Strategic Conversation: Defining, Measuring and Applying the Construct in Organisations

Abstract

'Strategic Conversation' is a term that has been mentioned with increasing frequency in literature over the last decade. Having the ability to engage in 'conversation that is strategic' has been promoted as a new core skill that is needed within organisations to help improve overall performance. The value of strategic conversation has been demonstrated by research that compared organisational performance before and after a program that used conversation to improve goal alignment. However, researchers have had to make broad assumptions about the nature of strategic conversation, and about how to manipulate it for research purposes. There has been no definition, construct, or instrument to help researchers use, or assess, strategic conversation. This research used three studies to define strategic conversation, develop a construct and measurement instrument, and test the impact of strategic conversation on organisation performance. Study 1 set out to define strategic conversation, generate a construct, and assemble and test an instrument. Independent panels of strategy experts helped create potential constructs that were subsequently converged by the researcher with a construct created from literature. The resultant construct comprised two components that were labelled 'Purpose' and 'Topic'. The construct suggests that for a conversation to be strategic, its purpose must be to create or support organisational goals, and the topic must belong within one or more of the components of a strategic life-cycle (viz. scanning, planning, implementing, measuring, assessing). An instrument was assembled to test for evidence of strategic conversation in organisations. The instrument was checked by panel members for face and content validity, underwent a pilot study for ambiguity, and was tested using a cross-sectional study of 380 members from a wide variety of manufacturing, service, and government organisations. The two-factor instrument demonstrated validity and reliability. Study 2 examined relationships of Strategic Conversation with selected organisational variables. Literature suggests that more instances of strategic conversation, or the extent to which conversation is more 'strategic', will correlate with organisational variables such as Strategic Planning, Strategic Behaviour, and Organisational Performance. The results of Study 2 supported most of the hypotheses, finding that Strategic Conversation was correlated with Strategic Planning (r = .59), Strategic Behaviour (r = .65), and Organisational Performance (r = .47) all with p less than .001. Also supported, using Baron and Kenny's four-step regression process and the Sobel test, was an expectation that the relationship between Strategic Planning and Strategic Behaviour (r = . 6 ) would be mediated by Strategic Conversation. This finding helps explain some of the variability reported in studies on strategic planning. Significantly, the strength of the relationship between Strategic Conversation and Performance (r = .47) was similar to that between Strategic Behaviour and Performance (r = .46). This parallel pathway to performance suggests that additional options exist for change agents to influence organisational development. The final study tested if strategic conversation could be learned by organisational members, and whether the learning made any difference (wanted or unwanted) to the organisation. To test the extent of learning of strategic conversation, and its subsequent impact, Study 3 facilitated a 6-month skills-development program that was completed by 11 organisations, whose representatives met for an hour each week. Three time-interval measurements (start, mid-point, finish) were made of the four variables. The average scores over the three measurement times for Strategic Conversation were 2.59, 2.99, and 3.69. Simultaneous performance scores were 2.82, 3.27, and 3.46. The increased scores over the period were 42% for Strategic Conversation, and 23% for performance, demonstrating that strategic conversation could be learned and that the elevated skills made a difference to organisational performance. There were also increased scores for Strategic Planning (51%) and Strategic Behaviour (62%). By comparison, scores of non-participating groups of organisations taken over the same period remained constant, thus excluding external common causes as an explanation for the performance improvement reported by participants. In an effort to capture unintended outcomes, especially negative ones, of either strategic conversation or the learning program, a technique called 'Most Significant Change' was employed to detect, identify, and quantify such outcomes. Participants reported thirteen unexpected outcomes, and decided on a way to quantify them. All unintended outcomes were beneficial, and the magnitude of changes, averaging 45% for all 11 organisations and all 13 unexpected outcomes, were similar to the change-scores for behaviour and performance derived by the instruments. Future academic and practitioner research posibilities, and potential applications for strategic conversation within organisations, are suggested.