Researchers in the field of managerial cognition are concerned with the way organizational decision makers mentally represent strategic issues and problems, and with how this influences their handling of strategic activities. It is often posited that changing actors' mental representations can enhance strategic adaptation and responsiveness. However, this area of study is fragmented and lacks a unifying theoretical framework. To redress these limitations, we develop a theory of how techniques such as cognitive mapping can achieve appropriate changes in managers' mental representations. Our theory outlines three sequenced processes and corresponding outcomes that are integral to successful cognitive change: differentiation, integration, and coherence of knowledge. We analyze the representational and processing characteristics of differentiated, integrated, and coherent knowledge, and the psychological mechanisms by which this can be attained with intervention techniques used by management researchers and practitioners. We synthesize theory and research from cognitive psychology concerning how mental representations (including categories, schemata, and mental models) and information processing (specifically the functions of working memory and dual processing) influence problem solving and decision making with research from behavioral decision theory and managerial cognition. In doing so, we explicate how several limitations and biases afflicting strategic thinking can be overcome based on the principles of differentiation, integration, and coherence. Propositions predict the specific benefits these provide for managerial decision making and problem solving, including improved usage of information relevant to a problem, the development of richer and more effective mental models, and the minimization of errors and biases in strategic thinking.