Strategic thinking skills differentiate middle-level managers from effective upper level leaders. With excellent strategic thinking skills, the leader is able to make effective decisions that benefit their companies in both the short and long term.
Developing strategic thinking skills requires practice. It requires us to think strategically and see the consequences of our thinking. Three ways to get this practice and develop great strategic thinking skills include:
- What is going to happen in 1, 3, or 6 weeks? What is going to happen in 6 months or one year?
- Forecast what is going to happen
- Evaluate the actions required to address what we see happening in the 1, 3, or 6 weeks ahead?
- Importantly, identify and consider the items on the critical path.
- What non-urgent, but important tasks or decisions need to be made today in order to achieve other goals in the 6 week or 6 month time frame?
- What can we do to ensure that we retain the flexibility to adapt to the changes we see by looking ahead?
- Use a feedback loop to ensure that we are looking ahead well. We should write down our assessment and save as a reminder for 3 or 6 weeks out to see how accurate our look ahead was
- Did the key issues that we were concerned with take place?
- What new issues sprang up that we, with hindsight, should have predicted?
Put ourselves into the shoes of our competitors, customers, and vendors
- Our competitors, customers and other stakeholders play a strong role in determining our strategy.
- We need to spend time looking at our business and our products and services from their point of view.
- This may allow us to see shortcomings in our business model or new opportunities for new market niches.
- Quite often, we will realize that our brand or competitive advantage is truly unremarkable and does not differentiate us from the competition.
- In doing this assessment, it is important to understand why our competitors, customers, and vendors act the way that they do.
- A vital assumption is that these competitors and customers are not being stupid or unreasonable. As Jack Welch once said: “The following is always wrong: ‘We’re losing market share because our competitors are crazy and they are giving the product away.'”
- Try to understand why they are thinking or doing what they are thinking or doing. Only when we look at what they are doing as a reasonable decision or choice will we gain the insight and strategic thought.
- With vendors, in particular, it is important to consider how they are making money from our business. There is a wise adage from finance and Wall Street that says to never enter into any agreement where we do not know how the other person is making money.
Play It Forward
- As I have written about previously, La Femme Nikita and Business Strategy, we need to use scenario analysis for different decisions and courses of action that we might make in order to see the longer-term strategic benefits and disadvantages in each scenario.
- This will ensure that we make a wise decision that benefits our business and improves our competitive position in both the short and long term
- Side note: One of the biggest strategic mis-calculations made is to pursue a strategy that gives a short term advantage, but can then be simply copied by the competition with the result that our and our competitor’s costs rise and all the benefits accrue to the customer.
As mentioned above, developing strategic thinking skills requires practice. So, let’s get started.