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!
I had a distressing phone conversation earlier this week. A former client called to say they were at a decision-point. They were trying to decide if they wanted to keep using their balanced scorecard system or not. He went on to say, “to be quite honest, the scorecard really isn’t driving the organization. It feels more like ‘busy work’…it leaves a bad taste in our mouths.”
“In fact,” he continued, “our project management discipline is clearly what is strategically guiding the organization while the balanced scorecard feels like an anchor weighing us down. It used to be what propelled us forward and kept everyone in alignment. Maybe if we cascade the scorecard, this will help?” I was perplexed. While I’ve diagnosed the root cause and prescribed the solutions for a lot of “broken” scorecard systems, this was the first time I’d heard of project management being “more strategic” than the strategic management system that drives it.
The next day, I joined the client executive team on a web conference. We walked through an overview of an integrated scorecard system – reviewing the 14 components of a fully integrated system. As we talked, some of the team members began remembering back to when they built the original scorecard and recalled how the underlying strategic elements were built – how they brought in board members and stakeholders to inform and set strategic direction. But most importantly, they began to remember when it was built.
This client is a healthcare organization and they built their original scorecard during the last presidential election cycle – at a time when there was political uncertainty. The environment was so uncertain that one of their strategic themes was “Readiness for Public Policy Changes” which meant that their resultant strategic scorecard was designed to prepare them for whichever way the political winds eventually blew. And that scorecard was appropriate for the times.
But their environment has since changed…significantly! In the past year or so, the Affordable Care Act now drives all action and projects at this organization. This massive shift in their strategic environment happened to coincide with the implementation of a robust project management system in which the portfolio is aligned to the tenants of Triple Aim. That’s when the room went silent. As I strained to hear across the phone line, I began to hear murmurs as one after another team member came to the same diagnosis. Their environment had changed and they had shifted strategic directions without updating their strategy / strategic balanced scorecard. Their strategic scorecard was outdated….expired! Their sense that their old scorecard was anchoring them in the past and was at odds with the new implied direction of the organization was absolutely correct.
They had stumbled into the classic “Set It and Forget It” mistake. Their project management discipline (which is critical to strategy execution) appeared to be “more strategic” because it was more aligned with their true strategy than was the rest of their strategic management system. Due to some key team member turnover, they had forgotten their entire system needs to go through a regular strategic evaluation cycle! Scorecards do not have indefinites shelf lives….they are dynamic systems designed to allow an organization to shift directions, as needed. The team is now in the process of updating their entire strategic management system to reflect their current reality. And as part of this update process, they will ensure that their current strategic direction is chosen, not implied. Only then can they be sure that their current portfolio of projects is truly aligned for maximum strategic impact.
Does your scorecard have a funky smell? For more examples of Scorecard Challenges and Solutions, we invite you to read “The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard.”
We also invite you to join the conversation at our Linked In group: www.theInstitutePress.com/group