This document discusses strategic thinking and strategy. It begins by listing common flawed concepts of strategy such as seeing it as an aspiration or action. It then discusses how overusing the term "strategy" can undermine credibility. Several attributes of strategic thinking are outlined, including systems perspective, being intent-focused, and thinking in time. Developing strategic thinking involves being a strategic learner, staying open-minded, and practicing techniques like asking questions. The document concludes by discussing strategic thinking in business context and testing the quality of a strategy.
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Strategic Thinking Guide
1. Learn | Consult | Research
“STRATEGY” ... WE KNOW
...
BUT...
WE DONT
By: Sohan Babu Khatri
CEO
Three H Management
2.
3. Activity 1: What is your
Organizations’, Business
Unit’s Strategy ?
4. Learn | Consult | Research
"Strategic ? Strategy ?”
... Are we Strategic Thinkers ?
5.
6. What is common about all these statements
?
• “Our strategy is to be the low-cost provider.”
• “We’re pursuing a global strategy.”
• “The company’s strategy is to integrate a set of regional
acquisitions.”
• “Our strategy is to provide unrivaled customer service.”
• “Our strategic intent is to always be the first mover.”
• “Our strategy is to move from defense to industrial
applications.”
7. Flawed Concepts of Strategy
• Strategy as aspiration
– “Our strategy is to be #1 or #2…”
– “Our strategy is to grow…”
– “Our strategy is to be the world leader…”
• Strategy as action
– “Our strategy is to merge…”
– “… internationalize…”
– “… consolidate the industry…”
– “… outsource…”
• Strategy as vision
– “Our strategy is to meet our customers’ needs…”
– “…to advance technology for mankind…”
12. It is this operational or tactical
thinking that leads us,
inevitably, into the many
complex crises and
convoluted relationships that
we are now facing.
We are overwhelmed with the
needs of the moment, and
there appears to be no relief in
sight.
13.
14. Adjectives Associated with Strategy /
Strategic
• War Plan / Game Plan
• Blueprint
• Grand Design
• Long Term
• External Environment
• Scenario
• Scheme
• Shrewd
• Craft
• Cunning
• Gimmick
• Setup
• Subtlety
• Maneuvering
• Approach
• Method
30. Learn | Consult | Research
Strategic Management
The Missing FUNCTION – The Missing
APPROACH and The Missing CULTURE
31. The Nature and Value of Strategic
Management
• Strategic management:
The set of decisions and actions that result in
the formulation and implementation of plans
designed to achieve a company’s objectives
1-31
32. What is strategic management?
• A continuous, iterative process aimed at keeping an organization
as a whole appropriately matched to its environment. (Certo and
Peter)
• Set of decisions and actions used to implement strategies that will
provide a competitively superior fit between the organization
and its environment so as to achieve organizational goals
• The art and science of formulating, implementing, and evaluating
cross-functional decisions that enable an organization to achieve
its objectives which in most cases are to achieve (Fred R. David) :
Strategic Competitiveness
Sustained Competitive Advantage
Above-Average Returns.
33. Terminology Explained
Strategic
Competitiveness
• Is achieved when a firm successfully
formulates and implements a value-
creating strategy
Sustained
Competitive
Advantage
• Occurs when a firm develops a strategy
that competitors are not simultaneously
implementing
• Provides benefits which current and
potential competitors are unable to
duplicate
Above-
Average
Returns
• Returns in excess of what an investor
expects to earn from other investments
with similar risk
38. “… strategic planning is
analytical and convergent,
whereas
strategic thinking is synthetic
and divergent.”
39. The Object/Idea to be
explained is considered a
WHOLE to be taken a-part
The Object/Idea to be
explained is considered a
part of a larger WHOLE
40. Strategic Thinking is a higher level
approach to issue identification and
resolution. It enables a concurrent view
of the start line, the goal line, and all
the relevant features in between, and at
the same time. It's like looking at an
aerial photograph, or down onto a
tabletop model of a piece of terrain that
we must navigate. We are able to see
the 'big picture'.
41.
42.
43.
44. Mintzberg describes strategic
thinking as a distinct way of
thinking that utilizes intuition
and creativity with the
outcome being “an integrated
perspective of the enterprise.”
48. Strategic thinking is thinking
that contributes to broad,
general, overarching concepts
that focus the future direction
of an organization based on
anticipated environmental
conditions
52. I keep six honest serving men.
They taught me all I know. Their
names are What, Why, When,
How, Where and Who.
- Rudyard Kipling
53. 1. Systems Perspective:
• strategic thinking reflects a systems or holistic view that recognizes how
the different parts of the organization influence each other;
2. Intent-focused: s
• strategic thinking conveys a sense of direction and is driven by the
continuous shaping and re-shaping of intent;
3. Thinking in Time:
• strategic thinking is not solely driven by the future, but by the gap between
the current reality and the intent for the future;
4. Hypothesis Driven:
• hypothesis generation and testing is central to strategic thinking activities. It
asks the creative question “What if?” followed by the critical question “If …
then?”;
5. Intelligent Opportunism:
• strategic thinking invokes the capacity to be intelligently opportunistic, or
open to new experience, allowing one to take advantage of alternative
strategies that may emerge in a rapidly changing environment.
54. Learn | Consult | Research
10 Strategic Thinking Competencies
55. 1. Strategy—mastering the understanding of Strategy
2. Insight—generating new ideas about the business.
3. Context—matching competencies with opportunities.
4. Competitive Advantage—creating distinct offerings with superior value.
5. Value—determining the benefits/ costs of one’s offerings.
6. Resource Allocation—deciding where to focus capital, talent and time.
7. Modeling—visually capturing the essence of business issues.
8. Innovation—creating new value for customers.
9. Purpose—developing mission, vision and values.
10. Mental Agility—ability to improvise, adapt and excel through adversity.
59. 1) HAVING AN
IMAGINATION
2) A BROAD
PERSPECTIVE
3) THE ABILITY TO
JUGGLE
4) THE ABILITY TO DEAL
WITH THINGS OVER
WHICH YOU HAVE NO
CONTROL
5) AN ADAMANT DESIRE
TO WIN
67. Be Strategic Learner
1) Preparation, with an affective element (a reason and
the emotional readiness to proceed with learning) and a
cognitive element (information gathering to see new
possibilities, verify, test);
2) Experience, current situation
(view point), prior successful life
experience (the dress rehearsal),
application of previous experience to
new situations (seeing patterns),
and reflecting (transforming
experience into learning);
3) Reevaluation (critical and
evaluative) in order to begin the
process again
68. Staying Open Minded
• Strategic thinking skill development requires
examination of one’s own internal beliefs and
assumptions about how the world operates.
• One of the greatest impediments to adopting the
open-minded thinking and questioning style
necessary for strategic thinking is the tendency to
reject what isn’t tangible or isn’t already known.
• “turning the mirror inward; learning to unearth our
internal pictures of the world, to bring them to the
surface and hold them rigorously to scrutiny”
69. Start Practicing
• Instead of saying no, ask a question.
• Ask questions that dive deep.
• Record thoughts, feelings, and new questions in a
journal or log.
• Take time to write down the feelings attached to your
thinking.
• Reflect about things that provoke questions or strong
feelings.
• Draw or design your strategy ideas instead of writing
them.
• Diversify and upgrade the kinds of verbal engagement
you use.
• Write or tell parables and analogies that illustrate your
assumptions and beliefs about strategy issues.
70. Learn | Consult | Research
Strategic Thinking in Business
Context
Activity: Is your organization strategic ?
71. • Creating a unique and
sustainable competitive
position
• Assimilating, attaining, and
extending best practices
Operational
Effectiveness
Strategic
Positioning
Run the same races faster Choose to run a different race
Achieving Superior Performance
Operational Effectiveness is Not Strategy
73. Basic Questions:
1. Where will we play ?
2. With What ? (Unique Value Proposition)
3. Using What ? (Resources and
Capabilities)
4. Remaining What ? For How Long ?
(Sustainability)
74. 5 P’s of strategy
A plan, - “how do I get there”
A pattern, in consistent actions over time
A position that is, it reflects the decision of the firm to
offer particular products or services in particular markets.
A ploy, a maneuver intended to outwit a competitor
A perspective that is, a vision and direction, a view of
what the company or organization is to become.
75. The Elements of Business Strategy
Arenas: where will we be active?
Vehicles: how will we get there?
Differentiators: how will we win in the marketplace?
Staging: what will be our speed and sequence of
moves?
Economic logic: how will we obtain our returns?
78. Testing the quality of your strategy
• Does your strategy fit with what’s going on in
the environment?
– Is there healthy profit potential where you’re headed?
– Does your strategy align with the key success factors of
your chosen environment?
• Does your strategy exploit your key resources?
– With your particular mix of resources, does this strategy
give you a good head start on competitors?
– Can you pursue this strategy more economically than
competitors?
79. ……
• Will your envisioned differentiators be
sustainable?
– Will competitors have difficulty matching you?
– If not, does your strategy explicitly include a ceaseless
regimen of innovation and opportunity creation?
• Are the elements of your strategy internally
consistent?
– Have you made choices of arenas, vehicles,
differentiators, and staging, and economic logic?
– Do they all fit and mutually reinforce each other?
80. …..
• Do you have enough resources to pursue this
strategy?
– Do you have the money, managerial time and talent, and
other capabilities to do all you envision? Are you sure
you’re not spreading your resources too thinly, only to be
left with a collection of feeble positions?
• Is your strategy implementable?
– Will your key constituencies allow you to pursue this
strategy? Can your organization make it through the
transition? Are you and your management team able and
willing to lead the required changes?
95. Levels of strategy
Competitive (Business)
How are we going to compete in our chosen
business(es)?
Functional
What resources and capabilities do we have to
support the corporate and competitive strategies?
Corporate
What direction are we going and what business(es)
are we in or do we want to be in?
96. Corporate Strategy
• Which describes a company’s overall direction
towards growth by managing business and
product lines?
• These include stability, growth, parenting and
retrenchment.
• For example, Coco cola, Inc., has followed the
growth strategy by acquisition. It has acquired
local bottling units to emerge as the market
leader.
97. Business Strategy
• Usually occurs at business unit or product
level emphasizing the improvement of
competitive position of a firm’s products or
services in an industry or market segment
served by that business unit.
• Business strategy falls in the in the realm of
corporate strategy.
• For example, Apple Computers uses a
differentiation competitive strategy that
emphasizes innovative product with creative
design.
98. Functional Strategy
• It is the approach taken by a functional area to
achieve corporate and business unit
objectives and strategies by maximizing
resource productivity.
• It is concerned with developing and nurturing a
distinctive competence to provide the firm with
a competitive advantage.
• For example, Procter and Gamble spends huge
amounts on advertising to create customer
demand.
99. Operating Strategy
• These are concerned with how the
component parts of an organization
deliver effectively the corporate, business
and functional -level strategies in terms of
resources, processes and people.
• They are at departmental level and set
periodic short-term targets for
accomplishment.
102. Characteristics of Strategic Management Decisions:
Corporate
Often carry greater risk, cost, and profit potential
Greater need for flexibility
Longer time horizons
Choice of businesses, Financial policies, sources of
long-term financing, and priorities for growth
1-102
103. Characteristics of Strategic Management Decisions:
Business
• Help bridge decisions at the corporate and
functional levels
• Less costly, risky, and potentially profitable than
corporate-level decisions
• More costly, risky, and potentially profitable
than functional-level decisions
• Include decisions on plant location, marketing
segmentation, and distribution 1-103
104. Characteristics of Strategic Management
Decisions: Functional
• Implement the overall strategy formulated at
the corporate and business levels
• Involve action-oriented operational issues
• Relatively short range and low risk
• Modest costs: depend upon available resources
• Relatively concrete and quantifiable
1-104
106. Five Tests of a Good Strategy
• A unique value proposition
compared to other organizations
• A different, tailored value chain
• Clear tradeoffs, and choosing what
not to do
• Activities that fit together and
reinforce each other
• Continuity of strategy with continual
improvement in realizing the strategy
107. Components of Strategic Management Model
• Company Mission
• External Analysis
• Long-Term Objectives
• Short-Term Objectives
• Policies Empowering
Action
• Strategic Control &
Continuous
Improvement
• Internal Analysis
• Strategic Analysis &
Choice
• Generic & Grand
Strategies
• Functional Tactics
• Restructuring,
Reengineering &
Refocusing
1-107
109. Four Approaches to Crafting Strategy
1. The Chief Architect
Approach
2. The Delegation
Approach
3. The Collaborative or
Team Approach
4. The Corporate
Intraperneur Approach