Strategic Thinking and Organisational Change by Andy Brough

The View from up here:
Strategic thinking precedes effective organisational change

The one question that every organisation must answer in order not just to survive, but also to realize its true reason for existence is . . . “What is our sustainable competitive advantage?”

In attempting to answer this question, organisations need to be clear about how they will adapt to changing customer demands.[i] Given the dramatic and sometimes tectonic shifts that have characterized the global economy over the last 18 months, organisations have been forced to reconsider their approach to organisational change. Historically, companies looked to organisational development specialists to facilitate a strategic planning process in anticipation of a change management intervention. At the same time, the organisation has had to continue to deliver value and demonstrate return on efforts, all within the context and constraints of the current market. Given this balancing act of preparing for the future whilst still needing to negotiate the present, there is a growing appreciation in the field of organisational development that for organisational change to be truly effective, it needs to be underpinned by legitimate strategy.  Not just any strategy mind you, what is required here is leaders who can display strategic critical thinking that will pave the way for effective strategic planning.[ii] This form of strategy ensures that organisational change does not result in unintended consequences. The prevailing agreement amongst strategists certainly seems to be that strategic thinking (synthesis) precedes effective strategic planning (analysis).[iii] This begs the obvious question. What is strategic thinking and how does this kind of thinking impact on organisational change?

What is Strategic Thinking?
Strategic thinking is not an easy concept to distill into one or two concepts simply because authors and researchers cannot seem to agree on a single definition. Probably the most suited for this article is that it is a “a process by which senior executives can rise above the daily managerial responsibilities and crises to gain a different perspective of both the organisation and the environment within which the organisation is found.”[iv] Rising above the daily managerial processes and taking a “helicopter view” of the organisation enables the leaders within an organisation to “hover” above the organisation whilst considering a range of possible strategic options. The helicopter can rotate on its own axis which enables the pilot to can scan the past and then look to the future with purpose and insight. Often, it is only when leaders are able to see beyond the immediacy of both the urgent and important that they enjoy the fresh perspective of:[v]

(a)   A holistic systems view that acknowledges how the different parts of an organisation impact on each other. Strategic thinking is integrative thinking. Strategic thinking is holistic thinking. Strategic thinking looks to not just at the individual pieces of the jigsaw, but seeks to discover how the pieces fit together.

(b)  A focused intent on identifying and even creating mismatches between existing resources and emerging opportunities. Conventional wisdom in strategic planning looks for the obvious fit between resources and opportunities. Strategic thinking goes one step beyond that obvious matching and looks to create the instances where either the opportunities or the resources need to be reconsidered.

(c)   Thinking in time (past, present and future). Strategic thinking acknowledges the link between the history of the organisation, the current reality that the organisation finds itself in, and the future possibilities that are open to the organisation. In other words, strategic thinking is about recognizing both the constraints of context and the opportunities of context in a simultaneous consideration. 

(d)  Generating hypotheses of “what if?” and “if then?”  By developing more intuitive approaches to strategy alongside the rational, analytical thought processes, strategic thinking provides for a juxtaposing of ideas that can be held in tension.

 (e) The ability to think both creatively and opportunistically. Put simply, strategic thinking provides organisational leaders with the ability to look for innovative and imaginative ideas by reconsidering the future and then repositioning the organisation within that possible future. This means that the organisation will need to then reconsider its core strategies and possibly even its market offering in the context of this future scenario. Strategic thinking is creative and divergent in its approach and is probably much more closely aligned to brainstorming in its approach. Where traditionally strategic planning has been characterized by left-brain thinking of logic, analysis and attention to detail, the more right-brain strategic thinking process facilitates intuition and entrepreneurial flair. A holistic strategic process will be successful if it is able to bring these two thinking styles together into a cohesive workable approach.

In making the case the case for strategic thinking as a precursor to strategic planning, we now need to turn our attention to organisational change. The real challenge for an organisation is to continue to find ways to exploit existing markets whilst exploring new market opportunities.[vi] This may require a strategic ambidexterity that will combine the need for change with a company’s “ability to combine exploration and exploitation strategies across products, market and resource domains.”[vii] To support this statement, let’s explore the concept of organisational change.

What is Organisational Change?
Organisational change is best understood in the context of  (a) evolutionary and (b) revolutionary change.[viii] Evolutionary change in an organisation describes a prolonged period of growth where no “major upheaval occurs in organisation practices." Sometimes called continuous change, this kind of change usually does not influence the whole organisation. Revolutionary change on the other hand, describes periods of substantial turmoil in the organisation.[ix] It is also characterized by greater resistance and is often brought about as a result of changes in the external environment that impact in turn on the organisation itself-often at a deep structural level. Change usually falls into one of two categories, (a) planned change and (b) unplanned change. This article limits itself to a discussion around a critique of planned change because this is where the link between strategic planning and change per se, is best demonstrated. This is not to suggest that an unplanned change does not require critical thinking, but rather that an unplanned change is usually reactive rather than strategic and there falls out of the scope of this article which is concerned with the link between strategic thinking and organisational change.

Planned change refers to all of the systematic, strategic efforts to improve and enhance organisational effectiveness. The outputs of this kind of change can be evaluated in terms of tangible measures such as financial performance, stakeholder satisfaction, and productivity.[x] Planned change then is an intentional, strategic approach that looks either at the deficiencies within an organisation[xi] or otherwise at what the organisation is doing well and how this can be improved upon.[xii]  However planned change, as an organisational development approach is not without its detractors.[xiii] Some of the criticisms of planned change are (a) information relating to how the individual members within an organisation contribute to change needs more research, (b) suggestions that more information is needed about how the stage of planned change unfold, (c) planned change tends to be described as a rational approach whereas in actual fact it is very chaotic, and  (d) the relationship between planned change needs to be better understood.

Strategic Thinking – Organisational Change: The Connection
By examining both strategic thinking and organisational change, all that is required now is to bring the two concepts together and make the link. If we are “in the helicopter” with an overall view of the current state of affairs, we are also able to more critically and strategically analyze what is coming. The place where strategic thinking and organisational change best intersect is in the realm of scenario planning. Just as a helicopter pilot runs simulations for most eventualities, even though he is only ever likely to experience a fraction of those scenarios, so a strategic thinker can create scenarios and simulate “what if “ situations that enable his organisation to more effectively pre-empt or even introduce a desired change.  The leap from forecasting to foresight is best made through visualization.[xiv] Visualization involves asking, “what does the next generation look like?” Through visual thinking leaders are able to tap into a creative state that brings the future into the present. By examining not just who they are now, but also who, or what they want to be in the future, leaders who embrace strategic thinking are better equipped to challenge the status quo and anticipate change. According to a McKinsey report, 40% of firms fail to execute strategy due to lack of capability, another 30% fail because of lack of readiness for change, and 17% fail due to poor strategy formulation.[xv]

Next Steps
In this article I support the notion of strategic thinking as an important antecedent activity to organisational change. In a rapidly, dynamic changing environment, leaders require critical thinking skills to move from reactive decision making to proactive foresight. In the midst of the chaos and complexity of the modern world, the effective leader is one who recognizes that, whilst it is impossible to see the future, one can take a perspective that will provide some clues as to what’s up ahead.  This kind of approach requires leaders to embrace a new planning paradigm that involves taking a step back and seeing the organisations we lead in the context of an open system environment.[xvi] When we can do this, we will be far better positioned to identify, respond to, and influence the changes impacting on, or required in that environment. Are you ready to take a ride?

 

Andy Brough is an Organisational Development and Marketing Consultant. Visit http:// www.andrewbrough.com or contact him at andyb[at]andrewbrough[dot]com 

Equipping for Excellence

 


[i] Eisenhardt, K. M., & Brown, S. L. (1998). Competing on the edge: strategy as 

         structured chaos. Long Range Planning, 31 (5), 786-789.

[ii] Bonn, I. (2001). Developing strategic thinking as a core competency.

        Management Decision, 39 (1), 63-70.

[iii] Ibid.

 

[iv] Garratt, B. (1995). Introduction in Garratt, B. (Ed.) Developing strategic

        thought. Rediscovering the art of direction-giving. London: McGraw-Hill.

[v] Graetz, F. (2002). Strategic thinking versus strategic planning: towards

        understanding the complementaries. Management Decision, 40 (5), 456-462.

[vi] Judge, W. Q. (2008). Organizational capacity for change and strategic

       ambidexterity. European Journal of Marketing, 42 (9/10), 915-926.

[vii] Aulak, P., & Sarker, M. (2005). Strategic ambidexterity in international

       expansion: exploration and exploitation of market, product and

       organizational boundaries. Academy of Management Best Paper Proceedings –

      International Management Division, 31-36.

[viii] Burke, W. W. (2002) Organizational Change. Thousand Oaks, CA: Sage.

[ix] Greiner, L. (1972). Evolution and revolution as organizations grow. Harvard

     Business Review, (July-August), 37-46.

[x] Cummings,  T. G. , & Worley, C. G. (2005). Organization development & change.

     Mason, OH: South Western

[xi] Lewin’s Planned change model or the Action Research model

[xii] Positive model based on appreciate inquiry

[xiii] Porras, J., & Robertson, P. (1992). Organizational development theory, practice and research in Dunette, M., & Hough, M. (Eds)

[xiv] Sanders, T. I., (1998). Strategic thinking and the new science. Planning in the midst of chaos, complexity, and change. NY: Simon & Schuster.

[xv] Hsieh, T. Y., & Yik, S. (2005). Leadership as the starting point of strategy. McKinsey Report, February, 1-10. 

[xvi] Sanders, T. I. (1998). Strategic thinking and the new science. Planning in the midst of chaos, complexity, and change. NY: Simon & Schuster.