The Psychology of Strategic Leadership

Course Number 1220

Associate Professor Giovanni M. Gavetti
Winter; Q3; Q4; 3 credits
14 2-hour sessions
Paper

The course is a modified version of "The Strategic Reasoning Lab: Thinking Like Great Strategists," which was taught in Winter 2010.

Course Overview

The course is concerned with the psychological aspects of strategic leadership. Its premise is that by knowing more about human thinking, strategic leaders can choose superior strategies and better execute them. For instance, strategists frequently deny the need to abandon obsolete strategies, with grave consequences for their companies. The root cause of their denial lies in the human mind's tendency to avoid evidence that disconfirms deeply held beliefs. By understanding the cognitive and emotional processes that underlie denial and how they can be countered, strategic leaders can avoid falling into this trap. Consider a related example. Identifying a new winning strategy generally requires disciplined imagination or creativity. An understanding of the cognitive processes that lead to the creative spark can thus greatly help strategic leaders who need to find new a new strategy for their company. Consider yet another example. Executing a new strategy frequently requires major cognitive changes in the organization. For instance, middle managers might need to abandon old assumptions about the identity of their company and espouse new ones. Strategic leaders thus need to understand the psychology of persuasion to motivate organizational members to pursue new strategies.

As these examples suggest, the proper management of relevant mental processes - one's own and others' - is essential to strategic leadership. Yet, what it takes to manage these processes is not yet codified in the "standard" toolkit available to strategic leaders. Drawing on recent developments in the cognitive, neurobiological, and social sciences, this course will make students aware of mental processes that are especially crucial to the job of strategic leaders, and will help them put this awareness into practice. The course puts equal weight on increasing such awareness and applying it to real-life situations. Its ultimate purpose is to offer a toolkit for managing relevant mental processes.

Pedagogy

The pedagogical premise of the course is that it is hard to understand and improve our thinking unless we experience directly the effects of our biases, rigidities, emotions, and other mental tendencies. Therefore, the course takes an experiential learning approach. That is, it will offer several different ways through which students will first replicate the thinking (and associated biases, etc.) that is typical in strategic decision-making and execution through individual and group-based simulations of strategic decisions (some of which will be videotaped), simulations of persuasion efforts, and in-class exercises. We will then use this raw material as the basis for reflection and class discussion. Traditional cases will also complement the experiential nature of the course. Finally, a few class discussions will be based on readings of recent psychological work that is essential to addressing the course's fundamental questions.

Course Organization

Class sessions will be held on both Monday and Wednesday afternoons from 3:30 PM - 5:30 PM, and most sessions will be concentrated in the first six weeks of the semester (see part I below), with time allotted for project work in Q4.

More specifically, the course has three parts. Part I (11 classes) introduces the main ideas and tools of the course. In Part II, students will work under the instructor's supervision on projects in which they will apply some of the insights learned in the first part of the course to concrete situations. There will be no class meetings in this period. Part III (2 classes) will focus on crystallizing the lessons derived from the projects.

Part I (12 classes; 1/23-2/29). Students will learn both the aspects of human thinking that are critical to the strategist's job and how these processes can be managed. This part has two modules. The first focuses on strategic decision-making, paying special attention to the reasoning mechanisms that are particularly conducive to the timely identification of strategic opportunities, and the cognitive and emotional biases that commonly prevent effective choices. Such mental processes will be identified and explained, and students will practice ways to improve or correct them. The second module focuses on how strategic leaders can mobilize organizations to act on new opportunities. The psychology of persuasion is central to this module. Because strategic change is often stifled by cognitive inertia in an organization's lower ranks, we will practice with tools strategic leaders can use to break this inertia, with a special emphasis on language and communication.

Part II (no class meetings; 3/01-4/22). Students (individually or in teams) will apply some insights learned in the first part of the course to real-life situations. Students will identify a specific subject of the course that they are interested in (e.g. how to overcome select biases; how to discipline imagination and creativity; how to craft a persuasion strategy; etc.) and a context in which their understanding of these subjects can be deepened. For instance, a student with an entrepreneurial idea could apply the course's tools to ensure that the reasoning behind this idea is not biased or flawed. Alternatively, a student interested in how to craft an effective persuasion strategy for a company she knows is undergoing a strategic change could develop such a strategy herself. Projects may involve an actual field component. For instance, if a company of interest is local and its leaders are open to it being studied, a project could involve a few meetings with the company's leaders. The deliverable of the project is a short written report and PowerPoint presentation.

Part III (2 classes; 4/23-4/25). Students will share the lessons derived from the projects, interpret them and crystallize their implications for practice.

Career Focus

The course is targeted at students who expect to bear responsibility for the overall strategy of a corporation or a business unit, and at students who plan to work as management consultants or in private equity firms. However, most of the topics discussed will be of general interest to the MBA population.

Grading

There is no final exam. Class participation will account for 70% of the final grade, and the project will account for the remaining.