Strategy by Design

Strategic thinking suffers from a focus on outputs over inputs

Published: May 7, 2014
Prof. Andrew Atkins
Prof. Andrew Atkins

In our work, we are often asked to improve the strategic thinking capabilities of a company’s leaders.  Defining what a client means by ‘more strategic’ can be an intriguing and revealing exercise, because the variations between definitions say a lot about the assumptions and biases people bring to strategy. 

To get a sense of what strategic thinking looks like in action, we often ask leaders to name a gifted strategic thinker and to describe what makes them gifted.  The usual suspects emerge; among them, Steve Jobs, for his singular design vision and the turnaround he engineered at Apple; Gandhi, for his lasting effect on change movements for generations based on the success of civil disobedience; and Oprah Winfrey for her ability to leverage her brand across a wide spectrum of media platforms from television and films to publishing.   

While each of these individuals may indeed be or have been a gifted strategic thinker, our understanding of what people mean by strategic thinking suffers from a focus on outputs over inputs.  What this exercise makes clear is that we are good at identifying strategic outcomes; what we aren’t as good at is identifying how that strategic work gets done.  

In our work we have found that while strategic outcomes may be extraordinary and impressive, the inherent thought processes are straightforward.  Fundamentally, strategic thinking involves answering three basic questions, and, as indicated in Figure One, the order of those questions matters—a lot!

  1. Where are we?
  2. Where do we want to go?
  3. How do we get there?

It’s a bit like the phrase, ‘Ready!  Aim!  Fire!’:  the questions start by prompting us to take stock of our current situation; then we look at our desired future state.  Starting with these two questions is essential, or we will fall into the all-to-common trap of taking action without a clear sense of purpose. Imagine, “Ready!  Fire!  Fire!  Fire!”   Only after having defined the starting and end points are we prepared to chart our path. 

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Collaborative work ‘inside the arrow’—the ‘How do we get there?’ part—involves three overlapping and iterative conversations that help to bridge the gap between our current situation and the desired future state:  

The Perspective Cycle. In the first conversation, we gather and organize information.  

The Insight Cycle. In the second conversation, we develop a theory of what’s going on.  

The Opportunity Cycle. Finally, we develop and test options.

As indicated in Figure Two, each of these steps is an iterative cycle of dialogue with stakeholders involving two key strategic thinking skills: Systems Thinking and Design Thinking.  Let’s take a closer look at the process in detail.

First up is the Perspective Cycle, which involves scanning the environment for information and then organizing that information into patterns.  In scanning, we are actively engaged with our environment and stakeholders at the periphery of our organization.  We may track specific types of information to monitor trends, and we keep ourselves open to unexpected information that may provide clues to an emerging trend or issue.  

Pattern recognition helps us organize individual data points into a coherent picture.  In this state we are sense-making and looking for connections that have meaning to us.  It’s useful to bear in mind that our expectations and operating assumptions can exert a powerful influence on what data we attend to and what connections we readily make.  Counteracting this ‘confirmation bias’ is one of the great benefits of working collaboratively, because accommodating diverse perspectives will often cause us to look at our own perspective with fresh eyes.

Next up is the Insight Cycle, which involves building theories to explain the patterns we’ve discerned in the Perspective Cycle. Developing and refining those theories often requires a reframing of our understanding to accommodate evolving insights as we share our theories with stakeholders.  In this stage we are creating hypotheses about how the world works, and these hypotheses are limited by the constraints we believe are at play.  When we reframe, we consciously challenge one or more of the constraints or assumptions to help us shift our perspective.  Even if the specific constraint still pertains, the shift in perspective often serves to prompt fresh thinking and opens new opportunities for exploration during the Opportunity Cycle.

As shown in Figure Two, the overlap between the Perspective and Insight Cycles is the realm of Systems Thinking. As we go from scanning to patterning to theory building and reframing, we are moving from attending to individual events to noticing patterns and then to discerning underlying structures that drive the patterns and events.  With Systems Thinking, we are focusing on the connections between data elements and recognizing that meaning lies in these connections.  This focus on the whole rather than the parts is a central part of our understanding of what it means to be strategic.  It’s literally seeing the forest and not just the trees.  Furthermore, we are influencing the system through the perspective and insight conversations to build legitimacy for our strategic conclusions.

Prof. Jay Cone
Prof. Jay Cone

Finally, we can proceed to the Opportunity Cycle, which involves envisioning the possible while we investigate the actual.  Envisioning continues the work we started in reframing by encouraging us to generate new possibilities or scenarios.  Investigating may include prototyping a new process or business as a way of learning our way forward into the new strategy. The options we identify through envisioning raise questions about near term choices. Investigating allows us to conduct experiments that will stretch our understanding of our options. We will be more flexible and responsive to changes in the environment through persistent investigating.

As shown in Figure Two, the overlap between the Insight and Opportunity Cycles is the realm of Design Thinking.  As a discipline, Design Thinking focuses on generating innovative answers to situations that people are motivated to change.  We think of innovation as creativity put to productive use.  In the intersection of Insight and Opportunity, we’re translating the possible into the practical.  

In 2011, IDEO’s Peter Coughlin and Seattle University’s systems thinking expert Colleen Porto gave a joint presentation at the annual Systems Thinking in Action conference, where they proposed an integrated view of Systems Thinking and Design Thinking.  They showed that the processes are similar in that they are both ways of building understanding of your environment.  However, maintaining their separate areas of focus allows us to tap into the power that each discipline contributes to strategic thinking.

The gifted strategists we listed earlier were undoubtedly successful, but none of them achieved their success alone.  Great strategic thinkers and great leaders are distinguished not by their ability to single-handedly come up with answers, but by their ability to spark collaborative activity by asking questions.  The leaders we listed worked with an extensive network of collaborators to achieve their success.  They recognized that people bring differing skills and perspectives to the dialogue and that tapping into a diverse group improves the quality of the work and increases the legitimacy of the process and outcomes.

When you engage collaboratively, you can improve the quality of your group’s strategic thinking by asking powerful questions.  To get a sense of your own strengths and preferences, take the self-assessment on page X.  These two dozen questions will provide an indication of which thinking skills are your strengths, and where you will benefit from involving others to balance out your weaknesses.  Following are a few questions under each thinking skill to get you started.

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Scanning

  • What kind of data or information might help you understand this situation?
  • Do you have enough data to focus you effort?  If no, what data do you believe is missing?
  • Who in your organization has regular contact with your customers, competitors, suppliers, and strategic partners? What are their observations about the changing environment?

Patterning
  • In what categories or ‘buckets’ does information seem to be falling?
  • What themes are emerging as you explore this situation?
  • What behaviors, actions, or outcomes have happened in a regular or repetitive fashion?
  • What seems to be the most pertinent information on the table at the moment?
  • In what ways are the variables that affect your business changing? Which are becoming more important? Which are becoming less important?

Building Theories
  • What explains the patterns you’re seeing?
  • What are some conclusions that others have drawn or solutions others have tried?  What unusual or surprising solutions have you seen?
  •  What hunches do you have about what is actually happening, causing things to happen, or likely to happen?
  • What hypothesis is emerging?  What hypotheses have you heard others express?

Reframing

  • You’ve heard others describe the problem or situation.  How do you understand the problem or solution?
  • What assumptions underlie the description or your understanding?
  • How would the understanding change if you altered one or more assumptions?
  • What would be the consequences of looking at the issue in a different way?

Envisioning
  • Picture a person or place that is related to the topic at hand.
  • Picture what this person/people is/are doing or saying now with regard to this issue.
  • Picture a successful application or demonstration of your idea.
  • Build a story about the future based on your theories about emerging trends. How does the story you created differ from carrying the status quo into the future?

Investigating
  • How did you arrive at that conclusion?
  • Imagining this plan of action is implemented successfully, what are the systems implications?  Are there unintended consequences?
  • Who are the stakeholders that will be impacted and what is your strategy for working with them?
  • What criteria should we use to assess the merits of our picture of the future?
  • What question does our picture of the future raise?
  • How might you design an experiment to help you assess the plausibility of the picture of the future you created?


In closing

The six strategic thinking skills embedded in the Perception, Insight and Opportunity Cycles are simple and commonly practiced, but often go unnoticed when people engage in strategy work.  Being aware of these skills and developing conscious competence in them will make you much more confident and capable in charting a path forward for your organization.


Andrew Atkins is the Chief Innovation Officer at Interaction Associates, based in Boston, MA.  His clients include Merck Serono, Tory Burch, and GE.  Jay Cone is a Senior Consultant at Interaction Associates.  His clients include TJX, GE, and Dell.

[This article has been reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management]

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  • Say Keng Lee

    A very well-thought, lucidly-illustrated, and succinctly-written paper on Strategic Thinking 101, and nice to see \"Systems Thinking\" working in harmony with \"Design Thinking\", thus contributing to the power of \"Strategic Thinking\"!

    on May 9, 2014
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