Strategizing Before Strategic Decision Making

Strategic management research and practice have long prioritized decision-making frameworks—such as game theory, real options, and financial modeling—to guide organizational choices. However, this paper argues that the field has neglected a more fundamental precursor: problem formulation. Before a leader can choose a strategy, they must first define the problem they are trying to solve. If the problem is misidentified, even the most sophisticated analytical tools will lead to a suboptimal or failed outcome.

When leaders jump straight to solution-seeking, they risk committing a type III error: solving the wrong problem. The authors illustrate this through a case study of a beer distributor considering a new tequila product. Depending on how the problem is formulated—as a simple product-launch decision, a business-model expansion, or a long-term succession and capability-building challenge—the resulting strategic premises and recommended actions change dramatically. A superficial formulation often leads to a narrow, ineffective strategy, whereas a comprehensive one reveals deeper, more vital strategic opportunities.

Strategizing is not merely an intuitive spark; it is a process that can be normatively designed, taught, and managed. The authors propose that effective strategizing requires a disciplined approach to group inquiry. Because individuals often suffer from cognitive biases and social pressures that inhibit the sharing of unique information, organizations should implement structured protocols—such as the modified nominal group technique—to ensure that diverse perspectives are heard and that the group reaches a shared, robust understanding of the problem before any solutions are proposed.

By shifting the focus from decision-making tools to the process of inquiry and problem formulation, the authors suggest that the field of strategy can provide greater value to leaders. This approach bridges the gap between academic theory and practical leadership, offering a way to navigate complex, ill-structured environments where the primary challenge is not just choosing between options, but identifying the right challenge to address in the first place.