“What does it mean to be a strategic thinker?”
Managers are routinely inured to deal with tactical issues on their monthly/quarterly targets. Led by this micro focussed view they can be forgiven to think of Strategy as the tactical tool that’s deployed at the time of annual budget meetings.
Having seen this across various organisations I worked with, I can empathise with Managers and at the same time feel this is an area where one needs to Coached as part of organisational L&D efforts.
Strategic thinking will encompass the set of thought process to look at a business situation from multiple approaches and evaluate business environment, future implications and navigate to the future goal through a good understanding of opportunities and challenges.
That was quite longish…a more simpler definition I use to describe strategy is,
a) Get to know where (Analysis) you are,
b) Define where (Objective) you want to be, then
c) define the path (How) to go from where you are, to where you want to be.
Let’s focus on the ways you can become an effective strategic thinker:
Observation & analysis of the business environment
Kenichi Ohmae, Japanese organizational theorist had to say this about developing a very clear idea of the current position of business.
“Analysis is the critical starting point of strategic thinking.”
Marketing/Senior managers typically start with the classical 4 quadrant figure of SWOT analysis to layout the strengths, weakness, opportunities and threats. This is abundantly practised across most organisations as an easy to use tool to slot in the issues across 4 boxes and allows a good visual feel of the issues being analysed. As simple as it is, the risk stems from the fact that the analysis might be limited to ticking the box and pasting this on the PowerPoint slide. Without sufficient critical thought being applied, the SWOT tool could be rendered ineffective and fails to suggest good options.
“The best CEO’s I know are teachers, and at the core of what they teach is strategy.”
Michael Porter the Guru of competitive strategy has theorized the famous ‘Porters 5 Forces’ model to aid analysis.
In addition to the SWOT tool, the Porters 5 Forces model allows the strategic thinker to consider all the forces in the economic value chain from customers to suppliers, entry barriers to alternative products/services and the industry environment.
The analytical process can be applied in your personal life too for defining your career map or for planning a personal event like a birthday or wedding.
Building a competitive advantage
An exhaustive analysis allows one to contemplate on upon ‘what is my competitive advantage’ and how ‘can I have a strategy that is different from the other average companies present out there’.
Competitive advantage is the distilling of a clear statement that defines ‘how does my product / service give my customers great value at a cost that is better than my competition’.
Since the focus is on the customer, it helps to have the customers view on my offering rather than what I think of my offering!
Strategic thinking encompasses the customers view in addition to understanding the mindset of the competitors and our stakeholders too – this is rightfully called ‘thinking out of the box’.
Recently I happened to consult a mid-size company on a strategy assessment session for a new category launch. The business unit managers along with the buyers presented a product launch roadmap that focussed early on strategy at the expense of inadequately fleshing out the purpose and mission of the whole act.
Taking time out to think through, why we do what we do – allows the purpose to be the guiding light that you can turn back to whenever you need it.
Articulating the story through a clear set of words is key to help keep our plan fit for purpose. This means clarifying to ourselves, ‘what is the guiding philosophy for our business’ and ‘what problem do we solve’?
This leads us to the next task of defining the Objective – where the objective becomes the achievement that will be accomplished through the application of our strategic plan.
Differentiation leads to Strategy
This thought process then leads you to define the strategy for your business, that could broadly fall into one of the four strategy models.
Differentiation strategy – where my product is different from competition and allows me to get away from price benchmarking vs competitors
Broad strategy – where the company will operate across a broad category killer format
Niche strategy – where the company will choose to focus on a niche offering to specific customer segment
Cost leadership strategy – where the company will compete with providing the best value and budget price points to customers
Execution of strategy
Execution of the strategy thus defined will set the company on the path to meet its objectives. This is where failure abounds if strategy is relegated to the annual budget slides.
The key elements of a good execution then are
a) having a well-defined strategy
b) shaping the operations and processes
c) assigning accountabilities on people who execute the strategy
Finally, it is people that make it happen.
For the strategic leader, it is key to having the right set of people in the right jobs and this starts with defining the job and then assigning the talent one needs to that job role.
It is an established fact that leaders having a strategic thought process, are the most effective leaders that take their teams to success. The globalised environment of today seeks out leaders with this mindset and companies value such talent highly.