When should strategic thinking be applied, in what conditions and context?
(Dedicated to the Trainers in Indonesia!)
This is a very good question, because at the back of it, there are similar questions like: should we apply strategic thinking all the time and what conditions can we dispense with strategic thinking, and when must we absolutely need to apply strategic thinking. Finally, it also begs the question: what is strategic thinking?
Let’s start with the definition.
Readers familiar with our work will know that strategic thinking is the application of different perspectives to understand our situation better so as to come to the right decision. According to Prof Henry Mintzberg, there are three-and-a-half pairs of opposing perspectives: seeing ahead and seeing behind; seeing above and seeing below; seeing beyond and seeing beside, and covering it all together – seeing it through. These translate into Jeanne Liedtka’s five competencies: intent focused, systems thinking, thinking in time, intellectual opportunism, and the hypothesis-driven process. We will uncover each of the five competencies over the next few posts.
So strategic thinking is really a 360-degree viewpoint of our situation so that we make the right decision every time.
Do we need to apply strategic thinking all the time? What makes for a strategic situation? Well, there are three criteria we have designed to help thinkers discern if the situation were strategic or not…
1. It impacts more than one person, or group of people
If your situation impacts a large group of people, then you need to think strategically. If it only impacts you (or your group), then you don’t need to worry too much; so long as you can accept the consequences, you can simply make the decision and go about implementing it.
2. It has a high opportunity cost
Many people think that an expensive decision will make it a strategic one. Well, not so. A person of extreme means may see the purchase of a $1.5 million car as inconsequential, and can make that decision at the bat of an eyelid; yet another person would have to consult a whole committee to simply purchase a $30,000 used van for the company! What makes one more strategic than the other is the opportunity cost associated with the decision. If the opportunity cost – what else you can do with the money, time, people, resources – is high, then you need to apply strategic thinking. If the opportunity cost is low, then the situation becomes less strategic.
3. It has an impact in the future
If your decision will be felt further in the future, it becomes more strategic. The longer it will be felt, the more strategic the situation is.
Yet, these three factors alone do not make the situation strategic; it is when they are ALL present in the situation. Hence, when it impacts more than one person (or group of persons), it has a high opportunity cost, AND it has an impact on the future, that is the time the situation is strategic and requires strategic thinking.
Does this mean that we don’t need to apply strategic thinking if indeed any of the three criteria is not present? Obviously not because it is always good to apply thinking rigor to any situation, but there is no need to pour in much resources to make the decision, if there is no real need for it.
In the following posts, we will talk about each of the competencies for strategic thinking and share more thoughts on when, where, why and how to apply strategic thinking.