Tuesday, May 8, 2012

How to Think Strategically

How to Think Strategically

What are the 5 skills of strategic thinking? 

Not long ago Grace, the CEO of a mid-size firm on the east coast, told me that she needed to hire a less expensive consulting group to work in another area of her company. Grace said that budgetary considerations necessitated the switch to this “low cost provider.” I asked her how the new consultant’s work would relate to the previous work and the implementation of her strategic plan. She said she hadn’t really thought about it “that way.” That’s when we discussed the difference between planning strategy and thinking strategically.

Thinking strategically is not the same as merely thinking about strategy or reflecting on a strategic plan. A strategic plan is a document from a systematic, often yearly, process. Thinking strategically, on the other hand, is a way of thinking throughout the day. It is a mindset that helps implement the plan via better daily decisions. The five skills of thinking strategically are seen below (1).

The Five Skills of Thinking Strategically
          I.    Focus Intention
        II.    Use Peripheral Vision
       III.    See the System
      IV.    Connect in Time
       V.    Test Drive Solutions

I. Focus Intention – What do we want to achieve? – Our energy, attention, and time can be focused like a laser's beam or diffused like a prism's spectrum. Intent-focused leaders are lasers. They act on what is most important and refuse to be distracted by the scattered spectrum of daily urgencies. These strategic thinkers strive to apply Peter Drucker’s mandate to be both effective (do the right things) and efficient (do things right) in that order. They also use the Pareto principle, better known as the 80/20 rule, to focus their organization on the fundamental few. They seldom mistake activity for accomplishment.

As a CEO, Grace is often pulled in many directions by diverse stakeholders who have competing agendas. We have worked together to identify and manage her strategic paradox (the tension she feels to improve service and constrain costs at the same time). She’s also choosing to be more focused by creating a “NOT to do list.”

II. Use Peripheral Vision – How are we staying open to other opportunities? – Athletes who are intent on scoring themselves seldom see their open teammates who may have easier shots. In basketball, this over-focus on self often results in forcing the shot. In business, clear direction without flexible execution is dogma. Thus, a leader with a strategic direction, but no peripheral vision, confuses focus with tunnel vision.

For example, Grace visits her regional offices every quarter to review their progress. When I asked her how she stayed open to regional influences and concerns as she pursued her strategic plan, her eyes glazed over. I explained that a healthy peripheral vision encourages leaders to keep their eyes wide open and pursue their top priorities at the same time. (Yes, another paradox!) Therefore, she decided to decrease the amount of time she spent reviewing her plan during her visits and increase the time she invested listening to each region’s stakeholders (local staff, customers, suppliers etc.).

III. See the SystemHow does this issue relate to our ecosystem? A systems perspective invites leaders to think about the parts of the organization, the pattern of the parts, and the relationship among the parts. It is a way of viewing issues as part of the larger ecosystem. Unfortunately, many leaders think in silos instead of systems. They walk around with blinders on, like the proverbial racehorse focused only on their race. Strategic thinkers, on the other hand, consider the relationships among the vertical (e.g., corporate, division level, business unit, etc.) and horizontal (e.g., marketing, research and development, manufacturing, suppliers, etc.) elements of the organization as they make decisions.

If Grace was thinking from a systems perspective when she considered hiring a less expensive consultant group, she would have thought about how her other initiatives would be affected by this new hire. Thinking strategically is not about saying NO to silos, it’s about saying KNOW to silos. It’s about knowing when to focus on your silo (your unit) and when to open your silo doors to connect with others.

IV. Connect in Time – How should our history influence our destiny? “If you’re still here after Christmas, I’m going to climb up on that Coke box and hit you...” The bank president, Steve, said that the lesson he learned from the preacher who uttered those words 40 years earlier was not to quit when the going got tough. So, Steve went back to college after Christmas, received his diploma two years later, and went on to become a successful banking executive. Steve now has the Coke box in his office. It’s his connection to the past.

Leaders, like Steve, know how to connect in time. They do not live in the past, but they do use it to communicate important values and principles via powerful metaphors, symbols, and stories. To connect in time, strategic thinkers reflect on the past and future. They consider how both should inform present decisions.

V. Test Drive Solutions – How could we try this? The last skill of the strategic thinker invites you to be hypothesis-driven. Unlike those who try to get it perfect the first time, strategic thinkers conduct small experiments. They test solutions by trying ideas, gathering data, conducting after action reviews, and adjusting course. Those skilled in this approach are able to think both creatively (like an entrepreneur) and critically (like a data-driven analyst). They build a culture that cultivates learning as a way of working.

For example, Hewlett-Packard applied this experimental mindset years ago as it researched and developed the ink-jet printer. Leaders at HP used this “rapid prototyping” to push innovations out the door to be tested by users as fast as possible. Failure was not only an option for the strategic thinkers at HP, failure was welcomed... if it was fast, small, and learning oriented.

As Grace develops these five strategic thinking skills, she’s realized that they have helped her make better decisions, adapt her strategies, and achieve her goals. Do you use any of these skills? How? Which ones should you develop to help lead your team? Let me know. I’d love to hear from you.

Keep stretching when you feel pulled,


1. Adapted from: Jeanne M. Liedtka; Thinking strategically: Can it be Taught? Long-Range Planning, Vol 31, 1998, pages 120 – 129.

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