Taking strategic thinking to a different level

Defining key performance indicators has become a precision exercise. This is driven by the unrestricted access that business executives have to Big Data, which provides detailed statistics on almost every aspect of the business.

While this is excellent news for businesses – especially struggling ones – executives may feel that they need a PhD to make head or tail of the information they have on hand. However, this is not the case. An article I recently read on the Harvard Business Review (HBR) website points out that strategic thinking is the best way to approach business management in a data-driven environment.

Acumen

The HBR article points out that acumen is about how you think: your ability to understand a situation, generate new ideas to move from the current to the desired future state and solve challenges to create new value. Acumen is comprised of three core components:

• Context awareness informs your vision of the big picture. Understanding both your internal situation (culture, purpose, processes, etc.) and external situation (market trends, customer behaviour, competitive landscape, etc.) helps you allocate resources to reach your goals.
• Insight refers to your ability to generate learnings from your context awareness. This requires curiosity and an exploratory mindset. A key trait of strategic thinkers is their discipline to continuously record, categorise, share, and reflect on insights.
• Innovation is when you channel your context awareness and insights to create new value. It typically springs from the thinking involved in overcoming a challenge or solving a problem.

The article adds that, to evaluate your acumen, ask yourself the following:

• Do I regularly assess my business’s current situation from both the internal and external perspectives?
• Do I share valuable insights with my team?
• When problem-solving, do I stick to the tried-and-true, or do I look for new approaches?

Allocation

The HBR article points out that allocation is about how you plan. Strategic thinkers set goals, distribute resources, recognise the risks and trade-offs when making decisions, and create advantage by offering superior value. Where you invest your resources — time, talent, and capital — is a primary driver of your effectiveness, and it requires the following components:

• Ability to focus resources: Resources are generally finite and, without discipline, can be spread too thinly to have an impact on achieving your goals and objectives. A strategic approach entails the ability to focus resources, the courage to make trade-offs, and the willingness to ensure that your use of resources aligns with your strategic intent.
• Decision making: Instead of simply accepting the base-level option, strategic thinkers generate a range of viable alternatives. Since trade-offs are being made with each decision, they analyse the pros and cons of each alternative, as well as the level of acceptable risk.
• Competitive advantage: The central aim of strategy is to create a benefit, gain, or profit. A competitive advantage is formed when the configuration of one’s resources and activities results in the creation of superior value for customers relative to competitors. Once advantage is attained, strategic thinkers continue to diligently evolve it in order to stay ahead of the competition.

The article adds that to determine whether you’re an effective allocator, ask yourself:

• Do I proactively move resources from underperforming areas towards ones with greater potential?
• Am I spending my time on activities that align with my goals?
• How am I measuring myself against my competition?

Action

The HBR article points out that action is about what you do. Preparing a business strategy is only one step; how you implement your strategy determines your success. This requires the ability to collaborate with others, execute strategies to achieve goals and optimise your personal performance.

• Collaboration is your ability to work with others to exchange knowledge, data, and insights that help further your progress toward a defined goal. Communication skills — verbal, visual, and written — are fundamental to successful collaboration, as is the ability to listen without judgment, because it allows you to approach the interaction with an open mind that is receptive to new and different paths forward.

• Execution involves the disciplined application of resources to achieve your goals. It requires focus and discipline to combat the continuous stream of interruptions, noise, and shiny objects that can lead you to veer off course. While execution is often thought of as tactical, there is an inherent strategic component because insights that aren’t actualised will languish in unproductive obscurity, lessening the value you can provide.

• Personal performance is the stewardship of your own time, energy, and mindset in pursuit of your desired outcomes. Being strategic requires the flexibility to adapt to changing circumstances and the mental agility to overcome challenges and forge new paths in the attainment of goals.

The HBR article adds that, to assess your action skills, ask yourself:

• When it comes time to implement a strategy, how prepared am I to take action?
• Do I ask others what their goals are at the beginning of the conversation?
• Do I easily get side-tracked by other obstacles along the way?

Moving chess pieces

The HBR article points out that, when we define strategic as possessing insight that leads to advantage, we can then begin to assess our own strategic fitness level. Acumen, allocation, and action — the ability to think, plan, and do — are what separate strategic thinkers from the rest, and they are behaviours that can be learned and applied to create superior value.

Business management has always required strategic thinking. All of the world’s top brands established themselves as world leaders by executives with a purpose for everything they did.

However, it seems that strategic thinking needs to be taken to another level for companies to survive the current disruption they face. As in chess, executives must now think beyond their next move. They must think four or five moves ahead to navigate troubled waters.