Weaving strategic decisions: Strategy formation under novelty, resource constraint and complexity
Prior research shows that executives can form strategy through holistic design, incrementally learning through action, and efficient search, but that the processes may often be at odds with each other. This study seeks to explore how executives combine mental conceptualizations and incremental actions to effectively search for and form strategy in novel, complex, and resource constrained environments. Through an in-depth, multiple case study of 8 early stage, two-sided market firms, we develop a theoretical framework to describe how executives create successful strategies for growth. We find that executives weave strategic decisions together into a system of activities through two separate but complementary practices. They use sequential focus to intensely devote resources to learning in a single decision domain while using stepping stones in other domains to move incrementally toward future goals without distracting from their primary focus. Our results have implications for search and learning theories, organizational growth and the microfoundations of strategy.