Strategic Thinking for Strategic Decision Making

The Podcast on Organizational Excellence - Digital Business Best Practices

In this episode, we will review the important concept of strategic thinking and its applicability in the business world and strategic decision making.

At work and also in our personal lives, we’re often asked to think strategically in order to improve our decision making. But what exactly is strategic thinking? Is it just another management buzzword, or does it really have any merit?

Before we try to understand strategic thinking, let’s first review the concept of its counterpart, which is referred to as conventional thinking. Conventional thinkers like to draw between the lines established by others. In other words, they stay inside their “boxes” and thus there is little in terms of creativity involved in thinking through conventional means. Within the context of our work in organizations, conventional thinking offers limited opportunities as improvements are mostly incremental. Based on the nature of the competitive environment that we have, we need something more creative and transformational in terms of how we think and create solutions.

And that’s where we get into the concept of strategic thinking. Strategic thinkers have a much larger, more creative, and forward-thinking framework. This type of thinking doesn’t just solve immediate problems: it also expands the organization’s possibilities and has the potential for more breakthrough solutions.

Due to its scope of being deep and broad, strategic thinking involves targeted research, large-scale thinking, and forces on to step out of the box to bring fresh perspectives.

Strategic thinking is typically used as a corporate management tool for formulating promising long-term strategies. Its benefits in a corporate setting are obvious because of the complex problems where its usually used. It requires a joint effort from different experts from multiple domains. But although it’s traditionally associated with corporate planning, strategic thinking is equally useful for smaller organizations, especially in situations where more rigorous, creative thinking and targeted action are needed to solve the problem. Relying solely on conventional thinking and techniques will probably not yield optimal results in such cases.

Aside from solving problems, strategic thinking can result in key insights that can then result in intelligent organizational decisions, which in turn can lead the organization into new and promising directions. Business literature contains many ideas on this type of thinking, but for those of us who are unfamiliar with it, here’s a simplified model that’s relevant to all levels of organizational planning and problem solving. You can use these following 4 steps to think strategically and use the ideas to advance your business.

1. Define the strategic problem or issue– In business and organizations, we are all required to work on and solve strategic problems. A problem is strategic in nature if it prevents you from achieving your desired business outcomes and benefits. In cases like this, it’s best to resist the temptation to use conventional thinking, which really means that instead of jumping in and automatically trying to devise potential solutions, try taking a step back and first define the problem. This will not only help to give you a sense of the scope of the problem but will also highlight any underlying complexities. Whether the issue involves a company division, a particular department, or a specific program, clearly defining the problem goes hand in hand with imagining your desired outcome before you can take the action steps needed to create the future condition and results. The output of this step is a clear definition of the problem and any other constraints that stand in the way of your desired outcome.

2. Formulate your problem’s ecosystem– Once you’ve defined the problem, the next step is to map out its ecosystem. The ecosystem is the world in which your problem lives and may include the organization’s value chain such as sales, operations, IT, and other departments, or it could be even bigger in scope and may cover business partners, customers, competitors, and other entities. In case of programs and projects, these may include stakeholders, users, external project customers, or internal departments.

Mapping out the ecosystem helps to provide the context of the problem, including its background and it can prevent you from developing a tunnel vision. If you think about it, how many times have you really been in a situation where an idea that looked promising at first sight turned out to be not so great when considered from other angles? So, a 360-degree view of the problem allows you to see the problem from all angles, i.e., in the context of the overall picture, before examining the different solutions.

The output of this step is that you have defined the problem in much more detail and it usually involves a detailed map or model of the problem’s ecosystem.

3. Think Critically– The third step in trying to find a strategic solution to your strategic problem is to think critically. So, a big element of strategic thinking is critical thinking. Many of us fall into the trap of conventional thinking often because we’ve never bothered to think beyond it. But thinking critically requires expanding our mental boundaries, acquiring new information, and then connecting the dots through special analytical skills that are used in a corporate setting that include SWOT analysis, benchmarking, surveys, etc.

For example, what would you do as the new CEO of a troubled company? What strategic thinking approach would you use? Your first task would be to collect as much information as possible on the company’s operations, sales, and other aspects of the firm’s value chain. That information would then become the focal point of an interdepartmental brainstorming session that would use the different types of available expertise to yield critical insights.

Once you go through this step, it will result in creative new insights and lessons, along with a list of potential options and solutions.

4. Make Strategic Decisions– The 4^th and final step in this four step process is about making decisions. The strategic thinking process cannot be considered complete unless the potential options are further examined for their business value. That translates into analyzing them for their practicality and the potential benefits they could bring to the organization.

This step results in final recommendations and ultimate decisions based on a careful examination of the practicality and benefits of the options yielded in Step 3 above.

Finally in summary, we can say that strategic thinking undoubtedly requires additional skill, time, and effort, but the investment is definitely worthwhile. While conventional thinking may be useful for ordinary situations, strategic thinking is more effective for tackling new problems and accelerating company growth. Because of its farsighted, creative nature, it also has the capacity to generate excitement and direct growth into groundbreaking channels. Lastly, let’s remind ourselves of a useful quote from Albert Einstein who said that “The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”

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