Four Causes of Mediocre Strategic Thinking

Mediocre Strategic Thinking (Four Causes)Avoiding mediocre strategic thinking by better understanding strategy

Mediocre strategic thinking produces mediocre strategy. Strategic thinking is an individual capacity, a style of thinking that can be developed, but is often hindered by the beliefs of others.

Here are four causes of mediocre strategic thinking (and there are certainly more that could be described):

1. Overlooking the significance of rivalry.

As organizations grow in size and complexity, they specialize and turn over responsibility for sales, deal making, and customer service to specialists. As those individuals lose touch with customers and markets, they shift their focus to  the rules, process, and tasks of their work. Eventually, strategy devolves to become a kind of goal setting.

Even more important, many managers give up on trying to understand why competitors are making inroads. They complacently believe in the superiority of their employees, products, and business models. Rivals (and substitutes) want your markets and profits, and they sneak up on you.

Making people aware of competition was one of Louis V. Gerstner Jr’s big challenges in turning around IBM. Here is how he expressed his frustration to a senior management team in 1994:

You know, I have received literally thousands and thousands of email messages since I’ve been in this company, and I’ve read every one. I want you to know that I cannot – I cannot – remember a single one that talked with passion about a competitor. [Comment: My reading of the entirety of Gerstner’s book, Even Elephants Can Learn to Dance, shows me that he meant the word “passion” as anger towards an external threat.] Many thousands of them talked with passion about other parts of IBM. We’ve got to generate some collective anger here about what our competitors say about us, about what they’re doing to us in the marketplace. This competitive focus has to be visceral, not cerebral. It’s got to be in our guts, not our heads. They’re coming into our house and taking our children’s and our grandchildren’s college money. That’s what they’re doing.

When was the last time you visited or talked to a customer? When was the last time you checked the feed on your organization’s (and your competitor’s) social media? What does your organization do to frustrate the customers?

  1. Confusing Strategy with “Steps To”

It is a gross oversimplification to say that strategy is the “steps to” the a goal. Strategy is not like a road trip with an established path. Strategy is more like the process of curing a disease.

Strategy making resembles the process of becoming a medical doctor. Novice physicians (newly-graduated MDs) often practice “backward reasoning” and jump from initially presented information to a diagnosis to search for data that supports their initial impression. Many business people use this same kind of backwards reasoning. I recently read the remarks of a General Motors Vice President explaining that chess masters pick their end goal (the checkmate) and work back from it. Not only is that an example of backwards reasoning, it’s an erroneous declaration; research shows that chess masters develop their games through patterns and react to the patterns established by their opponents. (You can find more on chess and strategy described in this article).

Expert business strategists, expert medical doctors, and chess masters employ “forward reasoning.” As they enter into a situation, they take note of symptoms and patterns. Then, they develop several possible diagnoses or ploys. They dig deeper into the data and use it to determine which hypothesis best fits the data.

  1. Over-valuing Ordered Perfection

Strategy making is an inherently messy, ambiguous process. Let’s consider the early step of environmental scanning, where we see signals – strong and weak – from existing customers, prospective customers, competitors, and regulators. What do they all mean?

As a general rule, people don’t like ambiguity. It causes them stress and they try to eliminate it if they can and ignore it if they can’t. One way of eliminating ambiguity is the famous use of mission, vision, and values statements. These can be useful tools; however, don’t waste time with endless word-smithing and polishing.

Good strategy isn’t about perfect statements of intent. Instead, good strategy focuses on finding insights in the signals and developing useful guidance for exploiting those insights. It involves educated guesses about a range of important things: the current situation, the future situation, the intentions of competitors and stakeholders, the values of stakeholders, and power.

Good strategic thinkers tolerate ambiguity. They are open to experimenting with the business model and learning from those experiments.

  1. Elitism

Too often, those people invited to strategy making sessions are invited because of their status, not because of their ability to contribute to the hard work of making strategy. Last Autumn, I learned that a Human Resource Vice President of a snow-belt-based company, on behalf of the CEO, was planning a strategy retreat in the Bahamas. The invitees to the session were the CEO’s top team. It seems likely that this strategy meeting was an excuse for a selected inner circle of managers to escape a cold Toronto winter. They’ll come back with a vision and a suntan, but I wonder if they will come back with anything the helps them address their organization’s challenges.

Another large, family-owned firm faced a similar problem. Many family members had inherited stock in the company and felt that gave them the right to demand board membership and to have their uninformed (and often selfish) views and opinions considered by the Managing Committee.

While top managers typically have a broader view of the organization, it does not hold that only they are exclusively best qualified to provide open-minded thinking and fresh perspective. While company owners are legitimate stakeholders, they often attention seekers. Status and privilege are not the characteristics of strategic thinkers,

Instead, look for every way you can to get customer insights, next generation perspective, and the voice of the technology into your strategy discussions.

Final Thoughts

Strategy making is a form of problem solving; not just a goal-setting or budgeting exercise. Strategy is about advancing the organization’s interests. To do it well you have to ask some basic questions:

  • Have we defined and committed to our basic organizational interests?
  • As we consider the future, what are the most important problems,issues, and opportunities that affect our interests?
  • Have we looked for weak signals outside of the normal discourse of our organization?
  • Are we alert for “pockets of the future” that are presently around us?

As you avoid these four causes of mediocre strategic thinking, you should migrate towards this advice from the respected academic, Henry Mintzberg:

“The real challenge in crafting strategy lies in detecting subtle discontinuities that may undermine a business in the future. And for that there is no technique, no program, just a sharp mind in touch with the situation.”

Do you agree with this list? What other causes would you add?

Gregs new book available now

How to Recognize Competence in Strategic Thinking

Strategic Thinking CompetenceAs a strategic thinking coach, I help people become more competent in the art of thinking strategically. Since strategic thinking, by definition, is concerned with success, I need to provide some sort of target for competency. That is the purpose of this article.

Why before What

Strategic thinking is hard work, and that is why it is uncommon. Let’s quickly affirm that you will experience benefits from investing effort into this discipline. It offers many benefits:

  • People get promoted because of their ability to think strategically. Strategic thinking is the #1 desired skill of the next generation of managers
  • Organizations with good strategy thrive; we are in an age of exploding complexity and this complexity creates threats and opportunities. The purpose of strategic thinking is to create good strategy; thus, organizational success is directly tied to success.
  • The world is full of opportunity for entrepreneurs who think strategically

An Individual Competency, Not an Organizational Process

I remind you that strategic thinking is a style of thinking, practiced by the individual. Strategic thinking is not a set of process or a part of a process (some people mistakenly confuse it for environmental scanning) or a tool (some people mistakenly confuse it for SWOT or scenarios); although those processes and tools can enhance the practice of thinking strategically.

Characteristics of a Good Strategic Thinker

Based on my experience, the competency goal is this:

A person is a competent strategic thinker when
they naturally and intuitively think strategically.

Here is what I would look for if I were evaluating a person as a competent strategic thinker:

  • The person is continually thinking about how he or she defines success.
  • As part of the definition of success, he or she recognizes that resources are limited and must be focused on those activities that increase the realization of success
  • The person recognizes ambiguity, and does not seek to eliminate the ambiguity until they feel they understand the situation
  • The person generally curious. As part of this curiosity, he or she is alert for patterns and see patterns and systems effects. He or she is alert for opportunities.
  • The person recognizes inertia; that is, the state of affairs when there is little change and other are habitually following the status quo.  In this case, the strategic thinker might encourage change (of a low-grade variety) simply to break the routine. I recently heard of a team of executives who decided to read magazines from outside their industry and field of expertise.
  • The person recognizes when compartmentalization of functions and specialties in an organization are causing too-narrow of a view of the organization.
  • The person is more aware of strategic resources in their possession.

What does the improvement pathway look like?

Two of the most important functions of a coach are to removing misconceptions and change inappropriate habits. These misconceptions and habits are different with each individual. Thus, in the diagnostic phase of coaching, we need to find out what the person knows that is true and what they know (and do) that is unhelpful.

People who are interested in strategic thinking always start with an existing base of knowledge about the field of strategy. They are not simply empty vessels to be filled with expertise. Some of their knowledge is valid, but some of their knowledge is invalid and the challenge reminds me of the quote by Will Rodgers,

It’s not what we don’t know that causes trouble. It’s what we know that ain’t so.

Probably the most significant misconception is that strategy is what is defined in a strategic plan, and is the mission, vision, and values of the organization. Strategy is a tailored response of resources and actions to meet a “core challenge.”

Thus, it’s better to tailor coaching to the existing knowledge of the learner.

All learners have strengths, and it is helpful to use them as foundation. For example, skill in risk analysis can be leveraged because risk analysis is a process of understanding cause and effect with the recognition that the effects appear in the future. A person who is competent at risk probably is comfortable with systems thinking and imaging the future, which are traits that are useful for strategic thinking.

Self Directed & Self-Paced Learning

Undoubtedly, individuals can pursue a self-directed course of study to improve their competency in strategic thinking.

I encourage all learners of strategic thinking to study examples.  Movies are a good choice that can be fun as well as instructive.  The movie that best portrays strategic thinking is Moneyball, but other good choices are 42, The Social Network, Dirty Rotten Scoundrels, and A Beautiful Mind.  You can find plenty of examples from historical and fictional characters, too.

Do you agree with these characteristics of competent strategic thinkers? What else should be added?

Strategic Thinking versus the “Facilitation Fluff” of Strategic Planning

Picture of marshmellow fluff

Too often, companies hire professional facilitators to support their strategic planning meetings but get nothing more than fluff. Many of these facilitators (under the claim of being a certified and master facilitator) have only a superficial understanding of strategy. They help the meeting produce something – but that something is definitely not strategy. Instead they help expensive executives and managers facilitate the production of fluff statements.

This article is not an attack on the idea of facilitation of meetings. Indeed, many meetings are wasteful and frustrating; and to be clear, a facilitator can be helpful.  However, experience shows that many facilitators push their technique at the expense of strategic thinking.

Mission, Vision, and Values: Is This Simply “Polishing the Doorknobs?”

Statements of mission, vision, and values are important; especially to small businesses. It is a good idea to have written something on paper about mission, vision, and values.  JUST DON”T TELL YOURSELF THAT YOU ARE PRODUCING STRATEGY!

  • A mission tells the organization its purpose
  • A vision establishes a verifiable future
  • A statement of values expresses those aspirations thought to be important.

If you already have a reasonably good statement, don’t let a facilitator waste your time on refreshing or rewriting them. It’s just an exercise in wordsmithing.  This activity is “doorknob polishing;” the doorknob is functional (the statement has been written), but there is not need to make it gleam and impress others.

And, while we’re at it…..

Strategic Plans are Documents – Let’s Hope that We Can Find a Strategy

In the last 3 weeks, I have reviewed three statements of strategy.  Only 1 of the 3 documents actually had something that I would recognize as a strategy.  The other two were just statements of goals and aspirations.  The one good strategy document clearly showed the nature of the business situation and constructed a focused set of guiding actions that would address the business situation. The good strategy was the result of insights that came from thinking strategically.e

Interestingly, the “strategic plan” that was produced by a professional facilitator looked great. However, I could find no strategy. It was attractive and concise, but an exemplar of fluff.  It probably worked fine to for internal alignment, but INTERNAL ALIGNMENT DOES NOT MAKE A DOCUMENT A STRATEGY!

How do I know? If I gave this document to a competitor of the company they would just yawn. If it were truly a good strategy, the reaction would be to mount a counter-response to avoid loss of advantage.  One of the acid tests of a good strategy is simply this: would your competitors be worried if they saw your strategy?

Facilitators and the Myth of High-Energy Meetings

Granted (again) that meetings are frustrating, boring, and wasteful; most of us would prefer entertainment and energy – even fun.  A facilitator that knows lots of good facilitation techniques can create the illusion of progress.  But it is really a dulling of the pain.

Your goal should NOT be to have a high-energy strategic planning meeting. It should be to design a good strategy….one that provides the organizational focus, leverage, investment guidance, and policy guidance.  As I wrote in a prior article, any written statements might be as straightforward as describing the objectives, scope, and advantages.

If you are really interested in creating a strategy that provides your organization a competitive advantage, you need to do the hard work of strategic thinking.

Hard Work – Nice Guys Finish Last

The truth is that strategy (in general) strategic thinking (in particular) is hard work.  Strategic thinking produces insights. This insight generation can be creatively fulfilling and powerful.  In my experience, this requires these essentials:

  • Quiet and undistracted time for individual reflection
  • Facts and data, not just gut feeling and aspirations
  • Listening to others, even if we have to patiently work with those who “think out loud”
  • A tolerance of ambiguity
  • A framework for taking strategic insights and putting them into a strategy

My own experience in facilitating strategy is this: you have to be clear in your own mind what good strategy looks like, and be able to discern it from doorknob polishing fluff.  You have to help your client find insights and knit those insights into a coherent set of activities that positions the organization’s resources in a logical way to meet serious and proximate competitive challenges.

There are thousands of charismatic facilitators who have a confused understanding of strategy as mission, visions, values, goals and the like. Facilitation fluff is common.

Do you agree that facilitation fluff is common and a problem? How have you seen it in practice? Do you agree that strategic thinking and insights needs a subtle and nuanced approach to finding insights and applying them?