Introduction

The managers of various organizations in both the public and private sectors face today a challenging and difficult situation. In the circumstances where they should be able to add to their organizations' performance, the environment of the organizations is no longer as predictable as it used to be. Instead, uncertainty and complexity have considerably increased. In the unpredictable world the dependence both between individuals and between organizations has grown, as well. In these circumstances, management has turned into a more difficult and also a more critical task where old power-based relations must be replaced with new types of relationships. Many authors (see e.g., Kouzes & Posner, 1993; Kouzes & Posner, 1995; Harisalo & Miettinen, 1995; Fukuyama, 1995; Lane, 1998; Sydow, 1996; Ciancutti & Steding, 2000) argue that trust constitutes a solid basis for these new types of relationships. Lane (1998) even emphasizes that the variety of exchange relationships and the new business environment cannot be handled without the presence of interpersonal and/or inter-organizational trust.

The role of trust has been studied in the area of management for a while. During recent years it has become a rather popular area both in intra-and interorganizational relationships. Many researchers have paid attention to the impact of trust both on the success and well-being of organizations. Trust has been, for example, supposed to add to the performance and foster a capacity for action, increase learning, reduce complexity and uncertainty, enhance collaboration and co-operation, and uncover innovative solutions (see e.g., Shaw, 1997; Hardy, Phillips & Lawrence, 1998; Lane, 1998; Iivonen & Huotari, 2000; Scott, 2000; Nooteboom, 2002). Emerging interest in knowledge management (KM) both in theory and in practice has also emphasized the need to study trust in the context of management because knowledge creation and sharing — two critical aspects of KM — demand at least a certain amount of trust (Iivonen & Huotari, 2000; McInerney, 2002; Huotari & Iivonen, 2004). Because of all the benefits of trust, it should be included in the strategic thinking of managers.

In this chapter I will consider what it means to include trust in the strategic thinking of managers. My aim is to divide strategic thinking into elements and include trust in each of these elements. My overall purpose is to give managers conceptual tools to understand and use trust in their everyday life to support their organizations. Although the benefits of trust have been repeated many times in the literature, the topic, "how to build trust in practice," is still underestimated. My chapter will meet this challenge.

Strategy has traditionally been defined in the context of organizations as Chandler did in 1962 in his classic work: "The determination of the basic long-term goals and the objective of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals" (cited in N si, 1991). According to N si (1991), the doctrine of strategic thinking has developed during the last decades so that the hard-line thinking which emphasizes the company functions as an active operator and shaper in its environment with faceless leaders has given space to soft, more humanistic thinking. In the soft strategic thinking, a leader is considered as a real person, visionary, and coach, in the midst of culture.

Mintzberg, Ahlstrand, and Lampel (1998) describe various schools of strategy formation. The design school, planning school, and positioning school are concerned with how strategies should be formulated. The entrepreneurial school, cognitive school, learning school, power school, cultural school, and environmental school consider specific aspects of the process of strategy formation. Finally, the configuration school aims to be more integrative.

Mintzberg, Ahlstrand, and Lampel conclude that ten schools look at the same process differently. Further, they state that strategy formation is a complex space and becoming more eclectic and nuanced. At the same time when good practice is needed, it is becoming more sophisticated and demanding. Mintzberg (1991) describes how strategic thinking differs from ordinary thinking, and characterizes it as seeing. In more detail, he says that strategic thinking is seeing ahead, behind, above, below, beside, beyond, and through. At the same time when strategic thinking is future-oriented with visions, it must be understanding of the past and the changes in and around organizations. As Mintzberg says: "What is the use of doing all this seeing — ahead and behind — above and below, beside and beyond — if nothing gets done" (p. 24). Trust as a part of managers' strategic thinking means seeing the role of trust as an important and necessary element in leading organizations. It means investing considerable effort to build the culture of trust.

Shaw (1997) defines trust as a belief that those on whom we depend will meet our expectations of them. This includes two basic elements. First, others are able to act in a way which is in balance with our needs and expectations; and second, they are also willing to do that. In a trusting relationship, it is essential to understand one another's needs and expectations. Trust grows when others correspond by fulfilling our expectations, and it turns into mistrust when they do not. Kouzes and Posner (1995) talk about trust response, which means that people who are trusting are regarded by others as trustworthy, and people who do not trust others are themselves perceived as less deserving of trust. The concept of trust has been analyzed in details elsewhere in this book (see Huotari & Iivonen, 2004). In this chapter the focus is on trust building, how it can be analysed, described and involved in the strategic thinking of managers.