Insights

What is Strategic Thinking?

Introduction to Strategic Thinking

The term ‘strategy’ originated from military situations, however, strategy is predominantly used in personal and enterprise thought processes.

For some, strategic thinking is often thought of as a complex mindset.

When broken down it is simply informed decision making towards achieving a goal, without focusing on how, and more of a focus on what, and why a decision is made. It involves a global directional mindset, with a view of the broader picture and taking into account core introspective beliefs and in the decisions made by an entity.

Dorie Clark, author of an online course titled ‘Strategic Thinking’ highlights a key benefit of strategic thinking with this excerpt from her course -

“If you can interrogate habits and practices in a targeted way, you can often uncover new ideas and efficiencies that others simply have never thought about”

Dorie Clark

Whilst strategic thinking is often applied to personal, business and military situations, the scope in what it can be applied in is always growing, with sports now utilising the methods included in strategic thinking. Strategic thinking is diverse and applicable to most industries, and holds value in the purpose to increase the odds of success.

What does Strategic Thinking Include?

Strategic thinking often involves collating as much available information and data on a topic before a decision is made. Through analysis of the information, a decision is made that aligns with the enterprises vision.

Leo Gura, a self-help expert defines strategic thinking with a clear sentence -

"Strategic thinking is about setting goals and developing flexible, long-range plans to reach those goals based on the careful analysis of internal & external environments."

Leo Gura

One could argue that Leo and many other strategic thinking experts are using vague jargon that doesn’t define specific measurements or attributes to strategic thinking.

However, the vagueness of the definition clears when applied to a specific scope such as a business or personal growth, and in a practical real-world scenario.

Strategic Thinking and Enterprise

Strategic thinking in the context of enterprise includes -

  • Internal values of a business and individuals at the organisation
  • A clearly defined and focused business vision
  • Analysis of cultural influences
  • An understanding of the current business environment
  • Adaptability and flexibility to challenges
  • Initiative to be proactive and address problems
  • A holistic view of the past - Yielding insights that are often hidden to others
  • Making decisions after assessing information and weighing up different possibilities for action

All of these when put together result in informed decision making, and as a result will have the greatest chance of achieving goals the business holds valuable.

Modern Pioneers and Leading Academics in Strategic Thinking

Some of the leading academics in Strategic Thinking such as Bernard Ross, Clare Segal, A.G Lafley, and Michael Porter have shaped the enterprise understanding of Strategic Thinking with books and models that dissect the term and what it is.

A.G. Lafley

A.G Lafley, Former CEO of Procter and Gamble has helped
shape businesses through strategic thinking and continues to define business
strategy and what it needs to include to be successful.

In his book on business strategy, titled ‘Playing to Win‘ he outlines a set of strategic choices a business should make to move ahead of competitors.

These five essential strategic choices -

  1. What is our winning aspiration?
  2. Where will we play
  3. How will we win?
  4. What capabilities must we have?
  5. What management systems do we need?

Lafley expands on the value from each question, these are best reviewed when used in real-world business models.

Whilst it is important to study and cite literature from the academic leaders, it is also vastly important to study case studies of recent years to gain an understanding of how the theoretical concepts can be applied in modern businesses.

Nick Jenkins - Moonpig.com Case Study

In the book ‘Demystifying Strategic Thinking‘, Nick Jenkins, Founder of Moonpig goes into detail as to how he applied strategic thinking when founding a company which went on to be sold for £120 million in July 2011.

Nick Jenkins and how he grew Moonpig.com is a great case study on strategic thinking in relation to long-term visions and problem-solving.

Nick talks about the differences in strategic thinking and tactical mindsets.

He mentions that instead of asking tactical questions such as -

  • How do we complete X, Y and Z
  • Who do we need to hire to accomplish A?
  • How can we grow D to work better with E?

We should instead ask strategical questions such as  -

  • What is the goal of the company?
  • What are the companies values?
  • What do our customers think of us?
  • Does X, Y and Z align with our goals?
  • Do we want to accomplish A?
  • Do we want to connect D to E in the first place?

Strategic Thinking Models

With over fifty strategy models available, adhering to personal, business and combat strategy. To which a large majority can be found in a book simply titled ‘The Decision Book: Fifty models for strategic thinking’, it can be overwhelming to select a model fitting for a scenario.

Each model aims to solve different problems, however, all have strategic thinking practices in common, the models involve inputting information to gain a better understanding of the environment at play and what suitable decisions are available.

Some of the more popular strategic thinking models found in
business include -

  • Lafley’s Strategic Choices
  • Porter 5 Forces
  • SWOT Analysis
  • SOAR Analysis

Consistent Themes

All of the strategic models available are focused on investigating possible information related to a decision making process, to ensure informed decisions are made.

Whilst some models focus on personal, military, enterprise and sport, all models share the same purpose. To get those at decision-making levels
o think strategically based on the information available to them.

Lafley

Looking again at Lafley's strategic model, it is essential to answer five questions.

  1. What is our winning aspiration?
  2. Where will we play
  3. How will we win?
  4. What capabilities must we have?
  5. What management systems do we need?

The value in Lafley’s model holds strong as answering these questions provides an organisation information to make informed strategic decisions.

To fully understand the practical applicableness to businesses, it is important to answer all questions.

Porter 5 Forces

Porter's 5 forces is a model developed by Michael Porter and first published in Harvard Business Review in 1979. It is a model focused on looking at internal and external environment information.

SWOT Analysis

A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a low-level concept strategy model that analyses products, services or businesses and examines what positives and negatives it holds, and how to prepare for the opportunities or threats are available as a result.

SOAR Analysis

A SOAR (Strengths, Opportunities, Aspirations and Results) analysis developed by Dr. Jacqueline Stavros, is an optimistic variation of the well-established SWOT analysis. As described by Denise Lalonde in her introduction to the SOAR framework is an improved variation of the SWOT structure due to its focus on positivity, over creating a “blame game”.

Whilst more positive, it is arguable that a SOAR analysis is a more ignorant model as it hides negative information which is necessary for informed decision making. No information should be withheld in strategic thinking, as it is the fundamental base to a correct decision.

Strategic Thinking - Definition/Conclusion

Lingjing Yin, Service Designer at FutureGov, highlights the key reasoning behind strategic thinking and why it’s so effective to implement in many facets of life.

“The impact of strategic thinking should be that organisations and teams spend valuable resources on doing the right things. They’re able to link a strategy to a future vision for a place, organisation or service, asking: are we doing the right things to make this a reality?”

Lingjing Yin

Through strategic thinking, tactics are formulated that are inline with a vision, reducing the demand to attain goals which don’t efficiently help move an organisation to their targets and vision

Strategic thinking is essential for any organisation looking to work effectively. By focusing on the bigger questions, the smaller details are influenced and are often easier to map out.

Whilst many of the questions in strategic thinking models may seem to result in fairly straightforward answers, it is those answers that help answer the complex questions.

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