Strategic thinking

There is something mystical about the word “strategy”.  People love to use strategy in a variety of different context – business strategy, technical strategy, product strategy, process strategy, people strategy, competitive strategy, winning strategy, sales strategy, marketing strategy, to name a few. 

You read about strategy.  You hear about strategy.  You talk about strategy.  You think strategy. 

Is strategic thinking an innate talent or an acquired skill? I tend to think of it as the former, but no matter how innate it is or it isn’t one can always strive to get better at that.  I am a simple kind of guy.  When I think about strategy, here are 3 things that I think about:

  • Thoughtfully define your destination

  • Realistically identify your current position

  • Anticipate tectonic shifts and plan for them   

Thoughtfully define your destination

The first step in strategic thinking is to accurately identify your objective, your mission – i.e. your destination.  A simple way to think about strategic thinking is ‘what is the most effective way to get from Point A to Point B?’  A chess player thinks strategically about the best way to capture the opponent’s King.  Capturing the opponent’s King is the chess player’s Point B.  When Microsoft started, Bill Gates and Paul Allen wanted to put a computer on every desk in every home. This was their Point B.  Henry Ford wanted to build a car for the common person.  That was his Point B.  Bill, Paul and Henry thought strategically on how they could best get to their respective Point Bs.  Bill and Paul decided to develop software to make computers fun and easy to use.  Ford’s strategy was to invest in a state-of-the art Assembly Line and reduce production costs.  

The mistake people make in identifying their Point B is to think about the success of their immediate products.  One needs to go deeper and understand the fundamental reason why their products exist.  Many railroad companies went out of business because they thought they were in the railroad business.  They strategized on how to build the best railroad organization.  If they viewed themselves as movers of people and goods to enable commerce, they would have evolved with changing times.  If a company that makes pens thinks they need the best way to make pens, then they are missing their Point B.  This company needs to think about helping people communicate, because communication is the fundamental reason why pens exist.   

Realistically identify your current position 

The next step is to realistically assess your Point A or your current position. In other words, if you don’t know where you are you may not know how to get to your destination.  For example, living in Seattle I need to be on I-5 South to reach San Diego.  Be it a business or an individual, being super aware of where you are, is absolutely critical to chart a course that will let you reach your destination.  Realistically assessing your current position requires objectivity and helps you calibrate how far you need to travel.

Anticipate tectonic shifts and plan for them 

Finally, a good strategic thinker has a wonderful ability to predict the future.  This ability is honed by analyzing historical data, studying trends, observing customer behaviors, studying competitive moves and overall, being watchful of ‘tectonic shifts’ that can rattle their foundations.  For example, in 1995, Microsoft reorganized and reprioritized efforts based on the Internet tectonic shift.  DEC failed to recognize the ‘Personal Computer’ tectonic shift and lost their leadership position in the industry.  Every major technological innovation is a classic example of one such tectonic shift and those who did a good job of anticipating that rode the wave phenomenally well.


Comments (14)

  1. Rachit says:

    Hmmm…interesting discussion!


  2. Pradeep UN says:

    There is a whole big field of study around Strategy – which obviously would not be justified by a blog post alone…

    But I think the biggest piece in good strategies are the element of understanding the risk involved and building in contingencies to overcome them. Atleast assuming you are building a strategy before just using brute force, brilliance and pluck. By which regard I am not sure if Bill and Paul actually worried about a strategy in the first place. But ofcourse who cares abt strategy 🙂

  3. Owen Cutajar says:

    Great post. Favourite quote is: "One needs to go deeper and understand the fundamental reason why their products exist.", something that is underestimated by so many people!

  4. Chandana says:

    Good article.

    I would like to add though that circumstances coming together just so are a huge part of this. No matter how sure you are about your strategy, in this working environment, how you are able to sell it and the support of your management chain, is a huge part of the equation.

    This is more than the "Anticipate tectonic shifts and plan for them".

    But if all the pieces came together just right then I would agree with the above.

  5. Some Guy says:

    I think Bill and Paul pursued a high volume cost leader strategy. I don’t believe that their goal was to just make computers fun and easier to use. THAT was point B. I think their goal was to make computers accessible to a mass populace in terms of software costs thru licensing to OEMs.

    Regardless, can you Microsoft guys please stop over using the words ‘rich’ and ‘exciting’ when you are talking about every single product or service? Seriously, get a thesaurus man. This reeks of uncreativity.

  6. bjho says:

    It must be fun to have leaders that share their way of thinking strategically in order to win.

  7. Bryan Hinton says:

    Your reference to tectonic shifts is very similar to the strategic inflection points concept that Andy Grove introduced is his book "Only the Paranoid can survive".

  8. Sudhir Desai says:

    In my opinion Strategic Thinking and Strategic Planning are not synonymous. One is a Capability or a Competence, the other is an Activity/Discipline.

    Strategic Thinking is the ability to think systemically, having a whole systems perspective which often goes beyond what the Organization is currently engaged in. This person or group has a high level of Cognitive Competence, to make sense of a large amount of complex and often ambiguous information, The ability to discern what is truly important, the ability to think over longer time horizons, to postulate and explore revolutionary and innovative possibilities, among other things.

    Strategic Planning on the other hand is a discipline, which can include innovative elements but essentially focuses on the rigor of making sure how to get from Point A to Point B without falling off the cliff.

    I would have to disagree with the proposition that anyone can predict the future.

    The complexity of the systems and the number of trends that can interact to create a future reality, and the ‘uncertainties’ associated with them, are beyond any one’s ability to forecast with certainty.

    The prescient Gates could not really foresee the Internet revolution and had to develop a reactive approach when Microsoft realized it would be left out by the new paradigm. DEC was then embedded in one paradigm, and now so is Microsoft.

    You can influence the future, you can envision desirable futures, you can empower yourself and people to influence it, but you have no control over ‘uncertainties’. That is why they are called uncertainties.

    You can only envisage them and prepare for alternative possiblities.

  9. John Tan says:

    Your three key points are definitely food for thought.

    I’ve been looking at Sun Tzu Art of War and seeing how I could link the concepts detailed to strategic thinking.  Any thoughts on it?


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