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Claude has worked as a Company Manager for Cirque du Soleil for the past 20 years and completed an MBA in Global Management at the University of Phoenix in 2014
Paul, the CEO of a widget-producing company, wants his executives to improve the strategic process of his company and to understand the difference between strategic thinking and strategic planning. In the lesson, we'll look at how Paul did just this. We'll start with the definitions of the two kinds of strategic processes.
Strategic thinking is a planning process that applies innovation, strategic planning, and operational planning to develop business strategies that have a greater chance for success.
More and more, organizations are learning that past experiences are not always the best basis for developing future strategies. Executives need to thoughtfully consider how to create value for customers. That's where strategic thinking comes in. Strategic thinking is the 'what' and 'why' of the planning process. It answers the question, 'What should we be doing and why?'
Strategic thinking requires innovation and creativity and includes a research phase to examine the voice of the customer, the employee, and industry practices. It's a process of examining everything we do in our various roles, understanding the needs of our customers, and ensuring that all of this is linked to clearly defined strategic imperatives.
The exercise of strategic planning, while important, tends to answer the 'how' and 'when' of business planning and rarely captures the essence of what it means to think strategically.
Strategic planning is a systematic process of envisioning a desired future, and it translates this vision into broadly defined goals or objectives and a sequence of steps of how to achieve them.
Jeanne M. Liedtka is a faculty member at the University of Virginia's Darden Graduate School of Business and former chief learning officer at United Technologies Corporation. She is particularly known for her work in corporate strategy. She has written and consulted on topics surrounding strategic thinking for over 30 years. According to Ledtka, strategic thinking differs from strategic planning along the following dimensions of strategic management:
| Strategic Thinking | Strategic Planning | |
|---|---|---|
| 1. Vision of the Future | Only the shape of the future can be predicted. | The future is predictable and specifiable in detail. |
| 2. Strategic Formulation and Implementation | Formulation and implementation are interactive rather than sequential and discrete. | The roles of formulation and implementation can be neatly divided. |
| 3. Managerial Role in Strategy Making | Lower-level managers have a voice in strategy making. | Senior executives obtain the needed information from lower-level managers, and then use it to create a plan. |
| 4. Control | Relies on self-reference. | Asserts control through measurement systems, assuming that organizations can measure and monitor important variables both accurately and quickly. |
| 5. Managerial Role in Implementation | All managers understand the larger system. | Lower-level managers need only know their own roles well. |
| 6. Strategy Making | Finding new strategic options and implementing them successfully is more important than evaluating them. | The challenge of setting strategic direction is primarily analytic. |
| 7. Process and Outcome | The planning process is a critical value-adding element. | The creation of the plan is the ultimate objective. |
Paul can see clearly from the analysis of the different strategic management dimensions by professor Jeanne Ledtka the difference between strategic thinking (what we should be doing and why) and the strategic planning (how and when we should do it).
Henry Mintzberg is an internationally renowned academic and author on business and management. He wrote in 1994 in the Harvard Business Review an article that compared strategic planning and strategic thinking. In the article, 'The Fall and Rise of Strategic Planning,' Mintzberg referred to strategic planning as the analysis of the environment (internal and external). Strategic thinking is the synthesis of the analysis done during the strategic planning process. Strategic thinking represents the vision of the analysis, the direction that the business should pursue. Strategic planning is done by the executives of the company and by the planners who assist the executives in putting the vision in place.
Paul can see the difference and the link between strategic thinking (what we should be doing and why) and the strategic planning (how and when we should do it).
Strategic thinking and strategic planning are two important processes that Paul, the CEO of the company, needs to do on a constant basis. Paul needs to think strategically to define what his company should be doing and why. Once this definition is done, the strategic planning analytical process can start to define how and when his company should do it.
Strategic thinking is what the company should do. Strategic planning is how the company will do it. We presented professor Ledtka's dimensions of strategic management with the difference between strategic thinking and strategic planning. We also presented professor Mintzberg's difference between strategic planning (the analysis) and strategic thinking (the synthesis, the vision). The review of these concepts should help Paul to put in place a strategic process in his company.
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Applying Strategic Thinking Skills2 chapters | 12 lessons
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