As John Hillen explains, there is a difference between strategic thinking and strategic planning, and understanding the distinction can help executives push their companies toward a brighter future.
I made the point in the first of these columns that one of the main differences between leadership and management is the ability to have a strategic perspective and think strategically. This is universally expected of leaders, almost never taught to anyone formally, and therefore often marks one of the tougher transitions for very successful managers in becoming effective leaders.
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It is not intuitive and it is not easy. I’ve repeatedly seen executive’s present painful strategic episodes as modestly successful because many of the tactical components happened on schedule. They were thinking like uber-project managers. But many times they missed the point entirely about the larger strategic impact – which was often painful for the organization in the big picture and in the long run.
It is an understandable phenomenon and no knock on those highly accomplished executives. Only a tiny majority of executives are natural “strategists.” And by that I mean that they principally justify their moves and their thinking in terms of connecting one event to another, and then to another (or several others), the accomplishment of which then creates a certain institutional movement, which then creates waves in the marketplace – causing a new dynamic for competitors and customers, which in turn opens up opportunities not previously available.
One famous study I use in my Leadership course shows that less than 5 percent of executives use strategy as their principle rationale for selling or defending their ideas and decisions. Most executives use expertise (“I’ve got the data – therefore we must do it this way….”), short-term achievement (“we want to get this done soon so it will roll up in the quarterly financials….”), or diplomacy (“I think everybody can leave this meeting happy that their equities were protected….”) as their chief “action logic” according to the study.*
Not many executives persuade people with the logic of strategy.
In coaching CEOs and working with boards, I’ve found many lament that their key direct reports don’t “think strategically enough.” But getting the feedback from a superior that “you’re not thinking strategically enough” is not only not helpful, it can paralyze people. What does “thinking strategically” really mean, and how can you do it?
In essence thinking strategically involves a perspective that is bigger picture, longer term, oriented around a future different from the present, and connecting many different activities and objectives in pursuit of one goal. A strategic thinker always assumes things must change.
In developing this skill, executives need to recognize what the great business strategist Henry Mintzberg and others have noted: Strategic planning IS NOT strategic thinking….at least not as practiced by many organizations.
For most organizations, strategic planning is a drill. Perhaps annually, perhaps less frequently. The calendar drives the drill – “Wow, its October already! We better get to work on the budget and strategic plan for next year.”
Strategic thinkers, on the other hand, are not thinking about strategy once a year, but are instead constantly thinking about the ecosystem of competitors and customers and partners in which they exist. They are always looking for strategic options for their organization and are ready to explore or implement them at any time.
Strategic thinkers have their eye on the market, obsessing over customer behavior and competitor’s moves. When they look inside at their own organization they are consumed with understanding the strengths and weaknesses of their people, their technology, their core competencies – to better understand their capacity for making moves in the market.
On the other hand, the usual corporate strategic planning drill tends to be data driven from the bottom up – teams and business units pushing forward plans they understand, can attain, and have the data to support. As a result, strategic planning tends to bake in the known, and bias the present. It favors data and analysis – things that can be proven.
Conversely, most great strategies are pulled forward by a vision of an alternative future, not a same-future that is rationalized by the known data about the present. Strategic thinking is seeing what opportunities might exist in the market, understanding past strategies that may or may not have worked (or not yet been tried), and framing new options for the organization around the things it does particularly well – and might be hard to copy.
Strategic thinking is not a dreamy exercise that is divorced from reality. Good strategic thinkers relentlessly align the opportunities in the market with the capabilities of the enterprise. And if those capabilities are missing, they outline a way to get them (i.e. key hires, R&D investment, or M&A).
But strategic thinkers always look forward, not trying to plan for the company they are – but rather trying to plan for the company they ain’t.
When I lead strategic planning exercises I throw out the bottom-up budget drills and always start with the very different organization we want to be in the future. And then we start thinking about how to get there from here.
How else can executives think strategically? They think always in terms of organizational coherence. Strategic thinkers are so-called “systems thinkers,” always dwelling on how all the pieces connect and if they fit. It is not enough to be a forward thinking idea generator, strategic thinkers have to have an eye for implementation.
One cannot just have a good idea about one thing – but must also understand how dozens of different pieces have to change and fit together to make the one thing happen. Pricing, technology, organizational structure, opportunity costs, priorities, capital, partnerships, talent management, and more. If one muscle works the wrong way or not at all, a good strategic idea may be all for naught.
Strategic thinkers always have a game plan to move the organization to a different place. They think in terms of priorities, trade-offs, dependencies, sequencing, and the allocation of resources. They ruthlessly assess talent in order to align skills with teams, activities, and goals. They trumpet the core values and purpose of an organization, but push to allow for new undertakings that will fulfill the mission in an ever-changing environment. And….they keep score!
So when your boss tells you to think more strategically so you can take it to the next level, that’s not a signal to be a chin-stroking visionary. It is, though, an invitation to start asking questions of your part of the organization that are strategic in nature.
Where are we now versus where do we need to be? Why does being in the new place make sense? Is it doable? How will we know when we got there – can we measure progress? Who should lead? What might we need that we don’t now have to get it done? What needs to change about the way we do business now to create a different outcome in a future that has not yet happened?
Now you are beginning to think strategically.
* For those interested, the study is outline in David Rooke & William R. Torbert, “Seven Transformations of Leadership,” from HBR 10 Must Reads on Leadership or Harvard Business Review, April 2005
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