What Are Primary Ingredients for Strategic Thinking?
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Strategic thinking and policy
formulation that actually work does not come cheap. It starts from an acute
understanding of the organization – its vision, mission, products and services
(to mention a few) as well the environment – political, economic,
socio-cultural and technological - in which the organization operates. In an
era of globalization and rapid technological breakthroughs, coupled with
intense competition home and abroad, change is the only constant thing (De
Meyer, Loch and Pich, 2001); and so, it behooves on
organizations to be strategic in their thinking so that they don’t get “submerged”
by the massive waves of uncertainties sweeping across the globe. The interactions between the market and the firm are not
static, rather they are fluid in nature (Dickson, Farris, &
Verbeke, 2001).
Dickson et al. (2001) termed this notion as "moving video," alluding
to the constant changes occurring in the environment of the organization.
Theoretical and empirical
studies on organizations and environments began in the late 1960s and 1970s (Davis & Powell, 1992). Katz and Kahn's
groundbreaking work in 1966 enabled people see the importance of an
organization's environment to its performance, design and even turnover. Later
studies following this publication were basically an embracing of the ideas and
notions earlier put forward by Katz and Kahn (1966). Davis & Powell, (1992) grouped these later studies into two categories: (1)
studies that centred on the organization (Dill, 1958; Evan, 1966); (2) studies
that described the attributes by which the organizational environment could be
viewed and understood) (Emery & Trist, 1965; Terreberry, 1968).
Theories
on Organization and Environment
Arising
from these studies on organization and its environment, three major theories
emerged. These were: (1) Thompson's contingency theory; (2) Pfeffer and
Salancik's resource dependence theory; and, (3) Williamson's transaction costs
economics. Though these theories are different, they do however have some
commonalities: (1) they all focus on the organization as the unit of analysis;
(2) acceptance of uncertainty as an inalienable part of the environment (thus
suggesting the need for organizations to be adaptive in their response to
changes in the environment); (3) "resource exchange relations" (i.e.
relationships with suppliers and customers) is viewed as the most important
source of uncertainty in all the three approaches (Davis & Powell, 1992).
Having established the fact
that the business environment is associated with a lot of “flux and
uncertainty” (Graetz, 2005, p. 1), how does an organization survive in such seeming chaotic environment?
Strategy is the answer; strategy formulation couched in a formulated policy
requires strategic thinking and the proposed primary ingredients for this are:
the organization and the environment.
Strategy has been defined as “a
process by which an organization assesses the future prospects of the firm to
achieve its objectives” (Graetz, 2005, p. 1). Elsewhere, Mintzberg (1987) defines strategy as a: plan; ploy;
pattern; position; and perspective - what he described as the five Ps of
strategy. Strategic thinking, therefore, in simple terms can be defined as the
ability to see pattern in the chaos arising from the dynamic interactions
between the resources an organization has deployed and its ever-changing
environment (Levinthal and Myatt, 1994; Teece, Pisano, and Shuen, 1997).
Features of Strategic Thinking
Based on the findings
from a research conducted into strategic thinking, Liedtka (1998) has put
forward five major characteristics of strategic thinking:
2. Strategic thinking embodies a focus on
intent. In contrast with the traditional strategic planning approach that
focuses on creating a "fit" between existing resources and emerging
opportunities, strategic intent intentionally creates a substantial
"misfit" between these.
3. Strategic thinking involves thinking in
time. Strategic thinkers understand the interconnection of past, present and
future.
4. It is hypothesis driven. Hypothesis
generating and testing is central to strategic thinking activities. By asking
the creative question, "What if?" followed by the critical question
"If ...then ...?" strategic thinking spans the analytic-intuitive
dichotomy that Mintzberg refers to in his definition of thinking as synthesis
and planning as analysis.”
5. Strategic thinking invokes the capacity
to be intelligently opportunistic, to recognize and take advantage of newly
emerging opportunities.”
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The
first characteristic is particularly of interest since it ties in nicely with
the subject matter of this study. It is worthy of note also that Liedtka (1998) will put forward an
appreciation of an holistic view of the organization and its environment as the
first most important characteristic of strategy. This is a further testament to
the centrality of the organization and its environment to strategic thinking
and policy formulation.
The
environment of an organization is the surroundings in which an organization
conducts its business, and this surrounding may either be internal or external.
The organizational environment is made up of the internal environment and
external environment. The internal environment of the organization covers
elements like the mission statement, vision, performance and, products and
services of the organization, whereas the external environment covers all
things external to the organization such as the political/legal factors,
economic factors, social factors and technology factors (macro-environment), as
well as the competition and industry/market forces (micro-environment).
Culture, the way of life of a group of people is also an important dimension of
the external environment.
Work by Warren, Rose and Bergunder (1974) unveiled
the cultural dimension of the organizational environment. They indicated that
indeed the environment of an organization is also affected by ideologies,
political values as well as social and professional norms. For example, in our
modern world today, almost everybody is in a hurry and wants things done fast
for them such that it is becoming a cultural thing and so this need for speed
is thus shaping the business environment and consequently the way organizations
do business. As such, certain organizations have decided to leverage socio-cultural
attribute to offer what they term, “Speed
banking.”
Conclusion
In conclusion, strategic thinking
devoid of the organization and the environment is most likely to fail. Every
good strategic thinking must of necessity involve the internal and the external.
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References
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