Strategic Thinking: Characteristics
Strategic Thinking
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.
Strategic thinking must take into account:
n Competencies and Skills: What are the company’s strengths? How can these be used to create a unique competitive advantage? What are the company’s weaknesses that might leave it vulnerable?
n Products and Offerings: What is the portfolio of offerings (product, service, price and image bundles) that the company provides to the market? What are the overlaps or white spaces among the offerings? What is the rationale or logic for these offerings? What makes them unique? What are the brands associated with these offerings? How do these brands fit with the company’s image? With each other?
n Environment and Industry: What is the overall economic context in which the company competes? What is the regulatory or governmental environment, and how does this impact the company? What is the structure of the industry? Where is this industry headed, and where do we want it to be? What is our position in the industry, and what do we want it to be? How does this industry connect with others, and what are the implications of that for our positioning?
n Markets and Customers: Who are the target customers for the offerings? What are their needs? How is the company uniquely suited to meet these particular needs?
n Competitors and Substitutes: What is the nature of competition in our industry? What other companies have offerings that could meet the same needs? What are their unique strengths and strategies? How are they similar to or different from us? How might they respond to our strategies? Are there companies not yet in the market who might choose to enter it? What are their strengths and strategies? What market conditions might lead to action on their part?
n Suppliers and Buyers: What other companies do we need to work with in order to make and sell our offerings? What is their relative power compared with us? What are their strategies and strengths, and are these aligned with ours? What’s in it for them?
Process Considerations
As important as the content of strategic thinking is the process by which it takes place. Processes are needed to ensure that strategies are:
n Aligned: A company’s strategies must fit with its mission, vision, competitive situation and operating strengths.
n 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.
n 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 test or experiment.
The logic behind the strategy must be clear. Effective strategies tell believable stories.
n 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.
n 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.
n 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.
n 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.
n 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.”
Porter, Michael E. Competitive Strategy: Techniques for Analyzing Industries and Competitors.
Porter, Michael E. “What is Strategy?” Harvard Business Review. November/December, 1996, pp. 61 – 78.
DeGeus, Arie. “Planning as Learning.” Harvard Business Review. March/April, 1988, pp. 70 – 78.
Mintzberg, Henry. “Crafting Strategy.” Harvard Business Review. July/August, 1987, pp. 66 – 75.
Vancil, Richard F. “Strategy Formulation in Complex Organizations.” Sloan Management Review. Winter, 1976, pp. 1 – 18.
Eisenhardt, Kathleen. “Speed and Strategic Choice: How Managers Accelerate Decision Making.”
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