2. SOME BASIC CONCEPTS B290 Simon Rodan

3. Antecedents to strategy Strategy requires action… Action requires understanding… Understanding requires –Simplification, –Prioritization Simplification and prioritization are aided by… –Context switching –Metaphor –Abstraction

4. Finance and Economics Time value of money Markets –Efficient Market Hypothesis –Financial Markets –Information asymmetry Self interest / ‘individualism’ Agency theory (motivation) (Stable) Equilibria Market failure (‘lemons’) Performance measures Human capital

5. Psychology Motivation –Extrinsic / intrinsic –Expectation –Procedural justice –Equity Biases –Estimation –Attribution –Salience Decision making –Logic of consequence or appropriateness –Evoked (action) schemas –The role of emotion Mental models –Representations of causality Creativity –Knowledge recombination

6. Sociology Institutions –Structure and processes Power of Social Networks –Important nodes and Holes –Information flow –‘Patterns’ Status –Middle status conformity Social capital “Enacting” environments –Testing –Shaping

7. Other ‘sources’ Variation, Selection, Retention –Liability of contingency –Population ecology Interpretive frames –Cuban missile crisis –Levels of analysis / aggregation Commonly found relationships –Monotonic –U shaped –S shaped

8. These concepts help –Categorize, organize, prioritize things we encounter –Speed up the buildings of mental models –Are high levels of abstraction –Aid understanding… –And enable action