Decision weaving: Forming novel, complex strategy in entrepreneurial settings

Timothy E. Ott and Kathleen M. Eisenhardt

Strategic Management Journal, 2020, vol. 41, issue 12, 2275-2314

Abstract: Research Summary Strategy formation is central to why some firms seize novel opportunities while others fail. We explore a core dilemma of strategy formation in entrepreneurial settings—whether to learn a novel strategy one domain at a time (modular) versus assemble a complex strategy of coherent activities across all domains at once (integrative). By studying six ventures, we develop a theoretical framework for how entrepreneurs effectively form novel, complex strategy: Decision weaving. They (a) employ sequential focus (not parallel), (b) pause at plateaus (not optima), and (c) deploy stepping stones (not leaps) in background domains. These behaviors enable both fast, effective learning and evolving yet holistic understanding of an emerging strategy. Overall, we contribute to the microfoundations of strategy by proposing a cognitively sophisticated, yet realistic strategist. Managerial Summary Strategy formation is central to why firms seize novel opportunities while others fail. By comparing three venture‐pairs, we develop a fresh framework for strategy formation in nascent markets where strategy is both novel and complex: Decision weaving. Effective strategists: (a) use sequential focus (not parallel) to learn about successive focal strategic domains, (b) pause at learning plateaus to consolidate that knowledge about a focal domain, and (c) use stepping stones to make progress in background domains without losing focus. These behaviors enable both fast, effective learning, and evolving yet holistic understanding of an emerging strategy. More importantly, these behaviors set the stage for rapid and profitable scaling (i.e., growth).

Date: 2020
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