Contents
Introduction 3
About Strategic Thinking 3
Creation of strategies 5
Differentiate between strategic thinking and strategic planning 5
Process Considerations in strategic thinking 6
The Elements of Strategic Thinking: The Liedtka Model 7
Levels of strategic thinking and its Characteristics 9
Identify and apply effective creativity techniques for various strategic needs 13
Improve decision making skills as part of your strategic thinking capabilities 14
Provide high level leadership training with practical and essential leadership skills 15
Conclusion 17
References: 20
Abstract
Strategic thinking is designed to reduce the risks of strategy failure. Managers explore how the raw materials of strategic thinking (creative and critical thinking, decision making and problem solving) can be transformed into a practical system for enhancing strategic promise and performance. They will also be introduced to visualization techniques that can help them communicate strategy in a concise, articulate, and compelling manner to significantly increase its likelihood of success. Understanding and applying the principles and techniques discussed about think strategically can help managers and their companies rise to the challenges - and opportunities - of today's turbulent marketplace. This article will help you to better understand strategic thinking and to identify the actions you need to take to enhance your own strategic thinking ability and help others develop theirs.
Introduction
It has been said that we think a great deal, but rarely do we think about how we think. Business is about action and accomplishment. Thinking is the invisible and intangible component and yet it is the key enabler to effective action. As global competitive pressures force businesses to become more responsive, effective organizational performance has become tied more closely to an organization-wide capacity for strategic thinking. No longer is such thinking only the province of those at the top or those charged with planning. Strategic thinking has become a necessary component of everyone’s job.
Strategic thinking offers managers and their companies the opportunity to move beyond the traditional application of strategic frameworks to identify and achieve breakthrough strategies. The real power of thinking strategically lies in its potential as a source of competitive advantage equally applicable to creating superior value for customers, erecting barriers to competitors, or enabling more rapid adaptability to change.
Competence in strategy is the sine qua non of the manager. Yet even among well-schooled and experienced managers, strategy failure rates remain uncomfortably high. There is little room for error in getting it right strategically in today's fast-moving marketplace with increasingly sophisticated competition and the performance of decision makers under scrutiny as never before. Get strategy wrong and second chances will be hard to find. And although strategy is critical to business success, the current model of strategic process taught to and expected of the average manager is largely incomplete.
The ability to think strategically is a powerful leadership quality. Effective strategic thinking can lead to the discovery of novel strategies that create a future significantly different from the present. Developing the ability to think strategically is an individual endeavor supported by organizational factors. Specific work experiences, learning styles, aspects of team structure and other organizational characteristics have been shown to help develop an individual’s ability to think strategically.
About Strategic Thinking
Strategic Thinking lies perhaps at the core of strategic process. However, the idea of Strategic Thinking still appears to be abstract.
In the context of the business environment, strategy process includes an analysis of the contingencies of the political, social, economic, technological and legal environment; generation of alternatives; and an appropriate strategic choice matching the organizational strengths and weaknesses with the environmental requirements. This involves two sub-processes: (17)
1. Generation of strategic alternatives and
2. Choosing from among strategic alternatives.
A lot of strategic choices are generated around the key strategic questions: who are the firm’s customers, what products is the firm offering, and how will it offer these products. Strategic thinking requires creativity and innovation in generating alternative strategic choices. But more importantly, it also requires exercising a choice from amongst alternatives. The question is how one exercises a choice. Modern strategy management gives us the techniques of understanding, not of choosing. Surprisingly, not much work has been done to understand what goes on in the mind of the person who takes strategic decisions. (17)
Strategic thinking focuses on finding and developing unique opportunities to create value by enabling a provocative and creative dialogue among people who can affect a company’s direction. It is the input to strategic planning—good strategic thinking uncovers potential opportunities for creating value and challenges assumptions about a company’s value proposition, so that when the plan is created, it targets these opportunities. Strategic thinking is a way of understanding the fundamental drivers of a business and rigorously (and playfully) challenging conventional thinking about them, in conversation with others. (18)
In a 1987 article in The Economist, Michael Porter uses the term “strategic thinking” to mean thinking about strategic issues. He suggests broadening the scope of planning to include every aspect of competitive analysis, and so avoid falling into the trap of routines. (1)
We conceive of strategic thinking as a set of ideas, principles, policies, concrete rules and operational procedures that shape the way managers think about their role and that Guide their daily actions. This set of ideas and rules is more malleable than corporate ideology or organizational identity, which are more permanent. Also, strategic thinking is different from operational plans, which represent more concrete commitments and specific actions at particular points in time. (1)
This paper defines strategic thinking as a way of solving strategic problems that combines a rational and convergent approach with creative and divergent thought processes. Such process orientation focuses this investigation on how senior managers in an organizational setting attempt to understand and take strategic action in an environment that is highly complex, ambiguous and competitive. It represents an important antecedent to strategic decision-making and may provide a key to better understand organizational change phenomena and ultimately, organizational performance and survival. (9)
Studies of organizational failures often mention the fact that key players such as the CEO had not thought through important strategic issues. They had been bogged down in operational problems and not thought strategically. However little attention has been given to what this strategic thinking is and why it did not happen. Why did the CEO not think strategically and what had been going on in the person’s head that their thinking was taken up with other matters. (14)
Indeed strategic thinking is suggested as a core competency (Bonn, 2001). (4)
Creation of strategies
These elements are found consistently in the literature:
1. vision and mission;
2. objective setting;
3. external environmental scanning;
4. internal environmental scanning;
5. strategic alternatives (crafting strategy);
6. strategy selection;
7. implementation; and
8. Control.
The concept of the creation of strategies is largely ignored. Problems in strategy are that, although the term strategic planning is the cornerstone for the entire discipline, there is little consistency in how it is actually achieved. One cause of this problem is the discipline’s general preference towards examining interrelationships among variables rather than the definition of the variables themselves. In order to facilitate an understanding of the content of strategy, it is necessary to classify the thinking of strategy scholars. (11)
Differentiate between strategic thinking and strategic planning
The ability to think strategically provides another dimension to the process of strategy making. It recognizes that strategic thinking and planning are distinct, but interrelated and complementary thought processes that must sustain and support each other for effective strategic management. Creative, groundbreaking strategies emerging from strategic thinking still have to be operationalized through convergent and analytical through strategic planning. Figure 2 depicts the distinct but complementary thought processes of strategic thinking and planning.
Process Considerations in strategic thinking
As important as the content of strategic thinking is the process by which it takes place. Processes are needed to ensure that strategies are:
Aligned: A company’s strategies must fit with its mission, vision, competitive situation and operating strengths. (18)
Goal-oriented: Strategies are the means by which a company sets out to achieve its goals. Effective strategies, then, set clear expected outcomes and make explicit links between these outcomes and the company’s goals. (18)
Fact-based: The best strategies are based on and supported by real data. While strategic thinking by its very nature requires assumptions about the future, these assumptions must be educated guesses, based on facts—for example, actual performance data or results of some kind of pilot.
Based on Broad Thinking: Companies that are strategically nimble are able to consider multiple alternatives at once and to consider a range of scenarios in making strategic choices. (18)
Focused: No company can do everything or be all things to all people. Strategy setting involves making choices about what a company will do and—as important—what it will not do. Strategies provide clear guidance about how a company’s activities will be prioritized, and how its limited resources will be deployed. (18)
Agreed upon: Especially in large complex organizations, successful strategies must gain the support of multiple stakeholders. This often requires a process of developing strategies that is interactive in gathering multiple points of view and in sharing the thinking behind the strategy as it evolves. (18)
Engaging: Strategies that will need to mobilize broad resources must be easily articulated so that they can capture the attention of the people who will be asked to carry them out. (18)
Adaptable: Strategies need to be able to be adjusted to build on learning from experimentation, errors and new information. At the same time, there needs to be some thoughtfulness in these adjustments so that they are responsive without being overly reactive or knee jerk. (18)
Implementable: Because effective strategies draw on the particular strengths and skills of an organization, they include explicit considerations of how they will be implemented. Implementable strategies provide clear guidance for decision making in order to shape behavior throughout the company. (18)
The Elements of Strategic Thinking: The Liedtka Model
Following the Mintzberg model, Liedtka (1998) developed a model which defines strategic thinking as a particular way of thinking, with very specific and clearly identifiable characteristics. Figure 1 illustrates the five elements of strategic thinking. (15)
The first element is a systems perspective. A strategic thinker has a mental model of the complete system of value creation from beginning to end, and understands the interdependencies within the chain. (15)
The systems perspective enables individuals to clarify their role within the larger system and the impact of their behavior on other parts of the system, as well as on the final outcome. This approach addresses, therefore, not only the fit between the corporate, business, and functional levels of strategy, but very importantly, the person level. (15)
According to Liedtka (1998); it is impossible to optimize the outcome of the system for the end customer, without such understanding. The potential for damage wrought by well-intentioned but parochial managers optimizing their part of the system at the expense of the whole is substantial. (15)
Thus, from a vertical perspective, strategic thinkers see the linkages in the system from multiple perspectives and understand the relationship among the corporate, business, and functional levels of strategies to the external context, as well as to the personal daily choices they make. From a horizontal perspective, they also understand the connections across departments and functions, and between suppliers and buyers. (15)
The second element of strategic thinking is that it is intent-focused and intent driven. Strategic intent is our term that implies a particular point of view about the long-term market or competitive position that a firm hopes to build over the coming decade or so. Hence, it conveys a sense of direction. A strategic intent is differentiated; it implies a competitively unique point of view about the future. It holds out to employees the promise of exploring new competitive territory. Hence, it conveys a sense of discovery. Strategic intent has an emotional edge to it; it is a goal that employees perceive as inherently worthwhile. Hence, it implies a sense of destiny: Direction, discovery and destiny. These are the attributes of strategic intent. (15)
Liedtka (1998) puts it this way: Strategic intent provides the focus that allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal. In the disorienting swirl of change, such psychic energy may well be the scarcest resource an organization has, and only those who utilize it will succeed. Therefore, strategic thinking is fundamentally concerned with, and driven by, the continuous shaping and re-shaping of intent. (15)
The third element of strategic thinking is intelligent opportunism. The essence of this notion is the idea of openness to new experience which allows one to take advantage of alternative strategies that may emerge as more relevant to a rapidly changing business environment. Mintzberg (1999) sees this approach as underscoring the difference between emergent strategy and deliberate strategy. In practicing intelligent opportunism, it is important that organizations seriously consider the input from lower level employees or more innovative employees who may be instrumental in embracing or identifying alternative strategies that may be more appropriate for the environment. (15)
The fourth element of strategic thinking is referred to as thinking in time. Strategy is not solely driven by the future, but by the gap between the current reality and the intent for the future. According to them; Strategic intent implies a sizeable stretch for an organization. Current capabilities and resources will not suffice. This forces the organization to be more inventive, to make the most of limited resources. Whereas the traditional view of strategy focuses on the degree of fit between existing resources and current opportunities, strategic intent creates an extreme misfit between resources and ambitions. Thus, by connecting the past with the present and linking this to the future, strategic thinking is always thinking in time. (15)
This oscillation between the past, present, and future is essential for both strategy formulation and execution. We need both a sense of continuity with our past and a sense of direction for our future to maintain a feeling of control in the midst of change. From his perspective then, the real question is not what does the future we are trying to create look like, rather it is having seen the future that we want to create, what must we keep from that past, lose from the past, and create in our present, to get there. (15)
The fifth element of the strategic thinking recognizes the process as one that is hypothesis-driven. Like the scientific method it embraces hypothesis generation and testing as core activities. According to Liedtka (1998) this approach is somewhat foreign to most managers. Yet in an environment of ever-increasing information availability and decreasing time to think, the ability to develop good hypotheses and test them efficiently is critical. The ability to work well with hypotheses is the core competence of the best strategy consulting firms. Because strategic thinking is hypothesis-driven, it circumvents the analytical-intuitive dichotomy that has dominated much of the debate on the value of formal planning. (15)
Strategic thinking is both creative and critical, although accomplishing both types of thinking simultaneously is difficult, because of the requirement to suspend critical judgments in order to think more creatively. Nonetheless, the scientific method is able to accommodate both creative and analytical thinking sequentially through its use of iterative cycles of hypothesis generating and testing. (15)
Taken together and repeated longitudinally this process allows an organization to pose a variety of hypotheses, without sacrificing the ability to explore novel ideas and approaches. The effect is an organization that can transcend simplistic notions of cause and effect and pursue life-long learning. (15)
In summary, Liedtka states: The strategic thinker remains ever open to emerging opportunities, both in service to the defined intent and also in question as to the continuing appropriateness of that intent. Firms who succeed at embedding a capability for strategic thinking throughout their organizations will have created a new source of competitive advantage. (15)
Their whole (holistic) system perspective should allow them to redesign their processes for greater efficiency and effectiveness. Their intent-focus will make them more determined and less distracted than their rivals. Their ability to think in time will improve the quality of their decision-making and speed of implementation. A capacity for hypothesis generation and testing will incorporate both creative and critical thinking into their processes. Intelligent opportunism will make them more responsive to local opportunities. (15)
The combined effects of these are the creation of a capacity for strategic thinking that meets what refers to as the three fundamental tests for a strategically valuable capability: (15)
1. They create superior value for customers,
2. They are hard for competitors to imitate, and
3. They make the organization more adaptable to change.
Liedtka (1998) suggests that these three discrete, but inter-related elements, when taken together can lead to significant positive outcomes in organizations, provided there is the accompanying supportive strategic planning context to encourage and enable the implementation of the fruits of this type of thinking. (15)
Levels of strategic thinking and its Characteristics
Three levels of strategic thinking and develops a number of propositions that can guide the development of an integrated framework for improving strategic thinking in an organizational context are individual, groups, organizational.( 9)
Characteristics of an individual strategic thinker
When individuals are confronted with an equivocal set of events, they try to make sense of them. According to cognitive theory, individuals construct meaning and make sense by building metal representations that guide their thinking and the direction of their decisions. (9)
Research on representational systems has investigated cognitive concepts such as schemas, frames, scripts, cognitive maps and how they are constructed, manipulated and applied in the decision-making process. They represent organized generic knowledge that is used to simplify the large amount of data presented in organizational settings, to organize and interpret data and to guide action. Hence, these representational systems structure the unknown, but they also define what decision-makers regard as relevant and act as a filter that influences their perception of organizational events and what should be done about them. (9)
Decision-makers who receive the same stimuli may use different frameworks to interpret them and, therefore, disagree about meanings, causes or effects. By enacting their environments, decision-makers develop subjective representational systems that influence how problems are framed and how managerial and organizational meaning is developed. (9)
The image of a single representational system for strategic thinking is adequate for a situation of high familiarity that has been encountered many times in the past, but it does not explain how senior managers deal with decision-making tasks that are novel, highly complex and ill-structured. Such tasks require senior managers to handle the presence of multiple potential ways to obtain a desired outcome and to integrate diverse sources of information to judge about the likelihood of future events. (9)
To deal with these tasks senior managers must be able to understand and conceptualize different and possibly conflicting information and scenarios. Starbuck and Milliken (1988) argued that complex decision-making tasks require managers to use multiple sense making frameworks, which may be inconsistent with one another or even contradict each other. Similarly, Fiol and Huff (1992) stressed the importance of managing a portfolio of multiple representational systems to improve strategic decision-making and encourage strategic thinking. Hence, decision-makers need to be able to hold several seemingly paradox and conflicting positions simultaneously in their mind and to tolerate the resulting uncertainty and ambiguity. (9)
Decision-makers with high strategic thinking abilities will show a greater diversity in representational systems than decision-makers with low strategic thinking abilities. (9)
Strategic thinking in groups
Strategic thinking is not purely an individual mental activity, but is influenced by the decision-makers participation in social interactions as well as the social and institutional context of the organization. Hence, an understanding of strategic thinking in complex organizational settings requires that we go beyond a focus on individuals and carefully examine the group context and its influence on an individual’s strategic thinking ability. (9)
On a group level, Kahlbaugh (1993) highlighted the importance of interactions by arguing that an individual creates novel thoughts in the context of interactions with others. Eisenhardt (1989), focusing on senior executives, noted that recurring interaction patterns among this group profoundly influenced strategic decision-making. (9)
As senior executives engage in strategic decision-making, the type and variety of cognitive perspectives represented on the team shape the interactions of the group members. Strategic decisions then reflect the representational systems employed in the decision-making process. (9)
A group draws on the different representational systems available among its members and develops a negotiated belief structure during the decision-making processes. These shared, but not identical cognitions enable individuals to select actions that fit with those of other organizational members and to create meaning in a co-operative setting. Hence, the process of group interaction in the decision-making process transcends the representational systems, which have been developed at the individual level and facilitates the creation of negotiated mental models and belief systems. Consequently, strategic thinking within a group is not the simple aggregate of all group members’ strategic thinking ability, but a function of the interplay between the strategic thinking abilities of individual members, the preserved diversity in negotiated belief structures of senior manager groups, and organizational influences. (9)
The literature has identified two areas, which are important for the process of group interaction, namely heterogeneity and conflict. The remainder of this section deals with these two areas and investigates their importance for strategic thinking. (9)
Heterogeneity
Walsh (1988) argued that groups with a broad range of perspectives are better in reading and defining their complex decision environments. Such groups draw upon the diverse representational systems available among their members and achieve high-realized coverage of the decision domain. Diverse representational systems are more likely to be present if a senior management group is heterogeneous with respect to members’ demographics and cognitions rather than homogeneous. (9)
Senior manager groups those are heterogeneous in terms of job-related forms of diversity have higher strategic thinking capabilities than senior manager groups that are heterogeneous in terms of non job-related forms of diversity. (9)
Conflict
Milliken and Martins (1996) have argued that heterogeneity is a “double-edged sword” that increases the opportunity for creativity, but also the likelihood for dissatisfaction among group members. Groups that are heterogeneous in terms of demographic attributes are also likely to be heterogeneous in terms of attitudes and values. (9)
An attempt to bring the different viewpoints of diverse team members into close contradistinction will accentuate the underlying dissimilarities and may produce acrimony and conflict. (9)
Researchers have usually differentiated between two different types of conflict that distinguished between task (or cognitive) conflict and relationship (or affective) conflict. Task conflict or cognitive conflict exists when group members disagree about the content and the goals of the task to be performed by putting forward different viewpoints, ideas and opinions. Conversely, relationship conflict or affective conflict exists when there are personal incompatibilities or disputes among group members. (9)
A number of researchers have argued that task-related conflict has a positive effect on strategic decision-making, because it provides a more inclusive range of information and helps people identify and better understand the key issues involved. Task-related conflicts encourage group members to develop new ideas and approaches. Task-related conflict facilitates critical evaluation of assumptions that underlie alternative solutions and hence, decreases the groupthink phenomenon. Similarly, task-related conflict produced better quality decisions, since it stimulates the discussion of ideas and promotes the critical evaluation of issues and decision alternatives. (9)
In summary, the above review of previous research suggests that task-related conflict has beneficial effects for decision-making. It helps individual members to reflect on their own thinking and to develop more diverse frames of reference and representational systems. In addition, it forces senior management groups to establish interaction processes, in which they identify, discuss and synthesize the different perspectives of their members. Such an approach facilitates the development of a broader range of ideas and options and a better understanding of possible alternatives. Task-related conflict increases the diversity in representational systems of individual senior managers. Task-related conflict increases the strategic thinking capabilities of senior manager groups. (9)
Conversely, research on relationship-related conflict has suggested that this type of conflict has negative effects on strategic decision-making, group productivity and group performance. Relationship-related Conflict decreases goodwill and mutual understanding and hinders the completion of organizational tasks. Similarly, Relationship-related conflict interferes with completing a task because members focus on reducing threats, increasing power, and attempting to build cohesion rather than working on the task .The conflict causes members to be negative, irritable, suspicious, and resentful. (9)
Communication and co-operation among group members was affected if relationship-related conflict was present. Relationship-related conflict reduces the ability of group members to assess new information and makes members less receptive to the ideas of others. Similarly, threat and anxiety associated with relationship-related conflict inhibit member’s cognitive functioning in processing complex information. (9)
As a consequence of relationship-related conflict, group members with negative sentiments towards one another or towards the entire group are more likely to withdraw emotionally from the group and less likely to contribute constructively in the decision-making process, hence reducing group performance and productivity. Relationship-related conflict decreases the strategic thinking capabilities of senior manager groups. (9)
Strategic thinking within the organizational context
The above sections have taken a micro-domain’s focus, investigating characteristics of an individual strategic thinker and the dynamics that take place within a group of senior managers. However, as discussed previously, individual strategic thinkers and senior management groups are influenced by the socio-political context of the organization. Hence, to better understand strategic thinking, we need to include the Organizational context, because the context forms the underlying foundation for the processes within the organization, shaping managerial thinking and helping people to act collectively. (9)
The collective structure of an organizational system develops through a process of negotiating multiple and competing interests between different individuals, communities and groups. It is through these interactions that organizational members form shared understandings around issues of common interest and develop common frames of thought and action. These frames of reference enable members to define their position within the organization and lead to the development of socially shared beliefs that guide strategic choices and actions. Hence, organizational characteristics create the context within which organizational members form a shared frame of reference that influences the strategic thinking ability of senior managers. (9)
The literature has identified three characteristics that are important to understand the influence of the organizational context on strategic thinking: organizational culture, organizational structure, and the reward and compensation system. (9)
Identify and apply effective creativity techniques for various strategic needs
Strategy is about ideas and the development of novel solutions to create competitive advantage. Strategic thinkers must search for new approaches and envision better ways of doing things, in other words, be creative. Most researchers have adopted a definition that focuses either on the outcome of a creative process or on the process of engaging in creative acts. Creativity is defined as the creation of a valuable, useful new product, service, idea, procedure, or process by individuals working together in a complex social system. (9)
A key element of most definitions of creativity is novelty and relevance for the organization. Creativity often involves recombining or making connections between things that may seem unconnected or Capacity to put existing ideas together in new combinations. Accordingly, creative thinking skills are the abilities to generate many alternative solutions to a problem and to develop or identify unusual associations or patterns. (9)
The ability to use creativity for imagining multiple alternatives and for exploring whether there might be alternative ways of doing things is critical for the development of unique strategies and action programs. Without creativity we are unable to make full use of the information and experience that is already available to us and is locked up in old structures, old patterns, old concepts, and old perceptions. (9)
Strategic planning and strategic thinking can be aided by the gathering and analysis of data in an environment that is uncertain since such analysis is likely to reduce uncertainty. (4)
There is, therefore, a role for more creative techniques to aid strategic planning and strategic thinking. Creativity is identified as an important part of the strategic planning process whilst emphasizing the importance of analysis and assessment, acknowledges that even with an ideal planning process, strategic thinking still requires the creative acts of synthesis and choice. (4)
Creativity is considered to be central to strategic thinking and thinking creatively in strategic terms has been suggested as a source of organizational and national competitiveness. Thus whilst there may be discussion about the relative importance of strategic planning and strategic thinking in the strategic management of an organization, an essential element of both appears to be the need for creativity. This holds true even though there is no agreed definition of strategic thinking since creativity is consistently considered to be an element of strategic thinking. (4)
A variety of techniques have been developed to improve creative thinking and when creative abilities are cultivated significant positive results are found. Creativity training often emphasizes the importance of generating and considering multiple solutions which itself tends to increase the quality of the final solution. The question of whether training can enhance the strategic thinking ability of senior managers is difficult to answer due to the lack of research in this area. (4)
Measuring Creative Output: To survey creative output, researchers consider three dimensions: Novelty; Resolution; and Elaboration and Synthesis with each dimension having several subscales.
Novelty: the extent of newness of the strategy in terms of the number and extent of new processes, new technologies, new products and concepts. The newness of the strategy in both the existing sector and other sectors the potential effect of the strategy on future strategies for this and other organizations.
Resolution: the degree to which the strategy fits or meets the needs of the situation.
Elaboration and synthesis: the degree to which the strategy combines elements into a refined, developed and coherent statement. (4)
Improve decision making skills as part of your strategic thinking capabilities
Strategic thinking translates into speed, since it facilitates decision making. It also guarantees flexibility, since it makes it possible to change plans and tailor actions to specific changing conditions. An organization which has developed the capacity for strategic thinking among its members can locate decision making close to where the action takes place. Freedom to decide enables swift responses. (1)
Strategic thinking may provide a common language that invites employees at all levels to engage in strategic conversations. Shared understanding depends on open communication, which both requires and contributes to aligned mental models and a common language. Conversations articulate individuals’ thinking and so becomes a central vehicle for developing a coherent and evolving motion picture of strategy and organizational design. (1)
Metzger identifies other unhelpful situations which result from what he calls the perils of myopic, short-term decision-making such as companies who get themselves involved in price wars which is great for the customers but harms the companies, or cost-cutting ‘‘retirement programs’’ which have seen companies paying good managers to leave, only to see them turn up as self-employed competitors or key staff at rival organizations. (12)
That’s why it is important for any company to be clear about its decision-making strategy. Who makes which decisions? Who has a legitimate role in the decision-making process? Who has the final say? How do you ensure that people are not making decisions for their own short-term gain rather than the organization’s long-term viability? (12)
And, often, they are decisions that need to be taken quickly. It’s all very well advising hard-pressed chief officers how to be inclusive, yet conclusive, in decision-making and how to safeguard against the dangers of the self-interest or obsequiousness of staff, if there is time to formulate a strategy for that particular decision. Usually there isn’t, so the strategy and safeguards have to be built in to the company culture already to allow executives to act fast. (12)
Emphasizing that, to outperform competitors, companies should decide quickly to seize opportunities, the most important step in unclogging decision-making bottlenecks is assigning clear roles and responsibilities. Good decision makers recognize which decisions really matter to performance, they think through who should recommend a particular path, which needs to agree, who should have input, who has ultimate responsibility for making the decision, and who is accountable for follow-through. They make the process routine. The result: better coordination and quicker response times. So, why aren’t we all good at it? Maybe it’s because we are just human – and are too engrossed with our own little picture to see the benefits of the big picture staring us in the face. (12)
In conclusion, we suggest that firms faced with complex strategic circumstances would benefit from finding ways to develop nonconventional thinking capacities in their rising stars. In addition, management education has a responsibility to design learning experiences that provide the opportunity to practice dealing with uncertainty, ambiguity and contradiction in a non-threatening and less risky setting. (18)
Provide high level leadership training with practical and essential leadership skills
A combination of leadership traits with entrepreneurial skills of sense making and opportunity hunting is required for a good strategic thinker. The predominance of leadership traits is in the idea of Strategic Thinking. Let us examine what these factors individually imply.
The most important task before organizations is therefore how to design new management practices processes and structures which leads to the growth of leadership and entrepreneurial skills at all levels of the organization. (17)
Leadership Development as a core “support activity” of the organization: Often the mind of the strategist is deeply at odds with the culture of the organization. This becomes easy to understand by the results of the exploratory survey. All the attributes of a strategic thinker culled from the Survey - i.e. being a Good Leader, visualizing long term future scenarios, looking for environmental cues to develop what ought to be, identifying patterns based on intuitive thinking and re-writing rules of competition – cannot be nurtured within the hierarchical organization bound by operational processes. (17)
Strategy was earlier (prior to the 1980s) the sole prerogative of the CEO who decided the distinctive strategy for his company. Then with the advent of industrial economic theory into strategy through the work of Porter (1980, Competitive Strategy; 1985, Competitive Advantage), strategy acquired the analytical rigor. Several tools and techniques emerged which attempted to put strategy formulation into an analytical framework. This reduced strategy to formulation of a competitive game plan. The market variables and the industry structure were the only important variables in this analysis. Strategy was reduced to the quest for that perfect competitive advantage and efforts to sustain the same. The strategic agenda was hijacked by the consultants who most of the time had no stakes on the successful implementation of strategy. Leadership may have become the sacrificial lamb in the process for most organizations. (17)
The effort to get that one sustainable competitive advantage brought stasis to strategy. A globalized economy and rapid technological changes have made the concept of a static and unique competitive advantage obsolete. Most strategic decision problems are unstructured situations. Neither are all the alternatives known, nor are the consequences of each alternative fully comprehended in advance. Therefore, competitive advantage has to evolve with time to become creation of unique value. Creativity, vision and insight are important elements for the evolution of competitive strategy. (17)
The other problem was that firms forgot their unique purpose of existence which was the end towards which competitive advantage was to be channelized. Strategy is not just about the unique positioning plan of the firm within the firms’ environment but also about its unique purpose. It is about what the firm is and what will it be in the future. It is about what makes the firm distinctive and about what makes the firm matter. It is not just about some financial goals to be achieved in the future but also about choosing the unique value which the firm will contribute to the world in the process of achieving those goals. It is about continuous adjustment and adaptation to the emerging business situation and the exigencies of implementation. It is about what the firm’s identity actually is. (17)
The point is, strategy formulation is not just a left brain exercise and that is where Leadership comes in. Strategy formulation is an everyday, continuous, and adaptive process. It requires ideas about how markets can be won and organizations be operated. It requires value that everyone understands and lives up to. It requires energy for stretching the boundaries and being passionate about implementation. It requires determination to take tough decisions. In effect, it requires leadership to determine direction and to move organizations from where they are to where they need to be. Leaders are important because they not only decide what needs to be done but they are also the ones who make things happen. Because systems and processes howsoever good they are, cannot decide what needs to be done. Strategic thinking needs the right brain qualities of a leader. (17)
This requires thinking about new organizational structures. Something likes the formation of some kind of a core group of leaders within an organization responsible for strategic thinking and its manifestation in business. Such a group can oversee the strategic dialogue process within the organization. In absence of such a group of Strategic Thinking Leaders nurturing of leadership qualities so essential for strategic thinking will not take place. (17)
In short, organizations may have to bring leadership back into the strategic agenda of organizations. Leadership development has long been outsourced to consultants and academics who have never been leaders themselves. Leaders have to teach others to be leaders. Resources have to be poured to train and teach everyone to be future leaders. Finally, it has to select from amongst them the outstanding ones. (17)
Conclusion
This paper has drawn on theories that define better understanding of strategic thinking to imply thinking strategically due to enhance growth and performance of the firms. Both management research and practice can benefit from such a multilevel view of strategic thinking. However, the lack of clear articulation as to the nature and implications of this concept has lead to considerable confusion.
strategic thinking, properly defined, is not only critical to the survival of the organization in these times of rapid and accelerating change, but more importantly, can be effectively accommodated within a progressive strategy-making regime to support strategic planning.
In line with the emerging stream of research in the strategy field that regards strategic thinking as a better way to approach the question of strategy than traditional strategic planning, we argue that one of the most significant sources of competitive advantage for companies in the future will be their ability to build a shared understanding.
The way one approaches strategy has major implications for putting it into practice. Implementation will not happen unless managers are involved in the strategy formation process and feel the resulting strategy as their own. This would certainly be described as an intangible asset in academic terms, yet we argue that Strategic thinking feels almost tangible when one has it. The approach outlined in this paper sheds new light on the mainstream approach to strategy making.
Successful business strategies result not from rigorous analysis but from a particular state of mind. The essence of strategy formation is not creating plans, but building a shared framework in the minds of strategists. Given the persistence of change, it may be that in the near future, in strategically managed firms, good managers will not be those who meet plans, but those capable of changing plans according to strategy.
Three levels of strategic thinking can guide the development of an integrated framework for enhancing strategic thinking in an organizational context are individual, groups, organizational.
A crucial element of strategic thinking is creativity. Creativity training often emphasizes the importance of generating and considering multiple solutions which itself tends to increase the quality of the final solution. To survey creative output, researchers consider three dimensions: Novelty; Resolution; and Elaboration and Synthesis with each dimension having several subscales.
It represents an important antecedent to strategic decision-making and may provide a key to better understand organizational change phenomena and ultimately, organizational performance and survival. We have outlined three nonconventional thinking capacities that strategic decision-makers might bring to bear in conditions of uncertainty, ambiguity and contradiction. These complement the conventional thinking capacities normally learned in response to a need to frame a problem space, resolve contradictions and make a choice.
It was found that the attributes of strategic thinking are complex and overlap with the cognitive dimensions of leadership. This is an important pointer to the kinds of processes and systems required for promoting and nurturing strategic thinking within the organization. Strategy formulation is both a left brain as well as a right brain exercise. Development of leadership appears to be the key to nurturing strategic thinking within the organization.
References
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Page 22 strategic direction vol. 22 no. 8 2006
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