Developing Strategic Thinkers

Strategic thinking is regarded as an essential core competency for leadership positions. In fact, many organizations already use this competency, among others, to appraise and evaluate the performance of their executives and leaders. Thus, a competency gap in strategic thinking is considered serious, and organizations will attempt to eliminate this gap. This brief article explores the most effective means to develop strategic thinkers.

Let us begin by listing some of the skills, knowledge, and attitudes that are attributed to this competency.

Strategic thinkers:

* Are systems-oriented, that is they think holistically and use the helicopter view.
* Embrace creativity, innovation, intuition, and understand the insight process (Eureka and aha!)
* Think futuristically and embrace visionary thinking
* Act like organizational radars (or antennae) scanning the internal and external environments
* Have a worldly mindset
* Act as explorers, with heighted curiosity and alertness
* Have the ability to keep an open mind to new ideas, and adapt to changing environments
* Have the desire and guts to outwit, beat, and out-run competition
* Are knowledgeable of their industry and experts in their areas of specialization
* Know their finance and risk management
* Have a bit of entrepreneurial spirit
* Are good communicators (good at asking probing questions and listening)
* Know how to inspire and lead teams.

Clearly, the type, weight, and relevance of these competency components vary greatly across industries and organizations. For example, General Electric (GE) has selected five competencies (which GE calls growth traits) to identify areas for development among their top people. The five GE growth traits are:

* Imagination (viewed as an advocate of innovation; has courage to take risks on both people and ideas).
* External focus (understands customer needs, marketplace dynamics, industry trends and the competitive landscape).
* Clear thinking (specifies strategy into actions; makes decisions and communicates priorities).
* Inclusiveness (connects with teams; inspires people to want to perform at a higher level; promotes an environment that recognizes and celebrates individual and cultural differences).
* Domain expertise (gains perspective through varied experiences and build-up of skills; strives to increase knowledge with up-to-date information).

This is how Jeff Immelt, CEO of GE, described the process in an interview with Harvard Business Review (2006): “We came up with a tool that we’ll use as part of Session C, our annual HR review. It’s a matrix that lists the five growth traits and their components. You are rated as green, yellow, or red on each one. Everybody has to have one red because the point is not to pick out winners or losers – it’s to say everybody’s got to work on something. That will guide the development plans for the top 5,000 people in the company this year.”

Now, the important questions are these: How can organizations, as good “gardeners”, cultivate the art and skills of strategic thinking in their future leaders? Is it possible to develop these competencies and, if so, how? What specific management development and training activities should be undertaken by high-potential men and women in order to become better strategic thinkers?

Unfortunately, early literature on this subject is limited. It is typically focused on management development initiatives and the learning aspects of thinking strategically without giving adequate consideration to having in place supportive organizational culture, systems, and structures (Bonn 2001, 2005). In her research on this subject, Bonn argues that strategic thinking needs to be addressed at different, but interrelated, levels: at the individual and group levels and at the organizational level. Organizations that successfully integrate strategic thinking at all three levels will create a critical core competency that forms the basis of an enduring competitive advantage. This integration at all levels, I believe, is absolutely necessary if leaders are expected to practice or cultivate their strategic thinking competencies. Otherwise, all the time, money and effort put into management developmental initiatives will simply be wasted.

Day and Schoemaker (2008) also alerted us to the importance of corporate climate and culture in cultivating strategic thinking. Their research discovered that “three primary qualities distinguish vigilant leaders from those striving for operational excellence. A vigilant leader:

* Focuses externally and stays open to diverse perspectives,
* Applies strategic foresight and probes for second-order effects and
* Encourages others to explore widely by creating a culture of discovery.”

Day and Schoemaker urged organizational leaders to set the tone at the top, and to systematically develop initiatives and programs throughout the organization that foster vigilance and cultivate the three qualities they identified. Therefore, organizations should first provide a culture (championed by top management and the board of directors) that supports and rewards strategic thinking instead of punishing or discouraging the behaviors and attitudes listed at the beginning of this section. Specifically, organizations ought to review their structures and systems that might act as barriers standing in the way of strategic thinking. Consider, for instance, traditional annual pay and performance reviews that focus on a predetermined checklist of traits or on individual goals and objectives; such reviews often result in poor morale, a lack of teamwork, internal competition, a lack of inter-departmental cooperation, and dysfunctional silos. Or consider the wide-spread linkage of budgets to compensation, which encourages playing games and short-term thinking to the detriment of the organization’s strategy. I feel strongly that these systems often create fences around and within the organization, act as shackles and blinkers that inhibit creative and futuristic thinking, and encourage managers to wear negative-thinking black hats (de Bono 1999). In fact, such systems encourage and reward managers to think inwardly, to strive for short-term operational efficiency rather than long-term effectiveness, and may drive managers to become more risk averse, conventional, and precedent-oriented.

Consequently, I believe that organizational leaders must start by smashing those barriers, tearing down the fences, throwing away the shackles and blinkers, and controlling the use of black hats. Additionally, organizations must erect radars in various parts of the globe to scan the environment for opportunities and threats. They must also introduce systems and incentives that actually reward exploration, vigilance, futuristic and creative thinking, and the other requirements that encourage strategic thinking. Only then should organizations invest in management training and development programs aimed at sharpening the strategic thinking competencies of those who are identified as future leaders.

In her book, Learning to Think Strategically, Sloan (2006) argued that it is a myth that strategic thinking can only be learned by a few people – it is not an inborn talent, but one that can be learned and cultivated. Sloan highlights the importance of informal learning, prior successful life experiences, dialogue, and the coordination between intuition and analytical thinking. She also covers the cross-cultural aspects of strategic thinking.

Similarly, Goldman (2007) found that “expertise in strategic thinking is not the product of innate ability and pure serendipity. It arises from specific experiences (personal, interpersonal, organizational and external) which occur over 10 years or more”. Goldman’s research revealed ten experiences that contributed to the development of strategic thinking: Family upbringing/education; general work experiences; becoming a CEO; being mentored; being challenged by a key colleague; monitoring results/benchmarking; doing strategic planning; spearheading a major growth initiative; dealing with a threat to organizational survival; and vicarious experiences.

To further improve strategic thinking, Goldman makes four recommendations:

* Include strategic thinking as a formal component of management development programs;
* Require executives to develop the strategic thinking of their subordinates;
* Encourage early participation in strategic planning and benchmarking activities;
* Support activities that incorporate experiential learning; and maximize the benefits of strategic planning sessions.

The informal on-the-job learning methods detailed by Sloan and Goldman are clearly superior to the traditional teaching of strategy through case studies or reading about successful strategists. However, there is a lot to be said for the benefits derived from the interactive team and individual projects and exercises used in some management development programs. We at Meirc Training & Consulting design our training seminars with this interactive approach in mind. There are several off-site programs that are designed with management education and learning in mind. For instance, one such program is the IMPM (International Masters in Practicing Management) as described by Mintzberg (2004) in his book Managers Not MBAs. The program is conducted in partnership with several international business schools in six countries. It is based on the notion of learning being connected to managerial experience, and it uses Mintzberg’s five managerial mindsets: reflective, worldly, analytical, collaborative, and action mindset.

There are, of course, several other programs and techniques specifically aimed at cultivating creativity and strategic thinking. Consider, for example, lateral thinking as advocated by Edward de Bono, or scenario planning sessions as practiced at Royal Dutch Shell Company. Notwithstanding their limitations, these developmental activities were considered effective by many academics and practitioners.

In an intriguing article, Jacobs and Heracleous (2007) suggested that managers can improve their strategic thinking by playing games. These games involve building business models of the organization, a brand, competitors, or the industry, and so forth. According to the authors, these games offer a useful complement to conventional strategic planning processes, and help to open up and orient debate about an organization’s strategic challenges. It will be interesting to see if such strategy games can foster creative and strategic thinking in the same way that teambuilding games were expected to improve team work.