Have you ever been told that you "need to be more strategic"?
Many people are told this as they rise through the ranks into more senior positions of leadership. But what does it mean? And how can you develop yourself as a strategic thinker?
Understanding Strategic Thinking
In business, strategic thinking emerges as a critical tool for navigating complexities, fostering innovation, and securing a competitive advantage
At its core, strategic thinking is the ability to anticipate, envision, maintain flexibility, and empower individuals and organizations to plan for the future in a systematic and insightful manner. It transcends day-to-day routine operations, focusing on long-term goals and the broader picture to guide decision-making processes.
It is a comprehensive, holistic and systemic approach to problem-solving.
How can you cultivate this invaluable mindset?
The Key Elements of Strategic Thinking
Strategic thinking requires a combination of:
- Imagination and analytical skills.
- Divergent (opening up and generating new possibilities) and convergent (focusing and making choices) thinking.
(See Alternating between divergent and convergent processes.)
Vision and Anticipation
Strategic thinkers possess the clarity of vision—the ability to see beyond the present, anticipating future challenges and opportunities. This foresight is grounded in a deep understanding of the current market dynamics, competitive landscape, and internal capabilities.
Strategic thinkers are able to imagine a future that is different to the past. They are not bound by their understanding of how things work at the moment or have worked in the past. Moreover, they can imagine more than one possible alternative future, resisting the immediate urge to predict which of them is more likely and discard the rest. This is because they can tolerate the uncertainty and ambiguity of believing alternatives are possible. They are able to "suspend disbelief" and consider alternatives with an open mind.
Strategic thinkers are often described as having the ability to "see around corners". This requires the ability to understand the possible consequences of things, be they actions, events, trends or structures. They try to anticipate the future, whilst recognising that they will never be able to predict it.
Strategic thinkers are students of both the future and the past. As George Santayana said, “Those who cannot remember the past are condemned to repeat it.”
On top of all of this, strategic thinkers can describe desired futures in visionary language. This are able to include all of the salient detail to ensure that the vision is both vivid and plausible, whilst leaving out any distractions or unnecessary baggage.
And their visions describe a world and an outcome which is different and orders of magnitude better, not the same but marginally better (faster or cheaper).
The big picture
Strategic thinkers avoid getting stuck in the weeds. They are able to step back from the most immediate and obvious problems (without ignoring or avoiding them) to see the big picture. They think beyond their team, department, division and organisation. They think beyond their industry, even. They take an outside-in perspective (what is needed and where can I get it), as well as an inside-out perspective (what have I got and what can I do with it). Strategic thinking requires the opposite of silo'd thinking.
They are able to take a vast breadth of information and are always looking for broader and alternative perspectives.
They are masters of reframing. Reframing is the act of changing the question, and considering alternative questions, before jumping to conclusions and trying to answer the same question in a different way.
Strategic thinkers understand what Henry Ford meant when he said "If you always do what you always did, you'll always get what you always got" and what Albert Einstein meant when he said "We can't solve problems by using the same kind of thinking we used when we created them." They recognise that change is required and good.
To achieve this, they seek and consume information from as many sources as they can. They read (or listen or watch) widely and talk to diverse people. They remain innately curious at all times. Whenever they have a thought, they actively explore its opposite.
And from all of this, they are able to distil the essential - the essence - from the merely important and interesting. Military historians sometimes describe this as Coup d'œil or Napoleon's Glance. Richard Rumelt, author of Good Strategy / Bad Strategy, describes it as The Crux (see Strategic Inception). Others have described it as the Pareto Principle - the principle that 80% of effects arise from 20% of causes (see Pareto Analysis).
Analytical Rigour
A hallmark of strategic thinking is the capacity for in-depth analysis. This involves a thorough assessment of internal strengths and weaknesses, alongside external opportunities and threats, often encapsulated in a SWOT analysis. Analytical rigour enables leaders to dissect complex scenarios, identify critical issues, and evaluate potential paths forward.
Big-picture thinking is not an excuse for vague, woolly or ill-defined blue-sky thinking. Combined with intuition, it helps strategic thinkers to determine what evidence they need, how and where to find it, and how to interpret it.
Strategic thinkers are fine-tuned to the perils of unsubstantiated assumptions and opinions as well as the risks of misinterpreting or overinterpreting data.
Decision-making and Prioritisation
Strategic thinkers make informed decisions about how best to achieve the long-term vision given the current and anticipated circumstances. This process involves weighing different options, considering their potential impacts, and choosing a course of action that best positions the organisation for future success.
Time and resources are inevitably limited. The ability to prioritise is indispensable.
Strategic thinkers are able to discern which actions will drive the most value towards achieving long-term objectives (using the Pareto Principle outlined above), ensuring efforts are concentrated where they can make the most significant impact.
Strategic thinkers must decide:
- Choice: What will be done, and, equally importantly what will not be done.
- Sequencing: The order in which they will be done, taking into account priorities and interdependencies.
- Resourcing: Allocating scarce resources to maximise the chance of success.
Adaptability
The only constant in life is change. Strategic thinkers are adept at navigating this change, demonstrating flexibility to adapt strategies in response to new information or shifting circumstances without losing sight of the overarching goals.
Strategic thinkers must make and commit to decisions whilst remaining open to the possibility of such changes. They must always remain open to the possibility of new and contradictory information, and therefore the possibility that they were wrong. And they must be ready to change course if circumstances demand it. This requires humility combined with a tolerance for ambiguity.
Collaboration
Strategy is not a solitary endeavour. It thrives on collaboration, drawing on the collective wisdom of stakeholders to refine strategies and build consensus. Engaging diverse perspectives enriches the strategic process, fostering more robust and innovative solutions. And strategies bring people together (in organisations, value chains, ecosystems and other partnerships) to achieve more together than they could on their own.
Strategic thinkers value this diversity whilst remaining alert to the realities of corporate politics that accompany it. As Charlie Munger, billionaire and right-hand man to Warren Buffett, famously said, "Show me the incentive, and I will show you the outcome." Strategic thinkers interpret diverse contributions through the lens of this perspective in an attempt to get closer to the truth and to maximise the chance of success. They're able to look at situations from other people's perspectives, developing empathy and building trust.
Execution
Ultimately, strategic thinking must culminate in action. This means translating insights and plans into tangible steps, implementing them effectively, and continuously monitoring progress to adjust as necessary.
Strategic thinkers who can't translate their thinking into clear and executable plans are just dreamers.
Developing Strategic Thinking Skills
-
Cultivate Curiosity: Encourage a culture of learning and curiosity within yourself and your organisation. Stay informed about industry trends, emerging technologies, and competitive movements. Talk to customers, suppliers, distributors and peers whenever you can. Actively seek out people you disagree with and try to understand their point of view.
-
Practice Scenario Planning: Engage in scenario planning exercises to explore various future possibilities. This not only prepares you for different outcomes but also sharpens your ability to anticipate and plan. Engage with scenarios in both fictional and non-fictional contexts to learn and hone the craft.
-
Foster Open Communication: Create an environment that encourages the sharing of ideas and insights. Cultivate the art of listening (see Honest people may differ - listening for strategic insight). Open communication channels enhance collaborative strategic thinking.
-
Reflect on Your Decisions: Regularly reflect on the outcomes of your decisions. This reflection helps in honing your strategic thinking skills over time, learning from both successes and setbacks. Record our decisions, together with the logic that supported them, in a decision log so that you don't misremember the circumstances when you come to review them.
-
Seek Feedback: Constructive feedback is invaluable in developing strategic thinking. Engage mentors or peers in discussions about your strategic approaches and be open to their perspectives.
Conclusion
Strategic thinking is not a talent reserved for the few but a skill that can be developed with intention and practice. By embracing the principles outlined above, leaders and organisations can enhance their strategic acumen, ensuring they are better equipped to navigate the complexities of the business world, drive innovation, and achieve sustained success. In doing so, they not only secure their own future but also contribute to a more dynamic, resilient, and forward-thinking business environment.