STRATEGOS
CASE-BASED STRATEGY DECISION MAKING
dr Jerzy Surma
Collegium of Business Administration
Warsaw School of Economics
e-mail: jerzy.surma@sgh.waw.pl
Natura non facit saltus
Herbert Alexander Simon – behavioral approach
decision-makers lack the ability and resources
to arrive at the optimal solution, they instead
apply their rationality only after having greatly
simplified the choices available
ILL-STRUCTURED PROBLEMS
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Challenge
ILL-STRUCTURED PROBLEMS:
 complex,
 unrepeatable,
 intuitive,
 made under uncertainty
…
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Challenge
ILL-STRUCTURED PROBLEMS:
 complex,
 unrepeatable,
 intuitive,
 made under uncertainty
STRATEGIC DECISION MAKING
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STRATEGIC DECISION MAKING
SME CEO:
1. Routine – habitual
and reactive decision
making
2. Intuitive decision
making
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STRATEGIC DECISION MAKING
Reasoning by analogy is
SME CEO:
a common form of logic among
business strategists.
1. Routine – habitual
Facing a novel opportunity
and reactive decision
or predicament, strategists think
Making
back to some similar situation
they have faced or heard about,
2. Intuitive decision
and they apply the lessons from
making
that previous experience
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STRATEGIC DECISION MAKING
Reasoning by analogy is
SME CEO:
a common form of logic among
business strategists.
1. Routine – habitual
Facing a novel opportunity
and reactive decision
or predicament, strategists think
making
back to some similar situation
they have faced or heard about,
2. Intuitive decision
and they apply the lessons from
making
that previous experience
Case-Based Reasoning
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Circut City
Car Max
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Strategos, plural strategoi (Greek: στρατηγός, pl. στρατηγοί; Doric Greek:
στραταγός, stratagos; literally meaning "army leader") is used in Greek to mean
"general". In the Hellenistic and Byzantine Empires the term was also used to
describe a military governor. In the modern Hellenic Army, it is the highest officer
rank
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Theoretical framework:
A Theory of Case Based Decisions - Bilboa
Let :
P - be a set of decisions problems (case description),
A – a set of acts that may be chosen at the current problem,
R – a set of possible outcomes.
Then a case is a triple: (q,a,r), where: q (problem) є P, a (act) є A, r (outcome) є R
Formally, a decision maker with memory M, similarity function s, and utility function u, w
ho now faces a new decision problem p, will rank each act a є A according to:
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Case description (P)
Company description: market share, location, products/services,
number of employees, sales volume (trends in at least two years period),
sales volume (export), EBITDA (trends in at least two years period), B2B/B2C.
Context description: industry, industry life cycle phase, Porter five forces analysis
(threat of substitute products, threat of the entry of new competitors,
intensity of competitive rivalry, bargaining power of customers,
bargaining power of suppliers).
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General Knowledge as a warning system
Inappropriate case retrieval based on the rule:
“if the new case company and the retrieved company
are in the different industry life cycle phase
then the proposed decisions might be wrong”
Inappropriate proposed solution based on the rule:
“if the company has just started to penetrate the market
with current products
and proposed decision is: intensive foreign market development
then this is risky and unrealistic proposal”
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The act which is chosen as a solution for the current
problem (A)
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Crucial phase - REVISE
Revise:
The solved case that was established in the
previous phase has a planned strategic decision
(act). This is a kind of proposal for a strategic
actions plan. The most important goal of the
revision phase is to recognize what has actually
happened with that company after strategic
decision was taken.
It is crucial to take into consideration the case
utility value (u) and user remarks concerning the
reasons why the proposed approach was
successful or unsuccessful. In reality, there are
several factors of different type such as economic
trend, customers’ behavior, organizational
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Evaluation by CEO’s (1/2)
The test group was selected by the target selection
and it is composed of 44 CEOs from SMEs
Industry
Percentage (quantity)
ICT
66% (29)
Media
14% (6)
Others
20% (9)
Summary
100% (44)
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Sources of the strategy decisions pointed by SME CEO’s
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Evaluation by CEO’s (2/2)
Variable
Explanation
Support
Education
Decision making
Strategos is supporting me in the real strategy decision problems
Strategos is teaching me in strategy management
Strategos is generating a final solution for my strategy problems
Test case
Bankier
TravelPlanet
Macrologic
K2 Internet
PointGroup
Perfect Line
LSI Software
Procad
Power Media
Quantum Software
One-2-One
Support
Education
Definitely no (1)
0,0%
0,0%
Decision
making
42,7%
No (2)
3,1%
2,8%
54,8%
I do not know (3)
10,3%
6,6%
2,5%
Yes (4)
42,4%
51,5%
0,0 %
Definitely yes (5)
44,2%
39,1%
0,0 %
Summary
100%
100%
100%
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Conclusions
1. acceptance of Strategos with a strong feeling of limitations
2. treated the system as an inspiration or verification for their actions
Suggested approach, together with methodological guidelines how to avoid superficial analogies,
may be used in practice as a form of popularization of strategic business consulting in SMEs.
The commercialization of suggested approach will contribute to the significant increase of
knowledge and “strategic” awareness in SMEs.
www.strategos.pl
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