Strategic thinking focuses on finding
and developing unique opportunities to create value for your organization. The
term has been misused and abused in the past and too often strategic planning
sessions fail to deliver any value. This can often lead to the disengagement of
employees, who are the very people that boards and management need actively
involved in the process.
A way of thinking
Strategic thinking is a way of
approaching the fundamental drivers of a business and challenging conventional
thinking. This is best done in discussions with stakeholders, with employees
being a key part of this. It also involves having an awareness of what has not yet
taken shape, of what might be, and of what might be on the horizon. Instead of
thinking ‘this is the way it’s always been done’ or ‘it’s not broken so why
change?’, the mindset should be - how could we improve our processes or
outcomes?
The board’s role in strategic thinking
is to bring an outside perspective, accumulated wisdom and to test the
consistency of management’s thinking. The role of senior management is to then,
initiate the process of strategic thinking and setting the agenda by posing the
questions and issues. Boards can lead the way by encouraging and modeling forward thinking, for example; supporting management to go beyond reporting on
KPIs and to put forward ideas and suggestions for discussion.
Strategic thinking models
There are many models to choose from to
plan your strategic thinking process. The key is to support the process, ensure
that outcomes and next steps are agreed and then actioned. Otherwise, you risk
remaining in a strategic thinking vortex with good ideas and no execution.
Wootton and Horne (2001), approach
strategic thinking as three main activities, shown in the figure below. The
gathering information and ideas generation stages are supported by the action
planning stage.
Blue Ocean Strategy is another
approach. This is the simultaneous pursuit of differentiation and low costs,
with the aim being not to out-perform the competition in the existing industry,
but to create new market space or a ‘blue ocean’, thereby making the
competition irrelevant. Blue Ocean Strategy provides a set of tools to create
new market space and offers a way to swim out of the red ocean filled with
sharks. The strategy canvas is the central diagnostic for building a compelling
Blue Ocean Strategy, which should cover both strategy formulation and
execution.
Scenario planning can play a meaningful role in strategic thinking due to its focus on the future. Scenario planning explores possible futures based on forecasting changes to the competitive environment and considers what the organization will look like in 10 or 20 years. It provides a disciplined means to imagining potential futures and how these may impact organizational sustainability. Scenario planning also plays a useful role in simplifying data into a small range of possible states. Each scenario explains how different elements may interact given certain conditions and also supports creative thinking in the context of time.
The choice of strategic thinking tool or approach is up to the individual board, considering organizational size and stage. What is important is that the board recognizes the need to think strategically, since it is key to the board making a meaningful contribution to the organization’s strategy. As strategic thinking is a competency needed by all directors, it is important to evaluate whether all board members have this skill. If not, the board must receive some training in this area.
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