How good are you at strategic thinking? Certainly, it’s a skill expected of most leaders today. But, despite lots written on the subject of strategy (like on leadership!) over recent decades, there doesn’t appear to be any consistent definition of exactly what it means to ‘think strategically’.
In my view, strategic thinking is about looking at and thinking about a situation with a broad, high-level – and usually longer-term – perspective in order to identify key issues, insights and opportunities to help solve problems or make decisions about future courses of action. It involves pausing to seek information, seeing the ‘big’ factors at play rather than just detail, and applying deliberate and conscious thought to guide and shape a choice or decision.
Strategic thinking offers so many potential benefits. Not least: a fuller understanding about a current situation; improved ability to spot opportunities; a stronger basis for developing and selecting options and choices for the future; and more time to be proactive and plan/prepare suitable action plans.
The strategy process
Strategic thinking informs and guides the different elements in the overall process of strategy-making. In an organisational context, these key elements might be summarised as: situational review; vision and future goals; strategy (broad choices for the future plus key intitiatives), a summary of resources and delivery arrangements (budget profile, risks/contingencies, responsibilities and targets); execution; and monitoring and review.
These activities are traditionally seen as following a rational, linear process, which shouldn’t be rushed (especially for corporate strategy or ‘big’ individual decisions like a product launch strategy). This contrasts with ‘routine’ or day-to-day decisions where people often tend to avoid deliberate thought and instead rely more on mental ‘short-cuts’ like past experience, intuition, popular opinion, or how they feel. In fact, though, the strategy process often tends to be more ‘iterative’ than linear and strategic choices can be made quickly, if needed. Partly, this is because some areas of the process naturally blend into each other and so can be carried out almost concurrently.
What’s more, strategic thinking is not just for corporate or business-level strategy, or another term just for longer-term planning. The basic idea behind strategic thinking – pausing to gather information to consider key issues and opportunities before making a decision – can also help almost anyone make better decisions: from middle-level or front-line managers carrying out tasks like deciding staffing needs for a new factory ……. to a parent reviewing options for next year’s family holiday.
A broad, composite set of thinking styles
Overall, strategic thinking is really a flexible mix of certain, specific thinking skills (modes) combined with the application of various mindsets and personal behaviours, supported and aided by a range of possible analytical or other cognitive tools and methods. Below I outline nine, particular thinking skills and four mindsets, which I think are especially valuable for doing strategic thinking well:
i) Analytical and systems thinking
This is the ability to objectively examine and ‘see’ fully what is there in a situation. At one level, it means drilling down to see all the facts and details, pushing through ambiguity, and actively looking for information which is missing or not clear. At another level, it means synthesising what is there by looking for connections and patterns between the different components and, particularly, seeing the overall ‘big picture’. This latter skill – so-called systems or holistic thinking – whilst natural to certain professions like engineers and designers (who think in terms of ‘structures’) can be quite a challenge for some managers.
ii) Critical thinking
This cornerstone skill is about checking the truth, accuracy or relevance of information you come across, together with the objectivity or reasonableness of associated claims or arguments. It means not taking everything at face value when you suspect that objectivity is lacking. It includes identifying and calling out major assumptions that are flawed; data which lacks robust evidence or reliability; and statements or assertions that are based on weak or erroneous reasonings (so-called ‘logical fallacies’).
iii) Outside-in/contextual thinking
This means noting and thinking about what is happening on the fringes – the periphery – of a given situation, as well as the perspectives of people/groups who are at the fringes or who are beyond (for example, in neighbouring, similar or allied market sectors) who are looking from the ‘outside-in’. It involves ‘looking beyond’ and seeing the bigger/wider context – very often the source of early signs of potential change or ideas for learning/innovation. Such thinking comes easily to leaders in countries in the Far East, but less so to executives in Western countries, who often more naturally look ‘within’ i.e. focussing on detail inside a situation.
iv) Foresight and visionary thinking
This skill area is about interpreting and making sense of known trends, judging/anticipating how the future may turn out as a result, and defining ways an organisation could/should respond or adapt. These abilities underpin leaders’ proficiency in responding to and managing for today’s high levels of uncertainty in the world. Various techniques are available, of course, to help anticipate the future or shape future options, including, for example: trend analysis, forecasting, horizon scanning, and scenario planning, alongside less numbers-based approaches like soliciting the views of specialist advisers and facilitated discussions with different stakeholder groups.
v) Creative thinking
As well as being good analysts and predictors, strategic thinkers and leaders need sometimes to be able to come up with fresh ideas and have imagination – to ask ‘what if?’ questions and think in terms of how things might or could be, rather than just how things are are likely to be. This calls for some appreciation of the nature of creative thinking, how to foster creativity, and of some creative thinking approaches and tools. It’s often the route for coming up with radical strategies or ‘non-obvious’ solutions to problems.
vi) Listening and reflecting
I think a key marker of a good strategic thinker is the readiness to consult and involve other people, rather than just think alone – particularly people who are connected with or who have an interest in the issue or situation concerned (for example, in a company, other managers, front-line staff, customers, or suppliers). It means being keen to share thoughts, asking others to give their views, listening carefully, responding with questions, building on others’ ideas, and debating certain points at greater length. Additionally, it means taking extended time sometimes to reflect in depth on selected ideas/points raised – including one’s own ideas or perspectives. Part of self-reflection is fostering ‘intuitive thinking’ i.e. encouraging up from one’s subsconsious and noting what one’s instincts or ‘gut feelings’ suggest.
vii) Balanced solutions designer
By this I mean the ability to devise solutions or answers to issues in a way that satisfies a range of different (possibly conflicting) influences, options or criteria in a balanced and pragmatic way. Obvious examples of major factors that need ‘balancing’ in an organisational context are: a company’s vision, resource constraints, levels of acceptable risk, customers’ satisfaction, short vs long-term needs, and different priorities or expectations across stakeholders. Strategic leaders need the ability (and confidence) to make trade-offs, decide priorities, and think of compromises in the factors they consider in the problems they need to solve.
viii) Judgement and decision-making
A good strategic thinker is skilled at identifying and pulling together the key strands from a review or discussion, weighing up arguments, and finally framing a specific potential decision to consider. Such evaluation rests a lot on the quality of ‘judgement’ – something that’s rather difficult to define but which rests critically on lots of relevant, well-rounded knowledge and experience. For when the time comes actually to make a decision, if you’re leading a group (typical with most strategic decisions in an organisation), you will need a balanced set of personal qualities, for example, confidence and good persuasive skills to convery your own views, but also humility and empathy to encourage others to give their assessment. For major decisions, of course, it’s best to follow a methodical approach e.g. define and apply a set of decision criteria and perhaps divide up the decision into a few segments to discuss in turn.
ix) Agile thinking
This is an increasingly important skill to effectively match the fast-moving nature of so many markets and sectors today. It involves abandoning the traditional, linear approach to strategy (referred to above) and switching to ‘agile strategy‘, where ideas and initiatives are thought of, immediately tried, and then reviewed within a short period – with strategy essentially emerging from the cumulative effect of those tactical decisions. A key benefit of agile strategy, of course, is that it enables an organisation to respond very quickly to new or ad-hoc opportunities as they appear.
And four key mindsets
i) An open and ‘growth’ mindset
An open mindset means keeping alert and curious to what’s happening around you, always seeking to see things as they are as objectively and accurately as possible, and the readiness to let new knowledge or experiences improve or develop your existing beliefs. It includes a keenness to seek out and listen to different or new viewpoints and arguments that other people may hold and – importantly – the ‘intellectual humility’ to accept them and, if appropriate, learn from them. This type of mindset is complemented by the related idea of a ‘growth’ mindset, which refers to a person believing that they can always achieve more by valuing ongoing learning and self-development, assisted by a positive attitude and dedicated effort.
ii) ‘Bias-aware’ mindset
A good strategic thinker knows about and tries to take deliberate action to try and mitigate against the wide range of personal ‘cognitive biases‘ and forms of ‘motivated reasoning’ (seeing things in a self-interested way) that can easily influence and ‘distort’ how a person views and interprets a situation or issue. Examples of common biases include confirmation bias, authority bias, aversion to loss/risk, and anchoring bias. A common example of motivated reasoning is giving a viewpoint that favours achievement of a goal or desire that you yourself prefer rather than what others would prefer. Also, as strategic thinking is often done in a group, good strategic thinkers are aware of various cognitive biases that can afflict groups, for example groupthink, overconfidence, leader’s halo-effect, polarisation of opinions, and bias to sharing known information.
iii) Flexible outlook and state of mind
Skilled strategic thinkers know that there is never just one way to look at an issue or situation, so they are always ready to look at a situation from multiple angles (sometimes called the ‘dragonfly-eye’ perspective). This involves being ready both to seek out the views or expertise of other people and to apply different thinking approaches (as summarised above). Skilled thinkers also know that a person’s state of mind (or mood) can be helpful or unhelpful for different kinds of thinking (for example, it is hard to focus on detail when you are tired), so they seek to adjust their state to suit their type of thinking at the time. States basically revolve around two key dimensions: a mental focus that is either ‘inwards’ or ‘outwards’ and, secondly, a focus that is ‘hard’ (thinking about facts and detail) or ‘soft’ (thinking openly, relaxed and holistically).
iv) Positive and aspirational mindset
Strategic thinking is best done with an attitude that is optimistic, positive, confident and ambitious about the future. This naturally complements and supports an open mindset and fosters, in particular, fuller and more original thinking. In contrast, a negative mindset will tend to ‘narrow down’ and frustrate people’s thinking. Also, of course, a positive mindset is infectious and will in turn motivate others and foster better thinking by a group.
A valuable, flexible ‘tool-kit’ for the future
Unfortunately, strategic thinking is not easy to do: it can take time, there is no fixed way of doing it; there are no right or simple answers, many issues can be abstract and imprecise, and it calls for a varied set of skills. Also, sadly, it is the case that the culture in many organisations is still that ‘thinking’ as an activity plays second fiddle to a stress on managers actually ‘doing’ things (and looking busy!): hence managers often show little interest in strategic thinking.
But such thinking offers valuable benefits, which all organisations should, therefore, encourage. Examples of ways organisations can do so include: ensuring senior-team meetings regularly include strategic topics; certainly use such thinking when dealing with long-term, complex or high risk decisions; empowering people at all levels to make decisions; communicating widely the organisation’s vision and strategy to guide local decisions; including strategic thinking in managers’ job descriptions; recognising and rewarding staff for instances of good strategic thinking; encouraging managers to plan regular slots in their diaries to engage in dedicated thinking; and, of course, providing appropriate coaching and mentoring for managers and other staff.
/ Written by Mike P. Owen, MBA, FCMI
Executive & strategic facilitator / coach. Senior Partner at Owen Morris Partnership.
Copyright of Owen Morris Partnership. December 2022