cognitive map words in a long list, in prememorized locations, visualized in rooms or boxes. The learner Tanya Sammut-Bonnici and John McGee perceives the memorized locations and walks through them mentally, detecting the objects Cognitive maps can be defined as mental images located there during the memorization phase. and concepts that are built to visualize and assimilate information. They are also referred PERCEPTION OF THE STRATEGIC to as mental maps, mind maps, schemata, ENVIRONMENT and frames of reference. They act as tools for Strategists may review their business environ- strategists to move beyond the constraints of ment by creating cognitive maps, which act as short-term and to process information tools to process knowledge. These mind maps spanning long periods of time. are frameworks that are shaped mainly from The mind creates spatial concepts in order to make sense of incoming information. The personal experience. They tend to influence the process organizes complex information into method employed by executives to transform manageable portions. It simplifies knowledge, data into information and to make strategic increases memory, and improves cognition inferences. where cognition is understood to be the mental Executives develop cognitive maps of their act or process by which knowledge is acquired, commercial environment through observing and including perception, intuition, and reasoning. interacting with others within the industry, The advantage of cognitive mapping as a through industry publications, training, fundamental mental process is that it acts seminars, and conferences. The collection as a coping mechanism under conditions of of information about the industry, through work uncertainty. It is also essential in environments experience and deliberate research, results in a where strategic decisions are made in rapidly of the industry’s structure and an shifting economic environments. For example, a understanding of what it takes to succeed in this manager’s perception of an organization may be environment. visualized in terms of division leaders, regional Executives may follow a grounded theory locations, product departments, or their relative approach with no preconceived hypothesis, power levels within the hierarchy. The four whereby an understanding of a business issue or distinct elements provide an anchor around phenomenon is based on information rather than which the understanding of the mental map of preestablished hypothesis. With this method, the organizational structure revolves. strategists allow data to shape their mental , the act of organizing informa- processes and develop their existing perspec- tion in visual spaces, is applied to both spatial tives. This mode of processing tends to be less and nonspatial tasks. The cognition of product common and less natural. It requires executives design would involve spatial processing. The to ignore intuition, which was formed by earlier method is applied equally effectively for nonvi- cognitive mapping. sual tasks, such as memorizing lists, code, names, and other textual information. COGNITIVE MAPPING THROUGH SYSTEM 1 Memorizing speeches, for example, often AND SYSTEM 2THINKING requires cognitive mapping of the subject. One of the earliest recorded forms of cognitive Cognitive science applies cognitive task analysis mapping was used by the Roman philosopher (CTA) to comprehend the underlying processes and orator Cicero, who used mnemonics to bind of cognitive maps in strategic management and his speeches around vivid mental images. The to provide an understanding of how mental skills “method of loci” or mental anchoring is traceable and strategies work. CTA provides information to students of rhetoric in antiquity. More recent to understand the thought processes of manage- feats of memory involve a mnemonic technique rial strategists who want to apply lessons learned called the memory palace, where the learner from efficient models of decision-making and to visualizes an object representing the different avoid decision errors.

Wiley Encyclopedia of Management, edited by Professor Sir Cary L Cooper. Copyright © 2014 John Wiley & Sons, Ltd. 2 cognitive map Two types of mental processes are employed traditionally been defined as an objective envi- to build cognitive maps. System 1 thinking ronment and how top management perceives the is rapid, intuitive, instinctive, and automatic. world around it. System 2 thinking is slow, conscious, analytical, Top management takes decisions based on and deliberate. the cognitive maps it has constructed for its Traditionally,the field of that deals industry, which in turn has direct effects on with cognitive mapping considered the brain as strategy reformulation and subsequent industry logical, premeditated, and calculated, as char- structure. Strategic decisions are based on intu- acterized by System 2 thinking. It has focused itive and cognitive constructs of the managers’ on observing complex intelligent behavior, cognitive community. which manifests itself in strategic behavior. A cognitive community could, therefore, Cognitive science applies this approach to extend the boundaries of individual rationality understand managerial psychology, to compre- by pooling existing information and cognitions. hend managers’ intentions, to construct mental Active interactions, mutual influence, evidence models of how they process strategic knowledge of collective efforts, and information sharing and to build a description of how managers think widen the boundaries of perception and improve in business environments. the chances of more factual cognitive maps. The faster, intuitive System 1 thinking Strategists and managers share their perspec- provides an alternative understanding of how tives on the industry. The decision makers’ cognitive maps are constructed by individuals, cognitive maps and strategic outlook provide the groups, and industries. It is applied automat- foundations for a common frame of mind that ically by the human mind in time-pressured would influence how an industry evolves and scenarios and situations when information is develops. The mental models of managers in limited. Most complex markets, industries, individual firms help to sustain the traditional and economies are characterized by bounded competitive structure of this industry. The rationality or bounded access to perfect infor- sharing of these mental maps makes up the mation. Intuition allows an executive to rapidly norms or the formula for doing business. Shared access information, knowledge, and memo- beliefs establish the identity of individual firms ries and to link atypical events with possible and help to create a stable transactional network causes, stored in the brain through experience, in which the actions of rivals can be interpreted. preprogrammed instinct, or training. Intuitive In cognitive communities, top management decision-making, although complex, is fast, has some external reference points, guidelines, automatic, and incisive. It scans a wide breadth and anchors that influence its decision-making. of data without going into depth and detail. The reference points change because sense Personal experiences and judgmental anchors making is a continuous process that evolves with provide a rationale for intuitive decisions. its environment. When strategists develop cognitive maps, they Cognitive maps do not always reflect reality are often bounded by System 1 thinking. At and are influenced by bias or lack of informa- other times, System 2 thinking may become tion. The existence and persistence of mental activated and conscious thinking intervenes. maps might lead individuals to ignore contra- There are interesting overlaps and interactions dictory data. They may not reflect evidence between rational incremental thinking and iter- from a changing world. Cognitive structures ative intuitive thinking. The process gives rise are also based on incomplete knowledge and to agreement and disagreement that is often the even the simplest inferences are frequently basis of negotiating cognitive maps developed biased. Individual and collective cognitive maps by groups of industry participants or “cognitive within an industry can be indifferent to signif- communities.” icant economic indicators and market signals during a time when an industry is changing. COGNITIVE COMMUNITIES Cognitive inertia, unless reexamined by regular Research on cognitive communities shows reviews of incoming information that refresh that there is a difference between what has the strategists’ understanding of the business cognitive map 3 environment, can lead to the decline of the Hodgkinson, G.P. and Healey, M.P. (2008) Cognition business. in organizations. Annual Review of Psychology, 59, 387–417. Kahneman, D. (2011) Thinking, Fast and Slow,Farrar, See also benchmarking; PEST analysis; psycholog- Straus and Giroux, New York. ical foundations of strategic management; strategic McGee, J. (2003) Strategic groups and cognitive commu- decision making; strategic drift; SWOT analysis nities, in The Oxford Handbook of Strategy: A Strategy Overview and Competitive Strategy (eds D. Faulkner and A. Campbell), Oxford University Press, Oxford, Bibliography pp. 290–294. Sammut-Bonnici, T. and Paroutis, S. (2013) Developing a dominant logic of strategic innovation. Management Crandall, B., Klein, G. and Hoffman, R.R. (2006) Working Research Review, 36 (10), 924–938. Minds: A practitioner’s Guide to Cognitive Task Anal- ysis, MIT Press, Cambridge, MA.

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