Emotions in strategic decision-making

For the past 15 years, we have studied leaders' decision-making and actions within organizations. On this page, we have compiled the most fascinating insights from our research, shedding light on the cognitive, emotional, and contextual factors that shape leadership and decision-making.

Picture: Tiina Somepuro

“Top managers ultimately favored the emotionally attractive option, despite analytical evidence suggesting otherwise.”

— Vuori & Tushman, 2024

Why great leaders make really bad decisions – and how you can do better

In this TED Talk, Timo draws on personal experiences, an analysis of leadership decisions, and his own research to shed light on how emotions influence decision-making. He highlights how emotions can, at their worst, cause significant harm, but at their best, inspire us to achieve the seemingly impossible. Timo also offers practical tools for effectively managing emotions to make better decisions.

Picture: Ahti Brummer / TEDxAalto University

“Emotions, when regulated across groups, do not paralyze decision-making but instead facilitate constructive reappraisals.”

— Vuori & Huy, 2022

How Leaders Can Harness Emotions to Drive Strategic Change

In this Harvard Business Review article, Timo Vuori and Quy Huy explore how Nokia's leadership embraced the emotional dimensions of strategy to drive a remarkable organizational transformation. They provide valuable lessons for leaders on integrating emotional intelligence into strategic initiatives.

Key Takeaways for Leaders:

  1. Recognize Emotional Dynamics in Strategy:
    Nokia’s leaders understood that emotions such as fear, pride, and hope significantly impact employees' ability to adapt to change. Addressing these emotions helped rebuild trust and foster engagement.

  2. Create a Shared Sense of Purpose:
    A clear and inspiring vision was central to Nokia’s transformation. Leaders unified employees by emphasizing a shared mission that energized the organization.

  3. Foster Open Dialogue:
    Leaders encouraged honest conversations, allowing employees to voice concerns and aspirations. This transparency helped overcome emotional resistance to change.

  4. Empower Teams Through Action:
    By involving employees in implementing strategic changes, Nokia’s leadership fostered ownership and commitment, turning strategy into action.

  5. Balance Rational and Emotional Messaging:
    Effective strategy requires both logic and emotion. Nokia’s leaders combined data-driven arguments with emotionally resonant storytelling to inspire and motivate employees.

Leadership Implications:

This case demonstrates that successful strategic transformations require leaders to address both the rational and emotional aspects of change. By understanding and leveraging the emotional drivers of their teams, leaders can unlock energy, creativity, and resilience, enabling their organizations to thrive in dynamic environments.

Read the full article from here: How Nokia Embraced the Emotional Side of Strategy

“Emotions, often overlooked in traditional models, are central to shaping the strategic focus and engagement of decision-makers.”

— Vuori, 2024

Lessons from the Depths of Organizations: Insights from Qualitative Research

CASE 1:

What did we do?

We conducted 19 interviews to explore organizational dynamics and challenges, focusing on:

  • Leadership practices and their impact on organizational culture and performance

  • Perceptions of collaboration, communication, and operational effectiveness within different organizational levels

  • Emotional and relational dynamics influencing employee engagement and decision-making

What did we learn?

We learn about decisions from the news rather than from internal communication.

At the time I joined, we had great things going on—amazing projects. I couldn't imagine anything greater in Finland to be a part of.

Our strength lies in our ability to react dynamically to the varying needs of different projects. Some individuals might be engaged in a project for over two or three years, while others may find themselves moving from one project to another, working on shorter assignments. [...] This approach ensures that everyone knows each other, as they collaborate across different projects.

Of course, it is personalized on some level to them. They (the key members) have made all work.

  1. Leadership was seen as overly focused on financial metrics ("Excel-driven"), neglecting human and emotional aspects. Employees desired a more human-centric leadership approach to align with their passion for their work

    Result: Suppressed emotions led to frustration and a negative atmosphere

    Lesson: Overemphasis on performance metrics can alienate employees and suppress their passion for work. Cultivate a leadership style that values employees as individuals, acknowledges their emotions, and aligns their passion with organizational goals

  2. Boards felt their expertise was underutilized, while employees perceived the board's involvement as interfering and disconnected. Decision-making processes were seen as hierarchical, with limited inclusion of operational staff

    Result: Misalignment created mutual distrust and inefficiencies in decision-making

    Lesson: Promote open communication and clearly define the roles and expectations of governance and operational teams

  3. The organization was perceived as divided into silos, with limited communication across departments. Employees reported a lack of clarity in roles and responsibilities, leading to inefficiencies and duplicated work

    Result: A sense of isolation, lack of trust, and challenges in achieving shared goals

    Lesson: Provide clear structures, empower employees to make decisions, and trust them to execute effectively. Invest in tools and processes that encourage interaction across departments and emphasize collective organizational goals​

  4. Internal communication was considered insufficient, leading to surprises and confusion about decisions. Employees expressed difficulty speaking openly with supervisors and feared making decisions due to potential backlash

    Result: A lack of psychological safety hindered collaborative and proactive problem-solving

    Lesson: Employees need safe environments to voice ideas and accept failures without fear of retribution. Create a culture of trust where mistakes are seen as learning opportunities, and open communication is encouraged

Contact Suvi-Tuuli if you want to learn more about the method and findings

CASE 2:

What did we do?

In a M&A situation, we interviewed five key individuals from the target organization. A private equity firm was acquiring a professional services organization.

  • Before the deal was finalized, both parties sought to clarify the cultural factors critical to the organization and its identity, as well as the challenges that could hinder potential future expansion

What did we learn?

  1. Ambitious, societally meaningful projects have strong influence on professionals’ motivation

    Good: The spirit is shared among the key members; different types of people share a professional identity and are able to pursue their work in the professional service organization

    Do not break: The organization's ambitious and holistic way of approaching the projects

    Challenge: Personalization of connections and lack of current participation in competitions

  2. Decentralized decision-making and needs-based resourcing in projects creates efficiency and sense of ownership

    Good: Needs-based resourcing and decentralized, project-specific decision-making enable the organization to operate efficiently

    Do not break: Independent team operations and respect for diversity

    Challenge: Maintaining an overview of projects and employees, as well as the cultural orientation of new employees (especially those recruited from foreign backgrounds). Remote work can also pose challenges for cultural learning

  3. Centralized organizational decision-making brings clarity, but the organization’s connections to society are personalized to key people and the company is dependent on them

    Good: Centralized organizational decision-making creates clarity for the organization’s identity and strategic work

    Do not break: Organizational-level clarity in strategic decision

    Challenge: Personalization of connections and the sharing of organizational-level information among a larger number of people

Contact Suvi-Tuuli if you want to learn more about the method and findings

It feels like we are being led like a corporation, but what we need is leadership that acknowledges people, not just numbers.

There’s potential for great collaboration with the board, but instead, it feels like interference.

Platform transitions create significant emotional stress for top managers of established companies because of the uncertainty and confusion caused by major shifts in strategy. This stress is mentally exhausting and makes it harder for managers to understand the new competitive environment.

— Vuori & Tushman, 2024

The human side of strategy making - Lessons from Nokia and other companies

In his installation lecture, Professor Timo Vuori delves into the pivotal role emotions play in strategic decision-making and organizational change. Drawing from over 15 years of research, he illustrates how emotions influence leaders' perceptions and actions, impacting the success of strategic initiatives. Vuori emphasizes the necessity for leaders to acknowledge and manage emotions within their teams to foster effective strategy formation and implementation. He also discusses the importance of creating an organizational culture that supports emotional awareness, which can lead to more resilient and adaptable strategies.

“Strategy making requires constant option generation, assumption testing, and dynamic updates. In Elävä Strategia book, we show how companies can systematically generate scenarios, evaluate them, and update their choices in a flexible way. This allows them to both adapt dynamically and perform consistently”

— Ritakallio & Vuori, 2018

Elävä strategia

Kyky nähdä, taito tarttua tilaisuuteen

The concept of Elävä Strategia seeks to improve the map an organization uses for the continuous development of its strategy. Instead of crafting a vision set in stone, it leverages artificial intelligence, scenarios, analytics, and experimentation to enhance the organization’s ability to identify which critical opportunities are opening—and which are closing—in a rapidly changing world. This enables swift action and allows organizations to capitalize on change for their benefit.

The past valued visionary leaders with strong convictions about where the world was heading. Today, we need leaders who recognize that even their own ideas from yesterday may already be outdated. We need leaders who acknowledge the facts, work based on the best understanding of the present, and inspire their organizations to do the same.

“The title of Elävä Strategia says it all: a successful strategy is no longer carved in stone for years but is instead a process of continuous formation, renewal, and implementation.
The book shares examples of strategic choices, leadership challenges, failures, and ongoing processes during periods of change. For this reason, it is essential reading for anyone engaged in strategic leadership.
The seven-topic summary with 32 key questions at the end is excellent. In leadership, a great question is always better than a brilliant answer to the wrong question.”


— Jorma Eloranta, Honorary Mining Counselor, Chairman of the Board

“Business is an endless and ever-evolving game where rules, competitors, and the very nature of the game often change suddenly. Elävä Strategia introduces a new logic to strategic thinking, while also providing a highly concrete playbook for dynamic strategic leadership.”


— Pekka Puustinen, Chief Customer Officer, Ilmarinen

“Static or annually updated strategic thinking is no longer sufficient. Elävä Strategia clearly illustrates both the forces driving change in strategy formation and the means to create a living, scenario-based strategic approach. I highly recommend it!”

— Risto Siilasmaa, Chairman of the Board, Nokia and F-Secure

Other resources

Academic publications

Vuori, T. O., & Tushman, M. L. (2024). Strategic decision‐making at platform transitions: The case of Nokia (2010–2011). Strategic Management Journal.

Open access: Strategic decision‐making at platform transitions: The case of Nokia (2010–2011)

Vuori, T. O., & Huy, Q. N. (2022). Regulating top managers’ emotions during strategy making: Nokia’s socially distributed approach enabling radical change from mobile phones to networks in 2007–2013. Academy of Management Journal, 65(1), 331-361.

Open access: AMJ20190865_proof.pdf

Vuori, T. O., & Huy, Q. N. (2016). Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative science quarterly, 61(1), 9-51.

Open access: Distributed-Attention-and-Shared-Emotions-in-the-Innovation-Process-How-Nokia-Lost-the-Smartphone-Battle..pdf

Articles in the media

Podcasts