- Strategy
Supply chain and operations executives are increasingly involved in making decisions about the company’s supply chain strategy that have long-term implications. But how do these executives, whose job responsibilities involve mainly short-term decision-making, think about the long-term? Researchers at the MIT Center for Transportation & Logistics (MIT CTL) asked this question seven years ago. The findings of their multi-method study, which involved collecting survey data from several MIT CTL partner companies, were published recently in the journal Production and Operations Management.
The study, authored by Shardul Phadnis, Chris Caplice, Yossi Sheffi and Mahender Singh, suggests that the types of strategies advocated by an executive are likely to be related to two dimensions of the person’s vision of the future business environment. These dimensions are the executive’s regulatory focus, which describes the balance between threats and opportunities in the vision, and the level of optimism about the company.
Executives who envision issues they see as opportunities for the company and are optimistic about the organization’s ability to succeed in that future, are likely to promote strategies that involve influencing the business environment itself for the benefit of the company’s novel products and services. The researchers term such executives as having pioneering cognition. For instance, a pioneering executive at a transportation provider may advocate initiatives such as promoting the company’s novel data analytics services to new customers or working with the industry to set standards that are beneficial to the company’s innovative products.
On the other hand, an executive with low optimism about the future, which he considers to consist primarily of threats, is likely to prefer initiatives that focus on changing the company’s internal organization and processes to optimize them for current products. The researchers call such executive to have a protective cognition. For example, a protective executive at a manufacturing company may prefer initiatives such as conducting process improvement to lower the total cost of producing the company’s existing products.
The other two types of cognition in the researchers’ typology are pushing (optimistic outlook about a future primarily consisting of threats), and provocative (low optimism in a future that consists primarily of opportunities).
All four types of cognition have unique strengths and weaknesses. No one type is universally superior to the others.
These findings are based on two studies. The first was a qualitative study that examined the scenarios of future and preferred strategic choices of two dozen senior executives at a large distributor. This study suggested the presence of the strategic patterns mentioned above. The second study, a survey of supply chain executives in the MIT CTL data, quantitatively examined the propositions of the qualitative study.
So, what types of executives are the most prevalent? Our own surveys, as well as findings from the psychology literature, suggest that the pushing type would be most common: executives’ scenarios would be primarily focused on threats and how to avoid them, but would remain optimistic about their company’s ability to navigate the troubled waters.
Surprisingly, or perhaps not that surprisingly, the average senior executive in the MIT CTL network who completed the survey mentioned in the second study above, was slightly closer to the pioneering type than the pushing type and farthest from the protective type. Perhaps this is a bias in the MIT CTL sample.
Why should one care about these findings for real-world decisions?
First, knowing that individuals’ preferred choices for supply chain strategy relate to their vision of the future, can help explain why different supply chain executives in one company may advocate different types of strategic choices for their firm and may vehemently oppose some choices advocated by other colleagues. Second, knowing the strategic types of all executives involved in making choices for a company’s supply chain strategy can help the organization become aware of any blind spots in the team and recognize that certain types of strategic choices (i.e., those advocated by the types not represented on the team) may not be considered by the team. Third, it may be possible—although speculative at this point—to design different scenarios to trigger different types of strategic cognition among the executives to generate different types of ideas for the company to pursue in designing its supply chain strategy. (Note: psychology research suggests that regulatory focus is context-dependent and can be manipulated in this manner; however, optimism is considered a stable trait and may be difficult to manipulate).
Shardul Phadnis and co-authors are grateful to all the respondents who completed the anonymous survey in this study. Thank you – we would not have these findings and the publication without your input!
For more information on the research described in this article contact Dr. Shardul Phadnis, Associate Professor, Director of Research, Malaysia Institute for Supply Chain Innovation, at: sphadnis@misi.edu.my.