The Formulation Processes and Tactics Used in Organizational Decision Making Author(s): Paul C. Nutt Source: Organization Science, Vol. 4, No. 2 (May, 1993), pp. 226-251 Published by: INFORMS Stable URL: http://www.jstor.org/stable/2635201 Accessed: 11/09/2009 22:08 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=informs . Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact [email protected]. INFORMS is collaborating with JSTOR to digitize, preserve and extend access to Organization Science. http://www.jstor.org
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8/14/2019 The Formulation Processes and Tactics Used In
The Formulation Processes and Tactics Used in Organizational Decision Making
Author(s): Paul C. NuttSource: Organization Science, Vol. 4, No. 2 (May, 1993), pp. 226-251Published by: INFORMSStable URL: http://www.jstor.org/stable/2635201
Accessed: 11/09/2009 22:08
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at
http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless
you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you
may use content in the JSTOR archive only for your personal, non-commercial use.
Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained athttp://www.jstor.org/action/showPublisher?publisherCode=informs.
Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed
page of such transmission.
JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the
scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that
promotes the discovery and use of these resources. For more information about JSTOR, please contact [email protected].
INFORMS is collaborating with JSTOR to digitize, preserve and extend access to Organization Science.
Consider a Toyota dealer who has been getting disturbing signals after a longperiod of sales growth. Declines in the closing ratio (a measure of lost sales) werenoted and profit had leveled off. The dealer judged these performance indicators tobe important signals and linked them to staffing problems. Growth was thought tohave forced the addition of sales people who were not enculturated into the dealer'sapproach to the car business. A sales manager position was created to train andsupervise the sales force. After a year, the closing ratio and profit continued to fall.The sales manager was fired and the dealership was back to square one.
This case, drawn from the data base developed for this study, indicates howformulation influences decision making. Consistent with the literature on strategicdecision making, formulation is defined as a process that begins when signals, such asperformance indicators, are recognized by key people and ends when one or moreoptions have been targeted for development (e.g., Ansoff 1984). During formulationindividuals interpret signals that capture their attention by making claims. The claimindicates beliefs and values (e.g., we must improve our closing ratio) that call foraction. To act, the decision maker sets a direction that guides subsequent activity.The importance of formulation stems from the pivotal role that these directions playin determining what will be considered and what will be excluded. The Toyota dealerlinked declines in the closing ratio to sales force quality. The remedy was seen interms of training. Given this direction no other option could be considered.
This research attempts to identify and describe the formulation procedures used bymanagers during organizational decision making addressing two questions. First, domanagers use distinct types of procedures to carry out formulation? Second, do theresults produced by these practice-based procedures differ? Answering these ques-tions demands field settings in which a combination of descriptive and quantitativetools can be applied (Kolb 1983, Schon 1987). To carryout this research, 163 decisioncases were analyzed to identify the formulation procedures used by managers indecision making. The cases were classified to identify procedural types. Adoptionrates, merit, and duration were used to determine the success of each type of
formulation procedure.
*Accepted by Richard L. Daft; received January 1990. This paper has been with the author for two
revisions. 226
1047-7039/93/0402/0226/$01.25Copyright C) 1993, The Institute of Management Sciences
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FORMULATION PROCESSES IN ORGANIZATIONAL DECISION MAKING 227
Formulation and Decision Making
Decision researchers agree that the early, formative steps in decision making arecrucially important because they guide the search for solutions (e.g., Cyert and March1963; Soelberg 1967; Bower 1972; Witte 1972; Mintzberg et al. 1976; Quinn 1981;Lyles 1981; Nutt 1984, 1986; Pettigrew 1985; Hickson et al. 1986). Although a varietyof terms are used, each study suggests that decision makers interpret signals andprovide direction. Decision makers are exposed to many signals, such as how keypeople interpret cost increases and innovations by competitors, and must determinewhich signal merits attention. After claims based on these signals have been sortedout by a decision maker, a direction is offered. Directions can be expressed asproblems to be overcome (Pounds 1969), boundaries that circumscribe what can bedone (Maier 1970), ideals to be met (Nutt and Backoff 1992), strategies to be followed(Schendel and Hofer 1979), issue agendas to be managed (Ansoff 1984), idealizedsolution targets (Nadler 1981), a preferred solution (Cohen, March and Olsen 1976),
and objectives (Locke et al. 1981). Qualifications can also be imposed such asstakeholders to be involved (Freeman 1983), urgency (Kolb 1983), and core values tobe preserved (Quinn 1988).
One of the most important acts in decision making is deriving directions fromclaims based on signals thought to be important (Slovic, Fischhoff and Lichtenstein1977; MacCrimmon and Taylor 1976). However, as Mintzberg et al. (1976) andFredrickson (1985) point out, little is known about how managers carry out formula-tion. Furthermore, studies of organizational decision making seldom address out-comes to distinguish between good and less desirable practice (Schendel and Hofer1979).
This research was undertaken to identify the formulation procedures used by
managers during organizational decision making and to assess these practices byaddressing two questions:
1. Procedural types. Determine how managers carry out formulation, identifyingprocedural types that have unique steps and step sequences.
A decision process is made up of a stream of action-taking steps that begins withclaims by stakeholders drawn from signals that seem important and ends when a
decision has been adopted. This research is concerned with the action-taking steps ofdecision makers as they respond to seemingly important claims and establish direc-tions that guide development, called formulation. Formulation is defined as aprocedure carried out by a responsible agent (a manager) that begins by respondingto the claims made by key people ends when an option or options have been targetedfor development.
To carry out this research each of action-taking steps in a decision is identified.Identifying each of the steps in a decision process before formulation procedures areidentified has two benefits. First, viewing all decision making steps makes it easier torecognize the appreciate the steps that are related to formulation. Second, thistreatment of the data makes no assumptions about which decision activity involves
formulation. As a result, arbitrary distinctions that determine what constitutes aformulation procedure are avoided during data collection.
IdentifyingDecision Making Procedure
The action-taking steps that make up a decision-making process can be identifiedby imposing a framework or from an examination and comparison of cases. Soelberg
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(1967), Bower (1972), Witte (1972), and Mintzberg, Raisinghani, and Theoret (1976)popularized an "emergent theme" approach which immerses the researcher in theraw data describing each case to find key decision making activities. This approachbecomes unwieldy when large data bases are assessed. The mass of detail makes it
difficult to analyze the data. As a result, researchers using the emergent themeapproach have been forced to examine a limited number of cases, making the
generalizability of their conclusions suspect. Researchers using a small case data base
may fail to discover important action-taking steps or fail to recognize the idiosyncraticnature of the steps that are discovered.
An alternative to this approach imposes a framework on the data. The researchercan fit the decision case to the framework and then look for action-taking steps. Bothreliability and generalizability improve when patterns emerge that have the same
steps and step sequences in a large number of cases. However, imposing a frameworkhas the disadvantage of creating the appearance of orderliness in what may be a
chaotic process. Also, imposing a framework may result in losing important messagesthat do not fit the framework. The advantages of systematic description of decisionsand using a large case data base outweigh the disadvantages of matching to an overlyneat set of steps and the possibility of lost information.
Using a framework to find patterns in decision making steps is similar to the "eticsand emics" classification approach, from phonetics and phonemics, applied by lin-guists (Pike 1967). An emic representation applies a minimal set of conceptualcomponents to describe the object being analyzed (e.g., a decision procedure).
Components of the thing being described (decision making) are used to identifyelements in the classificatory framework. This kind of framework allows the re-searcher to look for similarities and differences. The etic describes how the frame-
work is used to profile an object (e.g., decision case), drawing on the thing beingclassified (the case) as a point of reference. Such a classification is phyletic (McKelvey1978), because it attempts to identify and explain the origin of types.
The ClassificationFramework
The framework shown in Figure 1 pulls together the phases and routines identifiedin studies of organizational decision making, planning and design (e.g., Nadler 1981),innovation (e.g., Zaltman, Duncan and Holbek 1973), policy formation (e.g., Dunn1981), organizational change (e.g., Hage and Aiken 1970), planned change (e.g.,
Beyer and Trice 1978), and organization theory (Simon 1977, March 1981). To createthe framework, process phases identified in these studies were systematically com-
pared. The synthesis which emerged drew together recommendations for the stagingof activity and monitoring by a decision maker, providing a prescriptive view ofdecision making that has broad support in literature. Including monitoring in theprescriptions captures the transactional nature of decision making, identifying the keychoices called for by a decision maker as the decision process unfolds.
The decision making process shown in Figure 1 has three major blocks of activity:intelligence, choice, and development, drawn in part from Simon's (1977) intelligence,design, and choice typology. The boxes in Figure 1 represent decision making stageswhich identify the types of information that should be collected. The circles identifywere choices are made by a decision maker to monitor information gathering. Thearrows in Figure 1 indicate decision making steps which identify actions called for by
the decision maker and others involved in the decision process.In the intelligence block, signals (Stage I) that stem from sources such as liaison,
management information systems, and industry reports are interpreted by interestedparties. This interpretation is used to fashion claims that call for action. A decisionprocess is activated when key people make claims. This activism forces a decisionmaker to make a diagnosis that assesses the importance of each claim and reconciles
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FORMULATION PROCESSES IN ORGANIZATIONAL DECISION MAKING 229
INTELLIGENCE
Defer Stage I S
Signals
c as
DEVELOPMNT _
CHOICE
|Intentions L| 9l li W
C o n c e p t ~~Omissions, Tentative EvaluationDevelopment misconceptions, plans l
akerr
FIGURE 1. The Transactional Representation of Decision Making.
competing claims, determining if the claims suggest an important performance gap.Many decisions would be deferred at this point. If not deferred, a performancegap would be recognized. Beginning with Downs (1967), the notion of a performance
gap has been widely accepted as the trigger of decision making activity. When aperformance gap seems substantial, decision makers specify needs and opportunitieswhich activate development. The choiceblock identifies key judgments that are madeby the decision maker. The deuelopment lock identifies the staging of informationgathering activity carried out to fashion and implement the decision. The blocks arelinked by a series of transactions. The arrows in Figure 1 indicate how informationflows between a decision maker making choices and a support team that is carryingout development. Support teams are made up of technical staff, other managers, oreven the decision maker acting as his/her own technical advisor and periodicallychange.
Development begins in Stage II, intentions, when the decision maker specifies
needs or opportunities suggested by claims. A support team clarifies these needs andopportunities by offering problems or objectives. In Stage III, concept development,the decision maker states premises, which identify ways to deal with the problems orrespond to the objectives identified in Stage II. A support team responds by offeringoptions. In Stage III the decision maker tests the options for omissions, misconcep-tions, and errors. Alternatives that can be modified to overcome the decision maker's
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objections are subjected to an evaluation in Stage V. The decision maker identifiescriteria and the support team applies them to assess the merits of alternatives that
survive Stage IV. During installation (Stage VI) the decision maker applies tools such
as rewards and incentives, personnel selection and promotion, resource allocation,sanctions, coordination, and delegation to implement the preferred option. Thedecision process ends when field performance is judged to be adequate and thedecision maker terminates surveillance. The actions suggested by support staff canlead to cycling in a stage as the decision maker gathers information to explorepossibilities.
The transactional framework goes beyond a linear unfolding of steps that istypically used to describe decision making (e.g., Mintzberg et al. 1976, Kolb 1983).First, the transactions recognize that dialogues about possibilities between membersof a support team and the decision maker are essential for successful decision makingto occur (Churchman 1975, Nutt and Backoff 1986). Second, the framework captures
both the concepts required to understand decision making and the steps required tomake a decision. By capturing both the meta and focal level of decision making aswell as the dialogue in which crucial actions are uncovered, a decision process can berepresented with more precision and a greater depth of understanding. The frame-work identifies decision making stages that should be activated to gather information,but may be latent for a given decision.
Capturing Types of Decision Making Processes
To profile a decision making process, key transactions are identified that trace
action-taking steps. There are two types of traces. The normative trace identifies whatshould take place in a decision making process, indicating choices that should be
made, as shown by the arrows in Figure 1. The descriptive trace describes how adecision maker carries out a particular decision making process by taking steps tointerpret claims, establish intentions, guide the selection and development of options,assess options, and install a preferred option. For a particular decision, decisionmakers may delegate some of the analysis or design activities to a support staff. Todescribe the stream of choices in a particular decision, each action-taking step isshown by an arrow that connects one of the stages to the choice block. The profile ofthese steps captures the sequence of events in a decision case.
A Case Profile
A solar energy decision by a firm will be described to illustrate how the frameworkis used to trace the action-taking steps of a decision. Figure 2 provides a profile of thekey steps in this decision.
A solar heat pump idea was devised during the mid-seventies when the escalatingcost of energy was thought likely to continue indefinitely (signals). The CEO of an air
conditioning manufacturer was approached by the developer of a solar heat pumpwho offered the firm a license for its manufacture (a claim, see Step 1, Figure 2).Exploration of the idea (diagnosis) revealed growth and diversification potential (Step2). A 30% increase in sales was thought to be possible (performance gap) through anew heating and cooling device that could be sold to homes. The firm's CEO signed acontract to develop a heat wheel, an integral part of the solar heat pump that the
licensure had yet to develop, for a fee and a percentage of the ultimate sales (Step 3).A search revealed that existing technology was inadequate and that the firm must
develop the heat wheel internally (Step 4). In Step 5, the firm's CEO assignedengineers to build the heat wheel. This resulted in an eight-year effort in which the
engineers devised five specific heat wheel ideas and tested them for durability andmoisture retention without the CEO's involvement (Steps 6 to 14). The first four of
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(8 years of study)FIGURE 2. Profile of the Solar Energy Case.
these ideas lacked either durability or moisture retention or both. After eight years,
an asbestos heat wheel was created that met the durability and moisture retention
requirements and was presented to the CEO (Step 15). However, the material wasalso found to be costly and potentially dangerous. Recently disclosed environmental
studies had linked asbestos to health hazards. The CEO terminated development in
Step 16.
Methods
Several activities are carried out to create a profile for a decision case and
determine outcomes. First, interviews are conducted with people intimately involved
with the details of each decision. In the interview, the informants are asked to
identify action-taking steps and the order that these steps were carried out. Second,
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the steps and their ordering are transcribed, as in Figure 2, and the steps related toformulation isolated. Third, a search is then mounted to find cases with similar anddissimilar formulation procedures by comparing the nature and sequence of the
formulation steps in each case and naming distinct procedural types. Lastly, indica-tors of success are collected for each case.
Data Collection
Cases for this research were collected from organizations across the United Statesand Canada. A top executive (CEO, CFO, COO) in each organization was contactedand asked to supply a case and identify key participants. Data were collected throughinterviews with the decision maker and two others who were familiar with thedecision. The second set of interviews are used to corroborate the recall of theprimary informant (Yin 1981, 1984). The data that emerged from these interviewswere used to identify the steps taken during decision making and the dependent
variables (success measures).Table 1 offers a description of the decision cases, types of organizations providing
the cases, and the informants who provided information about the decisions. Theprime informant (decision maker) was a top manager (CEO, COO, or CFO) intwo-thirds of the cases. The most frequently observed decisions in the cases involvedservices (e.g., hospitals initiating burn care) or products (e.g., the heat pump case),closely followed by support services and space renovations. In all, 14 types ofdecisions were included in the case (Table 1). This diversity of decisions andorganizations suggests that a broad range of decision practice is represented in thecases, which makes the study's finding broadly descriptive of organizational decisionmaking.
Profiling a Decision Case
To minimize memory distortion and memory failure, the two most common errorsin reconstructing events (Bartlett 1954), separate interviews with the decision makerand the other informants were conducted by the author. Each informant was asked tospell out the sequence of actions taken during decision making. Informants were cuedby asking "what happened first" and then "what happened next" to elicit action stepsas the decision process was reconstructed for a case (Nutt 1984). The informationfrom each interview was transcribed as a narrative and then fit to Figure 1 using therules for coding transactions, described in the previous section of the paper. The
profile was presented to each informant to verify that it captured the steps that wereused, modifying the steps until they were acceptable. The profiles from each infor-mant were then compared and differences identified. If differences persisted, othersinvolved in the decision were interviewed (Huber and Power 1985). This, along withother data sources, such as reports and records, were used to determine whichversion of events seemed most plausible. A case was retained for the classificationphase of the study if there was agreement on the action-taking steps and sufficientdetail to understand what was done. Twelve cases failed to meet these tests and werediscarded. For two cases some of the key documentation was lost and could not bereconstructed.
IdentifyingFormulation Procedures
To identify the formulation procedure used in a decision, the sequence of action-taking steps that began with what informants said happened first and ended with oneor more option being targeted for development as highlighted by a double line in thecase profile (see Figure 2). The profiles were then sorted by the author, placing eachcase profile in a pile that used similar steps until a set of groupings emerged that had
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FORMULATION PROCESSES IN ORGANIZATIONAL DECISION MAKING 233
TABLE 1
Organizations, Decision Types,and Informants
Case Characteristics
Decision Types Number Percent
Service/product 33 20%
Support servicesa 28 17%
Space renovation 19 12%Data processing 12 7%
Planning 12 7%
Construction 11 7%Financial management 11 7%
Personnel policyb 11 7%Equipment purchases 10 6%
Mergers 4 2%
Staffing 4 2%
Public relations 3 2%Organizational restructuring 3 2%
Marketing 2 1%
TOTAL 163 100%
Organizations
Public 42 26%
Private 26 16%Third-sector 95 58%
TOTAL 163 100%
Primary Informant
CEO 55 34%COO 40 25%CFO 6 4%Middle Management 62 37%
TOTAL 163 100%
Secondary Informant
Subordinates 73 45%Staff 78 48%Task force member 12 7%
TOTAL 163 100%
aMaterial management, parking, telephone, records, purchasing, laboratory, etc.bTime off compensation, wage and salary, retirement, dismissal, etc.
distinct action-taking steps and step sequences (Campbell and Fiske 1959). A codenumber was placed on the back of each case profile and the sorting process repeated.Each case with an ambiguous classification was carefully reviewed, attempting tocreate a new category or to match it with an existing one. To improve intraraterreliability this process was repeated several times for all cases, without reference topast sorts. A second rater was asked to re-sort a sample of the case narratives to getan indication of interrater reliability. The two raters agreed on the classifications for81% of the cases. A sort of a sample of the case profiles (e.g., Figure 2) by the samerater produced 100% agreement.
Measures of Success
Success was determined by measuring each decision's adoption, merit, and dura-tion. These measures are conceptually independent. Good decisions may not be
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implemented and vice versa, and adopted as well as meritorious decisions can be time
consuming. Decisions may be adopted, but only after an extended time periodimplying considerable effort and have marginal effect. To avoid self-serving assess-
ments by the decision maker, the adoption, merit, and duration measures werecollected with a questionnaire given to the two secondary informants for each case.
Pragmatics suggests adoption as a success measure. Success for a manager is boundup in implementation. If a decision is used, it meets this test. In the questionnaire,the informants were asked to apply a "put to use" criterion to determine initial
decision adoption. For example, a burn center would be adopted if it were opened,an MIS would be adopted if the organization stopped using the old system, and a
merger would be adopted if it were completed.Changes in decision status were traced by adding additional categories to the initial
adoption measure. The secondary informants were asked in a follow-up questionnaire
to classify each decision as an adoption, ultimate adoption, partial adoption, failure,
or ultimate failure. Differences were resolved by discussion immediately after thequestionnaire was filled out. An "ultimate adoption" occurred if, for example, a
merger met with initial resistance, which held up adoption, but ultimately was carriedout. A "partial adoption" occurred when a part of the decision was adopted. For
example, some departments may refuse to participate in an MIS or all departmentsmay use some of the capability of an MIS, ignoring other features. "Ultimatefailures" depict decisions that were initiated, but later withdrawn. For instance, a newproduct can be withdrawn after performance monitoring. Delays in use, proportion of
use, and terminated use suggest important adoption qualifications. To capture thesequalifications, at least two years transpired before assessments were finalized. The"unqualified adoption" measure puts all qualifications (ultimate adoption, partialadoption, and ultimate failure) in the failure category, creating a stringent test of use.
Decision merit provides another indicator of success that may not agree with whatwas pragmatic. Objective data, describing the economic returns or benefits of adecision, offer ideal indicators of merit but proved to be difficult to collect. Most
organizations were either unwilling or unable to provide information that linked thedecision to factors such as money lost or gained. As a consequence, merit wasdetermined subjectively by having the secondary informants rate decision merit in a
questionnaire. The rating scale for merit in the questionnaire had five anchors:5 = outstanding, defined as making a decisive contribution, 4 = good, defined asbeing useful in several ways, 3 = adequate, defined as meeting some needs, 2 =
disappointing, defined as having several residual problems, and 1 = poor, defined ashaving no redeeming features. The secondary informants were told to review thesedefinitions and to check anywhere along a scale with these anchors to reflect theirviews, creating interval scale properties in the merit assessment. Informants then metand reviewed their initial ratings, discussing and exploring differences. After discus-sion, new ratings were made in which informants made changes that seemed appro-priate. These steps improve recall and reliability (Nutt 1992). Averaging the ratings ofinformants provides a balanced assessment, closer to the organization's perspective ofmerit.
Decision makers want fast answers and minimal use of resources in makingdecisions. This suggests man-hours and duration as success measures. Estimates of
man-hours or indeed any process-related measure of cost were not collectible, forreasons similar to those cited for merit. Duration was determined by the time,measured in months, required to make a decision. The secondary informants for eachdecision made initial estimates of decision duration and reconciled these estimatesusing the steps described for the merit measure. The time in months averaged overthe informants final estimates were used to measure duration for each case.
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FORMULATION PROCESSES IN ORGANIZATIONAL DECISION MAKING 235
TABLE 2
Dependent VariablesCorrelations
Initial Unqualified
Merit Adoption Adoption
Duration -0.16 -0.10 -0.03
(ns) (ns) (ns)Merit 0.64 0.51
(p < 0.0001) (p < 0.0001)
Initial Adoption 0.70
(p < 0.0001)
Analysis
Statistical analysis of the data treated formulation procedures as a factor, with
categories for each procedural type, to be linked with the success measures. One-wayANOVAs were carried out using formulation procedures as an independent variablewith multiple levels and one of the measures of success as the dependent variable.
The dependent variables are scaled in several ways which calls for care when usingparametric statistical methods, such as ANOVA. The decision merit measure wascollected with an anchored rating scale to create interval scale properties in theratings. However, the two adoption measures have binary values and a nominal scale.This calls for both parametric and nonparametric tests to be used in an ANOVAformat applying F tests and Kruskal-Wallis Chi-square tests, respectively. To ensurethat statistical tests give an accurate picture, the more conservative significant levelfrom these tests is reported. The results are described using a parametric format so
the relative merits of the formulation procedures can be determined by the averageadoption rates, merit ratings, and duration. Nonparametric methods would be limitedto reporting results by a ranking of formulation types.
A Duncan Multiple Range Test (DMRT) is used to isolate differences in thesuccess measures by comparing the types of formulation procedures, two at a time.The DMRT accounts for the number of comparisons being made, identifying cate-gories (in this case, types of formulation procedures) that are different at a 0.05 levelof significance.
Correlations between the dependent variables are shown in Table 2. Duration(time in months) had no correlation with the adoption measures nor the decisionmerit measure. In the case
data, long duration decisions could be high or low meritand are not linked to decisions that are more or less likely to be adopted. The meritand adoption measures are positively related. As merit increased, the prospect of an
adoption and an unqualified adoption also increases. This correlation confirms whatone would predict. The adoption and unqualified adoption measures are also stronglyrelated, but had to have this relationship given how each is defined.
The Nature and Success of Formulation Procedures
Study of the cases revealed four procedural types, called formulation processes,each using two distinct tactics. These processes and tactics are summarized in Table
3, which lists their salient features and frequency of occurrence. The steps used inthese formulation procedures are listed in Table 4. Figure 3 describes the simplesttrace of steps that was highlighted for each formulation procedure. More complextraces typically involved repeats of the steps, following the same-pattern.
The formulation processes and tactics were found to have several distinctivedifferences and a few similarities. Similarities stemmed from steps that were applied
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Process Type/Tactic Number Frequency* Salient Features
Idea Process 54 33.1% Idea ultimately used
available at outset.
a. Inferred problem 40 (24.5%) Analysis used to link
tactic problems to idea beforefine tuning.
b. Concept tactic 14 (8.6%) Process used to fine tune
idea.
Issue Processes 43 26.5% Issues uncovered and used
to identify solutions.
a. Inferred solution 31 (19.0%) Problem analysis used to
tactic infer solution.
b. Arena search tactic 12 (7.4%) Arena identifies topics
that guide solutionsearch.
Objective-directed 47 28.8% Objectivesused to guide
Processes development.
a. Specific objectives 32 (19.6%) Objectives have specific
tactic targets.b. General objectives 15 (9.2%) Objectives have general
tactic targets.
Reframing Process 19 11.7% A Demonstration of needs
or opportunities.
a. Solution 4 (2.4%) Demonstration of feasible
intervention tactic idea, followed by analy-
sis to link them to prob-lems.
b. Problem 15 (9.2%) New norms created to
intervention tactic define problems before
analysis used to infer
solutions.
TOTAL 163 100.0%
* Percent of all cases.
in several of the processes and tactics. Steps that considered claims and articulatedsome form of a performance gap appeared in each formulation procedure. A stepthat identified a need or an opportunity appeared in many of the procedures and, lessfrequently, a problem solving or an idea analysis step was observed. However, the
problem solving and idea analysis steps had different purposes and produced differ-ent rationales for action. Differences were also noted in the number, nature, and
sequence of steps in a formulation procedure. These procedures called for verydifferent types of actions to guide development, suggesting that distinct proceduraltypes emerged from the analysis.
Tables 5 and 6 summarize the results of statistical tests that determined the successof decisions guided by each of the formulation processes and tactics. The DMRTidentifies formulation processes and tactics that produce different results (p < 0.05).
Processes and tactics with similar success indicators have the same letter code, thosethat differ have a different letter code in Tables 5 and 6. The statistical analysessuggest that formulation procedure has a significant impact on decision makingsuccess. The nature of these formulation procedures and their success record is
presented by beginning with the simplest procedure and moving progressively to themore complex.
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FORMULATION PROCESSES IN ORGANIZATIONAL DECISION MAKING 241
Idea Processes
Idea formulation processes provide direction with a solution (Table 3). Thedecision maker imposes a solution idea on the decision making process. In the cases,
solution ideas emerge from several sources including the decision maker's visions andbeliefs, educational activities, the media, the literature, vendors, joint venture oppor-tunities, the notions of key people, and staff proposals. Development is concernedwith certifying the idea's virtues, determining the reactions of key stakeholders to theidea, and suggesting idea refinements. The key features of the idea do not changemuch during development. Such an approach limits innovation but reduces uncer-tainty about what will be done. Risk for the decision maker is lowered becausesurprises that can mobilize unexpected oppositions are unlikely. Also, decisionmakers' time is not taken up in idea finding, just idea refining.
Idea formulation processes are related to the work of Cohen et al. (1976) andothers who have found that solutions are used to direct a decision making process.
According to Brunsson (1982) and Starbuck (1983), decision makers prefer to useexisting ideas because they can quickly provide a way out of the traps posed byseemingly out of control situations.
Idea formulation was observed in 33% of the cases, making it the most frequentlyobserved formulation process. Idea processes had 67 percent initial adoptions, whichfell to 50 percent when qualifications were considered, produced decisions judged tobe "good," and took an average of 12.0 months to carry out (Table 5), suggesting thatthis process is not very successful. Two tactics were used to carry out idea processes,called "concept" and "inferred problem."
InferredProblem Tactics. The inferred problem tactic matches problems to avail-
able ideas. This tactic has steps of claims, performance gap, idea, analysis, and needsor opportunities inferred from the idea analysis (see Figure 3). Soelberg (1967) alsofound evidence that a search for problems follows the selection of a solution.Decision makers applying the inferred problem tactic conduct an analysis to linkproblems to their idea before development begins. For example, responding to claimscalling for cost consciousness, NASA sought ways to increase the use of theirhyperbaric oxygen treatment program that provides pressurized oxygen for thedecompression of astronauts (Table 4). A performance gap of increased utilizationwas identified. A Florida hospital would be offered NASA's program with thecondition that NASA would have priority use during a space flight (the idea). NASA
studied hyperbaric oxygen treatment to determine its value to a hospital. Theprospect of enhancing a hospital's prestige through a joint venture with NASA madethe idea seem salable.
When an inferred problem tactic is used, the decision maker offers an idea andcalls for a study to determine problems it could solve. This type of study suggests thatdifficulties with the idea should be ignored or downplayed, making the decisionmaker seem manipulative and self-serving. This may explain why the inferred prob-lem tactic is less successful than other tactics (see Table 6). Initial adoptions for theinferred problem tactic were 61 percent, which fell to 47 percent when qualificationswere considered. Decisions were judged to be good and took an average of 9.1months to carryout. Despite the limited success of this tactic it was applied in nearly
25 percent of the cases, making it the most frequently used tactic observed in thestudy.
Concept Tactics. The concept tactic merely imposes an idea, -refining it in subse-quent process steps. The tactic employs three steps: claims, performance gap, andimposing an idea. The idea directs activity during development. For example, the
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Department of Natural Resources in Ohio came across an idea, developed by thestate of Minnesota, in which taxpayers would check a box on their income tax formsto send a dollar of their refund to support "natural areas" and "wildlife protection"
programs. Claims were based on the apparent transportability of the Minnesotaprogram. The lack of state funding for preservation programs identified a perfor-mance gap to the DRN Director. The tax check-off idea prompted developmentalsteps to insure passage of the required legislation. The solar energy case, shown inFigure 2, also applied the concept tactic.
The concept tactic had an 8.6 percent use rate and produced both good and badresults (Table 6). This tactic had a very high initial adoption rate of 85 percent, whichfell dramatically (57 percent) when adoption qualifications were considered. Decisionmerit was judged to be "somewhat below good." The process took almost 31 monthsto carry out, which is nearly three times that required by the next most timely tactic(p < 0.05). This extended time period seems to result because the idea must be
tailored to fit its new application (Nutt 1984) and because this tactic producesresentment, producing more opposition than the other tactics. Tactics which appearself-serving and manipulative reduce decision making success.
Issue Processes
In this type of formulation process an issue is analyzed to produce options for the
decision process to consider. This notion of a issue differs from the broader and more
general view of an issue in strategic management (e.g., Ansoff 1984, Dutton et al.
1983, Dutton and Jackson 1987). The narrower and more concrete notion of a processthat deals with a "matter under dispute" is intended.
The issue identifies a concern or difficulty. Problems implied by the concern ordifficultyare explored to extract solution clues. Decision makes then become problemsolvers, attempting to tease solutions from the problem analysis (e.g., Maier 1970).This approach can be effective if problems become clear following analysis. If not,symptoms may be attacked and the decision process may fail to deal with importantconcerns that lie behind the symptoms (Kolb 1983).
Issue processes were observed in 26 percent of the cases. Dealing with issues wasthe least effective process observed in the study (p < 0.05). Issue processes produceddecisions with the lowest rate of initial adoption (57%) and the lowest unqualifiedadoption rate (39%), decisions with the least merit (judged to be between adequateand good), and took as long to carry out as any of the other processes (Table 5). Two
tactics were observed as attempts were made to extract solutions from a problemassessment called "inferred solution" and "arena search."
Inferred Solution Tactics. The inferred solution tactic extracts a solution from a
problem statement. The steps are claims, performance gaps, statement of needs or
opportunities, analysis of needs or opportunities, and seeking a solution that dealswith the needs or opportunities (Figure 3). For example, claims were made that the''appeals process" in a state department providing social security benefits could notdeal with the volume of cases without a change in procedure (Table 4). Afterconsiderable debate, a backlog of 18 months in dispositions was termed excessive,creating a performance gap. The need to reduce the backlog led to problem solving
which came up with a pooling idea that grouped similar cases for mass handling.The inferred solution tactic was used in 19 percent of the cases. For this tactic
initial adoptions were 56%, unqualified adoptions were 45%, decision merit wasbetween adequate and good, and the process took 11.2 months to carryout (Table 6).Limiting a solution search to the vicinity of a presumed problem seems to restrictideas which lower success.
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Arena Search Tactics. The arena search tactic identifies an arena instead of aproblem to guide the search for solutions. The steps are claims, performance gap,arena of search, and arena bound responses (see Fig. 3). For example, key people in afirmclaimed that inequities in salaries between males and females in comparable jobswould create charges of discrimination (Table 4). The need for equity became theperformance gap. A search for ways to overhaul the compensation system was thenmounted. The arena, overhaul the compensation system, directed developmentalactivities to make changes in the compensation procedures. Rather than a problem tobe overcome, as in the inferred solution tactic, the arena identifies where to searchfor solutions.
The arena search tactic was comparatively rare, occurring in just 7.4 percent of thecases. This tactic had fewer unqualified adoptions than the inferred solution tacticbut was similar in timeliness and merit (Table 6). Initial adoptions for arena searcheswere 59%, which plummeted to 25% when qualifications were considered. Decisions
were judged to be adequate to good and took an average of 11.9 months to complete.
Objective-DirectedProcesses
Objective-directed formulation processes use expectations (e.g., missions, aims, orgoals) to guide developmental activities. Intentions are stated in terms of desiredresults, such as reduce cost or increase capacity. A remedy is not suggested orimplied. There is considerable freedom to search for a way to meet stated aimsduring development. This may encourage innovations and increase decision makingcost.
Objective-directed formulation processes were observed in 29 percent of the cases.Direction setting with objectives was the second most successful process type in thestudy. These decisions had a 71 percent initial adoption rate and an unqualifiedadoption rate of 60%, produced outcomes judged to be "good," and were quitetimely, taking significantly less time to carry out than all but one other formulationprocess (Table 5). The tactics that decision makers use to set objectives call for ageneral target (e.g., reduce cost) or a specific target (e.g., reduce costs by 20%).
Specific Objectives Tactics. Steps of claims, performance gap, identify needs oropportunities, statement of objective with specific targets, and an unrestricted searchfor options are used in the specific objectives tactic (see Figure 3). For example, ahospital responded to Blue Cross claims of overstaffing and threats to reducereimbursement rates by identifying excessive labor cost as the performance gap,suggesting the need to cut nursing hours per patient day (Table 4). Objectivestargeted the required amount of labor cost reduction and a search was mounted tofind ways to cut labor cost. Other examples of specific objectives include makinginternal operations self-supporting and identifying specific expectations for profit orutilization.
The specific objectives tactic was used in 20% of the cases. This tactic led to 73%initial adoptions, 62% ultimate adoptions producing "good" decisions in an averageof 5 months (Table 6). Decisions made using specific objectives had very goodoutcomes.
General ObjectivesTactics. The generalobjectives
tactic had the samesteps
asthespecific objectives tactic (Figure 3) but created expectations such as the needs to
improve cost and profit performance that did not specify a target amount of cost orprofit. For example, key people in a hospital claimed that declining revenues werecaused by changes in the reimbursement policies of medicaid and insurance carriers(see Table 4). The changes limited patient revenues to actual cost and not institution-
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ally set charges, sharply reducing hospital revenue. The performance gap identifiedlost revenues. The needs to increase revenue led to an objective of funding newservices with a revenue enhancement potential. Suggestions were systematically
reviewed to determine their revenue prospects.General objectives was used in 9.2% of the cases. This tactic had 67% initial
adoptions and 53% ultimate adoptions, producing "good" decisions in 14.5 months
(Table 6). Both specific and general objectives lead to good decisions. These findingsgive some support to laboratory studies reported by Locke et al. (1981), who foundthat a specific objective improves results. In real decisions considered in this study,this distinction does not hold for merit or initial adoptions. However, specificity doesshorten the decision process and results in decisions that are more apt to besustained. With general objectives, a demonstration that aims have been met maytake longer because the information to support such a demonstration can be argu-
mentative, which can lengthen the decision process.
ReframingProcesses
Decision makers who apply a reframing formulation process are careful to justifythe need to act, using either solutions or problems as the focus of a demonstrationthat calls for action. Reframing was the most successful formulation process, but wasinfrequently used, being observed in less than 12 percent of the cases. As shown in
Table 5, all of the decisions made using this formulation process were initiallyadopted, in the shortest time period (8.5 months), with some of the best results. The
average time period was three or more months shorter than issue and idea formula-tion processes and decisions were rated between good and outstanding, compared to
the next highest rated formulation process that produced "good" results. Finally,a 79
percent unqualified rate of adoption, treating adoption delays and incomplete adop-tions as failures, had almost 20 percent more adoptions than the next best formula-tion process. Two tactics emerged from an analysis of the cases called solutionintervention and problem intervention.
Solution Intervention Tactics. This tactic uses potential solutions to demonstrateopportunities for action. The solution intervention tactic's steps are claims, perfor-mance gap, solution demonstrations, norms determined from expected performanceusing these solutions, ideas, ideas analyses, and inferred needs from the idea analysis(Figure 3). Each of these steps occurred before idea development was attempted. To
illustrate, claimsin
one of the cases called attention to supply item stockouts (seeTable 4). The nature and frequency of the stockouts suggested a performance gap.Material management programs were described by the firm's vice president whodemonstrated that stockouts seldom occur in organizations that have up-to-datemanagement procedures. The inventory control procedures in the material manage-ment systems were analyzed to identify expected stockout frequency. This led to anagreement that stockouts could be prevented and that new inventory managementpractices should be developed.
Decision makers who use the solution intervention tactic are careful to deal withnegative impressions that can be created by imposing ideas on a decision process. Thedecision maker establishes norms, shows that performance is subpar, and then
demonstrates new ways to act that can cope with these performance shortfalls. Theseideas are subjected to careful study, matching their attributes to needs identified bythe performance failure. The decision maker steers the decision process using these
steps, making action seem essential by offering several ideas that can be modified oreven discarded during development.
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The additions of norming and need demonstration steps distinguish the solutionintervention tactic from the concept and inferred problem tactics. Demonstrating theneed for action removes much of the self-serving and manipulative features found inthe idea formulation process and its tactics which stress expediency. Solution inter-vention tactics stress tact and diplomacy. Also, a means is not imposed. Insteadoptions are provided for further study. The search for solutions, however, is morerestricted than with tactics using objectives. The options offered during solutionintervention become the focus of study which seldom ventures beyond the type ofsolutions that are implied. For example, decisions that examine inventory controlsystem options do not shift their focus to consider new topics, such as revenueenhancement options.
The solution intervention tactic was applied in 2.4 percent of the cases, making itthe least frequently used tactic observed in the study. However, the solution interven-tion tactic produced some of the most successful decisions in the study. The solution
intervention tactic had a 100 percent initial adoption rate, the third shortest decisionduration of 9.5 months, and a decision merit rating of between good and outstanding(Table 6). Seventy-five percent of the decisions that apply the solution interventiontactic were adopted without qualifications. This increase in success, compared to theinferred problem and concept tactics, is attributed to the justification steps in thesolution intervention tactic which diplomatically demonstrated the need for action.
Problem Intervention Tactics. The problem intervention tactic is similar to thesolution intervention tactic, except that solutions are inferred. Demonstrations centeron needs, showing that change is necessary, but do not offer specifics about what todo. The decision maker norms the situation, terming performance subpar. After
demonstrating a performance shortfall a study of the needs implied by this lowperformance is carried out and solution ideas are elicited by problem solving activity.Steps are claims, performance gap, demonstrations, identify new expectations, specifyneeds, problem-solving, and derive ideas (Figure 3). For example, a corporatereorganization decision was initiated by members of a firm's board of directors whohad become frustrated with the scope of their responsibilities (Table 4). They claimedthat most boards have much less to do. The nature and scope of these responsibilitiesbecame a performance gap. The board justified the need for action by listing whatwas and was not expected of a board member in other companies. A trimmed list of
responsibilities was drawn from these practices to set new norms, justifying the needfor action. The need to increase delegation to top management was then specified.Consultants were hired to propose solutions that reduced the board's oversightresponsibilities through delegation, retaining only fiduciary responsibilities for theboard.
Decision makers who apply the problem intervention tactic help the organizationsee the value of exploring new practices by demonstrating the need for and feasibilityof action. Norms are selected that heighten expectation drawing on the performanceof competitors, previous work experiences, and innovations. The norm is applied toindicate performance shortfalls that call for action. Because key people see the rangeof possibilities being considered they can shed preconceptions which limit search
during problem solving. In contrast, the inferred solution and arena search tactics
focus attention on narrowly construed statements of dysfunctions to be overcome.The norm step helps decision makers using the problem intervention tactic to openthe decision process to possibilities before the narrowing that occurs during problemsolving. This is like steps advocated to promote creativity such as the red light-greenlight dictums of Guilford (1967), the convergence-divergence approach of de Bono
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(1973), and Maier's (1970) focus in-focus out suggestions. Steps that broaden andthen narrow distinguish problem intervention tactics from other tactics.
The problem intervention tactic was used in 9.2 percent of the cases. This tactic
had a success record much like the solution intervention tactic, but took less time.The problem intervention tactic produced more adoptions and higher decision merit
than any of the other tactics. As noted in Table 6, this tactic had a 100 percent initial
adoption rate and a 80 percent unqualified adoption rate, required 7.5 months to
complete, and produced decisions judged to be between good and outstanding.
Conclusions
The formulation practices of organizational decision makers were found to have
qualitative differences in procedure and quantitative differences in their success.
Several types of formulation procedures were identified. Reframing demonstrates theneed for and feasibility of new practices. Objectives provide targets that encourage an
unrestricted search for solutions. Issues infer solutions from problems and concerns.Ideas push preconceived solutions. The nature, number, and sequence of the steps inthese formulation procedures produced different decision making directions, ratio-nales, and success. Reframing is far more successful than any other formulationprocedure. Objectives are also quite successful, although not as good as reframing.Success falls when preconceived ideas or problem solving is used. Both reframing andobjectives produce better and more timely decisions. These findings will be used tooffer advice to decision makers, extend decision making theory, theory build, and
suggest further research needs.
Several ways to improve decision making practice can be suggested. First, formula-tion procedures have rates of use and success records that fail to match. The mostsuccessful tactics are infrequently used and the least successful are frequently used.Replacing formulation by issues and ideas with reframing or objectives shouldimprove success. Second, the search for ideas can be carried out using problem
analysis or objectives. Analysis of problems prompts a restricted search which is lesssuccessful than using objectives which mount an open, unrestricted, search. For
instance, a decision process can be directed to deal with training, such as "the
problem with this organization is poor training," as in the Toyota dealer case. Thislimits search to training solutions. By implying a type of solution, search becomesnarrow and overly focused (Nutt 1989). Objectives provide a more useful directionand analysis a less useful direction during decision making. Third, the cases suggestthat problem solving is prone to failure. This may stem from the defensive behavior
evoked in people who see themselves as responsible for the problem. Fourth,combining the demonstration and norming steps in reframing with specific objectivesseems desirable. Demonstrating the need to act appears to be the crucial step which
distinguishes reframing from the less successful formulation procedures. The specificobjectives tactic could incorporate demonstration and norming steps without alteringthe logic of objective setting and the norm would suggest an attainable target for theobjective.
Extensions to decision making theory can be drawn from the logic applied by the
most successful process: reframing. Reframing seems to work because it adheres tosteps called for in learning and development (Pettigrew 1985). When formulationquickly narrows to dysfunctions or displaces to ideas, little learning can occur. By
opening up the decision process to new possibilities, stakeholders are more apt torecognize the value of new ideas. This opening up allows people to move away fromstereotyped responses and traditional ways of acting.
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Other extensions to decision making theory can be made by comparing the resultsof this study with other descriptions of formulation procedure (e.g., Soelberg 1967;Bower 1972; Witte 1972; Mintzberg et al. 1976; and Pettigrew 1985.) For example,Mintzberg et al. (1976) found that formulation has recognition and diagnostic steps
but say little about how these steps are carried out. This study provides additionaldetail, identifying the type of information that is collected and the action-taking stepsthat are carried out to set the directions that guide development. These findings haveuse at two levels. At the meta level, the findings of the study describe the types ofdirections and justifications for action that will be more and less successful. At thefocal level, the study offers a detailed listing of steps making formulation procedureexplicit as well as providing evaluation of each procedure's success. The classificationframework and the method of profiling decisions using the framework allowed bothconcepts and procedural specifics to be identified. This approach can be used byother researchers to carry out process studies of decision making.
Themes of power, ambiguity, politics, uncertainty, and paradox can be inferredfrom the findings of the study suggesting ideas for theory building. Powerful decisionmakes often impose their ideas on a decision process. Also, solutions cropped upwhich seduced decision makers. Seizing such "opportunities" is viewed as a pragmaticway to take decisive action. However, imposing a solution frequently leads to failure.This suggests that sense making (Weick 1979) and garbage can models (Cohen et al.1976) and the like describe what decision makers prefer to do but do not capturewhat decision makers should do, again pointing out the tendency to mix descriptionwith prescription in the decision literature. Preconceived solutions and the con-straints on search that they impose led to poor results.
When decision makers impose "an answer" they create a clarity of purpose that is
misleading. Important sources of ambiguityand uncertainty are swept aside. Considerthe heat pump case (Figure 2). After the heat pump concept had been accepted bythe company CEO, no one was prepared to challenge its merit. The expectation of30% increase in sales was never validated or even discussed with anyone in theorganization as the decision process unfolded. Also, decisions formulated by an ideaseldom go beyond that idea. People become fixated with the idea and do not askreframing questions, such as "how do we find a product that complements ourair-conditioning business" or pose objectives, such as "how do we increase sales."The merits of concepts were never questioned in the cases. Decisions made in hastewith poor information were not reviewed to verify the information. People also seemreluctant to carry bad news (the idea does not work), as eight years of repeated
failure in the heat pump case suggests.As Wildavsky (1979) points out, managers do not know what they want until they
can see what they can get. Having an answer sweeps away this ambiguity anduncertainty. However, beginning with an answer can be rash because decision makingis not based on a clear understanding of the what is needed. Instead, the decisionprocess explores the virtues of an idea and reactions of key people to it. The moreblatant this behavior becomes the more time decision makers seem to spend defend-ing the idea. Decision makers who take steps to justify the need to act, using solutionintervention or problem intervention tactics, cut the duration of the decision processby 300 percent. Managing the politics of the situation with these steps greatlyimproves the prospect of decision success. Ideas can be helpful when used to
illustrate the benefits of new practices. These benefits are lost if the optionsconsidered are limited to the initial set of ideas. Treating ideas as possibilities, as insolution intervention tactic, improves the adoption prospects and merit of a decision.
Interest in formulation has been prompted by the paradoxes associated with theidentification and verification of ways to direct a decision process (Rumelt 1978, Nutt
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1979, Volkema 1983). By selecting a direction one sets aside an array of potentiallyrelevant directions. Post decision review often reveals that attending to some of thedirections that were set aside would have created significant opportunities and
advantages. As a result, managers are admonished to avoid solving the "wrongproblem," which Raiffa (1968) calls the "error of the third kind." However, neitherRaiffa nor his followers has provided tests to determine if the directions under
consideration will misdirect a decision process. Consider the Toyota dealer case. The
linkage of lost sales and declining profits to sales force training and inculturationproved to be incorrect, but what tests could have been applied to find a more
appropriate direction for this decision process?Although this question poses problems of logic that may never be fully answered,
directions can be tested. One approach examines directions that are both narrowerand broader in scope than the preferred direction, before committing to a direction.
Consider the Toyota case. The cultural training direction adopted by the car dealer
could have been expanded and narrowed in useful ways. A narrower view, forexample, could focus on the behavior of salespersons, attempting to identify thingsthat are turning off customers. Action would be limited to modifying undesirablebehavior. A broader view could look for ways to expand profits bringing into viewoptions such as promotions, buyer incentives, cost cutting, and pricing policy. Thedirection is broadened by considering ways to increase profits. These directions havea hierarchical relationship. The decision maker must solve the behavioral problem todo training and training must be adequate before promotions, cost-cutting, and thelike can work. Examining directions in this way can bring to light hidden difficultiesthat have eluded the decision maker's attention and must be dealt with to ensuregood results. Because none of the decision makers in the cases developed directions
in this way the cases cannot be used to evaluate the suggested test. Further researchwill be required to verify its merit.
Several limitations to this research should be noted. These limitations stem fromthe data base, decision adoption rates, the nature of decisions examined, and theinfluence of context. Each suggests future research efforts.
Only 16% of the cases were carried out in firms. As a result, the data base may notfully capture decision making in the private sector. The sector distinctions noted byRainey et al. (1976), among others, suggest that differences among sectors may arise.Sector differences should be explored in subsequent research.
The initial adoption rates of 70% in the cases may overstate the number ofdecisions that are implemented by organizations. Allowing the contact person toselect a case makes it easier to get a case but also makes it unlikely that faileddecisions and particularly bad practice would be suggested. As a result, the rate ofdecision failure may be understated, suggesting that more than 30% of the decisionsmade by organizations fail. It also suggests that the worst examples of decisionpractice may have been excluded from the cases. However, there is no practical wayto determine the "true" rate of failure or to insure that a representative number ofdecision "debacles" have been included in a case data base.
Intervening variables of problem type and context are likely to influence a decisionprocess and its effectiveness, suggesting conditions under which a formulation tacticcan be best used. In addition to sector, intervening factors include urgency, extent of
support (e.g., budget and staff), type of decision (internal operations, products, etc.),and political factors (decision maker level, leverage, savvy, etc.). A preliminaryassessment of politics and organizational level suggests that the conclusions cited inthis paper hold for both top managers (CEOs, COOs and CFOs) and middle
managers, no matter how well they handle implementation. Laying out the qualifica-tions that these factors offer goes beyond what can be accomplished in a single paper.
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Future research will be needed to determine how each of these factors influencesformulation. In such an effort, factors such as "interests" (Hickson et al. 1986), "ideachampions" (Bower 1972), and implementation (Nutt 1986) should be considered.
Another needed study would explore the action-taking steps that were common to
all of the formulation tactics. For instance, claims derived from industry reports maybe handled differently during formulation than those derived from an MIS or liaisonarrangements, and with different results. Performance gaps can be clearly articulated,such as reaching for an industry leader's profit, or vague, such as improving image.Alternatives can be single or multiple, specific or general, etc. Differences in the basisfor claims made, performance gap clarity, and the nature of alternatives may addimportant qualifications to the success of formulation procedures.
Acknowledgements
The helpful comments of Robert Backoff, David Landsbergen, Dick Daft, and the anonymous referees
are gratefully acknowledged.
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