On Strategic Thinking
After a decade creating transformative bets, I am sharing my reflections on effective innovation in a series of essays. Read more on the Flywheel for Innovation.
In a recent conversation, the topic of Strategic Thinking came to the forefront. To define Strategic Thinking, let's start by defining what "strategy" entails. One of my favorite definitions comes from Richard Rumelt, who distilled the kernel of a good strategy into three components:
Diagnosis: This forms the bedrock that untangles the nature of the challenge at hand. In a world often entangled with complexity, a good diagnosis has the power to pinpoint the crucial aspects of a situation, making it comprehensible.
Guiding Policy: To surmount the hurdles identified in the diagnosis, a guiding policy acts as the compass, steering the approach towards a solution.
Coherent Actions: These are the synchronized steps that collaborate harmoniously to support the fulfillment of the guiding policy.
This definition resonates with my 15 years driving product and organizational innovation, that strategy isn't a noun—it's a verb. In my experience, strategy becomes the compass for individuals and organizations, propelling them towards their goals. It establishes the true north based on reality, defines unwavering criteria for prioritization, and drives deliberate and focused actions.
Therefore, Strategic Thinking evolves into the orchestra that conducts a symphony of actions. It doesn't just reside in thought processes; rather, it encompasses a set of conscious and consistent behaviors.
Strategic Thinking is to sustain awareness, intentionality, and cohesion in an ever-evolving landscape:
Unveiling Reality: Are we reflecting the business reality? This involves aggregating and synthesizing data diverse sources—customer feedback, market trends, industry dynamics, and regulatory shifts—to construct a comprehensive, data-informed picture.
Capitalizing on Strengths: Do we understand our strengths and limitations? Is there a defensible thesis behind "why us can win" and "why we must do it now"? The most under-capitalized strength is the ability to understand customers leveraging usage data and behavioral analysis. Inventing from one's strengths builds conviction.
Prioritization Paragon: Have created a durable set of criteria that drive high quality, cohesive decisions to help us focus? Deciding on how we would make decisions is the foundation to making good decisions. Focus on delivering a small set of critical paths well, and create a flywheel of experimentation, validation, and improvement.
When applying "strategic thinking", I want to debunk a few myths:
Beyond Titles: Strategic thinking isn't confined to those with the "strategist" title. It permeates everyday work and life. For instance, a constrained marketing budget leads to strategic thinking between competing go-to-market activities.
Beyond Goals: Strategic thinking transcends the realm of goals. It's not solely about setting objectives; it's about devising a viable and enduring path to achieve those goals. By addressing "how," "why us," and "why now," strategic thinking instills conviction.
Cultivable Skill: Strategic thinking can be nurtured on both individual and organizational levels. To cultivate this skill, organizations can equip their teams with toolkits of classic frameworks (like Porter's Five Forces and Eisenhower Matrix) and set up regular strategy reviews for healthy debate on whether decisions and progress are made according to what truly matters.
As we navigate the intricate landscape of decisions, strategic thinking offers a dynamic framework —a fusion of perspective and action—that doesn't just shape success, but also fosters resilience in a world where the only constant is change.
