Strategic Guidelines - Free Essay Example

Introduction

The Chief Executive Officer (CEO) and their closest team (Top Management Team) are responsible for establishing strategic guidelines and major plans for the organization. This is based on a reading, among other variables, of the environment in which the company operates (Helpap & Bekmeier-Feuerhahn, 2016; Will & Pies, 2018). In some way, they are leading actors of the company’s strategy, and its construction of meaning is considered to be, in consequence, one of the basic foundations of the organization’s advance or retreat in its changing competitive environment (Palmer et al., 2017). In fact, to some extent, some of the most resounding failures have been driven by executives who only took into account their points of view fed, for example, by the administrative training they received (Mills, A. & Mills, J., 2017).

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Senior management, therefore, has an essential responsibility among the others in their charge, namely: to make sense of the situations - internal and external - that affect the organization (sensemaking) and, once these have been processed, communicate it to the other stakeholders of the same (sensegiving) (Will et al., 2018). This paper seeks to understand the construction of meaning carried out by the senior managers of a multinational automotive company, concerning the turbulent strategic environment they face today. Such understanding contributes to the expansion of the current level of knowledge about the discourse of sensemaking and its implications for organizational studies.

Sensemaking Framework

The discourse of the construction of meaning (sensemaking) is considered one of the most influential within the fields of organizational strategy, managerial and organizational cognition, and, in general, of the organizational studies (Pavez, 2019). According to Helms Mills, sensemaking is considered to have eight elements, namely: 1) it is based on the construction of identity, 2) it is retrospective, 3) it is active in sensitive environments (projection), 4) it is social, 5) it is always in progress (ongoing), 6) it focuses on - and is guided by - selected signals (extracted cues), 7) it is subject to enactment, and 8) is driven by the criterion of ‘plausibility’ rather than by the ‘accuracy’ of the explanations made by the actors (Weick et al., 2005).

Sensemaking allows to better understand how people appropriate and enact their ‘realities’ (Will et al., 2018) and, more generally, the processes by which individuals seek plausibility to understand ambiguous, misleading, or confusing issues or events” (Mills et al., 2017). It is considered then that the construction of ‘plausible accounts of equivocal situations’ is frequently considered the interpretive work of the construction of meaning and that carrying out this work implies that the subjects build their zone of meaning or reality, extracting significant configurations from experiences and lived situations (Weick, 2012).

As a theory, the construction of meaning delineates the process by which organizational situations are framed, narrated, or categorized through the words or bodily gestures of agents in contexts, and how these structure subsequent perceptions (Will et al., 2018). Through experience, this structuring becomes learning as agents cognitively detect regularities in the midst of crude and often disordered experience and compress them into less detailed conceptual structures that can then come to guide the senses, inferences, and behavior (Pavez, 2019).

Multinational Automotive Company

The strategic context faced by the managers of large automotive corporations in the world is considered, in effect, as highly competitive, complex, and, at present, dynamic and turbulent (Gao, Kaas, Mohr, & Wee, 2016). This is mainly due, in general, to the impact of the dynamic transformation on the geoeconomics of the world and to developing aspects such as the fourth industrial revolution (Schwab, 2017) and, in particular, to the convergence of three macro-trends within this revolution, to know: connectivity, electrification and changing customer needs (World Economic Forum, 2016).

Automotive organizations compete to advance in the adoption, adaptation, and, essentially, the development of new technologies and in carrying out other series of actions to strengthen their competitiveness. However, various variables make the competitive environment that characterizes them turbulent. Among them, the following stand out: 1) the profound changes to which the industry in which they compete is exposed, 2) the high influence of existing regulations and current trade agreements, 3) the pronounced changes in the price of oil, 4) variations in the price of important currencies such as the dollar and the yuan and 5) the strengthening of highly innovative and revolutionary competitors, such as Tesla, as well as the strong entry of others rather unexpected, such as Google (Hosseini et al., 2016; Pelenk, 2018). For managers of organizations immersed in this industry, this raises ambiguity, equivocation, and confusion.

Major Changes

The actor’s ‘range of perception’ matters in determining turbulence- The managers of the organization, given its global nature, construct a sense of their environment by making a broader consideration of it than that carried out by those who are in charge of companies that have only local operations. These, in effect, take into account not only what happens in the national context, with which they are directly related, but also the regional and global situation, as well as the main factors that, in their view, give form to it. General deterioration of the economy, fluctuations in oil prices, and exchange rates constitute some of the turbulence.

The ‘turbulence’ is cataloged with different labels according to the manager and is accompanied by an optimistic spirit towards the future and a look at the competitive system as a whole- Depending on what has been indicated, the construction of meaning about the existence of a turbulent environment is built from notions present in the top management’s discourse, such as ‘concern,’ ‘need,’ ‘urgency,’ and ‘crisis.’ This is accompanied, on the other hand, by a spirit of optimism and resistance to the situation, as well as an effort to justify what was being done to adequately address the circumstances. This is done by developing arguments that try to support the actions taken to move towards the future. The organization has made impressive savings in the last three years in manufacturing costs, administrative costs, and materials costs. It has a whole strategy and a structure to generate innovation, to bring new ideas that allow reducing costs, rationalizing costs.

The ‘turbulence’ is faced thanks to a positive but cautious image of the future and the justification of, and persistence in, what has been done in the past and present- Faced with a turbulent environment, the response of senior managers is, initially, to read the medium to get their look and find a justification for it; then, to provide reasons to move forward despite the vicissitudes, to consider the future with optimism and, by this means, make sense of the action that is taking place in the present. For the latter, however, the actors do use a certain level of caution in what they claim, in their capacity as leaders of the organization. They recognize the presence of uncertainty as a central aspect of their considerations and, in fact, use it as an argument to alert others to the fact that, eventually, despite what is done based on the reading made of the situation, things, in the end, would get better.

Communication, leadership, integration, the importance of everyone’s day-to-day work and innovation have been identified as critical aspects to move forward within a turbulent environment- For the construction of the strategy and its implementation, the role played by communication (formal and informal) between the various actors of the company is considered fundamental. This, in effect, together with the leadership of senior management, are considered central elements of coordination of the system and a key to being able to operate adequately within the current turbulent environment.

Conclusion

This paper has tried to contribute to the expansion of the current knowledge on the discourse of sensemaking and its implications for the field of organizational studies. This, in particular, trying to understand the construction of meaning carried out by senior managers in the context of a multinational automotive company based on the turbulent strategic environment they currently face.

The top managers of the multinational automotive organization construct a sense of a turbulent environment according to their ‘range of perception,’ as well as according to a particular selection of certain key issues and the neglect or ignorance - partial or total - of others. These aspects generate visible variations between individuals concerning their level of responsibility in the organization (local or national, regional, or global). Senior managers also consider the future as an inspiring argument for meaning-making processes about the turbulent environment they are going through, as well as the strategies established in the past and present, in which they try to persist with conviction, whenever possible. That kind of environment, and the ‘images of the future’ they build, also motivate them to focus on developing dynamic capabilities, such as innovation, to try to survive the turbulence and emerge well from it. Thus, they try to enact their environment and not just adapt to what it may dictate.

Sensemaking processes are accompanied by sensegiving processes and, in a turbulent context such as the one in which the studied organization is found, they are established through flexible and effective communication processes. This, however, also goes hand in hand with the monitoring of certain guidelines provided from the global and regional levels, which ensure consistency of efforts and maintenance and reputation of corporate and brand identity. The senior managers also build sense of the organization, ensuring that it is distributed throughout the organization, thereby generating that the strategy is not only ‘proclaimed’ but also ‘practiced’ daily by each member of the corporation.

References

Helpap, S., & Bekmeier-Feuerhahn, S. (2016). Employees’ emotions in change: advancing the sensemaking approach. Journal of Organizational Change Management. https://www.emerald.com/insight/content/doi/10.1108/JOCM-05-2016-0088/full/html

Hosseini, S. H. K., Hosseini, S. F., Kordaniej, A., & Ahmadi, P. (2016). Survey and explain the role of sensemaking in successful strategy implementation in Iran’s automotive companies. Business: Theory and Practice, 17(3), 202-215.

McCann, J., Selsky, J., & Lee, J. (2009). Building agility, resilience and performance in turbulent environments. People & Strategy, 32(3), 44-51.
http://agilityconsulting-com.secure37.ezhostingserver.com/resources/Strategic%20Agility%20Institute/HRPS-BuildingAgility.pdf

Mills, A. J., & Mills, J. C. H. (2017). When plausibility fails: Toward a critical sensemaking approach to resistance. Insights and research on the study of gender and intersectionality in international airline cultures, 113-130. https://www.emerald.com/insight/content/doi/10.1108/978-1-78714-545-020171007/full/html

Palmer, I., Dunford, R., & Buchanan, D. A. (2017). Managing organizational change: A multiple perspectives approach. New York: McGraw-Hill Education.