The Influence of Tacit Knowledge and Collective Mind on Strategic Planning

Decision making through rigorous thinking is a way of life for managers. However, their perception of how they are supposed to think and the decision processes they use is plagued by inconsistency. Throughout their education managers are taught the rational or analytical method of strategic planning (Ansoff, 1988; Mintzberg, 1994). Through personal experiences, however, they have learned that making decisions using tacit, or hidden, knowledge is quite effective (Isenberg, 1984). Managers, through their strategic choices, determine the success or failure of an organization (Andrews, 1971; Ansoff, 1988; Child, 1972; Priem, 1994). In this article we propose a model of the strategic decision-making process used by members of top management teams (TMTs). Specifically, we couple two criteria: 1) the supra-individual concept of the collective mind (Durkheim, 1895; Neck and Manz, 1994; Weick and Roberts, 1993) with 2) the efficacy of tacit knowledge and intuition in decision making (Agor, 1986a; Isenberg, 1984; Polanyi, 1966). The phenomenon of a collective mind is formed when a group of individuals enacts a single memory complete with differentiated responsibilities for remembering appropriate portions of a common experience. It is revealed in shared vocabularies (Martin, 1992), consensus on strategic means and ends (Bourgeois, 1980; Dess, 1987), and shared perceptions of the organization's environment, strategic position, and prospects (Hambrick, 1981). Tacit knowledge is defined as work-related practical knowledge (Wagner and Sternberg, 1986). It is that which is neither expressed nor declared openly but rather implied or simply understood and is often associated with intuition. Intuition is broadly considered as direct knowing, immediate understanding, learning without the conscious use of reasoning, or making a choice without formal analysis (Behling and Eckel, 1991). Intuition is also considered a conduit between the subconscious and conscious (Parikh et al., 1994) and used to access tacit knowledge (Anthony et al., 1995). Traditionally, the rational analysis method is the preferred decisionmaking method taught and stressed (Mintzberg et al., 1995). An emphasis on tacit knowledge, or intuition, is contrary to these teachings and often carries a stigma (Agor, 1986a). However, everyone incorporates tacit knowledge in the decision process to some degree (Agor, 1985a; Polanyi, 1966). Our purpose here is not to denigrate the time honored rational or analytical decision-making process. Rather, we simply attempt to highlight the intuitive approach to making decisions in order to show its benefits to the strategic planning process. Through our proposals, we contend that incorporating tacit knowledge into a model of the strategic decision-making process is appropriate. Furthermore, it is beneficial to broaden the definition of strategic decision maker to include the collective mind (Weick and Roberts, 1993) of the TMT. Previous studies (e.g., Bantel and Jackson, 1989; Finkelstein, 1992; Hambrick and Mason, 1984; Wiersema and Bantel, 1993) have shown that consideration of the TMT as a whole can be more explanatory than reviewing independent tiers of the leadership hierarchy or the CEO alone. We therefore focus on the TMT as the group of top level senior executives of an organization who make strategic decisions. However, we refrain from ascribing individual psychological characteristics to a collective mind (Walsh, 1995) by considering team members as individuals whom are influenced by the collective. In the following sections of this article, we present a review of tacit knowledge and its relation to intuition. This is followed by incorporating tacit knowledge and the collective mind into a partial model of the TMT strategic decision-making process along with corresponding propositions. Research implications germane to further study of this area and implications applicable to the practitioner conclude the article. …