Strategic thinking is not strategic planning. This is a common confusion in organizations. Matter of fact, this confusion is one of the reasons why organizations cannot improve strategic thinking and behave in ways that isolate strategic thinking to just a few people in the organization when strategic thinking should belong to all!
Strategic thinking and strategic planning are different but crucial skills; they’re needed urgently in leaders and organizations today! Here we briefly explore the complexity of this topic to highlight the challenge, give leaders a view of the core skills they must develop, and promote the need for the development of those skills. LS|EGTM partners with leaders and organizations to help them overcome the challenges and harness opportunities. Let’s start with an interesting value perspective using AirB&B to frame the first part of this discussion.
Perceiving and Acting in an Environment Full of Ambiguity, Part I.
The Value of Strategic Thinking
Leaders in organizations must be able to understand their environments, the changing needs and preferences of their customers, and rapidly adapt and responsively deliver. Anyone who can do that will dominate and will shape the future business environment. Here’s an example. Airbnb, founded just nine years ago, changed the way people find places to stay away from home and even the feel of an entire vacation experience. Airbnb connects travelers with people who would rent their property (room, apartment, or other) for short stays. At great prices and with a system of checks and balances embedded in transactions, both travelers and property owners win. From a platform in San Francisco, California, Airbnb has exploded into listings and lodgings for over 65,000 cities worldwide, and grown into a $30 billion enterprise.[1] The hospitality and service industry has now changed. No longer are customers at the mercy of big hotels; they have other options, anywhere. Who would have thought?
Not Everyone Can Do It
Many of us can’t help but wonder how three people came up with an idea like that and turned it into a multi-billion dollar enterprise. What is more interesting to me is the thinking skill that led to the birth of such success. For Airbnb, it was the opportunity to fill the need to lodge guests for a design convention in San Francisco, when hotels were hard to come by, and what they learned from the actions they took from lodging a few guests with air mattresses.[2] It was the ability to discover possibilities in unique environments and make the connections that then painted an overarching roadmap for unstoppable gains. This is at the core of strategic thinking, but not everyone can do it. Strategic thinking is one of the major challenges for executives; many get lost in details and lose their strategic perspectives.[3] The good thing is that leaders and organizations can develop the instinct and skill for strategic thinking.
The Trap: Strategic Planning versus Strategic Thinking
Strategic thinking is not strategic planning. This is a common confusion in organizations. Matter of fact, scholars note this confusion as one of the reasons why organizations cannot improve strategic thinking and behave in ways that isolate strategic thinking to just a few people in the organization when strategic thinking should belong to all.[4] Both are important, but one cannot exist without the other. Let us make a quick distinction between the two.
Strategic planning is concerned with the development of long-term objectives and strategies. It’s the exercise of linking realistic business strategies to the vision of the organization.[5] This is important work because it’s related to the aims of the organization, and how they will be achieved. This process also helps the organization decipher priorities, and in turn, determine how scarce resources will be utilized. Strategic planning becomes the ability to act strategically, aligned with a full view of present conditions and future outlooks (a strategic mindset cultivated in strategic thinking).
Strategic thinking is about the ability to understand the current business condition and link it to the conditions that caused it, so leaders can uncover the answers to the complex problems of today and tomorrow. The literature on strategic thinking points to four key activities that take place when one thinks strategically: scanning, questioning, conceptualization, and testing.[6] In other words, strategic thinking requires a distinctive ability to scan the environment, build casual relationships, question assumptions and think collectively, and act strategically.
Although there’s so much more we can say, I’ll take a pause here to let you reflect over these thoughts. We’ll come back to this subject next week. Specifically, the second part of this post will discuss how leaders develop strategic thinking and strategic planning skills. Read you next week!
Always motivated, lugo
Dr. Jose Lugo Santiago is the chief leadership and foresight strategist for LS|EG, a consulting firm dedicated to facilitating change through leadership, strategy, and foresight. He holds over 28 years of experience leading organizations in the military and civilian sectors, and crafting strategy to meet successful business process re-engineering and innovation. He is also the author of several titles to include peer-reviewed academic works. His doctoral areas of research are Leadership and Foresight, Culture, Strategic Change, and Organizational Development.
References and notes:
[1] (2017). The world’s most innovative companies: The 2017, 50 most innovative companies. Company Profile. FastCompany & Inc. Retrieved from https://www.fastcompany.com/company/airbnb.
[2] Carson, B. (2016, February 23). How three guys turned renting an air mattress in their apartment into a $25 billion company. Business Insider. Retrieved from http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#it-started-with-an-email-joe-gebbia-sent-his-roommate-brian-chesky-an-idea-what-if-they-made-a-designers-bed-and-breakfast-complete-with-a-sleeping-mat-and-breakfast-it-was-a-way-to-make-a-few-bucks-almost-nine-years-later-that-idea-is-worth-25-billion-1.
[3] Bonn, I. (2005). Developing strategic thinking as a core competency. Management decision, 39(1), 63; Bonn, I. (2001). Improving strategic thinking; A multilevel approach. Leadership & Organization Development Journal, 26(5), 337.
[4] (2015). The (lost) art of war: How strategic thinking is being forgotten, and how to get it back. Strategic Direction, 31(11), 27-29.
[5] Hughes, R. L., & Beatty, K. C. (2005). Becoming a strategic leader: Your role in your organization’s enduring success. Daryaganj, New Delhi: Jossey-Bass.
[6] Goldman, E. F., Scott, A. R., & Follman, J. M. (2015). Organizational practices to develop strategic thinking. Journal of Strategy and Management, 8(2), 156.
Dr. Jose Lugo Santiago is the chief leadership and foresight strategist for LS|EG, a consulting firm dedicated to facilitating change through leadership, strategy, and foresight. He holds over 28 years of experience leading organizations in the military and civilian sectors, and crafting strategy to meet successful business process re-engineering and innovation. He is also the author of several titles to include peer-reviewed academic works. His doctoral areas of research are Leadership and Foresight, Culture, Strategic Change, and Organizational Development.