Developing strategic thinking Essay

IntroductionMy research interest in strategicalal idea started in 1993 when I interviewed 35 fourth-year executives for a longitudinal study on the changes in strategic planning and strategic management in large nerves between 1982 and 1993. These senior executives were obligated for strategic planning, strategic management or corporate development in 35 of the 100 largest manufacturing companies in Australia. The interviews lasted between three and four hours and full-lengthness of the questions I asked concerned the problems that they had experienced with their strategic planning or strategic management approach in the preceding five years. The main problem identified by the studyity of senior executives was strategic mentation. Interestingly, strategic cerebration was a problem regardless of whether the companies had a formalised strategic planning system or apply a non-formalised approach. For fashion model, one senior executive from a company with a formalised stra tegic planning system stated Our senior executives tend to land carried away by dilate and lose their strategic perspective.AbstractLack of strategic thought demonstrate by senior managers has been identified as a major shortcoming in organisations. Draws on concepts in management and psychology to present a framework that can be used to remedy this situation. Argues that strategic thinking needs to be addressed at devil different, but interrelated aims the separate level and the organisational level. Organisations that successfully integrate strategic thinking at these two levels will create a critical core power that forms the basis of anenduring competitive advantage.Europe, East Asia, Australia, New Zealand and the United States (p. 242). The ability to think strategically, however, is life-or-death to remaining competitive in an increasingly turbulent and global environment. Considering that the average life expectancy of US Fortune 500 companies is only between 40 and 50 years (de Geus, 1997) and that only 49 percent of the 100 largest manufacturers in Australia in 1982 were still among the top 100 manufacturers in 1993 (Bonn and Christodoulou, 1996), the need for strategic thinking has never been greater. This paper presents a framework that can be used to increase strategic thinking in organisations. It argues that strategic thinking needs to be considered at two different, but inter-related levels. Organisations that successfully integrate strategic thinking at these two levels will create a critical core competency that forms the basis of an enduring source of competitive advantage.The debate on strategic thinkingThere is no agreement in the literature on what strategic thinking is. A number of authors h hoary up used the term interchangeably with other concepts such as strategic planning or strategic management. Wilson (1994) for example notes thatSimilarly, a senior executive from a company without a formalised planning system reported I t is a major challenge to get our conclusion makers to think in strategic rather than operational terms.This lack of strategic thinking is not restricted to organisations in Australia. As research from the Institute of Directors in London has shown, 90 per cent of directors and vice-presidents had no induction, inclusion or training to become a competent direction giver of their business (Garratt, 1995a, p. 242). According to Garratt (1995a), this region seems to hold good in The current issue and full text archive of this journal is available at http//www.emerald-library.com/ftThis continuing search for improvement has profoundly changed the character of strategic planning so that it is now more appropriate to refer to it as strategic management or strategic thinking (p. 14, italics in original).Other authors have focussed on strategic management processes and either stated explicitly that good strategic planning contributes to strategic thinking (Porter, 1987) or assumed implic itly that a well designed strategic management system facilitates strategic thinking at heart an organisation (Thompson and Strickland, 1999 Viljoen, 1994). Mintzberg (1994) suggested a gull distinction between strategic thinking andconcepts such as strategic planning. He stated that strategic planning is not strategic thinking (p. 107) and argued that all(prenominal) term focuses on a different stage in the strategy development process. In his view, strategic planning focuses on analysis and deals with the articulation, elaboration and formalization of existing strategies. Strategic thinking, on the other hand, emphasises synthesis, using intuition and creativity to create an integrated perspective of the enterprise (p. 108).He claimed that strategic planning is a process that should occur after strategic thinking. Garratt (1995b) argued along similar lines. He defined strategic thinking as a process by which senior executives can rise above the daily managerial processes and c rises (p. 2) to gain a different perspective of the organisation and its changing environments. Heracleous (1998) made the distinction between strategic planning and strategic thinking by an analogy to single-loop learning and double-loop learning. In his view, the former is analogous to strategic planning, the later to strategic thinking. He claimed that single-loop learning involves thinking within existing assumptions and taking actions based on a fixed set of potential action alternatives. Double-loop learning, in contrast, challenges existing assumptions anddevelops unused and innovative solutions, leading to potentially more appropriate actions. Heracleous argued that like single-loop learning and double-loop learning, strategic planning and strategic thinking argon interrelated in a dialectical process and are equally cardinal for effective strategic management.This article supports the view that strategic thinking and strategic planning are two different concepts and that strategic planning is a process, which takes place after strategic thinking. My analysis in the following sections demonstrates that strategic thinking manifests itself at two different levels the individual level and the organisational level. This approach integrates the micro domains focus on individuals and groups with the macro domains focus on organisations and their context. In other words, it acknowledges the twine of individual characteristics and actions on the organisational context and vice versa, the influence of the organisational context on individual thinking and behaviour. As Chatman et al. (1986) have argued When we look at individual behaviour in placements, we are actually seeing two entities the individual as himself and the individual as representative of thiscollectivity . . . Thus the individual not only acts on behalf of the organization in the usual agency sense, but he also acts, more subtly as the organization when he embodies the values, beliefs, and g oals of the collectivity.Thus, understanding strategic thinking requires a dual-level approach that investigates the characteristics of an individual strategic thinker as well as the dynamics and processes that take place within the organisational context in which the individual operates. For instance, to book an accurate picture of the effects of differing leadership styles on strategic thinking, we can look at their impact on individual managers and on the way they influence the wider organisational climate, culture and structure.Strategic thinking at the individual levelStrategic thinking at the individual level comprises three main fixingss 1 a holistic understanding of the organisation and its environment 2 creativity and 3 a vision for the early of the organisation. Each of theseelements will be addressed in the following sections.A holistic understanding of the organisation and its environmentA crucial element of strategic thinking is the ability to take a holistic perspec tive of the organisation and its environment. This requires an understanding of how different problems and issues are connected with each other, how they influence each other and what effect one solution in a particular area would have on other areas. As Kaufman (1991) has expressed it Strategic thinking is characterized by a switch from seeing the organization as a splintered conglomerate of disassociated parts (and employees) competing for resources, to seeing and dealing with the corporation as a holistic system that integrates each part in relationship to the substantial (p. 69).Taking a holistic approach requires the ability to distance oneself from day-to-day operational problems and to see how problems and issues are connected to the overall pattern that underlies particular details and counterbalancets. Senge (1990) has called this approach systems thinking. He argued that We must look beyond personalities and events. We must look into the underlying structures which shape individual actionsand create the conditions where types of events become likely (p. 43). such an attention to the underlying structures of complex situations requires thinking in terms of processes rather than events to enable a reconciliation of apparent contradictions and the development of innovative solutions. Mastering complexness in organisations also requires managers to be familiar with the dynamics of organisational life. Stacey (1996) argued that managers need a thorough understanding of how organisations and managerial actionschange over time and of the feedback processes that lead to such changes. This includes being sensitive to the subtle interactions between the different parts of the organisation and understanding the structural causes of behaviour and their effects on other parts of the organisation. Finally, a holistic view requires recognition that organisations are components within large and complex systems, such as markets, industries and nations. Strategic th inkers need to understand how organisations are embedded within this wider context and how they are influenced by the dynamics, interconnection and interdependency of these systems.Strategy is about ideas and the development of novel solutions to create competitive advantage. Strategic thinkers must search for new approaches and envision better ways of doing things. A prerequisite for this is creativity, in particular the ability to question prevalent concepts and perceptions (de Bono, 1996) and to recombine or make connections between issues that may seem unconnected (Robinson and Stern, 1997). According to Amabile (1998), creative thinking refers to how people approach problems and solutions their capacity to put existing ideas together in new combinations (p. 79, italics in original).This involves contest the tyranny of the given (Kao, 1997, p. 47) by questioning prevailing beliefs or mental models in the organisation. Senge (1990) has described mental models as deeply ingrain ed assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action (p. 8). He argues that such models are often tacit and beneath our level of awareness, yet they have a strong influence on organisational behaviour . . . new insights fail to get put into practice because they conflict with deeply held internal images of how the world works, images that contrast us to familiar ways of thinking and acting (p. 174).Thus, the ability to reflect on mental models and to challenge prevailing assumptions and core beliefs is crucial for the development of unparalleled strategies and action programs. This requires strategic thinkers to understand their own behavioral patterns as well as existing concepts and perceptions within the organisation. Strategists should enjoy the challenge of thinking out of the shock and of using imagination and creativity to explore whether there might be alternative ways of doing things. De Bono(1996) has made this point very clearWithout creativity we are unable to make full use of the information and experience that is already available to us and is locked up in old structures, old patterns, old concepts, and old perceptions (p. 17).Creativity is a process that begins with the generation of ideas. As de Bono (1996) has noted. . . strategy is too often seen solely as a reduction process in which various possibilities are reduced to a sensible course of action (p. 72).CreativityCreative thinking is needed to imagine multiple possibilities and to search for alternatives to formulaic approaches. The creative process also involves the selection and development of ideas. Good strategists are able to recognise the potential of a new idea at a very early stage. To visualise the value of an idea that has been put forward by people from different organisational levels might be even more important than the generation of original ideas by the strategist. As Robinson and Stern (1997) have observed The larger the company, the more likely it is that the components of creative acts are already present someplace in it, but the less likely it is that they will be brought together without some help (p. 15, italics in original).Finally, there is the need for translating the new idea into practice. ripened management must provide the resources that are needed to implement the idea. As Amabile (1998) has noted . . . deciding how much time and money to give to a squad or project is a sophisticated judgment call that can either support or kill creativity (p. 82)A vision for the futureStrategic thinking should be driven by a strong sense of organisationalpurpose and a vision of the desired future for the organisation. A sure-enough(prenominal) vision as opposed to the popular vision-statements conveys a sense of direction and provides the focus for all activities within the organisation.For Senge (1990), a genuine vision is a call rather than simply a good idea (p. 142, i talics in original). In his view, visions are pictures or images people carry in their heads and hearts (p. 206). They represent what one truly wants, based on fundamental intrinsic values and a sense of purpose that matters deeply to the people in the organisation. Evidence for the importance of a clear vision has been provided by Collins and Porras (1998). Their research showed that visionary companies outperformed nonvisionary companies significantly. One dollar invested in a general market stock fund on January 1, 1926 would have heavy(p) to 415 dollars by December 31, 1990, while the same dollar invested in a visionary company stock fund would have grown to 6,356 dollars, a difference of over 1500 percent.According to Collins and Porras (1998), the visionary companies did not attain this extraordinary long-term performance because they wrote one of the elegant vision or mission statements that have become popular in recent years. They pointed out that Just because a company ha s a vision statement (or something like it) in no way guarantees that it will become a visionary company (p. 201, italics in original). Instead, leaders in visionary companies place strong emphasis on building an organisation that has a deep understanding of its reason for existence and of its core values, those fundamental and enduring principles that guide and inspire people throughout the organisation and bind them together around a common identity. Thomas J. Watson, Jr. (1963), former IBM chief executive, made this point very clear I steadfastly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on which it premises all its policies and actions (p. 5). accordant alignment (p. 229, italics in original).Developing a genuine vision and building it into the very fabric of the organisation must be a central element of the daily work of strategic thinkers. A vision that is shared throughout the organisation fosters commitment rath er than compliance and creates a sense of commonality that permeates the whole organisation. It inspires peoples imagination and provides a focus that allows individuals to contribute in ways that make the most of their expertise and talents. Ultimately, as Collins and Porras have shown, a genuine vision helps to achieve superior performance in the longterm.Strategic thinking at the organisational levelThe organisational level provides the context in which individual strategic thinking can occur. Organisations need to create the structures, processes and systems that 1 foster ongoing strategic dialogue among the top team and 2 take advantage of the adroitness and creativity of every individual employee.