Secrets of strategic thinking

A strategy is an individual’s comprehensive approach to a task.In other words strategy is a course of action for achieving an organization’s purpose.To think strategically means to take the long-term view and see the big picture of desired end states and set goals. It is like ‘seeing the forest, not just the trees’ or taking a helicopter ride to a sufficient height to see a big picture (‘helicopter view’ of the firm). Strategic thinking requires the consideration of the past, the present and the future of the firm. Strategic thinking plays a meaningful role in ‘thinking in time.’ Strategic thinking is an ability constantly to view an organization’s operations, issues, and problems in a broad situational and environmental context and with a long time perspective. Thinking strategically requires research, analysis and forethought in order to create a plan for how you will proceed as an organization in the future.  Strategic thinking is a very creative, dynamic and powerful skill that will energize you and your interactions with others. Strategic thinking is a key competency that leaders, managers, supervisors and front-line employees need to develop to enable the organization to identify and take advantage of emerging issues.

Concept of strategy

Strategy is a concept with military roots. Strategy is a term comes from the Greek strategia meaning ‘generalship.’ Strategy is the art of planning and directing overall military operations and movements in a war or battle. Henry Mintzberg in his book, ‘The rise and fall of strategic planning’ points out that people use ‘strategy’ in four different ways:

1. Strategy as plan – strategy is a plan. Strategy is some sort of consciously intended course of action into the future (‘purposeful action’) or a guideline to deal with a situation. It can be general or specific.
2. Strategy as pattern –strategy is a pattern. Strategy is consistency in behaviour over time.
3. Strategy as position – strategy is a position. Strategy becomes a ‘niche’ in economic terms or product-market domain.
4. Strategy as perspective – strategy is a perspective- character of an organization.

Strategy is all of these- it is a plan, position, perspective and pattern (four Ps for strategy). Strategy is a means of establishing the organizational purpose, in terms of its long-term objectives, action programs and resource allocation priorities. A strategy aims to steer the direction of the overall organization. It affects the long-term well-being of the organization. A strategy is future –oriented and marked by uncertainty and risk.

Strategy versus tactics

A strategy is the approach you take to achieve a goal. Strategy is being clear about where you want to go. Strategy has been characterized as “...the pattern of decisions in a company that determines and reveals it objectives, purposes or goals...” Strategy is undertaken before the battle. Tactics are implemented during the battle. A strategy is a larger plan that can comprise several tactics, which are smaller, focused, less impactful plans that are part of the overall plan. Strategy is a thinking process required to plan a change, course of action or organization. A tactic is a tool used in pursuing an objective associated with a strategy. Tactics are the specific actions that are undertaken in implementing the strategy. These actions comprise what is to be done, in what order, using which tools and personnel. Every tactic must suit the strategy. Tactics are the actions that lead to execution of the strategy. Tactics are made up of a few elements: an action, a purpose, a schedule and a measurable result.

Definition and explanation

Strategic thinking is defined as the individual’s capacity for thinking conceptually, imaginatively, systematically and opportunistically with regard to the attainment of success in the future.

Strategic thinking is not similar to critical thinking. Critical thinking can be useful part of strategic thinking but critical thinkers are less likely to be imaginative and opportunistic. Strategic thinking is also not similar to creative thinking. Creative thinking is imaginative and playful. Moreover creative thinking attends to a lesser degree to concepts, systems and opportunities.  Strategic thinking is identifying, imagining and understanding possible and plausible future operating environments for your organization.  Strategic thinking is goal – directed, structured and focused on the future in a precise way. It is analytical and ambitious. It concerns power and trends as well as uncertainty.

Strategic planning

Strategic planning is the channelling of business insights into an action plan to achieve goals and objectives.  A strategic plan is a top-level overview of an organization, its performance, its mission and its goals. A strategic plan is like a game plan for the team to follow. It is a step-by-step operating instruction of an organization.

Create vision àdefine objectivesàdefine strategiesà implementàcontrol.

Strategic management

Strategic management is the continuous process of creating, implementing and evaluating decisions that enable an organization to achieve its objectives.

Strategic management à strategic planning +implementation+control.

Elements of strategic thinking

Conceive an ideal future –strategic thinking begins with a clear image of the desired long-range future for the organization. Based on the vision, decisions and actions are formulated.

Focus on core values –based on the core values of the organization – strategic decisions and actions are clearly defined and accepted by the people at all levels of the organization.

Always look for opportunities and threats – strategic thinking mind set depends on a keen awareness of the environment. Strategic thinkers always discover opportunities and detect potential threats in advance.

Search for patterns and relationships –strategic thinkers recognize the patterns between events and circumstances.

Recognize connections - strategic thinkers are deeply aware of interrelationships between actions and events within a system.

Value of strategic thinking

1. Strategic thinking keeps the organization at the leading edge of change.
2. Strategic thinking optimizes the ability to shape and leverage change to organization’s advantage.
3. Strategic thinking eliminates complacency.
4. Strategic thinking creates a sense of unity.
5. Strategic thinking provides proactive leadership and the leaders think systematically with a system’s approach.
6. Strategic thinking creates a life-long learning atmosphere.
7. Strategic thinking provides an effective system to solve major problems.
8. Strategic thinking improves the understanding of the business environment.

Strategic thinking framework (ref: net source)

Strategic thinking can occur in two phases each of which consists of specific steps.

Phase I –setting the stage –consists of two stages

1.  Seeing the big picture – understanding the broader business environment in which you operate.
2. Articulating strategic objectives –determining what you hope to achieve by thinking strategically.

Phase II –applying your skills – consists of 5 additional steps.

1.  Identifying relationships, patterns and trends- detecting patterns across seemingly unrelated events and categorizing related information.
2. Getting creative – generating alternatives, visualizing new possibilities, challenging your assumptions and opening yourself to new information.
3. Analysing information – sorting out and prioritizing the most important information, while making a decision, implementing a project, handling a conflict etc.
4. Prioritizing your actions – staying focused on your objectives while handling multiple demands and competing priorities.
5. Making trade –offs –recognizing the potential advantages and disadvantages of an idea or course of action.

Characteristics of strategic thinker

1. Curiosity – being genuinely interested in what is going on in your unit, company and industry.
2. Flexibility –trying new approaches and ideas.
3. Focus on the future – remaining alert for opportunities that may prove valuable in the future.
4. Openness – welcoming new ideas from peers, customers, suppliers and business partners.
5. Positive outlook – viewing challenges as opportunities and believing that success is possible.
6. Self-awareness – continually working to broaden your knowledge and experience.

Strategic analysis tools

Strategic analysis is the process of conducting research on the business environment within which an organization operates and on the organization itself, in order to formulate strategy.  The strategic analysis tools include PEST, five forces, value chain and SWOT.

PEST analysis – It is a useful tool for understanding the political, economic, socio-cultural and technological environment that an organization operates in it. It can be used for evaluating market growth or decline and as such the position, potential and direction for a business.

Porter’s five forces model – A tool that can be used to evaluate the five forces of competition position analysis: buyer power, supplier power, intensity of rivalry, threat of substitutes and threat of new entrants. This simple framework assesses and evaluates the competitive strength and position of a business organization.

Value chain analysis – A tool based on the principle that organizations exist to create value for their customers. The value chain analysis reveals about your internal strengths and weaknesses. This method divides your firm into its value –producing activities, with aim of evaluating what makes the firm strong and what makes it weak.

SWOT analysis – A SWOT analysis is a simple tool that helps in understanding strengths, weaknesses, opportunities and threats involved in a project or business activity. It starts by defining the objective of the project or business activity and identifies the internal and external factors that important to achieving that objective. Strengths and weaknesses are usually internal to the organization, while opportunities and threats are usually external.

Benefits of strategic thinking

Strategic thinking offers guidance on the actions to achieve the vision and mission of the organization. Strategic thinking raises awareness about the threats and opportunities involved in a business activity. Strategic thinking aligns the organization around a common direction and set of priorities; improves teamwork and employee’s commitment. Strategic thinking improves the quality of decision making and speed of implementation. Strategic thinking improves organizational efficiency and effectiveness.  Strategic thinking fosters a culture that supports new ideas and creativity for the benefit of the organization.

                         Strategy is undertaken before the battle

                         Tactics are implemented during battle.
                              Strategy + Execution= Success.