Strategic thinking Essay

There is a lack of clear understanding of what exactly strategic thinking means and this, in turn, has lead to considerable confusion in the strategic management arena.
For instance, according to Clawson (2007), there are three vital components of organizational leadership, such as strategic thinking, relationship building and organizational design. Other author, Wilson (1994) have suggested that strategic thinking is merely thinking about strategy.
H. Mintzberg (1994), one of the leading authorities in the area of strategic management, by contrast, clearly emphasizes that strategic thinking is not merely “alternative nomenclature for everything falling under the umbrella of strategic management”. It is a particular way of thinking with specific and clearly discernible characteristics. In explaining the difference between strategic planning and strategic thinking, this analyst argues that strategic planning is the systematic programming of pre-identified strategies from which an action plan is developed. Strategic thinking, on the other hand, is a synthesizing process utilizing intuition and creativity whose outcome is “an integrated perspective of the enterprise.”
The problem, as he sees it, is that traditional planning approaches tend to undermine, rather than appropriately integrate, strategic thinking and this tends to impair successful organizational adaptation.
In general strategic thinking involves thinking and acting within a certain set of assumptions and potential action alternatives as well as challenging existing assumptions and action alternatives, potentially leading to new and more appropriate ones.
Traditional notions of strategic planning have come under severe attack by many in the business community. Strategic planning often takes an already agreed upon strategic direction and helps strategists decide how the organization is to be configured and resources allocated to realize that direction. Because of this, one of the most common critiques of strategic planning is that it is overly concerned with extrapolation of the present and the past as opposed to focusing on how to reinvent the future (also referred to as “strategic intent” or “strategy as revolution”
Advantages or disadvantages of exercising the strategic thinking in an organization
In order for organization to be successful in a highly competitive – not just leaders, but every employee must think strategically; under strategic thinking condition such threats creativity and knowledge made a great impact on the whole organization.
Among the benefits of exercising the strategic thinking in an organization I can name the following: creation of sense of unity, system thinking, providing proactive leadership, becoming a learning organization, better understanding of the business environment and company’s competitive advantages, refusal from reactive decision making practices, fighting with complacency, better understanding and analysis of competitors behavior and future plans, and finally long term perspectives and leadership in changes, fresh thinking, business initiatives and innovations. It also helps to make the workforce’s performance much effective.
Organizational design and factors that influence it
Strategy cannot be successfully executed without the right organization design. There are several situations in which creating a new design or restructuring is self evident. These include:
Startup of a new business, subsidiary, or venture
Significant growth, or conversely contraction in the business
Shift from a domestic to global company
Merger or acquisition
Spin-off or divestiture of products and businesses
However, organization redesign is often needed during the normal course of implementing business strategy. Existing organization designs can lose relevance as market conditions change, leadership changes, and processes change to increase efficiency. These changes can occur slowly, “sneaking up” on the company and accumulating to the point where a redesign is needed. And a key problem for leaders is that by the time they recognize the need for redesign, it may be too late. Leaders need to respond early to the increases in temperature in their environment and take the needed actions.
Some typical early warning signs that call for an organizational redesign include:
Slowdown/difficulty in meeting business plan targets;
Disconnects in key processes as they flow across different departments or work groups;
High levels of conflict within and between organizational units;
Difficulty obtaining and sharing resources across the organization;
Lengthy, cumbersome decision-making processes;
Role confusion/turf issues;
Metrics are hard to define or overly complex;
Productivity declines.
What these indicators all point to is a fragmentation in the smooth flow of information, materials and decision-making. These are signs that the structural boundaries are located in the wrong places. Leaders should monitor these signs and initiate redesign efforts sooner versus later. This will enable them to respond more quickly and effectively to market changes.
As executives lead redesigns there are some critical things to think about and do:
Start with a statement of strategic intent. Many leaders believe they have a coherent organization strategy. And while most do have a strategy in mind, they must also communicate it adequately. We often hear that managers and peers do not “get it” – they do not really understand the strategy and its implications for day-to-day business. Often strategies are vague, or lack the direction for action needed for effective execution. The statement of strategic intent is the vehicle for clarifying an underlying strategy for all the leaders and employees of the organization. In practical terms, the statement of strategic intent is a concise statement that communicates how the organization plans to differentiate itself from its competitors on the basis of products, markets, technology, pricing, or people. It identifies the key customers/markets and articulates the value proposition for those key customers. It is different from a mission statement in that it defines a specific course of action that supports the overall mission. The statement of strategic intent is the basic building block for an effective organization design. It is the ultimate objective that the design is supporting. Without clear definition of the strategic intent, it is almost impossible to develop an effective structure.
Determine the high level organizational boundaries that support the strategic intent. Once the statement of strategic intent is agreed to, the executive can develop the “right” structure. If the strategy reflects a technology/product focus, the structure should reflect that. If the strategy is a mass-production, low cost strategy, a different structure is warranted. Understanding the strategic intent provides guidance to where to place organizational boundaries.
Where you draw boundaries is critical to strategy execution. When designing your organization, pay attention to the key breakdown areas. A “breakdown” is a failure of the organizational system to operate as planned.
Include integrating mechanisms to ensure that the right dialogue occurs. Organizational boundaries often create new barriers to the free flow of information, materials and decisions. Yet, leaders often feel that once they have determined the key organizational boundaries, their job is done. Effective organization design recognizes that mechanisms and structures must be implemented that cut across departmental boundaries so that information is properly shared. If people cannot talk to one another, and hold the important dialogues needed to achieve results, then the redesign is essentially useless.
Although organization redesign is not about a quick fix, it can generate quick results.
Organization design is more than moving the boxes. Organization design is a more robust process that focuses on aligning structures, systems and processes to achieve strategic objectives. Organization redesigns provide a good opportunity to examine critical business processes. In fact, analyzing core business processes often identifies where most of the critical breakdowns are occurring. Business process analysis becomes a tool for identifying where to place organizational boundaries.
Poor executive performance is often blamed for poor design. Executives are generally replaced when they fail to achieve expected business results. Poor business results are often attributed to poor individual performance or poor leadership skills. After all, it is easier to change the person than the structure. The underlying problem, however, is often a poor design. A poor organization design can prevent the business unit leader from having full and adequate control over key resources.
Conclusion
Strategic thinking has been gaining increasing popularity in the literature on organizational planning. However, the lack of clear articulation as to the nature and implications of this concept has lead to considerable confusion. For example, strategic thinking has been presented as a somewhat higher order of strategic planning; as an alternative to strategic planning; and as an approach that is downright incompatible with strategic planning. Inadequate delineation of the precise characteristics of this concept has also impeded its implementation by practitioners and its further development by educators.
Strategic thinking just can’t be successfully executed without the right organization design. Effective organization design helps build strategic capability.
There are clear indicators for measuring success of organization design efforts:
There is a faster cycle time for developing the right products/services defined by company strategy.
The company’s resources move quickly when needed.
The business is able to adapt to changes in market conditions quickly, without creating a feeling of chaos to employees and suppliers.
Work is getting done efficiently – without rework, excessive reviews.
The right information is getting to the right people.