competent with the individual strategic thinker. I encourage you to assess the individuals around you: Are they sharp minds in touch with the situation? Are they acting reasonably?
A competent strategic thinker is more likely to craft good strategy. An incompetent strategic thinker is more likely to craft bad strategy.
Strategic Thinking’s Three Literacies
We would expect a literate person be able to read and write and to have a working knowledge of the use of verbs, nouns, adjectives, adverbs, and so forth. We would also expect her to be able to distinguish broader concepts, such as the difference between a book of fiction and a book of nonfiction; within those categories, a literate person could recognize a science fiction adventure from a romance novel and a history of civilization from natural history.
When addressing specialized topics, we expect a practitioner to be literate with the theory and application of her domain, such as a physician using professionally correct terms to describe the human anatomy and an accountant being able to distinguish a balance sheet from an income statement.
A competent strategic thinker is literate in three areas: strategy, judgment, and futures.
Literacy with strategy. There are thousands of articles and books published on strategy every year. Because strategy is an ambiguous concept, people pick up small pieces of good thought (the importance of planning, for example) and hold incomplete understandings of the principles of good strategy. The specialized language of strategy includes concepts such as the organization of resources, power, statements of the core challenge, and weak signals. As I’ve discussed, strategies are not synonymous with goals, nor are goals the steps to achieve a strategy.
Grand strategy is a term used by the military to describe the interests of a nation and its use of political, military, and economic power. The acronym VUCA originated with the U.S. military as a concept for showing the limitations of master planning and for encouraging agility.
In the for-profit business environment, the phrases corporate strategy, business strategy, and functional strategy have specific meanings. Corporate strategy is concerned with the question: What businesses do we want to participate in? General Electric’s famous approach to its portfolios of business is an example. GE wanted to be number one or a strong number two in each of its businesses and divested its businesses that couldn’t meet that criteria.
Business strategy is concerned with developing and sustaining a winning value proposition. Oakland’s Moneyball strategy is an example of a business strategy.
Functional strategy is associated with departments within the organization, examples being marketing strategy, or IT strategy. Upon closer inspection, functional strategy is typically practiced as programming. The department has a set of goals to achieve, and it is programming the implementation of its resources to meet those goals. In some cases, the department is nurturing some capability (such as a technology or a talent development program) that may bring unique competitive advantage to the business.
A literate strategic thinker will also recognize the distinctions of emergent versus deliberate strategy. Deliberate strategy is traditional, institutionalized strategic planning where management establishes a long-range vision and then directs the organization to implement actions to move toward espoused goals. Emergent strategy is entrepreneurial, flexible, and opportunity seeking.
Judgment literacy. An individual with judgment literacy is aware of the presence of cognitive biases and the possibility that individuals may make decisions that are not in their own best interests.
Daniel Kahneman was awarded the Nobel Prize for his contributions to a better understanding of decision making. Kahneman’s excellent book, Thinking Fast and Slow, provides an excellent and detailed description of topics that are relevant to strategic thinking: perceptions, memories, and decisions. Kahneman states, in the introduction to the book, that his goal is to “improve the ability to identify and understand errors of judgment and choice, in others and eventually in ourselves, by providing a richer and more precise language to discuss them.” This precise language includes the terms fallacies, illusions, and neglects (such as the previously described neglect of ambiguity).
People want to be systematic, rational, and deliberate in their strategizing. A fundamental task for a competent strategic thinker is to override, when appropriate, her intuitions, habits, impulses and inclinations.
Chapter 11 provides more on the role of judgment literacy and Chapter 12 describes how better conversation can help avoid mistakes in strategic judgment.
Futures literacy. One common way of anticipating the future is to rely on extrapolated trends or forecasts of a “projected future” or “predicted future.” Another kind of future is the “preferred future,” where leaders establish some wished-for outcome. Planning is done by backcasting to envision the steps to the goal.
A strategic thinker often uses a third discovery-oriented approach. She wants to see things that she couldn’t see before. She notices weak signals and explores their implications. She wants to fully grasp the potential of the future rather than be locked into a particular view.
Futures literacy is not the ability to make better predictions. Its purpose is to examine the anticipatory assumptions that connect present-day choices to their future effects. With an increased understanding of futures concepts and tools, strategic thinkers can make more-proactive decisions and can sidestep unintended consequences.
Futures literacy is probably the least-well-known of any of the three strategic thinking literacies. Fortunately, the mainstream of strategic management thought is embracing it. You will learn more about the tools of futures literacy in Chapter 7.
Nuance Matters
The text of Oakland’s Moneyball strategy contains many words because situations are unique and the response must match it. Like the words clever, powerful, effective, or good, the word nuanced is also a suitable adjective for characterizing a strategy. A nuanced strategy is desirable, and a generic strategy is not.
Given knowledge of the detail of a situation, we can see that a good strategy is understandable and commonsensical. Notice that I didn’t need pretentious words or complicated graphics to describe the Moneyball strategy.
In Chapter 1, I discussed Shoshin, the beginner’s mind. The beginner’s mind is appreciative of detail. A learner with a beginner’s mind embraces nuance because it can reveal the logic of a particular good strategy.
The next chapter describes the strategic-thinking narrative for Christopher Columbus. It will help you deepen your understanding of the purpose, nature, and scope of strategic thinking. Two highlights are the four pillars and the four X-factors of strategic thinking. These concepts provide an essential framework for defining and applying strategic thinking.
CHAPTER 3
Big Ideas
The Four Pillars of Strategic Thinking and DICE
It
