow teams accelerate. The results also differ from the view (Hickson etal., 1986; Mintzberg et al., 1976) that conflict is an important determinant ofpace. One reason may be that those authors focused on situations whereconflict slowed tbe pace but not on equally confUctual situations in whicbconflict was resolved. Tbus, they could not observe tbe essential role ofconflict resolution in determining decision speed (Gersick, 1989; Tjosvold,1985). Finally the centralization view (e.g., Vroom & Yetton, 1973) neglectsthat autocrats become bogged down by inadequate information, excessiveworkloads, and anxiety as much as, and perhaps more tban, others do.

CONCLUSIONS EMERGING FROM A RESEARCH PROGRAMThis work is part of a larger researcb program on strategic decision

making in high-velocity e nviro nm ents. T he initial article (Bourgeois &Eisenhardt, 1988) identified some attributes of successful decision making


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1989 Eisenha rdt 573attribute: fast strategic decision making. The results link fast decisions toseveral factors, including tbe use of real-time information, multiple alterna-tives, counselors, consensus with qualification, and decision integration.

From this research program, a perspective is beginning to take shapethat challenges some traditional thinking about strategic decision making.Tbis emergent view places crucial importance on top management ieams.Others (Hickson et al., 1986; Mintzberg et al., 1976) have argued tbat deci-sion characteristics are paramount. The view here is that, although decisioncharacteristics are important, there are recurring interaction patterns amongexecutives that also profoundly influence strategic decision making and,ultimately, firm performance.Second, this view emphasizes a complex perspective on cognition. Arational versus incremental paradigm has dominated the literature on stra-tegic decision making, with the rational model often cast as a straw man[Anderson, 1983; Cyert & March, 1963: Lindblom, 1959; Quinn, 1980). Theresults of this researcb program suggest the limitations of that dichotomy.People are boundedly rational but are also capable of engaging in sensibleproblem-solving strategies to help compensate for their limitations. In thisview, interesting research questions center on problem solving strategies,and results from tbe artificial intelligence literature may be particularly rel-evant.Finally, tbe emergent perspective higb ligbts emotion as integral to higb-stakes decision making. The politics article [Eisenbardt & Bourgeois, 1988)indicated that intense emotions such as frustration, distrust, and loyaltyshaped organizational politics. Similarly, the present article identifies con-fidence and anxiety as key factors influencing the pace of decision closure.Thus, the view emerging from this researcb program is tbat emotion is crit-ical for understanding strategic decision making.The current article and tbe overall research program address tbe processof strategic decision making, especially in fast-paced, technology-driven en-vironments. Tbe microcomputer industry is admittedly an extreme situa-tion, a setting tbat places an extraordinary premium on fast, high-qualitydecision making. However, if tbe ideas presented here survive empiricaltests, they offer lessons for all organizations as they face an increasinglyturbulent world.

REFERENCESAnd erson. P, 1983, Decision making by objection and tbe Cuban missile crisis. AdministrativeScience Quarterly, 28: 201-222 .Astley. W, C. 1978. Sources of power in organizational life. Unpublished doctoral disserta-tion. University of Washington, Seattle,Bell. C. C. 1984. The mini and micro indu stries. IEEE transactions on computing. 17(October):

14-29,Bourgeois, L. J. 1980. Performance and consensus. Strategic Management faurnal, 1: 227 -248 .


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574 Academy of Management Journal SeptemberDutton, J., & Jackson, S. 1988. Discerning threats and opportunities. Administrative ScienceQuarterly, 33: 370-387.Eisenhardt, K. 1989. Building theories from case study research, Academy of ManagementReview, 14: in press.Eise nha rdt, K., & Botjrgeois, L. J. 1988. Politics of strategic decisio n mak ing in high-ve locityenvironments: Toward a midrange theory. Academy of Managem ent /ouma l, 31 : 73 7-770.Eisenha rdt. K., & Bourgeois, L. J. 1989. Charting strategic decisions; Profile of an industry star.In M, Van Glinow & S, Mohrmann (Eds.), Managing complexity in high technology orga-nizations, systems, and people: Forthcoming. New York: Oxford University Press.Fredrickson, J., & Iaquinto. A. 1987. Incremental cha nge, its correlates, and th e co mp rehen sive-ness of strategic decision processes. Academy of Managem ent Proceedings: 2 6 - 3 0 .Fredrickson, J., & Mitchell, T, 1984. Strategic decision processes: Comprehensiveness and per-

formance in an industry with an unstahle environme nt. Academy of Managem ent Journal,27: 399-423 .Gal, R., & Lazarus, R. 1975. The role of activity in anticipating and confronting stressful situ-ations. Journal of Human Stress, 2: 4 - 2 0 .George, A. 1980. Presidential decision m aking in foreign policy. Boulder, Colo.: WestviewPress.Gersick, C. 1988. Time and transition in work teams: Toward a new model of group develop-ment. Academy of Management Journal, 31: 9-41 ,Gersick, C, 1989, Marking time: Predictable transitions in task groups. Academy of Manage-ment Journal, 32: 274-309.Claser, B,. & Strauss, A, 1967, The discovery of grounded theory: Strategies for qualitativeresearch. London: Wiedenfeld and Nicholson.Hayes, J, 1981. The complete prohlem solvers. Philadelphia: Franklin Institute Press,Hickso n, D,, Butler. R.. Cray, D. Ma llory, C , & W ilson, D. 1986, Top decisions: Strategicdecision making in organizations. San Francisco: Jossey-Bass.Hof, R. 1984. Why once-ambitious computer firm quit. Peninsula Times Trihune, September29: B l.Huber. G. 1985. Temporal stability and response-order biases in participant descriptions oforganizational decisions. Academy of Management Journal, 28: 943 -950,Janis, 1. 1982. Victims of groupthink (rev. ed,), Boston: Houghton-Mifflin,Langer, E. 1975, The illusion of control. Journal of Personality and Social Psychology, 32 :311-328.Lindhlom. C. 1959, The science of "muddling through." Public Administration Review, 19 :79-88,Ma rch. J., & Olsen, J, 1976, Amhiguity and choice in organizations. Bergen, Norway: Univer-sitetsforlaget.Miles, R.. & Snow, C. 1978, Organizational strategy, structure, and process. New York; Mc-Graw-Hill Book Co,Mintzberg. H. 1973, Strategy making in three modes, California Management Review, 16:

4 4 - 5 3 ,Mintzberg. H,, Raisinghani. D-, & Theoret. A. 1976, The structure of "unstructured" decision


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1989 Eisenhardf 575Nystrom, P., & Starbuck. W. 1984. To avoid organizational c rises, unlearn. OrganizationalDynamics, 12(Spring): 53 -6 5.Payne . J., Bettman, J,, & )obnson . E. 1988. Adap tive strategy selection in decision making.

foumal of Experimental Psychology, 14: 534-552.Pfeffer. J. 1981. Power ill organizations. Marsbfield. Mass.: Pitman Publishing.Quinn, J. B. 1980. Strategies for change: Logical incrementalism. Homewood, 111.: Dow-Jones-Irwin.Scbweiger, D., Sandberg. W., & Ragan, J. 1986. Group approaches for improving strategic deci-sion making: A comparative analysis of dialectical inquiry, devil's advocacy, and consen-sus. Academy of Management foumal, 29 : 5 1 - 7 1 .Scbwenk, C. 1963. Laboratory research on ill-structured decision aids: The case of dialecticalinquiry, Decision Sciences, 14: 140-144 .Scbw enk. C. 1985. The use of participant recollection in the mod eling of organizational deci-sion processes. Academy of Man agement Review, 10: 496503.Simon, H. 1987. Making m anagement decisions : The role of intuition and emotion. Academy ofManagement Executive, 1: 57-64.Staw. B, 1981. The escalation of commitment to a course of action. Academy af ManagementReview. 6: 577-587.Staw, B., San deland s, L..& Dutton, J. 1981. Threat-rigidity effects in organizational behavior: Amultilevel analysis. Administrative Science Quarterly, 26: 501-524.Sutton, R., & Callahan, A. 1987. The stigma of bankruptcy: Sp oiled organizational image and itsmanagement. Academy of Management faurnal, 30: 405-436.TJDSvold, D. 1985. Implications of controversy researcb for management. Joumal af Manage-ment, 11: 21-3 7.Vroom. V.. & Vetton, P. 1973, Leadership and decision making. Pittsburgh, Pa.: University ofPittsburgb Press.Weick, K, 1979. Tbe social psychology of organizing (Zd. ed.), Reading, Mass.: Addison-Wesley.Yin, R. 1964. Case study research: Design and methods. Beverly Hills: Sage Publications.

APPENDIXQuanti tat ive MeasuresGoal conflict [Botirgeois, 1980). The goal question consisted of a list of ten organizationalgoals, introduced by: "In the space provided, indicate bow important eacb of tbese goals is toyour firm" (0-10 scale). The goals included: long-term profitability, growth. Innovation, stockprice, company prestige, and community service. Each top management team's standard devi-ation on each of the goal items was summed.

Policy conflict [Bourgeois. 1980). The questionnaire contained a matrix in whicb 12 keydecision areas ran down one side of tbe paper and executive titles ran across the top. The textread: "Here is a list of various decision areas wbich may be of strategic importance to your firm.Please indicate how important eacb of tbese decision areas is to tbe long run bealth of yourfirm" (0 = not at all important. 10 = extremely important). Decision areas were: marketingstrategies and prod uct pric ing. R&D project selection, exp ansion of prod uctio n c apac ity, m ajorfinancings, and restructuring the organization. The team standard deviation on eac b of the items


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Academy 0/ Management Journol Septemberother specific member of the team. The text read: "How often during the process of deliberating,debating, and making policy decisions, have you found yourself in open disagreement with thesuggestions or proposals of each of these individuals?" {0 = never. 10 = constantly). The meanscore for each executive and then the overall mean for the team were computed.

Power (Astley, 1978). Using the same key-decision-area matrix described above, we askedexecutives to assign scores to each manager on each decision in terms of how m uch influencethat manager had on the decision (0 = no influence. 10 = very great deal of influence). The textread: "Now. for the same list of decision areas {excepting those scored 0 or 1), indicate howmuch influence you think each m anager has in making decisions concerning that decision area.If the manager has a very great deal of influence over the decision area, give a rating of 10; noinfluence w ould score 0; and so on." Com puting mean scores every other respo ndent assignedto an executive involved three steps: a mean power score for each person on each decision; amean score for each decision area (R&D. marketing, finance, m anufacturin g, an d organ ization);and an overall mean.Kathleen M. Eisenhardt received her Ph.D. degree in organizational behavior fromStanford University. She is an assistant professor in the Department of Industrial En-gineering and Engineering Management. School of Engineering, at Stanford University.Her research interests include strategic decision making and entrepreneurship in high-technology environments, agency theory, and inductive methods.


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