out that it depends. Conversations with a local real estate professional suggest that if you have a swimming pool, it does not add to the value of your home. Most agents believe it actually lowers the value because many prospective buyers do not want the added cost of maintenance, are concerned about decreased yard space, or worry about their children. That said, if your neighbors have a swimming pool and you also have a swimming pool, your property value will be comparable to your neighbors'. And, in fact, if you are one of the few in your neighborhood who does not have a swimming pool, your property value will go down. The old mantra “location, location, location” holds true here. The influence or impact of having a swimming pool differs according to where the property is located.
We consider questions to be a critical element of strategic thinking. Both the number of questions asked and the nature and scope of those questions are both important. On this front, a conversation that one of us overheard while serving as a law enforcement executive comes to mind. A patrol commander and a crime analyst were discussing the ability to predict the likely time and location of armed robberies based on available data. This was an important issue, in that our local community had experienced a spate of armed robberies at several local convenience stores committed by what was presumed to be the same individual.
As they discussed the matter, it became increasingly clear that the commander's comments were focused mainly on the precision and accuracy of the forecast, while the crime analyst's comments centered on matters related to maintaining a holistic perspective and context. As the commander kept asking for more detail, the analyst kept focusing on what patrol officers would do with the information. Experience suggests neither set of questions was right or better than the other. Although it is unrealistic to expect predictions to be 100 percent accurate, a certain level of precision is needed in order to ensure the utilization of resources. A forecast that is 99 percent accurate is much better than one that is only 60 percent accurate. That said, achieving 99 percent accuracy is only useful if it influences or impacts actions in some planned and purposeful way.
These situations showcase the underlying tenet of this book: Strategic thinking only matters if it leads to purposeful action. Furthermore, leadership only matters if it is informed by a clear understanding of context and perspective. It is strategic leadership – the result of leadership actions informed by strategic thinking – that drives meaningful results.
Fundamental Questions
With these issues in mind, we highlight a few of the questions that colleagues, clients, and students have raised with us when discussing strategic thinking and leadership. We believe you will be able to relate to many, if not all, of them.
■ From the senior vice president of a private label canned vegetable company:
■ How do I gain and maintain an in-depth understanding of my business?
■ How do I articulate the vision of where we should go?
■ After I've gotten buy-in, how do I lead the effort – not micromanage – while still giving direction and having sufficient controls to make sure things are on track?
■ From a physician's assistant in a leading teaching hospital:
■ How do I get people to “follow the leader”?
■ How can I define success?
■ What the heck is “strategic” thinking?
■ From the executive vice president and practice leader of a private equity firm:
■ How can I make numerous quick, strategic decisions?
■ In terms of strategic thinking, how can I more quickly pick things up, assess matters, draw conclusions, and make decisions – and then more quickly attack?
■ How do strategic thinking and strategic leadership change when applied to different situations?
■ From a director of a leading children's hospital:
■ How can I help leaders redirect reactive habits toward more strategic thinking?
■ What are the measures of “sound” strategic thinking? What are the best practices?
■ How do I teach strategic thinking to my team to prepare them for the future?
■ From a corporate board member:
■ How do you combine the art and the science of strategy formulation to create something exceptionally powerful?
■ How do you strengthen an individual's strategic thinking capability?
■ Is there a particular strategic thinking style that is more conducive to a particular industry or profession, or more applicable to a profit or nonprofit organization?
These and other questions inform our focus in writing this book, as do hundreds of other conversations we've had with leaders in both professional and casual situations. We don't address all of them directly, but we're confident that you will gain insight into each of them and into your own questions as you work your way through this text.
Strategic thinking – with its emphasis on assessing situations, recognizing patterns, and making decisions – is a compelling imperative in today's complex, changing, and risk-laden world. While the focus and process of strategic thinking may vary, it is always key to maintaining perspective and focus when the external environment changes. Leadership – with its emphasis on influencing others toward a chosen course of action – is equally compelling. While the manner in which leadership is exercised may change, it is nonetheless key to having an impact on your team, organization, community, industry, or profession.
These are the considerations and questions we intend to address as we explore the key aspects of leading with strategic thinking. The next chapter presents fundamental concepts that define both strategic thinking and leadership, and provides real-world examples of strategic leadership in practice.
1
FUNDAMENTALS OF STRATEGIC THINKING AND LEADERSHIP
To adequately address the issues and questions we raised in the Introduction, we must recognize and understand the nature of strategic thinking and leadership. To do so, we will begin by addressing each as an independent topic. We will also explore the important relationship between them. After reviewing their nature and elements, we will turn our attention to their application through several stories of strategic thinking and leadership in action.
The Nature of Strategic Thinking
Achieving a meaningful understanding of strategic thinking involves addressing several interrelated topics. From an academic perspective, we see strategic thinking at the intersection of three fields of study: cognitive psychology, systems thinking, and game theory.
Figure 1.1 The Three Components of Strategic Thinking
Cognitive psychology is the study of perception, creativity, decision making, and thinking. Systems thinking is an approach to understanding how systems behave, interact with their environment, and influence each other. Game theory is the study of decision making when the decision involves two or more parties (the decision maker and the opponent or adversary). While these are all academic disciplines, they address highly practical real-world matters. Applying cognitive psychology helps you manage your biases and blind spots. Systems thinking helps you broaden the slate of factors you consider when evaluating options and prioritizing actions. Game theory helps you further recognize the ramifications of your decisions and actions and take steps to mitigate opposing forces. We will now explore each of these disciplines in terms of how they influence and impact strategic thinking and strategic leadership.
Before we begin, we should note that the purpose of this chapter is not to provide an exhaustive review of the research that has been conducted in each of these three fields. Rather, our intent is to lay the foundation for subsequent chapters and provide enough information to raise your level of awareness of considerations impacting your ability to think and lead strategically.
The