What can strategic thinking do for you?
There was once a frog that lived all his life at the bottom of a well and saw the world through the opening at the top. He saw the sun in the day and the stars at night. When he was thirsty he took a drink from the water around him. When he was hungry, he ate the insects that buzzed around him. He was happy and contented and refused to listen to the other animals that visited him and told him stories of the world outside the well. They invited him to come up and see it for himself. “Why should I? I have everything that I need right here!” he would answer. Soon he became friendless as one by one, he cut himself off in his little well. One day, a yellow bird decided to fly the frog on his back out of the well. And for the first time, the frog understood what the other animals had begged him to see. He saw the vastness of the ocean, the grandeur of the snow-covered mountains and the beauty of the wide-open meadows! There were much more opportunities to live a better and more contented life. The beauty of the world outside was vastly superior to his well and vowed never to return to it.
This is the famous Chinese folk story that had been told countless times over the years. One may think that this fable is no longer relevant – what with the Internet, Google and all the different social media at our fingertips! The truth of the matter is many people are still like the frog and live in their very own well. We need someone – or something - like the yellow bird to help us break out of our well and see the vast expanse of our world. That bird is strategic thinking.
Many leaders are so caught up in day-to-day activities that they don’t have the time to contemplate what is out there. Like the frog, we are situated in our well, enjoying what we see and managing within the confines of our environment. In time, we get comfortable and even when opportunities arise, we refuse; preferring to play it safe and stay in our little well. What the story doesn’t tell is what might happen if the frog continued to remain in the well. Well, we don’t need to be a rocket scientist to predict that the frog’s development would be stunted, its legs would shrivel up and it wouldn’t be long till its days are up! In a sense, if an organisation does not develop its strategic thinking, it might well go down the path of the shrivelled up frog!
Like the yellow bird, strategic thinking will carry us on its back to see new vistas, to experience new opportunities and to give us a longer lease on life. We will finally be able to run with the others, to enjoy the vast open world that is beyond our company. In this article, I will share with you 5 ways that Professor Jeanne Liedtka devised for strategic thinking that can achieve all that…
1. Being intent focused
If there is one consistent view about strategic thinkers, it is their ability to stick with the big picture. They may be busy with the frenetic pace of activities, but every so often, they will stop, stick their head out, get their bearings correct, and then continue. Course correction is part and parcel of strategic thinking and the route is seldom smooth. Strategic thinkers never, ever say that the quickest way between here and there is a straight line. Will they stub their toes? More often than they can remember! Will they get lost? Once in a while. Will they lose heart? Yes, especially when they start losing the forest for the trees. The key, therefore, is to be intent focused. If we know where we’re headed, and we know what we’re working towards, no amount of setbacks can derail the strategic thinker.
But let’s get one thing straight: strategic thinkers are not the Kumbayah-singing, positive-thinking, happy-go-lucky campers. Their resolve is derived not from wishful thinking but from a larger intent. Kennedy’s moon-landing challenge was not the ravings of a lunatic; it was driven by something more fundamental than that – to beat the Russians to the moon and by doing so, to retain the title of technological champion and maintain an effective balance against communism. That was Kennedy’s intent. And it served to gel the country in a program that was to prove costly both in money and in lives.
I recall a young gentleman with whom I was working over the course of almost two years on building his business. When we first spoke, he had neither business experience nor resources. However, he knew that he possessed skills that were in short supply in an industry that was difficult to break into. He had hitherto been working for someone doing the same work but under very trying conditions. He felt that he was being exploited. Working on his intent, he identified that although money was very important to him, it was more the ability to manage the project, to deliver high quality work and to have a say in its outcome. But most importantly, he wanted to offer others in a similar position as he was in now, a fair deal for a good day’s work. It was with this unshakable intent that he achieved his first year’s goal of $200,000 within 6 months; and his second year’s goal of $500,000 within another 8 months. All in all, he surpassed his goals with a staff of 5 people. His intent allowed him to bring 5 other people out of their misery into a more humane working environment. And he made money too.
Of course it was not without hard work! Being intent focused does not pull the focus away from it. Strategic thinkers know that hard work is a must. Yet working hard for the sake of working is like jumping onto an exercise bike and hoping to be somewhere else 30 minutes later! It’s not going to happen! The hard work needs to be driven by the bigger picture, by the intent. Keeping an eye on the prize - being intent focused – that’s what it takes to be effective for the future.
2. Thinking in systems
In 1929, Frigyes Karinthy published a series of short stories called Everything is Different. In one of these stories entitled Chain Link, he expounded the idea that the modern world will “shrink” due to the ever-increasing connectedness of human networks. (This idea predates Facebook and Twitter by 80 years!) As a result of his hypothesis, Karinthy’s characters believed that two complete strangers could be linked together by not more than 5 acquaintances. And from this was born the idea of the Six Degrees of Separation.
While the Six Degrees notion was predicated on human interaction, it is not difficult to see how mathematicians, physicists and engineers can identify a network theory based on a similar notion. And indeed, new studies on the inter-relationship of system drivers have become standard fare for people dealing with change, with innovation and with business. So where do strategic thinkers feature in all these?
All complex issues have this one feature in common: the inter-relatedness of system elements. Cause and effect is not a simple straight-line function. The non-linearity of input and output creates a system that is inherently unpredictable. When the output of the system is itself the input in the next iteration of that system, there is no telling what the next output will be. All systems are non-linear and therefore unpredictable. Strategic thinkers understand this and rather than trade in absolutes, they operate under uncertainty. They work with probabilities and scenarios rather than with the pronouncement of fact. They design their actions knowing that there will be course corrections and readily make that when the time comes.
So what can this do for you? For one, you will not get too riled up when things don’t go according to plan. Stress levels plummet when you take unexpected outcomes in your stride. Indeed, strategic thinkers are constantly on the lookout for changes in the environment to indicate if they were still heading down the best-case scenario or if they are now on the worst.
Being on the worst-case scenario is not a bad thing – all we need to do is to identify the centre of gravity of the situation and deal with it. Strategic thinkers are attuned to the interplay of forces within the system, of interconnections between and among drivers. Uncovering how these forces interact - and what changed along the way – allows them the ability to focus resources to solve an issue holistically.
3. Thinking in time
“Study the past if you would divine the future.”
Confucius uttered this statement around 500BC. One might think that after 2500 years, man would have been much more prescient! In reality, history repeats itself and we often walk right back to where we first started.
Thinking in time basically understands where we’ve been, what steps we had taken, what decisions we had made, to get us to where we are now. It is the appreciation of the thinking that had been done to get us to the current situation, and what we now need to do to get to where we want to go.
While the concept is so simple, the practice is much less ubiquitous. In many situations, we tackle the issues we face without fully understanding what was done previously – and in some important cases – what was omitted. This brings to mind a story of a strategy session I was facilitating for a group of librarians in a university. They were wondering if they should change the name of their department. As one of them put it, “This question is a matter of life and death!” It turned out that librarians in universities are not simply gatekeepers of the repository of information; they are actually purveyors of knowledge. Most of them hold Masters degrees in knowledge management and pride themselves as researchers. In fact, one of their key roles is to provide research assistance to university students. But they have been largely ignored. They were now wondering if they should change their department name to reflect their larger role. When the librarians applied thinking in time they realised that it was not their name that caused the problem, it was how they marketed themselves. Their problem was caused by the lack of awareness. Apparently, the library staff only advertised their services to the students on the first week of the first year. For most undergraduates, that is the most confusing time! We cannot expect anything to be taken in, much less remembered, during this time! So they decided to change the way they interacted with the students rather than changing their name. And they got instant results!
Sometimes the answer to our future lies in the past. Strategic thinkers grasp that concept well.
4. Being hypothesis-driven
Each of us has our concept of what works and what does not, even regarding the future. Unfortunately, some of these may be flights of fantasy while others may be so filled with assumptions that even Swiss cheese has fewer holes in them!
Most people’s thinking are filled with assumptions. Assumptions help us to simplify the matter so that we can focus on key elements to make a decision. Yet when these assumptions become limiting, when they are designed to make a non-linear system linear, then the solution may work poorly, if at all. Many a times, these assumptions take time to reveal themselves in the system, thereby creating a false sense of confidence in one’s ability to predict the future. Truth be told, he was just lucky!
What do strategic thinkers do differently? They apply the scientific method of creating a hypothesis, identifying the assumptions of that hypothesis, and then testing them out. The idea is not so much to find confirming information about the assumptions (we have all seen the effects of the confirmation bias), but to actively look out for disconfirming information. But they also understand the lack of disconfirming information does not in itself confirm the hypothesis. So they will frame the next steps carefully by identifying the best-case, worst-case and most-likely case scenarios using their assumptions; with the best-case being one where all their assumptions are correct and the worst-case with all their assumptions wrong. This presents them the limits of variability of their situation, allowing them to see if they can deal with such uncertainty. If they cannot accept it, they will either abort the idea or find ways to overcome it. If they can accept it, they will limit their downside exposure, testing the hypothesis until it becomes glaringly clear where they are headed and what they will be up against.
Let me give you an example of how the hypothesis-driven process helped my company identify what NOT to do without spending too much money. After spending countless disappointing meals in mid- to high-class restaurants, I identified the problem: the inability of waiters to identify when a customer was ready to order more. And if waiters could simply get diners to purchase two more drinks per table, the restaurant would likely see an uptick in sales of about 4-5%. That translates to quite a lot of money! My hypothesis was: come up with a program that would train the waiters to identify the signs for asking for the next order, we can help the restaurant make much more money. And our asking price would pale in comparison to the uptick. Indeed, we can see an ROI in the range of 400 – 500%! Who wouldn’t want that? Luckily I understood the impact of assumptions on our hypotheses and we started to canvass the restaurant owners’ views of the program. The answers that came back opened our eyes to how restaurants work, and more importantly, why training was not the solution for them. Ultimately, we abandoned the idea after spending 2 weeks on it and a little printing. Total cost: less than $1,000. This is chump change in relation to the amount of money we would have lost if we went into the idea full-scale with development, marketing and sales.
When you adopt strategic thinking, you will join the pantheon of thinkers who approach uncertainty in a logical, scientific manner. By identifying your hypotheses and uncovering the limits of the underlying assumptions, you can test the means to a sustainable solution. When you do that, you will find that you increase your value to your stakeholders and help build a more sustainable future. You will have become a strategic thinker.
5. Using intellectual opportunism
What is intellectual opportunism and how different is it from other forms of strategic thinking? Before we jump into what intellectual opportunism is, let’s just take a snapshot of some of the common strategy tools and processes. There’s the SWOT and PEST analyses; Porter’s Five Forces, generic strategies and value chain analyses; there’s McKinsey’s 7-S; Ansoff’s Growth Grid; BCG’s product portfolio matrix; Kim and Mauborgne’s Blue Ocean; Michaud and Thoenig’s strategy orientation and a host of other strategy tools focused on change. What do all these tools and processes have in common? In a nutshell, to survive in the marketplace. Some may focus on competition, others on ourselves. Most are non-collaborative.
Strategic thinkers also use these tools to create a mental model of the competitive landscape. However, they also look at how to collaborate to enlarge the pie. The strategic thinker knows that an individual, a company or even a country cannot hold all the aces. To try to pit ourselves against another in the same market space would ultimately lead to a win-lose situation – sometimes even a lose-lose! So collaboration is always top of mind for strategic thinkers.
If we cannot collaborate, then we would avoid direct competition by carving out white spaces – cracks in the competitive tapestry that will enable us to support our new business without going headlong against an incumbent. Just think about it – how many different inkjet printer makers are there in the market? Do we really need so many? And how can they ALL survive? They do so by focusing on a certain niche or target market. Some may focus on the ink cartridges, some on the support, others on the market itself. By identifying different market white spaces, companies can make use of their intellectual property to create a new market space. And that is really what intellectual opportunism is really all about.
Strategic thinkers, therefore, do not sit on their laurels and reap the current benefits of their intellectual property. They take what they have and find new and novel ways of applying them. Take SAP for example. They started out when 5 ex-IBM engineers saw the potential of technology in business advancement. With just one client, they built a system that they would eventually take to other like-minded customers who today total 251,000!
Or take the iPhone. It did not come out from a brainstorming session led by Steve Jobs. Instead it happened because the iPod was at that time, the leading product for personal mobile music (it is incidentally its first major money maker; its cash cow!). When Apple engineers looked at how their customers were using the iPod, they identified a potential threat: any phone maker who could tack a music player onto their phone could wipe out the iPod business. So with that, Apple began designing their very own iPod with a phone. It became the second bestseller of Apple products, the iPhone! (Incidentally, contrary to expectations within Apple that the iPhone would wipe out the iPod market, it actually contributed to its further growth!)
These are just two examples of intellectual opportunism at work. Using the strengths you have from within, find new market spaces that you would penetrate either by yourself, or in collaboration with someone else already in the market, to seize new opportunities. And use the hypothesis-driven process to deliver it to the market!
So, what can strategic thinking do for you?
1. It develops your focus and trains your resolve on the big picture. You will impact the right things rather than simply doing things right.
2. It helps you understand the interrelatedness of all systems, giving you the ability to weather storms not by over-reacting to the boat rocking in the waves, but steering it towards safe destinations.
3. It makes you understand your current reality by looking at what happened in the past, so that you can make greater sense of where you’re headed in the future.
4. It gives you a process of dealing with uncertainty by developing hypotheses, testing your assumptions and stretching your thinking with scenarios so that you can drive forward with greater confidence.
5. It supports your push for business growth as your capitalise on your intellectual property in bigger ways.
Seeing how strategic thinking can multiply your leadership capabilities and magnify your impact to your organisation, don’t you think it is time for you to develop your strategic thinking capabilities?