STRATEGIC THINKING: WHERE THE MAGIC HAPPENS

Would You Like More Magic?

Current events are demanding strategic change in lots of businesses and for lots of people. Yes, change is a constant, but right now it feels like the only game in town.

Transforming strategy requires critical and systematic thinking, but it’ll always have an air of subjectivity too.

That’s the gap between analysis and decision-making. For some, the gap’s the point at which “the magic happens”.

Strategic Thinking Defined

Strategic thinking for transformation is about knowing how to critically assess problematic situations in organisations that come from challenges in your business’s operating context.

Once you’ve made that assessment, strategic thinking then extends to designing maps or plans that plot the route for strategic change which enables you to start answering the questions set by the context.

As you implement your plan, gaps in your knowledge will mean you have to start changing your approach, but without a plan, based on considered thinking, you’re unlikely to get anywhere meaningful fast.

All that said, at some point, transformational decisions need to be made by someone. Those decisions are informed by how we interpret cues, signals and signs from our operating context.

It’s All Subjective

We interpret cues through mental models, that are built out of our subjective experiences of life. What this means is that all decision-making and especially strategic decision-making is to a large extent subjective.

Leadership thinking for strategic transformation should:

  1. Take in as many different viewpoints and data as possible – that’s called requisite variety, which counters the decision-makers subjectivity

  2. Identify team-based outcomes that offer the focal point for planned changes

  3. Show how change can be achieved through conceptual modelling and strategy maps

  4. Translate complicated problem situations into project plans that are well defined and manageable

  5. Apply systematic methods that can assist leadership in the future and offer systematic problem analysis even in socio-economic situations that lie beyond organisational boundaries

Netflix: a Case in Point

In 2013, CEO Reed Hastings released an 11-page memo to employees and investors detailing a commitment to move from just distributing content digitally to become a leading producer of original content that could win Emmys and Oscars.

The memo said: “we don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. Home Box Office, not satellite.”

Since unveiling that new purpose, by 2019, Netflix revenue had roughly tripled, its profits multiplied 32-fold, and its stock annual growth rate had increased 57% annually, versus 11% for the standard and poor 500.

Doubtless, underlying Hastings’ statement was a massive amount of analysis; the comparisons he made indicate that. But his intended outcome was clear: “a leading producer of digital content”. The subjective leap was from content to production.

Strategic Thinking is like Rapid Evolution

Businesses with characteristics best suited to their environments are more likely to survive. Poorly adapted enterprises are less likely to survive. It’s the adaptation that matters. And adaptation comes from a critical appraisal of the organisational problems generated by contextual challenges, then making a decision on how to respond, leading to the development of a transformation ‘road map’.

Strategic Magic is Not Illusory

Most magic is illusion but we can set up the right conditions to create seemingly magical strategic transformation by better developing our ability to think critically and systematically, and especially by embracing life experiences that expand and refine our mental models, improving our strategic decision-making capabilities.

To find out more about how we can help you to better develop skills in strategic thinking for transformation, click here and take a look at Strategic Leaders, our 12-month mentoring programme, leading to an MBA from a British university.

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