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Strategic Management Journal (forthcoming)
We propose a theory that explains why the relentless pursuit of perfect implementation of strategy may be useful even in a world in which the strategies being implemented are far from optimal. We formulate a computational model in which an organization's strategy adapts based on performance feedback. However, the distinctive feature of our approach is that we abandon the “organization as a unitary actor” assumption, and model a separation of beliefs and actions. The central insight is that given this separation, precise implementation has benefits beyond the well-known effect of enabling exploitation of good strategies. It enables the discovery of better strategies by allowing more effective learning from feedback on the value of current strategies.