Strategic Thinking vs. Strategic Planning?

Strategic Thinking vs. Strategic Planning?

Recently a client asked a very simple, and yet extremely complex, question: “What’s the difference between ‘strategic thinking’ and ‘strategic planning’?” Great question! A quick Google search reveals that academics have pondered and debated this question since the early 1990’s. One extremely helpful scholarly overview can be found in the June 1998 volume 31 of Long Range Planning, in a very high-level discussion by Loizos Heracleous entitled “Strategic Thinking or Strategic Planning?”  Heracleous presents a variety of perspectives from business academicians differentiating between the two.

While these scholarly discussions are intellectually stimulating, we are left lacking a simple and practical explanation to differentiate between the two. At the Strategy Management Group, we suggest that “strategic planning/management” and “strategic thinking” exist in a symbiotic relationship. The two not only work together…but they require each other. Strategic planning without strategic thinking will digress into a sluggish and lifeless process of setting goals and measuring objectives.  Strategic thinking without strategic planning/management will cannibalize itself in a quest for structure and process. Strategic thinking informs strategic planning/management.  Strategic planning/management gives voice, action and structure to strategic thinking.

In working with our clients, we find that most have a relatively strong understanding and appreciation for the value of strategic planning/management. Likewise, we find that many are hungering for an organizational culture which is bettered trained and more engaged in thinking strategically. So in our attempt to remain practical and engaged in the “real world” of our clients’ business, we underscore that at its essence, “Strategic Thinking” is a way of viewing challenges and opportunities from a variety of perspectives and altitudes, in order to proffer the very best solutions and directions. It is the habit of visualizing alternative futures for the organization and their impact on others. It’s not just a way of thinking what could be, but also a way of seeing what should be.

That said, training and cultivating an organizational culture to think strategically is a vital tool throughout the strategic planning process. During the high-level strategy formation phase, leaders thinking strategically will drive alignment around analyzing the opportunities from the widest possible perspective and understanding.  During the operational and implementation phase, a strategic thinking organization will ensure that the higher level strategic direction cascades throughout the day-to-day decision making at all levels. C-suite executives, middle managers, and front line staff are entrusted with the freedom to think through solutions and trade-offs, to ensure each decision is best aligned with the overall strategic direction. Finally, during the all-important evaluation and control phase, strategic thinking ensures that an organization is measuring those drivers which best lead to success of the overall mission.

Strategic thinking is more than just “thinking outside the box” . . . it is also knowing which box to think outside of!

 

 

Identify Strategic Thinking with One Simple Question

Identify Strategic Thinking with One Simple Question

I used to work on a research team for a company that produced an operational risk software product. I always found it interesting how different members of the same team answered an important question: what do you do? Here is the way Person A and Person B responded: Person A: We do research on the internet and enter data points into an operational risk database. Person B: We help banks understand operational risk and how much related capital they were required to reserve by providing an analytical software solution that models operational risk in the global market. Technically both answers were correct. For the data model to be statistically significant, the product needed a certain number of data points, and our research team’s job was to research and categorize examples of operational loss in order to populate the database and make the model work. And yet, somehow Person A’s answer was always unsatisfying for some people. It might be tempting to say that Person B was simply exaggerating the importance of their work by describing it in terms of the mission of the product line, but I think that misses an important point about the value of thinking strategically no matter what your position with the organization is. Person A was simply describing our job. Person B was describing how we created value. Different ways of describing our work was actually a window into the strategic thinking style of the team members. From Daniel Pink to Simon Sinek and others, much has been said and written about how people are more motivated and productive when they understand the larger context for their work. Understanding why they are doing the work is profoundly important for creative professionals to feel a sense of engagement. Helping employees transition from narrowly thinking about what they do to more broadly thinking about what they are trying to accomplish can improve organizational performance in a number of ways. The good news is that strategic thinking is a teachable skill. In our BSC Certification courses, we begin by teaching the basic semantics of strategy. At first, students mechanically append or replace the “task” language that most are comfortable with (we need to develop a new service by milestone x) with language that reflects a higher level objective (we want to improve the customer experience; the development of a new services is one option for accomplishing that). Over time, mechanical semantics evolve into an instinct for intuitively thinking about the strategic context. As students change the way they think about strategy and action, critical thinking skills improve as well (e.g. if we are trying to improve the customer experience, is a new service really the best way to do it?). The transition for many teams from always focusing on tactics and actions to always starting with the big picture and working down can be quite profound. For more about how to improve strategic thinking in your organization, see our Balanced Scorecard Certification Program or The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.
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