The Strategic Mindset

Applying strategic thinking skills for organizational success

By Tim Harnett

Do leaders at your organization know what strategy is and how they can create it? Rich Horwath, CEO of the Strategic Thinking Institute, thinks the answer might surprise you. “Pass out notecards at your next meeting and ask everybody to write down their definition of strategy. You’ll typically find that most people don’t have the same definition. Before you can have sound strategic thinking in place, there needs to be an understanding of what strategy is, and how it differs from other business planning terms like mission, vision, goals, objectives and tactics.”

How can leaders at your organization think and act more strategically? Horwath shares some tips.

Figure 1: Horwath’s Strategic Thinking Framework

Follow the foundational framework

The foundational framework behind strategic thinking involves three A’s: acumen, allocation and action (Figure 1). “All great projects start with acumen,” Horwath says. “What’s the idea that will lead to new value, either for the company or the customer? Once you have that idea for new value, you can move on to the second A: allocation. How do you configure your resources (time, people, budget) to focus on that new value and deliver it to customers?

Once we’ve intelligently allocated our resources and made trade-offs, you can address the third A: action. What are the critical few priorities that will help us achieve our goals? We need to have the discipline to stay focused on what’s important to achieving our goals and not get distracted by the urgent things that pop up on email, voice mail and text messages that take us off task. A great leader is someone who’s able to filter a lot of the extraneous, non-important activities out of their people’s way so they can focus on those 2-3 things that will generate the most value. At the same time, great leaders understand that strategy is just as much about what we choose not to do as it is about what we choose to do.”

Lead with a strategic approach

Leading at your level requires newly promoted leaders to take a more strategic approach. “One of the greatest sources of frustration I see in organizations is people feeling spread too thin,” Horwath says. “They’re trying to do too many things at one time. This is typically because they don’t have clear strategies, which act as filters to limit the team’s scope of focus. Without the trade-offs that come from strong strategies, everything becomes important, killing the team’s morale. We see people getting promoted from a manager to a director level, but they’re still leading at a tactical level. They lack the knowledge, skills and tools to see the big picture, and because they haven’t developed their strategic thinking capabilities, they fall back into their tactic-heavy, check-the-box planning routine. As Tesla CEO Elon Musk said, ‘The problem is that at a lot of big companies, process becomes a substitute for thinking.’”

Use strategy conversations to drive success

Recently, the Strategic Thinking Institute partnered with Chief Learning Officer for the 2017 CLO Strategy Skills survey, asking organizations about the state of strategic thinking among their leaders. Survey respondents gave the impression of organizations that were generally unified in their desire to teach strategic thinking and devote resources to strategic thinking initiatives. The big gap identified was the fact that only 32 percent of respondents said they teach their managers how to facilitate strategy conversations (Figure 2).

Figure 2: Elements included in strategy education at organizations Source: 2017 CLO Strategy Skills survey

This lack of effective strategy conversations manifests itself most prominently in silos, where different functional areas aren’t aware of one another’s strategies. They don’t know how to lead effective strategy conversations and completely miss the opportunity for alignment.

“Unlike other skill sets we try to nurture in the organization, the return on investment for strategic thinking is very tangible,” Horwath says. “Strategic thinking leads to effective strategy conversations that generate insights, creating new value for customers. When organizations value strategic thinking, typically you see greater profitability, increased sales, improved productivity and strategic direction which should lead to competitive advantage.”

“Studies have shown that the No. 1 cause of business failure and bankruptcy is bad strategy,” Horwath says. “When you think about the pace of change in most industries and the increasing level of competition due to digital factors and changing business models, strategic thinking is no longer a nice to have, it’s a must have.”

Visit www.strategyskills.com for more information and to read the full results of this research.

The Strategic Thinking Institute is dedicated to helping managers at all levels develop their strategic thinking and planning capabilities to grow profits and create competitive advantage. Founded by New York Times bestselling author on strategy Rich Horwath, STI has worked with world class companies in the U.S., Europe and Asia-Pacific to build enterprise-wide strategic capabilities, facilitate strategy conversations, and set strategic direction. Visit www.StrategySkills.com for free resources on strategic thinking and planning, including white papers, videos, podcasts and infographics.