82 Part 1: Strategic Management Inputs
The challenge and difficulty of making effective decisions
are implied by preliminary evidence suggesting that one-half of
organizational decisions fail.^32 Sometimes, mistakes are made
as the firm analyzes conditions in its internal organization.^33
Managers might, for example, think a capability is a core com-
petence when it is not. This may have been the case at Polaroid
Corporation as decision makers continued to believe that the
capabilities it used to build its instant film cameras were highly
relevant at the time its competitors were developing and using
the capabilities required to introduce digital cameras. In this
instance, Polaroid’s decision makers may have concluded that
superior manufacturing was a core competence, as was the
firm’s ability to innovate in terms of creating value-adding fea-
tures for its instant cameras. If a mistake is made when analyz-
ing and managing a firm’s resources, such as appears to have
been the case some years ago at Polaroid, decision makers must
have the confidence to admit it and take corrective actions.^34
A firm can improve by studying its mistakes; in fact, the
learning generated by making and correcting mistakes can be
important to efforts to create new capabilities and core compe-
tencies.^35 One capability that can be learned from failure is when
to quit. Polaroid should have obviously changed its strategy ear-
lier than it did, and by doing so it may have been able to avoid
more serious failure. Another potential example concerns News
Corp.’s Amplify unit. As of mid-2015, the firm had invested over
$1 billion in the unit that makes tablets, sells online curricula,
and offers testing services. In 2014, Amplify generated a $193
million dollar loss as it seeks to change the way children are
taught. Facing competition from well-established textbook
publishers that are enhancing their ability to sell digital prod-
ucts such as those Amplify sells, News Corp. may want to care-
fully evaluate its previous decisions to see if mistakes were made and if so, how future
decisions might be error free.^36
As we discuss next, three conditions—uncertainty, complexity, and intraorganiza-
tional conflict—affect managers as they analyze the internal organization and make
decisions about resources (see Figure 3.2).ConditionsUncertainty Uncertainty exists about the characteristics of
the firm’s general and industry environments
and customers’ needs.
Complexity Complexity results from the interrelationships
among conditions shaping a firm.
Intraorganizational Conflicts Intraorganizational conflicts may exist among
managers making decisions as well as among
those affected by the decisions.Figure 3.2 Conditions Affecting Managerial Decisions about Resources, Capabilities, and
Core CompetenciesGene Blevins/Polaris/Newscom
At one time, Polaroid’s cameras created a
significant amount of value for customers.
Poor decisions may have contributed to the firm’s
subsequent inability to create value and its initial
filing for bankruptcy in 2001.