STRATEGIC THINKING

Think of STRATEGIC THINKER

Examples:

Steve Jobs
Elon Musk
Oprah Winfrey
ORIGIN – WAR
 The ART OF WAR - The ancient military strategist Sun Tzu offers us one of the most well-
known examples of strategic theory in his opus The Art of War. Sun Tzu’s brilliance lies in his
recognition of the fluid nature of reality and the fact that any practitioner of strategy must
constantly adapt to it.
- Key to Sun Tzu’s thinking is his realization that all plans are temporary. He knew that a
plan can become obsolete as soon as it’s crafted. For him, the decision to position
one’s forces in competition depends on two major factors: (1) objective conditions in
the physical environment and(2) the subjective beliefs of competitors in that
environment.
- In this, Sun Tzu originates a view shared by elite strategic theorists down to the
present: that the most brilliant plans are those that spring into being in the dynamic of
action and response. Sun Tzu believed that strategy requires rapid responses to
changing conditions based on sound judgment and principles.

A 13 Point Plan to Mastering Business Strategy

1. The Laying of Plans, Calculations, and Estimations
“All warfare is based on deception.”
2. Waging War – The Challenge
“let your main object be victory, not lengthy drawn-out campaigns. “
3. Attack by Stratagem or Planning Offensives
-Not size but unity
“the skillful leader subdues the enemy’s troops without any fighting”
- monopoly
“If you know neither the enemy nor yourself, you will succumb in every battle”
4. Tactical Dispositions or Positioning
“One may KNOW how to conquer without being able to DO it”
5. Energy & Direction
“The quality of decision is like the well-timed swoop of a falcon which enables it to
strike and destroy its victim.”
6. Weak Points and Strong / Illusion versus Reality
“Do not repeat the tactics which have gained you one victory, but let
your methods be regulated by the infinite variety of circumstances.”
7. Maneuvering and Dealing with Direct Conflict
“The difficulty of tactical maneuvering consists in turning devious into the direct, and
misfortune into gain”
8. Variation in Tactics aka The Innumerable Changes
“in the midst of difficulties we are always ready to seize an advantage, we may
extricate ourselves from misfortune”
9. The Army on the March / Moving the Force
“When envoys are sent with compliments in their mouths, it is a sign that the enemy
wishes for a truce.”
10. Terrain or Situational Positioning
“The power of estimating the adversary, of controlling the forces of victory, and of
shrewdly calculating difficulties, dangers, and distances, constitutes the test of a great
general.”
11. The Nine Situations / Terrains
“Strike at its head, and you will be attacked by its tail; strike at its tail, and you will be
attacked by its head; strike at its middle, and you will be attacked by head and tail
both.”
12. The Attack by Fire
“Unhappy is the fate of one who tries to win his battles and succeed in his attacks
without cultivating the spirit of enterprise; for the result is waste of time and general
stagnation.”
13. The Use of Spies / Intelligence
“Spies are a most important element in water because on them depends an army’s
ability to move.”
  PORTER
 The realm of business has proven to be a fertile area for the development of
strategic theory. Harvard business professor Michael Porter elevated strategic thinking
to a new level of respect in the nation’s business schools, beginning with his path
breaking work in the 1980s on competitive advantage, competition, and strategic
thinking.
 Peter Drucker, the great 20th-century management thinker, observed that there are
two types of thinking: thinking about objects and thinking about people. Static thinking
involves planning around objects and is quite easy; the variables are few and relatively
unchanging. Strategic thinking, however, is much more difficult, because it involves
anticipating the actions and reactions of competitors and preparing accordingly.
- For Porter, “strategy means choosing a different set of activities to deliver a unique
mix of value,” in other words, doing things differently. This definition bridges the gap
between the military and business and between ancient and modern ideas.

STRATEGIC THINKING

- Thinking strategically helps us to make sense out of chaos and enables us to use the
forces around us to our advantage, rather than allow those forces to pummel us.
- Strategic thinking skills are most critical in the moments when an outcome is uncertain
and additional strategic action is needed.
- THE PROCESS OF MAKING A MENTAL PICTURE OF THE FUTURE AND TAKING ACTIONS
TO MAKE IT A REALITY
- Strategic Management = Strategic thinking + strategic planning
- Heracleous (1998) made a distinction between strategic thinking and planning by an
analogy to single-loop learning and double-loop learning.
- Single-loop learning: Adapting or adjusting as usual, without critically re-examining
guiding assumptions (O denotes organization)
- Double-loop learning: Enlightened, creative action with results from critical re-
examination of guiding assumptions (O denoted Organization)

5 TRATEGIC THINKING COMPETENCIES

 A SYSTEMS PERSPECTIVE – the ability to understand implications of strategic actions

  Intent Focused – the ability to focus on and leverage all the energies with total
commitment
 Thinking in Times –the ability to hold past, present and future in mind and to make
better decision.
 Hypothesis Driven – creative and critical thinking are incorporated into strategy
making
 Intelligent Opportunism –respond to good opportunities
6 THINKING HATS as a Thinking Tool for Strategic Thinking –EDWARD DE BONO

 Step 1 (White Hat): Present the FACTS of the issue

 Step 2 (Green Hat): Generate new ideas on how the issue could be improved
 Step 3 (Yellow Hat): List the potential positive benefits of the ideas
 Step 4 (Black Hat): List the probable negative drawbacks of the ideas
 Step 5 (Red Hat): Get everybody’d gut feelings on the proposed ideas
 Step 6 (Blue Hat: Summarize and conclude

ELEMENTS OF STRATEGIC THINKING

- Creativity
- Vision
- Systems thinking

Strategic thinking is the term used to describe the creative aspects of strategic management

 Focus on strategic intent

 Long-terms orientation
 Consideration of past and present
 Systems perspective
 Ability to seize unanticipated opportunities
 Scientific approach

STRATEGIC PLANNING MODELS

Strategic Planning Process

- Define strategy
 - Determine mission
- Identify goals
- Understand internal factors
- Understand external factors
- Perform SWOT analysis

“Think of models as a way of ideating strategy. [A model is] a template: You use it at the
beginning of the planning process. The idea behind a model is to tease out the ideas,” says
Tom Wright, CEO and Co-Founder of Cascade Strategy, a software company based in Sydney,
Australia, with offices all over the world.

Strategic Planning Models

 Strategy Map - This approach helps organizations design and communicate their strategies.
Strategy mapping often falls under the umbrella of a BSC, but strategy maps can also stand
alone.

 Balanced Scorecard - The balanced scorecard system strives to connect big picture
elements with operational elements. BSC is well-known and works for companies of varying
sizes.

 SWOT Analysis - SWOT (strengths, weaknesses, opportunities, and threats) offers a way to
examine both internal and external forces impacting your company.

 PEST Mode - The PEST (political, economic, social/sociocultural, and technological)

approach looks at elements of the external environment, including the forces in its name.

 Gap Planning - A strategy gap is the distance between how a company is currently
performing and its desired goal. Gap planning is the analysis and evaluation of that
difference.

 Blue Ocean Strategy - This framework emphasizes new markets and uncontested space.
blue ocean = uncontested market
- Value innovation
 Porter’s Five Forces - This model looks at five competitive forces that are present in every
industry and helps to determine strengths and weaknesses: competition in the industry, the
potential of new entrants into the industry, the power of suppliers, the power of customers,
and the threat of substitute products.
RIVALRY AMONG EXISTING COMPETITORS
1. Threat of new entrants – low entry barriers
- low R&D expense
- not much specialized knowledge required
- production and labor cost is relatively lower in some cities
2. Competitive rivalry – high competition
- lot of well-established company with significantly large resources and process patents
3. Buyer power – higher bargaining power for wholesalers as they can switch with low cost
- lower bargaining power for retail as they are loyal to the brand
4. Supplier power – low because the company as many suppliers
5. threat of substitution - low threat due to high brand loyalty

 VRIO Framework - This approach looks at the questions of value, rarity, imitability, and
organization concerning the competitive potential of a company.

Other Models:
 Alignment Model: This model helps align your mission statement with available resources.
It is particularly effective for businesses facing internal struggles.
- making sure an organization’s actions align with its vision

 The Basic Model: Sometimes called a simple strategic planning model, the basic model
involves creating a mission statement, goals, and strategies.

 Inspirational Model: This is a somewhat quick method of strategic planning that begins by
coming up with a highly inspirational vision for the organization and the goals to match.
 - The process works by gathering people to talk about a highly inspirational vision for
the company. Leaders encourage participants to brainstorm exciting and far-reaching
goals, then capture the details using powerful and poignant wording.

 Issue-Based or Goal-Based Model: A step up from the basic model, this model is better for
more established businesses. It incorporates SWOT or other types of assessments to
determine goals, mission statements, action plans, and other steps.
- requires organizations to identify their most important current issues, suggest action
plans to address those issues, and include that information in the strategic plan

 Organic Model: As the name implies, this model does not necessarily follow a set plan,
instead evolving and changing as conditions warrant.
- relies on everyone having a shared vision and being willing to openly discuss how to
get there using common values.

 Real-Time Model: This a fluid process that works best for companies that operate in a
rapidly changing environment.
- a continuous process and works best for rapidly changing organizations that might not
have the need for set, detailed, or traditional strategic planning.

 Scenario Model: When used in conjunction with other models, the scenario model can
help you identify goals, as well as issues around them, by using scenarios that might arise.
Some experts say this is more of a technique than a model.
- looks at what is happening outside of an organization, including regulatory,
demographic, or political forces, to determine how they can impact what is happening
inside of a company