Strategic thinking

Not to be confused with Strategic planning.

Strategic thinking is defined as amental or thinking pro-cess applied by an individual in the context of achievingsuccess in a game or other endeavor. As a cognitive ac-tivity, it produces thought.When applied in an organizational strategic managementprocess, strategic thinking involves the generation and ap-plication of unique business insights and opportunitiesintended to create competitive advantage for a firm ororganisation.[1][2][3] It can be done individually, as well ascollaboratively among key people who can positively alteran organization’s future. Group strategic thinking maycreate more value by enabling a proactive and creativedialogue, where individuals gain other people’s perspec-tives on critical and complex issues. This is regarded as abenefit in highly competitive and fast-changing businesslandscapes.[4][5][6]

1 Overview

Strategic thinking includes finding and developing astrategic foresight capacity for an organization, by ex-ploring all possible organizational futures, and chal-lenging conventional thinking to foster decision mak-ing today.[7][8] Recent strategic thought points ever moreclearly towards the conclusion that the critical strategicquestion is not the conventional “What?”,[9] but “Why?”or “How?”.[9] The work of Henry Mintzberg[10][11] andother authors,[12][13][14] further support the conclusion;and also draw a clear distinction between strategic think-ing and strategic planning, another important strategicmanagement thought process.[6][15]

General Andre Beaufre wrote in 1963 that strategic think-ing “is a mental process, at once abstract and rational,which must be capable of synthesizing both psycholog-ical and material data. The strategist must have a greatcapacity for both analysis and synthesis; analysis is nec-essary to assemble the data on which he makes his diag-nosis, synthesis in order to produce from these data thediagnosis itself--and the diagnosis in fact amounts to achoice between alternative courses of action.”[16]

There is no generally accepted definition for strate-gic thinking, no common agreement as to its role orimportance, and no standardised list of key compe-tencies of strategic thinkers.[17] There is also no con-sensus on whether strategic thinking is an uncommon

ideal or a common and observable property of strategy.Most agree that traditional models of strategy making,which are primarily based on strategic planning, are notworking.[18][19][20] Strategy in today’s competitive busi-ness landscape is moving away from the basic ‘strategicplanning’ to more of ‘strategic thinking’ in order to remaincompetitive.[21] However, both thought processes mustwork hand-in-hand in order to reap maximum benefit.[6]It has been argued that the real heart of strategy is the'strategist'; and for a better strategy execution requiresa strategic thinker who can discover novel, imaginativestrategies which can re-write the rules of the competitivegame; and set in motion the chain of events that will shapeand “define the future”.[22][23]

2 Strategic thinking vs. strategicplanning

In the view of F. Graetz, strategic thinking and planningare “distinct, but interrelated and complementary thoughtprocesses” that must sustain and support one another foreffective strategic management. Graetz’s model holdsthat the role of strategic thinking is “to seek innovationand imagine new and very different futures that may leadthe company to redefine its core strategies and even its in-dustry”. Strategic planning’s role is “to realise and to sup-port strategies developed through the strategic thinkingprocess and to integrate these back into the business”.[13]

Henry Mintzberg wrote in 1994 that strategic thinkingis more about synthesis (i.e., “connecting the dots”) thananalysis (i.e., “finding the dots”). It is about “capturingwhat the manager learns from all sources (both the softinsights from his or her personal experiences and the ex-periences of others throughout the organization and thehard data from market research and the like) and thensynthesizing that learning into a vision of the directionthat the business should pursue.” Mintzberg argued thatstrategic thinking cannot be systematized and is the crit-ical part of strategy formation, as opposed to strategicplanning exercises. In his view, strategic planning hap-pens around the strategy formation or strategic thinkingactivity, by providing inputs for the strategist to considerand providing plans for controlling the implementation ofthe strategy after it is formed.[24]

According to Jeanne Liedtka, strategic thinking differsfrom strategic planning along the following dimensionsof strategic management:[14]

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2 4 REFERENCES

3 Strategic thinking competencies

Liedtka observed five “major attributes of strategic think-ing in practice” that resemble competencies:[14][25]

1. Systems perspective, refers to being able to under-stand implications of strategic actions. “A strate-gic thinker has a mental model of the completeend-to-end system of value creation, his or her rolewithin it, and an understanding of the competenciesit contains.”[14]

2. Intent focused which means more determined andless distractible than rivals in the marketplace.Crediting Hamel and Prahalad with popularising theconcept, Liedtka describes strategic intent as “thefocus that allows individuals within an organizationto marshal and leverage their energy, to focus atten-tion, to resist distraction, and to concentrate for aslong as it takes to achieve a goal.”[14]

3. Thinking in time means being able to hold past,present and future in mind at the same time to cre-ate better decision making and speed implementa-tion. “Strategy is not driven by future intent alone.It is the gap between today’s reality and intent forthe future that is critical.”[14] Scenario planning is apractical application for incorporating “thinking intime” into strategy making.[26]

4. Hypothesis driven, ensuring that both creative andcritical thinking are incorporated into strategy mak-ing. This competency explicitly incorporates thescientific method into strategic thinking.[25]

5. Intelligent opportunism, which means being respon-sive to good opportunities. “The dilemma involvedin using a well-articulated strategy to channel organ-isational efforts effectively and efficiently must al-ways be balanced against the risks of losing sightof alternative strategies better suited to a changingenvironment.”[14]

4 References[1] “What is Strategic Thinking?". harvardbusiness.org. Re-

trieved 10 August 2012.

[2] “What is Strategic Thinking? by Rich Horwath” (PDF).Retrieved 10 August 2012.

[3] “Strategic Thinking” (PDF). Center for Applied Re-search. Retrieved 10 August 2012.

[4] “Strategic Thinking : The power of collaboration”. har-vardbusiness.org. Retrieved 10 August 2012.

[5] “Strategic Thinking : Is Leadership the missing link AnExploratory Study” (PDF). Retrieved 10 August 2012. byManuAmitabh, Fellow Scholar, M.D.I Gurgaon andArun

Sahay, Professor and Area Chairman, Strategy Manage-ment, M.D.I Gurgaon

[6] “Strategic Thinking : A discussion paper” (PDF).csun.edu. Retrieved 10 August 2012.

[7] “Strategic Thinking presentation”. Retrieved 10 August2012.

[8] “Thinking Futures ..thinking beyond the status-quo tostrengthen today’s decisions”. Retrieved 10 August 2012.

[9] Michael D. Taylor Systems Thinking in Project Manage-ment

[10] Henry Mintzberg (1994), “The Fall and Rise of StrategicPlanning”, Harvard Business Review

[11] Henry Mintzberg (1987), “Crafting Strategy”, HarvardBusiness Review, 65(4), 66-75.

[12] Ingrid Bonn, (2001), “Developing Strategic Thinking asa Core Competency”, Management Decision, 39(1), 63 -76.

[13] Fiona Graetz, (2002), “Strategic Thinking versus Strate-gic Planning: Towards Understanding the Complementar-ities”, Management Decision, 40(5/6), 456-462.

[14] Jeanne Liedtka,(1998), “Linking Strategic Thinking withStrategic Planning”, Strategy and Leadership, 26(4), 30-35.

[15] Stan Abraham, (2005), “Stretching Strategic Thinking,”Strategy & Leadership, 33(5), 5-12.

[16] Beaufre, Andre (1965). An Introduction to Strategy. Fred-erick A. Prager. LCCN 65014177.

[17] David Hussey, (2001), “Creative Strategic Thinking andthe Analytical Process: Critical Factors for Strategic Suc-cess”, Strategic Change, 10(4), 201-213.

[18] Mark Chussil, (2005), “With All This Intelligence, WhyDon’t We Have Better Strategies?”, Journal of BusinessStrategy, 26(1), 26-33.

[19] Jeanne Liedtka, (2000), “Strategic planning as a contrib-utor to strategic change: a generative model

[20] “From Strategic Planning to Strategic Thinking”. Re-trieved 10 August 2012.

[21] “Strategic Thinking versus Strategic Planning”. Retrieved10 August 2012.

[22] Max Mckeown, (2011), “The Strategy Book: How tothink and act strategically for outstanding results", FT-Prentice Hall.

[23] Paul Schoemaker, (2012), “6 Habits of True StrategicThinkers”

[24] HenryMintzberg-The Fall and Rise of Strategic Planning-Harvard Business Review-January 1994

[25] Liedktka Strategic Thinking-Can It Be Taught?-LongRange Planning-1998

[26] Paul Schoemaker, (1995), “Scenario Planning: A Tool forStrategic Thinking”, Sloan Management Review, 36(2),25-40.

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5 External links• What is strategic thinking?, harvardbusiness.org

• 6 Habits of True Strategic Thinkers by Paul J. H.Schoemaker, Inc.com

• For Great Leadership, Clear Your Head by JoshuaEhrlich, Harvard Business Review

• How to Think Strategically by Michael Watkins,Harvard Business Review

• Strategic Thinking: Success Secrets of Big BusinessProjects Dr David Stevens, McGraw Hill, 1997

• Strategy Execution – Ensure your culture providesfor common sense by i-nexus

4 6 TEXT AND IMAGE SOURCES, CONTRIBUTORS, AND LICENSES

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