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San Jos State University School of Library & Information Science Spring 2010, LIB282-13, Dr. Ken Haycock
Abstract: A common misconception about strategic thinking is that it is a thing but it is in fact a way of thinking, not a particular outcome. It is a form of intuitive thinking which looks at problems or situations from unstructured and free-form perspectives. It is the antidote to myopic thinking. Most often, strategic thinking is employed in problem solving, and long-term decision making. Strategic thinking is about divining possibilities and is therefore a means for envisioning a future. Within the literature, strategic thinking is most often summoned to fulfill three leadership competencies: problem solving, scenario planning, and adaptability. If done well, strategic thinking should result in competitive advantage for an organization. Learning to think strategically can be learned but cultivating this mode of thinking is a cumulative endeavor and takes concerted mental conditioning.
Contents
What is Strategic Thinking?.......................................................................................................................... 2 Strategic Thinking versus Strategic Planning ............................................................................................... 4 What Does Strategic Thinking Look Like? .................................................................................................. 6 Company Examples ...................................................................................................................................... 9 Strategic Thinking and Leadership Competencies ...................................................................................... 10 Problem Solving ...................................................................................................................................... 10 Adaptability ............................................................................................................................................. 11 Scenario Planning................................................................................................................................... 11 Learning to Think Strategically .................................................................................................................. 12 Conclusion .................................................................................................................................................. 15 References ................................................................................................................................................... 16
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
thinking into a business context, hint at its outcome of creating competitive advantage, and highlight its future focus:
Strategic thinking is an individual thinking activity that benefits organizations. Its purpose is to discover competitive strategies to position the organization significantly differently from the present. Thinking strategically is not the same as preparing a strategic plan, which details tactics to be taken to achieve goals and objectives. Strategic thinking is thinking that contributes to broad, general, overarching concepts that focus the future direction of an organization based on anticipated environmental conditions. (Methods paragraph)
Mintzberg, Heracleous (1998), and Liedtka (1998) see strategic thinking as a highly creative, innovative, and certainly an unconventional mode of thinking. Strategic thinking is the tool to get done what nearly all leadership competencies seek to do: move an organization forward, innovate, streamline, or make things better. Most often, strategic thinking is employed in areas of problem solving and long-term decision making. It is also the means for envisioning a future which is unfettered by inefficiency. Heracleous explains that the purpose of strategic thinking is to discover novel, imaginative strategies which can rewrite the rules of the competitive game; and to envision potential futures significantly different from the present (p.485, fig. 2). Rouse (1997) articulates the macro perspective of strategic thinking which opens the door to innovative solutions:
Strategic thinking is arguably the most difficult task faced by executives and senior managers. It requires stepping back from day-to-day firefighting and focusing on longterm fire prevention. If done well, it challenges assumptions and creates new mental models of markets, offerings, and organizations. (p.40) A common thread among these definitions is that strategic thinking is employed to conjure a vision for the future, to discover a novel solution, to disrupt status quo mindset, all in the quest for innovation. If it is true that a problem cannot be solved using the same thinking that
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
caused it in the first place, then strategic thinking is certainly the antidote to myopic thinking. Often the adjective strategic gets attached to any manner of leadership functions such as strategic planning, strategic finance, strategic alliance, etc. (perhaps to add a cache of thoughtful or measured action?). But strategic thinking is a verb, not an adjective. In popular vernacular it is thinking outside of the box.
Strategic planning is a territory populated by practical initiatives such as SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), PEST analysis (Political, Economic, Social, and Technological), Action Plans, Mission and Vision Statements, and SMART goals (Specific, Measureable, Attainable, Relevant, Time Bound). Strategic planning is about analysis. Strategic planning is a linear discipline, which can include innovative elements but essentially focuses on the rigor of articulating in concrete terms how to get from one step to another in the realization of a defined goal. It is about breaking down a goal into steps, determining how the steps could be implemented, and identifying the possible consequences of each step.
Strategic thinking, on the other hand, is about divining possibilities. It involves synthesis, using intuition, and creatively forming a vision of reality different than the one currently being lived. Activities that spark strategic thinking are open-ended, free-formed and not largely focused on achieving any quantifiable outcome. To the traditional rational thinker, this sort of mental engagement can be seen as fruitless and maybe even deemed a waste of time because it has no measureable outcome. Consider these examples: brainstorming, where the goal is not to necessarily solve anything but simply to follow thought paths and see where they
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
end up; or mind mapping, a process of creating matrix diagrams that capture spontaneous, nonlinear ideas and can reveal connections not initially seen. Mapping is a visual, iterative tool that can reveal the root cause of a phenomenon affecting an organization. Pisapia (2009) suggests that what makes strategic thinking such a challenge for most people is that it requires momentarily shutting off their critical thinking skills in favor of more holistic cognition:
Strategic thinking is creative, critical, and analytical although accomplishing all types of thinking simultaneously is difficult, because of the requirement to suspend critical judgment. When applied correctly, strategic thinking enables the leader to (a) recognize interdependencies, interrelationships and patterns, and (b) make consequential decisions using both powers of analysis and intuition. (p.47)
Thinking and planning are distinct activities and as such require different modes of thinking. Planning concerns analysis establishing and formalizing systems and procedures; thinking involves synthesis encouraging intuitive, innovative and creative thinking. Liedtka concludes that the literature leaves one with a strong sense that strategic thinking is clearly incompatible with strategic planning (p.121). Planning is clearly vital, but it cannot produce what Heracleous calls unique strategies which can challenge industrial boundaries and redefine industries (p. 486). For traditional linear thinkers the free form nature of strategic thinking can seem unwieldy, even silly. All this pie-in the-sky vision of the future can take on a patina of the absurd. Yet if highest hopes for what the future could be arent articulated or explored, how will ground-breaking, paradigm shifting, revolutionary ideas come to light? Dr. Martin Luther King, Jr. did such a thing publicly, in front of a crowd of over 250,000 people on the mall in Washington D.C. during the height of the Civil Rights Movement in 1963. Dr. King put words to his radical vision of a world beyond racism, of an integrated society, and racial justice, which
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
at the time seemed nearly impossible. Dr. King was essentially asking people to imagine a what if scenario, which is a cornerstone of strategic thinking. What if we could all come together at the table of brotherhood and what if the state of Mississippi [was] transformed into an oasis of freedom and justice. That speech indelibly marked a sweeping vision of the future into the minds of people everywhere. In a nod to the vast difference between thinking and planning, Sinek (2009) in a recent presentation reminds us that Dr. Kings speech was entitled, I have a Dream not I Have a Plan.
The subject of strategic thinking has been studied in both scholarly and popular circles. The ideas that characterize what strategic thinking looks like can be expressed in two ways: in scholarly theory such as Liedtkas Model of the Elements of Strategic Thinking, or via the congenial list-of-characteristics approach presented by The Harvard Business Review. The common themes among both types of analysis are that strategic thinking reveals the interconnectedness of ideas, is concerned with possibilities, and requires suspending critical judgment in order to think more creatively. Based on her research into strategic thinking, Liedtka created a model of five major attributes of strategic thinking:
1. Systems Perspective: Strategic thinking reflects a systems or holistic view that recognizes how the different parts of the organization influence each other. 2. Intent-focused: Strategic thinking conveys a sense of direction and is driven by, the continuous shaping and re-shaping of intent 3. Thinking in Time: Strategic thinking is not solely driven by the future, but by the gap between the current reality and the intent for the future.
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
4. Hypothesis Driven: Hypothesis generation and testing is central to strategic thinking activities. It asks the creative question What if? followed by the critical question If then ? 5. Intelligent Opportunism: Strategic thinking invokes the capacity to be intelligently opportunistic, or open to new experience which allows one to take advantage of alternative strategies that may emerge in a rapidly changing business environment. (p. 122) These 5 elements are what comprise strategic thinking. Liedtkas model is oft bandied about the literature with a vague sense of duty; perhaps because of its scholarly nature, perhaps because it has stood the test of time. But the dry, scientific patois has a way of obscuring any visceral meaning for the reader. Happily, Liedtka offers the following synthesis and practical outcomes of strategic thinking, painting a picture of how strategic thinking is made manifest in a very tangible way: 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. 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 decisionmaking 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.(p. 124) When put in a context of outcomes, Liedtkas 5 elements come to life in real and identifiable ways. Liedtka makes a compelling argument for the use of strategic thinking. Who wouldnt want to improve the quality of their decision making or achieve greater efficiency and effectiveness? The combined effect of these is the creation of a capacity for strategic thinking
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
that meets what Day (1994) refers to as the three fundamental tests for a strategically valuable action: 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. (p.48) Liedtka suggests that these three discrete, but inter-related elements, can lead to significant positive outcomes in organizations when combinedprovided there is the accompanying strategic planning to implement of the fruits of this type of thinking.
From a popular perspective, Harvard Business Publishing captures a vivid image of what strategic thinking looks like by listing its constituent parts. Their corporate reference product called Managementor offers a composite of three areas that comprise strategic thinking: personality traits, cognitive capacities, and behaviors and attitudes. The Managementor website offers online, asynchronous, mini-seminars on key business topics. David J. Collis (2007), a professor in the strategy unit at the Harvard Business School and a private business consultant, compiled at-a-glance lists of characteristics of what strategic thinking looks like in an individual. According to Collis, the personality traits that strategic thinkers usually share are: curiosity, flexibility, future focus, positive outlook, openness, and breadth. Colliss second list of behaviors and attitudes bears certain resemblance to Liedtkas 5 elements. Present in the list are the ideas of hypothesis generation, time thinking, systems perspective, and intent focus. The third area Collis includes is the big one: cognitive capacities. Although Collis doesnt use formal psychological terms, he captures the concepts of creative thinking, intuition, abstract thinking, lateral thinking, systems thinkingall of which populate the literature on strategic thinking. According to Collis, a strategic thinker has the cognitive capability to grasp abstract
Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock
ideas and put the "pieces" together, generate a wide range of options, factor hunches into their decision-making, and understand the cause-and-effect linkages among the elements that make up a system.
Company Examples
What does strategic look like applied to actual companies? The following are two examples of how thinking strategically about revolutionizing a business can create a new paradigm and how a business can be successfully differentiated from its competitors. The example of a revolutionary vision of the future is Ford Motor Company. At the beginning of the 20th century cars were built individually and painstakingly by craftsmen. Owning a car was a potent status symbol. But then Henry Ford had a vision of the future in which everybody would own a car. Ford wanted to democratize the auto industry and he achieved this vision of the future by introducing the auto assembly line. Ford had the idea on a trip to Chicago, where he observed the way the meat packers used the overhead trolley to dress beef; cutting a piece of the carcass as it moved along (Gross, 1996). It is doubtful that Ford could have come up with his radical (for the time) concept of the future as a result of formalized planning techniques. Fords creative, strategic thinking is evident. One challenge in strategic thinking is to find a different way to doing what is already being done. In other words: how to be successfully different. One of the best examples of differentiation is Trader Joe's, the specialty-grocery chain. It grew from a handful of convenience stores in Southern California to 174 stores nationally and $2.4 billion in revenues in 2001. The founder, Joe Coulombe, recognized early on that he could not compete as a convenience store against the likes of the 7-Eleven chain or as a grocery store against such giants
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as Safeway. Trader Joe's differentiates itself in five ways: (1) selective products with fast turnover, (2) private-labeled unique products that sell because the brand is trusted, (3) an intimate "feel" to each store where shopping turns into a social experience, (4) fanatical attention to what customers want and like, and (5) delivering extraordinary value. Its business model is inimitable (Abraham, 2005). Indeed, the competitive advantage of Joe Coulombes strategic thinking meets Days criteria of: creating superior value for customers, being hard for competitors to imitate, and being adaptable to change.
Throughout the literature, strategic thinking is most often summoned to facilitate three leadership competencies: problem solving, adaptability, and scenario planning. Strategic thinking can be applied in any situation but of all the possible competencies, these three require a degree of imagination to achieve any sort of breakthrough. Problem Solving Strategic thinking is about solving problems. For example, something in an organization is not going right and a solution must be found. Is this not the most fundamental, recurring problem that any organization faces? When a solution is divined the stage is set for change. When planning for change it behooves an organization to gather as many scenarios, ideas, and possibilities as possible from a maximum of perspectives. Strategic thinking is the way to achieve this. Why? Because strategic thinking is about exploring possibilities in a space where analytical judgment and critical thinking have been temporarily suspended. If one is going to engage in this sort of creative thinking, they would be well served to get the problem well defined. A strategic thinker understands the importance of defining what the problem actually is.
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Defining the problem correctly is the first and most important action to take in any problem-solving process. Indeed, the business world's graveyards are filled with organizations whose executives implemented elegant answers to the wrong questions. That is particularly true in strategy formulation. (Christensen, 1997, p. 143) In strategizing for the long term, strategic thinking can reveal solutions that alter the course of an organization. Therefore it is critical that the problems are defined correctly.
Adaptability Another primary component of strategic thinking is adaptability. Adaptability is adjusting, modifying, or tweaking a plan to suit an ever shifting landscape. The keen strategic thinker recognizes that successful strategy today may not work well tomorrow and is therefore constantly on the lookout for signs that adjustment is necessary.
One of the greatest emotional human challenges is meeting change head on. Fear of change is a basic to most humans but strategic thinkers find a way to overcome the fear of unpredictability and have cultivated a tolerance for uncertainty. The improvisational musical experience, like strategic thinking, is a flow of moves that adapt to the changing dynamics of the overall experience. Jazz musicians dont always know exactly where they are going, but like great leaders, would rather relinquish predictability and control in exchange for success.
Scenario Planning Schoemaker (1991) describes scenario planning as a thinking tool and communication device that aids the managerial mind rather than replace it (p. 551). As such, scenario planning is particularly valuable in times of high uncertainty and complexity because it can challenge the status quo. By identifying trends and uncertainties in an organizations macro environment,
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scenario planning stimulates thinking about alternatives which might otherwise be ignored and challenges the prevailing mindset.
Performing mental run-throughs can also deliver a pre-emptive strike and remove obstacles before they arise in the path to a goal. Scenario planning need not be done only whilst in crisis mode, it is a good exercise to train ones brain to recognize precursors, accelerate ones ability to act and work proactively rather than shoring up with damage control measures (Dalton, 2007). To jump start the seemingly incongruous task of planning for unanticipated events, Dalton suggests the following 5 step exercise: First, imagine the toughest business scenarios you might face; think of all the things you take for granted as an organization and imagine losing it. Work to identify at least two potentially calamitous scenarios. Second, identify the indicators likely to precede each scenario. Third, walk through each scenario as though it was real; what are your options and consequences; why would you choose one option over another. Fourth, visualize the implementation of the chosen option and Fifth, identify what is thematic about your decision making. The criteria used to make pivotal decisions are likely to be consistent over time. For example, a leader who is consistently benevolent is likely to have earned an organization of mediocre performers; if the pattern is to be harsh than likely it has earned resentment of your leadership. (p. 43)
The reflective step at the end of this scenario rehearsal is a nice reminder that self awareness can be gleaned from most any activity.
Learning to Think Strategically Can strategic thinking be learned? The literature says yes. However, cultivating this mode of thinking is a cumulative endeavor and takes concerted mental conditioning. If one accepts the premise that thinking is not innate but a learned skill, then certainly strategic thinking
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can be acquired, sharpened, or awakened in anybody. Just as with athletic prowess, some individuals may have greater acuity and agility with strategic thinking, but like learning to swing a golf club, a person can adopt new patterns of thinking. Acquiring the skill of strategic thinking develops only in the crucible of experience. The first stop in the journey to develop strategic thinking skills is examining ones own internal beliefs and assumptions about how the world operates. One of the greatest impediments to adopting an open-minded thinking style is that humans have a tendency to reject what isnt tangible or already known. One can witness this fact when new ideas are met with blocking statements such as, we cant do that its not how its done or thats not how things work around here or essentially anything that follows the statement, yeah, thats a great idea but. These types of responses spring from thinking influenced by our mental models, or assumptions we carry about life. Senge (1990) identifies mental models as deeply ingrained assumptions, generalizations, or even pictures and images that influence how we understand the world and how we take action (p.8). Identifying and understanding personal mental models starts with turning the mirror inward; learning to unearth our internal pictures of the world, to bring them to the surface and hold them rigorously to scrutiny (Senge, p.9).
Adherence to old ways of thinking can cripple growth and innovationthe very things that strategic thinking is meant to reveal. Entrenched mental model thwart changes that could come from creative thinking. Being aware of the mental models one possesses is the first step in not being limited by them. Too often great ideas are passed over because they do not align with current thinking:
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The process of adoption fails because the new ideas are at such variance with mental models currently accepted by the organization. More specifically, new insights fail to get put into practice because they conflict with deeply held internal images of how the world works, images that limit us to familiar ways of thinking and acting. That is why the discipline of managing mental modelspromises to be a major breakthrough. (Senge, p.1) The upside to mental models is that a person or organization does not have to be ruled by them or their potential negative influence. According to the research, individuals can learn how to think strategically and can turn it into a habit (Liedtka). Christensen (1997) is convinced that you can indeed teach an old dog a new trick, or in this case, a linear thinker to loosen up a bit. Christensen touches on the idea that thinking strategically can become an ingrained skill by its continuous application and repetition:
Good management teams are deeply competent when it comes to preparing annual operating plans and delivering the numbers called for in those plans. Why? Because they confront these tasks over and over again. Managers develop ways of thinking and working that make them very effective in meeting those recurring [analytic] challenges. Company executives can actively cultivate a deep competence in strategic [thinking] by engaging in such [behavior] over and over again. (p.154) Once an internal inventory is taken of beliefs and assumptions, what are some of the external factors responsible for cultivating an ability to think strategically? Goldman (2009) conducted a study to identify specific experiences that contribute to the development of an individual's ability to think strategically. Results indicated that strategic thinking is not the product of innate ability and pure serendipity. Rather, it arises from specific experiences (personal, interpersonal, organizational and external) which occur over 10 or more years. The study revealed 10 key experiences that are common among executives identified as excelling at strategic thinking. For example, early mentoring with lots of feedback, having sole responsibility for a large project, dealing with diffusing a threat to the organization, or early exposure in school to diverse cultures and the Socratic Method (examining commonly held truths
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that shape opinion, and scrutinizing them to determine their consistency with other beliefs). Participants also cited becoming a CEO and doing strategic planning as experiences that fostered their strategic thinking skills which may appear paradoxical because of the mutually dependant and mutually conflicting conditions. This goes to show that waiting to feel competent in strategic thinking is not necessarily a prerequisite to engage in the behavior. Respondents identified additional formative experiences as education-related, ranging from a master's in business administration degree to military training, participating in sports, and being a volunteer board member.
Conclusion All organizationswhether for profit or notare competing within the marketplace. Just as Apple fights for technology customers, municipal services compete for funding. In the face of an unpredictable, highly volatile and competitive marketplace, a capacity for innovative, divergent strategic thinking at multiple organizational levels is seen as central to creating and sustaining competitive advantage (Liedtka, p. 32). For all of strategic thinkings free form, unencumbered, and creative aspects, it delivers quite a powerful punch to a companys bottom line. If done effectively and in earnest, the mental mode of strategic thinking can unlock the door to radical, paradigm shifting visions of the future. Strategic thinking is the process of finding alternative ways of keeping an organization on the cutting edge, and in a competitive marketplace those who distinguish themselves win. Abraham (2005) explains why strategic thinking is an important part of every leaders job:
A company would not need a strategy if it did not have to compete - it could make do simply with a plan. But strategy implies competing and outwitting competitors. It follows that strategic thinking is the process of finding alternative ways of competing and
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providing customer value. So we can define strategic thinking as identifying alternative viable strategies or business models that deliver customer value. (p.5) Strategic thinking is paramount to successful business practice. And the good news is that anyone can learn to adopt this thinking style. It is a skill first and foremost, but with continued practice of thinking outside the box it can become a way to approach all aspects of life.
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Karla Spence Bluestone | SJSU | SLIS | Spring 2010, LIB282-13, Dr. Ken Haycock